BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements
for the year ended 31 December 2020
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Index
General Information
Chairman's Statement
Strategic Report
Board of Directors
Corporate Governance
Directors' Report
Independent Auditor's Report
Consolidated and Company Statements of Financial Position
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Changes in Equity - Group
Statement of Changes in Equity - Company
Consolidated and Company Statements of Cash Flows
Accounting Policies
Notes to the Annual Report and Financial Statements
Notice of Annual General Meeting
Page
2
3 - 6
7 - 18
19
20 - 28
29 - 33
34 - 41
42
43
44
45
46
47 - 63
64 - 95
96 - 100
1
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
General Information
Country of Incorporation and Domicile
United Kingdom
Registration Number
08248437
Directors
Registered Office
Nominated advisor and Broker
MJ Houston (Executive Chairman)
TG Leslie (Non-Executive Director)
DA Facey (Chief Financial Officer)
AT Simbanegavi (Chief Operating Officer)
RC Croll (Non-Executive Director)
4th Floor Reading Bridge House
George Street
Reading
Berkshire
RG1 8LS
SP Angel Corporate Finance LLP
Prince Frederick House
35-39 Maddox Street
London
W1S 2PP
Bankers
Arbuthnot Latham & Co., Limited
Financial Public Relations
Auditors
St Brides Partners Ltd
51 Eastcheap
London
EC3M 1JP
BDO LLP
55 Baker Street
London
United Kingdom
W1U 7EU
2
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Chairman's Statement
Dear Shareholders,
I am pleased to present our audited results for the year ended 31 December 2020.
Overview
Operational
●
●
●
24% increase in tonnes processed to 402,000
10% year on year increase in carats produced to 15,371
29% year on year increase in carats sold to 16,290
Resource Expansion
●
●
●
Transformational expansion project nearing completion leading to an expected annual run rate of over 1 million
tonnes per annum
49% increase in Inferred and Indicated Diamond Resource to 10,368,300 net tonnes which provides a minimum
10-year life of mine based on planned production of 1mtpa
53% increase in net carats to 516,200
Financial
●
£3,601,819 revenue, lower that 2019’s £4,073,853 due to the effect of COVID-19
2020 began optimistically for the Company, having completed a fundraise in February 2020 to implement an
expansion plan that would transform BlueRock. The months that followed shook the world and had a material impact
on BlueRock's operations. As a result of COVID 19, Kareevlei was shut in March 2020 and remained closed for 46
days. During that time, we quickly established new strategies that would ensure the safety of our team, whilst
enabling the mine to reopen despite having watched the international diamond market evaporate. The word
‘unprecedented’ has been used countless times in the past 18 months and is felt by many to be overused. However,
it was an unprecedented period, and we are only now getting back on our feet as vaccination programmes worldwide
build momentum, markets bounce back, and unique to BlueRock, our expansion plan reaches its final phase.
The revenue lost due to COVID-19 was approximately USD$2.5 million, from the combination of the impact on
pricing and our enforced shutdown of 46 days in Q2.
Operations
Kareevlei hosts five known diamondiferous kimberlite pipes with a combined Inferred and Indicated Diamond
Resource of 10.4 million tonnes / 516,200 carats (announced in February 2021) and produces excellent quality
diamonds with 90% of output gem quality. Having secured £1.7m in funding in February 2020, our aim was to fast-
track a material increase in production volumes at Kareevlei from the 323,000 tonnes achieved in 2019 to a run rate
of around 750,000 tonnes per annum (‘tpa’) and a consequent expected increase in carats to 30,000 by the end of
2020 and at a steady state production in excess of 40,000 carats per annum from 2021. We also aimed to optimise
profitability through reducing unit costs by investing in infrastructure and the benefit of the much-improved economies
of scale; to this end, our target was to reduce cost per carat by approximately USD50.
As mentioned, soon after we started this programme, we were forced to stop work at the mine due to the pandemic,
but continued to develop the business on a corporate level. Firstly, we reviewed our sales strategy and established a
new partnership with Antwerp based Bonas-Couzyn N.V, part of the Bonas Group (“Bonas”), to market the Kareevlei
diamonds through its Antwerp facility. Whilst this partnership remains in place, we have yet to use it. We expect to
start selling through Antwerp once our new facility is fully operational.
3
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Chairman's Statement
We also signed Heads of Terms with Delgatto Diamond Finance Fund LP (“DDFF”), a New York based fund, to
provide pre-sales finance that would enable us to have greater flexibility over when sales were made. Once again,
we have not used this provision, but it remains an option for us.
Once operations restarted at the mine on 11 May 2020, we quickly increased production at minimal cost having
made modifications to the primary crushing circuit and introducing the third pan. Volumes continued to rise for the
remainder of the year, resulting in a 24% increase in tonnes processed to 402,000 against 323,000 in 2019. Carats
produced and sold were also up 10% at 15,371 and 29% at 16,290 respectively year on year, whilst the grade was
slightly down as we concentrated on amalgamating KV1 and KV2 to create one larger and more efficient Main Pit
and add considerable flexibility to our mining operation. Having completed this in Q3 2020, the average grade for the
second half was a much improved 4.4 cpht, a slight increase over the average for FY 2019.
Post period end, in February 2021, we reviewed our expansion project and decided to increase our production target
to 1Mtpa and annual revenue to circa USD16m assuming a grade of 4 cpht and an average sale price of USD400. At
this time, we raised a further £1.5m. Later in May 2021,
to bring forward certain
deliverables ahead of planned commissioning and to explore options to advance the development of our largest pipe,
KV3.
this was appraised again,
In May 2021 as a result of increasing costs and delays related to our expansion project we entered into Heads of
Terms for a loan to raise a further £1.61 million, which will be exchanged for a convertible loan note, subject to
Takeover Panel and independent shareholder approval, the details of which are discussed in detail below.
Expansion Project
I am glad to say that our transformational expansion project is nearing completion. We are expecting to start
commissioning of the the wet side of the new plant shortly and once complete we are targeting annual production of
1 million tonnes and hope that we will be able to exceed this. The increased tonnages will provide the economies of
scale to turn Kareevlei into a highly cash generative asset.
The Diamond Market
2020 was a very difficult year for the diamond market. For a number of months there were no auctions either in
South Africa or elsewhere. During the second half of the year we sold diamonds to a private buyer.
Initially we were
obtaining prices in excess of USD300 per carat but towards the end of the year this fell to nearer USD200 per carat.
I am delighted to report that in 2021 the market has recovered to pre-COVID levels and we have achieved an
average of USD424 per carat in the first five months of the year, through the South African auction house, which is
higher than the pre-COVID price of USD415 achieved in 2019 for a similar product mix. At the time of writing the
market remains buoyant with a tight supply of rough diamonds and a strong recovery in the retail sector.
Diamond Resource ("Resource")
At the end of the year, we announced a provisional Resource update that was confirmed post period end in February
2021, demonstrating a 49% increase in net tonnes to 10,368,300, a 53% increase in net carats to 516,200 and
notably the Competent Person upgraded 19% of the resource from Inferred to Indicated. Based on our planned
production of 1mtpa, this provides a minimum 10-year life of mine, however, we remain confident that the Resource
will increase further once more work is completed on KV3, our largest pipe, where at present only 40% of this pipe’s
current known volume has been included.
4
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Chairman's Statement
Partnerships
We have an excellent relationship with Teichmann, which owned 27% of BRD's shares at the end of the year and are
also our mining contractor, our biggest supplier.
I discuss our relationship with them later in my statement.
Post period end, and to allow Management to focus on day-to-day production as well as commissioning / handover
requirements, we appointed BinVic (Pty) Limited (‘BinVic’), a fully integrated project execution service provider, to
complete our expansion project.
We also strengthened the Board and management, appointing an experienced mining engineer based in South
Africa, Rob Croll, as a Non-Executive Director, and who is also heading up a technical committee of the Board.
Furthermore, we engaged Minexec (Pty) Ltd, headed up by Meiring Burger, to work alongside our Kareevlei CEO,
Gus Simbanegavi, to provide additional management support and to ensure that the delivery of the increased
tonnages is achieved with the maximum efficiency. Meiring has a strong operating mining background in Africa with a
focus on a culture of accountability and skills development.
Outlook
Our strategy remains to achieve and then maximise the profitability at Kareevlei and in the longer term to explore
other new similar opportunities where we believe we can add value. To this end, we expect to complete our
expansion project in July 2021 and build up to full production in August enabling us to hit our full year production
guidance of 750,000 tonnes to 850,000 tonnes processed and carats produced of between 30,000 to 39,000 carats.
We have put a temporary hold on our plan to connect to the national grid, whilst we consider alternative power
options that, on a sustainable basis, will move the operation towards lower carbon emissions. We remain committed
to finding the right power solution and to implement it in 2022.
Accordingly, by the end of the year, we expect BlueRock to be a very different company, with annual run rate
revenues doubled to +USD16m, and cost per unit cost reduced to c.USD220 per carat, thereby providing a healthy
margin compared with our average sale price for 2019 (pre-COVID) of US$415 and the first five months of 2021 of
USD424 per carat.
We appreciate that it has been a challenging period and in reality it has set BlueRock back the best part of a year on
its growth plan at the Kareevlei operation and we would like to thank shareholders for their continued support.
However, with the expansion plans coming to fruition, we are highly optimistic for BlueRock’s future and look forward
to providing further updates on progress.
Events following the end of the year
At the end of 2020 and the beginning of 2021 Kareevlei experienced unprecedented levels of rain fall which forced
the plant to close for a total of 29 days. Not only did this impact the timetable for the completion of our expansion
project, but also reduced production levels accordingly. These two events coupled with the very low pricing that we
achieved in the last quarter of 2020, led to a cash requirement which was satisfied by the issue of a further £1.5m of
equity in February 2021.
In May 2021 as a result of increasing costs and delays related to our expansion project we entered into Heads of
Terms for a loan to raise a further £1.61 million, which will be exchanged for a convertible loan note, subject to
Takeover Panel and independent shareholder approval. The funds are due to be received in 12 equal monthly
instalments and the first payment was received in June 2021 in contemplation of agreeing final loan documentation
shortly. We are encouraged by the continued support of Teichmann who are working even more closely with the
Company to ensure that we reach our goals.
In conclusion, what started out to be an exciting year for BlueRock ended up being a very challenging one with the
impact of COVID 19 over an extended period and two extreme wet seasons having a significant influence on
outcomes. Your Board, with the best knowledge available in early 2020 pushed ahead with the expansion at
Kareevlei as strategically it remained key to delivering on shareholder value.
5
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Chairman's Statement
However, some tough lessons have been learnt and in hindsight we may have done certain things differently if we
had known the ongoing impact of COVID 19 particularly in relation to the on ground management support. We
addressed this in early 2021 through the appointment of BinVic to manage the expansion project and more recently
through the appointment of Rob Croll. Rob is based in South Africa and able to make regular visits to the mine.
Looking forward, the mine and plant expansion is very close to completion and management are focusing on
preparedness to deliver on the materially higher tonnages and cost controls both of which will drive cashflows and
profitability. We have the marketing arrangement with Bonas in place with the potential to add value to sales which
we will implement at the appropriate time.
I would like to thank everyone at BlueRock and Kareevlei, as well as our shareholders and key stakeholders for their
continued efforts and support.
Michael Houston
Executive Chairman
6
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Strategic Report
Operational statement
Overview
COVID-19 dominated the year, resulting in operations being forced to close for 46 days starting in March 2020.
Once the South African Government relaxed its restrictions we recommenced operations in May 2020, although there
was no ready market for our diamonds at that time.
Our primary focus in the year was:
a)
b)
to complete our expansion project to get to an annual throughput of 1,000,000 tonnes. Although the pandemic
caused significant delays to and had significant cost implications for the project. This is now due for completion
in August 2021, and
create the Main Pit from KV1 and KV2 enabling us to mine more flexibly and more efficiently. This led to a
reduction in grade in the first half as we were mining near surface and near the ore/waste contact zone,
increasing the dilution of the material processed.
Despite the problems caused by the pandemic we increased tonnes processed by 24% to 402,000 tonnes and carats
produced by 10% to 15,371 carats.
Safety, Health and Environment
The health and safety of our employees is always paramount and in the current circumstances even more so. We
have implemented in accordance with South African Government guidelines a number of new measures to ensure
that we are compliant with best practice in relation to preventing the spread of COVID 19.
We have had 14 cases of COVID-19 in 2020, but due to the measures that we had implemented, the impact on our
operations has been limited. There were zero fatalities recorded for the year and 2 Lost Time Injuries recorded. The
operational team continues to focus on ensuring the safety of our employees in this regard.
Mining
In the first half of the year we concentrated in developing the Main Pit from KV1 and KV2 in order to provide a more
flexible and more efficient mining environment. This was largely completed by the end of the first half of 2020
although we continue to work on establishing the ramp and haul road network within the pit as we go deeper.
Total waste mined in 2020 was 791,000 tonnes up from 692,000 tonnes in 2019 reflecting the extra work required to
create the Main Pit and the increased level of production. Waste mining was down in Q2 as we were concentrating
on conserving cash at the start of the pandemic when the future was very unclear.
7
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Strategic Report
Total ore mined in 2020 was 377,000 tonnes up 10% on 2019 (343,000 tonnes). In 2020, the strip ratio average was
2.1 (2.0 in 2019).
Processing
A total of 402,000 tonnes of ore was processed during the year, up 24% on the previous year of 323,000 tonnes. This
is quite an achievement as we were closed for 46 days starting on 26 March 2020 as a result of the COVID-19
pandemic. In addition excessive rain fall in December 2020 affected operations with 12 days lost in Q4.
Production volumes by quarter are shown below:
Production levels were up in all quarters despite the shut down in Q2 and the heavy rains in December 2020. The
management of the plant during the rainy season had a marked improvement, which resulted in significantly better
performance in Q1 compared to 2019.
Recoveries
Grade and carats produced
The average grade for the year fell from 4.3 cpht to 3.8 cpht. The primary reason for the decrease was the reduced
grade in the first half of the year when we were concentrating on developing the Main Pit requiring us to mine nearer
surface and nearer the edges of the Main Pit leading to a higher level of dilution.
8
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Strategic Report
The grade for the first half of the year averaged just 3.0 cpht whereas the grade for the second half averaged 4.4
cpht similar to the 4.3 cpht we achieved in 2019. The second half of the year saw a record number of carats
produced as grades and volumes recovered. Total carats produced in 2020 was 15,371, up 10% on 2019.
Value per carat
The market for diamonds was affected badly as a result of the pandemic. Retail sales almost disappeared overnight
and most, if not all, of the auction houses were closed for most of the final three quarters of 2020. This is shown in
the graph below.
All of our sales from Q2 onwards were made to private buyers, thus eliminating the competitive nature of the auction
process.
Initially, we were obtaining reasonable prices from the private market albeit at a c25% discount to the 2019
prices. However these prices collapsed in Q4 when we achieved an average of just over USD250 per carat. The
average price achieved for 2020 was $295 per carat, a fall of $120 per carat from 2019. Therefore, the revenue lost
due to COVID-19 was approximately USD$2.5 million, from the combination of the impact on pricing and our
enforced shutdown of 46 days in Q2,
Tenders resumed in January 2021 and the market has returned strongly in 2021 and we are now achieving average
prices in excess of our average for 2019 of USD415 per carat.
The Resource and Life of Mine
At the end of the year, following a drilling programme designed to prove greater depths of Resources and to further
define the surface area of the resource, we announced a provisional increase in our Resource as follows:
Tonnes
Total mined tonnes to date
Net tonnes
Carats
Mined carats
Net carats
CPHT
November
2018 ¹
7,700,000
(691,000)
7,009,000
367,000
(28,500)
338,500
4.83
December
2020 ²
Increase
10,009,000
-
-
513,500
5.13
43 %
52 %
6 %
(1) 2018 resource statement
(2) Provisional figures for December 2020 based on mined tonnes and carats and not a volumetric depletion
9
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Strategic Report
The provisional figures were confirmed in Q1 2021 by our Compentent Person. Whilst we had always been confident
that the Resource was far larger than previously estimated it is comforting to have this confirmed by our Competent
Person. Based on our expected production run rate of 1m tonnes per annum, the current Resource estimate gives us
a life of mine of 10 years.
We anticipate further increases in the Resource once we start to explore KV3 further. At present only 40% of the
potential Resource is included in the Resource statement. However, a significant proportion of the remaining 60%
has similar characteristics to parts of the Main Pit which has proved to be diamond bearing. Once we have completed
the expansion project we will do further work necessary to prove this additional Resource.
Operational outlook
2020 was a challenging year for all.
We are now nearing the completion of our expansion project and expect to be running at the new levels during
August 2021, which will bring us the necessary economies of scale.
The recovery of the diamond market since early 2021 has been encouraging as we are obtaining good prices for our
diamonds in 2021. The average so far for this year is USD424 per carat, which is higher than the average of USD415
per carat for 2019.
Gus Simbanegavi
Chief Operating Officer
10
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Strategic Report
Financial review
Overview
The results for the year show the impact of COVID-19 during the year, despite which we achieved increases in waste
mined, ore mined and production volumes compared to 2019. However depressed prices and lower grades led to a
decrease in revenue.
Revenue and Loss for the Year
In 2020, the Group made a loss before tax of £2,988,808 (2019: £684,244) on revenue of £3,601,819 (2019:
£4,073,853) reflecting the effect of COVID 19 and the resulting mine closure in the first half of the year and the
downturn in the diamond market in the second half of the year. It is difficult to calculate the overall cost of the
pandemic, but
revenue lost due to COVID-19 was approximately USD$2.5 million, from the combination of the
impact on pricing and our enforced shutdown of 46 days in Q2.
Statement of Financial Position
Borrowings increased from £1,073,187 in 2019 to £1,524,506 in 2020, as a result of the loan from Numovista Pty Ltd
financing the purchase of the new plant equipment. Property, plant and equipment have increased by £1,565,415 in
the year, as investment in the mine continues, specifically in relation to the new plant. Leased assets have increased
from £455,381 in 2019 to £520,795 in 2020 and lease liabilities increased from £467,703 in 2019 to £576,528 in 2020
as a result of new leases. Inventories have decreased by £379,039 due to the December 2020 rainfall and the impact
this had on the mining operations. Trade and other payables have increased by £356,979 due to the increase in
costs specifically related to the expansion project.
Cash flows
Investments
During the year we invested £1,268,083 (2019: £569,367) in the purchase and upgrading of plant and equipment.
The majority of this expenditure related to our expansion project to improve processing facilities. The rehabilitation
guarantee was increased by £101,888 (2019: £286,984). This was required as the footprint of the mine has been
increased.
Financing
During 2020, the Company raised a total of £3,149,996 gross of expenses through two placings and subscriptions
(£1,700,000 in February 2020 and £1,449,996 in July 2020). The fund raisings were largely to fund our expansion
plans in order to reach our target of operating at an annual run rate of 400,000 tonnes, as outlined in the Operational
Statement, but also to cover the loss of income as a result of COVID-19.
Cash position
the end of
At
Additionally, the Group had diamond inventories of £306,753 (2019: £527,300).
the year the Group cash balance (excluding restricted cash) was £355,463 (2019: £165,935).
Since the year end the Company has raised further funds through a placing and in May 2021 as a result of increasing
costs and delays related to our expansion project we entered into Heads of Terms for a loan to raise a further £1.61
million, which will be exchanged for a convertible loan note, subject to Takeover Panel and independent shareholder
approval. Nevertheless, there remains a material uncertainty as detailed in our Going Concern Report.
11
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Strategic Report
Risk Management
Principal risks and uncertainties
In addition to the extra risks resulting from the COVID-19 pandemic which are discussed below, the principal risks
that relate to the Group have been set out below, categorised as follows:
- Operational risks
- Risks relating to the Group’s operations including mining
- Market risks
- Risks associated with changes in the markets in which the Group operates
- Country risks
- Risks relating to the Group's mining operations in South-Africa
- Other risks
- COVID-19 risks and Climate Change risks
Operational risks
Reliability of mineral resource and reliance on historic data
The calculation of a mineral Resource involves significant assumptions and estimates that may prove inaccurate,
including assumptions of diamond prices.
the Kareevlei
tenements, reliance has been placed upon measurements and data collected by Diamond Resources Pty Limited
(the vendor of the Kareevlei tenements) and other parties and the analysis of the results achieved by Kareevlei
Mining (Pty) Limited. There can be no guarantee that predicted grades will continue to materialise or that the
resource will be economically viable. The Group mitigates this risk by continually assessing its production assets in
order to provide further evidence to support the Resource estimates initially set out in the Competent Person’s Report
dated August 2013 prior to expanding our production facilities, and which was updated in February 2021.
In calculating the Inferred and Indicated Resource at
Increase in production
The future profitability of the Group is dependent upon increasing production levels in order to achieve the necessary
economies of scale. Whilst the Group believe that it has a management team with the appropriate skills, has
developed a detailed plan and that it has sufficient Diamond Resources in order to achieve the required increase in
production, there remain significant challenges in order to achieve this and there can be no guarantees that such an
increase will be achieved neither can there be any guarantee that once achieved, such levels can continue to be
achieved.
Exposure to mining hazards
Whilst the Group’s exposure is reduced due to the open cast mining technique, the Group remains exposed to a
number of risks and hazards associated with mining including pit wall failure, adverse weather and mechanical
breakdown. The Group monitors its mining operations constantly to ensure that mining risks are minimised. In
the Group's production team has extensive experience operating and maintaining similar production
addition,
facilities.
Security risks
Whilst the Group has implemented security procedures, there can be no guarantee that theft of plant, machinery or
diamonds will not occur. Should any theft occur, the Group may suffer adverse financial consequences. We have
mitigated this risk by ensuring that our security team is present at all times.
12
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Strategic Report
Market risks
Exposure to a decrease in rough diamond prices
As the Group has commenced diamond sales, the profitability of mining operations is directly related to the prevailing
diamond price. Historically, diamond prices for good quality stones has been relatively stable, but are affected by
numerous factors which the Group is unable to control or predict, including world production levels, international
economic trends, industrial and consumer demand, currency exchange fluctuations, seasonality, speculative activity,
synthetic diamonds and political events.
Exposure to strengthening of the South African Rand and weakening of the US Dollar
The Group realises US Dollars for its diamond sales and reports its results in Pounds Sterling. Should the South
African Rand strengthen against
the Group’s mining operations, which are largely
denominated in South African Rand, may be adversely affected. Should the US Dollar weaken against the Pound,
the Group’s revenues may be reduced.
the costs of
the Pound,
Exposure to movements in the prices of raw materials, equipment and services
Should market prices for raw materials, services and equipment, such as diesel or mining equipment increase, the
Group’s results may be adversely affected. The Group seeks to obtain the best rate for each product or service,
taking into account price, service quality and reliability.
