jgallagh18 Mar 2013 23:08
I repeat, no-one - not European Diamonds, not Kopane, not Firestone - has yet operated Liqhobong at a profit. In addition, Plant 1 is coming to the end of its useful life and investment in Plant 2 and grid power, inter alia, is crucial to any future for the mine. I am not making it up. Go back two and a half years and read in the RNSs what Firestone themselves have said since KDD reverse took over FDI. Read the analysts' reports. Lighobong's run-of-mine cpht is very modest and the site remote and problematic, so they have always known that profitability would depend on several factors: volume throughput, large stones, specials and fancies from the better facie, cheap power, a stable and favourable exchange rate. Thus far there has been no announcement of the CAPEX ($167m) necessary to build Plant 2 becoming available, in what is, as Firestone themselves admit, a challenging period for raising finance.
As regards your financial assertions, I remind you that in late 2011 Firestone was projecting $45m pa revenue from diamond sales by now. Even by your own, I would say highly optimistic, figures, they are achieving less than half that revenue. You say FDI is 'averaging at circa $5m sales per quarter'; which perhaps you base on the 17 Dec 2012 RNS. However, in Q1 2013 they have held but a single tender, of only 40k carats, which will not achieve anything like those results. For a look at the Company's financial health, I refer you to the most recent Finals from November last year; even at the reduced loss rate achieved after restructuring, and excluding impairments and BK11 losses, they were losing $6m+ in H2 2011. Interims due shortly will give a more up-to-date picture, as well, no doubt, as some news on the police investigation.
As I said in my last posting, now is not the time to be reckless.
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