BlueRock Diamonds signs contract with Teichmann

South Africa-focussed diamond mining company BlueRock Diamonds announced on Tuesday that the contract with Teichmann South Africa, to provide mining services to BlueRock, has been signed.

The AIM-traded firm had announced that it was in negotiations with a member of the Teichmann Group to provide the quantity of ore necessary to meet its production plans on 16 May.

It described Teichmann as a pan-African civil engineering and mining group, with more than 1,800 employees.

Teichmann's experience in mining operations was expected to “significantly de-risk” the company's mining activities, and allow BlueRock to meet its production targets in a cost-effective manner.

The board said the Teichmann contract was for a period of five years, with an effective start date of 1 July, to provide a number of services at the levels required to meet BlueRock’s production plans.

Those services included the extraction of ore, waste and haul to stockpile, the break down of ore to the required size as and when required, and the delivery of ore to the processing plant.

BlueRock said that, unlike the agreement with the previous provider of those services, which was paid on an hourly basis with a minimum number of hours guaranteed, Teichmann would be paid almost entirely on a cost per tonne basis.

As a result, the effective cost per tonne was reduced with the planned increased production.

Based on the lower end of the firm’s current production expectations, the estimated cost of Teichmann's services for the 12 months to 30 June next year would be around ZAR 21m (£1.18m).

“I am delighted that we have now finalised terms with Teichmann,” said BlueRock Diamonds executive chairman Mike Houston.

“Teichmann [has] been on site since 1 July as was planned and we have established a good working relationship.”

Houston said the upgrading of the company’s mining operation was “key” to the overall success of the business, adding that having an experienced mining contractor was an “essential” part of that process.

“I believe that our partnership with the wider Teichmann Group will provide further benefits going forward as we continue to implement our defined growth strategy.”