BlueRock Diamonds : News Release

BlueRock Diamonds is an AIM-listed diamond producer which operates the Kareevlei Diamond Mine near Kimberley in South Africa which produces diamonds of exceptional quality and ranks in the top ten in the world in terms of average value per carat. The Kareevlei licence area covers 3,000 hectares and hosts five known diamondiferous kimberlite pipes with a combined inferred resource of 10.4 million tonnes / 516,200 carats (February 2021); based on its planned production of 1 million tonnes per annum, this provides a minimum 10-year life of mine.

To Shareholders, option-holders and the holders of Existing CLNs

Dear All

PROPOSED ISSUE OF SUBSCRIPTION SHARES, NEW CONVERTIBLE LOAN NOTES, APPROVAL OF WAIVER GRANTED BY THE PANEL ON TAKEOVERS AND MERGERS OF RULE 9 OF THE CITY CODE ON TAKEOVERS AND MERGERS AND NOTICE OF ANNUAL GENERAL MEETING

1. INTRODUCTION
   On 5 July 2022 the Company announced that it had entered into the Subscription Agreement with Teichmann Company Limited and parties connected with TCL for an aggregate £1,650,157 and that the Company's subsidiary, Kareevlei, had entered into the Facility Agreement with TSA for up to
   ZAR30m.
   Subject to the satisfaction of a number of conditions relating to the grant of security, the Company expects, pursuant to the Subscription Agreement, to issue £1,066,411 Simple Loan Notes to the Noteholders with the intention that, subject to independent shareholder approval, further details of which are set out below, the Simple Loan Notes will be redeemed in consideration for the issue by the Company of the Subscription Shares and that this will be accompanied by the issue of New Convertible Loan Notes of £583,746 and an amendment to the Existing CLN, subject to the conditions set out in the Subscription Agreement and summarised below.
   The Company is requesting the support of Shareholders for the passing of the Resolutions, which are required in order to complete the Teichmann Financing (to the extent not already completed) and to avoid the need to redeem the Simple Loan Notes in case the Resolutions are not passed. The Resolutions will be proposed at the Annual General Meeting to be held on 7 September 2022.
   The Teichmann Concert Party currently holds 3,785,556 Ordinary Shares, equating to 17.4% of the issued ordinary share capital of the Company. The total number of Ordinary Shares of the Company immediately following issue of the Subscription Shares will be 37,011,192, of which the Teichmann Concert Party will hold 19,019,993 Ordinary Shares, representing 51.75% of the enlarged ordinary share capital of the Company. Following the issue of the Subscription Shares and conversion of the Existing CLNs and NCLNs into Ordinary Shares through the allotment and issue of the Existing Conversion Shares and the New Conversion Shares respectively, the enlarged share capital will be
   52,094,972 Ordinary Shares (assuming no other share issues and exercise of Michael Houston's options), of which the Teichmann Concert Party would hold 34,103,773 Ordinary Shares, representing 65.46% of the enlarged issued ordinary share capital of the Company. The total enlarged share capital and the Teichmann Concert Party's holding may be further increased by the issue of shares in accordance with the Broker Option which is further described in paragraph 5 below. Under the Broker
   Option, the Teichmann Concert Party's holding would still represent a maximum of 65.46% of the enlarged issued ordinary share capital of the Company.
2. BACKGROUND
   As announced by the Company on 1 June 2022, during the first five months of 2022, the Kareevlei Diamond Mine experienced nearly double its normal annual rainfall (561mm/22 inches). The wet season extended into what are normally considered dry months, April and May and in particular May, when the Company experienced over three times the long-term average, and this following on from a very wet Q1 had a significant impact on both mining development and processing against expectations.
   Mining development fell 36% (400,000 tonnes) as compared to budget for April and May, which limited the mine's access to quality kimberlite and necessitated the use of lower grade and more difficult to handle material (clay content) in Kareevlei's processing operations. Additionally, where the Company

had hoped to ramp up production at its new 1Mtpa processing plant, the unforeseen lost days to rain and the lower-grade feed resulted in operations being down against budget over the period March to May by 48% on tonnes processed, 51% on grade and 74% on carats produced.

Accordingly, while South Africa has since experienced drier weather conditions, the delayed roll out of the Company's mining development plan has impacted production output in Q2, and will impact Q3 and therefore the 2022 outlook which was revised down in the Company's announcement of 11 July 2022. In addition, as a result of global economic conditions, the Company is facing increased costs of production due to higher diesel prices and increased costs of major suppliers.

