TIDMFDI
RNS Number : 0160X
Firestone Diamonds PLC
25 April 2019
25 April 2019
Firestone Diamonds plc
("Firestone", the "Group" or the "Company")
Quarterly Update on Operations
Firestone Diamonds plc (AIM: FDI), provides its quarterly update
on operations at its Liqhobong Diamond Mine ("Liqhobong") for the
quarter ended 31 March 2019 (Q3 of the Company's 2019 financial
year).
Third Quarter ended 31 March 2019
HIGHLIGHTS:
-- Liqhobong's most valuable stone recovered to date, a 70 carat
white diamond was sold in March;
-- A number of other high value stones were also sold during the
quarter including a 46 carat white diamond;
-- Average value of US$80 per carat (Q2: US$72 per carat), with
signs of recovery in prices realised for the smaller, lower value
goods; and
-- 1,242,481 tonnes of waste mined (Q2: 902,151 tonnes) as
planned and on track to meet guidance of between 4.3 million tonnes
and 4.8 million tonnes for FY2019.
SUMMARY:
-- Lost time injury free quarter (Q2: also lost time injury free);
-- 862,838 tonnes of ore treated in the quarter (Q2: 884,252
tonnes), marginally lower due to unforeseen plant equipment
failures during early January as previously reported;
-- Lower average grade of 18.0 carats per hundred tonnes
("cpht") (Q2: 25.4 cpht), mainly due to ore from the lower grade
northern part of the pit being mined and treated resulting in the
recovery of 155,206 carats (Q2: 224,947 carats);
-- Operating cost during the quarter of US$11.55 per tonne
treated (Q2: US$12.00 per tonne treated), substantially lower than
FY2019 guidance of US$15-16 per tonne treated;
-- A total of 211,368 carats sold in the third quarter of the
financial year (Q2: 191,735 carats), realising revenue of US$16.8
million (Q2: US$13.9 million);
-- Still on track to meet FY2019 guidance; and
-- The mine continued to generate positive cash flows after
finance costs; with net cash as at 31 March 2019 of US$29.9 million
(Q2: US$26.2 million).
POST QUARTER HIGHLIGHTS:
-- Notable recovery of a 72 carat yellow, makeable diamond, a 22
carat makeable white diamond and an 11 carat fancy light-pink
diamond, all of which will go on sale at the upcoming tender in
early May.
Paul Bosma, Chief Executive Officer, commented:
"We spent most of the third quarter mining in the lower grade
northern part of the pit and it was pleasing to see an increase in
average diamond value which resulted in improved revenue for the
quarter. Besides continued strong demand for our special stones it
was also encouraging to see a modest increase in pricing for the
smaller, lower value goods at the March sale.
During the final quarter of the year, mining will return to the
higher grade, southern part of the pit. Waste stripping is
accelerating according to plan and we achieved our highest ever
monthly tonnes moved in March.
The rainfall increased in March and we received very good rains
during April which have replenished our reservoirs, the extent to
which should be sufficient to see us through the coming dry
season."
Operations
During the quarter ended 31 March 2019, Liqhobong treated
862,838 tonnes of ore (Q2: 884,252 tonnes). The fewer tonnes
treated resulted from a mechanical breakdown which occurred at the
beginning of January which is a particularly difficult time of the
year to mobilise repair teams. Nevertheless, our suppliers worked
together with our on-site team to carry out the required repair
work which was successfully completed in the shortest possible
time. Most of the mining during the quarter took place in the lower
grade northern part of the pit resulting in the recovery of 155,206
carats compared to the previous quarter of 224,947 carats, at a
grade of 18.0 cpht (Q2: 25.4 cpht). During the quarter, 64 stones
(plus 10.8 carats) were recovered (Q2: 89 stones).
It is pleasing to report that, after the challenges experienced
in the previous quarter regarding the establishment of new access
roads and platforms in cut 2 South, 38% more waste of 1,242,481
tonnes was moved compared to the previous quarter of 902,151
tonnes. The mining contractor achieved the tonnage target for March
and with the recent arrival of additional items of machinery, is
adequately equipped to maintain the higher tonnage volumes required
going forward.
Health & safety
The third quarter was once again worked safely with no Lost Time
Injury's recorded.
Financial
A combination of continued cost savings and local currency
weakness against the US dollar, resulted in operating costs for the
quarter of US$11.55 per tonne treated (Q2: US$12.00 per tonne
treated) including waste stripping, which remains well below the
guidance range of between US$15 and US$16 per tonne treated for the
year to end June 2019. Costs were US$2.7 million lower than planned
for the quarter and are US$7.4 million lower on a year to date
basis, mainly as a result of the weaker local currency. The
positive impact of the weaker local currency is expected to
continue for the remainder of the financial year as currency hedges
are in place to cover 100% of the expected operating costs at
average rates exceeding R14.50:US$1. The lower cost for the year
includes US$0.5 million in respect of the fewer waste tonnes moved
which is expected to be incurred in the final quarter of
FY2019.
Cash available at the end of the quarter was US$29.9 million
(Q2: US$26.2 million).
Diamond Sales and Market Outlook
A total of 211,368 carats were sold (Q2: 191,735 carats),
realising revenue of US$16.8 million (Q2: US$13.9 million) at an
average value of US$80 per carat (Q2: US$72 per carat).
The improved average sales value realised for the quarter was
largely due to the sale of several large, high quality diamonds
that were recovered since December. It was also encouraging to see
a modest increase in the average value realised for the smaller,
lower value goods. Alrosa's March sale also saw an increase
compared to the previous sale (+9%) and commented that the market
is gradually stabilizing and the demand for smaller-sized stones
demonstrated recovery in the first quarter. Subsequently, in April,
De Beers announced its best sale for 2019, commenting that demand
was stable. We share the same cautious optimism expressed by many
other diamond producers regarding diamond prices in the second
quarter of 2019.
For more information please visit: www.firestonediamonds.com or
contact:
+44 (0)20 8741
Firestone Diamonds plc 7810
Paul Bosma
Grant Ferriman
Macquarie Capital (Europe) Limited
(Nomad and Broker)
Nick Stamp +44 (0)20 3037
Nicholas Harland 2000
+44 (0)20 7920
Tavistock (Public and Investor Relations) 3150
Jos Simson
Gareth Tredway
Annabel de Morgan
Background information on Firestone
Firestone is an international diamond mining company with
operations in Lesotho. Firestone commenced commercial production in
July 2017 at the Liqhobong Diamond Mine. Liqhobong is owned 75% by
Firestone and 25% by the Government of Lesotho. Lesotho is 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-
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