TIDMFDI
RNS Number : 3954F
Firestone Diamonds PLC
29 October 2018
29 October 2018
Firestone Diamonds plc
("Firestone", the "Group" or the "Company")
Quarterly Update on Operations
Firestone Diamonds plc (AIM: FDI), a new diamond producer with
operations focused in Lesotho, provides its quarterly update on
operations at its Liqhobong Diamond Mine ("Liqhobong") for the
quarter ended 30 September 2018 (Q1 of the Company's 2019 financial
year). Liqhobong is owned 75% by Firestone and 25% by the
Government of Lesotho.
First Quarter ended 30 September 2018 summary
-- First lost time injury recorded in the quarter after 6.7
million hours worked LTI-free since July 2014, with the employee
returning to work three days later;
-- 240,733 carats recovered at a grade of 23.8 carats per
hundred tonnes ("cpht") (Q4-FY18: 263,512 carats at a grade of 25.7
cpht);
-- 1,012,323 tonnes of ore treated, (Q4-FY18: 1,025,647 tonnes);
-- Cost per tonne treated of US$10.05 (Q4-FY18: US$10.98),
substantially lower than FY19 guidance of US$15-16 per tonne
treated;
-- A total of 194,206 carats sold in first sale of the financial
year (Q4-FY18: 261,985 carats), realising revenue of US$13.5
million (Q4-FY18: US$18.6 million);
-- Average value of US$70 per carat (Q4-FY18: US$71 per carat),
below expectation mainly due to a deterioration in prices received
for the smaller, lower value run of mine ("ROM") stones; and
-- Net cash at the end of the quarter of US$25.7 million (Q4-FY18: US$27.8 million).
Post Quarter events
-- A total of 102,835 carats sold realising total proceeds of
US$8.2 million, in the second sale of FY19 on 26 October;
-- Average value realised of US$79 per carat, despite continued pressure on the ROM stones;
-- A number of special stones were sold including a 68 carat
white diamond, the third most valuable stone sold to date for just
under US$1.0 million, and a 20 carat fancy yellow diamond; and
-- Recovery of a 326 carat near-gem diamond, the largest stone recovered to date at Liqhobong.
Paul Bosma, Chief Executive Officer, commented:
"The first quarter was a good start to our financial year and it
is pleasing that the positive operational momentum from the
previous quarter was maintained. We held one sale during the
quarter which was impacted by lower average values realised for the
smaller, lower quality ROM stones. However, from a total revenue
perspective, the impact was partly offset by higher sales volumes.
We completed our second sale of the financial year post the quarter
end, and pleasingly, the strong demand for our special stones
offset the continued pricing pressure on the ROM stones, resulting
in an improved average value realised of US$79 per carat. During
October we also recovered our largest stone to date, a 326 carat
near-gem diamond which provides further evidence of Liqhobong's
large stone potential and importantly, the ability of the treatment
plant to recover larger stones intact."
Operations
The exceptional operational performance continued into the first
quarter of the 2019 financial year, when, despite a cold winter in
the Lesotho highlands and a number of days of snow which resulted
in minor production delays, 1,012,323 tonnes of ore (Q4-FY18:
1,025,647 tonnes) were treated at an average throughput rate of 540
tonnes per hour ("tph") (Q4-FY18: 530 tph). Production continued to
be focused in the higher grade southern half of the pit where a
sump is being excavated in preparation for the rainy season and
240,733 carats were recovered during the quarter (Q4-FY18: 263,512
carats) resulting in a grade of 23.8 cpht (Q4-FY18: 25.7 cpht).
Waste stripping of Cut 2 south commenced during the quarter. New
access roads and excavation platforms were established against the
steep southern flank of the valley. Waste mining tonnages are
planned to increase during the year as more working space is
established.
During the quarter, 114 special stones (plus 10.8 carats) were
recovered (Q4-FY18: 114 stones). The average quality and size
improved in September with the recovery of several better quality
diamonds which were sold at the recent tender which realised an
average value of US$79 per carat.
A combination of cost savings and continued local currency
weakness against the US dollar, resulted in a decrease in the
operating costs for the quarter, to US$10.05 per tonne treated
(Q4-FY18: US$10.98 per tonne treated) including waste stripping,
well below the guidance range of between US$15 and US$16 per tonne
treated. Costs for the quarter were US$1.2 million lower than
planned as a result of the weaker local currency and a further
benefit of US$1.3 million will be realised against the plan as
forward exchange currency contracts that are currently in place,
mature over the next quarter.
Work on the mine plan continued during the quarter to consider
the viability of extending the life of mine.
Health & Safety
The company recorded its first lost time injury during the
quarter after having worked a total of 6.7 million man-hours since
project commencement in July 2014. Fortunately, the incident was
not too serious with the employee returning to work three days
later. The team will continue to focus on safety in the workplace
as a priority in an effort to maintain the exemplary safety
record.
Financial
Cash available at the end of the quarter was US$25.7 million
(Q4-FY18: US$27.8 million, adjusted for timing of sales proceeds at
the end of the quarter) which included proceeds of US$13.5 million
from the September sale.
Diamond Sales
Due to the European holiday season and religious holidays, only
one sale was planned for the first quarter. A total of 194,206
carats were sold (Q4-FY18: 261,985 carats), realising revenue of
US$13.5 million (Q4-FY18: US$18.6 million) at an average value of
US$70 per carat (Q4-FY18: US$71 per carat).
The demand for smaller stones below 3 grainers remained subdued
as experienced by many producers including De Beers. This was
mainly as a result of the pressure on the Indian midstream due to a
weak local currency and reduced lending into the industry. Looking
forward, indications are, that based on strong GDP growth and
favourable employment rates in the United States, which accounts
for almost half the global polished diamond demand, the industry
can expect a strong end of year retail season for diamond
jewellery.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
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 +44 (0)20 3037
and Broker) 2000
Nick Stamp
Nicholas Harland
+44 (0)20 7920
Tavistock (Public and Investor Relations) 3150
Simon Hudson
Jos Simson
Gareth Tredway
About Firestone
Firestone is an international diamond mining company with
operations focused in Lesotho. Firestone commenced commercial
production in July 2017 at the Liqhobong Diamond Mine in Lesotho.
Lesotho is emerging as 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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END
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