Firestone’s Liqhobong mine on track for initial production

firestone photoFirestone Diamonds, the AIM-listed diamond development company, has released its half year interim results for the six months ended 31 December 2014 that showed the loss for the period decreased by US$3.3 million to US$4.4 million (H1 2014: US$7.7 million).

According to the company, the loss for the period under review included accounting losses on foreign exchange movements of US$2.1 million and lower corporate costs of US$1.6 million (H1 2014: US$2.2 million), which were, however, offset by finance income of US$0.3 million (H1 2014: Nil).

Firestone said it recorded the loss per share of 1.5 cents (H1 2014: 8.8 cents), consolidated net cash at 31 December 2014 was US$47.3 million (H1 2014: US$4.2 million) adding that total debt facilities of US$112.4 million are in place.

The company also announced that the Liqhobong Mine Development Project in Lesotho is on track to commence initial production at the end of H1 2016 while BK11 Mine in Botswana remains under care and maintenance.

In late June 2014, the group’s vision of developing a tier one, large scale mining operation, started to turn into reality as it commenced construction at Liqhobong in the Lesotho highlands.

Stuart Brown, Chief Executive Officer of Firestone said in the last six months in which Liqhobong has moved from the concept of a large scale, tier one diamond mine, to construction.

“The period has been one of intense operational effort with the creation of approximately 1,000 jobs in Lesotho. All major construction contracts have been finalised and good progress has been made to date,” he said.

“The Project remains on schedule to achieve initial production at the end of H1 2016. I look forward to keeping shareholders updated on the Project’s progress.”

The company revealed that under the leadership of Glenn Black, the Chief Project Officer, strong progress has been made to date, in line with the company’s expected Project timeline.

More than 400 people have already been employed on the Project, with this number anticipated to rise further to approximately 800 people during the course of this year, and a further 600 people have been employed on the electrical infrastructure project. Currently, we have over 200 pieces of earthmoving and construction equipment deployed

It added that the project to connect the mine to the grid power is a separate project (budgeted at ZAR165.0 million) which is proceeding well and is expected to be completed during the second half of 2015, ahead of the initial schedule.

With regards to the Project Finance Facility of up to US$82.4 million from Absa Bank Limited (the “Project Finance Facility”) and the US$30.0 million debt facility from the Company’s two largest shareholders, the Group is currently making good progress in terms of finalising the remaining conditions precedent prior to the expected draw down on the facilities during the second quarter of 2015.

“In respect of the Project Finance Facility, the remaining conditions precedent include, inter alia, putting in place a standby debt facility of US$13.0 million to fund any potential cost over-runs or delays, which is expected to be obtained from Resource Capital Fund VI L.P., further details of which are expected to be announced in due course,” said the company chairman.

Firestone said BK11 Mine in Botswana has continued to be kept on care and maintenance at a cost to the Group of US$46,000 (H12014: US$46,000) per month.

“Management initiated a formal disposal process for the Group’s BK11 mine in August 2014 which is in line with the strategy to focus resources on the Company’s key asset, the Liqhobong Mine Development Project.”

 

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