(Alliance News) - BlueRock Diamonds PLC on Tuesday provided an update regarding its principal operating subsidiary, Kareevlei Mining Pty Ltd, being placed into business rescue in February and the subsequent impact on the company.
The South Africa-focused diamond producer said that the business rescue practitioners told the company that the assets of Kareevlei are "unlikely, in a liquidation scenario, to realise sufficient proceeds to settle the secured creditor, Teichmann South Africa", and that there is "unlikely to be any distribution to preferred and unsecured creditors".
The BRPs believe Kareevlei can only be rescued if its debt is extinguished or brought to a "manageable" level, working capital funding is obtained, and that the mine is owner-managed and operated.
BlueRock Diamonds said that the BRPs have also exercised their rights to suspend the obligations of Kareevlei, such as the management agreement and loan agreements. Consequently, the company has no source of income from Kareevlei.
The diamond producer said it believes it is unlikely to raise sufficient further finance to fund Kareevlei, though it noted that the business rescue plan has not been finalised as the outcome of the discussions are material to the final assessment of the BRPs regarding the ability to either rescue or liquidate Kareevlei.
As a result, BlueRock Diamonds said, with the absence of certainty about Kareevlei in the near future, its own prospects are increasingly uncertain.
"The board has explored numerous options to minimise the potential loss to stakeholders. In the absence, however, of any distribution from Kareevlei or new capital being raised it is unlikely that the company can be considered to be a going concern," it said.
By Heather Rydings, Alliance News senior economics reporter
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