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Interim Results

19 Sep 2017 07:00

RNS Number : 0965R
BlueRock Diamonds PLC
19 September 2017
 

19 September 2017

 

BLUEROCK DIAMONDS PLC

 

("BlueRock" or the "Company")

 

Interim results for the six months ended 30 June 2017

 

Introduction

 

BlueRock Diamonds, the AIM listed diamond mining company, which owns and operates the Kareevlei Diamond Mine in the Kimberley region of South Africa, is pleased to announce its interim results for the six months ended 30 June 2017. The interims will be available today for download from www.bluerockdiamonds.co.uk

 

Operational Highlights

 

· Monthly production is now in excess of 20,000 tonnes per month and is nearing the target of 25,000 tonnes per month

· Average grade continues to increase; average for the period was 1.59cpht. Post period end the average grade has increased to 2.41cpht and the grade sold in the September tender reached 3.01cpht

· Average value per carat achieved for the first 6 months of 2017 was USD 320, post period end the average price achieved rose to USD 343

· In August 2017, raised £860,000 (gross) through a placing and subscription

 

Chairman's Statement

 

The Company has made great strides during the first half of 2017.

 

Our new management team continues to improve existing mining activities at Kareevlei; production is nearing target levels, value per carat remains high and our recovered grade continues to improve. As a consequence, our Kareevlei operations are nearing breakeven.

 

We are now looking to expand our operations either through developing our existing mining right at Kareevlei or by acquiring rights to mine other areas. We intend to do this in a cost-effective way, using our current facilities where possible to assess other potential opportunities.

 

Production volumes

 

Production volumes have increased significantly since recommencement of operations in March 2017.

 

2017

March

April

May

June

July

August

Production volume (tonnes)

9,051

7,098

9,661

14,427

20,209

20,929

 

Following the end of the extreme rainfall in the first 10 weeks of 2017, production recommenced in March 2017. During March, April and May, production levels remained below expectation due to the usual teething problems associated with the commissioning of a new plant, the processing of wet kimberlite in March and an unwelcome number of breakdowns caused by an over reliance on old equipment.

 

Having identified these issues, management replaced the equipment that was causing the breakdowns, leading to significant increase in production volume in June and then July. Uptime in March to May averaged approximately 6.4 hours per day and is now running at approximately 16 hours per day. We currently operate two shifts per day (over a five day week) and will be moving to three shifts per day in early 2018, which is expected to further increase our daily uptime. Our target monthly production volume remains at 25,000 tonnes.

 

Grade

 

The average pit grade for K2 as determined by Zstar (our competent person) is 4.5 carats per hundred tonnes ("cpht"). We have been concentrating on developing the K2 pit for the long term and have, therefore, been drilling, blasting and processing the remaining Level 1 kimberlite approximately 7m to 17m below the surface, before commencing to the lower levels. The Level 1 kimberlite contains a significant amount of calcrete and, accordingly, we expected grades from this ground to be lower than average pit grade. Our average grade for the first 6 months of 2017 was 1.59cpht. Since the end of the half year, the average grade for 2017 has have improved to 2.40cpht with the grade for the parcel sent to the September tender being 3.01cpht. The Company expects to commence blasting of the Level 2 kimberlite later this month.

 

Pit development

 

We have now completed the remedial work required to ensure K2's long-term production. The last of the calcretised Level 1 kimberlite will be processed by mid-October 2017 after which we will begin to mine the Level 2 kimberlite, which consists of pure kimberlite. We expect that the Level 2 kimberlite will produce a significantly higher grade than Level 1, although it should be noted that it is expected that different areas of the pit are likely to produce differing recovered grades.

 

Value per carat

 

The value per carat continues to significantly exceed the estimate provided by Zstar; the average for the first 6 months of 2017 was USD320 per carat compared with the Zstar estimate of USD232. The higher value reflects the quality of our diamonds and the coarseness of our production. As our production continues to grow, so does our reputation for producing high quality diamonds.

 

The recent introduction of our tertiary crusher into the circuit is designed as a further method of liberation and is expected to result in an increase in grade. It may, however, have an impact on the average value per carat due to the increase in smaller diamonds. We are in the process of assessing whether the likely increased grade from the tertiary crusher outweighs the costs of its operation.

 

Costs of production

 

The new management team have concentrated on reducing costs of production in order to reduce the breakeven point and hence to improve the long-term profitability of the mine.

