BlueRock posts maiden profit

Aim-listed BlueRock Diamonds turned a profit for the first time during the second half of the 2019 financial year, the success of which was based on the diamond producer having sold 12 675 ct of diamonds for the year, marking an increase of 118% over the year before.

While grades and prices per cart had also improved, BlueRock on Tuesday noted that its production volumes had increased by 70% year-on-year to 323 000 t for the 2019 financial year.

The combination of the increase in volumes and grade led to a 125% increase in the number of carats produced in the year, the producer said, adding that in all the key performance indicators, BlueRock “has achieved what was a challenging and aggressive guidance”.

Commenting on the continued success at the producer’s Kareevlei diamond mine, in Kimberley, South Africa, BlueRock executive chairperson Mike Houston said the achievement “is testament to the implementation of the revised production strategy”, which was implemented by the company’s new management in the second quarter of last year. 

This strategy focuses on stabilising production ahead of maximising the exploitation of the resource, he explained, adding that, to that end, BlueRock was developing plans to effect a further step change increase in production and lower unit costs.

The producer also said it expects to report positive earnings before interest, taxes, depreciation and amortisation and positive comprehensive income for the second half of 2019, which will exclude noncash adjustments for International Financial Reporting Standard 9 charges and movement in foreign exchange.

About 2 085 ct remained on hand at the end of December, which will be placed in the January tender.
 
Further, the first quarter of this year has, so far, started satisfactorily and BlueRock’s management expects that, despite the impact of seasonal rains that previously caused significant disruption to operations, the producer will meet its targeted production volumes for the quarter, which are significantly ahead of those achieved in the prior comparable quarter.
 
As BlueRock has been operating at near current capacity – 40 000 t/m – it continues to benefit from increased economies of scale and management remains focussed on cost reduction.

The unaudited cost per carat produced, including all costs incurred in South Africa but not those incurred in the UK, in the second half of 2019 fell to $275/ct compared with the cost per carat for August and September 2019 of about $300/ct.

This compares to the sale price per carat in the fourth quarter of 2019 of $410/ct.
 
BlueRock expects that, in addition to the cost reductions arising from increased production, there are a number of areas where significant cost savings can be made, including, for example, linking up to the electricity grid, which will reduce the cost of generated power for the plant.

The producer confirmed that it continues to investigate other opportunities to reduce costs.