Country risks
Operations in South Africa
The Group’s main country of operation is South Africa. Whilst the Directors intend that the Group will carry out its
is possible that new laws, rules or
activities in accordance with all applicable laws, rules and regulations,
regulations may be enacted or that the interpretation of current laws, rules or regulations may change, either of which
may limit the ability of the Group to operate. The Group activities and profitability may also be adversely affected by
economic or political factors outside its control.
it
Financial Risk Management
Details of the Group’s financial risk management is set out in note 29.
Other Risks
COVID-19 Pandemic
The COVID-19 pandemic resulted in the mine being forced to close for a period in 2020 and a weakening in the
market value of diamonds. Although cases in the Northern Cape are currently high, the Group is compliant with local
protocol, and further enforced shutdowns are not anticipated. However there remains a risk, that future outbreaks
could affect both production and prices.
Climate Change
The effect of Climate Change in the future, particularly on the level of rainfall is a potential risk outside of the Group’s
control. As the effect of Climate Change becomes clearer the Group will see to amend its operating practices in order
to mitigate this risk.
13
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Strategic Report
Key Performance indicators
As a management team we monitor a variety of performance indicators:
Production
Tonnes processed in 2020 was 402,000 tonnes, 24% up on 2019. Average monthly production for the second half of
2020 was approximately 39,000 tonnes compared to 37,000 during 2019.
This is a strong result particularly given the problems of COVID-19.
Grade
The average grade for 2020 was 3.8 cpht, 12% down on 2019 grade of 4.3 cpht. The average grade for the second
half of 2020 was approximately 4.4 cpht.
The lower grade in the first half of the year resulted from the development of The Main Pit which required mining at
nearer surface and edge, leading to a greater level of dilution.
Carats produced
Despite the impact of COVID-19, the carats produced were 15,371, up 10% on 2019 and carats sold were 16,290, up
forward balance of
29% on 2019. Carats sold was greater than carats produced as a result of
inventories.
the brought
Value per carat
The value per carat for 2020 was USD300, 28% down on 2019.
Prices were impacted severely by the COVID-19 pandemic.
14
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Strategic Report
Directors' Section 172 statement
This section serves as the Directors’ Section 172 statement and should be read in conjunction with the Strategic
Report and the Report from the Company’s Corporate Governance Committee. This disclosure describes how the
Directors have had regard to the matters set out in section 172(1)(a) to (f) and forms the Directors’ statement
required under section 414CZA of The Companies Act 2006.
The matters set out in Section 172(1) (a) to (f) are that a Director must act in the way they consider, in good faith,
which would be most likely to promote the success of the Company for the benefit of its stakeholders as a whole, and
in doing so have regard (amongst other matters) to:
(a) the likely consequences of any decision in the long term;
(b) the interests of the Company’s employees;
(c) the need to foster the Company’s business relationships with suppliers, customers and others;
(d) the impact of the Company’s operations on the community and the environment;
(e) the desirability of the Company maintaining a reputation for high standards of business conduct; and
(f) the need to act fairly between members of the Company.
In the above Strategic Report section of this Annual Report, the Company has set out the short to long term strategic
priorities, and described the plans to support their achievement.
The analysis has been split into two distinct sections, the first to addresses Stakeholder engagement, which provides
information on stakeholders, issues and methods of engagement, disclosed by stakeholder group. The second
section addresses principal decisions made by the Board and focuses on how the regard for stakeholders influenced
decision-making.
Section 1. Stakeholder mapping and engagement activities within the reporting period.
The Company continuously interacts with a variety of stakeholders important to its success, such as equity investors,
business partners, workforce, government bodies, local communities, suppliers and advisors. The Company strives
to strike the right balance between engagement and communication. Furthermore, the Company works within the
limitations of what can be disclosed to the various stakeholders with regards to maintaining confidentiality of market
and/or commercially sensitive information.
15
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Why: why is it important
to engage this group of
stakeholders
How: how BlueRock
engaged with the
stakeholder group
What: what came of the
engagement
Strategic Report
Who: Key Stakeholder
groups
Equity Investors and
Business Partners
Teichmann Company Ltd and
associated own 27% at
the
date of this report.
Workforce
The Group has approximately
90 employees
including its
Directors. Two of the Directors
are UK residents and three are
resident Directors.
overseas
The rest of
the Company’s
workforce is based in South
Africa
for
Access to capital has been
of vital
importance to the
long-term success of our
business
to enable the
Group to proceed with its
expansion plans
the
mine.
Teichmann provide a vital
role in the mining process,
without which the Company
cannot create value for its
shareholders by producing
diamonds and therefore a
return on the investment.
Through our engagement
activities, we strive to obtain
investor buy-in into our
and
strategic
how we go about executing
them.
We are seeking to promote
an investor base that
is
interested in a long term
holding in the Company and
will support the Company in
achieving
strategic
its
objectives.
objectives
commitment
The Group’s
long-term
success is predicated on
our
the
workforce to our vision and
the demonstration of our
values on a daily basis.
of
The key mechanisms of
engagement included:
have
Teichmann
the
Teichmann
option to appoint a Director
to the Board. As of
the
date of signing this Annual
Report they have not taken
up this option. Regular
meetings are held between
and
the
Board
management
of
Teichmann.
with
engaged
We
investors on topics of
strategy, governance and
The
performance.
CFO
Chairman
presented at a number of
investor
roadshows and
one-to-one meetings.
and
Over the course of 2020,
the Group raised £3.15
million in cash, gross of
expenses,
through new
share issues
Prospective and existing
investors
The AGM and Annual and
Interim Reports.
Investor
presentations.
Shareholder calls with the
Board.
Regular
and updates
roadshows and
releases
news
The
Remuneration
Committee operated an
employee Bonus scheme
achieving
payable
on
certain
production
targets, and an employee
trust has been set up to
of
own
the
5%
Company’s
operating
subsidiary.
The workforce have been
trained in aspects of
corporate policies and
procedures to engender
positive corporate culture
the
aligned
Company
of
conduct
code
with
open
General Workforce:
The Company maintains
of
an
between
communication
senior
its
management
the
Board.
employees,
and
line
is
There
formalised
a
employee induction into
the Company
corporate
policies and procedures.
Meetings were held with
project
provide
staff
to
updates
ongoing
and
business objectives.
Efforts to focus on mine
safety
yielded
have
significant improvements in
safety
performance,
resulting in a reduction of
injuries in calendar year
2020.
16
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Strategic Report
Who:
groups
Key
Stakeholder
Why: why is it important
to engage this group of
stakeholders
How:
with
engaged
stakeholder group
how BlueRock
the
What: what came of the
engagement
Governmental bodies
The Group is regulated in South
for
Africa, by the Department
Mineral
and
Energy(“DMRE”).
Resources
Community
the
The local communities at
mine site in South Africa and
the surrounding area.
The Group’s mining licence
renewals require satisfying
the requirements of
the
which
DMRE,
include
to to Broad -
changes
Economic
Black
Based
Empowerment
ownership
requirements.
has
The Group
held
several meetings with the
DMRE and has ongoing
dialogue in this regard.
The Group has made
operational
significant
and
improvements
is
amended
finalising
its
BBBEE
ownership
arrangements.
Company
all
has
The
key
identified
the
stakeholders within
local
and
communities,
has held regular meetings
with all parties.
The Group has ongoing
engagements with the
local communities.
fears
We need to engage with the
local community to build
trust. The community’s trust
is more likely
will mean it
that
the
any
can be
has
community
assuaged and our plans
and strategies are more
accepted.
likely
be
engagement
Community
will
inform better decision
making.
to
The Group has a social and
economic impact on the
and
communities
local
surrounding
The
area.
Company is committed to
ensuring sustainable growth
adverse
minimising
impacts.
local
communities will have an
interest in the ownership of
the subsidiary once the
BBBEE
is
finalised. The majority of the
workforce is drawn from the
local communities.
ownership
The
suppliers
Key suppliers and Advisors
been
have
Key
in South Africa.
identified
Advisors include our Nomad,
brokers,
lawyers, auditors and
PR consultants.
is essential
A good relationship with key
to
suppliers
ensure timely supplies so
as to not
interrupt mining
and processing.
Key advisors are essential
to ensure we maintain good
governance in all areas.
Regular
communication
takes place with all key
suppliers and advisors.
has
not
The Group
any
experienced
problems with supplies or
corporate
governance
issues during the year.
17
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Strategic Report
Section 2, Principal decisions by the Board during the period.
We define principal decisions as both those that have long-term strategic impact and are material to the Group, but
also those that are significant to our key stakeholder groups. In making the following principal decisions, the Board
considered the outcome from its stakeholder engagement, the need to maintain a reputation for high standards of
business conduct and the need to act fairly between the members of the Group:
The Board considers that the principal decisions made in 2020 were:
a)
The closure and subsequent reopening of the mine following the onset of COVID-19
As a result of the South African Government Directive the Company was required to close down our mining
activities on 26 March 2020. The restrictions started to be lifted on 16 April 2020 and we reopened the
mine on 11 May 2020 having satisfied ourselves that we could operate safely and it was economically
beneficial to do so, compared with the alternative, which was to remain in care and maintenance until the
situation improved.
b)
The decision to increase annual production capacity to c700,000 tonnes pa and allied fund raising
The Board remains of the view that economies of scale are essential in order for Kareevlei to operate
profitably. The decision was taken at the beginning of 2020 to increase the capacity to c700,000 tonnes
per annum. The Board raised a total of £1.7 million before expenses to fund the increase.
c)
Fund raising in July 2020
As a result of the problems and delays occasioned by COVID-19, the Board decided to raise further equity
funding in July 2020, totalling £1.45 million before expenses.
In making the above principal decisions, the Directors believe that they have considered all relevant stakeholders,
potential impact and conflicts, the Company’s business model and its long-term strategic objectives, and have acted
accordingly to promote the success of the Company for the benefit of its stakeholders as a whole. We do not believe
that any stakeholders have been affected detrimentally by these decisions.
The Strategic Report has been approved
By order of the board
Michael Houston
Executive Chairman
30 June 2021
18
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Board of Directors
Michael Houston - Executive Chairman, aged 69
Michael Houston is a mining veteran with over 30 years' experience in Africa having worked with companies
including Anglo American (Executive roles), Shanta Gold (CEO), and Zimplats Holdings (CEO/COO). He has also
worked on a consultancy basis supporting a number of companies with various project reviews and due diligence.
David Facey - Finance Director, aged 58
David is a Fellow of the Institute of Chartered Accountants of England and Wales and has over 20 years' experience
in Corporate Finance and Equity Capital Markets. After working at PwC, David spent 10 years at HSBC Investment
Bank, where he specialised in raising funds in the UK for companies all over the world, particularly in the EMEA
region.
Throughout his career David has advised governments, large corporates and smaller enterprises on public fund
raising, private fund raising, mergers and acquisitions. In addition, David was a founding partner in SP Angel, an
investment banking boutique specialising in advising SMEs on raising funds in the London market, both public and
private.
Tim Leslie - Non-Executive Director, aged 54
Tim Leslie has worked in the financial markets for over 25 years. He joined Paribas in 1986 and has since worked for
JPMorgan, HSBC and then at Donaldson Lufkin & Jenrette (“DLJ”). In 2000, DLJ was bought by Credit Suisse and
Tim left to join the hedge fund Moore Capital Management LLC as a portfolio manager.
In 2003 Tim launched a new fund at Moore Capital, the Moore Credit Fund, for which he was the Chief Investment
Officer. Tim left Moore Capital
in 2008 and launched James Caird Asset Management LLP with assets under
management of US$3.6bn as at launch. In 2011, Tim founded JCAM investments Ltd to run a family office and make
longer term investments.
Gus Simbanegavi - Chief Operating Officer, aged 46
Gus is a mining engineer and has extensive experience of working in mining operations in South Africa and
Zimbabwe. He has previously worked closely with the Company's Chairman Mike Houston.
Importantly, Gus'
experience encompasses both small and large scale mining operations including extensive open cast mining.
Gus is a professional Mining Engineer and also holds a Masters in Business Administration. He is a member of the
Australian Institute of Mining and Metallurgy (AusIMM). Gus has over 20 years’ experience in executive roles for
mining operations which spans across diverse mining commodities with majority of experience in Gold and Platinum
Mining for both Open pit, Underground mining and Processing plants.
Before joining Bluerock diamonds Gus has worked at various levels for Aquarius Platinum (SA), Eqstra Holdings,
Zimplats and Delta Gold where he was involved in taking the various operation from design concept to operational
mines. He was instrumental in the development of Zimplats Ngezi Operations in Zimbabwe and Aquarius Platinum’s
Everest and Marikana Platinum Mines in South Africa. Experience over the years has been operational management
and project implementation of mining projects and operations.
Rob Croll - Non-Executive Director, aged 69
Rob Croll was appointed on 21 May 2021. Rob is a Mining Engineer with some 46 years experience in the mining
industry. During this period he has held a number of senior executive and consulting positions, both within the
Corporate environment and as an Independent Consultant. He has also had exposure to the financial markets. Rob
is currently the Lead Independent Non-Executive Director for Resource Generation Limited.
19
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Corporate Governance
The Board of BlueRock Diamonds plc (the “Company” or “BlueRock”) fully supports good corporate governance and
recognises that it enhances its decision-making processes by improving the success of the Company and increasing
shareholder value over the medium to long-term.
BlueRock currently complies with the principles of the Quoted Companies Alliance Corporate Governance Code (the
“QCA Code”) to the extent that the Directors consider it appropriate, having regard to the Company’s size, board
structure, nature of operations and available resources.
The QCA Code identifies ten principles to be followed in order for companies to deliver growth in long term
shareholder value, encompassing and efficient, effective and dynamic management framework accompanied by
good communication to promote confidence and trust. The sections below set out the ways in which the Company
applies the ten principles of the QCA Code in support of the Company’s medium to long-term success, together with
any areas of non-compliance.
The 10 principles are as follows:
1)
2)
3)
4)
5)
6)
7)
8)
9)
establish a strategy and business model which promote long-term value for shareholders
seek to understand and meet shareholder needs and expectations
take into account wider stakeholder and social responsibilities and their implications for long-term success
embed effective risk management, considering both opportunities and threats, throughout the organisation
maintain the board as a well-functioning, balanced team led by the chair
ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
evaluate board performance based on clear and relevant objectives, seeking continuous improvement
promote a corporate culture that is based on ethical values and behaviours
maintain governance structures and processes that are fit for purpose and support good decision-making by the
board
communicate how the company is governed and is performing by maintaining a dialogue with shareholders and
other relevant stakeholders.
10)
Principle 1
Business Model and Strategy
Our business model is to acquire and develop under exploited mining opportunities in sub-Saharan Africa, initially in
South Africa.
Our short to medium term strategy is to concentrate on our existing asset, the Kareevlei Diamond Mine (“Kareevlei”)
in the Kimberley region of South Africa, in order to establish its long-term profitability. This will involve developing a
multi-pit mining operation to maximise volume, grade and de-risk this key aspect of the business. To date KV1 and
KV2 have been combined into one larger more effective opencast pit and test mining completed on KV5.
Management with the completion of a Resource upgrade in early 2021, will complete an “economic life of mine
assessment on all 5 pipes in 2021 with the objective to setting a long term life of mine plan to fully exploit the
Resource.
Once we have achieved our short to medium term strategy with the expansion/optimisation of our operations at
Kareevlei, we will seek other mining opportunities.
Our expertise is in open cast mining and processing and we intend to continue to concentrate our activities on open
cast mining although in the longer term, if economically advantageous, we may consider expanding our operations
beyond open cast mining. We are unlikely to expand our operation into alluvial diamond mining.
Principle 2
Understanding Shareholder Needs and Expectations
The Board is committed to maintaining good communications and having a constructive dialogue with both its
institutional and private shareholders.
20
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Corporate Governance
The Executive Chairman and Finance Director are principally responsible for shareholder liaison and have regular
dialogue with investors in order to develop an understanding of their views.
The Company encourages all shareholders to attend its Annual General Meeting where they can meet and question
the Directors and express ideas or concerns. In addition, the Company regularly invites shareholders to submit
questions to and participate in shareholder calls and video interviews via Interactive Investor, both of which are
available on the Company’s website. The Directors undertake presentations and roadshows to institutional investors
as appropriate. In addition, shareholder communication is answered, where possible or appropriate, by Directors or
the Company’s Financial PR advisors, St Brides Partners Ltd, or the Company’s Nominated Adviser and broker, SP
Angel Corporate Finance LLP.
Principle 3
Stakeholder and Social Responsibilities
The Board recognises that the Company’s continued growth and long-term success is largely reliant on its relations
with its stakeholders, both internal (employees and shareholders) and external (customers, suppliers, business
partners and advisors etc).
The Company maintains a regular dialogue with all of its stakeholders, including suppliers of key materials and
services and its regulator in South Africa, the Department for Mineral Resources and Energy.
The Company works closely with its advisors to ensure it operates in conformity of its listing regulations as well as
the social, legal, religious and cultural requirements of the countries in which it operates.
As a Company, we take our corporate social responsibilities very seriously, particularly as we operate in area of high
unemployment. The Company employs a dedicated person to fulfil its social responsibility policies which involve
supporting facilities that improve the quality of life of the community local to our mine. The Board is fully supportive of
the assistance the Company provides to the local community.
Principle 4
Risk Management
As a business operating in an emerging market there is clearly an elevated risk which is balanced by potentially
greater rewards. The Board is mindful of and monitors both its corporate risks and mining risk which are set out in the
risk report on pages 12 to 14.
Currently, we operate only one mine but, if and when the Company opens up additional mines, it will monitor mining
risk on a mine by mine basis as each mine will present its own unique risks. Mining risks are categorised by both
probability and impact and appropriate measures identified to monitor and mitigate any potential
impact are
monitored through the life cycle of the mine as existing risks change and new risks appear. Mining risks and
mitigation are a key part of regular discussions in management meetings.
The Company’s corporate risks, risk monitoring, and risk management procedures are regularly reviewed by the
Board and updated as necessary. The risk report is set out on pages 12 to 14.
21
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Corporate Governance
Principle 5
Board Structure
The Plc Board contains a balance of Executive and Non-Executive Directors, including an Executive Chairman who
is responsible for dealing with the strategic direction and long-term success of the Company. The Board consider that
is appropriate to have an Executive Director serving as the Chair, as this is expected to be temporary, and will
change on the appointment of a Chief Executive Officer. The Board meets at least every month or at any other time
deemed necessary for the good management of the business and at a location agreed between the Board members.
The Board currently consists of two Non-Executive directors and three Executive directors. Tim Leslie and Rob Croll
are the independent Non-Executive Directors. It is the Board's intention to revert to a Non- Executive Chairman in
due course.
As announced on 16 May 2019, Teichmann Company Limited (“TCL”), an investment company controlled by trusts
retains a right to appoint a non-
connected with the owners of BlueRock’s strategic partner, Teichmann Group,
executive director to the Board whilst it maintains a holding over 10%. TCL currently hold approximately 29% of the
Company and have indicated that at this juncture, they do not intend to take up the right. If and when Teichmann
exercise their right,
the Company due to TCL’s substantial
the appointee will not be fully independent of
shareholding, however the appointee will be considered to be independent of the executive team.
TCL has entered into a Relationship Agreement with the Company which, among other matters, governs
Teichmann's ability to make changes to the Company's board composition.
The CEO role is currently carried out by the Executive Chairman and the Company will appoint a CEO when the
Board considers necessary.
The Executive Board members consist of the Chairman, the Finance Director and the Chief Operating Officer. The
Chief Operating Officer is also CEO of the Company's subsidiary, Kareevlei Mining Pty Limited.
Non-Executive Directors are required to commit to up to 4 days a month. The Executive Chairman and Finance
Director are required to commit to up to 10 days a month. The monthly commitment varies depending upon the
demands of the company.
In 2020 the Board held 12 formal Board meetings. Attendance at these meetings were as follows:
Director
Mike Houston
Tim Leslie
David Facey
AT Simbanegavi
Meetings attended
12
12
12
12
% attended
100
100
100
100
The Audit Committee met twice in the period to which all committee members were in attendance. The Remuneration
Committee met twice in the year at which all committee members were present, however given the size of the
company a number of remuneration and audit committee matters are covered in the course of normal Board
meetings.
22
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Corporate Governance
Principle 6
Board Composition and Experience
The Company operates in a complex and challenging technological and geographical area and the Board is mindful
that in order to deal effectively with the challenges of the business and to maximise its growth opportunities it has to
incorporate a broad range of skills and diversity.
The Board considers that all directors have the relevant professional and technical skills to ensure that they are able
to fulfil their duties. Mike Houston, Executive Chairman has extensive experience in the natural resources sector
having been Chairman and CEO of Zimplats Holdings (ASX) and CEO of Shanta Gold (AIM), Tim Leslie has
operated in the financial sector for many years and is a FCA regulated person, and David Facey is a Fellow of the
Institute of Chartered Accountants and has many years of
In addition, Gus
Simbanegavi is a mining engineer and has extensive experience of working in mining operations in South Africa and
Zimbabwe. Gus' experience encompasses both small and large scale mining operations including extensive open
cast mining. Rob Croll is a Mining Engineer with some 46 years’ experience in the mining industry and has held a
number of senior executive and consulting positions, both within the Corporate environment and as an Independent
Consultant.
investment banking experience.
Rob Croll and Tim Leslie, notwithstanding his holding of £462,500 in a loan note (see note 16), are considered to be
independent directors.
The current composition of the Board may be found on page 19 of the Annual Report.
The Board and its Committees also seek external expertise and advice when required in particular from specialist
mining and engineering consultants.
Principle 7
Board Evaluation
The Board considers evaluation of its performance and that of its Committees and individual directors to be an
integral part of corporate governance to ensure it has the necessary skills, experience and abilities to fulfil
its
responsibilities. The goal of the Board evaluation process is to identify and address opportunities for improving the
performance of the board and to solicit honest, genuine and constructive feedback.
The Board considers the evaluation process is best carried out internally given the Company’s current size, however
the Board will keep this under review and may consider independent external evaluation reviews in due course as the
Company grows.
The last Board performance evaluation was carried out in Q3 2019, with the next evaluation scheduled to take place
in Q3 2021. No evaluation took place in 2020.
23
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Corporate Governance
Board Evaluation:
Review
Board composition in terms of skills, experience and
balance
Board cohesion
Board operational effectiveness and decision making
Board meetings conduct and content and quality of
information
The Board’s engagement with shareholders and other
stakeholders
The corporate vision and business plan
Committee Evaluation:
Board Committees’
experience and balance
Board Committees’ Terms of Reference
Board Committees’ effectiveness
Individual director evaluation:
Executive Director performance in executive role
Executive Director performance and contribution to the
Board
Non-Executive Director performance and contribution to
the Board
Non-Executive Director’s independence and time served
All Directors’ attendance at Board and Committee
meetings
composition in terms of
skills,
Period
Annually or as required
Annually or as required
Annually
Annually or as required
Annually
Annually
Annually or as required
Annually
Annually
Annually
Annually
Annually
Annually
Annually
The Board as a whole, or in part as appropriate, undertakes the evaluation process aided by the Chairman, CEO and
independent Non-Executive Directors or external advisors, as necessary. The Chairman is responsible in ensuring
the evaluation process is ‘fit for purpose’, as well as dealing with matters raised during the process. The Chairman
will keep under review the frequency, scope and mechanisms for the evaluation process and amend the process as
required.
