PRODUCING EXCEPTIONAL QUALITY DIAMONDS
Corporate Presentation Q1 2019
PRODUCING EXCEPTIONAL QUALITY DIAMONDS Corporate Presentation Q1 - - PowerPoint PPT Presentation
PRODUCING EXCEPTIONAL QUALITY DIAMONDS Corporate Presentation Q1 2019 DISCLAIMER The information contained in these slides has been prepared by BlueRock Diamonds plc (the Company) . This Presentation is being made for information purposes
PRODUCING EXCEPTIONAL QUALITY DIAMONDS
Corporate Presentation Q1 2019
The information contained in these slides has been prepared by BlueRock Diamonds plc (the “Company”). This Presentation is being made for information purposes only and does not constitute an offer or invitation for the sale or purchase of securities or any of the assets described in it nor shall they nor any part of them form the basis of or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever or otherwise engage in any investment activity (including within the meaning specified in section 21 of the Financial Services and Markets Act 2000). The information in this Presentation does not purport to be comprehensive and has not been independently verified. While this information has been prepared in good faith, no representation or warranty, express or implied, is or will be made and no responsibility or liability is or will be accepted by the Company or any of its officers, employees, agents or advisers as to, or in relation to, the accuracy or completeness of this Presentation, and any such liability is expressly disclaimed. In particular, but without prejudice to the generality of the foregoing, no representation or warranty is given as to the achievement or reasonableness of any future projections, management estimates or prospects contained in this Presentation. Such forward- looking statements, estimates and forecasts reflect various assumptions made by the management of the Company and their current beliefs, which may or may not prove to be correct. A number of factors could cause actual results to differ materially from the potential results discussed in such forward-looking statements, estimates and forecasts including: changes in general economic and market conditions, changes in the regulatory environment, business and operational risks and other risk factors. Past performance is not a guide to future performance. The Presentation is not a prospectus nor has it been approved by the London Stock Exchange plc or by any authority which could be a competent authority for the purposes of the Prospectus Directive (Directive 2003/71/EC). This Presentation has not been approved by an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000. The information contained in this Presentation is subject to change, completion or amendment without notice. However, the Company gives no undertaking to provide the recipient with access to any additional information, or to update this Presentation
Recipients of this Presentation in jurisdictions outside the UK should inform themselves about and observe any applicable legal
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Corporate Presentation Q1 2019
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AIM listed diamond producer which operates the Kareevlei Diamond Mine –
diamond mines in the world High calibre local team with years of experience gained at De Beers and Petra Diamonds recently strengthened by appointment of Michael Houston as Chairman Total material processed 400,000 tonnes, carats recovered 13,000 Increasing stone size with FY2018 average grade 3.28 cpht & average value of US$316/c; recently recovered exceptional 8.97c diamond independently valued +$50,000
Cullinan Exploration (South Africa) Finsch Koffiefontein Kimberley KAREEVLEI
PRODUCING EXCEPTIONAL QUALITY, HIGH VALUE DIAMONDS
Plans to significantly increase production in 2019 with further growth expected in 2020
Mining licence covers
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Discovered by De Beers in
diamondiferous pipes
(combined inferred resource of pipe KV1, KV2, KV3 and KV5)
6.2cpht – inferred grade of KV
KV1