 

In the first 6 months of 2017, we reduced the costs of loading/hauling significantly by appointing a new contractor on significantly better terms than hitherto. Since the end of the interim period, we have reduced these costs further by leasing the loading and hauling equipment directly and operating them ourselves. We have also replaced ageing key pieces of equipment with new equipment, which has reduced operating costs, while increasing reliability. It has improved the plant's ability to process continuously, resulting in a significant positive impact on production volumes.

 

New opportunities

 

During the first half of 2017, we reached an agreement with Koedonza Olives CC to mine a 1.5 hectare kimberlite pipe located in Windsorton, approximately 40km north of Kimberley in the Northern Cape known as Jubilee. Whilst there is no empirical data for the pipe, there is evidence of diamonds being found near the surface by alluvial mining operators. We intend to carry out a bulk sample of up to 2,500 tonnes in the next month, which will be processed at our Kareevlei facility for minimal cost. A decision as to how to proceed with Jubilee will be made once the results of this limited bulk sample have been analysed.

 

We continue to assess how best to exploit the 3,000 hectares covered by our existing mining right across the Kareevlei Mining Area, on which there are 5 known kimberlite pipes in existence. Of the 5 pipes, K5 is the least known about, although the data that does exist suggests that the coarseness of the diamonds in pipe 5 could be significantly greater than the other pipes. Similarly to Jubilee, we intend to carry out a bulk sample of K5 in order to provide further evidence as to whether K5 is an economically viable pit to mine, despite its relatively small size of 0.25ha. Test work on Pipe 5 and Jubilee is expected to be completed within the next four weeks.

 

Financing

 

In May 2017, we raised £360,000 at 3p a share, which was used to fund working capital.

 

Further to this raise, in July 2017 a loan agreement was entered into with Mark Poole, a significant BlueRock shareholder, of up to £315,000 in order to fund some of the required replacement equipment. We have drawn down £251,000 of this amount and we do not intend to draw down any further funds under this facility.

 

In July 2017, the term of the unsecured loans provided by Tim Leslie and Paul Beck (both directors) and Mark Poole was extended to 31 December 2017. Tim Leslie and Paul Beck agreed to advance a further £20,000 each under the same facility. We intend to repay these amounts prior to maturity, subject to the normal cashflow considerations.

 

In August 2017, we raised a further £860,000 (gross of expenses) through a placing and subscription at 1.25p, of which Adam Waugh, Chief Executive Officer of the Company agreed to subscribe for 4,000,000 new shares. These funds are expected to provide sufficient working capital in order to reach break-even based on our current internal forecasts.

 

Issue of new share options

 

On the 10 August 2017, BlueRock Diamonds plc announced that it granted the following new share options to Adam Waugh (the Company's CEO), Johan Milho, (the Company's mine manager) and Paul Beck (the Company's non-executive Chairman). The details of the issue are noted below:

 

Individual

Tranche A

No. of New Share Options

Tranche B

No. of New Share Options

Adam Waugh

3,417,740

3,417,740

Johan Milho

683,548

683,548

Paul Beck

992,096

992,096

 

Tranche A options have an exercise price of 1.25p, and Tranche B options have an exercise price of 2.25p.

 

Further details of the financings in June, July and August are set out in the announcements made via the London Stock Exchange's RNS system on 1 June 2017, 20 July 2017 and 10 August 2017.

 

Diamond sales and production update

 

Since the period end, the number of carats sent and average grade of the parcel sold at the monthly tender has continued to increase and the average value per carat remains significantly above expectations.

 

2017

Carats recovered

(cpht)

Average price/carat

(USD)

Average Grade

July

329.66

396

1.82

August

400.06

330

2.08

September

545.63

323

3.01

 

   

In July, August and September, we sold 1,275 carats at tender and achieved grades ranging from 1.82cpht to 3.01cpht. The average price achieved for our goods over this period was USD 343.

 

Production has continued to improve with July producing 20,200 tonnes representing an increase of 40% on production achieved in June 2017. The total tonnage for August showed an increase of 3.5% to 20,929 tonnes. Production throughout September continues to move towards our target of 25,000 tonnes.