Where deficiencies are identified these are addressed in a constructive manner. Where necessary individual
Directors are offered mentoring and training. If deficiencies are identified within the Board as a whole, then changes
or additions to the Board will be considered in conjunction with the Nominations Committee.
The evaluation process are focused on the improvement of Board performance, through open and constructive
dialogue and the development and implementation of action plans.
Succession planning is a vital task for boards and the management of succession planning represents a key
measure of the effectiveness of the Board and a key responsibility of both the Nominations Committee and wider
Board.
Principle 8
Corporate Culture
The Board recognises that a corporate culture based on sound ethical values and behaviours is an asset and
provides competitive advantages. The Company is mindful that respect of individual cultures is critical to corporate
success and endeavours to conduct its business in an ethical, professional and responsible manner, treating our
employees, customers, suppliers and partners with equal courtesy and respect at all times. The Company is also
committed to providing a safe environment for its staff and all other parties for which the Company has a legal or
moral responsibility in this area.
24
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Corporate Governance
In order to ensure that these values are continually applied and adopted, the Board seeks to recruit the best talent
available and create a diverse talent pool.
The Board has implemented a Code for Directors' and employees' dealings in securities which it considers to be
appropriate for a company whose securities are traded on AIM and is in accordance with the requirements of the
Market Abuse Regulation.
Principle 9
Governance Structure
The Board sets the Company’s strategic aims and ensures that necessary resources are in place in order for the
Company to meet its objectives. All members of the Board take collective responsibility for the performance of the
Company and all decisions are taken in the interests of the Company. Whilst the Plc Board has delegated the
operational management of the Company via the Operational Board to the Executive Directors and other senior
management, there are detailed specific matters subject to decision by the Plc Board of Directors. These include
acquisitions and disposals, joint ventures and investments, projects of a capital nature and all significant contracts.
The Non-Executive Directors have a particular responsibility to constructively challenge the strategy proposed by the
to ensure appropriate remuneration and that
Executive Directors;
succession planning arrangements are in place in relation to Executive Directors and other senior members of the
management team. The senior executives enjoy open access to the Non-Executive Directors.
to scrutinise and challenge performance;
The Chairman is responsible for leadership of the Board and ensuring its effectiveness on all aspects of its role. The
Chairman with the assistance of the Chief Executive Officer sets the Board’s agenda and ensures that adequate time
is available for discussion of all agenda items, in particular strategic issues.
The Chairman promotes a culture of openness and debate by facilitating the effective contribution of Non-Executive
Directors in particular and ensuring constructive relations between Executive and Non- Executive Directors. The
Chairman is also responsible for ensuring that the Directors receive accurate, timely and clear information.
Given the current absence of a CEO, the Chairman is also responsible for running the business, implementing the
decisions and policies of the Board and for the overall operational performance of the Company and ensuring the
Company’s communication with shareholders is timely, informative and accurate with due regard to commercial
sensitivity and regulatory requirements.
The Finance Director is responsible for the Company’s finances and the operations and technical requirements of the
Company. The role of Company Secretary is undertaken by the Finance Director. The Chief Operating Officer is
responsible for the day to day running of the Company's main asset, Kareevlei and is also the CEO of that company.
The Non-Executive Directors are appointed not only to provide independent oversight and constructive challenge to
the Executive Directors but are also chosen to provide strategic advice and guidance. This is particularly important
given the Company operates overseas in challenging markets.
All Directors are able to allocate sufficient time to the Company to discharge their duties. There is a rigorous and
transparent procedure for the appointment of new directors to the Board. The search for Board candidates is
conducted, and appointments made, on merit, against objective criteria and with due regard for the benefits of
diversity on the Board.
The Board is responsible for ensuring that a sound system of internal control exists to safeguard shareholders’
interests and the Company’s assets. It is responsible for the regular review of the effectiveness of the systems of
internal control. Internal controls are designed to manage rather than eliminate risk and therefore even the most
effective system cannot provide assurance that each and every risk, present and future, has been addressed. The
key features of the system that operated during the year are described below.
The Board has established the following committees to assist with oversight and governance:
25
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Corporate Governance
Audit Committee
The Audit Committee consists of Tim Leslie (chair) and Rob Croll. It oversees and reviews the Company’s financial
reporting and internal control processes, its relationship with external auditors and the conduct of the audit process
together with its process for ensuring compliance with laws, regulations and corporate governance. It is composed
entirely of non-executive directors but other individuals such as the Company’s CFO, Chairman and COO may be
invited to attend all or any part of any meeting when deemed appropriate. The Company’s external auditors will be
invited to attend meetings of the Committee on a regular basis.
There is currently no internal audit function in view of the size of the Company, although this is kept under annual
review.
The Audit Committee has been involved with the planning of the audit for the year ended December 2020 and has
discussed the audit findings with the Company’s external auditors.
Remuneration Committee
The Remuneration Committee consists of Tim Leslie (chair) and Rob Croll. The Remuneration Committee is
responsible for establishing a formal and transparent procedure for developing policy on executive remuneration and
to set the remuneration packages of individual Directors. This includes agreeing with the Board the framework for
remuneration of the Executive Chairman and CFO and such other members of the executive management of the
Company as it
individual
remuneration packages of each Director including, where appropriate, bonuses, incentive payments and share
options.
is furthermore responsible for determining the total
is designated to consider.
It
The Committee’s policy is to provide a remuneration package which will attract and retain Directors and Management
with the ability and experience required to manage the Company and to provide superior long-term performance. It is
the aim of the Committee to reward Directors competitively and on the broad principle that their remuneration should
be in line with the remuneration paid to Senior Management of comparable companies. In addition to paying fees in
cash, fees have been paid also in shares and share options as a method of preserving cash within the business.
Nomination Committee
The Nominations Committee comprises Tim Leslie (chairman) and Rob Croll. The Nominations Committee leads the
process for Board Appointments and is responsible for review of the board size, structure and composition (both
executive and non-executive) including any potential new applicants to ensure the Board contains the right balance
of skills, knowledge and experience to manage and grow the business. The Nominations Committee will make
recommendations to the Board on any proposed or suggested changes to the Board with a view on the leadership
needs of the business including succession planning.
Principle 10
Stakeholder Communication
The Board is committed to maintaining good communication and having constructive dialogue with all of
its
stakeholders, including shareholders, providing them with access to information to enable them to come to informed
decisions about the Company. The Investors section of the Company’s website provides all required regulatory
information as well as additional information shareholders may find helpful including: information on Board members,
advisors and significant shareholdings, a historical list of the Company’s Announcements, its corporate governance
information, the Company’s publications including historic Annual Reports and notices of Annual General Meetings,
together with share price information.
Results of shareholder meetings and details of votes cast will be publicly announced through the regulatory system
and displayed on the Company’s website with suitable explanations of any actions undertaken as a result of any
significant votes against resolutions.
26
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Corporate Governance
Audit Committee Report
An important part of the role of the Audit Committee is its responsibility for reviewing the effectiveness of the Group’s
financial reporting, internal control policies, and procedures for the identification, assessment and reporting of risk.
The Committee devotes significant time to their review and further information on the risk management and internal
control systems is provided within the Strategic Report.
A key governance requirement of the Group’s financial statements is for the report and accounts to be fair, balanced
and understandable. The co-ordination and review of the Group-wide input into the Annual Report and Accounts is a
sizeable exercise performed within an exacting timeframe. It runs alongside the formal audit process undertaken by
external Auditors and is designed to arrive at a position where initially the Audit Committee, and then the Board, is
satisfied with the overall fairness, balance and clarity of the document underpinned by the following:
• detailed guidance issued to contributors at operational levels;
• a verification process dealing with the factual content of the reports;
•
• a comprehensive review by the senior management team.
thorough review undertaken at different levels that aim to ensure consistency and overall balance; and
An essential part of the integrity of the financial statements are the key assumptions and estimates or judgements
that have to be made. The Committee reviews key judgements prior to publication of the financial statements at the
full and half year, as well as considering significant issues throughout the year. In particular, this includes reviewing
any materially subjective assumptions within the Group’s activities to enable an appropriate determination of asset
the judgements exercised by
valuation and provisioning. The Committee reviewed and was satisfied that
Management on material items contained within the Annual Report were reasonable. The Committee concluded that
the estimates about
future production, sales volumes, diamond prices, grades, operating costs and capital
expenditures used in the review were reasonable. It was also concluded that waste stripping costs did not meet the
criteria for capitalisation under IFRS and thus that these costs should be fully expensed in 2020.
The Committee focussed on Management’s assessment of Going Concern with respect to the Group’s cash position
and its commitments for the next 12 months. The Committee considered the level of uncertainty resulting from the
impact of the COVID-19 pandemic, and the potential uncertainties relating to the completion of the new plant and
planned increased production levels, as well as the possibility that the new CLN will not be approved. The Committee
looked at various scenarios to test the management’s views and concluded that the wording contained in the Going
Concern section of the Directors’ Report was appropriate.
The Audit Committee has considered the Group’s internal control and risk management policies and systems, their
effectiveness and the requirements for an internal audit
the Group’s overall risk
management system. The Committee is satisfied that the Group does not currently require an internal audit function.
function in the context of
The Committee has recommended to the Board that shareholders support the re-appointment of the Auditors at the
2021 AGM.
27
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Corporate Governance
Remuneration committee report
The Remuneration Committee (“Committee”) has been engaged on all matters of corporate remuneration.
Over the past year and into 2021, the Committee has considered the following matters:
• Executive compensation including base compensation, bonus and equity incentives;
• Non-Executive Directors' remuneration
As a result of the Remuneration Committee’s deliberations it has been agreed that share based incentive schemes
should be reserved for the executive team only and that Non-Executive Directors should be paid a market rate for
their services which hitherto have been provided largely for no payment.
The Remuneration Committee will meet formally in Q3 2021 in order to approve remuneration for the following year.
The annual remuneration for the Directors is noted in the Directors’ report.
28
BlueRock Diamonds Plc
(Registration Number 08248437)
Consolidated and Separate Annual Financial Statements for the year ended 31 December 2020
Directors' Report
The directors present their report for the year ended 31 December 2020.
1. Review of activities
Principal activities and results
The principal activity of the Group is diamond mining in the Kimberley region of South Africa. There were no major
changes herein during the year.
The operating results and consolidated statement of financial position of the Group are fully set out in the attached
financial statements together with a review of the Group's performance and prospects contained in the chairman's
statement.
2. Going concern
The Group has prepared forecasts covering the period to 31 December 2022. Appropriate diligence has been
applied by the directors who believe that the forecasts are prepared on a realistic basis using the best available
information. The Group had cash balances of £156,000, a further £202,000 due from Teichmann (in accordance with
the terms of their February 2021 share subscription), together with approximately 2,133 carats of diamonds and 267
carats of diamonds held in concentrate form and no bank debt at 28 June 2021. However, there remains a balance of
£550,095 on the loan for some of the new plant equipment. The forecasts include repaying 50% of the existing
Convertible Loans in October 2021 (£462,500) and assume the Group will exercise the option to extend the
remaining 50% until October 2022. The forecasts also assume that the Group will receive the amount due under the
Teichmann Group loan note as detailed below.
Heads of Terms have been agreed with the Teichmann Group for a £1.61m loan note with the intention that this will
be replaced by a convertible loan note ('CLN'). Under the Heads of Terms, the initial loan will have a short term
expiring on 31 August 2021. The funds are due to be received in 12 equal monthly instalments and the first payment
was received in June 2021. It is expected that the initial
loan (of which only three instalments will have been
received) will be refinanced through the future issue of the CLN to Teichmann. The proposed CLN will not be issued
In addition,
by the Company until shareholders have approved additional Company authorities to issue new shares.
the Company is applying to 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"). In the event that the CLN is not issued by 31
August 2021, being the term of the initial
loan, BlueRock will be required to repay the higher of a) all amounts
invested by Teichmann plus the interest on the entire amount of the loan that would have accrued over a three and a
half year period; or b) all amounts invested by Teichmann plus the market value of such shares as would have been
issued should the CLN have been issued, been converted and run for its full term less the principal amount invested.
Therefore, until the CLN has been issued, there remains an uncertainty regarding the receipt of the remaining funds
due under the Teichmann Group Loan, and the potential of repayments being due to Teichmann.
The COVID-19 pandemic resulted in the mine being forced to close for a period of 46 days in 2020 plus a weakening
in the market value of diamonds, both of which had an impact on the Group’s operating results for FY2020. Although
the Board is not anticipating any future impact of the severity seen in 2020, in making its going concern assessment,
the Board has considered the increased level of uncertainty resulting from COVID-19. Cases in the Northern Cape
are currently high and, although the Group is compliant with local COVID-19 protocols, there can be no certainty that
COVID-19 will not impact on future production.
The new plant is nearing completion, and although the Board is confident that it will soon be operating at full capacity,
there remains the risk that the completion of the new plant is delayed and that production levels do not increase at
the expected levels which may require higher levels of working capital than expected.
29
BlueRock Diamonds Plc
(Registration Number 08248437)
Consolidated and Separate Annual Financial Statements for the year ended 31 December 2020
Directors' Report
After review of these uncertainties, the Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future, based on its assessment of the forecasts,
principal risks and uncertainties and mitigating actions considered available to the Group in the event of downside
scenarios. Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements.
However, at the date of approval of these financial statements, uncertainties relating to completing the issue of the
CLN to Teichmann, the potential future impact of COVID-19 and the completion of the new plant, which could result
in additional funding being required, indicate the existence of a material uncertainty which may cast significant doubt
about the Group and parent Company's ability to continue as a going concern and therefore it may be unable to
realise its assets and discharge its liabilities in the normal course of business.
The financial statements do not include the adjustments that would result if the Group and parent Company were
unable to continue as a going concern.
3. Events after reporting date
Refer to note 28 of the Consolidated Financial Statements for a detailed discussion of events that occurred after the
reporting date.
4. Directors' interest in contracts
The holdings of the Directors and their related parties in the share capital of the Group are as follows:
Number of ordinary
shares
Percentage of
share capital
Number of
ordinary
shares subject
to share
options
Percentage
of share
capital
subject to
share
options
21,274
112,285
144,285
24,285
-
0.15%
0.80%
1.02%
0.17%
0.00%
-
181,564
279,304
363,127
-
0.00%
1.29%
1.97%
2.54%
0.00%
T Leslie
D Facey
M Houston
AT Simbanegavi
RC Croll
Other than as disclosed above, none of the Directors, nor any persons connected with them, is interested in any
related financial product (as defined in the AIM Rules) whose value in whole or in part is determined directly or
indirectly by reference to the price of the ordinary shares, including a contract for difference or a fixed odds bet.
There are no outstanding loans granted or guarantees provided by any member of the Group to or for the benefit of
any of the Directors, nor are there any outstanding loans or guarantees provided by the Directors to or for the benefit
of the Group, other than what is disclosed in note 27.
Other than as disclosed in this Annual Report and Accounts, no Director has any interest, whether direct or indirect,
in any transaction which is or was unusual in its nature or conditions or significant to the business of the Group taken
as a whole and which was effected by the Group during the current or immediately preceding financial year, or during
any earlier financial year and which remains in any respect outstanding or unperformed.
In the case of those Directors or key Managers who have roles as Directors of companies which are not a part of the
Group, although there are no current conflicts of interest, it is possible that the fiduciary duties owed by those
Directors to companies of which they are Directors from time to time may give rise to conflicts of interest with the
duties owed to the Group. Except as expressly referred to in this Annual Report and Accounts, there are no potential
conflicts of interest between the duties owed by the Directors to the Group and their private duties or duties to third
parties.
30
BlueRock Diamonds Plc
(Registration Number 08248437)
Consolidated and Separate Annual Financial Statements for the year ended 31 December 2020
Directors' Report
5. Dividend
No dividend was declared or paid to shareholders during the year.
6. Directors
The directors of the company during the year and up to the date of this report are as follows:
Name
MJ Houston (Executive Chairman)
TG Leslie (Non-Executive Director)
DA Facey (Chief Financial Officer)
AT Simbanegavi (Chief Operating Officer)
RC Croll (Non-Executive Director)
7. Financial risk management
Nationality
British
British
British
Zimbabwean
British
Appointment date
2 November 2018
4 September 2013
1 December 2017
19 February 2020
21 May 2021
Details of the Group’s financial risk management is set out in note 29.
8. Significant shareholders as at the date of this report
Other than as set out below, the Group is not aware of any holding in the Group’s ordinary share capital which
amounts to 3 per cent or more of the Group’s issued share capital:
Name
Teichmann Company Limited and associated
companies
Spreadex Limited
Edale Europe Absolute
Holding
Shares which could be
acquired through other
financial instruments
Number of
ordinary
shares
Percentage
of share
capital
25.79%
-
0.00%
Percentage of
share capital
Number of
ordinary
shares
3,641,271
905,224
815,000
6.41%
5.77%
574,200
404,069
4.07%
2.86%
The Takeover Panel executive has opined that a concert party exists which comprises of the following members with
a current aggregate shareholding of 26.80%. Details of which are:
Name
Teichmann Group:
Teichmann Company Limited
T-Three Drilling (Mauritius) Limited
Gold Finger Investments Ltd
M Houston
C Holton
B Nicolay
A McKinney
Total
Holding
Number of
ordinary
shares
Percentage of
share capital
2,480,262
971,624
26,000
144,285
65,354
43,612
54,419
3,785,556
17.56%
6.88%
0.18%
1.02%
0.46%
0.31%
0.39%
26.80%
M Houston is not considered to be part of the Teichmann Group, but is considered part of the concert party.
31
BlueRock Diamonds Plc
(Registration Number 08248437)
Consolidated and Separate Annual Financial Statements for the year ended 31 December 2020
Directors' Report
9. Auditor
BDO LLP were the independent auditors for the year under review.
10. Annual General Meeting
The Annual General Meeting will take place on 22 July 2021 at 10.00a.m. (BST).
11. Directors' and officers' insurance
The Group maintains insurance cover for all Directors and Officers of Group Companies against liabilities which may
be incurred by them while acting as Directors and Officers.
12. Directors' remuneration
Details of the remuneration of the Directors for the financial year are set out below:
MJ Houston - received fees of £59,500 (2019: £55,417)
TG Leslie - received fees of £19,167 (2019: £10,000)
D Facey - received fees of £59,000 (2019: £56,000)
AT Simbanegavi - received fees of £27,500 (2019: £nil)
A Waugh - received fees of £nil (2019: £40,000) *
* A Waugh resigned as director on 18 September 2019
Details of share options granted to the Directors during the financial year are set out below:
Date of grant
Number of
shares
Contracual life Exercise
price
MJ Houston
D Facey
AT Simbanegavi
18/02/2020
18/02/2020
18/02/2020
181,564
116,404
297,967
5 years
5 years
5 years
85p
85p
85p
13. Directors' responsibility statement
Directors' responsibility
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the
Directors have elected to prepare the Group and Company Financial Statements in accordance with international
accounting standards in conformity with the requirements of the Companies Act 2006. Under company law the
Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of
the state of affairs of the Group and Company and of the profit or loss of the Group for that period. The Directors are
also required to prepare Financial Statements in accordance with the rules of the London Stock Exchange for
companies trading securities on AIM.
32
BlueRock Diamonds Plc
(Registration Number 08248437)
Consolidated and Separate Annual Financial Statements for the year ended 31 December 2020
Directors' Report
In preparing these Financial Statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
state whether they have been prepared in accordance with international accounting standards in conformity with
•
the requirements of the Companies Act 2006, subject to any material departures disclosed and explained in the
financial statements; and
•
Company will continue in business.
prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the Financial Statements comply with the requirements of the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the Annual Report and the Financial Statements are made available on a
website. Financial statements are published on the Company's website in accordance with legislation in the United
Kingdom governing the preparation and dissemination of Financial Statements, which may vary from legislation in
other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity of the Financial Statements contained therein.
On behalf of the Board
Michael Houston
Executive Chairman
30 June 2021
33
Independent auditor’s report to the members of BlueRock
Diamonds plc
Opinion on the financial statements
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the
Parent Company’s affairs as at 31 December 2020 and of the Group’s loss for the year
then ended;
the Group financial statements have been properly prepared in accordance with
international accounting standards in conformity with the requirements of the Companies
Act 2006;
the Parent Company financial statements have been properly prepared in accordance
with international accounting standards in conformity with the requirements of the
Companies Act 2006 and as applied in accordance with the provisions of the Companies
Act 2006; and
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements of BlueRock Diamonds plc (the ‘Parent Company’) and
its subsidiaries (the ‘Group’) for the year ended 31 December 2020 which comprise the
Consolidated and Company Statements of Financial Position, Consolidated Statement of Profit
or Loss and Other Comprehensive Income, Consolidated Statement of Changes in Equity -
Group, Statement of Changes in Equity - Company, Consolidated and Company Statements of
Cash Flows and notes to the financial statements, including a summary of significant accounting
policies. The financial reporting framework that has been applied in their preparation is applicable
law and international accounting standards in conformity with the requirements of the Companies
Act 2006 and, as regards the Parent Company financial statements, as applied in accordance
with the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We remain independent of the Group and the Parent Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
Material uncertainty related to going concern
We draw attention to note 1 in the financial statements which highlights that the Group and Parent
Company’s liquidity is dependent on the completion of issue of a convertible loan note which
requires shareholder and regulatory approvals. Additionally, the potential impact on the Group’s
business of the COVID-19 pandemic and the risk of delays in commissioning and increased
production from the new plant may result in the need to raise additional funds should such adverse
scenarios materialise. As stated in note 1, these events or conditions, along with other matters as
set out in note 1, indicate that a material uncertainty exists that may cast significant doubt on the
Group and Parent Company’s ability to continue as a going concern. Our opinion is not modified
in respect of this matter.
34
In auditing the financial statements, we have concluded that the Directors’ use of the going
concern basis of accounting in the preparation of the financial statements is appropriate. We have
highlighted going concern as a key audit matter based on our assessment of risk and the effect
on our audit strategy.
Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to
continue to adopt the going concern basis of accounting and in response to the key audit matter
included the following testing:
We discussed the impact that COVID-19 has had on the Group with Management and
the Audit Committee, including the impact of the Government restrictions implemented in
South Africa and their assessment of any future risks and uncertainties that are relevant
to the Group’s business model and operations. We compared this to our own assessment
of risks and uncertainties based on our understanding of the business and diamond
mining sector.
As part of our site visit, we inspected and discussed the progress of the construction of
the new plant with Management, including key operational Management on-site at the
mine in South Africa and the Audit Committee and their assessment of any future risks
and uncertainties.
We reviewed Management’s reverse stress testing analysis to determine the point at
which liquidity breaks and considered whether such scenarios, including significant
reductions in diamond prices, sustained production interruption or delays to sale tenders,
were possible given the potential impacts of COVID-19 and the level of uncertainty.
