TIDMFDI
RNS Number : 1789L
Firestone Diamonds PLC
17 July 2017
17 July 2017
Firestone Diamonds plc
("Firestone", the "Group" or the "Company") (AIM: FDI)
Quarterly Update and Commencement of Commercial Production
Firestone Diamonds plc, the AIM-quoted diamond company, is
pleased to provide its quarterly update on commissioning activities
at its Liqhobong Diamond Mine ("Liqhobong" or the "Project") for
the quarter ended June 2017 (Q4 of the Company's financial year).
Liqhobong is owned 75% by Firestone and 25% by the Government of
Lesotho.
Highlights for the quarter ended 30 June 2017
-- Plant commissioning activities completed and full nameplate
targets reached for all three months of the quarter
-- 925,000 tonnes treated (Q3: 639,000 tonnes) bringing total
for the financial year to 1,966,000 tonnes, at upper end of
guidance range of 1,800,000 to 2,000,000 tonnes
-- 204,000 carats recovered at a grade of 22 carats per hundred
tonnes ("cpht") (Q3: 103,000 carats at a grade of 16.1 cpht)
bringing total carats recovered for the financial year to 365,000
at an average grade of 18.6 cpht, ahead of guidance (360,000
carats)
-- Recovery of 54 special stones (larger than 10.8 carats) as
well as the continued recovery of fancy yellow diamonds (Q3: 31
special stones), a total of 112 special stones were recovered
during the financial year
-- Two scheduled diamond sales held during the quarter in
Antwerp saw 182,786 carats sold, generating total sale proceeds of
US$14.1 million, achieving an average price of US$77 per carat, due
to different sales mix compared to previous quarter
-- Diamond sales for the financial year saw 310,376 carats sold,
generating total sale proceeds of US$27.8 million, achieving an
average price of US$90 per carat
-- Continued strong operating cost management resulting in
US$11.3 per tonne treated for the quarter and US$11.6 per tonne
treated for the year, slightly below bottom end of guidance
-- Following the completion of commercial production testing,
Firestone commenced commercial production and ceased capitalising
Project expenditure from 1 July 2017
-- As at 30 June 2017, cash on hand was US$17.3 million, which
includes the US$5.0 million drawn down from the extended US$15.0
million standby facility, with US$10.0 million still available
-- Zero lost time injury record maintained, with over 4.4
million hours worked since the start of the Project over three
years ago
-- Post the period end, second ABSA debt repayment of US$4.1 million made
Stuart Brown, Chief Executive Officer, commented:
"I am delighted to report that Firestone has finished its
financial year with another extremely strong quarter. The
commissioning and ramp up process at Liqhobong has been very
successful, particularly in terms of mining and treatment and to
have achieved commercial production within eight months of start-up
is an exceptional record. I am exceedingly proud of the team's
performance and in particular the safety record, which we continue
to strive to protect. I look forward to reporting on the next
financial year where Firestone expects to realise its vision of
becoming a mid-tier diamond producer."
Mine Performance - Commercial Production Testing Complete
Liqhobong's plant has performed to nameplate design during the
4(th) quarter ended 30 June 2017, treating 925,000 tonnes (Q3:
639,000 tonnes) bringing the total for the financial year to
1,966,000 tonnes. This tonnage achievement is at the top end of
guidance and confirms that Liqhobong has completed its commercial
production testing programme. As a result of the commencement of
commercial production, Firestone ceased to capitalise Project
expenditure from 1 July 2017.
As mining operations at Liqhobong have advanced and the cuts and
benches are being established to follow the detailed mine plan, the
Company's ability to access more areas of the pit increases, with
the Company moving into the higher grade K5 ore during the quarter.
The ability to further access K5 and K4 and other areas of the pit
will continue to increase over the coming months as the
infrastructure for cut one is established.
Of the 1,966,000 tonnes treated for the year, 80% came from the
lower grade K2 material in the pit with some dilution. 7% of the
tonnage came from the K4 material also with some dilution. 8% of
tonnage came from K5, with the balance of the material treated
coming from historic mixed stockpiles used during the initial
commissioning stages.
It is important to note that the tonnes treated to date, and
therefore the grade and value, are not yet representative of
Liqhobong's true production profile. This will only start to become
evident as more representative volumes of all ore facies are
treated and the characteristics of the ore body becomes more fully
understood.
During the quarter ended June 2017, 204,000 carats were
recovered at a higher grade of 22 cpht (Q3: 103,000 at a grade of
16.1 cpht). The continued increase in grade is a result of the
Company processing higher grade K5 ore as well as the successful
plant modifications implemented in the previous quarters. A total
of 54 special stones were recovered larger than 10.8 carats (Q3: 31
special stones) bringing the total for the financial year to 112
special stones, as well as the continued recovery of fancy yellow
diamonds throughout. A total of 365,000 carats were recovered
during the financial year, at an average grade of 18.6 cpht,
marginally beating the production guidance. In addition, the
Company's diamonds continue to be recovered with minimal
damage.
