Firestone secures $25m to open way for new mine plan
Firestone Diamonds, which is ramping up to full production at a new diamond mine in Lesotho, has secured itself financial breathing space, raising $25m and renegotiating its debt with Absa as it adjusts a mine plan to target better-quality diamonds.
Firestone, which is traded on London’s Alternative Investment Market, is headed by former De Beers chief financial officer and acting CEO Stuart Brown.
The start of operations at Liqhobong was inauspicious as the realisation set in that the value of the rough diamonds was well below what had been planned. The mine plan was revised, cutting 76-million tonnes of waste extraction from the plan and cutting the life of the Liqhobong to nine years from 15. The mine started commercial production in July 2017 and the six months to end-December marked its first interim results with diamond revenue and operating costs.
Firestone earned revenue of $25m for the period and generated a gross profit of $1.5m. Taking into account a host of other charges, it ended the interim period with an attributable loss of $7.2m. The interim results were “ugly, as expected”, said Yuen Low from Shore Capital. “It should not be a surprise to anyone that the interim 2018 financials were not pretty.”
Brown assured investors that Firestone was adequately capitalised and had enough debt facilities to draw down to achieve the revised mine plan.
“The company entered the second half of the financial year on a strong financial footing, having raised $25m at the end of the period, while also proposing revised terms on its credit facility, as it embarks on its revised mining plan,” he said, pointing out there was still $8m it could draw from its debt facilities.
“With the strong retail season and the conservative sales volumes from all the major producers towards the end of 2017, we have seen a very encouraging start to 2018 for the rough market, with our first sale of the calendar year realising an average value of $82 per carat.”
Firestone mined 1.9-million tonnes of ore in the six months and 1.5-million tonnes of waste. The majority of the ore tonnes came from the lower-grade material in the pit. It extracted 379,716 carats in the period.
Firestone sold 352,272 carats in four sales, raising $26m, including a single diamond that realised more than $1m. The sales averaged $74 per carat. A sale in February of 114,887 carats realised an average of $82/carat and brought in $9.4m.