We critically assessed Management’s base case cash flow forecasts, which had been
approved by the Board, and challenged Management’s assumptions in respect of
diamond process, production, operating costs and capital expenditure. In doing so, we
considered factors such as past performance, trading to date in H1 FY 2021 and external
market data.
We evaluated the forecast production levels against post year end actuals and
considered the impact of recent plant upgrades on the achievability of forecasts.
We inspected Heads of Terms for the proposed loan facility from one of the Company’s
shareholders and considered the effect of the conditions precedent associated with the
facility. We made inquiries of Management and the Audit Committee as to the basis upon
which they anticipate such funding being approved by the shareholders and receipt of
regulatory approvals.
We reviewed and considered the adequacy of the disclosure within the financial
statements relating to the Directors’ assessment of the going concern basis of
preparation.
Our responsibilities and the responsibilities of the Directors with respect to going concern are
described in the relevant sections of this report.
35
Overview
Coverage
Key audit matters
Materiality
100% (2019: 100%) of Group profit before tax
100% (2019: 100%) of Group revenue
100% (2019: 100%) of Group total assets
Going concern
Carrying value of
mining assets
Group financial statements as a whole
2020
Yes
Yes
2019
Yes
Yes
£58,000m (2019:£62,000m) based on 1.5% (2019:1.5% of
revenue
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment,
including the Group’s system of internal control, and assessing the risks of material misstatement
in the financial statements. We also addressed the risk of management override of internal
controls, including assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
Whilst BlueRock Diamonds plc is a Company registered in England and listed on the Alternative
Investment Market in the UK, the Group’s principal operations are located in South Africa. In
approaching the audit, we considered how the Group is organised and managed. We assessed
there to be two significant components, being the Parent Company and Kareevlei Mining Limited
in South Africa, which includes the Group’s mining operations. The remaining component was
considered non-significant to the Group audit and we performed analytical review procedures in
respect of this component.
A full scope audit for Group reporting purposes was performed on the significant component
Kareevlei Mining Limited by a local BDO member firm. BDO LLP performed a full scope audit of
the Parent Company, specific procedures over key risk areas for the significant component
including the Key Audit Matters detailed above and performed the audit of the consolidation.
Our involvement with component auditors
For the work performed by component auditors, we determined the level of involvement needed
in order to be able to conclude whether sufficient appropriate audit evidence has been obtained
as a basis for our opinion on the Group financial statements as a whole. Our involvement with
component auditors included the following:
We held planning meetings remotely with the component auditors and local management
at Kareevlei Mining Limited.
Detailed Group reporting instructions were sent to the component auditors, which
included the significant areas to be covered by their audit, and set out the information to
be reported to the Group audit team.
We received and reviewed Group reporting submissions and performed a review of the
component auditors’ file. Our review was performed remotely using our online audit
software as a result of travel restrictions due to COVID-19.
36
We held clearance meetings remotely with the component auditors and local
management to discuss significant audit and accounting issues and judgements.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud) that we identified, including
those which had the greatest effect on: the overall audit strategy, the allocation of resources in
the audit, and directing the efforts of the engagement team. In addition to the matter described in
the Material uncertainty related to going concern section of our report, we have determined the
matter below to be the key audit matter to be communicated in our report. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
How the scope of our audit addressed
the key audit matter
We reviewed and challenged
Management’s impairment indicator
assessment and confirmed it was
performed in accordance with relevant
accounting standards in order to determine
whether there were any indicators of
impairment.
As part of our impairment indicator review,
we obtained and reviewed Management’s
life of mine plan to confirm that significant
headroom existed over the asset carrying
value as part of our assessment of
potential impairment indicators.
In performing our review:
We compared the current year financial
performance against budget to identify
potential impairment indicators and to
evaluate the accuracy of Management
forecasts. Where performance was
below budget we considered the
underlying drivers and the extent to
which they impacted the quality of
forward estimates.
We compared the Group’s market
capitalisation at year end to its net
assets.
We reviewed the Competent Person’s
Report to support the mineral resource
included in the life of mine plan and
performed an assessment of the
independence, objectivity and
competence of the expert.
Key audit matter
Carrying
value of
mining
assets
The Group's Kareevlei project
non-current assets, as
disclosed further in notes 5, 6
and 7 represents the Group’s
significant assets as at 31
December 2020. Management
and the Board are required to
assess whether there are any
potential impairment triggers
which would indicate that the
carrying value of the assets at
31 December 2020 may not be
recoverable. As detailed in
note 3.1.4, there are
judgements and inherent
uncertainties involved in
assessing the mining assets
for indicators of impairment.
Management have performed
an impairment indicator review
under applicable accounting
standards and have not
identified any indicators of
potential impairment.
We determined the carrying
value of mining assets to be a
key audit matter given the
significant judgements required
in respect of the assessment of
indicators of impairment.
37
As part of our review of the life of mine
plan, we evaluated the appropriateness
of key estimates and assumptions used
by Management, including diamond
pricing, production, operating costs and
capital expenditure, against market
data and historical trends. We reviewed
Management’s sensitivity analysis and
performed additional sensitivity
analysis on key assumptions such as
diamond pricing to confirm that the
forecast headroom is not sensitive to
reasonably possible changes in the
assumptions.
Key observations
We found Management’s judgements used
in their assessment of indicators of
impairment to be appropriate.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating
the effect of misstatements. We consider materiality to be the magnitude by which misstatements,
including omissions, could influence the economic decisions of reasonable users that are taken
on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed
materiality, we use a lower materiality level, performance materiality, to determine the extent of
testing needed. Importantly, misstatements below these levels will not necessarily be evaluated
as immaterial as we also take account of the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their effect on the financial statements as a
whole.
Based on our professional judgement, we determined materiality for the financial statements as
a whole and performance materiality as follows:
Component
Group
Materiality
£58,000 (2019: £62,000) 1.5% of Revenue (2019: 1.5% of Revenue).
Basis for materiality
We consider revenue to be the most
significant determinant of the Group’s
financial performance used by shareholders
given the focus on increasing production.
Parent company
£35,000 (2019: £43,000) Capped at 60% of group materiality (2019:
70% of group materiality) given
the
assessment of the components aggregation
risk.
Performance materiality
Performance materiality was set at 75% (2019: 75%) of the above materiality levels for the group
and the parent company being £43,500 and £26,250 (2019: £46,500 and £32,250) respectively.
The level of performance materiality was set after considering a number of factors including the
38
expected value of known and likely misstatements and Management’s attitude towards proposed
misstatements.
Component materiality
Significant components of the group were audited to a lower level of materiality of between
£35,000 and £52,200 (2019: £43,000 and £52,000). In the audit of each component, we further
applied performance materiality levels of 75% of the component materiality to our testing to
ensure that the risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences
in excess of £2,900 (2019: £1,200). We also agreed to report differences below this threshold
that, in our view, warranted reporting on qualitative grounds.
Other information
The Directors are responsible for the other information. The other information comprises the
information included in the annual report and financial statements other than the financial
statements and our auditor’s report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the
audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions
and matters as described below.
Strategic
report
Directors’
report
and
In our opinion, based on the work undertaken in the course of the audit:
the information given in the Strategic report and the Directors’ report for
the financial year for which the financial statements are prepared is
consistent with the financial statements; and
the Strategic report and the Directors’ report have been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent
Company and its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the Directors’ report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
Matters
on
which we are
to
required
report
by
exception
39
the Parent Company financial statements are not in agreement with
the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are not
made; or
we have not received all the information and explanations we require
for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibility statement, the Directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the Directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and
the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the Directors
either intend to liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We
design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the legal and regulatory frameworks that are applicable
to the Group and the industry in which it operates, and considered the risk of acts by the
Group that were contrary to applicable laws and regulations, including fraud. We
considered the significant laws and regulations to be the Companies Act 2006, tax
legislation and the various Mining Regulations in South Africa.
Based on our understanding we designed our audit procedures to identify non-
compliance with such laws and regulations impacting the Group. Our procedures involved
making enquiries of Management and those charged with governance to understand their
awareness of any non-compliance of laws or regulations, inquiring about the policies that
have been established to prevent non-compliance with laws and regulations by officers
and employees of the Group, inquiring about the Group’s methods of enforcing and
monitoring compliance with such policies and reviewing board minutes to identify any
instances of non-compliance.
We assessed the susceptibility of the Group’s financial statements to material
misstatement, including how fraud might occur by obtaining an understanding of the
controls that the Group has established to address risks identified by the entity, or that
40
otherwise seek to prevent, deter or detect fraud. We considered the significant fraud risk
areas to be in relation to revenue recognition and management override of controls.
We addressed the fraud risk in relation to revenue recognition, testing a sample to
supporting documentation, including testing the cut-off of revenue transactions in the
period proceeding and preceding year end.
We addressed the risk of management override of internal controls, including testing a
risk based selections of journals and evaluating whether there was evidence of bias in
Management’s estimates (Refer to the ‘key audit matters’ section) that represented a
material misstatement due to fraud.
We also communicated relevant identified laws and regulations and potential fraud risks
to the component audit team and all engagement team members and remained alert to
any indications of fraud or non-compliance with laws and regulations throughout the audit.
In respect of the component auditors, we communicated specific procedures to be
performed in relation to testing the appropriateness of journal entries made throughout
the year by applying specific criteria to select journals which may be indicative of possible
irregularities and fraud and also by assessing the judgements made by Management
when making key accounting estimates and judgements, and challenging Management
on the appropriateness of these judgements. As part of our Group audit, we performed a
review of the component auditors’ file, which included the areas detailed above.
Our audit procedures were designed to respond to risks of material misstatement in the financial
statements, recognising that the risk of not detecting a material misstatement due to fraud is
higher than the risk of not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery, misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the further removed non-compliance with laws
and regulations is from the events and transactions reflected in the financial statements, the less
likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s
report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with
Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that
we might state to the Parent Company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Parent Company and the Parent
Company’s members as a body, for our audit work, for this report, or for the opinions we have
formed.
Ryan Ferguson (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
30 June 2021
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
41
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Consolidated and Company Statements of Financial Position
Figures in £
Assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Mining assets
Investments in subsidiaries
Other receivables
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents (including restricted
cash of £214,499 (2019: £223,914))
Total current assets
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Accumulated loss
Other reserves
Total equity attributable to owners of parent
Non-controlling interests
Total equity
Liabilities
Non-current liabilities
Provisions
Borrowings
Lease liabilities
Total non-current liabilities
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Total current liabilities
Notes
Group
2020
Group
2019
Company
2020
Company
2019*
5
6
7
8
10
9
10
11
12
12
13
8
14
16
6
15
16
6
2,344,335 `
520,795
560,332
-
425,319
3,850,781
778,920
455,381
406,068
-
344,442
1,984,811
-
-
-
5
10,360,032
10,360,037
-
-
-
5
8,052,049
8,052,054
458,308
162,163
569,962
837,347
56,703
389,849
-
136,190
537,525
-
36,676
378,062
1,190,433
1,283,899
673,715
414,738
5,041,214
3,268,710
11,033,752
8,466,792
454,333
6,885,796
(7,223,054)
3,393,154
3,510,229
162,900
4,147,980
(5,120,207)
3,118,484
2,309,157
454,333
6,885,796
(473,817)
3,081,203
9,947,515
162,900
4,147,980
(79,444)
3,100,761
7,332,197
(2,261,809)
1,248,420
(1,764,910)
544,247
-
9,947,515
-
7,332,197
454,197
828,300
551,743
1,834,240
1,237,563
696,206
24,785
1,958,554
302,989
916,489
454,508
1,673,986
880,584
156,698
13,195
1,050,477
-
465,601
-
465,601
111,826
508,810
-
620,636
-
916,490
-
916,490
61,407
156,698
-
218,105
Total liabilities
3,792,794
2,724,463
1,086,237
1,134,595
Total equity and liabilities
5,041,214
3,268,710
11,033,752
8,466,792
* The comparative figures have been restated. Refer to note 10 and 30 for details.
These financial statements were approved by the Board and authorised for issue on 30 June 2021
Michael Houston
Executive Chairman
42
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Group
2020
Figures in £
Notes
Revenue from contracts with customers
Other income
Administrative expenses
Operating expenses
Other gains
Loss from operating activities
Finance income
Finance costs
Other losses
Loss before taxation
Income tax expense
Loss for the year
Loss for the year attributable to:
Owners of Parent
Non-controlling interest
17
18
19
20
21
18
22
Other comprehensive loss net of tax
Components of other comprehensive income that may be reclassified
to profit or loss
Gains on exchange differences on translation
Total other comprehensive income
Total comprehensive loss
Comprehensive loss attributable to:
Owners of parent
Non-controlling interests
Group
2019
4,073,853
911
(128,326)
(4,418,605)
-
(472,167)
25,460
(192,350)
(45,187)
(684,244)
3,601,819
1,062
(192,137)
(5,683,454)
853
(2,271,857)
24,209
(248,022)
(493,138)
(2,988,808)
-
(2,988,808)
-
(684,244)
(2,388,532)
(600,276)
(2,988,808)
(510,722)
(173,522)
(684,244)
397,605
397,605
32,297
32,297
(2,591,203)
(651,947)
(2,094,304)
(496,899)
(2,591,203)
(486,822)
(165,125)
(651,947)
Basic and diluted loss per share
Basic loss per share
24
(0.35)
(0.21)
As permitted by section 408 of the Companies Act 2006, the parent company’s profit and loss account has not been
included in these financial statements. The loss after taxation for the financial year for the parent company was
£680,058 (2019: Loss of £16,850).
43
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Consolidated Statement of Changes in Equity - Group
Figures in £
Share capital
Share
premium
Capital
redemption
reserve
Foreign
currency
translation
reserve
Share-based
payment
reserve
Accumulated
loss
Attributable
to owners of
the parent
Non-
controlling
interests
Total
Balance at 1 January 2019
44,352
3,460,309
2,003,010
(6,177)
333,837
(4,609,485)
1,225,846
(1,599,785)
(373,939)
Changes in equity
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Issue of equity
Share issue expenses
Share-based payments
Balance at 31 December 2019
-
-
-
118,548
-
-
162,900
-
-
-
1,450,452
(113,214)
(649,567)
4,147,980
-
-
-
-
-
-
2,003,010
-
23,900
23,900
-
-
-
17,723
-
-
-
-
-
763,914
1,097,751
(510,722)
-
(510,722)
-
-
-
(5,120,207)
(510,722)
23,900
(486,822)
1,569,000
(113,214)
114,347
2,309,157
(173,522)
8,397
(165,125)
-
-
-
(1,764,910)
(684,244)
32,297
(651,947)
1,569,000
(113,214)
114,347
544,247
Balance at 1 January 2020
162,900
4,147,980
2,003,010
17,723
1,097,751
(5,120,207)
2,309,157
(1,764,910)
544,247
Changes in equity
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Issue of equity
Share issue expenses
Share-based payments
Transfer lapsed options to accumulated loss
Balance at 31 December 2020
Notes
-
-
-
291,433
-
-
-
454,333
12
-
-
-
2,870,501
(132,685)
-
-
6,885,796
12
-
-
-
-
-
-
-
2,003,010
13
-
294,228
294,228
-
-
-
-
311,951
13
-
-
-
-
-
266,127
(285,685)
1,078,193
13
(2,388,532)
-
(2,388,532)
-
-
-
285,685
(7,223,054)
(2,388,532)
294,228
(2,094,304)
3,161,934
(132,685)
266,127
-
3,510,229
(600,276)
103,377
(496,899)
-
-
-
-
(2,261,809)
(2,988,808)
397,605
(2,591,203)
3,161,934
(132,685)
266,127
-
1,248,420
44
BlueRock Diamonds Plc
(Registration Number 08248437)
Consolidated and Separate Financial Statements for the year ended 31 December 2020
Statement of Changes in Equity - Company
Figures in £
Balance at 1 January 2019
Changes in equity
Loss for the year
Total comprehensive income
Issue of equity
Share issue expenses
Share-based payments
Balance at 31 December 2019
Balance at 1 January 2020
Changes in equity
Loss for the year
Total comprehensive income
Issue of equity
Share issue expenses
Share-based payments
Transfer lapsed options to accumulated loss
Balance at 31 December 2020
Share capital
Share
premium
Capital
redemption
reserve
Share-based
payment
reserve
Accumulated
loss
Total
44,352
3,460,309
2,003,010
333,837
(62,594)
5,778,914
-
-
118,548
-
-
162,900
-
-
1,450,452
(113,214)
(649,567)
4,147,980
-
-
-
-
-
2,003,010
-
-
-
-
763,914
1,097,751
(16,850)
(16,850)
-
-
-
(79,444)
(16,850)
(16,850)
1,569,000
(113,214)
114,347
7,332,197
162,900
4,147,980
2,003,010
1,097,751
(79,444)
7,332,197
-
-
291,433
-
-
-
454,333
12
-
-
2,870,501
(132,685)
-
-
6,885,796
12
-
-
-
-
-
-
2,003,010
13
-
-
-
-
266,127
(285,685)
1,078,193
13
(680,058)
(680,058)
-
-
-
285,685
(473,817)
(680,058)
(680,058)
3,161,934
(132,685)
266,127
-
9,947,515
Note
45
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Consolidated and Company Statements of Cash Flows
Figures in £
Cash flows used in operations
Cash used in operations
Net cash flows used in operations
Cash flows used in investing activities
Proceeds from sales of property, plant and
equipment
Purchase of property, plant and equipment
Increase in loan advanced to group company
Movement in rehabilitation guarantee
Cash flows used in investing activities
Cash flows from financing activities
Proceeds from issuing shares (net of fees:
£132,685 (2019: £108,214))
Repayments of borrowings
Repayments of lease liabilities
Increase in restricted cash
Cash flows from financing activities
Net increase in cash and cash equivalents
Exchange rate changes on cash and cash
equivalents
Net increase / (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
year
Cash and cash equivalents at end of year
Notes
Group
2020
Group
2019
Company
2020
Company
2019
26
(1,025,363)
(1,025,363)
(362,022)
(362,022)
(530,401)
(530,401)
(488,330)
(488,330)
10
10
26
26
2,889
-
-
-
(1,268,083)
-
(101,888)
(1,367,082)
(569,367)
-
(286,984)
(856,351)
-
(2,030,802)
-
(2,030,802)
-
(715,868)
-
(715,868)
2,895,784
1,448,786
2,895,784
1,448,786
(245,237)
(66,380)
(8,811)
2,575,356
(142,262)
(63,545)
(13,786)
1,229,193
(156,892)
-
(8,811)
2,730,081
(142,262)
-
(13,786)
1,292,738
182,911
6,617
10,820
(13,066)
168,878
-
88,540
-
189,528
(2,246)
168,878
88,540
165,935
168,181
154,148
65,608
11
355,463
165,935
323,026
154,148
46
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Accounting Policies
1. Basis of preparation
These Consolidated Financial Statements have been prepared in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006. These Consolidated Financial Statements have been
prepared under the historical cost convention except as noted below. They are presented in British Pounds Sterling
(Pounds) which is also the functional currency of the Company.
BlueRock Diamonds Plc is incorporated in England and Wales with company number 08248437 with registered
office, 4th Floor, Reading Bridge House, George Street, Reading, Berkshire, RG1 8LS.
The preparation of financial statements in conformity with International Financial Reporting Standards requires the
use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of
applying the group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the consolidated and separate financial statements are disclosed
in note 3.
Going concern
The Group has prepared forecasts covering the period to 31 December 2022. Appropriate diligence has been
applied by the directors who believe that the forecasts are prepared on a realistic basis using the best available
information. The Group had cash balances of £156,000, a further £202,000 due from Teichmann (in accordance with
the terms of their February 2021 share subscription), together with approximately 2,133 carats of diamonds and 267
carats of diamonds held in concentrate form and no bank debt at 28 June 2021. However, there remains a balance of
£550,095 on the loan for some of the new plant equipment. The forecasts include repaying 50% of the existing
Convertible Loans in October 2021 (£462,500) and assume the Group will exercise the option to extend the
remaining 50% until October 2022. The forecasts also assume that the Group will receive the amount due under the
Teichmann Group loan note as detailed below.
Heads of Terms have been agreed with the Teichmann Group for a £1.61m loan note with the intention that this will
be replaced by a convertible loan note ('CLN'). Under the Heads of Terms, the initial loan will have a short term
expiring on 31 August 2021. The funds are due to be received in 12 equal monthly instalments and the first payment
was received in June 2021. It is expected that the initial
loan (of which only three instalments will have been
received) will be refinanced through the future issue of the CLN to Teichmann. The proposed CLN will not be issued
In addition,
by the Company until shareholders have approved additional Company authorities to issue new shares.
the Company is applying to 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"). In the event that the CLN is not issued by 31
loan, BlueRock will be required to repay the higher of a) all amounts
August 2021, being the term of the initial
invested by Teichmann plus the interest on the entire amount of the loan that would have accrued over a three and a
half year period; or b) all amounts invested by Teichmann plus the market value of such shares as would have been
issued should the CLN have been issued, been converted and run for its full term less the principal amount invested.
Therefore, until the CLN has been issued, there remains an uncertainty regarding the receipt of the remaining funds
due under the Teichmann Group Loan, and the potential of repayments being due to Teichmann.
The COVID-19 pandemic resulted in the mine being forced to close for a period of 46 days in 2020 plus a weakening
in the market value of diamonds, both of which had an impact on the Group’s operating results for FY2020. Although
the Board is not anticipating any future impact of the severity seen in 2020, in making its going concern assessment,
the Board has considered the increased level of uncertainty resulting from COVID-19. Cases in the Northern Cape
are currently high and, although the Group is compliant with local COVID-19 protocols, there can be no certainty that
COVID-19 will not impact on future production.
The new plant is nearing completion, and although the Board is confident that it will soon be operating at full capacity,
there remains the risk that the completion of the new plant is delayed and that production levels do not increase at
the expected levels which may require higher levels of working capital than expected.
47
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Accounting Policies
Basis of preparation continued...
After review of these uncertainties, the Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future, based on its assessment of the forecasts,
principal risks and uncertainties and mitigating actions considered available to the Group in the event of downside
scenarios. Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements.
However, at the date of approval of these financial statements, uncertainties relating to completing the issue of the
CLN to Teichmann, the potential future impact of COVID-19 and the completion of the new plant, which could result
in additional funding being required, indicate the existence of a material uncertainty which may cast significant doubt
about the Group and parent Company's ability to continue as a going concern and therefore it may be unable to
realise its assets and discharge its liabilities in the normal course of business.
The financial statements do not include the adjustments that would result if the Group and parent Company were
unable to continue as a going concern.
48
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Accounting Policies
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated and separate annual financial
statements are set out below. These policies have been consistently applied to all the years presented, unless
otherwise stated.
2.1 Consolidation
Subsidiaries
Subsidiaries are all entities over which the group has control. The group controls an entity when the group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the group. They are deconsolidated from the date that control ceases.
