LONDON (Alliance News) - BlueRock Diamonds PLC Tuesday said operations at Kareevlei should restart within the next "four to five weeks" once South African authorities revisit and inspect the mine and the processing plant will also be restarted and lead to better grades and recovery rates.
The Kareevlei mine was undergoing trial operations when BlueRock identified issues with the efficiency of the plant in the first quarter of this year, prompting the miner to suspend operations in June so it could "more easily assess the shortcomings" of the plant configuration.
On Tuesday, BlueRock said a number of areas had been found to be contributing toward the unsatisfactory grades being recovered.
"These include sub optimal setting size on our screens, some inefficiencies in our pan operations, unnecessary recycling of material through the tertiary crushing circuit and a non-representative supply of run-of-mine kimberlite," said BlueRock.
"These modifications are close to completion and we expect to see a recovery in grade and also increased capacity of the plant when we restart operations," said the company.
In addition, BlueRock plans to address some "bottlenecks" within the process that are currently hampering production. The dense media separator, which utilises the difference in material density to isolate various minerals, has been identified as the "most significant" bottleneck, and BlueRock has identified a new separator that is twice the size of the current system in place.
The miner said the new separator is available within the Northern Cape of South Africa and the company is "assessing the benefits of its acquisition," it said.
Importantly, the plant is not the only issue at Kareevlei. The Department of Mineral Resources visited the mine earlier this month to inspect the company's operations, and although the majority of the project was found to be compliant with regulations, two areas need addressing before authorities will give the miner the green light.
The processing plant procedures and the guarding rails on the plant have been identified as issues that need addressing, alongside the trackless mobile machinery, which is underground equipment that is unmanned.
The assessment regarding trackless mobile machinery relates to the machinery owned by the contractor at Lace, Diacar. As a result of the order to bring the fleet up to scratch, Diacar has opted to terminate its agreement to provide earth-moving services to BlueRock.
The miner said it will either appoint a new contractor or lease and operate its own equipment.
Diacar has also informed BlueRock that it wishes to sell its processing plant and BlueRock is considering if the purchase would be worthwhile.
"Should we decide to acquire the Diacar Plant we will be able to retain 100% of all diamond revenues coming from the mine which we believe will outweigh the increased operating cost that we would need to assume," said BlueRock.
"We expect to be able to make the necessary changes to our operational procedures and guarding rails within the next four to five weeks when the Department of Mineral Resources will revisit our mine at which time we expect to have completed the required changes to our plant. Accordingly, we anticipate restarting operations at that time," said BlueRock.
Importantly, authorities have also upped the rehabilitation guarantee that BlueRock must provide because the size of the operation has increased. The original cost was only ZAR280,000, around GBP15,000, but that has now increased to ZAR2.2 million, or GBP115,000.
BlueRock said, taking the opportunity to snap up the Diacar plant into account, that it is undertaking a detailed financial assessment of the entire operation and said it would make a further announcement regarding funding "shortly".
BlueRock shares were down 2.5% to 11.70 pence per share on Tuesday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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