Firestone Diamonds achieved solid fourth quarter production to hit the lower end of its FY 2019 guidance, but the miner's year was made 'tough' by a market that eschewed the smaller, lower value goods that make up the bulk of the output at the Liqhobong Diamond Mine in Lesotho. Firestone produced 208,572 carats during Q4 ended 30 June 2019, representing an 34% increase compared to 155,206 carats in the previous quarter. With that end-of-year surge - a stunt it has pulled off for the second year in a row - the miner's total output during FY 2019 was 829,458 carats (835,832 carats in FY 2018), within the guidance of 820 - 870,000 carats. That guidance is unchanged for 2020.
The miner said in Q4 it sold a total of 177,521 carats in Antwerp, a 32% decline from the 261,985 carats sold in Q4 last year, realising revenue of $12.7 million compared with $18.6 million in Q4 2018 and $16.8 million in Q3. The average value achieved in Q4 was the same as in Q4 2018 - $71 per carat - down from $80 per carat in Q3. The average value realized in FY 2019 $73 per carat. These values were lower than the previous quarter, the company says, despite the sale of several notable stones including a 72 carat yellow makeable stone, a 22 carat makeable white stone and an 11 carat fancy light-pink stone, due mainly to the sale of fewer high value stones compared to Q3 and a slightly higher proportion of run of mine category goods. Firestone notes that they recovered 82 stones weighing more than 10.8 carats (Q3: 64 stones), but that the overall average value of the +10.8 carat stones recovered during Q4 was lower than Q3, due to fewer better quality stones.
"The fourth quarter performance was solid from an operational perspective, helping us achieve our guidance range for all items for FY 2019," said CEO Paul Bosma. "From a market and pricing perspective, it was a tough financial year, particularly for the smaller, lower value goods and these conditions are expected to persist for the rest of 2019 and possibly improving during 2020 when global rough supply is expected to reduce.” Firestone suggests that the average prices for rough goods may rise in the near future. "The prices realised for the smaller goods that make up the bulk of our production by volume remain subdued mainly due to a build-up of rough and polished inventory in the midstream," they explain, adding, "Prices are expected to increase during 2020 as rough supply reduces as a result of lower production volumes from De Beers and the anticipated closure of Argyle mine."
The miner said its operating costs per tonne treated were "significantly lower" than the estimated cost, which gives a boost to their bottom line. "As expected," they note, "the positive impact of the weaker local currency continued into the final quarter of FY 2019 when costs were $2.6 million lower than planned. Costs for the financial year were $10.0 million lower than planned: $4.0 million due to cost savings in local currency terms and $6.0 million as a result of the weaker currency." The cash balance at the end of the quarter was $26.3 million (Q3: 29.9 million).