Firestone Diamonds is revising its mining plan and has opened talks with its lender after recording disappointing prices at its Liqhobong mine in Lesotho.
The company’s last two sales yielded just $69 per carat, compared with the $107 per carat it had previously assumed to be the mine’s value, Firestone said in a statement Friday. The company sold 195,330 carats of rough for a total of $13.5 million at the sales in July and September in Antwerp.
“A combination of oversupply and the previously reported Indian demonetization program is still having an impact on the lower-quality run-of-mine goods, as well as the fact that the summer months are traditionally the quietest time in the rough selling season,” Firestone explained.
While Firestone on Tuesday reported the recovery of its largest Liqhobong diamond to date — a 134-carat, gem-quality, light-yellow diamond — the overall occurrence of larger, better-quality diamonds at the miner has been lower than the company expected. This has dented the average price at the latest sales, it said.
This could be a result of the company carrying out mining in the lower-grade areas of the deposit, Firestone explained. The company expects production to progress to all areas of the mine over time, resulting in higher average prices.
However, while prices should rise, the company needs to revise its mine plan due to the current pricing pressures, it said. It is working with consultants to finalize the new strategy based on a recalculated average price estimate for its entire lifespan, which will be higher than $69 per carat but lower than $107 per carat.
The company also needs to get more financing and restructure its existing debts to deliver the new mine plan, it added. It is in discussions with major shareholders and its debt provider, ABSA Bank, and expects to complete these discussions and revise the plan by the end of the year.
Firestone started production at Liqhobong in October 2016, with the first sale of rough taking place in February.