TIDMFDI
RNS Number : 0560C
Firestone Diamonds PLC
17 January 2018
17 January 2018
Firestone Diamonds plc
("Firestone", the "Group" or the "Company")
Quarterly Update on Operations
Firestone Diamonds plc (AIM: FDI), a new diamond producer with
operations focused in Lesotho, provides its quarterly update on
operations at its Liqhobong Diamond Mine ("Liqhobong") for the
quarter ended 31 December 2017 (Q2 of the Company's 2018 financial
year). Liqhobong is owned 75% by Firestone and 25% by the
Government of Lesotho.
Quarter ended 31 December 2017 summary
-- Solid operational performance:
o 963,213 tonnes treated, making a total for the first six
months of FY2018 of 1.9 million tonnes, just ahead of budget with
tonnes per hour ("tph") treated of 521 (budget: 509)
o Recoveries slightly lower than Q1 at 180,709 carats, resulting
in a year-to-date ("YTD") total of 379,716 carats
o Overall grade for Q2 of 18.8 carats per hundred tonnes
("cpht") and 20.0 cpht YTD
o Costs reduced to US$11.60 per tonne treated despite adverse
exchange rate movements;
-- A total of 156,942 carats sold in the quarter, realising
US$12.5 million at an average of US$80 per carat (Q1: US$69 per
carat);
-- Zero lost time injury record maintained with over 5.3 million
man hours worked since project commencement in July 2014;
-- Revised mine plan adopted to maximise cash flow in the
shorter term while addressing the issues affecting value recovered;
and
-- Successful capital raise of US$25 million and bank debt
rescheduling subject to final ECIC approval in Q1 2018 - cash on
hand at period end of US$29.7 million, before the December loan
repayment of US$6.0 million which was paid in January 2018.
Stuart Brown, Chief Executive Officer, commented: "Mine
production for the quarter has been very solid, with yet another
quarter-on-quarter increase in tonnes treated since the mine was
commissioned. The average value per carat achieved improved on the
previous quarter, while the sale held in December was stronger than
the first sale earlier in the period. There is cautious optimism on
diamond pricing in 2018 after positive initial year-end retail
numbers out of the US and China.
"Despite the recovery of fewer carats in the period, grades are
expected to improve in the second half as mining moves to higher
grade areas of the pit."
Operations
In the quarter ended 31 December 2017, Liqhobong treated 963,213
tonnes of ore (Q1: 944,582 tonnes) at an average of 521 tph (Q1:
507 tph). 180,709 carats were recovered (Q1: 199,007 carats),
reflecting the treatment of ore from a lower grade block resulting
in a lower grade achieved of 18.8 cpht (Q1: 21.1cpht). An increase
in grade is expected in the second half of FY2018 as mining moves
to higher grade areas of the pit.
During the quarter, 80 special stones (plus 10.8 carats) were
recovered (Q1: 45) which was pleasing although overall, the average
quality remained somewhat below expectation.
Despite local currency strength against the US$, cost per tonne
of ore treated, including waste stripping, was reduced to US$11.60
per tonne (Q1: US$12.20 per tonne). Management will continue to
manage costs as well as possible, given the operational
constraints. With the stronger local currency, cost per tonne is
expected to increase over the second half of the year.
Liqhobong's revised mine plan's objective is to deliver the best
returns in the medium term at low risk whilst at the same time
offering optionality of taking 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.
Health & Safety
Liqhobong has an industry-leading health, safety and
environmental record. During the quarter, there were no
environmental problems or incidents to report and the outstanding
health and safety record was maintained with no lost time injuries
since project commencement in July 2014 with over 5.3 million man
hours worked to date.
Financial
Cash available at the quarter end was US$29.7 million (Q1
quarter end: US$4.3 million), reflecting the successful capital
raise of US$25 million that completed at the end of December. Cash
on hand at period end was before the final loan repayment of US$6.0
million ahead of the 18 month repayment holiday period during which
only interest is required to be serviced.
Diamond Sales
A total of 156,942 carats were sold 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).
The overall diamond market for the two sales in the quarter was
better than in Q1 with the December sale stronger than the October
sale. Very competitive bidding was seen together with some price
recovery on the lower category run of mine goods. Supply of lower
value goods across the market is still plentiful 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. Initial retail numbers from the US and China seem
positive with cautious optimism on diamond pricing for 2018.
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 ("MAR").
For more information please visit www.firestonediamonds.com or
contact:
+44 (0)20
Firestone Diamonds plc 8741 7810
Stuart Brown
Macquarie Capital (Europe) Limited +44 (0)20
(Nomad and Broker) 3037 2000
Nick Stamp
Nicholas Harland
Guy de Freitas
Tavistock (Public and Investor +44 (0)20
Relations) 7920 3150
Simon Hudson
Jos Simson
Barney Hayward
About 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.
-ends-
This information is provided by RNS
The company news service from the London Stock Exchange
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