As a result of fewer diamonds being produced and sold (3,570 and 2,699 carats respectively in Q2 2022 versus 5,442 and 5,106 in Q2 2021) as well as increasing costs, BlueRock's cash resources have been depleted during what continues to be a period of heavy investment in mining development. The Company, therefore, entered discussions with TCL to support it through this period.

On 5 July 2022, the Company announced the Noteholders' subscription for £1,066,411 Simple Loan Notes. If the Resolutions are passed, they will be refinanced by subscription for the Subscription Shares for £1,066,411 in aggregate. Further, if the Resolutions are passed, the Noteholders will subscribe for the New Convertible Loan Notes for £583,746 in aggregate and the Existing CLN will be amended as described section 4 of part 2.

If the Resolutions are not passed, then the Simple Loan Notes become redeemable immediately plus the greater of £1,000,000 and the market value of the New Conversion Shares had they been issued. The refinancing of the Simple Loan Notes by subscription for the Subscription Shares, combined with the issue of the New Convertible Loan Notes and amendment of the Existing CLN, will, therefore, save the Company considerable liability.

The terms of the Subscription Agreement, the Simple Loan Note Instrument, the New Convertible Loan Note Instrument and amendment of the Existing CLN are summarised in section 4 of part 2.

The Teichmann Concert Party has been a substantial shareholder and partner of BlueRock for a number of years now and has a good working relationship with the Board. The Teichmann Financing will allow the Noteholders to increase their exposure to the Kareevlei mine which the Company believes offers considerable value to all shareholders particularly once the current expansion project, which the Teichmann Concert Party has helped to fund, is completed and the mine is operating at its targeted run rate of 1m tonnes per annum.

The Noteholders and TSA have confirmed that the NCLNs will be funded from their existing cash resources. No management incentivisation arrangements are agreed or proposed in connection with the Teichmann Financing.

3 THE TEICHMANN FINANCING Subscription Agreement, SLNs and CLNs

On 4 July 2022 the Company and Noteholders entered into the Subscription Agreement pursuant to which £1,066,411 Simple Loan Notes will be issued to the Noteholders. The SLNs are redeemable on 7 September 2022 with zero interest payable. Subject to the passing of the Resolutions, the SLNs will be redeemed for 15,234,437 new Ordinary Shares, issued at £0.07 per share, which would have the effect of increasing the interest of the Teichmann Concert Party in the Company's voting share capital from 17.38% as at the date of the Circular to 51.75% (before conversion of the Existing CLN or the New

Convertible Loan Notes but assuming the exercise of Michael Houston's options).

If the Resolutions are not approved by 7 September 2022, the Company will be required to redeem the Simple Loan Notes at the amount invested by the Noteholders plus the greater of £1,000,000 and the market value of the New Conversion Shares had they been issued.

Subject to approval of the Resolutions, a New Convertible Loan Note of £583,746 will be issued to the Noteholders, with a conversion price of £0.07 and a maturity date of 30 November 2025. The SLN, the NCLN and the Existing CLN will, subject to regulatory approval in South Africa, be secured by a charge over the Company's shares in Kareevlei, as well as a charge over the Company's bank accounts for the benefit of TSA, as lender under the Facility Agreement, and the holders of the Existing CLNs, SLNs and New CLNs.

Furthermore, and again subject to the approval of the Resolutions, the Existing CLN of £1,610,000 will be amended to provide for redemption and to run to an extended term of 30 November 2025. It will also remove applicable interest to its maturity and amend the conversion price from 40 pence to 24.9 pence (the commercial effect among the parties being the same due to the treatment of interest and which will not alter the maximum number of shares to be issued under the Existing CLN, being 6,465,247 Ordinary Shares).

If the NCLN Subscription takes place, the Company will issue £583,746 of New Convertible Loan Notes to the Noteholders convertible into Ordinary Shares at a price of £0.07 per share.

The total number of Ordinary Shares of the Company immediately following issue of the Subscription Shares and conversion of the Existing CLNs and NCLNs into Ordinary Shares through the allotment and issue of the Existing Conversion Shares and the New Conversion Shares respectively would be 52,094,972 (assuming no other share issues and exercise of Michael Houston's options), of which the Teichmann Concert Party would hold 34,103,773 Ordinary Shares, representing 65.46% of the enlarged issued ordinary share capital of the Company.