The group applies the acquisition method to account for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of
the acquiree and the equity interests issued by the group. The consideration transferred includes the fair value of any
asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially at their fair value at the acquisition
date. The group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either
at
the recognised amounts of acquiree's
fair value or at
identifiable net assets.
the non-controlling interest's proportionate share of
Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances and unrealised gains on transactions between group companies are
eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been
adjusted to conform with the group's accounting policies.
Disposal of subsidiaries
When the group ceases to have control of a subsidiary any retained interest in the entity is remeasured to its fair
value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is
the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint
venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect
of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean
that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
2.2 Foreign currency
Functional and presentation currencies
The consolidated and separate financial statements have been presented in British Pound Sterling (Pounds), which
is also the functional currency of the company. The functional currency of the South African subsidiaries is the South
African Rand.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in profit or loss.
49
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Accounting Policies
Summary of significant accounting policies continued...
Group companies
The results and financial position of all the group's entities that have a functional currency different from the
presentation currency are translated into the presentation currency as follows:
• Assets and liabilities for each statement of financial position presented are translated at the closing rate at the
•
reporting date;
Income and expenses for each statement of comprehensive income are translated at average exchange rates
(unless this average is not a reasonable approximation of the exchange rates at the dates of the transactions, in
which case income and expense items are translated at the exchange rates at the dates of the transactions);
and
• All resulting exchange differences are recognised in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and
liabilities of the foreign operation and translated at the closing rate at each reporting date.
2.3 Property, plant and equipment
Recognition
Property, plant and equipment is recognised as an asset when:
•
•
it is probable that future economic benefits associated with the asset will flow to the entity; and
the cost of the asset can be measured reliably.
Initial measurement
An item of property, plant and equipment that qualifies for recognition as an asset is initially measured at its cost.
The cost of an item of property, plant and equipment includes:
•
its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts
and rebates.
• any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of
•
operating in the manner intended by management.
the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located,
the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the
item during a particular period for purposes other than to produce inventories during that period.
Subsequent measurement - Cost model
After initial recognition, property, plant and equipment is measured at cost less any accumulated depreciation and
any accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure incurred on items of property, plant and equipment is only capitalised to the extent that such
expenditure enhances the value or previous capacity of those assets. Repairs and maintenance not deemed to
enhance the economic benefit or service potential of items of property, plant and equipment are expensed as
incurred.
Where the entity replaces parts of an asset, it derecognises the part of the asset being replaced and capitalises the
new component.
Stripping costs
Costs associated with removal of waste overburden are classified as stripping costs.
50
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Accounting Policies
Summary of significant accounting policies continued...
Stripping activities that are undertaken during the production phase of a surface mine may create two benefits, being
either the production of inventory or improved access to the ore to be mined in the future. Where the benefits are
realised in the form of inventory produced in the period, the production stripping costs are accounted for as part of
the cost of producing those inventories. Where production stripping costs are incurred and where the benefit is the
creation of mining flexibility and improved access to ore to be mined in the future, the costs are recognised as a non-
current asset, referred to as a ‘stripping activity asset’, if:
(a) future economic benefits (being improved access to the orebody) are probable;
(b) the component of the orebody for which access will be improved can be accurately identified; and
(c) the costs associated with the improved access can be reliably measured.
If all the criteria are not met, the production stripping costs are charged to the statement of profit or loss as operating
costs. The stripping activity asset is initially measured at cost, which is the accumulation of costs directly incurred to
perform the stripping activity that improves access to the identified component of ore, plus an allocation of directly
attributable overhead costs. If incidental operations are occurring at the same time as the production stripping
activity, but are not necessary for the production stripping activity to continue as planned, these costs are not
included in the cost of the stripping activity asset. If the costs of the stripping activity asset and the inventory
produced are not separately identifiable, a relevant production measure is used to allocate the production stripping
costs between the inventory produced and the stripping activity asset. The stripping activity asset is subsequently
amortised over the expected useful life of the identified component of the orebody that became more accessible as a
result of the stripping activity.
The expected average stripping ratio over the average life of the area being mined is used to amortise the stripping
activity. As a result, the stripping activity asset is carried at cost less amortisation and any impairment losses.
The average life of area cost per tonne is calculated as the total expected costs to be incurred to mine the orebody
divided by the number of tonnes expected to be mined. The average life of area stripping ratio and the average life of
area cost per tonne are recalculated annually in light of additional knowledge and changes in estimates. Changes in
the stripping ratio are accounted for prospectively as a change in estimate.
Depreciation
Depreciation of an asset commences when it is available for use, and ceases at the earlier of the date that the asset
is classified as held for sale, or the date that the asset is derecognised.
Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the
item is depreciated separately.
The depreciation charge for each period is recognised in profit or loss unless the asset enhances another asset
under construction whereby it is included in the carrying amount of another asset. The depreciable amount of an
asset shall be allocated on a systematic basis over its useful life. The depreciable amount of an asset is determined
after deducting its residual value.
Residual values, useful lives and depreciation methods are reviewed at each financial year end. Where there are
significant changes in the expected pattern of economic consumption of the benefits embodied in the asset, the
relevant changes will be made to the residual values and depreciation rates, and the change will be accounted for as
a change in accounting estimate.
51
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Accounting Policies
Summary of significant accounting policies continued...
The measurement base, useful life or depreciation rate as well as the depreciation method for all major classes of
assets are as follows:
Asset class
Mine infrastructure
Leasehold improvements
Plant and Machinery
Measurement base
Cost
Cost
Cost
Motor vehicles
Cost
Method
Units of production
Term of lease
3-5 years straight line
basis
5 years straight line
basis
Units of production method
When a units-of-production basis is used, applicable to deferred stripping, mining rehabilitation assets and mining
rights, the relevant assets are depreciated at a rate determined as the tonnes of ore mined (typically production
facility assets) from the relevant orebody section, divided by the Group’s estimate of ore tonnes held in reserves and
resources which have sufficient geological and geophysical certainty and are economically viable. The relevant
reserves and resources are matched to the existing assets which will be utilised for their extraction. The assets
depreciated in the units-of-production method are existing assets. Future capital expenditure is only subject to
depreciation over remaining resources once incurred. The Group depreciates its assets according to the relevant
sections of the orebody over which they will be utilised.
Impairments
Whenever events or changes in circumstance indicate that the carrying amount of an asset may not be recoverable
an asset is reviewed for impairment. This includes mining assets, property, plant and equipment. A review involves
determining whether the carrying amounts are in excess of their recoverable amounts. An asset’s recoverable
amount is determined as the higher of its fair value less costs of disposal and its value in use. Such reviews are
undertaken on an asset-by-asset basis, except where assets do not generate cash flows independent of other
assets, in which case the review is undertaken on a cash generating unit basis.
If the carrying amount of an asset exceeds its recoverable amount an asset’s carrying value is written down to its
estimated recoverable amount (being the higher of the fair value less cost to sell and value in use) if that is less than
the asset’s carrying amount. Any change in carrying value is recognised in the statement of comprehensive income.
Derecognition
The carrying amount of an item of property, plant and equipment is derecognised when the asset is disposed of or
when no future economic benefits are expected from its use or disposal. The gain or loss arising from the
derecognition of an item of property, plant and equipment is included in profit or loss when the item is derecognised.
the consolidated statement of profit or loss and other
Gains are classified as other gains on the face of
comprehensive income.
2.4 Mining rights
Mining rights are recognised at cost, including any directly attributable transaction costs. The amortisation charge for
each period is recognised on a ‘units of production’ method.
2.5 Mining rehabilitation asset
The estimated cost of environmental rehabilitation is based on current legal requirements and existing technology. A
provision is raised based on the present value of the estimated costs. These costs are included in the cost of the
related asset. The capitalised assets are depreciated in accordance with the accounting policy for property, plant and
equipment.
52
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Accounting Policies
Summary of significant accounting policies continued...
2.6 Financial instruments
Financial assets and financial liabilities are recognised in the statement of financial position when the group becomes
a party to the contractual provisions of the instrument.
Financial assets
Financial assets are classified as either financial assets at amortised cost, at fair value through other comprehensive
income (“FVTOCI”) or at fair value through profit or loss (“FVPL”) depending upon the business model for managing
the financial assets and the nature of the contractual cash flow characteristics of the financial asset.
A loss allowance for expected credit losses is determined for all financial assets, other than those at FVPL, at the end
of each reporting period. The Group applies a simplified approach to measure the credit loss allowance for trade
receivables using the lifetime expected credit loss provision. The lifetime expected credit loss is evaluated for each
trade receivable taking into account payment history, payments made subsequent to year end and prior to reporting,
past default experience and the impact of any other relevant and current observable data. The group applies a
general approach on all other receivables classified as financial assets. The general approach recognises lifetime
expected credit losses when there has been a significant increase in credit risk since initial recognition.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
party. The Group derecognises financial liabilities when the Group’s obligations are discharged, cancelled or have
expired.
Other receivables
Other receivables are accounted for at amortised cost and are stated at
appropriate expected credit loss allowances.
their nominal value as reduced by
Trade and other receivables
Trade receivables are initially recorded at fair value and subsequently carried at amortised cost. Trade receivables do
not carry any interest and are stated at
loss
allowances for estimated recoverable amounts as the interest that would be recognised from discounting future cash
payments over the short payment period is not considered to be material.
their nominal value as reduced by appropriate expected credit
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid
investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes
in value. These are initially and subsequently recorded at fair value. Restricted cash represents amounts held in
escrow with the Group’s attorneys to meet any payments under the claims by a former director.
Trade and other payables
Trade and other payables are initially recorded at fair value and subsequently carried at amortised cost.
Included under trade and other payables are income in advance. Income received in advance refers to advances
received at year end in respect of future diamond sales. On tender award, revenue for the sale of diamonds are
recorded and the liability extinguished.
Borrowings excluding convertible loans
Borrowings are included as financial liabilities on the group balance sheet at the amounts drawn on the particular
facilities net of the unamortised cost of financing. Interest payable on those facilities is expensed as finance cost in
the period to which it relates.
53
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Accounting Policies
Summary of significant accounting policies continued...
Derivatives
Derivatives embedded in other financial instruments or other non-financial host contracts are treated as separate
derivatives when their risks and characteristics are not closely related to those of the host contract and the host
contract is not carried at fair value with unrealised gains or losses reported in profit or loss.
Changes in the fair value of derivative financial instruments are recognised in profit or loss as they arise.
Convertible loan notes
The convertible loan notes are accounted for under the guidance of IAS 32, Financial Instruments: Presentation.
These can either be treated as compound instruments or stand-alone instruments with an embedded derivative
relating to the conversion feature. When the instrument is treated as a compound instrument the fair value of the
liability portion of the convertible loan notes is determined using a market interest rate on an equivalent non-
convertible loan note. This amount is recorded as a liability on an amortised cost basis until extinguished on
conversion or maturity of the loan notes. The remainder of the proceeds are allocated to the conversion option, which
is recognised and included in shareholders' equity, net of tax effects and is not subsequently re-measured. In cases
where the criteria for compound instrument are not met, the host debt contract is valued initially at fair value and the
embedded derivative is separately carried at fair value through profit and loss.
A substantial modification of the terms of an existing financial
liability or a part of it, are accounted for as an
extinguishment of the original financial liability and the recognition of a new financial liability. The difference between
the carrying amount of a financial liability (or part of a financial liability) extinguished or transferred to another party
and the consideration paid, including any non‑cash assets transferred or liabilities assumed, are recognised in profit
or loss. A substantial modification exists if the discounted present value of the cash flows under the new terms,
including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10
per cent different from the discounted present value of the remaining cash flows of the original financial liability.
2.7 Exploration and evaluation assets
During the exploration phase of operations, all costs are expensed in the consolidated statement of comprehensive
income as incurred.
A subsequent decision to develop a mine property within an area of interest is based on the exploration results, an
assessment of the commercial viability of the property, the availability of financing and the existence of markets for
the product. Once the decision to proceed to development is made, development and other expenditures relating to
the project are capitalised and carried at cost with the intention that these will be depreciated by charges against
earnings from future mining operations over the relevant life of mine on a units of production basis. Expenditure is
only capitalised provided it meets the following recognition requirements:
• completion of the project is technically feasible and the Group has the ability to and intends to complete it;
• the project is expected to generate future economic benefits;
• there are adequate technical, financial and other resources to complete the project; and
• the expenditure attributable to the development can be measured reliably.
No depreciation is charged against the property until commercial production commences. After a mine property has
been brought into commercial production, costs of any additional work on that property are capitalised as incurred.
54
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Accounting Policies
Summary of significant accounting policies continued...
2.8 Inventories
Recognition
Inventories are recognised as an asset when
•
•
it is probable that future economic benefits associated with the item will flow to the entity; and
the cost of the inventories can be measured reliably.
Measurement
Inventories, which include rough diamonds, are measured at the lower of cost of production or net realisable value
using the first-in-first-out formula.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs
necessary to make the sale. Net realisable value also incorporates costs of processing in the case of the ore stock
piles. Changes in net realisable value are recognised in the income statement.
The cost of production includes direct labour, other direct costs and related production overheads. Consumables are
stated at the lower of cost on the weighted average basis or estimated replacement value. Work in progress are
stated at raw material cost including allocated labour and overhead costs.
2.9 Tax
Tax expense (tax income) is the aggregate amount included in the determination of profit or loss for the period in
respect of current tax and deferred tax.
Current tax is the amount of income taxes payable (recoverable) in respect of the taxable profit (tax loss) for a period.
Deferred tax liabilities are the amounts of income taxes payable in future periods in respect of taxable temporary
differences.
Deferred tax assets are the amounts of income taxes recoverable in future periods in respect of:
• deductible temporary differences;
•
•
the carry forward of unused tax losses; and
the carry forward of unused tax credits.
Current tax assets and liabilities
Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. The amount already paid in
respect of current and prior periods which exceeds the amount due for those periods, is recognised as an asset.
The benefit relating to a tax loss that can be carried back to recover current tax of a previous period is recognised as
an asset.
Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to
(recovered from) the taxation authorities, using the tax rates and tax laws that have been enacted or substantively
enacted by the end of the reporting period.
Current tax assets and liabilities are offset only where:
•
•
there is a legally enforceable right to set off the recognised amounts; and
there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously.
55
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Accounting Policies
Summary of significant accounting policies continued...
Deferred tax assets and liabilities
A deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax
liability arises from:
•
•
the initial recognition of goodwill; or
the initial recognition of an asset or liability in a transaction which is not a business combination and at the time
of the transaction, affects neither accounting profit nor taxable profit (tax loss).
A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable
profit will be available against which the deductible temporary difference can be utilised, unless the deferred tax asset
arises from the initial recognition of an asset or liability in a transaction that:
is not a business combination; and
•
• at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).
A deferred tax asset is recognised for the carry forward of unused tax losses and unused tax credits to the extent that
it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits
can be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the
asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively
enacted by the end of the reporting period.
The measurement of deferred tax liabilities and deferred tax assets are made to reflect the tax consequences that
would follow from the manner in which it is expected, at the end of the reporting period, recovery or settlement if
temporary differences will occur.
Deferred tax assets and liabilities are offset only where:
•
•
there is a legally enforceable right to set off current tax assets against current tax liabilities; and
the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation
authority on either the same entity within the group or different taxable entities within the group which intend
either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities
simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are
expected to be settled or recovered.
Royalties
Royalties incurred by the Group comprise mineral extraction costs based on a percentage of sales paid to the local
revenue authorities. These obligations arising from royalty arrangements are recognised as current payables and
disclosed as part of royalty and selling costs in the statement of profit or loss.
Royalties and revenue-based taxes are accounted for under IAS 12 when they have the characteristics of an income
tax. This is considered to be the case when they are imposed under government authority and the amount payable is
based on taxable income – rather than based on quantity produced or as a percentage of revenue. For such
arrangements, current and deferred tax is provided on the same basis as described above for other forms of taxation.
The royalties incurred by the Group are considered not to meet the criteria to be treated as part of income tax.
2.10 Leases
Identification of a lease
At inception of a contract, it is assessed to determine whether the contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration. If the terms and conditions of a contract are changed, it is reassessed to once again
determine if the contract is still or now contains a lease.
56
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Accounting Policies
Summary of significant accounting policies continued...
The practical expedient allowed by IFRS16 is elected, and therefore the non-lease components are not separated
from the lease components. Each lease component and any associated non-lease component is treated as a single
lease component.
Lease term
The lease term of a lease is determined as the non-cancellable period of the lease, together with the periods covered
by an option to extend the lease where there is reasonable certainty that the option will be exercised, and periods
covered by an option to terminate the lease if there is reasonable certainty that the option will not be exercised.
The assessment of the reasonable certainty of the exercising of options to extend the lease or not exercising of
options to terminate the lease is reassessed upon the occurrence of either a significant event or a significant change
in circumstances that is within the group's control and it affects the reasonable certainty assumptions.
The assessment of the lease term is revised if there is a change in the non-cancellable lease period.
Recognition and measurement
At inception, a right-of-use asset and a lease liability is recognised in the statement of financial position.
Right-of-use assets
Right-of-use assets are initially measured at cost, comprising the following:
•
•
•
•
the amount of the initial measurement of the lease liability;
any lease payments made at or before the commencement date, less any lease incentives received;
any initial direct costs incurred; and
an estimate of costs to be incurred in dismantling and removing the underlying asset, restoring the site
on which it is located or restoring the underlying asset to the condition required by the terms and
conditions of the lease, unless those costs are incurred to produce inventories. The obligation for those
costs are incurred either at
the commencement date or as a consequence of having used the
underlying asset during a particular period.
The right of use assets are presented separately in the statement of financial position.
The right of use asset is subsequently depreciated using the straight line method from the lease commencement date
to the earlier of the useful life of the right of use asset or the end of the lease term. In addition, the group applies IAS
36 Impairment of Assets to determine whether a right of use asset is impaired and accounts for the identified
impairment loss as described in the policy for property, plant and equipment.
Lease liability
The lease liability is initially measured at the present value of the lease payments that are not yet paid at the
commencement date. Lease payments are discounted using the interest rate implicit in the lease, if the rate can be
readily determined, else it is based on the group's incremental borrowing rate. The following lease payments are
included where they are not paid at the commencement date:
•
•
•
•
•
fixed payments, less any lease incentives receivable;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as
at the commencement date;
amounts expected to be payable under residual value guarantees;
the exercise price of a purchase option if there is reasonably certainty that the option will be exercised;
and
payments of penalties for terminating the lease, if the lease term reflects the exercising an option to
terminate the lease.
57
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Accounting Policies
Summary of significant accounting policies continued...
Subsequently, the lease liability is measured by:
•
•
•
increasing the carrying amount to reflect interest on the lease liability;
reducing the carrying amount to reflect the lease payments made; and
remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect
revised in-substance fixed lease payments.
Reassessment of lease liability
Where there are changes in the lease payments, the amount of the remeasurement of the lease liability is recognised
as an adjustment to the right-of-use asset. Where the carrying amount of the right of use asset is reduced to zero,
and there is a further reduction in the measurement of the lease liability, the remaining amount of the remeasurement
is recognised in profit or loss.
Short-term leases and leases of low-value items
The group has elected not to recognise right of use assets and lease liabilities for short term leases and leases of low
value assets. The group recognises the lease payments associated with these leases as an expense in the
statement of profit or loss on a straight line basis over the lease term.
Variable lease payments
Variable lease payments that do not depend on an index or rate are not included in the measurement of the lease
liability and the right of use asset. The related payments are recognised as an expense in the period in which the
event or condition that triggers those payments occurs and are included in ‘Operating expenses’ in the statement of
profit or loss as shown in note 19 to the financial statements.
2.11 Provisions and contingencies
A provision is a liability of uncertain timing or amount. A liability is a present obligation of the entity arising from past
events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic
benefits.
A contingent liability is:
• a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence
or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or
• a present obligation that arises from past events but is not recognised because it is not probable that an outflow
of resources embodying economic benefits will be required to settle the obligation, or the amount of the
obligation cannot be measured with sufficient reliability.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.
A provision is recognised when:
•
•
there is a present obligation (legal or constructive) as a result of a past event;
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation;
and
• a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation
at the end of the reporting period. Where the effect of the time value of money is material, the amount of a provision
is the present value of the expenditures expected to be required to settle the obligation.
Contingent assets and liabilities are not recognised, but details are disclosed in the notes to the annual financial
statements.
58
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Accounting Policies
Summary of significant accounting policies continued...
2.12 Share-based payments
The Group operates equity-settled share-based remuneration plans for its employees. None of the Group’s plans are
cash-settled.
All goods and services received in exchange for the grant of any share-based payment are measured at their fair
values. Where employees are rewarded using share-based payments, the fair value of employees’ services is
determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at
the grant date and excludes the impact of non-market vesting conditions.
All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to
retained earnings. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting
period, based on the best available estimate of the number of share options expected to vest.
Non-market vesting conditions are included in assumptions about the number of options that are expected to become
exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected
to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period.
No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different
to that estimated on vesting.
Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the
nominal value of the shares issued are allocated to share capital with any excess being recorded as share premium.
2.13 Revenue
Rough diamond sales are made through a competitive tender process and revenue is recognised when the customer
has a legally binding obligation to settle under the terms of the contract when the performance obligations have been
satisfied, which is once control of the goods has transferred to the buyer which occurs when the tender closes.
Revenue is measured based on consideration specified in the tender award.
Where the Group makes rough diamond sales to customers and retains a vested right in the future sale of a polished
diamond, the Group will record such revenue only at the date when the polished diamond is sold (and only its interest
therein).
Revenue is shown net of value added tax.
Interest income is recognised using the effective interest method.
2.14 Employee benefits
Employee benefits are all forms of consideration given by an entity in exchange for services rendered by employees
or for the termination of employment.
2.15 Equity, reserves and dividend payments
Share capital represents the nominal value of shares that have been issued.
Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the
issuing of shares are deducted from share premium, net of any related income tax benefits.
59
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Accounting Policies
Summary of significant accounting policies continued...
Other components of equity include the following:
• Other reserves – comprises foreign currency translation differences arising from the translation of
financial
statements of the Group’s foreign entities into Sterling, the recognition of share based payment movements and the
non-distributable redemption reserve for cancelled deferred shares charge
• Retained earnings includes all current and prior period retained profits.
Non-controlling interest represents current and prior period retained profits and other comprehensive income items
attributable to the non-controlling shareholder in subsidiaries
All transactions with owners of the parent are recorded separately within equity.
Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been
approved in a general meeting prior to the reporting date.
3. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
3.1 Critical accounting estimates and assumptions
The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
addressed below.
