Firestone Diamonds steadily increasing production; on track for 1 mln carats/yr by 2014

Firestone Diamonds PLC (LON:FDI) expects to see significant increases in production from the Liqhobong mine in Lesotho and the BK11 mine in Botswana in the current year and said it is well positioned to reach its target of producing 1 million carats per annum by 2014.

The comments came as it reported results for the full year to end-June 2011, which showed that throughput and production at Liqhobong’s Plant 1 have been continually ramping up, with Firestone producing 5,210 carats in the third quarter 2011, 18,158 in the second and 33,930 carats in the first quarter of the current financial year.

Optimisation work at the plant is now at an advanced stage and production is expected to increase each quarter until it reaches its target capacity in the fourth quarter of Q4 2012, at which point it is expected to generate revenue of approximately US$45 million per annum.

Work on the specifications and design for Plant 2 is progressing well. Plant 2 is expected to commence operation in 2013 and to generate revenue of US$135 million per annum at full production.

Discussions have started with a number of banks in respect of a debt facility to finance the construction of Plant 2 at Liqhobong.

At BK11, production has been ramping up from 2,508 carats in Q3 2011 to 1,812 carats in Q4 and 4,523 carats in Q1 2012. The production plant is currently operating at a capacity of 1 million tonnes per annum and following completion of the final work on the secondary crushing circuit is expected to reach its full operating capacity of 1.5 mtpa in Q4 FY 2012.

Revenue in the full year reached £2.45 million, up from £3,000 a year earlier, and the operating loss narrowed to £2.06 million from £2.42 million in the previous financial year.

Chief executive Tim Wilkes said: "The past year has seen Firestone move into a select group as one of the few listed kimberlite producers worldwide.  We expect to see significant increases in production from the Liqhobong Mine in Lesotho and the BK11 Mine in Botswana in the current year.  Firestone's prospects are now better than at any time in its history and the company is well positioned to reach its target of producing 1 million carats per annum by 2014."

The company expects rough diamond prices to recover in 2012 driven by a long term shortfall in supply.

Firestone’s financial position remains secure, with US$15 million in cash and diamond stocks with an estimated value of US$3 million as of October 2011.