TIDMFDI
RNS Number : 3824L
Firestone Diamonds PLC
19 April 2018
19 April 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 March 2018 (Q3 of the Company's 2018 financial
year). Liqhobong is owned 75% by Firestone and 25% by the
Government of Lesotho.
Third Quarter ended 31 March 2018 summary
-- Solid operational performance despite challenging conditions
due to above average rainfall during the wet season:
o Recoveries 6.6% higher than Q2 at 192,604 carats, resulting in
a year-to-date ("YTD") total of 572,320 carats;
o Grade of 22.2 carats per hundred tonnes ("cpht"), higher than
18.8 cpht in Q2 and 20.6 cpht YTD;
o 869,126 tonnes treated, making a total for the first nine
months of FY2018 of 2.8 million tonnes, ahead of budget; and
o Costs for Q3 of US$13.03 per tonne treated and US$12.3 per
tonne treated YTD despite stronger local currency.
-- A total of 217,380 carats sold in the quarter (Q2: 156,942
carats), realising revenue of US$17.6 million (Q2: US$12.5 million)
at an average value of US$81 per carat (Q2: US$80 per carat);
and
-- Zero lost time injury record maintained with over 5.8 million
man hours worked since project commencement in July 2014.
Stuart Brown, Chief Executive Officer, commented: "Despite
experiencing several disruptions during the quarter due to heavy,
above average rainfall, the orebody has started to deliver the
higher grades we have been expecting and so carats produced
increased compared with the previous quarter.
"In the first nine months of the financial year, Liqhobong has
recovered fewer carats than planned due to the adverse weather and
higher water levels in the main pit, particularly in February and
March, which restricted access to the higher grade ore blocks. We
still expect to achieve annual production at the lower end of
guidance of 800,000 to 850,000 carats, as mining progresses in the
higher grade ore."
Operations
The quarter was particularly challenging from an operational
perspective as a result of adverse weather conditions which,
although providing welcome rainfall, caused more disruptions to
operations than planned for during the wet season. This resulted in
fewer tonnes treated, however, the higher grade achieved of 22.2
cpht (Q2: 18.8 cpht) as mining progressed to higher grade ore
blocks resulted in a 6.6% increase in diamonds recovered compared
to Q2.
In the quarter ended 31 March 2018, Liqhobong treated 869,126
tonnes of ore (Q2: 963,213 tonnes) at an average throughput rate of
509 tph (Q2: 521 tph). 192,604 carats were recovered (Q2: 180,709
carats), reflecting the treatment of higher grade ore. A further
increase in grade is expected in the final quarter of FY2018 as
mining of higher grade areas of the pit resumes.
During the quarter, 93 specials (plus 10.8 carats) were
recovered (Q2: 80) which was encouraging although, overall, the
average quality still remained somewhat below expectation.
A combination of fewer tonnes treated and local currency
strength against the US$, resulted in an increase in the costs for
the quarter, including waste stripping, to US$13.03 per tonne
treated (Q2: US$11.60 per tonne treated), which is still below the
forecast of US$13.80 per tonne treated for the 2018 financial year.
Management continues to focus on managing the costs within their
control.
As announced in December 2017 the Company is pursuing a revised
mine plan with the objectives of delivering the best returns in the
medium term at low risk whilst at the same time offering the
optionality of taking advantage of the longer life of mine
potential of the Liqhobong orebody should realised diamond values
increase or should there be a sustained improvement in market
conditions. The Company is making good progress on delivering this
plan and is pleased to report that in the first three months of the
revised plan we have realised slightly better values of US$81 per
carat due to a combination of better rough market conditions and
the recovery of a few exceptionally valuable small fancy coloured
stones.
The Company continues to plan for mining to progress across the
pit over the next 15 months, which will provide a truer
representation of diamond quality and pricing than has been
possible from the access to limited production areas during the
ramp-up period.
Health & Safety
Liqhobong has an industry-leading health, safety and
environmental record. Despite the challenging conditions
experienced during the quarter, it is pleasing to report that there
were no significant environmental incidents and that the
outstanding health and safety record was maintained with no lost
time injuries since project commencement in July 2014 with over 5.8
million man hours worked to date.
Financial
Cash available at the quarter end was US$18.1 million (Q2:
US$29.7 million before the December loan repayment of US$6.0
million which was paid in January 2018), and was higher than the
plan as a result of rigorous cost control and good cash management.
The cash balance excludes proceeds from the March sale of US$8.2
million which were received shortly after month-end and payments to
creditors in respect of March of US$1.0 million, which were settled
in early April.
The restructuring of the ABSA debt facility received approval
from South Africa's Export Credit Insurance Corporation during the
quarter and now remains subject only to final documentation, which
is expected to be completed in Q4.
Diamond Sales
A total of 217,380 carats were sold in the quarter (Q2: 156,942
carats). The sales achieved an average value of US$81 per carat
(Q2: US$80 per carat), yielding proceeds of US$17.6 million (Q2:
US$12.5 million).
The rough diamond market continued to strengthen during the
first quarter of 2018 with confidence returning after a successful
retail season. Very competitive bidding was seen together with
continued 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,
evidenced by the strong demand for the special fancy pink and
yellow stones that were offered by Liqhobong. Positive retail
numbers from the US and China give rise to cautious optimism on
rough diamond pricing for the balance of 2018. This is of course
predicated on the supply of rough diamonds remaining in balance
with demand. If major producers remain responsible and global macro
conditions remain supportive then there is some cause for cautious
optimism that the confidence in the rough market will continue
through the remainder of the year with sustained improvement in
rough prices.
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
Gareth Tredway
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' Letšeng Mine, Firestone's
Liqhobong Mine, Namakwa Diamonds' Kao Mine and Lucapa's Mothae
Mine.
-ends-
This information is provided by RNS
The company news service from the London Stock Exchange
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