 

Paul Beck

Non-executive Chairman

 

 

 

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

 

Enquiries:

BlueRock Diamonds plc

Adam Waugh, CEO

 

awaugh@bluerockdiamonds.co.uk

 

SP Angel (NOMAD and Broker)

Stuart Gledhill

Lindsay Mair

 

+44 (0)20 3470 0470

 

Yellow Jersey PR

Felicity Winkles

Joe Burgess

Katie Bairsto

+44 (0) 7769 325254

 

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2017

Consolidated Statement of Financial Position

Note

As at

30 June

2017

Unaudited

£

As at

30 June

2016

Unaudited

£

As at

31 December 2016

Audited

£

Assets

Non-current assets

Property, plant and equipment

5

821,415

517,367

783,314

Mining assets

255,179

164,449

216,276

1,076,594

681,816

999,590

Current assets

Inventories

6

15,930

26,874

2,202

Trade and other receivables

7

44,311

41,953

131,997

Cash and cash equivalents

8

106,347

458,222

291,555

166,588

527,049

425,754

Total assets

1,243,182

1,208,865

1,425,344

Equity and liabilities

Equity Attributable to Equity Holders of the Parent

Share capital

10

679,096

388,046

556,796

Share premium

10

2,656,728

2,012,781

2,443,826

Retained losses

(2,352,940)

(2,018,022)

(1,828,598)

Convertible loan note reserve

12

-

293,818

-

Foreign exchange reserve

(279,982)

(9,689)

(332,160)

702,902

666,934

839,864

Non-controlling interest

(1,071,106)

(567,084)

(817,386)

(368,204)

99,850

22,478

Liabilities

Current liabilities

Trade and other payables

11

632,757

387,716

413,681

Non-current liabilities

Embedded derivative

12

72,451

-

292,839

Borrowings

12

761,531

626,236

583,548

Provisions

13

144,647

95,063

112,798

1,611,386

1,109,015

1,402,866

Total equity and liabilities

1,243,182

1,208,865

1,425,344

Consolidated Statement of Comprehensive Income

 

Note

6 months ended

30 June

2017

Unaudited

£

6 months ended

30 June

2016

Unaudited

£

12 months ended 31 December 2016

Audited

£

Revenue

150,551

206,072

239,646

Other income

-

58

500

Operating expenses

(901,660)

(516,454)

(1,545,018)

Operating loss

(751,109)

(310,324)

(1,304,872)

Finance charges

(30,186)

-

(60,229)

Foreign exchange (loss) / gain

3

(85,869)

-

869,608

Loss before taxation

(867,164)

(310,324)

(495,493)

Taxation

(7,134)

-

(90,566)

Total loss for the period

(874,298)

(310,324)

(586,059)

Other Comprehensive Income:

Exchange differences on translating foreign operations

70,511

(264,264)

(700,035)

Total comprehensive loss, net of tax

(803,787)

(574,588)

(1,286,094)

Total comprehensive loss, net of tax attributable to:

Owners of the parent

(550,067)

(353,777)

(814,981)

Non-controlling interest

(253,720)

(220,811)

(471,113)

(803,787)

(574,588)

(1,286,094)

Earnings per share - from continuing activities

 Basic and diluted

15

(0.01)

(0.01)

(0.02)

Consolidated Statement of Changes in Equity

Convertible loan note reserve

 

£

Share capital

 

 

£

Share premium

 

 

£

Retained losses

 

 

£

Foreign exchange reserve

 

£

Total attributable to equity holders of the Group

£

Non-controlling interest

 

£

Total equity

 

 

£

Balance at 1 January 2016:

293,818

321,604

1,335,952

(1,859,800)

185,866

277,440

(346,273)

(68,833)

Loss for the period

-

-

-

(158,222)

-

(158,222)

(152,102)

(310,324)

Other comprehensive income:

Foreign exchange movements

-

-

-

-

(195,555)

(195,555)

(68,709)

(264,264)

Total comprehensive loss:

-

-

-

(158,222)

(195,555)

(353,777)

(220,811)

(574,588)

Transactions with shareholders:

Issue of share capital

-

66,442

676,829

-

-

743,271

-

743,271

Total transactions with shareholders:

-

66,442

676,829

-

-

743,271

-

743,271

Balance at 30 June 2016 (unaudited):

293,818

388,046

2,012,781

(2,018,022)

(9,689)

666,934

(567,084)

99,850

Balance at 1 July 2016:

293,818

388,046

2,012,781

(2,018,022)

(9,689)

666,934

(567,084)

99,850

Loss for the period

-

-

-

(138,733)

-

(138,733)

(137,002)

(275,735)

Other comprehensive income:

Foreign exchange movements

-

-

-

-

(322,471)

(322,471)

(113,300)

(435,771)

Total comprehensive loss:

-

-

-

(138,733)

(322,471)

(461,204)

(250,302)

(711,506)

Transaction with shareholders:

Extinguish convertible loan note reserve

(293,818)

-

-

293,818

-

-

-

-

Issue of share capital

-

168,750

506,250

-

-

675,000

-

675,000

Share issue expenses

-

-

(75,205)

-

-

(75,205)

-

(75,205)

Issue of share options

-

-

-

34,339

-

34,339

-

34,339

Total transactions with shareholders:

