AIM-listed company BlueRock Diamonds has awarded a mining services contract to South African civil engineering and mining group Teichmann.

The finalisation of the contract follows after the company announced in May that it was in talks with a Teichmann Group member to provide the ore required to meet its production plans.

According to BlueRock, Teichmann’s expertise in mining operations will help de-risk its mining activities and enable it to meet production targets in an efficient manner at reduced costs.

Under the contract, Teichmann will extract ore, waste and haul to stockpile, break it down to the required size, and deliver it to the processing plant.

The contract, which is awarded for a period of five years, was effective from 1 July.

The estimated cost of Teichmann’s services for the 12 months ending 30 June 2020, amounts to approximately ZAR21m (£1.179m). It will be paid on a cost per tonne basis.

BlueRock Diamonds executive chairman Mike Houston said: “Teichmann have been on site since 1 July as was planned, and we have established a good working relationship.

“The upgrading of our mining operation is key to the overall success of the business and having an experienced mining contractor is an essential part of this process.

“I believe that our partnership with the wider Teichmann Group will provide further benefits going forward as we continue to implement our defined growth strategy.”

Teichmann Group holds a 19% stake in BlueRock. It invested £310,000 in the fundraising announced on 16 May.

In September last year, the company started kimberlite processing from its second pipe, KV1, at the Kareevlei Diamond Mine in the Kimberley region of South Africa.

BlueRock has five known kimberlite pipes, including KV1, within the Kareevlei project area.