Firestone sells 195 330 ct of diamonds in latest diamond sales

JOHANNESBURG (miningweekly.com) – Aim-listed Firestone Diamonds sold 195 330 ct of diamonds during its latest diamond sales, held in July and September, in Antwerp, netting about $13.5-million in proceeds.

The company attributed the drop in the average realised value from $107/ct to an average value of $69/ct to the continued lower frequency of higher-value diamonds and a subdued market during the period under review.

Firestone noted that the variability in average diamond values at Liqhobong diamond mine – which the company has experienced to date from mining in the lower grade areas of the openpit – is expected to ease as higher-grade kimberlite areas are mined and treated.

“[In the overall market environment], a combination of oversupply and the previously reported Indian demonetisation 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,” the company said in an operational update on Friday.

Since the start of production in the fourth quarter of 2016, Firestone has sold all 505 706 ct recovered for $41.3-million at an average value of $82/ct.

Meanwhile, Firestone continues to revise the life of mine (LoM) and new mine plan for Liqhobong.

“While, 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,” the company said.

This means that additional financing would be required, along with a restructuring of existing debt obligations to be able to deliver such a revised mine plan.

Firestone has been engaging with both its major shareholders and its debt provider Absa Bank with a view of reaching a solution and aims to update the market once the discussions are completed and a revised mine plan is agreed, which is expected to take place in the fourth quarter of 2017.