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BlueRock Diamonds plc (LSE:BRD) has set off to rock the diamond industry this morning as its shares were floated on the AIM market. Shares are priced at 10.25 pence, which is a 46% premium to the placing price of 7.00 pence. The shares are being sold on a Periodic Auction Call basis. As of 3:00 pm, the offer price is 11.00 pence. The bid price is 9.50. BRD has raised £1.31 million with the issue of 18.7 million Ordinary Shares. With the admission to the AIM market, the company will have in excess of 31.5 million shares in issue, which would give the company a market cap of £2.21 million at the placing price.
Unlike many mining stocks, where there are upfront expenses over a fairly lengthy period of time, BlueRock expects to be extracting kimberlite ore before 2013 is over. The company anticipates that it will be fully operational by the second year of operation. This is all possible because BRD is purchasing the rights to mine the Karleevlei Tenements in South Africa, which was originally discovered by DeBeers in 1991 and operated by several other companies in the interim.
Previous owners have generated adequate research to substantiate an Inferred Mineral Resource (IMR) of 359,000 carats. Work to remove the overburden is expected to begin immediately and should be completed by December in time to begin open cast mining on a trial basis before the year end, pending the full extension of mining rights, which is expected to happen in Q1 2014.
BRD’s broker, SP Angel, indicated that the total cost to begin the trial mining would be about £1.15 million, including the £261,000 used to actually acquire the assets. The broker noted that the “trial mining should give greater confidence to the valuation (of the project) based on 223 carats so far with stones ranging in size and quality to the largest stone of 3.74 carats, with an average size of 1.14 carats.”
BlueRock acquired the mining site from Tawana Resources, an Australian company that was force to halt its efforts when the global economy crashed and diamond prices fell along with everything else. BRD plans to take advantage of increasing demand in China, where CEO Riaan Visser says that, “Diamond growth is even outstripping cars.”