(293,818)

168,750

431,045

328,157

-

634,134

634,134

Balance at 31 December 2016

(audited):

-

556,796

2,443,826

(1,828,598)

(332,160)

839,864

(817,386)

22,478

Balance at 1 January 2017:

-

556,796

2,443,826

(1,828,598)

(332,160)

839,864

(817,386)

22,478

Loss for the period

-

-

-

(602,245)

-

(602,245)

(272,053)

(874,298)

Other comprehensive income:

Foreign exchange movements

-

-

-

-

52,178

52,178

18,333

70,511

Total comprehensive loss:

-

-

-

(602,245)

52,178

(550,067)

(253,720)

(803,787)

Transactions with shareholders:

Issue of share capital

-

122,300

243,700

-

-

366,000

-

366,000

Share issue expenses

-

-

(30,798)

-

-

(30,798)

-

(30,798)

Issue of share options

-

-

-

77,903

-

77,903

-

77,903

Total transactions with shareholders:

-

122,300

212,902

-

-

413,105

-

413,105

Balance at 30 June 2017 (unaudited):

-

679,096

2,656,728

(2,352,940)

(279,982)

702,902

(1,071,106)

(368,204)

 

Consolidated Statement of Cash Flows

 

6 months ended

30 June

2017

Unaudited

£

6 months ended

30 June

2016

Unaudited

£

12 months ended 31 December 2016

Audited

£

Operating activities

Cash used in operations

14

(724,344)

(121,493)

(163,258)

Net cash used in operating activities

(724,344)

(121,493)

(163,258)

Investing activities

Purchase of property, plant and equipment

(210,454)

(51,692)

(350,260)

Acquisition of Diamond Resources (Pty) Limited

-

-

(32,826)

Proceeds on disposal of property, plant and equipment

-

-

19,113

Purchase of non-current assets

-

(23,355)

-

Net cash used in investing activities

(210,454)

(75,047)

(363,973)

Financing activities

Proceeds on share issue

10

335,202

700,000

1,343,066

Proceeds from borrowings

343,877

-

-

Exercised share options

-

43,270

-

Net cash received from financing activities

679,079

743,270

1,343,066

Net (decrease) / increase in cash and cash equivalents

(255,719)

546,730

815,835

Cash and cash equivalents at the beginning of the period

8

291,555

175,755

175,755

Foreign exchange differences

70,511

(264,263)

(700,035)

Cash and cash equivalents at the end of the period

8

106,347

458,222

291,555

 Notes to the Interim Consolidated Financial Statements

1. Accounting policies

 

1.1 General information and basis of preparation

 

The condensed interim consolidated financial statements (the "interim financial statements") are for the six-month period ended 30 June 2017.

 

These interim financial statements have not been audited, and the financial information set out in this report does not constitute statutory accounts as defined by the Companies Act 2006. The comparative figures for the year ended 31 December 2016 were derived from the statutory accounts for the year to 31 December 2016, which have been delivered to the Registrar of Companies. Those accounts received an unqualified audit report which did not contain statements under sections 498(2) or (3) (accounting records or returns inadequate, accounts not agreeing with records and returns or failure to obtain necessary information and explanations) of the Companies Act 2006.

 

The interim financial statements have been prepared on the basis of the accounting policies set out in the December 2016 financial statements of BlueRock Diamonds plc and IAS 34 "Interim Financial Reporting" on a going concern basis. They are presented in sterling, which is also the functional currency of the parent company. They do not include all of the information required in annual financial statements in accordance with IFRS and should be read in conjunction with the consolidated financial statements of the Group for the period ended 31 December 2016.

 

The interim financial statements have been approved for issue by the Board of Directors on 18 September 2017.

 

1.2 Standards issued but not adopted

 

The following relevant new IFRS standards, amendments to standards and interpretations have been issued by the IASB, but are not effective for the financial year beginning on 1 January 2017 and have been adopted by the EU and have not been early adopted.

 

The Directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial statements of the Company when the relevant standards and interpretations come into effect. The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated:

 

Standard

Key requirements

Effective date as adopted by the EU

 

IFRS 9

 

Financial Instruments - Replacement to IAS 39 and is built on a single classification and measurement approach for financial assets which reflects both the business model in which they are operated and their cash flow characteristics.

 

 

1 January 2018

IFRS 15

Revenue from contracts with customers - Introduces requirements for companies to recognise revenue for the transfer of goods or services to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. Also results in enhanced disclosure about revenue.

