BlueRock Diamonds tumbles after discounted placing

BlueRock Diamonds shares tumbled on Thursday after the AIM-listed diamond producer announced a discounted share placing to help implement its upgraded mining plan and pay a contractor.

The company raised a total of £2.1m via a placing of 6m new ordinary shares at 35p each. The placing price represents a discount of around 34.6% to the closing mid-market price on Wednesday.

Net proceeds will be used to provide additional working capital so BlueRock can implement its upgraded mining plan to ensure consistent supply of quality ore to the processing plant. This will optimise the throughput of the new 1 million tonne plant, while maximising the economic life of the mine, it said.

They will also be used to pay its mining contractor, Teichmann, in order to accommodate the impact of the two operation shutdowns in the fourth quarter of last year.

Chief executive Mike Houston said’: "The board is delighted to have concluded the placing, which will provide working capital for Bluerock's diamond business as it moves into a transformative growth phase, aiming to double carat production to 36,000-43,000 carats in 2022. It is particularly pleasing to have the support of key contractors and management in the capital raise."

BlueRock also provided an update on trading, saying that diamond prices remain buoyant amid a "fast-changing" market following recent geopolitical events and Russian trade sanctions.

The company’s average sale prices for the first two months of 2022 increased to around $600 per carat from $460 in 2021. Following the implementation of sanctions on Russia and the expected impact on the rough diamond supply chain, prices have risen further and BlueRock said it achieved an "impressive" price of more than $1,000 per carat in the March 2022 tender.

"While it is difficult to know if, or how long, the March pricing will persist, it is the board's view that even prior to the impact of the current geopolitical issues, there has been a step change in diamond pricing. The board is not currently seeking to alter pricing guidance for the year from the current $450 per carat but, will keep it under review," it said.

At 0950 BST, the shares were down 29% at 38p.