Shares in Firestone Diamonds (LON:FDI) surged today after the company released a postive trading update on its activities in Lesotho.
As at 11.45am, they were up 5.13 per cent, to change hands at 5.13 pence, but earlier had gained as much as 10 per cent.
Earlier, the company revealed it treated 152,422 tons of ore in Q2 at its pilot plant at the Liqhobong mine - nine per cent above its forecasts.
49,240 carats were recovered at a grade of 32.3 carats per hundred tonnes (cpht), it said in the statement, which also revealed sales figures for stones from the mine at a dual tender held in Gaborone and Antwerp this month.
The company also told investors it had appointed a new chief financial officer - Grant Ferriman.
Modifications at Liqhobong's pilot plant aimed at decreasing breakage began in June and were completed this month and are expected to lead to a further improvement in diamond values.
Chief executive Tim Wilkes said: "We have continued to build on the positive production and carat recovery trends from Q1.
"The second planned shutdown during the latter half of June has gone very smoothly and the plant is ramping up towards a steady state of around 2000 tonnes per day."
At the tender, 45,773 carats were sold, realising gross revenues of $4.14 million or $91 dollars per carat.
This price was significantly higher than the $71 per carat achieved during the previous quarter.
The dollar per carat achieved demonstrates continued strong demand for higher quality stones whilst some pressure remains on the poorer quality and smaller stones, Firestone said.
Wilkes said the encouraging sales augured well for the feasibility study on the main treatment plant at Liqhobong, which will undergo final review for board approval in October 2012.
The DFS for the main treatment plant is largely completed and being reviewed, the firm said. The results are expected to be announced towards October this year.
As at June 30, Firestone has a strong cash position of around $16.3 million.
It is also reviewing its strategy in regard to its exploration portfolio, it added.
"This is a positive update from Firestone – carat values should improve for the company as they recover higher value stones from improvements in processes at the mine," said City broker Fairfax.
"With cash in the bank, the company can continue with making improvements at the pilot plant until the DFS sets outs the potential to develop a bigger plant and operation at the mine.
"We continue to see this as a good recovery play and see the long term supply and demand for diamonds particularly larger and special stones as remaining largely intact," added analyst John Meyer.
Broker Northland added in a note: "This is an impressive performance from Firestone Diamonds that increased the average per carat value of the diamonds from Liqhobong.
"This is despite the recent weakness in the diamond market that has seen many other diamonds miners reduce the average price per carat achieved."
The company also announced today it had appointed Julian Treger and Mike Wittet as non-executive board members with effect from Tuesday (July 24).
In addition, Grant Ferriman joined the firm as CFO with effect from July 5 this year.