Firestone Diamonds released interim results for the six months that ended on December 31, and reported that while revenue rose 88 percent year on year to $3 million (GPB 1.97 million), costs surged more than eight-fold leaving the company with an operating loss of $13.5 million (GBP 8.6 million), compared with a loss of GBP 1.6 million one year ago. The company also announced restructuring program to focus on Lesotho and a new round of funding.
Tim Wilkes, the chief executive of Firestone Diamonds, said, "The higher than expected cash outflows in first half 2012 are mainly due to the general weakness in the diamond price experienced from July 2011 combined with technical challenges experienced at both the Liqhobong and BK11 plants. With the restructuring that has been undertaken, the company is now focused on increasing Liqhobong's revenue per carat production in 2012 and in developing the main treatment plant in order to reach our target of producing over 1 million carats per annum by 2015, whilst achieving the required run rate by fourth quarter 2014."
During this reporting period, the company's Liqhobong mine produced 70,192 carats, more than triple the amount from one year ago. The company sold 42,802 carats at an average price of $59 per carat, compared with $140 per carat in 2011. At the BK11 mine in Botswana, which is now on care and maintenance, Firestone produced 9,910 carats and sold 8,168 carats at an average price of $133 per carat, down from $233 per carat one year earlier.
Firestone Diamonds added that it is raising $23.1 million (GBP 14.7 million) through Mirabaud Securities as part of the restructuring of the company to further development of Liqhobong diamond mine in Lesotho. Firestone provisionally placed 172,900,000 new ordinary shares with both institutional and other investors at a price of 8.5 pence per "placing share." Proceeds will also be used for repayment of debt and ongoing costs of BK11 in Botswana. The company's directors moved to recapitalize and re-classify existing shares.
Current share option schemes were terminated and there are 13,330,000 options to acquire ordinary shares outstanding. Firestone proposed adopting two new share option schemes - one for employees and executive directors and the other for non-executive directors and consultants. The placement and capital reorganization and the adoption of the share option schemes are conditional upon the approval of Firestone's shareholders at an upcoming general meeting.