(IDEX Online) - Firestone Diamonds plc, whose operations are focused in Lesotho, has reported record production figures for its fiscal fourth quarter ended 30 June at its Liqhobong diamond mine.
It also provided guidance for FY 2019 for the Liqhobong operation which is 75% owned by Firestone with the rest belonging to the government of Lesotho.
Firestone reported the following:
The exceptional operational performance resulted in several new production related records during the final quarter and market guidance being achieved for the financial year to end-June 2018
Recoveries 36.8% higher than Q3 at 263,512 carats, resulting in a full year total of 835,832 carats, within guidance of between 800,000 and 850,000 carats
Grade of 25.7 carats per hundred tonnes ("cpht"), higher than 22.2 cpht in Q3 and 22.0 cpht for FY 2018
Tonnes treated were 18.0% higher than Q3 at 1,025,647 tonnes, resulting in a full year total of 3.8 million tonnes ("mt"), ahead of guidance of 3.6 mt;
Costs for Q4 of US$10.98 per tonne treated and US$11.91 per tonne treated in FY 2018 despite a stronger local currency during most of the year
A total of 261,985 carats sold in the quarter (Q3: 217,380 carats), realising revenue of US$18.6 million (Q3: US$17.6 million) at an average value of US$71 per carat (Q3: US$81 per carat) mainly due to a larger proportion of run of mine diamonds and fewer valuable stones recovered
Paul Bosma, Chief Executive Officer, commented: "The fourth quarter saw record production. We were able to access the high grade blocks in the mine plan and thanks to excellent operational performance we were able to achieve record carat recoveries. The increased volume translated in an improved cash position at the end of the financial year.
"As always, the average dollar per carat achieved is highly sensitive to the incidence of special stones, of which, we saw a lower incidence in this particular quarter. However, we continue to have grounds for optimism given the parts of the ore body we plan to exploit over the next 12 months. We recently completed a structural and geotechnical assessment of the pit and the outputs are now being used to rerun our life of mine plan. We look forward to updating the market in this respect during the first half of FY 2019."
Operations
"The company had an extremely successful quarter from an operational perspective and ended FY 2018 on a high note. The company is pleased to report that ore tonnes treated, carats recovered, grade recovered, and operating costs set new records, beating all previous quarters. Fair weather conditions during the dry, early winter months, and processing more competent ore as mining progresses deeper in the pit contributed towards the higher processing throughput rates. The waste stripping target for the year was achieved with overall waste tonnes mined at 2.9 million."
In the quarter ended 30 June 2018, Liqhobong treated 1,025,647 tonnes of ore (Q3: 869,126 tonnes) at an average throughput rate of 530 tonnes per hour ("tph") (Q3: 509 tph). As expected, grade increased to 25.7 cpht (Q3: 22.2 cpht) as mining progressed to the higher grade areas of the pit. As a result, 263,512 carats were recovered during the quarter (Q3: 192,604 carats), taking total carat recoveries for FY 2018 to 835,832 carats, achieving guidance of between 800,000 and 850,000 carats.
"During the quarter, 114 stones (plus 10.8 carats) were recovered (Q3: 93 stones) which was encouraging although, overall, the average quality still remained somewhat below expectation with the recovery of fewer valuable stones. All the weathered shallow ore has now been mined. We consider that the mix of fancies mined in the upper parts of the ore body are not entirely representative of the overall diamond assortment and we remain hopeful of an improvement in average value as a result of an increased incidence of better quality, higher value specials in the future.
"A combination of additional tonnes treated and local currency weakness against the US$, resulted in a decrease in the operating costs for the quarter, including waste stripping, to US$10.98 per tonne treated (Q3: US$13.03 per tonne treated). Excellent cost management throughout the year ensured that operating costs of US$11.91 were below guidance of US$13.80 per tonne treated for FY 2018.
"As announced in December 2017, the company is pursuing a revised mine plan with the objective of delivering the best returns in the medium term at low risk whilst at the same time retaining the optionality of taking advantage of the longer life of mine potential of the ore body should realized diamond values increase or should there be a sustained improvement in market conditions. The company continued making good progress on delivering the December 2017 Revised Mine Plan, achieving an average value of US$75 per carat for the six months ended 30 June 2018, in line with that used by ABSA bank in support of the debt restructuring. Work is currently under way to optimize this plan further based on an updated structural geology and geotechnical model and the company expects to present additional information in this regard during H1 FY 2019.
Diamond Sales
A total of 261,985 carats were sold in the quarter (Q3: 217,380 carats). The sales achieved an average value of US$71 per carat (Q3: US$81 per carat), yielding proceeds of US$18.6 million (Q3: US$17.6 million). Average diamond values were lower than the previous quarter due mainly to the recovery of a higher proportion of run of mine category goods and fewer special stones.
"The rough diamond market continued to be positive with De Beers reporting good demand across the product range for its fifth sale concluded at the end of June. At the company's recent sale, demand and pricing remained positive for good quality 1 carat diamonds and up, however, run of mine categories were under some pressure in this competitive market segment. Rough supply in general is being well managed by the industry with none of the major producers over-supplying the market. Traditionally the market enters a quieter period until the end of August due to the European summer holidays. We remain optimistic for the remaining sales this year."
Guidance for FY 2019
The company continues to mine according to the most recent mine plan which was announced in December 2017. During FY 2019, the company plans to treat between 3.6 and 3.8 mt of ore and expects to recover between 820,000 and 870,000 carats. The company also plans to develop the mine further through the stripping of between 4.3 and 4.8 mt of waste rock.