4.5cpht – inferred grade of KV
KV2
4.2cpht – inferred grade of KV
KV3 Open pit mining
up to 100m below surface
employed at mine-site
put through plant in FY 2018
highest valuation to date for 7.76 carat diamond sold for US$78k Average value per carat
ranking top 10 kimberlite mines in the world
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▪ To date, only 3% of the inferred resource has been mined ▪ Currently mining KV1 and KV2 ▪ Trial mining at KV5 showed that it produces larger, higher value diamonds with an initial estimate of US$411 per carat ▪ Developing plans to start mining the higher grade section of KV3 within the mid term mine plan ▪ Potential inground value of circa US$100 million
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INFERRED RESOURCE NOVEMBER 2018
INFERRED RESOURCE FOR KV1, KV2, KV3 & KV5 OF 7,744,600 TONNES AND 367,000 CARATS
Pipe Volume (m3) Tonnes Carats (+1mm) Grade (cpht +1mm) KVW01 605 800 1 561 400 97 000 6.2 KVW02 734 000 1 909 700 86 600 4.5 KVW03 1 461 600 3 629 200 152 000 4.2 KVW05 253 400 644 300 31 400 4.9 TOTAL 3 054 800 7 744 600 367 000 4.7
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KV5 1.5 Km
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▪ Of total material mined to-date 80% of ore has been extracted from between surface and 20m below. Grades from this diluted area run between 0 and 3 cpht ▪ Less than 20% of material processed has been at levels below 20m from surface. Grades from this area run up to 6.3 cpht ▪ When mining undiluted kimberlite (typically below 20m) grades are expected to average at pit grade (4.5 cpht KV2 and 6.3 cpht KV1) ▪ Assuming 400,000 tonnes of kimberlite processed per year (our YE 2019 run rate target) the variation in grade has the following effect (assuming our historic valuation of US$327/carat) on revenues:
KV2 - Section 4 KV2 - Section 8
0 – 3 cpht 4 – 6 cpht Already mined Grade (cpht) US$ millions 2 2.6 3 3.9 4 5.2 5 6.5
Costs remain unchanged irrespective of grade (Grade measured by cpht is the weight of diamonds (carats) found in 100 tonnes of kimberlite)
▪ Mined 380,000 tonnes to date
▪ 100,000 very low grade 0- 10 m from surface. <1 cpht ▪ 230,000 calcretised kimberlite. 10 – 20m from surface 2 – 3 cpht ▪ 50,000 undiluted kimberlite. 20 – 30m from
▪ Average grade assuming zero grade in the 0 - 10m level is 3.5 cpht ▪ Expect future mining to be in +4 cpht ▪ Grade so far varies between 1.1 cpht to 6.3 cpht
▪ This variation is expected whilst mining the near surface section ▪ Average grade increases when mining undiluted kimberlite at the sub 20m level
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DRIVE TO OPEN UP SECOND PIT TO PROVIDE FLEXIBILITY AND DE-RISK SUPPLY OF ORE
▪ Commenced stripping in April 2018 ▪ 340,000 tonnes of waste removed ▪ 55,000 tonnes kimberlite processed ▪ Inferred resource of 1.56m tonnes
▪ Resource modelled to 65m below surface ▪ Total mineable resource likely to be much greater
▪ Inferred grade of 6.2 cpht, 40% higher than KV2 ▪ 40m from KV2 at closest point which will enable mining both pipes as one pit, saving costs ▪ 10.58c diamond recovered
▪ Sold in October 2018 for US$74,557 ▪ Third largest stone by size and value ever mined at Kareevlei ▪ Pleasing that it has come from near surface ground
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DRIVE TO OPEN UP SECOND PIT TO PROVIDE FLEXIBILITY AND DE-RISK SUPPLY OF ORE
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▪ Plant utilisation of 73%
▪ Poor design and layout ▪ Non-standardisation of components
▪ Identified bottleneck with crushing circuit
▪ Augmenting current skill base ▪ Continual improvement ongoing
50000 100000 150000 200000 2014 2015 2016 2017 2018
Tonnes Year
Historic Tonnage Processed
Phase 1
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PIT EVALUATION ▪ 4 to 5 year mine plan to extract 2m tonnes ore from combined KV1 and KV2 (400,000t per year, 300,000 to 350,000t for 2019)
▪ 50m push back allowing mining to 70m below surface
Phase 2
▪ Flexibility during this period to switch to 70m push back
