Firestone Diamonds Ends FY 2018 With Record Production in Q4

Mining and Exploration
23/07/2018 14:32

Firestone Diamonds, a new diamond producer with operations focused in Lesotho (Liqhobong Diamond Mine, owned 75% by Firestone and 25% by the Government of Lesotho), reports it achieved "exceptional operational performance result[ing] in several new production-related records during the final quarter." Specifically, its Q4 recoveries were 36.8% higher than Q3 at 263,512 carats, resulting in a full year total of 835,832 carats, within guidance of between 800,000 and 850,000 carats. The miner's ability to access high-grade blocks at Liqhobong led to a grade of 25.7 carats per hundred tons ("cpht"), higher than 22.2 cpht in Q3 and 22.0 cpht for FY 2018. The volume of ore treated was 18.0% higher than Q3 at 1,025,647 tons, resulting in a full year total of 3.8 million tons ("mt"), ahead of guidance of 3.6 mt, while the cost of processing that ore declined despite a stronger local currency during most of the year: all four metrics set records for the young miner. 

Firestone sold a total of 261,985 carats in Antwerp during the quarter (Q3: 217,380 carats), realizing an average value of $71 per carat (Q3: $81 per carat), yielding proceeds of $18.6 million (Q3: $17.6 million). The miner commented that average diamond values were lower than the previous quarter due mainly to the recovery of a higher proportion of run-of-mine goods and fewer special stones. Firestone recovered 114 'specials' (stones larger than 10.8 carats) during the quarter (Q3: 93 stones), "which was encouraging although, overall, the average quality still remained somewhat below expectation with the recovery of fewer valuable stones," they said. They also noted that the rough diamond market continued to be positive, pointing out De Beers' accounts of demand across the product range for its fifth sale concluded at the end of June.

Firestone's new CEO Paul Bosma commented: "The fourth quarter saw record production. We were able to access the high grade blocks in the mine plan and thanks to excellent operational performance we were able to achieve record carat recoveries. The increased volume translated in an improved cash position at the end of the financial year. As always, the average dollar per carat achieved is highly sensitive to the incidence of special stones, of which, we saw a lower incidence in this particular quarter. However, we continue to have grounds for optimism given the parts of the orebody we plan to exploit over the next 12 months." At their most recent sale, demand and pricing remained positive for good quality 1-carat diamonds and up, however, run of mine categories were under some pressure in this competitive market segment. Rough supply in general is being well managed by the industry with none of the major producers over-supplying the market. Traditionally the market enters a quieter period until the end of August due to the European summer holidays. "We remain optimistic for the remaining sales this year." 

Firestone successfully concluded its restructuring of the $82.4 million ABSA Debt Facility on 29 June 2018. The restructuring provides for a capital repayment grace period up until 30 June 2019, when capital payments recommence, and an extension of the term of the facility by two and a half years to end December 2023. They have established a FY 2019 guideline of treating between 3.6 and 3.8 mt of ore, with the expectation of recovering between 820,000 and 870,000 carats. The company also plans to develop the mine further through the stripping of between 4.3 and 4.8 mt of waste rock. The miner has also increased its the adjusted cash balance of to $2.5 million as a result of the improved operational performance for the quarter, and continued rigorous cash management. Firestone also maintained its outstanding safety record was, with no lost time injuries since project commencement in July 2014, with over 6.2 million man hours worked to date.