 

1 January 2018

 

 

 

1. Accounting policies (continued)

 

The following relevant new IFRS standards, amendments to standards and interpretations have been issued by the IASB, but are not effective for the financial year beginning on 1 January 2017 and have not been endorsed by the EU and have not been early adopted:

 

Standard

Key requirements

Effective date as adopted by the EU

 

IFRS 16

 

Leases - Introduces a single lessee accounting model and eliminates the previous distinction between an operating and a finance lease.

 

1 January 2019

 

2. Significant judgements and sources of estimation uncertainty

 

In the application of the Group's accounting policies the Directors are required to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

 

The judgements, estimates and assumptions applied in the interim financial statements including the key sources of estimation uncertainty were the same as those applied in the financial statements for the period ended 31 December 2016.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

3. Foreign exchange (loss) / gain

 

 

6 months ended 30 June

 2017

£

Unaudited

6 months ended

30 June

2016

£

Unaudited

12 months ended

31 December

 2016

£

Audited

Foreign exchange (loss) / gain

(85,869)

-

869,608

 

The foreign exchanges (loss) / gain relate to translation differences on subsidiary balances that are translated into the reporting currency of the Company at the reporting date and do not constitute a movement through the other comprehensive income reserve.

 

4. Segmental reporting

 

Operating segments are identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance.

 

The Group's operations relate to the exploration for, and development of mineral deposits in the Kimberley region of South Africa and as such the Group has only one reportable segment. The non-current assets in the Kimberley region in June 2017 were £1,043,043 (June 2016: £681,816; December 2016: £999,590)

 

All revenue consists of sales of diamonds in South Africa through auctions as is customary in the industry. The Company sells its diamonds through auctions run by CS Diamonds (Pty) Ltd.

 

  

 

5. Property, plant and equipment

 

Cost / Valuation

30 June 2017

£

 

Accumulated depreciation

£

Carrying value

30 June 2017

£

Unaudited

Mine infrastructure

55,803

(9,643)

46,160

Motor vehicles

12,435

(2,749)

9,686

Plant and machinery

884,213

(118,644)

765,569

Total

952,451

(131,036)

821,415

 

Reconciliation of property, plant and equipment

 

Carrying value

1 January 2017

£

Audited

Additions

 

£

Depreciation

 

£

Disposals

 

£

FX revaluation

£

Carrying value

30 June 2017

£

Unaudited

Mine infrastructure

52,321

4,057

(9,643)

-

(575)

46,160

Motor vehicles

13,191

-

(2,749)

(618)

(138)

9,686

Plant and machinery

717,802

197,248

(118,644)

(17,579)

(13,258)

765,569

783,314

201,305

(131,036)

(18,197)

(13,971)

821,415

 

6. Inventories

 

30 June

 2017

£

Unaudited

30 June

2016

£

Unaudited

31 December

 2016

£

Audited

Diamonds on hand

15,930

26,874

2,202

 

7. Trade and other receivables

 

30 June

 2017

£

Unaudited

30 June

2016

£

Unaudited

31 December

 2016

£

Audited

Prepayments

6,943

6,690

2,073

VAT

37,356

35,263

53,952

Other receivables

12

-

75,972

44,311

41,953

131,997

The carrying value of all trade and other receivables is considered a reasonable approximation of fair value.

 

8. Cash and cash equivalents

 

30 June

 2017

£

Unaudited

30 June

2016

£

Unaudited

31 December

 2016

£

Audited

Cash in bank and on hand

106,347

425,396

291,555

Deposit - Diamond Resources

-

32,826

-

106,347

458,222

291,555

9. Share Based Payments

The Directors were granted share options under the share option agreements dated 19 August 2013. There were no amendments to the terms of the options granted during the period.

 

The share options held by current and former Directors as at 30 June 2017 and the exercise prices were as follows:

 

Director

Number of ordinary shares subject to share options

Tranche 1

Tranche 2

Tranche 3

Tranche 4

Tranche 5

Number and Exercise Price (pence)

 

P. Beck

315,251

-

157,625 - 40

157,626 - 55

-

-

T. Leslie

372,876

57,625 - 18

157,625 - 40

157,626 - 55

-

-

A. Markgraaff

372,876

57,625 - 18

157,625 - 40

157,626 - 55

-

-

A. Waugh

2,446,478

-

-

-

776,091 - 11

1,670,387 - 5

Total

3,507,481

115,250

472,875

472,878

776,091

 

1,670,387

 

The following share options were granted during the period to 30 June 2017:

On 19 January 2017 1,670,387 share options were granted to Adam Waugh and 556,795 share options were granted to the Company's mine manager, Johan Milho, both issues of share options have an exercise price of 5p per Ordinary Share.