Costs per tonne treated for the quarter were US$11.3, below the
lower end of guidance of US$12.0 to US$14.0 per tonne, which was a
particularly pleasing result as the Company had to work with a
significantly stronger ZAR:US$ exchange rate of ZAR12.9 compared to
the budgeted ZAR14.5. The average cost per tonne treated for the
year is US$11.6 also below the lower end of guidance.
The waste stripping programme is currently ahead of schedule and
the main pit is now completely dewatered. Waste moved for the year
was 1,785,000 tonnes against a budget of 1,424,000 tonnes, with the
increase being to allow the Company to complete the Residue Storage
Facility 3 wall uplift ahead of schedule to further protect the
mine in case of above average downpours during the rainy season
which normally runs from October to April each year. It is expected
that the wall uplift will be completed during the current
quarter.
The summer rainy season was slightly above average and all the
storage facilities on site were filled to required levels. As at 30
June 2017 Firestone had 560,000m(3) of water on site, which is more
than sufficient to last until the next rainfall season later in
2017.
Health & Safety
At the end of the quarter and financial year, the Project
maintained its outstanding health and safety record, having reached
over 4.4 million hours worked without a single Lost Time Injury
since the Project commenced over three years ago. A total of
2,626,640 hours worked have been recorded for the 2017 financial
year.
Diamond Sales
During the period, Firestone held two diamond sales in May and
June 2017 in Antwerp. The diamond sales saw all 182,786 carats
offered for sale sold, achieving an average price of US$77 per
carat for total sale proceeds of US$14.1 million.
Diamond sales for the end of the financial year therefore
amounted to 310,376 carats sold, generating total sale proceeds of
US$27.8 million, achieving an average price of US$90 per carat.
The average price per carat for the quarter was lower than the
Company's internal projections and is a result of an increase in
the recovery of finer carats at Liqhobong, as the Company modified
its plant during the commissioning stages as previously reported.
The exceptional recoveries included in the first two sales (March
and April 2017) were also slightly better than the exceptional
recoveries included in the May and June sales, hence the decline in
the average realised price.
The Indian demonetisation programme has also impacted the
Company's sales results when compared to the Company's initial
price book and historic sales of our run of mine goods. Firestone
has estimated that the impact of the Indian demonetisation
programme has reduced sale proceeds by approximately 8% for the
Company's sales to date.
Firestone does not expect a recovery in the lower priced
category goods in the short to medium term, as supply remains
readily available and demand is seen to be reducing slightly.
Firestone has however, continued to see strong interest and support
for its higher quality and better value goods in all four of its
sales.
In line with previous guidance, the Company will continue to
hold two diamond sales per quarter and the Company will update the
market on the result of such sales in the next quarterly update
expected in October 2017 for the quarter ended 30 September
2017.
Financial
As at 30 June 2017, the Company had US$17.3 million cash on
hand, which included the compulsory drawdown of the US$5.0 million
from the extended US$15.0 million standby facility as announced 22
June 2017, with US$10.0 million still available.
In addition, post the quarter end, the second ABSA debt
repayment of US$4.1 million was made as scheduled (US$3.3 million
in capital with interest of US$0.8 million).
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 contact:
+44 (0)20
Firestone Diamonds plc 8741 7810
Stuart Brown
+44 (0)20
Strand Hanson Limited (Nomad) 7409 3494
Stuart Faulkner
Richard Tulloch
James Dance
Macquarie Capital (Europe) Limited +44 (0)20
(Joint Broker) 3037 2000
Raj Khatri
Nick Stamp
Mirabaud Securities LLP (Joint
Broker)
+44 (0)20
Rory Scott 7878 3360
+44 (0)20
Ed Haig-Thomas 7878 3447
Tavistock (Public and Investor +44 (0)20
Relations) 7920 3150
+44 (0)7788
Emily Fenton 554 035
Jos Simson
Barney Hayward
Background information on Firestone
Firestone is an international diamond mining company with
operations focused in Lesotho. Firestone is currently in the
process of commencing production at the Liqhobong Diamond Mine in
Lesotho.
Lesotho is emerging as one of Africa's significant new diamond
producers, hosting Gem Diamonds' Letseng Mine, Firestone's
Liqhobong Mine and Namakwa Diamonds' Kao Mine.
For more information please visit:
www.firestonediamonds.com.
**ENDS**
This information is provided by RNS
The company news service from the London Stock Exchange
END
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