3.1.1 Ore reserves and associated Life of Mine (LoM)
There are numerous uncertainties inherent in estimating ore reserves and the associated LoM. Therefore, the Group
must make a number of assumptions in making those estimations, including assumptions as to the prices of
diamonds, exchange rates, production costs and recovery rates. Assumptions that are valid at the time of estimation
may change significantly when new information becomes available. Changes in the forecast prices of diamonds,
exchange rates, production costs or recovery rates may change the economic status of ore reserves and may,
ultimately, result in the ore reserves being restated. Where assumptions change the LoM estimates, the associated
depreciation rates, residual values, waste stripping and amortisation ratios, lease terms and environmental provisions
are reassessed to take into account the revised LoM estimate.
3.1.2 Valuation of embedded derivatives
There is an adjustable conversion feature within the convertible loan agreement which effects the conversion price
and the number of new ordinary shares issued. IFRS 9 requires a fair value calculation of the embedded derivative at
recognition, as it is not closely related to the host contract, and a revaluation to be performed at each year end. The
embedded derivative has been fair valued using the Monte Carlo model which requires critical estimates, in particular
the Group’s future share price volatility. At the year end the fair value of the embedded derivative was £21,718 (2019:
£10,359). Further details can be found in note 16.
3.1.3 Rehabilitation provision
Estimates and assumptions are made in determining the amount attributable to the rehabilitation provision. These
deal with uncertainties such as legal and regulatory framework, timing and future costs. The carrying value of the
rehabilitation provision is disclosed in note 14. The Board use an expert to determine the existing disturbance level
and associated cost of works and estimates of inflation and risk-free discount rates are based on market data.
60
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Accounting Policies
Critical accounting estimates and judgements continued...
3.1.4 Impairment of non-current assets
Mining assets and Property, plant and equipment representing the group’s mining assets in South Africa are
reviewed for impairment at each reporting date. The impairment test is performed using the approved Life of Mine
plan and those future cash flow estimates are discounted using asset specific discount rates and are based on
expectations about future operations. The impairment test requires estimates about future production and sales
volumes, diamond prices, grades, operating costs and capital expenditures necessary to extract resources in the
current medium term mine plan. Production forecasts include further growth from existing production levels, reflecting
plant upgrades, steps to improve mining flexibility and investment to open new mining areas. Diamond prices are
estimated with reference to recent achieved prices and the Board’s assessment of the diamond market outlook.
Changes in such estimates could impact recoverable values of these assets. Details of the carrying value of property,
plant and equipment and mining assets can be found in note 5 and 7.
The impairment test using the medium-term forecasts indicated significant headroom as at 31 December 2020 and
therefore no impairment is considered to be appropriate. However, such headroom is dependent on achieving
increases in production by upgrading the plant. However, the directors consider the forecasted production levels to
be achievable best estimates.
3.1.5 Expected credit loss assessment for receivables due from subsidiaries
The Directors make judgements to assess the expected credit
loss provision on the loan to the Company’s
subsidiary. This includes assessment of scenarios and the subsidiary’s ability to repay its loan under such scenarios
considering risks and uncertainties including diamond prices, future production performance, recoverable diamond
reserves, environmental legislation and other factors. No credit loss provision was raised. If the assumed factors vary
from actual occurrence, this will
impact on the amount at which the loan should be carried on the Company
Statement of Financial Position.
The carrying value of the subsidiary loan is set out in note 10.
3.1.6 Capitalised stripping costs
Waste removal costs (stripping costs) are incurred during the development and production phases at surface mining
operations. Furthermore, during the production phase, stripping costs are incurred in the production of inventory as
well as in the creation of future benefits by improving access and mining flexibility in respect of the ore to be mined,
the latter being referred to as a ‘stripping activity asset’. Judgement is required to distinguish between these two
activities at Kareevlei. The orebody needs to be identified in its various separately identifiable components. An
identifiable component is a specific volume of the orebody that is made more accessible by the stripping activity.
Judgement is required to identify and define these components, and also to determine the expected volumes
(tonnes) of waste to be stripped and ore to be mined in each of these components. These assessments are based on
a combination of information available in the mine plans, specific characteristics of the orebody and the milestones
relating to major capital investment decisions.
Judgement is also required to identify a suitable production measure that can be applied in the calculation and
allocation of production stripping costs between inventory and the stripping activity asset. The ratio of expected
volume (tonnes) of waste to be stripped for an expected volume (tonnes) of ore to be mined for a specific component
of the orebody, compared to the current period ratio of actual volume (tonnes) of waste to the volume (tonnes) of ore
is considered to determine the most suitable production measure.
These judgements and estimates are used to calculate and allocate the production stripping costs to inventory and/or
the stripping activity asset(s). Furthermore, judgements and estimates are also used to apply the stripping ratio
calculation in determining the amortisation of the stripping activity asset.
61
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Accounting Policies
Critical accounting estimates and judgements continued...
No stripping costs were capitalised during the current financial year as the waste stripping ratio was below the
estimated average strip ratio for the relevant sections of the ore body based on the existing medium term detailed
mine plans, as the primary benefit of the stripping was access to ore mined in the period. Whilst there may be a
longer term benefit through access to deeper sections of the ore body the Board concluded that the criteria for
recognition under the Group’s accounting policy were not met having considered the absence of a defined measured
and indicated resource and consideration of the longer term mine planning status. All stripping costs incurred during
the period were charged to the statement of profit or loss.
3.1.7 Contingent liabilities
The Group is subject to claims by a former director and companies related to that former director totalling £238,788.
Whilst fully disputing the claims, the Group maintains liabilities to the claimants of £183,364 as disclosed in note 15.
The Group has placed £214,499 (2019: £223,914) in escrow with its attorneys to meet any payments under the
claims. The Group has taken legal advice which advises that the claims are without merit and no provision is made
for the additional claim amount. This matter has required the Board to exercise judgment in assessing both the extent
to which liabilities should be retained and the decision not to provide for the additional claim amount.
3.2 Critical judgements in applying the entity's accounting policies
3.2.1 Determining the lease term
In determining the lease term, management considers all facts and circumstances that create an economic incentive
to exercise, or not to exercise, an extension option. Extension options are only included in the lease term for
instances where the company is reasonably certain that it will extend or will not terminate the lease when the lease
expires. For all leases, the most relevant factors include:
• If there are significant penalties to terminate (or not extend), the group is typically reasonably certain to extend (or
not terminate).
• When the lessee and the lessor each has the right to terminate the lease without permission from the other party
with no more than an insignificant penalty, the group is typically certain to terminate.
• Otherwise, the group considers other factors including historical lease durations, related costs and the possible
business disruption as a result of replacement of the leased asset.
The lease term is reassessed on an ongoing basis, especially when the option to extend becomes exercisable or on
occurrence of a significant event or a significant change in circumstances which affects this assessment, and that is
within the control of the group.
Judgment is needed in determining the lease term of surface lease agreements. The lease term of surface lease
agreements are based on the approved Life of Mine (LoM) estimate.
3.2.2 Determining the incremental borrowing rate to measure lease liabilities
Interest rate implicit in leases is not available, therefore, the group uses the relevant incremental borrowing rate (IBR)
to measure its lease liabilities. The IBR is estimated to be the interest rate that the group would pay to borrow:
•
•
•
•
over a similar term
with similar security
the amount necessary to obtain an asset of a similar value to the right of use asset
in a similar economic environment
The IBR, therefore, is considered to be the best estimate of the incremental rate and requires management’s
judgement as there are no observable rates available.
62
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Accounting Policies
4. Changes in accounting policies and disclosures
4.1 Standards and Interpretations effective and adopted in the current year
The Group adopted certain standards and amendments for the first time, which are effective for annual periods
beginning on or after 1 January 2020 and are listed in the table. The adoption of
these new accounting
pronouncements has not had a significant impact on the consolidated financial statements of the Group nor the
accounting policies, methods of computation or presentation applied by the Group.
Amendments and New Standards
The Conceptual Framework for Financial
Reporting
Amendments to IFRS 3
Amendments to IAS 1 and IAS 8
Amendments to IFRS 9, IAS 39 and IFRS 7
Amendments to IFRS 16
Description
Revised Conceptual Framework for Financial Reporting
Definition of a business
Definition of material
Interest rate benchmark reform – Phase 1
COVID-19 Related Rent Concessions
4.2 New standards and interpretations not yet adopted
The new standards, amendments and improvements that are issued, but not yet effective, up to the date of issuance
of the Group’s consolidated financial statements are listed in the table below. These standards, amendments and
improvements have not been early adopted and it is expected that, where applicable, these standards, amendments
and improvements will be adopted on each respective effective date. The impact of the adoption of these standards
cannot be reasonably assessed at this stage.
Amendments and New Standards
IFRS 17
Amendments to IFRS 9, IAS 39,
IFRS 7, IFRS 4 and IFRS 16
Amendments to IAS 37
Amendments to IFRS 3
Amendments to IAS 16
Amendments to IAS 1
Amendments to IFRS 10 and
IAS 28
Improvement IFRS 1
Improvement IFRS 9
Improvement IAS 41
* Annual periods beginning on or after
Description
Insurance contracts
Interest Rate Benchmark Reform – Phase 2
Effective date*
1 January 2021
1 January 2022
Onerous contracts – cost of fulfilling a contract 1 January 2022
1 January 2022
Reference to the Conceptual Framework
1 January 2022
Property, plant and equipment proceeds
before intended use
Classification of liabilities as current or non-
current
Sale or Contribution of Assets between an
Investor and its Associate or
Joint Venture
Subsidiary as a first-time adopter
Fees in the ’10 per cent’ test for derecognition
of financial liabilities
Agriculture
–
measurements
1 January 2022
1 January 2022
1 January 2023
1 January 2022
Taxation
Pending
value
fair
in
63
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
5. Property, plant and equipment
5.1 Balances at year end and movements for the year
Reconciliation for the year ended 31 December
2020 - Group
Balance at 1 January 2020
At cost
Accumulated depreciation
Net book value
Movements for the year ended 31 December
2020
Additions
Depreciation
Disposals
Exchange differences - Cost
Exchange differences - Accumulated depreciation
Property, plant and equipment at end of year
Closing balance at 31 December 2020
At cost
Accumulated depreciation
Net book value
Reconciliation for the year ended 31 December
2019 - Group
Balance at 1 January 2019
At cost
Accumulated depreciation
Net book value
Movements for the year ended 31 December
2019
Additions
Depreciation
Transfer of right-of-use-assets on 1 January 2019 -
Cost
Transfer of right-of-use-assets on 1 January 2019 -
Accumulated depreciation
Exchange differences - Cost
Exchange differences - Accumulated depreciation
Property, plant and equipment at the end of the
year
Closing balance at 31 December 2019
At cost
Accumulated depreciation
Net book value
Leasehold
improvements
Plant and
Machinery
Motor
vehicles
Total
5,067
-
5,067
1,809,364
(1,056,986)
752,378
44,700
(23,225)
21,475
1,859,131
(1,080,211)
778,920
-
(443)
-
(391)
(24)
4,209
1,754,985
(216,653)
(439)
(44,067)
70,074
2,316,278
8,047
(4,225)
-
(3,734)
2,285
23,848
1,763,032
(221,321)
(439)
(48,192)
72,335
2,344,335
4,676
(467)
4,209
3,513,434
(1,197,156)
2,316,278
35,754
(11,906)
23,848
3,553,864
(1,209,529)
2,344,335
-
-
-
1,304,188
(781,426)
522,762
67,503
(19,462)
48,041
1,371,691
(800,888)
570,803
5,069
-
512,185
(279,749)
12,498
(6,075)
529,752
(285,824)
-
-
(2)
-
-
(35,128)
(35,128)
-
(7,008)
4,188
2,220
(174)
93
2,220
(7,184)
4,281
5,067
752,378
21,475
778,920
5,067
-
5,067
1,809,364
(1,056,986)
752,378
44,700
(23,225)
21,475
1,859,131
(1,080,211)
778,920
64
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
Property, plant and equipment continued...
5.2 Additional disclosures
Assets whose title is restricted and pledged as
security
Group
2020
Group
2019
Company
2020
Company
2019
The carrying values of assets pledged as
security is as follows:
Plant and Machinery
94,103
102,242
-
-
Plant and equipment to the value of £94,103 are under security of the loan agreement with Mark Poole. The Group
cannot pledge these assets as security for other borrowings or sell them to another entity. In the event of default
Mark Poole may acquire the equipment of Kareevlei Mining Proprietory Limited for 1.00 South African Rand, see
note 16 for further detail.
65
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
6. Leases
6.1 Amounts recognised in the statement of financial position - Group
Right-of-use assets
As at 31 December 2020
Balance at 1 January 2020
Additions
Decrease through net exchange differences
Depreciation
Effect of modification in lease terms
At 31 December 2020
Closing balance at end of year
At cost
Accumulated depreciation
At 31 December 2020
As at 31 December 2019
At 1 January 2019 on adoption of IFRS16
Additions
Decrease through net exchange differences
Depreciation
Effect of modification in lease terms
At 31 December 2019
Closing balance at end of year
At cost
Accumulated depreciation
At 31 December 2019
Lease liabilities
As at 31 December 2020
Balance at 1 January 2020
Additions
Finance costs
Effect of modification in lease terms
Lease payments
Decrease through net exchange differences
At 31 December 2020
Lease liabilities
Current
Non-current
At 31 December 2020
Land and
buildings
Motor
vehicles
Total
30,086
17,728
(2,204)
(3,314)
(12,268)
30,028
35,444
(5,416)
30,028
32,907
-
(170)
(2,651)
-
30,086
34,945
(4,859)
30,086
26,918
17,728
3,083
(10,233)
(8,280)
(1,952)
27,264
7,098
20,166
27,264
455,381
176,409
(29,929)
(55,030)
(26,036)
520,795
628,009
(107,214)
520,795
230,049
20,151
(1,297)
(53,880)
260,358
455,381
511,446
(56,065)
455,381
467,703
176,409
51,376
(24,754)
(66,380)
(27,826)
576,528
24,785
551,743
576,528
425,295
158,681
(27,725)
(51,716)
(13,768)
490,767
592,565
(101,798)
490,767
197,142
20,151
(1,127)
(51,229)
260,358
425,295
476,501
(51,206)
425,295
440,785
158,681
48,293
(14,521)
(58,100)
(25,874)
549,264
17,687
531,577
549,264
66
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
Leases continued...
As at 31 December 2019
At 1 January 2019 on adoption of IFRS16
Additions
Finance costs
Effect of modification in lease terms
Lease payments
Decrease through net exchange differences
At 31 December 2019
Lease liabilities
Current
Non-current
At 31 December 2019
197,142
20,151
19,446
260,358
(55,178)
(1,134)
440,785
7,966
432,819
440,785
31,689
-
3,759
-
(8,367)
(163)
26,918
5,229
21,689
26,918
228,831
20,151
23,205
260,358
(63,545)
(1,297)
467,703
13,195
454,508
467,703
6.2 Amounts recognised in the statement of profit or loss - Group
Depreciation on right-of-use assets
Interest expense relating to lease liabilities
Short term lease expenses
6.3 Amounts recognised in the statement of cash flows
Group
2020
Group
2019
55,030
51,376
395,234
53,880
23,205
210,596
Group
2020
Group
2019
Total cash outflow for leases
66,380
63,545
6.4 Other information related to leases
The group's leases consist mainly of leasing of buildings, land and motor vehicles. With the exception of leases of
low value underlying assets and short-term leases, each lease is reflected on the statement of financial position as a
right of use asset and a lease liability. Lease payments are fixed. Variable lease payments which do not depend on
an index or a rate are excluded from the initial measurement of the lease liability and the related right of use asset.
The group classifies and depreciates its right of use assets in a consistent manner to its property, plant and
equipment.
67
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
7. Mining assets
Reconciliation of changes in mining assets
Reconciliation for the year ended 31 December 2020 - Group
Balance at 1 January 2020
At cost
Accumulated amortisation
Net book value
Movements for the year ended 31 December 2020
Additions
Amortisation
Exchange differences - Cost
Exchange differences - Accumulated amortisation
Mining assets at end of period
Closing balance at 31 December 2020
At cost
Accumulated amortisation
Net book value
Reconciliation for the year ended 31 December 2019 - Group
Balance at 1 January 2019
At cost
Accumulated amortisation
Net book value
Movements for the year ended 31 December 2019
Additions
Amortisation
Exchange differences - Cost
Exchange differences - Accumulated amortisation
Mining assets at end of period
Closing balance at 31 December 2019
At cost
Accumulated amortisation
Net book value
For further details on the mining rehabilitation provision see note 14.
68
Mining
assets
Total
518,858
(112,790)
406,068
518,858
(112,790)
406,068
Mining
assets
207,802
(31,821)
(28,681)
6,964
560,332
Total
207,802
(31,821)
(28,681)
6,964
560,332
697,980
(137,648)
560,332
697,980
(137,648)
560,332
Mining
assets
Total
384,380
(81,003)
303,377
136,537
(32,223)
(2,059)
436
406,068
Mining
assets
518,858
(112,790)
406,068
384,380
(81,003)
303,377
136,537
(32,223)
(2,059)
436
406,068
Total
518,858
(112,790)
406,068
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
8.
Investments in subsidiaries
8.1 The amounts included on the company
statement of financial position comprise the
following:
Investments in subsidiaries
Investments in subsidiaries
8.2 Investment in subsidiaries
Company
2020
Company
2019
5
5
5
5
8.2.1 Details of the group's material subsidiaries at the end of the reporting period are as follows:
Name of subsidiary
Kareevlei Mining Proprietory Limited
Diamond Resources Proprietory Limited
Principal activity
Diamond Mining
Diamond Mining
Place of incorporation and
business
South Africa
South Africa
8.2.2 Voting rights:
Kareevlei Mining Proprietory Limited
Diamond Resources Proprietory Limited
8.2.3 Summary of Group's interest in subsidiaries
Carrying
value
2020
Interest
2020
74.00%
100.00%
Interest
2019
74.00%
100.00%
Carrying value
2019
5
-
5
-
At 31 December 2020
Total assets
Total liabilities
Retained losses
Revenue
Loss after tax
At 31 December 2019
Total assets
Total liabilities
Retained losses
Revenue
Loss after tax
Kareevlei
Mining
Proprietory
Limited
Diamond
Resources
Proprietory
Limited
4,367,212
(13,066,305)
(7,349,515)
3,601,819
(2,308,752)
2,853,970
(9,641,908)
(6,120,545)
4,064,853
(667,393)
-
-
-
-
-
-
-
-
-
-
69
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
Investments in subsidiaries continued...
8.2.4 Details of minority
BlueRock’s subsidiary, Kareevlei Mining Proprietary Limited, is 26 per cent owned by Ghaap Mining Proprietary
Limited, a Kimberley based company. Ghaap Mining Proprietary Limited is a South African private company wholly
owned by Mr. William Alexander van Wyk who, in terms of South African legislation is considered to qualify as an
Historically Disadvantaged South African (“HDSAs”).
9.
Inventories
Inventories comprise:
Consumable stores
Work in progress
Diamonds on hand
Group
2020
Group
2019
Company
2020
Company
2019
13,820
137,735
306,753
458,308
15,167
294,880
527,300
837,347
-
-
-
-
-
-
-
-
Inventory is carried at the lower of cost or net realisable value. During the year no write-downs to net realisable
value were recorded.
70
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
10. Trade and other receivables
10.1 Trade and other receivables comprise:
Current
Other receivables
Prepaid expenses
Value added tax
Total current receivables
Non-Current
Other receivables (i)
Amounts due by subsidiary (ii)
Total non-current receivables
Group
2020
Group
2019
Company
2020
Company
2019 (as
restated*)
122,139
9,032
30,992
162,163
425,319
-
425,319
1,384
4,830
50,489
56,703
122,139
2,509
11,542
136,190
1,166
2,816
32,694
36,676
344,442
-
344,442
575,674
9,784,358
10,360,032
496,474
7,555,575
8,052,049
The carrying value of all trade and other receivables including the loan to a group company is considered a
reasonable approximation of fair value.
Refer to note 29.3 for the group's expected credit loss provision assessment for receivables.
Company:
(i) Non-current other receivables represent management fees receivable from Kareevlei Mining Proprietary Limited.
(ii) The amounts due by subsidiary is a loan to Kareevlei Mining Proprietary Limited that bears interest at the
Nedbank Limited prime variable overdraft rate or unsecured loans to corporate customers.
* The 2019 classification of the management fees receivable- and amounts due from Kareevlei Mining Proprietary
Limited, have been changed from current to non-current. See note 30 for further details.
Group:
(i) Other non-current receivables represent amounts held by financial institutions and the Department of Minerals
and Energy as guarantees in respect of environmental rehabilitation obligations in respect of the Group’s South
African mines.
71
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
Trade and other receivables continued...
10.2 Items included in trade and other receivables
not classified as financial instruments
Group
2020
Group
2019
Company
2020
Company
2019
Company
instruments included in trade
Prepaid expenses
Value added tax
Total non-financial
and other receivables
Total trade and other receivables excluding non-
financial assets included in trade and other
receivables
Total trade and other receivables
9,032
30,992
4,830
50,489
2,509
11,542
40,024
55,319
14,051
2,816
32,694
35,510
547,458
587,482
345,826
401,145
10,482,171
10,496,222
8,053,215
8,088,725
11. Cash and cash equivalents (including restricted cash)
11.1 Cash and cash equivalents comprise:
Group
2020
Group
2019
Company
2020
Company
2019
Cash
Cash on hand
Balances with banks
Total cash
136
569,826
569,962
471
389,378
389,849
-
537,525
537,525
-
378,062
378,062
Total cash and cash equivalents included in
current assets
569,962
389,849
537,525
378,062
Cash and cash equivalents in the Consolidated Statement of Cash flows excludes restricted cash of £214,499
(2019: £223,914).
11.2 Cash and cash equivalents where availability is restricted
Bank balances to the value of £214,499 (2019: £223,914) are not available for use as it is held in trust with the
Group's attorneys. This account is held as security for the claims submitted by a former director of the Group and
may only be utilised against this claim, should it be successful. Refer to note 25 for further details.
72
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
12. Share capital
Authorised and issued share capital
Group
2020
Group
2019
Company
2020
Company
2019
Issued
9,086,657 (2019: 3,258,004) Ordinary shares
of 5p (2019: 5p) each
Share premium
454,333
6,885,796
7,340,129
162,900
4,147,980
4,310,880
454,333
6,885,796
7,340,129
162,900
4,147,980
4,310,880
Share reconciliation
Details of issue
Date
Number of ordinary
shares
Opening balance
Placing and equity issue
Placing and equity issue expenses
Placing and equity issue
Placing and equity issue expenses
Issue of shares as repayment of loan facility
Shares outstanding - closing
01/01/2020
18/02/2020
18/02/2020
16/07/2020
16/07/2020
06/10/2020
Details of warrants issued
3,258,004
2,000,000
-
3,806,718
-
21,935
9,086,657
Share capital
£
162,900
100,000
-
190,336
-
1,097
454,333
Share
premium
£
4,147,980
1,600,000
(76,760)
1,259,660
(55,925)
10,841
6,885,796
Issued during 2020
There were no new warrants issued during the period. 69,067 warrants with an average price of 1,500p lapsed
during the period.
