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Firestone Questions Future of Operations

Oct 28, 2019 8:20 AM   By Rapaport News
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RAPAPORT... Firestone Diamonds is assessing its ability to remain operational, as it struggles with mounting debt and lower prices in the weak market.

“From a market perspective, pricing remains subdued,” Firestone CEO Paul Bosma said last week. “The company continues to engage with its debtholders to ensure it can sustain operations through the current downturn, and further announcements in this regard can be expected in due course.”

Sales of rough diamonds from the company’s Liqhobong mine in Lesotho fell 21% year on year to $10.6 million in the first fiscal quarter ending September 30. Sales volume dropped 13% to 168,612 carats, with the miner achieving an average price of $63 per carat, compared to $70 the previous year.

The average price per carat was lower than the previous quarter, despite the sale of several high-value stones, including a 37-carat, fancy-pink stone and a 55-carat, fancy-yellow stone, the miner noted. This was due to the fact that the majority of rough sold was comprised of either lower-value or smaller-sized goods, the company added.

Firestone’s production slipped 16% to 201,091 carats for the three-month period. Although Firestone mined ore predominantly from the higher-grade southern pit, the grade was lower than the company expected, seemingly because the ore gets harder as the miner deepens the pit, it explained.

The company also expects production and sales to fall in the second quarter, it noted. A power interruption at Liqhobong, which has affected operations since October 1, is expected to cause the loss of an entire month’s production, and the miner has had to cancel its December tender because it will not have enough rough to offer buyers.

“The loss of revenue and higher operating costs will impact the company’s cash balance, and together with the impact of a weaker diamond-pricing environment, has placed further focus on finding an interim solution regarding its indebtedness,” Firestone said.

Image: The Liqhobong mine. (Firestone Diamonds)
Tags: Firestone, Firestone Diamonds, Liqhobong mine, Paul Bosma, Rapaport News
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