 

Movements in the number of share options outstanding and their related weighted average prices are as follows:

 

30 June 2017

31 December 2016

30 June 2016

Average exercise price in pence per share

Number of options

Average exercise price in pence per share

Number of options

Average exercise price in pence per share

Number of options

Outstanding at the beginning of the period

29.2

3,555,720

34

4,616,722

34

4,121,131

Granted

5

2,227,182

-

-

11

776,091

Lapsed

-

-

31

1,261,002

-

-

Exercised

-

-

-

-

15

280,500

Outstanding at the period / year end

19.55

5,582,902

29.2

3,555,720

30

4,616,722

Exercisable at the period / year end

19.55

5,582,902

29.2

3,555,720

30

 

4,616,722

 

Options are valued at date of grant using the Black-Scholes option pricing model. The fair value per option of options granted during the period and the assumptions used in the calculation are shown below:

 

6 months ended

30 June

2017

Year ended

31 December

2016

Pricing model used

Black-Scholes

Black-Scholes

Weighted average share price at grant date (pence)

5.75

13.5

Weighted average exercise price (pence)

5

11

Weighted average contractual life (years)

5

5

Share price volatility (%)

 50%

50%

Dividend yield (%)

0%

0%

Risk-free interest rate (%)

0.70%

0.56%

 

The total share-based payment expense for the period ended 30 June 2017 was £77,903 (June 2016: £nil; December 2016: £34,399).

 

 

10. Share capital and share premium issued

 

30 June

 2017

£

Unaudited

30 June

2016

£

Unaudited

31 December

2016

£

Audited

Number of Ordinary shares

67,879,580

38,804,580

55,679,850

Ordinary share capital of 1p per share

679,096

388,046

556,796

Share premium

2,656,728

2,012,781

2,443,826

3,335,824

2,400,827

3,000,622

 

In the period ended 30 June 2017 the following Ordinary share issues occurred:

 

Date of issue

Details of issue

Number of ordinary shares

Share capital

£

Share premium

£

At 1 January 2017

55,679,580

556,796

2,443,826

1 June 2017

Placing and equity issue

12,200,000

122,000

243,700

1 June 2017

Placing and equity issue expenses

 -

-

(30,798)

1 June 2017

Placing and equity issue SP Angel advisory fees

30,000

300

-

At 30 June 2017

67,879,580

679,096

2,656,728

 

On 1 June 2017, a placing and subscription raised an aggregate of £335,202 after expenses via the issue of 12,200,000 new ordinary shares of 1 pence each in the capital of the Company at a price of 3 pence per New Share; this transaction is further discussed in Note 16. Additionally 30,000 new shares were issued to SP Angel as payment for advisory work completed in connection with the placing and subscription.

 

11. Trade and other payables

 

30 June

 2017

£

Unaudited

30 June

2016

£

Unaudited

31 December

 2016

£

Audited

Trade payables

290,801

174,304

260,116

Accrued expenses

24,297

182,460

37,025

Corporation tax payables

97,699

-

90,566

Other payables

219,960

30,952

25,974

632,757

387,716

413,681

 

An amount of £192,376 is included within trade payables for amounts being claimed as being due to companies related to a former director of the Company. This amount is disputed in full by the Company based on legal advice received.

 

Within other payables is a balance due to a major shareholder of the Company, Mark Poole, the total advanced of £194,377 (June and December 2016: £nil), was sent in advance of agreeing the asset finance facility which was agreed on 20 July 2017, see note 17 for further details. In addition, within other payables is an amount of £25,974 which relates to an amount claimed by a former director and which, based on legal advice received by the company, is disputed in full.

 

 

 

12. Borrowings and embedded derivative

30 June

 2017

£

Unaudited

30 June

2016

£

Unaudited

31 December

 2016

£

Audited

Convertible loans

612,031

626,236

583,548

Draw down facility

149,500

-

-

761,531

626,236

583,548

 

Convertible loans

 

The movement on each convertible loan liability component can be summarised as follows:

Convertible loans 1 - 3

£

Convertible loan 4

£

 

Total

£

Balance at 1 January 2016

596,123

-

596,123

Finance charge: unwinding the discount factor

30,113

-

30,113

Balance at 30 June 2016

626,236

-

626,236

Issued on 2 November 2016

-

574,352

574,352

Finance charge: unwinding the discount factor

20,920

9,196

30,116

Embedded derivative

-

300,503

300,503

Fair value adjustment to embedded derivative

-

(7,664)

(7,664)

Extinguished on 2 November 2016

(647,156)

-

(647,156)

Balance at 31 December 2016

-

876,387

876,387

Finance charge: unwinding the discount factor

-

28,483

28,483

Fair value adjustment to embedded derivative

-

(220,388)

(220,388)

Balance at 30 June 2017

-

684,482

684,482

Equity component at 1 January 2016 and 30 June 2016

293,818

-

293,818

Extinguished on 2 November 2016

(293,818)

-

(293,818)

Equity component at 31 December 2016 and 30 June 2017

-

-

-

 

All convertible loan stock is repayable on the 16 October 2019 and carries a zero coupon (nil interest).