Facility Agreement

On 4 July 2022, Kareevlei entered into a new extended credit facility with its mining contractor, TSA, for up to ZAR30 million which reduces to ZAR20 million 180 days after the effective date (being the date on which the borrower satisfies the conditions precedent to drawdown). Subject to South African regulatory approvals, where relevant, the facility will be secured over the plant, machinery, equipment and other moveable assets of Kareevlei. Subject to South African regulatory approvals, where relevant, the facility will also be guaranteed by the Company in favour of TSA and secured by a charge over the Company's bank accounts for the benefit of TSA and the holders of the Existing CLNs, SLNs and New CLNs.

Further details of the Subscription Agreement, SLN Instrument, NCLN Instrument and Existing CLN Amendment Deed are set out in section 4 of part 2 of the Circular.

Further details relating to TCL, its ultimate beneficial owners and the Teichmann Concert Party are set out in section 1 of part 2 of the Circular.

1. OTHER ARRANGEMENTS
   In addition to the Teichmann Financing, the Company, its nominated adviser SP Angel and TCL have entered into a new Relationship Agreement. Under this agreement, TCL has the right to appoint up to three directors to the board of the Company (as long as this number is matched by independent directors who will retain the casting vote) and to participate in future fundraisings to maintain its shareholding (calculated on a fully diluted basis). This agreement includes typical clauses on the ability of the Company to operate independently of TCL. Further details of the Relationship Agreement are set out in section 4 of part 2 of the Circular.
   The Company, Kareevlei, TCL and TSA have also entered into a Governance Agreement which sets out a framework under which TCL and other material shareholders of BlueRock and Kareevlei can appoint directors at the Kareevlei level subject to the Company retaining control of the operation of Kareevlei through a casting vote. The Company and TCL are to agree terms of reference for a management committee of Kareevlei, such committee to include an independent technical expert. Further details of the Governance Agreement are set out in section 4 of part 2 of the Circular.
   Assuming the Resolutions are passed at the AGM to enable the Teichmann Financing to proceed (to the extent it has not at that time done so), it is the intention of Michael Houston, David Facey and Tim Leslie to resign as directors, subject to suitable replacements being identified.
2. BROKER OPTION
   To provide Shareholders and other investors who were not able to participate in the Teichmann Financing the option to subscribe for Ordinary Shares at the issue price of 7p per share, the Company has agreed with Teichmann to provide the Broker Option. This allows subscriptions for up to an aggregate £0.3 million at 7p per share with priority given to existing Shareholders of the Company. The Teichmann Concert Party will subscribe for 65% of the total number of Ordinary Shares issued under the Broker Option such that its maximum percentage shareholding is maintained at no more than 65.46%. This has the effect of up to approximately £105,000 of the Broker Option being available to Shareholders and investors that are independent of the Teichmann Concert Party.

The maximum number of Ordinary Shares to be issued under the terms of the Broker Option, if exercised, will be 4,285,714 Ordinary Shares.

To subscribe under the Broker Option, Shareholders should communicate their interest to the SP Angel by 5:00 pm on 24 August 2022 via their independent financial adviser, stockbroker or other firm authorised by the Financial Conduct Authority, as SP Angel cannot take direct orders from individual private investors.

There is no guarantee that SP Angel will exercise the Broker Option or that Shareholders and investors will be able to acquire any Broker Option Shares.

6 SIGNIFICANT SHAREHOLDERS

The holders of more than 3% of the Company's Ordinary Shares following issue of the Subscription

Shares, the Existing Conversion Shares and the New Conversion Shares are set out below: .

*Under common ownership, part of the Teichmann Concert Party

7 RELATED PARTY TRANSACTION

TCL, and certain connected parties connected with the owners of Teichmann Group, as a substantial

Shareholder of the Company, are each considered to be a "related party" as defined under the AIM

Rules and, accordingly, the Teichmann Financing, the Relationship Agreement, Governance Agreement and Broker Option constitute a related party transaction for the purposes of Rule 13 of the AIM Rules.

The Directors independent of the Teichmann Financing, the Relationship Agreement, Governance Agreement and Broker Option from an AIM Rules perspective, being Michael Houston, David Facey,

Tim Leslie and Rob Croll, consider, having consulted with the Company's nominated adviser, that the terms of the Teichmann Financing, the Relationship Agreement, Governance Agreement and Broker

Option are fair and reasonable insofar as the Company's Shareholders are concerned.