Firestone meets annual production targets despite market weakness

Liqhobong mine’s waste storage facility. (Image courtesy of Firestone Diamonds.)

Africa-focused Firestone Diamonds (LON:FDI) became on Thursday one of the few precious stones miners to remain afloat amid lingering market weakness, particularly for smaller, lower-value diamonds.

The company posted annual production within guidance, following a “solid” fourth-quarter during which it recovered 208,572 carats, 34% more than in the previous three months of the year.

The miner dug up 829,458 carats in the fiscal year ended June from Liqhobong, in Lesotho, which is its only operating mine. While the figure was within Firestone’s 820,000 to 870,000 carats forecast, it was 0.8% lower than in the previous year.

During the reporting year, the company’s notable recoveries included a 72-carat yellow makeable diamond, which was the second one over 70-carat Firestone has found this year at Liqhobong. 

“From a market and pricing perspective, it was a tough financial year, particularly for the smaller, lower-value goods” 

Firestone Diamonds’ chief executive, Paul Bosma

Firestone also found a 22-carat white makeable rock and an 11-carat fancy light-pink diamond.

“Makeable” diamonds are those whose shape allows to cut one large diamond from it. In contrast, “sawable” stones can be cut in half in order to create two smaller diamonds.

For 2020, Firestone expects diamond recoveries to be between 820,000 and 870,000 carats, with ore tonnes treated between 3.6 million and 3.8 million tonnes. In 2019, it has mined 3.7 million tonnes, which was within guidance but below the 3.8 million tonnes it recovered a year prior.

“From a market and pricing perspective, it was a tough financial year, particularly for the smaller, lower-value goods and these conditions are expected to persist for the rest of 2019 and possibly improving during 2020 when global rough supply is expected to reduce,” chief executive, Paul Bosma, said in a statement.

Over the past 18 months, diamond miners have had a hard time as demand for rough diamonds remains affected by market volatility and ongoing trade tensions between China and the US.

Polished diamond demand, as well as midstream rough diamond sales, have also been impacted on by retail store closures and destocking in the US.

Last week, South Africa’s Petra Diamonds (LON:PDL), owner of the iconic Cullinan mine, said it anticipated that next year’s production would be lower due to ongoing market weakness.

Earlier this month, the world’s biggest miner of precious stones, De Beers, also reported an output drop and cut guidance for the year. It followed up today by confirming plans to scale back production, as part of its efforts to boost prices and demand.

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