 

The loan note will be convertible:

 

· at the note holder's option at any time up to the end of the term at a conversion price of 11 pence per ordinary share; and

 

· at the Company's option after the second anniversary of initial subscription provided that the one month volume weighted average price of the Company's ordinary shares is in excess of 120% of the conversion price and the closing mid-market price on the date prior to the Company opting to convert exceeds 120% of the conversion price.

 

In addition, if the Company sells its interest in its subsidiary undertaking before the final repayment date for consideration equivalent to or greater than 120% of the loan note outstanding then the notes will become redeemable and a 20% premium will be payable to the note holder.

 

A fair value exercise to determine the value of the three components was undertaken by the Directors at the date the convertible loan was initially drawn down.

 

The fair value of the host loan instrument (including the embedded redemption feature) been valued as the residual of:

 

a) The fair value of the first draw down on 16 October 2014 is discounted at a commercially applicable rate of 9.25%. The fair values of the draw downs on 27 May 2016 and 2 October 2016 have been discounted at a commercially applicable rate of 10.5%.

b) The residual amount between the transaction price of the loan and the fair value of the liability has been allocated to an equity reserve.

 

 

12. Borrowings and embedded derivative (continued)

 

Draw down facility - £150k

 

On 15 March 2017, BlueRock Diamonds plc agreed an unsecured loan facility of up to £150,000 with Tim Leslie (Director), Mark Poole (Major Shareholder) and Segar Properties (Hyde Park) Limited, a company wholly owned by Paul Beck (Director). The loan term is to 31 December 2017 and carries a coupon of 10% per annum, payable at the end of the term and contains no conversion provisions. The transaction is further discussed in note 16.

 

13. Provisions

 

Reconciliation of provisions

 

Rehabilitation costs

£

Balance at 1 January 2016

81,718

Unwinding of discount

13,345

Balance at 30 June 2016

95,063

Unwinding of discount

17,735

Balance at 31 December 2016

112,798

Revaluation of provision

31,849

Balance at 30 June 2017

144,647

The provision for environmental rehabilitation closure cost was independently assessed by Ndi Mudau of NDI Geological Consulting Services. The closure cost assessment reports over the Remainder of the Farm No. 113 (Skietfontein), Portion of Portion 2 (Kareeboompan) of the Farm 142, Portion 1 (Westhoek) of the Farm 113, and Portion 2 (Klipvlei) of the Farm 113. The financial provision was calculated in accordance with Regulation 54 of the Minerals and Petroleum Resources Development Act 2002 (Act 28 of 2002) and is dated 23 June 2017.

 

14. Cash used in operations

30 June

2017

£

Unaudited

30 June

2016

£

Unaudited

31 December 2016

£

Audited

Loss before taxation

(867,164)

(310,324)

(495,493)

Adjustments for non-cash items:

Depreciation and amortisation

131,036

79,905

171,258

Loss on disposal of fixed assets

18,197

7,809

-

Embedded derivative charge

(220,388)

-

292,839

Share based payment expense

77,903

-

34,339

Impairment on acquisition of Diamond Resources (Pty) Limited

-

-

32,826

Finance charge on convertible loan notes

28,483

30,113

60,229

Foreign exchange revaluation gain / (loss) on fixed assets

17,768

(75,384)

(220,602)

Movements in provisions

(1,701)

13,345

31,080

Changes in working capital:

Decrease / (increase) in trade and other receivables

87,686

(34,330)

(124,374)

Increase in trade and other payables

17,564

143,582

6,177

(Increase) / decrease in inventories

(13,728)

23,791

48,463

(724,344)

(121,493)

(163,258)

 

 

 

 

15. EPS (Earnings per share)

30 June

 2017

£

Unaudited

30 June

2016

£

Unaudited

31 December

 2016

£

Audited

Loss attributable to ordinary shareholders

(550,067)

(353,777)

(814,981)

Weighted average number of shares

57,645,136

35,009,972

39,466,581

Loss per share basic and diluted

(0.01)

(0.01)

(0.02)

Weighted average number of shares after dilution

57,645,136

35,009,972

39,466,581

Fully diluted earnings per share

(0.01)

(0.01)

(0.02)

 

Share options granted to directors could potentially dilute EPS in the future but are not included in a dilutive EPS calculation because they are antidilutive for the period.

