The last six months of 2010 were probably the most significant in Firestone Diamonds' (LON:FDI) history, according to chairman Philip Kenny.
This morning the AIM-listed African diamond producer published the interim results for the six months ended 31 December 2010. The interims follow yesterday’s extensive update on the group’s operations at the Liqhobong and BK11 mines.
Kenny reflected on the transformational six months, in which it began production at BK11 in July and subsequently agreed the deal to acquire Kopane Diamonds - to get control of the Liqhobong mine in Lesotho.
The chairman emphasised that Firestone is now one of only three junior listed kimberlite producers worldwide and that Liqhobong is a world class asset and one of the world's most attractive undeveloped kimberlites.
“With both Liqhobong and BK11 on track to be in full production in 2011, an exciting portfolio of kimberlites to be evaluated in Botswana, and the continued positive outlook for the rough diamond market, we believe that the prospects for Firestone are very good,” Kenny said.
“The company is now well positioned to reach its target of producing 1 million carats per annum by 2014.”
In yesterday's operational update chief executive Tim Wilkes said that Firestone is now very well positioned to become a significant diamond producer in 2011.
The company hopes to be producing 1 million carats a year from its two diamond mines, Liqhobong and BK11, by 2014. Next month Firestone plans to sell diamonds from Liqhobong and BK11, 5,000 and 2,200 carats respectively, at Gaborone in Botswana.
At the Liqhobong mine in Lesotho, Firestone began production last month, ahead of schedule, and it said that grades from initial production are in-line with expectations. Notably it has recovered some high quality diamonds, a 15 carat white gem stone and two yellow gem stones of 45 and 14 carats.
Firestone said it is on schedule with its plans to triple production capacity at the first Liqhobong plant by the end of 2011.
It also said that it will now make its development decision on the second plant by the end of 2011. The new plant would create 4.2 million tonnes of additional capacity each year, and provide US$140 million in revenue.
Additionally Firestone has now contracted a work programme to extend the power supply to the mine. The work is expected to be completed by the first quarter of 2012.
Meanwhile at the BK11 mine in Botswana production has fallen short of Firestone’s targets, throughput reached 90 percent of its 1.5 million tonnes a year target rate.
Problems were encountered with the crushing and scrubbing circuits, and it only achieved diamond liberation between 20-30 percent. Diamond liberation will be improved with plant modifications in the second quarter.
Firestone said it still expects to achieve its production targets in 2011. Diamond qualities are consistent with previous production and it said that mining operation are generally progressing well and the pit has now reached a depth of 30 metres.
It expects grid power to be available to the BK11 mine in the third quarter of this year.
On a corporate level, it agreed terms with the Standard Chartered Bank Botswana for a US$6 million, 3 year, 6.5 percent fixed rate credit facility. Firestone will be able to draw down from the facility in April 2011.
"We are pleased with the continued progress that we have made at Liqhobong, which we believe has the potential to be a highly profitable mining operation,” Wilkes said. “The recovery of three large diamonds is particularly encouraging at this early stage given we have yet to commence mining at the high grade K5 and K6 units.”
Wilkes added: “While diamond recovery at the BK11 plant has been below target, we expect this to be resolved shortly and remain confident of meeting our 2011 production targets.”