Firestone Diamonds output down on technical issue at Lesotho mine

Africa-focused Firestone Diamonds (LON:FDI) didn’t exactly have a bright year in 2018, with its shares down almost 70% to date, and the situation likely to get worse after it reported Monday that production had dropped 13% in the second quarter of its financial year.

The company’s Liqhobong diamond mine in Lesotho treated 884,252 tonnes of ore in the three months to the end of December 2018 at an average of 526 tonnes per hour.

The results represents a decline compared to just over one-million tonnes of treated ore, due to unscheduled repair work being undertaken on one of the scrubbers in November.

Firestone said it remains on track to meet its production target of between 820,000 and 870,000 carats for the full-year.

During the quarter, 89 stones were recovered, down 22% from 114 stones in the prior quarter. The recovery of 224,947 ct of diamonds brought the year-to-date total to 465,680 ct, which places the company on track to meet its production target of between 820,000 ct and 870,000 ct for the full-year.

A total of 191,735 carats were sold during the period, down 1.3% from 194,206 carats sold in the first quarter, but higher average value per carat help the company’s revenue — it reached $72 million in the second quarter, up from $70 in the previous three-month period.

Chief executive Paul Bosma said Firestone had had a “reasonable second quarter”, but noted that demand for the smaller, lower-value stones had deteriorated further during the quarter.

“Demand for larger, better-quality stones remains strong as was evidenced by the pricing received for the 46 ct white stone that was sold during the first sale of 2019,” Bosma said.

Firestone spent $185 million building Liqhobong, which started production in late 2016, and boasts over 11 million carats in reserve. The total open pit resource contains over 17 million carats down to 393 metres.

Despite sluggish conditions at the lower value end of the market, Liqhobong remained cash flow positive after finance costs for the quarter.