Firestone Diamonds Updates Financials, Shelves Mine Expansion

Lesotho-focused Firestone Diamonds (LSE:FDI) has reported a US$6.6-million loss for the last half of 2018.

The multimillion-dollar shortfall has forced the gem miner to shelve plans to expand its 75 percent owned Liqhobong mine.

Firestone began production at the Lesotho mine in late 2016 after spending US$185 million to build the diamond project.

The proposed extension to the Cut 3 area would have extended the life of mine by three years and resulted in 40 percent more carats; however, the expansion has now been deemed “uneconomical.”

“The second half of 2018 saw a global price slump in the smaller, lower value goods, which negatively impacted our average dollar per carat achieved,” Firestone CEO Paul Bosma said.

“Since then, prices have stabilized at these lower levels, and we are looking forward to some improvement once inventory levels in the midstream of the diamond market normalize.”

Despite the poor market performance from the diamond sector during the last half of 2018, Firestone did recover 465,680 carats of diamonds during the last six months of the year. That is an 85,864-carat increase from the previous period’s total of 379,716 carats.

The company also unearthed its largest gem to date: a 326-carat light yellow makeable diamond.

“Production is on track to meet guidance and we once again did well to manage costs, which are well below full year guidance,” Bosma continued.

“[W]e sold our most valuable stone to date at the recent sale, a 70-carat makeable recovered in January, and aided by a modest price increase in the smaller fraction we realized our highest average sale price since declaring commercial production in mid-2017 of US$90 per carat.”

Shares of Firestone were down 1.45 percent on Thursday (March 28), trading at GBX2.38.

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.