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Firestone finds 100-Carat diamonds

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Diamond mining and development company Firestone Diamonds (LSE:FDI) recovered three 100-carat diamonds from its’ 75% owned Liqhobong Mine in Lesotho.

The three large 100-carat diamonds indicated an increase in higher clarity diamonds being recovered in the mine which has recently been producing than the budgeted grades of 38-carat per hundred tonnes and 115% mine call factors recovered.

Plant 1, where the 100-carat diamonds were recovered, has increased its’ output from 0.4 million tonnes to 0.6 million tonnes per annum.

Average resource grade of 45 carats per hundred tonnes (“cpht”) are mined in the K5 unit, which will be the focus of operations for the next two years, compared to the 28 cpht grades found in K2 and K4 units.

The gems which were found are considered damaged indicating breakage is occurring in plant 1 of the mine. However, specialists and personnel are now being engaged to ensure changes are made in the plant to reduce damage and breakage of high grade diamonds.

“We are implementing a programme of continued improvement and enhancement to maximize the recovery of diamonds and we are confident that we will see positive results over the coming weeks,” said Tom Wilkes, Chief Executive Officer of Firestone Diamonds plc.

A definitive feasibility study is expected to be completed in June 2012, from which the production of a 2nd plant could be be determined.

Liqhobong Mine

The Liqhobong Mine is operated by Liqhobong Mining Development Company Limited (LMDC), which is 75% owned by Firestone Diamond and the remaining 25% by the Government of Lesotho.

The mine, comprised of the main pipe and satellite pipe covering 8.5 hectares and 0.8 hectares respectively, is part of the 390 hectares mining lease provided to LMDC due to expire in 2017, but renewable for 10 more years.

Mining records show 350,000 carats of diamonds have been produced between 2005 and 2008. Indicated resources estimated 12.64 million carats were contained in 38.54 metric tonnes at an average of 32 cpht.

CEO Comments

Tom Wilkes expressed the company’s optimism in the progress of the Lesotho project, especially the recovery of the 100-carat diamonds, saying:

“We are very pleased with the performance of the plant at Liqhobong over the past two months…The performance of the mineral resource has been outstanding with respect to grade, mine call factor and diamond assortment.”

“The recovery of three plus 100 carat diamonds, albeit broken, confirms Firestone’s conviction that the resource has the ability to produce much higher value diamonds than recovered to date. These positive indicators bode well for Firestone as we shift our focus towards phase 2 of the project, being the development of a world class diamond mine and a purpose built plant facility.”

Market Reaction

Firestone Diamonds sold all its diamond stocks during the first tender on 3rd February, with 35 international buyers in attendance but failed to give any details of the sale which is somewhat confusing. It has also been noted that the company are now failing to report the production split between BK11 and Liqhobong which also adds to the confusion.

Shares of Firestone Diamonds are down 9.7% from the previous day’s trading to 11.625 pence per share as of 9:00 AM GMT following the operational update.

Company Spotlight

Firestone Diamonds holds diamond mining leases in Lesotho and Botswana. The company was admitted to the Alternative Investment Market of the London Stock Exchange in 2010.

References
↑ Liqhobong Mine Information
↑ Firestone Diamonds says recent diamond sales confirm continued strong demand
 Firestone Diamonds Business Overview

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