BlueRock Diamonds raises £750,000 to invest in South Africa mine

Explorer BlueRock Diamonds has raised £750,000 from an equity placing on AIM and a loan note extension in order to invest in its Kareevlei mine in South Africa.

About 16.8m shares were issued of 1p each sold at 4p raised £675,000 and an extension to a convertible loan note raised a further £75,000.

The proceeds are to be used to meet production target levels of 30,000 tonnes per month at a reduced cost as well as refine the company's plant in order to improve grades.

Chief executive Adam Waugh said, "The funds raised will enable us to fully implement our plans for Kareevlei where we hope to significantly reduce the cost per tonne of production as well as improving our recovered grade."

The company is particularly looking to buy primary crushing equipment to be installed during the first quarter of 2017, which is considered to be more cost effective than using external contractors

It also seeks to mitigate the effects of drought conditions through the use of increased water recycling, while maintaining targeted production, but said that there is “no certainty that the company will be able to achieve the targeted tonnage and grade improvement” following the recent shut down of operations.

South Africa’s Department of Mineral Resources suspended operations at the mine in July, following an inspection that said the company has to change plant procedures, guarding rails and trackless mobile machinery at the site. It was reopened in August.

Recommencement of the drill and blast programme will be in mid-January and it is expected that there will be a steady stream of run of mine material available.

A gradual ramp up of production levels during the first quarter of 2017 is expected to be completed before the quarter ends.

Shares in BlueRock Diamonds were down 24.81% to 5.07p at 1107 GMT.