TIDMFDI
RNS Number : 1692S
Firestone Diamonds PLC
29 September 2017
29 September 2017
Firestone Diamonds plc
("Firestone" or the "Company") (AIM: FDI)
Diamond Sales Results and Operational Update
Firestone Diamonds plc, the AIM-quoted diamond company,
announces the results of its latest diamond sales, held in July and
September 2017 in Antwerp, and provides a further update on the
process of revising the life of mine ("LOM") plan for its Liqhobong
Diamond Mine ("Liqhobong"), which was first referred to in the
announcement of 8 August 2017.
HIGHLIGHTS OF JULY AND SEPTEMBER SALES
-- Total of 195,330 carats sold including another >US$1 million
stone
-- Average value of US$69 per carat ("/ct")
-- Total sale proceeds of US$13.5 million
-- Since commencement of production in Q4 CY2016, the Company
has sold all 505,706 carats recovered, for US$41.3 million,
at an average value of US$82/ct
The July and September 2017 diamond sales saw all 195,330 carats
offered for sale sold for US$13.5 million, which included the
Company's second >US$1 million stone, achieving an average value
of US$69/ct.
This average realised value per carat represents the continued
lower than expected occurrence of larger, better quality diamonds
and a subdued market, as was experienced in the previous quarter.
The board of Firestone (the "Board") believes that this is due to
two factors;
-- Firstly, the overall market environment, where a combination
of oversupply and the previously reported Indian de-monetisation
programme is still having an impact on the lower quality Run of
Mine goods, as well as the fact that the summer months are
traditionally the quietest time in the rough selling season;
and,
-- Secondly, the lower-than-expected occurrence of larger,
better quality diamonds at Liqhobong. The Board believes that the
lower frequency of higher value diamonds to date is potentially a
function of the mining that has taken place since commissioning in
the lower grade areas within the open pit, and which is now nearing
completion. Over time, mining will progress into all areas of the
open pit and the Board expects the average value per carat to
improve.
From an operational perspective, the Company continues to treat
ore at nameplate capacity, and is recovering the anticipated
reserve grades within operating cost expectations.
The Board anticipates an improvement in the occurrence of higher
quality diamonds as the higher grade kimberlite areas are mined and
treated. Management continues to analyse the variability in average
diamond values that it has experienced to date, which has seen the
average values achieved range from US$107/ct to US$69/ct.
In the Board's view, this is not an uncommon situation in the
early production stages of a new mine, and, in Liqhobong's case,
the Board believes that the Company's true value proposition will
become clearer as more representative volumes of all the ore facies
are mined and treated.
Firestone continues to work with its consultants in regards to
finalising a new mine plan based on a revision of the expected
average LOM dollar per carat value which it anticipates will be
higher than the average value realised at its two most recent sales
of US$69/ct, albeit it expects the average value to be lower than
the original figure of US$107/ct used in the Bankable Feasibility
Study, which is due to current market conditions, as set out
above.
Whilst, over the medium term, both market conditions and diamond
values are expected to improve, the Board recognises that a revised
mine plan needs to be developed in the context of the short-term
pricing pressures currently being experienced, and with a view to
achieving optimal value for shareholders in the longer term.
It should be noted therefore, that at current values, the
Company would require additional financing and would need to
restructure its existing debt obligations in order to be able to
deliver such a revised mine plan.
In this regard, the Company has been in productive discussions
with both its major shareholders and its debt provider ABSA Bank
Limited, with a view to reaching a solution.
Firestone will update the market further once those discussions
are complete and the revised mine plan is agreed, which is expected
to take place in Q4 CY2017.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014.
For more information contact:
+44 (0)20 8741
Firestone Diamonds plc 7810
Stuart Brown
+44 (0)20 7409
Strand Hanson Limited (Nomad) 3494
Stuart Faulkner
Richard Tulloch
James Dance
Macquarie Capital (Europe) Limited (Joint +44 (0)20 3037
Broker) 2000
Raj Khatri
Nick Stamp
Mirabaud Securities LLP (Joint Broker)
+44 (0)20 7878
Rory Scott 3360
+44 (0)20 7878
Ed Haig-Thomas 3447
+44 (0)20 7920
Tavistock (Public and Investor Relations) 3150
+44 (0)7788 554
Emily Fenton 035
Jos Simson
Barney Hayward
Background information on Firestone
Firestone is an international diamond mining company with
operations focused in Lesotho. Firestone commenced commercial
production in July 2017 at the Liqhobong Diamond Mine in
Lesotho.
Lesotho is emerging as one of Africa's significant new diamond
producers, hosting Gem Diamonds' Letseng Mine, Firestone's
Liqhobong Mine and Namakwa Diamonds' Kao Mine.
For more information please visit:
www.firestonediamonds.com.
**ENDS**
This information is provided by RNS
The company news service from the London Stock Exchange
END
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