Kazera Global plc

("Kazera" or the "Company")

Diamond Processing Plant Update - Significant Impact to Kazera Throughput

Kazera Global plc, the AIM quoted investment company, is pleased to provide an update in relation to the Muisvlak Diamond Processing Plant which the Company currently uses for its diamond mining activities at Alexander Bay, South Africa.

Highlights

·      Six times increase to Muisvlak Diamond Processing Plant (the "Plant") throughput anticipated as a result of the establishment of a Joint Venture between MV FIVE (Pty) Ltd ("MV5"), a company representing the local community, and Kazera which will see MV5  taking over control of the Plant as part of a 5 year contract

o  As part of the deal, throughput at the Plant is expected to increase six-fold to 35,000 tons of gravel per month, significantly increasing the amount of gravel Kazera can process from its activities at Alexander Bay

o  Profits from the joint venture, which will come from other operators utilizing the Plant, will be split on a 30/70 basis in favour of Kazera

o  The joint venture expects significant job creation within the local and regional community

·      It is anticipated that increased throughput will be achieved by increasing the number of shifts as well as completing various operational efficiencies

o  The Plant is anticipated to become operational by 1 October 2021

·      Management of the Plant also gives the joint venture access to a mining area containing over 400,000 carats of diamonds.

·      Kazera expects the change in plant ownership to significantly increase the profitability of its Diamond mining operations

Following discussions with Alexkor and the local community, Alexkor has agreed that MV FIVE (Pty) Ltd ("MV5"), a company representing the local community, will operate the Processing Plant at Muisvlak (the "Plant") for an initial period of five years as well as benefiting from a further five year extension  option with the agreement of all parties. MV5 will also have the right to co-ordinate mining activities in the Southern region of the Alexander Bay mining area.

MV5 and Kazera have entered into a separate joint venture agreement, pursuant to which Kazera will bring the Plant up to required Health and Safety Standards and implement procedures to improve its operational efficiency. This joint venture will then manage the Plant and the associated mining activities, with profits to be shared on a 70/30 basis in favour of Kazera.

Background 

The Company's South African subsidiary, Deep Blue Minerals ("Deep Blue"), commenced purchasing machinery in June 2020 and has, since then, acquired mining blocks and started mining at the Alexander Bay area. For the last 5 months it has largely been a positive contributor to the financial performance of the Company. Deep Blue's operations however have been hampered by its inability to process all the gravels it has produced as a result of operating issues at the Plant. Consequently, Deep Blue and other contractors currently have large stockpiles of diamond bearing gravels awaiting processing.

The Plant, which was commissioned in 2013 at an estimated cost of approximately £6 million, has the ability to process up to 150 tons per hour of gravel. In recent months it has been only been operating one shift per day at an average of 7 out of 22 working days due to difficulties associated with the Covid-19 pandemic and, more significantly, various staff redundancies that the operators of the Plant have been forced to implement.

The diminished operations of the Plant have impacted on all contractors and the local community who rely heavily on the ability to sell diamonds.

MV5 and Improvements to the Plant

To ensure the proper operation of the Plant, Alexkor have entered into a contract with the local community, represented by MV5, pursuant to which MV5 will take over the operation of the Plant. The contract is for a 5 year period with a possible extension of a further 5 years.

MV5 have now entered into a joint venture with Kazera, in terms of which Kazera will undertake to bring the Plant to acceptable Health and Safety standards and then to implement improvements to its operation and efficiency. Profits from the joint venture will be split between MV5 and Kazera on a 30/70 basis in favour of Kazera.

By investing in a number of upgrades, including a screening plant to remove oversize materials before they enter the plant (reducing volumes to be processed as well as wear and tear), Kazera and MV5 believe that they can run the plant on two 10 hour shifts per day and achieve a monthly throughput of 35,000 tons of gravel per month. This is a material increase of 6 times the average monthly throughput over the recent period which means that Kazera and the other contractors have the potential to increase their diamond production by up to six times.

Management of the Plant also gives the MV5/Kazera joint venture access to a mining area which contains over 400,000 carats of diamonds.

MV5 and Kazera will also have control of the entire infrastructure relating to the Plant, including workshops, workers' accommodation and security. The Plant will also provide an established base for the mining of Heavy Mineral Sands.

Kazera and MV5 are confident that the Plant can be operational by 1 October 2021, from which date it will begin generating revenues for the MV5/Kazera joint venture as contractors incur a fee per ton processed. This money will be paid directly to the MV5/Kazera joint venture by the contractors. Of equal importance, the proper operation of the Plant will allow Deep Blue and other contractors the opportunity to process the vast stockpiles of gravel that they have accumulated over the past year and to realise the value of the diamonds contained therein. It will also allow Deep Blue to ensure that, in the future, all gravel mined by it in a mining cycle is processed and ready for final sorting during that cycle.

Dennis Edmonds, Kazera Joint Chief Executive Officer, commented: 

"This development is a major milestone for our diamond mining operations.

"We have been severely constrained in the past due to our inability to process the thousands of tons of gravel that the team in South Africa have been producing on a monthly basis. This joint venture has the potential to provide a potential six-fold increase in diamonds produced, which will create a significant profit for the Company. It is reflective of the high regard in which our team in South Africa is held, as well as of the commitment of both Alexkor and the local community to working together to achieve a stable and profitable environment for mining contractors and the wider community."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No. 596/2014 ('MAR').

For further information on the Company, visit: www.kazeraglobal.com

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