▪ Strip ration increases ▪ Extends pits by 1 to 2 years
▪ Depending on grade a further push back to 100m is possible
▪ Higher strip ratio
Phase 3
▪ KV3 ▪ Total mineable resource of 3.6m tonnes
▪ Total surface area of 5.5 ha
▪ 250m from plant ▪ North segment of specific interest
▪ Geology similar to KV1 and KV2
▪ Inferred grade
▪ 4.2 cpht
▪ Mining to 70m will provide a further 8 years extra Life of Mine
Phase 2 Phase 1
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▪ Historic average monthly tonnage (2017 and 18) 15,000 tonnes ▪ Evaluation by technical team near complete ▪ Plan to increase utilisation to between 85%-90% per month by: ▪ Move to a 24/7, 365 day operation ▪ Strengthening operational team ▪ De-bottlenecking the crushing circuit and improving inventory management
THE PLANT
▪ Once the mining operation is capable of producing a regular feed of >40,000 tonnes of ore per month, higher plant capacity will be incorporated
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1) Assuming average sale price of USD327 per carat and USD 1 = ZAR 13.5 2) Excluding capitalised waste costs 3) Based on a throughput of 40,000 tonnes 4) Illustrative
▪ The majority of plant costs are largely fixed leading to lower processing costs as volume increases ▪ Processing cost does not include removal of waste which is capitalised and is equal to US$1.49 a tonne removed ▪ Strip ratio estimated at 3.7 to 70m bgl (below ground level) rising to 5.1 to 100m bgl
US$ S$ 3 3 cp cpht 4 4 cp cpht 5 5 cp cpht 6 6 cp cpht Revenue per processed tonne (1) 9.81 13.08 16.35 19.62 Mining cost (2) 1.9 1.9 1.9 1.9 Plant costs (3) 4.1 4.1 4.1 4.1 Net processing profit (4) 3.81 7.08 10.35 13.62
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▪ Ramping up production at Kareevlei diamond mine
▪ Plant to be brought up to standard to operate 24/7, 365 days a year ▪ Work has already started and will take until Q2 2019 to finalise ▪ Production will continue
▪ Mining operations are being stepped up materially to de-risk operations and to supply a regular feed of undiluted, higher grade kimberlite
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Tim im Lesl Leslie – Non
Director
Donaldson Lufkin & Jenrette (“DLJ”)
Investment Officer
2008 with AUM of USD3.6bn at launch
family office and make longer term investments
Da David Face acey – Fin Finance Dir Director
years experience
raising finance for companies all over the world
the international corporate finance team at HSBC and PwC
Ada Adam Wau augh - Chi hief f Ex Executive Offic ficer
Dolphin Plc until 2008
Cloud Ltd, a cloud computer service provider
Children's Benevolent Society
Mic ichael Houston – Non
airman
Africa
roles), Shanta Gold (CEO), Zimplats Holdings (CEO/COO), Erin Resources (MD), Hana Mining (Non-Executive director)
number of companies with various project reviews and due diligence
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Johan Mil ilho – Min ine Mana anager
industry
Billiton PLC and global diamond firm, De Beers
Dr Dr Kurt Petersen – Sen Senior Consultant Metallurgist
Joc
gist
specialising in kimberlite mapping logging and petrology.
Diamonds
Will illy Van an Wyk – Dir Director of
areevlei Min ining
maintenance of diamond recovery machinery
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Quarter Volume tonnes (1) Carats (2) Cpht US$/carat Q1 2017 9,310 92 1.92 161 Q2 2017 31,033 451 1.66 352 Q3 2017 63,163 1,275 2.26 344 Q4 2017 49,641 1,567 3.16 391 FY 2017 153,147 3,385 2.45 362 Q1 2018 38,781 1,563 3.80 378 Q2 2018 34,247 875 2.45 305 Q3 2018 63,621 1,834 3.13 341 Q4 2018 53,341 1,533 (3) 4.01 316 FY2018 189,990 5,805 3.28 332
Notes 1) Based on calendar quarters. 2) Based on the period between tenders which usually take place in the third or fourth week of each month. 3) not including 808 carats held on hand (2017: 344c)
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GRADES INCREASING AS KIMBERLITE PIPE IS MINED DEEPER
Calcrete No diamonds Calcretised Kimberlite 2.4 CPHT Kimberlite >4.5 CPHT 27m 150 m
Ground Level
1 1
Extracted 6.3 CPHT 80m