Issued during 2019
On 11 February 2019 1 warrant was issued for each ordinary share issued on that date. A total of 383,333 warrants
were issued and exercisable at 200p for a period of 2 years.
On 16 May 2019 1 warrant was issued for each ordinary share issued on that date. A total of 1,974,000 warrants
were issued and exercisable at 100p for a period of 2 years.
Refer to note 27.4 for details of warrants issued to directors as part of the share placements on the above dates.
Warrants are valued at the date of grant using the Black-Scholes option pricing model.
The fair value per warrant issue during 2019 and the assumptions used in the calculation are shown below:
11/02/2019
Date of issue:
383,333
Number of warrants issued
Average grant date share price (p)
Average exercise price (p)
Share price volatility (p.a)
Risk-free interest rate (p.a)
Dividend yield (p.a)
Average contractual life (years)
Average fair value per option (p)
155
200.00
73.16%
0.72%
0
2
50.19
67.50
100.00
85.71%
0.73%
0
2
23.89
16/05/2019
1,974,000
73
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
13. Other Reserves
13.1 Analysis of other reserves
Group
Movement:
Balance 1 January 2020
Other comprehensive expense
Non-controlling interests
Share-based payments
Transfer lapsed options to accumulated loss
Balance 31 December 2020
Movement:
Balance 1 January 2019
Other comprehensive expense
Non-controlling interests
Share-based payments
Balance 31 December 2019
Company
Movement:
Balance 1 January 2020
Share-based payments
Transfer lapsed options to accumulated loss
Balance 31 December 2020
Movement:
Balance 1 January 2019
Share-based payments
Balance 31 December 2019
2,003,010
-
-
-
2,003,010
2,003,010
-
-
2,003,010
Capital
redemption
reserve
Foreign
currency
translation
reserve
Share-based
payment
reserve
2,003,010
-
-
-
-
2,003,010
17,723
397,605
(103,377)
-
-
311,951
1,097,751
-
-
266,127
(285,685)
1,078,193
Capital
redemption
reserve
Foreign
currency
translation
reserve
Share-based
payment
reserve
(6,177)
32,297
(8,397)
-
17,723
333,837
-
-
763,914
1,097,751
Total
3,118,484
397,605
(103,377)
266,127
(285,685)
3,393,154
Total
2,330,670
32,297
(8,397)
763,914
3,118,484
-
-
-
-
1,097,751
266,127
(285,685)
1,078,193
3,100,761
266,127
(285,685)
3,081,203
Capital
redemption
reserve
2,003,010
-
2,003,010
Foreign
currency
translation
reserve
-
-
-
Share-based
payment
reserve
333,837
763,914
1,097,751
Total
2,336,847
763,914
3,100,761
74
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
Other Reserves continued...
13.2 Nature and purpose of reserves
Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of
foreign entities. The South African subsidiaries’ functional currencies are different to the Group’s functional currency
of British Pound Sterling. The rates used to convert the operating functional currency into British Pound Sterling are
as follows:
Average rate
Year end
Currency
ZAR to GBP
ZAR to GBP
2020
21.07
19.98
2019
18.43
18.44
Share-based payment reserve
For details on the share-based payment equity reserve, refer to note 23.
Capital redemption reserve
During 2018 the nominal value of ordinary shares was split into 0.01p nominal share capital and 0.99p deferred
shares. These were in turn purchased by the company using the proceeds from the issue of one additional ordinary
share and immediately cancelled. As such these are held within the capital redemption reserve.
14. Provisions
14.1 Provisions comprise:
Group
2020
Group
2019
Company
2020
Company
2019
Rehabilitation cost provision
454,197
302,989
-
-
14.2 Reconciliation of provisions
Balance at 1 January 2020 - Group
Change in estimate
Unwinding of discount rate
Exchange differences
Total changes
Balance at 31 December 2020
Balance at 1 January 2019 - Group
Change in estimate
Unwinding of discount rate
Exchange differences
Total changes
Balance as at 31 December 2019
75
Provision for
rehabilitation
302,989
137,779
27,761
(14,332)
151,208
454,197
204,840
77,630
21,629
(1,110)
98,149
302,989
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
Provisions continued...
14.3 Details of provisions
Provision for rehabilitation
The provision for environmental rehabilitation closure cost was independently assessed by Ndi Mudau of NDI
Geological Consulting Services. The closure cost assessment reports over the Remainder of the Farm No. 113
(Skietfontein), Portion of Portion 2 (Kareeboompan) of the Farm 142, Portion 1 (Westhoek) of the Farm 113, and
Portion 2 (Klipvlei) of the Farm 113. The financial provision was calculated in accordance with Regulation 54 of the
Minerals and Petroleum Resources Development Act 2002 (Act 28 of 2002) during March 2021.
In determining the amounts attributable to the rehabilitation provision at the Kareelvei mining area, management
used a discount rate of 7% (31 December 2019: 10%), estimated rehabilitation timing of 10 years (31 December
2019: 10 years) and an inflation rate of 4.37% (31 December 2019: 4.9%).
15. Trade and other payables
15.1 Trade and other payables comprise:
Trade payables
Accrued liabilities
Account due to former Director
Total trade and other payables
Group
2020
1,068,671
147,116
21,776
1,237,563
Group
2019
Company
2020
Company
2019
737,541
119,447
23,596
880,584
45,643
66,183
-
111,826
28,007
33,400
-
61,407
An amount of £161,588 (2019: £175,092) is included within trade payables which are subject to amounts claimed as
being due to companies related to the former Director of the company. These amounts are historic and disputed in
full by the Company based on legal advice received. The account due to a former Director totalling £21,776 (2019:
£23,596) relates to amounts claimed but disputed in full by the Company.
15.2 Items included in trade and other payables not classified as financial liabilities
Total
trade and other payables excluding
non-financial liabilities included in trade and
other payables
1,237,563
880,584
111,826
61,407
76
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
16. Borrowings
16.1 Carrying amount of borrowings by category
Year ended 31 December 2020 - Group
Convertible loans (i)
Loan facilities (ii)
Embedded derivative (i)
Components listed under borrowings on the consolidated
and company statements of financial position
Trade and other payables excluding non-financial liabilities
(Note 15)
Components listed separately on the consolidated and
company statements of financial position
Borrowings comprise the following on the consolidated
and company statements of financial position:
Current portion
Non-current portion
Year ended 31 December 2019 - Group
Convertible loans (i)
Loan facilities (ii)
Embedded derivative (i)
Components listed under borrowings on the consolidated
and company statements of financial position
Trade and other payables excluding non-financial liabilities
(Note 15)
Components listed separately on the consolidated and
company statements of financial position
Designated at fair
value
At amortised
cost
Total
-
-
21,718
815,539
687,249
-
815,539
687,249
21,718
21,718
1,502,788
1,524,506
-
-
1,237,563
1,237,563
1,237,563
1,237,563
21,718
2,740,351
2,762,069
6,244
15,474
21,718
-
-
10,359
689,962
812,826
1,502,788
696,206
828,300
1,524,506
776,704
286,125
-
776,704
286,125
10,359
10,359
1,062,829
1,073,188
-
-
880,584
880,584
880,584
880,584
10,359
1,943,413
1,953,772
Borrowings comprise the following on the consolidated
and company statements of financial position:
Current portion
Non-current portion
Designated at fair
value
-
10,359
10,359
At amortised
cost
156,698
906,131
1,062,829
Total
156,698
916,490
1,073,188
77
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
Borrowings continued...
Year ended 31 December 2020 - Company
Convertible loans (i)
Loan facilities (iI)
Embedded derivative (i)
Components listed under borrowings on the consolidated
and company statements of financial position
Trade and other payables excluding non-financial liabilities
(Note 15)
Components listed separately on the consolidated and
company statements of financial position
Borrowings comprise the following on the consolidated
and company statements of financial position:
Current portion
Non-current portion
Designated at fair
value
At amortised
cost
Total
-
-
21,718
815,539
137,154
-
815,539
137,154
21,718
21,718
952,693
974,411
-
-
111,825
111,825
111,825
111,825
21,718
1,064,518
1,086,236
6,244
15,474
21,718
502,566
450,127
952,693
508,810
465,601
974,411
Year ended 31 December 2019 - Company
Convertible loans (i)
Loans facilities (ii)
Embedded derivative (i)
Components listed under borrowings on the consolidated
and company statements of financial position
Designated at fair
value
-
-
10,359
At amortised
cost
776,704
286,125
-
Total
776,704
286,125
10,359
10,359
1,062,829
1,073,188
Trade and other payables excluding non-financial liabilities
(Note 15)
Components listed separately on the consolidated and
company statements of financial position
Borrowings comprise the following on the consolidated
and company statements of financial position:
Current portion
Non-current portion
-
-
61,407
61,407
61,407
61,407
10,359
1,124,236
1,134,595
-
10,359
10,359
156,698
906,131
1,062,829
156,698
916,490
1,073,188
78
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
Borrowings continued...
i) Convertible loans and embedded derivative
The movement on each convertible loan liability component can be summarised as
follows:
Balance 1 January 2019
Finance charge: unwinding of discount factor
Fair value adjustment to embedded derivative
Balance 31 December 2019
Finance charge: unwinding of discount factor
Fair value adjustment to embedded derivative
Balance 31 December 2020
Embedded
derivative
Convertible
loans
12,463
-
(2,104)
10,359
-
11,359
21,718
706,094
70,610
-
776,704
38,835
-
815,539
Total
718,557
70,610
(2,104)
787,063
38,835
11,359
837,257
At 31 December 2020 the Group had in issue convertible loan stocks of £925,000
which had an initial term until 16 October 2021. On 27 February 2020, the Company
announced that 50% of the total loan had been transferred to Mr Tim Leslie, a non-
executive Director of BlueRock Diamonds Plc. The Group has an option, at their own
discretion, to increase the initial term by a further 12 months.
The terms of the convertible loan note provide a mechanism for weighted conversion
price revisions should additional funds be raised below the prevailing conversion price.
Following the fund raising in February 2021, the current conversion price is 93p.
This option to convert the loan into shares has been treated as a separate financial
instrument, as an embedded derivative. This is due to a clause in the updated
convertible loan note agreement which will require the Company to issue a variable
number of shares if future fundraising over life of the convertible loan note raises
additional funds at a price per Ordinary share of less than 5p. This requires a separate
valuation as it does not relate to the host contract.
In addition if the Company sells its interest in Kareevlei Mining Proprietary Limited
("subsidiary") before the final repayment date for consideration equivalent to or greater
than 120% of the loan note outstanding then the notes will become redeemable and a
20% premium will be payable to the note holder.
Management have carried out an assessment of the terms of the convertible loan and
have judged that the instrument consists of two components:
• a loan instrument; held at amortised cost
• an embedded derivative representing the conversion option as the option fails the
fixed for fixed criteria and the embedded redemption feature.
The embedded
derivative should be recognised separately as a derivative financial instrument at fair
value through profit and loss
A fair value exercise to determine the value of the two components was undertaken by
the Directors at the date the convertible loan was initially drawn down. The fair value
of the host loan instrument (including the embedded redemption feature) has been
valued as the residual of:
• The fair value of the first draw down on 16 October 2014 was discounted at a
commercially applicable rate of 9.25%. The fair values of the draw downs on 27 May
2016 and 2 October 2016 have been discounted at a commercially applicable rate of
10.5%.
79
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
Borrowings continued...
Refer to note 31 for details of the fair value of the embedded derivative.
ii) Loan facilities
Loan facilities comprise the following:
Group
2020
Group
2019
Company
2020
Company
2019
Loan: M Poole
Loan: A Waugh
Loan: Numovista Pty Ltd
Current portion
Non-current portion
72,013
65,141
550,095
687,249
301,610
385,639
687,249
116,998
169,127
-
286,125
156,698
129,427
286,125
72,013
65,141
-
137,154
114,214
22,940
137,154
116,998
169,127
-
286,125
156,698
129,427
286,125
M Poole
In 2017 the Company entered into a loan facility agreement with Mark Poole. A 90 day interest free
period was included in the agreement from the date of the first draw down. After this point interest
accrues on the capital balance at a rate of 10% per annum, which is payable quarterly in arrears. All
capital to be repaid within 5 years from the date of the draw down on the facility.
Additionally a security over the property, plant and equipment of Kareevlei Mining (Pty) Limited is
held, see note 5 for further detail.
During the period ended 31 December 2020 an interest charge of £9,716 (2019: £10,701) was
recognised on the total capital drawn down. Outstanding at the period ended 31 December 2020 was
£68,308 capital and £3,705 interest.
A Waugh
BlueRock Diamonds Plc and its subsidiary Kareevlei Mining Proprietory Limited entered into a loan
agreement with Adam Waugh (Former Non-Executive Director) on 17 August 2018. The loan was
fully drawn down on 17 August 2018. The Loan will only be available to satisfy any final
determination of any further claim that Mr CB Visser brings. Refer to note 15 and 27 for further details
of the claims instituted by Mr Visser.
The principal amount of the loan is £181,400. The key provisions of the loan are as follows:
- a term of up to three years, but pre-payable in full or in part at any time at the option of the
Company;
- an arrangement fee of 5 percent of the loan principal;
- interest payable of 11 percent per annum on the loan principal payable quarterly, 6 percent payable
in cash and the remaining 5 percent payable by a combination of cash and shares (at the Company’s
sole discretion);
- a repayment premium at an amount equal to 2 percent of the loan principal per month that the loan
is outstanding, payable on repayment of the loan in full or in part to be satisfied half in cash and half
in shares, at the mid-market price at the time of the relevant repayment, or cash (at the Company’s
sole discretion);
- and that in the event that the Company raises further funds, preference is given to repaying the
loan. It will be the Board’s intention to repay the Loan as soon as practicable
On 16 May 2019 it was further agreed with Adam Waugh to repay his loan in £30,000 quarterly
instalments in arrears commencing on 31 August 2019.
80
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
Borrowings continued...
Numovista Pty Ltd
During March 2020 Kareevlei Mining (Pty) Ltd entered into a sale of assets agreement with
Numovista Pty Ltd whereby mining equipment was purchased from Numovista (Pty) Ltd. Ownership
of the equipment transferred with the payment of the initial deposit. The balance of the loan is
repayable in 36 monthly instalments of £18,395. The effective interest rate is 9.75%.
16.2 Financial liability maturity analysis
Year ended 31 December 2020 - Group
Trade and other payables excluding non-
financial liabilities (Note 15)
Convertible loan
Loan facilities
Embedded derivative
Lease liabilities
Year ended 31 December 2019 - Group
Trade and other payables excluding non-
financial liabilities (Note 15)
Convertible loan
Loan facilities
Embedded Derivative
Lease liabilities
Year ended 31 December 2020 - Company
Trade and other payables excluding non-
financial liabilities (Note 15)
Convertible loan
Loan facilities
Embedded Derivative
Year ended 31 December 2019 - Company
Trade and other payables excluding non-
financial liabilities (Note 15)
Convertible loan
Loan facilities
Derivatives
Between 3 months
and
1 year
Between 2
and 5 years Over 5 years
Total
1,237,563
388,352
301,610
6,244
24,785
1,958,554
-
427,187
385,639
15,474
179,889
1,008,189
880,584
-
156,698
-
13,195
1,050,477
-
776,704
129,427
10,359
110,607
1,027,097
111,826
388,352
114,214
6,244
620,636
61,407
-
156,698
-
218,105
-
427,187
22,940
15,474
465,601
-
776,704
129,427
10,359
916,490
-
-
-
-
371,854
371,854
-
-
-
-
343,901
343,901
-
-
-
-
-
-
-
-
-
-
1,237,563
815,539
687,249
21,718
576,528
3,338,597
880,584
776,704
286,125
10,359
467,703
2,421,475
111,826
815,539
137,154
21,718
1,086,237
61,407
776,704
286,125
10,359
1,134,595
81
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
17. Revenue from contracts with customers
17.1 Revenue comprises:
Group
2020
Group
2019
Sale of diamonds
3,601,819
4,073,853
The revenue from the sale of rough diamonds is recognised at the point in time at which control transfers. Control of
the rough diamonds are transferred to the buyer when the tender closes.
17.2 Segmental reporting
Operating segments are identified on the basis of internal reports about components of the Group that are regularly
reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their
performance.
The Group's operations relate to the exploration for, and development of mineral deposits in the Kimberley region of
South Africa and as such the Group has only one reportable segment. The non-current assets in the Kimberley
region are £3,850,781 (2019: £1,984,809). All revenue consists of sales of diamonds in South Africa through
auctions as is customary in the industry. The Group sells its diamonds through auctions run by CS Diamonds.
18. Other gains and losses
Other gains and losses comprise:
Group
2020
Group
2019
Gain or loss on disposal of assets
Gain or loss on foreign exchange differences
Fair value (loss)/gains on derivatives
Total other gains and losses
853
(481,779)
(11,359)
(492,285)
-
(47,291)
2,104
(45,187)
82
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
19. Loss from operating activities
Loss from operating activities includes the
following separately disclosable items
Group
2020
Group
2019
Operating expenses
Operational and direct costs
Property plant and equipment
- depreciation
Right-of-use assets
- depreciation
Mining assets
- amortisation
Inventory on hand
- Diamond stock movement
- Stockpiles and consumables movement
Share-based payments
- Equity-settled share-based payments
3,761,554
3,585,514
221,321
285,824
55,030
53,880
31,821
32,223
170,535
127,593
(337,003)
(310,184)
266,127
114,348
Staff costs
1,107,426
991,514
Auditor's remuneration
Audit fees - audit of financial statements
Audit fees - audit of accounts of subsidiary of
company
Other audit-related services - Interim review
Other services - Agreed upon procedures
60,400
32,386
-
-
92,786
35,350
8,460
5,125
1,845
50,780
Staff numbers and costs
Directors' remuneration
Staff salaries
Group
2020
Group
2019
Company
2020
Company
2019
165,233
942,193
1,107,426
161,417
830,097
991,514
165,233
20,440
185,673
161,417
4,050
165,467
Refer to note 27.3 for further details of directors' remuneration.
The table above relates to the Directors remuneration, key management personnel and employees of the Group.
Directors
Administration and production
2020
Number
2019
Number
4
86
90
4
60
64
83
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
20. Finance income
Finance income comprises:
Group
2020
Group
2019
Interest received from financial institutions
24,209
25,460
21. Finance costs
Finance costs included in profit or loss:
Group
2020
Group
2019
Finance charges - trade and other payables
Finance charges - loan facilities
Finance charges - convertible loan notes
Finance charges - leases
Finance charges - provisions
Finance charges - financial institutions
Total finance costs
9,424
64,816
38,835
51,376
27,761
55,810
248,022
8,578
30,863
70,610
23,205
2,337
56,757
192,350
22.
Income tax expense
22.1 Income tax recognised in profit or loss:
Group
2020
Group
2019
Deferred tax
Originating and reversing temporary differences
-
-
22.2 The income tax for the year can be reconciled
to accounting loss as follows:
Group
2020
Group
2019
Loss before tax from operations
(2,988,808)
(684,244)
Income tax calculated at 19% (2019: 19%)
Tax effect of
- Differences in rates (South African tax)
-
purposes
Unrecognised tax losses and timing differences
Tax charge
(Income)/Expenses not deductible for
tax
(567,874)
(130,006)
(207,788)
(60,065)
253,132
522,530
-
244,664
(54,593)
-
-
-
-
-
244,664
-
The group has tax losses carried forward of £3,329,158 (2019: £2,921,732) for which no deferred tax asset is
recorded given insufficient certainty regarding the timing of future taxable profits.
84
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
23. Share-based payments
23.1 The company had the following share based payment agreements which are described below:
share option plan -
share option plan -
Type of arrangement
Directors
Tranche 4
Directors
Tranche 5
Directors
Tranche 9
Directors
Tranche 10
Directors
Tranche 11
share option plan -
share option plan -
share option plan -
Number of
Date of grant
01/05/2016
shares granted Contractual life
1,552
4 years
Exercise
price
5,500p
19/01/2017
4,454
5 years
2,500p
16/05/2019
228,060
5 years
18/02/2020
130,320
5 years
18/02/2020
465,615
5 years
50p
85p
85p
Tranche 4 and 5 have fully vested. All options in Tranche 4 lapsed during the period.
Tranche 9 options are split with half vesting 1 year from the date of grant and half vesting immediately on the date of
grant. Tranche 9 options have fully vested.
Tranche 10 options vested immediately on the date of grant.
Tranche 11 options are split with half vesting 1 year from the date of grant and half vesting 2 years from the date of
grant.
23.2 Movements in the number of share options outstanding and their related weighted average exercise prices
are as follows:
Outstanding at the beginning of the period
Granted during the period
Expired during the period
Outstanding at the end of the period
Weighted
average
exercise price
in pence
2020
132.77
85.00
5,500.00
132.77
Weighted
average
exercise
price in
pence
2019
2,235
50.00
688.70
132.77
Options
2020
234,066
595,935
(1,551)
828,450
Options
2019
22,961
228,060
(16,955)
234,066
Exercisable at the end of the period
92.65
362,835
211.39
120,037
85
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
Share-based payments continued...
23.3 Options granted during the year
Options are valued at the date of grant using the Black-Scholes option pricing model.
The fair value per option of options granted during the current period and 2019 and the assumptions used in the
calculation are shown below:
Average grant date share price (p)
Average exercise price (p)
Share price volatility (p.a)
Risk-free interest rate (p.a)
Dividend yield (p.a)
Average contractual life (years)
Average fair value per option (p)
23.4 Share based payment expense
2019
Tranche 9
2020
Tranche 10
67.50
50.00
86 %
0.83%
0 %
5.00
48.43
88.00
85.00
83 %
0.48%
0 %
5.00
57.70
Tranche 11
88.00
85.00
83 %
0.48%
0 %
5.00
57.70
The total share-based payment expense for the year ended 31 December 2020 was £266,127 (2019: £114,348) in
relation to share options.
24. Earnings per share
24.1 Basic earnings per share
Group
2020
Group
2019
Loss for the year attributable to owners of the
company
(2,388,532)
(510,722)
Weighted average number of ordinary shares
6,753,581
2,470,871
6,753,581
2,470,871
Basic loss per share
(0.35)
(0.21)
(0.10)
(0.01)
24.2 Additional disclosures
Share options granted to directors could potentially dilute EPS in the future but are not included in a dilutive EPS
calculation because they are antidilutive for the period.
86
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
25. Contingent liabilities
Dispute with former director
Group
2020
Group
2019
Company
2020
Company
2019
Estimated financial effect
55,424
60,067
55,424
60,067
The amount payable to CB Visser and his related companies as disclosed in Note 15, is currently under dispute. CB
Visser is a former director and CEO of both Kareevlei Mining (Pty) Ltd and BlueRock Diamonds Plc. who resigned
during September 2016. The total claim submitted by him amounts to £238,788 of which £183,364 has been
accounted for under trade and other payables. The Group has given security for the amount of £214,499 in respect
of the above claim. This security is held in trust by the group's lawyers. The company's legal advisors are of the
opinion that based on current available information, the claims are without merit.
