Firestone Diamonds, which mines the Liqhobong mine in Lesotho (75% Firestone, 25% government of Lesotho) saw production decline somewhat in the second fiscal quarter ended 31 December 2017, as the average price achieved increased. 180,709 carats were recovered (Q1: 199,007 carats), reflecting the treatment of ore from a lower grade block resulting in a lower grade achieved of 18.8 cpht (Q1: 21.1cpht). However, the miner expects to see an increase in grade in the second half of FY2018 as mining moves to higher grade areas of the pit. The company sold a total of 156,942 carats in the quarter (Q1: 195,330 carats, including Liqhobong's second >US$1 million stone, a 45 carat clean white stone). The sales achieved an average value of US$80 per carat (Q1: US$69 per carat), yielding proceeds of US$12.5 million (Q1: US$13.5 million).
During the quarter, Firestone recovered 80 special stones (plus 10.8 carats) compared to 45 in Q1, although overall, they said, the average quality remained somewhat below expectation. In their statement released January 17, Firestone notes that overall diamond market for the two sales in the quarter was better than in Q1, with the December sale stronger than the October sale. They noted very competitive bidding together with some price recovery on the lower category run of mine goods. The supply of lower value goods across the market is still plentiful, they note, but better quality goods are in demand, as are fancy colours, as evidenced by the strong demand for the special yellow stones that were offered by Liqhobong.
"Mine production for the quarter has been very solid, with yet another quarter-on-quarter increase in tonnes treated since the mine was commissioned", said CEO Stuart Brown. "There is cautious optimism on diamond pricing in 2018 after positive initial year-end retail numbers out of the US and China." In October, the company revised its mine plan after the asset yielded disappointing results. Liqhobong's revised mine plan's objective is to deliver the best returns in the medium term at low risk while maintaining the opportunity to take advantage of the longer life of mine should the average diamond values increase or should there be an improvement in market conditions. The revised plan is over a shorter nine-year period and involves the stripping of 76.0 million fewer waste tonnes. A far more representative area of the pit will be mined over the next 18 months, which should improve the likelihood of recovering higher quality stones and, in turn, provide a truer representation of diamond quality and pricing than has been possible from production to date.