TIDMBRD
RNS Number : 0684K
BlueRock Diamonds PLC
27 August 2021
BlueRock Diamonds PLC / AIM: BRD / Sector: Natural Resources
27 August 2021
BlueRock Diamonds PLC ('BlueRock' or the 'Company')
Update on Teichmann Financing
BlueRock Diamonds PLC, the AIM listed diamond producer, which
owns and operates the Kareevlei Diamond Mine ('Kareevlei') in the
Kimberley region of South Africa, announces the signing of a loan
note subscription agreement ("Subscription Agreement") with
Teichmann Company Limited ("TCL"), T-Three-Drilling Limited and
three Teichmann employees, (together, "Teichmann") for GBP1.61
million, the Heads of Terms of which were announced on 21 May 2021
("Teichmann Financing"). Under the Subscription Agreement, the
Company will initially issue a GBP1.61 million simple loan note
("SLN") to Teichmann with the intention that this will be replaced
by a convertible loan note ("CLN") subject to the conditions set
out in the Subscription Agreement and summarised below.
Mike Houston, Executive Chairman said, "I am pleased to announce
the execution of the Teichmann Financing for which the Heads of
Terms were announced on 21 May 2021.
"We have commenced the commissioning process of our new plant
and I am delighted to say that despite the challengers of moving to
the targeted 1 million tonnes of ore milled per annum, this long
journey is reaching an end.
"We are extremely excited with the discovery of the three large
diamonds, a 58.6 carat, 21.6 carat and 14.3 carat, recently
announced. The larger stone, which is more than double the size of
our previous record, demonstrates the potential of the resource at
Kareevlei; as production increases, the recovery of further large
stones should follow. This, together with the high run of mine
diamond price and the significant unit cost reduction driven by the
benefit of the economy of scale, augurs well for the future. We are
looking forward to receiving the August tender results after which
in early September we will announce the sale value of these three
stones."
Teichmann Financing
As set out in the announcement made on 21 May 2021, the Heads of
Terms of the Teichmann Financing was entered into to provide
funding to complete the Company's transformational expansion
project.
Under the Teichmann Financing, the SLN has a short-term expiring
on 31 October 2021 and a coupon of 14.5 per cent. per annum. It is
expected that the SLN will be refinanced through the future issue
of the CLN to Teichmann, the CLN totalling GBP1.61m will have a
strike price of 40p, a three and half -year term and a 14.5 per
cent. coupon compounding annually. Interest will roll up and be
paid in full at maturity, repayment or on conversion. The CLN will
be convertible three months after issue at any time by Teichmann
and by BlueRock if the Company's share price is above 60p.
Including rolled up interest, the CLN will convert into 6,465,247
ordinary shares. The issue of the CLN is conditional on the Company
having received approval from The Panel on Takeovers and Mergers
for a waiver of the obligation that might arise on the exercise of
the conversion rights under the CLN for Teichmann (and its concert
party) under Rule 9 of the Takeover Code to make a mandatory offer
for the Company, subject to the approval of independent
shareholders in accordance with Appendix 1 of the Takeover Code
(the "Waiver"). If the Waiver is granted by 30 September 2021, then
the SLN will be redeemed by the issue of the CLN on or before 31
October 2021.
In the event that the Waiver is not granted, then within one
month of the expiry of the term of the SLN, BlueRock will be
required to redeem the Simple Loan Notes at the amount invested by
the Noteholders plus the greater of:
a) GBP976,099 (being the interest that would have accrued over
the term of the NCLNs at a rate of 14.5% per annum); and
b) the market value of the Conversion Shares, had they been
issued, at the closing share price on 30 September 2021 less
GBP1,610,000.
Should the CLN be approved and issued to Teichmann, on
conversion the interest on the full amount of the CLN for the
entire term will be added to the principal amount of the CLN prior
to conversion. Assuming that no further shares are issued prior to
conversion on conversion, Teichmann (including concert party
members) will hold approximately 49.8% of the enlarged issued share
capital of the Company.
The SLN is, and the CLN will be, issued as part paid. It has
been agreed that Teichmann will pay for the loan note subscription
in 12 equal instalments of GBP134,000. To date Teichmann have paid
three monthly instalments under the SLN totalling GBP402,000. The
funds due from Teichmann under the Teichmann Financing will reflect
the near-term cash flow needs of the Company, with all principal to
be provided by 31 May 2022.
The Company intends to convene a General Meeting as soon as
practicable to consider the issue of the CLN for which a circular
is expected to be issued in due course.
The Company remains in discussions with Teichmann SA (Pty)
Limited in relation to the payment for its mining services contract
influenced by short term higher development costs and the possible
decision to bring forward the development of the KV3 pipe (the
"Mining Agreement"), the non-binding heads of terms of which were
also announced on 21 May 2021. A further announcement will be made
once this agreement has been finalised. Under this agreement,
Teichmann SA (Pty) Limited will provide extended credit terms to
BlueRock in respect of balances due up to 30 June 2021, with such
balances expected to be repaid from July 2021 onwards subject to
agreement of a repayment plan. Teichmann SA (Pty) Limited will be
granted security over the assets of the Company's operating
subsidiary Kareevlei Mining (Pty) Ltd during the period of the
extended credit, which cannot be called until the funds envisaged
under the Teichmann Financing are paid in full.
The Company has an existing relationship agreement in place with
Teichmann, which will remain in force.
Related Party Transaction
TCL (together with certain parties connected with TCL or its
group companies ("Teichmann Group") and/or the owners of the
Teichmann Group), as a substantial Shareholder of the Company, is
considered to be a "related party" as defined under the AIM Rules
and accordingly, the Teichmann Financing constitutes a related
party transaction for the purposes of Rule 13 of the AIM Rules.
The Directors independent of the Teichmann Financing, being
Michael Houston, David Facey, Gus Simbanegavi, Tim Leslie, and Rob
Croll, consider, having consulted with the Company's nominated
adviser, that the terms of the Teichmann Financing are fair and
reasonable insofar as the Company's Shareholders are concerned.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK domestic law by virtue of the European Union (Withdrawal) Act
2018 ('MAR'). Upon the publication of this announcement via
Regulatory Information Service ('RIS'), this inside information is
now considered to be in the public domain.
ENDS
For further information, please visit BlueRock's website
www.bluerockdiamonds.co.uk or contact:
BlueRock Diamonds PLC
Mike Houston, Executive Chairman mhouston@bluerockdiamonds.co.uk
David Facey, Finance Director dfacey@bluerockdiamonds.co.uk
SP Angel (NOMAD and Broker)
Stuart Gledhill / Caroline Rowe Tel: +44 (0)20 3470 0470
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St Brides Partners Ltd (Financial
PR) info@stbridespartners.co.uk
Isabel de Salis / Susie Geliher
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Notes to editors:
BlueRock Diamonds is an AIM-listed diamond producer which
operates the Kareevlei Diamond Mine near Kimberley in South Africa
which produces diamonds of exceptional quality and ranks in the top
ten in the world in terms of average value per carat. The Kareevlei
licence area covers 3,000 hectares and hosts five known
diamondiferous kimberlite pipes with a combined inferred resource
of 10.4 million tonnes / 516,200 carats (February 2021); based on
its planned production of 1 million tonnes per annum, this provides
a minimum 10-year life of mine.
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