87
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
26. Cash used in operations
Group
2020
Group
2019
Company
2020
Company
2019
(Loss)/profit before taxation
Adjustments for non-cash items
Interest accrued on group loan
Interest accrued on convertible
loan notes
Interest accrued on borrowings and leases
Interest on rehabilitation provision
Decrease / (increase) in
inventories
Decrease / (increase) in trade and
other receivables
Increase in trade and other
payables
Depreciation and amortisation
Share-based payments
Fair value movement on derivatives
Foreign exchange movements
Gains on disposal of property,
plant and equipment
Total non-cash adjustments
Cash used in operations
(2,988,808)
(684,244)
(680,058)
(16,850)
-
38,835
116,193
27,761
298,127
-
70,609
(615,074)
38,835
(694,076)
70,609
54,067
2,337
(647,188)
19,860
-
-
30,862
-
7,352
14,910
15,024
(57,187)
(44,466)
401,035
295,912
50,419
2,675
308,172
266,127
11,359
481,779
(853)
371,927
114,347
(2,104)
47,291
-
-
266,127
11,359
435,318
-
-
114,347
(2,104)
43,321
-
1,963,445
(1,025,363)
322,222
(362,022)
149,657
(530,401)
(471,480)
(488,330)
Reconciliation of liabilities from financing
Loans and
borrowings
Lease liabilities
Total
Group:
At 1 January 2019
Cash flows:
Draw down
Repayment
Non-cash flows:
Loans converted into share capital
Financial liabilities raised and modifications
Interest accruing
Decrease through net exchange differences
At 31 December 2019
Cash flows:
Draw down
Repayment
Non-cash flows:
Loans converted into share capital
Financial liabilities raised and modifications
Interest accruing
Decrease through net exchange differences
At 31 December 2020
404,525
228,831
633,356
-
(142,262)
(7,000)
-
30,862
-
286,125
-
(245,237)
(11,938)
593,482
64,817
-
687,249
-
(63,545)
-
(205,807)
-
280,509
23,205
(1,297)
467,703
(7,000)
280,509
54,067
(1,297)
753,828
-
(66,380)
-
(311,617)
-
151,655
51,376
(27,826)
576,528
(11,938)
745,137
116,193
(27,826)
1,263,777
All movements on convertible loan notes and derivatives were non-cash. The Company figures comprise the loans
and borrowings above, excluding leases liabilities.
88
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
27. Related parties
27.1 Relationships
Name
William van Wyk
Ghaap Mining (Pty) Ltd
Subsidiaries:
Teichmann Company Limited
Numovista Pty Ltd
Nature of relationship
Minority interest in Kareevlei Mining (Pty) Ltd
William van Wyk is a majority shareholder of this company
Kareevlei Mining Proprietory Limited
Diamond Resources Proprietory Limited
Significant shareholder in BlueRock Diamonds Plc
Common shareholder with significant influence
89
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
Related parties continued...
27.2 Related party transactions and balances
Loan account - Owing by related party
Kareevlei Mining Proprietory Limited
Management fees owing by related party
Kareevlei Mining Proprietory Limited
Trade payables due to related party
Group
2020
Group
2019
Company
2020
Company
2019
-
-
-
-
9,784,358
7,555,575
575,674
496,474
Teichmann Company Limited
Numovista Pty Ltd
277,436
550,095
179,054
-
-
-
-
-
Transactions with related parties
Kareevlei Mining Proprietory Limited
- Interest received
- Management fees received
Teichmann Company Limited
- Contractor fees paid
Numovista Pty Ltd
- Purchase of plant and equipment
Ghaap Mining (Pty) Ltd
- Contractor fees paid
William van Wyk
- Interest paid
-
-
-
-
615,074
79,200
694,076
79,200
1,176,476
739,202
650,000
56,655
-
-
3,083
3,759
-
-
-
-
-
-
-
-
As at 31 December 2020 the balance payable on the vehicle lease facilities entered into with William van Wyk was
£27,264 (2019: £26,918).
A Waugh
- Interest paid - A Waugh
- Consulting fees paid
10,144
25,000
27,741
-
10,144
25,000
27,741
-
During August 2018 the Group entered into a loan agreement with A Waugh. See note 16 for further details. As at
31 December 2020 the balance payable on the loan agreement was £65,141 (2019: £169,127).
90
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
Related parties continued...
27.3 Compensation paid to directors and key management personnel
Directors:
MJ Houston - received fees of £59,500 (2019: £55,417)
TG Leslie - received fees of £19,167 (2019: £10,000)
D Facey - received fees of £59,000 (2019: £56,000)
AT Simbanegavi - received fees of £27,500 (2019: £nil)
A Waugh - received fees of £nil (2019: £40,000) *
Key management personnel:
AT Simbanegavi - received salary from Kareevlei Mining Proprietory Limited of £113,622 (2019: £93,237)
* A Waugh resigned as director on 18 September 2019.
27.4 Placing and subscriptions
The directors subscribed to the following shares and share options during the
year:
Name
MJ Houston (Executive Chairman)
DA Facey (Chief Financial Officer)
AT Simbanegavi (Chief Operating Officer)
A Waugh (Former Non-Executive director)
28. Events after the reporting date
Fundraising
Number of
ordinary
shares issued
Share options
issued
14,286
181,564
14,286
116,404
14,286
297,967
21,935
-
64,793
595,935
During February 2021 the Company successfully raised an aggregate before expenses of £1,500,000 via the issue
of 3,750,000 ordinary shares of 5 pence each in the capital of the Company through a placing and subscription at 40
pence per new share.
In May 2021 as a result of increasing costs and delays related to our expansion project we entered into heads of
terms for a loan to raise a further £1.61 million, which will be exchanged for a convertible loan note, subject to
Takeover Panel and independent shareholder approval. The funds are due to be received in 12 equal monthly
instalments and the first payment was received in June 2021.
91
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
29. Financial risk management
29.1 Financial risk factors
The group's activities expose it to a variety of financial risks: market risk (including currency risk, price risk and cash
flow interest rate risk), credit risk and liquidity risk.
29.2 Market Risk
29.2.1 Foreign exchange risk
Management has set up a policy to require group companies to manage their foreign exchange risk against their
functional currency. To manage their foreign exchange risk arising from future commercial
transactions and
recognised assets and liabilities, entities in the group may use forward contracts. Foreign exchange risk arises when
future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the
entity’s functional currency.
Sensitivity analysis
At 31 December 2020, if the pound sterling had weakened/strengthened by 12% against the South African Rand
with all other variables held constant, post-tax loss for the year would have been £247k lower (2019: £72k) or £314k
higher (2019: £91k), mainly as a result of foreign exchange gains or losses on translation of South African Rand
denominated trade receivables and intragroup borrowings. The exchange rates used for conversion of South African
rand monetary items to Sterling were – 2020: 21.07 (2019: 18.44).
29.2.2 Price risk
The profitability of mining operations is directly related to the prevailing diamond price. Historically, diamond prices
have been volatile and are affected by numerous factors which the Group is unable to control or predict, including
world production levels,
industrial and consumer demand, currency exchange
fluctuations, seasonality, speculative activity and political events.
international economic trends,
The Group realises US Dollars for its diamond sales, and reports its results in Pounds Sterling. Should the South
African Rand strengthen against
the Group’s mining operations, which are largely
denominated in South African Rand, may be adversely affected. Should the US Dollar weaken against the Pound,
the Group’s revenues may be reduced.
the costs of
the Pound,
Should market prices for raw materials, services and equipment, such as diesel or mining equipment increase, the
Group’s results may be adversely affected. The Group seeks to obtain the best rate for each product or service,
taking into account price, service quality and reliability.
Sensitivity analysis
An increase in the average US Dollar diamond price per carat of 10%, with all other variables held constant would
have decreased post-tax loss by £360k (2019: £406k), while a decrease would have increased post-tax losses by
£360k (2019: £406k)
29.2.3 Interest rate risk
The Group has borrowings that incur interest at fixed rates and therefore does not have significant risk relating to
movements in interest rates. The Group’s fixed rate borrowings comprise convertible loan notes and loan facilities
which incur interest at fixed interest rates of between 10% and 12.50%.
92
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
Financial risk management continued...
29.2.4 Covid 19 risk
Possible further shutdown
There is a risk that the South African Government may impose a second shutdown should the spread of the
infection increase. There have been no infections to date at the mine and the Group has taken measures to protect
its employees and has plans in place to detect and isolate cases.
29.3 Credit risk
Credit risk consists mainly of cash deposits and cash equivalents. The Group only deposits cash with major banks
with high quality credit standing and limits exposure to any one counter-party.
The credit risk on receivables from subsidiaries is significant and their recoverability is dependent on the discovery
and successful development of economic reserves by these subsidiaries' undertakings. Given the nature of the
Group’s business significant amounts are required to be invested in exploration activities. The Directors manage this
risk by reviewing expenditure plans and budgets in relation to projects. This review ensures that any expenditure is
value-enhancing and as a result the amounts receivable will be recoverable subject to successful discovery and
development of economic reserves. The maximum credit exposure of the Company as at 31 December 2020 was
£11,033,747 (2019: £8,466,787) of which £9,784,358 (2019: £7,555,575) is related to the subsidiary loan. The
maximum credit risk of the Group as at 31 December 2020 was £732,125 (2019: £446,552).
The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for the subsidiary loan receivable and considered scenarios including recovery via future
production, via sale of licences and a scenario in which the loan cannot be realised.
Based on analysis of forecasts and the underlying Inferred Resource value no expected credit loss provision is
considered to apply.
29.4 Liquidity risk
The Group’s risk to liquidity is a result of the funds available to cover future commitments. The Group manages
liquidity risk through an ongoing review of future commitments and credit facilities. The maximum exposure from the
Group's financial liabilities, including borrowings, lease liabilities and trade and other payables are set out in note
16.2.
29.5 Capital risk management
The Group's capital management objectives are:
• to safeguard the Group's ability to continue as a going concern and provide access to adequate funding for its
exploration and development project so that it continues to provide returns and benefits to shareholders;
• to support the Group's growth; and
• to provide capital for the purpose of strengthening the Group's risk management capability.
The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and
equity holder returns, taking into consideration the future capital requirements of the Group including planned
exploration work and capital efficiency, projected profitability, projected operating cash flows and projected capital
expenditures. Management regards total equity as capital and reserves,
for capital management purposes If
additional equity funding should be required, the Group may issue new shares.
93
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
30. Prior period error
As at 31 December 2020, BlueRock Diamonds Plc, the company, had receivables owing to it from its underlying
operating subsidiary in South Africa amounting to £10,360,032 (2019: £8,052,049). Whilst legally these receivables
are repayable on demand, given that the nature of the funding is for the subsidiary's operational activity on long term
assets, it is unlikely that these receivables will be called in the next 12 months or realised within a 12 month period.
For 31 December 2020 the receivables have been classified to non-current assets which reflects the period in which
these assets will be realised in line with the requirements of IAS 1. The nature of these receivables has not changed
in the last 12 months and therefore the receivables should have also been classified as non-current in the prior
financial period. The comparative for 2019 has also been restated to reflect the receivables as non-current assets.
The overall impact in 2020 is a decrease in current assets of £8,052,049 and an increase in non-current assets of
£8,052,049 on the Company statement of financial position. There is no impact on comparative total assets, net
assets, profit or loss or cash flow movements.
31. Fair value measurement of financial instruments
Financial liabilities measured at fair value in the statement of financial position are grouped into three Levels of a fair
value hierarchy. The three Levels are defined based on the observability of significant inputs to the measurement, as
follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly
• Level 3: unobservable inputs for the asset or liability.
The following table shows the Levels within the hierarchy of financial assets and liabilities measured at fair value on a
recurring basis as at each year end:
Financial liabilities held at fair value through
profit and loss:
Group
2020
Group
2019
Company
2020
Company
2019
Embedded derivative (level 3)
21,718
10,359
21,718
10,359
The Group’s management team perform valuations of financial items for financial reporting purposes, including Level
3 fair values. Valuation techniques are selected based on the characteristics of each instrument, with the overall
objective of maximising the use of market-based information.
Embedded derivative (level 3)
The derivative financial instrument is a level 3 valuation as it is not possible to observe all future additional financing
requirements for the Group to perpetuity. Therefore, the future conversion price of the convertible loan notes may be
reduced. As a result the derivative has been valued using the Monte-Carlo simulation with 5,000 iterations to
anticipate the Group share price movements to provide a valuation for the convertible loan note. Inputs included in
the Monte Carlo simulation were: the Company’s historical and current share price, the convertible loan exercise
price, the risk-free rate of return, the convertible loan grant date and vesting period.
94
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notes to the Annual Report and Financial Statements
Figures in £
32. Ultimate controlling party
The Group considers that there is no ultimate controlling party.
95
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of BlueRock Diamonds plc (the “Company”) will be held at
10am on 22 July 2021 at the offices of SP Angel, 35- 39 Maddox Street, London, W1S 2PP, for the purposes of
considering the business set out below and, if thought fit, passing, the Resolutions set out below, which in the case of
Resolution 6 will be proposed as a special resolution and in the case of Resolutions 1, 2, 3, 4, and 5 will be proposed
as ordinary resolutions.
Please note that due to COVID-19 and the UK’s Government restrictions on travel, assembly and guidance on
meetings, shareholders, their proxies and corporate representatives are requested not to attend in person, as they
will not be admitted to the meeting Shareholders are only able to vote on resolutions set out in the Notice of AGM by
proxy. Further details can be found below.
Ordinary Resolutions
1
2
3
4
5
THAT the financial statements of the Company for the year ended 31 December 2020 and the reports of the
Directors and auditor thereon be received and adopted.
THAT Mike Houston, who retires by rotation, be re-elected as a Director of the Company.
THAT Rob Croll, who is retiring having been appointed by the directors of the Company since the last annual
general meeting of the Company and who being eligible offers himself for election as a director of the Company.
THAT BDO UK LLP be re-appointed as auditor to the Company to hold office from the conclusion of the Meeting
until the conclusion of the next Annual General Meeting and to authorise the Directors to determine the auditor’s
remuneration.
THAT the Directors be and they are hereby generally and unconditionally authorised for the purposes of Section
551 of the Companies Act 2006 (the “Act”) to exercise all the powers of the Company to allot shares in the
Company and grant rights to subscribe for or to convert any securities into shares in the Company subject to the
following conditions:
5.1 that the maximum aggregate nominal amount of shares to be allotted in pursuance of such authority
shall, be £706,050; and
5.2 that this authority shall expire on the earlier of 22 October 2022 or the conclusion of the Company’s
next Annual General Meeting unless revoked, varied or renewed before that date save that the
Company may, before such expiry, make an offer or agreement which would or might require shares
in the Company to be allotted or rights to subscribe for or to convert any securities into shares in the
Company to be granted after such expiry and the Directors may allot shares in the Company or grant
rights to subscribe for or to convert any securities into shares in the Company in pursuance of such
offer or agreement notwithstanding that the authority conferred hereby has expired.
This resolution revokes and replaces all unexercised authorities previously granted to the Directors to allot
shares and grant rights to subscribe for or convert any securities into shares in the Company but without
prejudice to any allotment of shares or grant of rights already made, offered or agreed to be made pursuant
to such authorities.
96
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notice of Annual General Meeting
Special Resolution
6
THAT, conditional upon the passing of Resolution 5, the Directors be and they are hereby generally and
unconditionally empowered pursuant to Section 570 of the Act to exercise all powers of the Company to allot
equity securities (within the meaning of Section 560 of the Act) for cash pursuant to the general authority
conferred by Resolution 5 above as if Section 561(1) of the Act did not apply to any such allotment, provided that
this power shall be limited to the allotment of equity securities:
6.1 in connection with an offer of such securities by way of a rights issue, open offer or any other pre-
emptive offer to holders of ordinary shares in proportion (as nearly as may be practicable) to their
respective holdings of such shares, but subject to such exclusions or other arrangements as the
Directors may deem necessary or expedient in relation to fractional entitlements or any legal or
practical problems under the laws of any territory, or the requirements of any regulatory body or stock
exchange; and
6.2 otherwise than pursuant to paragraph 6.1 above, the allotment of equity securities for cash up to an
aggregate nominal amount of £706,050
this authority shall expire on the earlier of 22 October 2022 or the conclusion of
the
provided that
Company’s next Annual General Meeting unless revoked, varied or renewed before such date, save that
the Company may, before such expiry make an offer or agreement which would or might require equity
securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of any
such offer or agreement notwithstanding that the power conferred hereby has expired. This resolution
revokes and replaces all unexercised authorities previously granted to the Directors to allot shares and
grant rights to subscribe for or convert any securities into shares in the Company but without prejudice to
any allotment of shares or grant of rights already made, offered or agreed to be made pursuant to such
authorities.
PROVISIONS FOR ATTENDANCE AND VOTING
is not essential
for work purposes. The Company will procure that a quorum of
Due to the ongoing UK Government “stay at home measures” which at the time of publication of this
document include a prevention of public gatherings of more than six people, and with a view to holding the
General Meeting in a manner consistent with the need to prevent the spread of Covid-19, the Directors
have formed the view, which is supported by the Chartered Governance Institute (ICSA), that attendance in
person at a general meeting by a shareholder, other than one specifically required to form the quorum for
two
that meeting,
Shareholders (currently anticipated to be the Chairman and one other) will be present at the General
Meeting. Other Shareholders must not attend the General Meeting in person and any person seeking to
attend the General Meeting will be refused entry. The Resolutions will be voted on by way of a poll vote
and Shareholders, other than the two Shareholders attending the General Meeting as referred to above,
are strongly advised to appoint
the chairman of the meeting as a proxy to vote on their behalf if they want
their vote to count. Details of how to appoint the chairman of the meeting as your proxy are set out on the
Form of Proxy. You are free to appoint someone else as your proxy but if you do they will be refused entry
If you do not indicate
to the General Meeting and in those circumstances your vote would not count.
clearly on the Form of Proxy as to how you wish the chairman of the meeting to vote, the chairman will use
his discretion in relation to the resolutions being put before the meeting and Shareholders are being asked
to submit their votes by way of proxy, appointing the chairman of the meeting as their proxy. It is not
intended that the above arrangements for holding the General Meeting will be altered, even if there is any
relaxation of the current UK Government “stay at home measures”.
97
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notice of Annual General Meeting
By order of the Board
David Facey
Company Secretary
Registered Office:
4th Floor
Reading Bridge House
George Street
Reading
Berkshire
RG1 8LS
Date: 30 June 2021
98
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notice of Annual General Meeting
Appointment of proxies
1. As a member of the Company, you are entitled to vote at the meeting but in view of the Covid-19 circumstances all
voting will be via a proxy given to the chairman of the meeting, and you should have received a proxy form with this
notice of meeting. You can only appoint a proxy using the procedures set out in these notes and the notes to the
proxy form.
2. A proxy does not need to be a member of the Company but must attend the meeting to represent you. Details of how
to appoint the chairman of the meeting or another person as your proxy using the proxy form are set out in the notes
to the proxy form. However, as the AGM will be a closed meeting due to Covid-19, proxies, other than the chairman
of the meeting, will be denied entrance and therefore in order for your vote to count you need to appoint the chairman
of the meeting
3. Details of how to appoint the chairman of the meeting as your proxy using the proxy form are set out in the notes to
the proxy form.
4. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or
against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at their discretion.
Your proxy will vote (or abstain from voting) as they think fit in relation to any other matter which is put before the
meeting.
Appointment of proxy using the proxy form
5. The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their vote. To
appoint a proxy using the proxy form, it must be:
5.1 completed and signed;
5.2 sent or delivered to the Company’s registrars, Share Registrars Limited, The Courtyard, 17 West Street,
Farnham, Surrey, GU9 7DR, or scanned and emailed to voting@shareregistrars.uk.com (please include “BlueRock
Diamonds Plc” and your full name in the subject line of the email); and
5.3 received by Share Registrars Limited no later than 10am on 20 July 2021.
6.
In the case of a member which is a company, the proxy form must be executed under its common seal or signed on
its behalf by an officer of the company or an attorney for the company.
7. Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of such
power or authority) must be included with the proxy form.
8. The Company, pursuant to regulation 41 of the Uncertificated Securities Regulations 2001 (SI 2001/3755) and
paragraph 18(c) Companies Act 2006 (Consequential Amendments) (Uncertificated Securities) Order 2009, specifies
that only those ordinary shareholders registered in the register of members at 10 am on 20 July 2021 or, in the event
the meeting is adjourned, on the register of members 48 hours excluding non business days, before the date of any
adjourned meeting, shall be entitled to attend or vote at the meeting in respect of the number of ordinary shares in
the capital of the Company registered in their name at that time.
Changes to entries on the relevant register of securities after that time will be disregarded in determining the rights of
any person to attend or vote at the meeting.
99
BlueRock Diamonds Plc
(Registration Number 08248437)
Annual Report and Financial Statements for the year ended 31 December 2020
Notice of Annual General Meeting
Appointment of proxy by joint members
9.
In the case of joint holders of shares, where more than one of the joint holders purports to appoint a proxy, only the
appointment submitted by the most senior holder (being the first named holder in respect of the shares in the
Company’s register of members) will be accepted.
Changing proxy instructions
10. Where you have appointed a proxy using the hard copy proxy form and would like to change the instructions using
another hard copy proxy form, please contact Share Registrars Limited. If you submit more than one valid proxy
appointment, the appointment received last before the latest time for the receipt of proxies will take precedence. Note
that
time for receipt of proxy forms specified in paragraph 5 also applies in relation to amended
instructions. Any amended proxy appointment received after the specified cut off time will be disregarded.
the cut off
Termination of proxy appointments
11.
In order to revoke a proxy instruction you will need to inform the Company by sending a signed hard copy notice
clearly stating your intention to revoke your proxy appointment to Share Registrars. In the case of a member which is
a company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the
company or an attorney for the company. Any power of attorney or any other authority under which the revocation
notice is signed (or a duly certified copy of such power or authority) must be included with the revocation notice.
12. The revocation notice must be received by the Company no later than 10.00 a.m. on 20 July 2021.
13.
If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, your
proxy appointment will remain valid.
Corporate representatives
14. A corporation which is a member can appoint one or more corporate representatives who may exercise, on its behalf,
all its powers as a member provided that no more than one corporate representative exercises powers over the same
share.
Total voting rights
15. As at 6 p.m. (BST) on 29 June 2021 (being the last business day prior to the publication of this notice), the
Company’s issued share capital comprised 14,121,202 ordinary shares of £0.05 each. Each ordinary share carries
the right to one vote at a general meeting of the Company and, therefore, the total number of voting rights in the
Company as at 6 p.m. (BST) on 29 June 2021 is 14,121,202.
Communication
Except as provided above, members who have general queries about the meeting should contact the Company’s
registrar, Share Registrars Limited, The Courtyard, 17 West Street, Farnham, Surrey, GU9 7DR.
100