JOHANNESBURG (miningweekly.com) – Aim-listed Firestone Diamonds on Tuesday reiterated that it would complete its Liqhobong project, in Lesotho, in the fourth quarter of 2016, with the project having been 49% complete as at September 30.

Outlining its results for the year ended June 30, the company stated that the project remained within its $184.5-million budget, with the project’s earthworks, civil and plant construction under way.

Firestone Diamonds added that, while the project team was initially able to get ahead on a number of work streams before the start of the 2014/15 summer rainy season, above-average rainfall experienced at critical times of the earthworks had hampered progress.

Further, it pointed out that an increase in the quantity of overburden that had to be removed from the primary crusher and plant terraces had resulted in the civil works programme being extended by six months.

The additional work required to achieve the revised project schedule was estimated to cost R156-million, which would be funded from the project's surplus cash generated from realised foreign exchange gains, savings on the grid power project and from contingency reserves included in the original project budget of $185.4-million.

Despite the increase in rand costs of the project to, in aggregate, R2.1-billion, the dollar cost of the project remained within its original budget, which meant that the project continued to be fully funded through to production ramp-up, with the group having finalised all of the outstanding conditions required to draw down the $82.4-million Absa project finance facility.

The group had drawn down the first monies under the facility in September.

Firestone chairperson Lucio Genovese marked the year as a period of “tremendous progress”, adding that, if the previous year could be characterised as the year in which Firestone successfully concluded the financing arrangements for Liqhobong, this year could be seen as the period in which it not only broke ground at site, but moved into full-scale construction.

“The speed at which the company was able to mobilise at site and begin earthworks and construction activities post financing, was a result of several years of planning and I congratulate CEO Stuart Brown and his team on their approach to ensuring the project started so swiftly,” he added.

Genovese added that Firestone worked hard in difficult terrain. Once in full production, Liqhobong is expected to produce one-million carats a year with the potential for large stones, placing it in the midtier of diamond mines globally.
 
DIAMOND MARKET
Meanwhile, the group described the diamond market as having been difficult over the last year, with rough diamond prices coming under pressure in all markets as the global economic situation had been challenging, especially towards the middle of this year when weaker economic data came out of China.

“The supply-demand fundamentals of the diamond industry are still favourable when taking a medium- to long-term view and, in time, the stability and steady growth in prices that we all desire will return.

“The major producers have acknowledged the challenges facing the industry and over the coming 18 months we hope to see a steady improvement, as rectifying actions are taken to normalise the industry,” Genovese pointed out.

Further, retail growth remained key to the success of the diamond industry and, while China’s economic growth had certainly slowed down, when compared with the phenomenal growth experienced between 2010 and 2013, it remained a large growth market that would help drive future demand for diamond jewellery.

“I remain convinced that being part of an industry where long-term demand is forecast to outstrip supply is far better than being a participant in an industry where supply is capable of being increased dramatically to meet demand,” Genovese said.