London South East | The UK's favourite investor portal.

During the 20 months of trial mining, Firestone extracted one million tonnes of ore and got 325,000 carats (32cpht) making US$29m. That worked out at 89US$/carat at a time when prices were higher than they are today, and as a result although obtaining 29m, they made a marginal loss.. FDI's viability for commercial investors, as presented, was US$106 to 108 /carat, with the upside being larger stones, potentially lifting the total to US$157. However and importantly the mine stands financially sound on US$107 per carat based on 32ctpht at running costs of US12 per hundred tonnes, and allowing for a degree of a few percent. This is not break even, this is commercial viability, designed to pay debt and modest dividend. Now the 32 cpht obtained by the crap old trial mine was on main body ore, albeit dotted about a bit, subsequently our tailings and diluted ore picked up 14.4 cpht which i think has already risen to 20cpht, and is set to exceed 32cpht between April and June ( this is my opinion only :o) Therefore our February sales result of US$107 is extremely comforting, i'm so much more relaxed now !.

AGM Review Having attended the AGM, i thought the following points maybe of interest; The Chairman stated that the ramp-up period of 6+ months remains on target, and that despite expected teething problems, they had a splendid November with glitches being overcome. The June end of year target of 350,000+ carats recovered remains unaltered. They have recovered fancy yellow diamonds and whilst no indication of size was mentioned there was confirmation that no breakages occurred. The first diamond sale is expected end of January 2017, possibly early February. When asked privately whether other coloured stones were present i was advised that red and blue have been found, but once again no admission of size,,, maybe tiny or moderate, i don't know. The mine has moved from 12 hour/day to 24hr/day and processing 500 tonnes/hour = 360,000/month. However there are occasions when that is not maintained, due to weather, electrical outages (problem in National Grid substation identified and hopefully fixed), or operational glitches..... Nonetheless these are early days. The Chairman felt the operational risk factors are almost gone. The mine is not processing the optimum ore as there is significant 'tidying-up' of the old mine workings still to do. It will probably be another twelve months before an accurate statement of the mines future revenue ct/tonne can be clearly defined. Still the chairman's 'private' opinion is very encouraging. The second water retention dam is just about complete and there is a possibility of a third dam, water being a valuable commodity. Water currently pooled at the centre of the mine area will not be drained until it can be utilised/saved, and accordingly mining is taking part around the edge of the main target area. Clearly 6 months to full ramp-up is an ambitious target, most start-ups take longer, but did i get the impression that they almost wanted to say they were doing it faster still?, i'm hesitant to say so, but the overall impression was extremely positive, with a pent-up enthusiasm carefully suppressed. "This time next year Rodney, we'll all be Millionaires". !! ?

The following extract is taken from their June report, although the Sept report gives a better analysis. I have calculated (roughly) , that if all goes to plan, they should receive an operational profit of circa 50M USD by their June year end, although this does not take into account EBITDA nor the arrangement of shared equity with the Gov of Lesotho nor debt repayment, and unforeseeables ......... Very rough, but still positive. "............................. Production Guidance Following the successful construction progress achieved in Q2 2016, Liqhobong is expected to commence initial production in early Q4 2016. Once initial production has started, Firestone anticipates that the ramp up process to full nameplate capacity, being 3.6 million tonnes per annum or 500 tonnes per hour to recover up to 1 million carats per annum, will take at least six months. During commissioning, ore from mixed low grade stockpiles and diluted ore from the main pit will be processed through the plant. The variability of this ore will influence the recovery of run of mine carats. It is difficult at this stage to predict the average dollar per carat expected for early sales of diamonds. The Company expects to treat between 1.8 and 2.0 Mt of ore during the financial year ending June 2017. Within this period, it is estimated that between 380,000 and 450,000 carats will be produced at Liqhobong. Costs are projected to be in the region of US$12 to US$14 per tonne processed. Diamond Sale Firestone has scheduled its first diamond sale for January 2017, in Antwerp. Thereafter the Company will aim to host two sales per quarter. As mentioned, during the initial stages of commissioning and ramp-up, the plant will be treating lower grade ore and not run of mine production. It is expected that with a purpose built plant and mining larger volumes of kimberlite across the main pit, we will get a better understanding of the occurrence and value of large stones over time. ..............................." It does seem that my optimism over how long it will take to shift the low grade might be misplaced, nonetheless i think 'helium1's' assessment is probably correct.....

Latest Share Chat

Member Info for Tanelorn

Posts (Last 30 Days)

Posts (All Time)

Last Post

Member Since

Share Chat Post Distribution over the last 30 days