BlueRock Diamonds plc – Finalisation of contract with Teichmann to provide mining services
Tuesday, August 6th, 2019
BlueRock Diamonds plc, the AIM listed diamond mining company, which owns and operates the Kareevlei Diamond Mine in the Kimberley region of South Africa (“Kareevlei”), is pleased to announce that the contract with Teichmann South Africa (Pty) Ltd (“Teichmann”) to provide mining services to BlueRock has been signed (the “Teichmann Contract” or the “Transaction”).
On 16 May 2019, the Company announced that it was in negotiations with a member of the Teichmann Group to provide the quantity of ore necessary to meet BlueRock’s production plans. Teichmann is a pan African civil engineering and mining group with over 1,800 employees. Teichmann’s extensive experience in mining operations is expected to significantly de-risk the Company’s mining activities and allow BlueRock to meet its production targets in a cost-effective manner.
The Teichmann Contract is for a period of five years commencing with an effective start date of 1 July 2019 to provide the following services at the levels required to meet the Company’s production plans:
- to extract ore, waste and haul to stockpile
- where required, to break down ore to the required size
- deliver ore to the Processing Plant
Unlike the agreement with the previous provider of these services which was paid on an hourly basis with a minimum number of hours guaranteed, Teichmann will be paid almost entirely on a cost per tonne basis and, accordingly, the effective cost per tonne is reduced with the planned increased production. Based on the lower end of the Company’s current production expectations, the estimated cost of Teichmann’s services for the 12 months ended 30 June 2020 will be approximately ZAR 21 million (approximately GBP 1.179 million).
Related party Transaction
Teichmann Company Limited (“TCL”), an investment company controlled by trusts connected with the owners of the Teichmann Group, invested £310,000 in the fundraising announced on 16 May 2019 and own approximately 19% of the issued share capital of the Company and, therefore, Teichmann is considered to be a related party under the AIM rules.
The Directors independent of the Transaction, being Mike Houston, David Facey, Tim Leslie and Adam Waugh, consider, having consulted with the Company’s nominated adviser, that the terms of the Transaction are fair and reasonable insofar as the Company’s shareholders are concerned.
Mike Houston, Executive Chairman commented, “I am delighted that we have now finalised terms with Teichmann. Teichmann have been on site since 1st July as was planned and we have established a good working relationship. The upgrading of our mining operation is key to the overall success of the business and having an experienced mining contractor is an essential part of this 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.http://www.bluerockdiamonds.co.uk