Construction at the Liqhobong diamond mine in Lesotho is making “good progress” according to Stuart Brown of Firestone Diamonds (LON:FDI), in spite of adverse weather conditions and the need to shift more earth than had previously been anticipated.
Those two factors combined have added ZAR156mln (US$12.9mln) to overall costs, the company said, and caused the scheduled completion date to slip back from the end of the first half of 2016 to the fourth quarter of 2016.
Nonetheless, the project remains “well within” the US$185mln budget, with the additional costs to be met by surplus cash from foreign exchange gains, from savings achieved on the construction of grid power to site, which is running ahead of schedule, and from existing contingency funds.
As at May 31, Firestone had US$20mln in the bank, in addition to a US$30mln bond facility and a US$82.4mln banking facility from ABSA.
Liqhobong, said the company, remains “fully funded” into the first quarter of 2017, by which time cash flow should be coming in from the first production of diamonds.
Earth moving is a critical aspect of the mine construction at Liqhobong, as sites are cleared for the installation of the primary crusher and other plant, but the original survey, undertaken in 2012, appears to have underestimated the quantity of material that needs to be moved. In addition, the presence of several large rocks has further slowed down progress.
Firestone had made efforts to recover the lost time, but the heavy rainfalls hampered those efforts.
Other aspects of construction continue to go well, with all major equipment and long-lead items either completed or nearing completion, and the first steelwork expected on site in July.