 

16. Related party transactions

 

Relationships

Minority Interest ‑ William van Wyk

Kgalagadi Engineering & Mining Supplies (Pty) Ltd

Ghaap Mining (Pty) Ltd

Shareholder - Mark Poole

BlueRock Diamond

Shareholder's Daughter - Emma Poole

BlueRock Diamond

 

Placing and Subscription

 

As part of the £366,000 placing and subscription on 1 June 2017, Paul Beck, Non-Executive Chairman of the Company, has subscribed for 333,333 New Shares, following which he will have a beneficial interest in 2,551,231 Ordinary Shares representing 3.8% of the issued share capital and total voting rights of the Company. Included in Mr Beck's beneficial interest are 455,455 Ordinary Shares held by Front Square Securities Limited, a company wholly owned by Mr Beck and his wife and of which Mr Beck is a director.

 

Borrowings

 

On 15 March 2017, the Company agreed the terms of a £150,000 unsecured loan facility with Tim Leslie and Paul Beck, two of its directors, and Mark Poole, one of its major shareholders (the "Loan Facility") in order to provide extra working capital.

 

The Loan Facility, comprising of a maximum contribution from Tim Leslie and Mark Poole of £62,500 each and Segar Properties (Hyde Park) Limited, a company wholly owned by Paul Beck, £25,000, has a term until 31 December 2017 and a coupon of 10% per annum, payable at the end of the term. At 30 June 2017 the full loan facility had been drawn down and remained outstanding, for further detail see note 12.

 

Additionally, in June 2017 Mark Poole advanced £194,377 in advance of agreeing the asset finance facility, which was agreed on 20 July 2017, see note 17 for further details.

 

Transactions with related party companies

 

Kareevlei Mining made payments of £43,499 (2016: nil) to Kgalagadi Engineering & Mining Supplies (Pty)Ltd for the acquisition of mine equipment and related services. William van Wyk is a shareholder in Kgalagadi Engineering & Mining Supplies (Pty) Ltd.

 

 

 

17. Events after the reporting period

 

Asset finance facility

 

On 20 July 2017, BlueRock Diamonds plc and its subsidiary Kareevlei Mining PTY Limited have entered into an asset finance facility of up to £310,000 ("Loan Facility") with Mark Poole, a substantial shareholder in the Company. The Loan Facility will be used to purchase essential equipment for the efficient and cost effective operation of the mine.

 

The Loan Facility carries an interest rate of 10% over a five-year term, repayable in 19 equal quarterly instalments following an initial three-month interest free period. The Loan Facility is unsecured but it carries the right for the purchase of the capital goods acquired utilising the Loan Facility for ZAR 1 in the event of the Group's default.

 

Placing and subscription update

 

On 10 August 2017, the Company raised an aggregate of £860,000 (before expenses) via the issue of 68,800,000 new ordinary shares of 1 pence each in the capital of BlueRock Diamonds plc (the "New Shares") through a placing and subscription at a price of 1.25 pence per New Share.

 

Adam Waugh, Chief Executive Officer of the Company has agreed to subscribe for 4,000,000 New shares in the Fundraising.

 

Extension of loan facility

 

On 10 August 2017, BlueRock Diamonds plc successfully agreed the extension of the maturity date on the six month loan facility of up to £150,000 entered into on 15 March 2017 with Tim Leslie, Mark Poole and Segar Properties (Hyde Park) Limited, a company wholly owned by Paul Beck. The extension from the current maturity date of 15 September 2017 has been agreed to the 31 December 2017. The loan carries a coupon of 10% per annum, payable at the end of the term and contains no conversion provisions.

 

Issue of new share options

 

On the 10 August 2017, BlueRock Diamonds plc announced that it has granted the following new share options to Adam Waugh (the Company's CEO), Johan Milho, (the Company's mine manager) and Paul Beck (the Company's non-executive Chairman). The details of the issue are noted below:

 

Individual

Tranche A

No. of New Share Options

Tranche B

No. of New Share Options

Adam Waugh

3,417,740

3,417,740

Johan Milho

683,548

683,548

Paul Beck

992,096

992,096

 

Tranche A options have an exercise price of 1.25p, and Tranche B options have an exercise price of 2.25p.

 

 

 

This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR BVLLFDKFEBBX
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