RAPAPORT… ABSA Bank has granted Firestone Diamonds a waiver after a
drop in small-diamond prices put the miner at risk of breaching its loan covenants.
The terms of Firestone’s $82.4 million loan from ABSA included assumptions about estimated future diamond values. Weakness in the
small-diamond market resulted in the company’s average selling price falling to
$74 per carat in the nine months ending March 31 — below its expectations. To ensure
that Firestone wouldn’t breach the terms, it obtained the waiver from ABSA for
two of its six covenants.
“The lower
average value was impacted mainly by lower prices realized for the smaller,
lower-value goods, which has also affected many other diamond-mining companies
and the wider diamond industry,” Firestone said.
Image: Firestone Diamonds’ Liqhobong mine in Lesotho. (Firestone Diamonds)
Firestone Gets Bank Waiver After Prices Slide
The Bottom Line
- Firestone Diamonds' average selling price fell to $74 per carat in the nine months ending March 31 due to weaker small-diamond prices.
- The $82.4 million loan from ABSA Bank included covenants based on expected diamond values, which the price drop put at risk.
- Firestone obtained a waiver for two of six loan covenants to avoid breaching terms amid industry-wide small-diamond price weakness.
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