RAPAPORT… Firestone Diamonds is revising its mining plan and has
opened talks with its lender after recording disappointing prices at its Liqhobong
mine in Lesotho.
The company’s last two sales yielded just $69 per carat,
compared with the $107 per carat it had previously assumed to be the mine’s
value, Firestone said in a statement Friday. The company sold 195,330 carats of
rough for a total of $13.5 million at the sales in July and September in
“A combination of oversupply and the previously reported
Indian demonetization program 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,” Firestone explained.
While Firestone on Tuesday reported the recovery of its
largest Liqhobong diamond to date — a 134-carat, gem-quality, light-yellow
diamond — the overall occurrence of larger, better-quality diamonds at the
miner has been lower than the company expected. This has dented the average
price at the latest sales, it said.
This could be a result of the company carrying out mining in
the lower-grade areas of the deposit, Firestone explained. The company expects
production to progress to all areas of the mine over time, resulting in higher
However, while prices should rise, the company needs to
revise its mine plan due to the current pricing pressures, it said. It is
working with consultants to finalize the new strategy based on a recalculated
average price estimate for its entire lifespan, which will be higher than $69
per carat but lower than $107 per carat.
The company also needs to get more financing and restructure
its existing debts to deliver the new mine plan, it added. It is in discussions
with major shareholders and its debt provider, ABSA Bank, and expects to
complete these discussions and revise the plan by the end of the year.
Firestone started production at Liqhobong in October 2016,
with the first sale of rough taking place in February.