JOHANNESBURG (miningweekly.com) – Aim-listed Firestone Diamonds on Tuesday announced a share placing to raise about $6-million (£3.97-million) before expenses, which would be used for, among others, working capital at the company's flagship Liqhobong diamond mine, in Lesotho.

The group owns a 75% interest in Liqhobong, with the remaining interest held by the Lesotho government.

The company had provisionally placed 198.5-million of its new ordinary shares through a placing through Mirabaud Securities and a direct subscription with institutional and other investors, including certain existing shareholders at a price of 2p a share.

Firestone said the net proceeds of the placing would be used for capital expenditure (capex) at the main treatment plant (MTP) and general working capital and other purposes, including the debt repayment.

"Today's proposed placing adds stability to Firestone's financial position and underpins the continued strong support from shareholders. Liqhobong is at an exciting stage in its development as it transitions its focus to the implementation and financing stage and we look forward to keeping all stakeholders updated on all material developments," Firestone nonexecutive chairperson Lucio Genovese said.

The definitive feasibility study for the MTP estimated the initial capex to be about $167-million. However, a further substantial equity fundraise would be required to fund the MTP, but the company noted that it was pursuing various additional funding alternatives to minimise the equity dilution for shareholders.

Firestone expected to close its other financing initiatives during the fourth quarter of 2013. If successful, the company expected to have sufficient funding to fully develop and implement the MTP, which, when operational, was expected to produce about one-million carats a year.

With the preparation work nearing completion, Firestone's focus was on financing and implementing the MTP.

The group also noted that the pilot plant at Liqhobong, which had produced about 274 577 ct of diamonds since opening in September 2011 and achieved an average diamond price of $86/ct in the 12-month period ended May, continued to operate.

However, Firestone’s board was in the process of considering when the operation should be discontinued to prepare the mine site for the development of the MTP, which it envisaged to occur before the end of the calendar year.

The company highlighted that it was also looking to strengthen its executive team to assist the group in the implementation of its strategy and, in particular, oversee the implementation of the MTP.