▪ 90% of output is gem quality
▪ Colours range from “D” ▪ High average value achieved without any exceptional diamonds ▪ Very high average stone size for kimberlite diamonds of ~0.35 carats per diamond
▪ Establishing a reputation for superior quality and shape of diamonds amongst international buyers
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VALUE PER CARAT IN THE TOP 10 OF KIMBERLITES IN THE WORLD
Not
▪ Included in trade and
amount of £195,000 in respect of claims made by Mr Visser, a former director ▪ Currently, Mr Visser has just commenced
proceedings which the Company has been advised are without merit ▪ Funds equal to more than the claim have already been deposited with the court as security
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As at at 30 June ne 2018 18 Un Unau audi dited ed £ As at at 30 June ne 2017 17 Un Unau audi dited ed £ As at at 31 Decem ember ber 2017 17 Audi dited ed £ Asset ssets No Non-cur urrent asse ssets Pr Prope perty, plan ant and d equi uipm pmen ent 734,829 821,415 830,701 Mi Mini ning ng asse ssets 496,632 255,179 352,642 1,231,461 1,076,594 1,183,343 Curren ent asse ssets Inv nven entor
es 65,848 15,930 103,951 Trade de and d other her receivab ables es 29,737 44,311 6,361 Cash sh and cas ash equival alents 244,217 106,347 268,128 399,802 166,588 378,440 Total al asse ssets 1,571,263 1,243,182 1,561,783 Equi uity and d liab abilities es Equi uity Attribut utabl ble to Equi uity Holder ders of the Paren ent Share capi pital al 2,023,242 679,096 1,398,242 Share prem emium 2,901,620 2,656,728 2,811,536 Retai ained ned loss sses es (3,521,204) (2,352,940) (2,579,999) Fo Forei eign n ex excha hang nge e rese serve (65,578) (279,982) (390,441) 1,338,080 702,902 1,239,338 No Non-con
ng int nter eres est (1,331,500) (1,071,106) (1,195,696) 6,580 (368,204) 43,642 Li Liab abilities es Curren ent liab abilities es Trade de and d other her payab ables 393,133 632,757 371,298 Borrowing ngs 25,283
No Non-cur urrent liab abilities Embe bedd dded ed derivative 70,354 72,451 113,333 Borrowing ngs 870,660 761,531 850,505 Pr Provisions ns 205,252 144,647 148,282 1,564,682 1,611,386 1,518,141 Total al equi uity and d liab abilities es 1,571,263 1,243,182 1,561,783
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6 6 mo months ende nded 30 30 Jun une 20 2018 18 Unau audit ited £ 6 6 mo months ende nded 30 30 Jun une 20 2017 17 Unau audit ited £ 12 12 mo months ende nded 31 31 December 20 2017 17 Aud udit ited £ Revenue 555,842 150,551 945,924 Other inc ncom
782
Ope peratin ing exp xpenses (1,345,341) (901,660) (2,294,489) Ope peratin ing los
(788,717) (751,109) (1,348,119) Finance cha harges (44,953) (30,186) (82,384) Chan ange in n fair air valu alue of financia ial l ins nstruments de desig signated at at FVTPL 42,979
For
ign exchange (lo loss) / gai ain (503,240) (85,869) 71,468 Los Loss be before ta taxati tion n (1,293,931) (867,164) (1,179,529) Tax axatio tion
(22,008) Tot
he pe perio iod d (1,293,931) (874,298) (1,201,537) Other Com
ncom
Ex Exchange dif differences on n tran anslati ting for
ign ope peratio ions 439,004 70,511 (78,760) Tot
net t of tax (854,927) (803,787) (1,280,297) Tot
net t of tax attr trib ibutable le to to: Own wners of f the he par parent (719,123) (550,067) (901,987) No Non-con
lling interest (135,804) (253,720) (378,310) (854,927) (803,787) (1,280,297) Ear arnin ings pe per sh shar are – from
inuin ing activ ivit itie ies Bas asic ic and nd di diluted (0.01) (0.01) (0.01)
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BlueRock Diamonds Adam Waugh, CEO awaugh@bluerockdiamonds.co.uk +44 (0) 7711 673817 +27 83 583 8731 SP Angel Corporate Finance LLP (NOMAD and Joint Broker) Stuart Gledhill +44 (0)20 3470 0470 BlueRock Diamonds David Facey, FD dfacey@bluerockdiamonds.co.uk +44 (0) 7810 336540 SVS Securities plc (Joint Broker) Tom Curran tom.curran@svssecurities.com +44 (0)20 3700 0100
St Brides Partners (Financial PR) Melissa Hancock/Juliet Earl +44 (0)20 7236 1177 Turner Pope Investments (Joint Broker) Lewis Jones/Andy Thacker +44 (0)20 3621 4120