14 Sep 2011 07:00
Firestone Diamonds plc
Diamond sale results
LONDON: 14th September 2011
Firestone Diamonds plc, ("Firestone" or "the Company"), the AIM-quoted diamond mining and exploration company (ticker: AIM:FDI), announces results from its fourth diamond sale of 2011 in Gaborone, Botswana, which was concluded on 9 September 2011.
HIGHLIGHTS
Results of tender
• | Fourth diamond sale of 2011 completed | |
- | 24,109 carats available for sale, an increase of 69% from the July 2011 tender | |
- | 3,395 carats sold for $863,037 | |
- | 20,714 carats, principally comprising smaller diamonds, did not achieve reserve prices and were withdrawn | |
• | Liqhobong | |
- | 1,846 carats sold for an average of $231/carat | |
• | BK11 | |
- | 1,549 carats from BK11 sold for an average of $282/carat | |
Rough diamond market
• | Prices increased approximately 40% in the first half of 2011 driven by significant growth in demand from China and India |
• | Prices have fallen approximately 15 to 20% since the beginning of August 2011 primarily due to uncertainty in international financial markets |
• | Fundamentals remain positive, with demand from China and India and shortfall in supply expected to continue to support prices |
Future diamond sales
• | Stability expected to return to the market later in 2011 |
• | Withdrawn diamonds will be held until the next diamond sale, which is expected to be held in Q4 2011 |
• | The Company has the ability to withhold any production that does not achieve reserve prices until stability returns to the rough diamond market later in 2011 or in early 2012 |
Results of tender
A total of 24,109 carats was available for sale, an increase of 69% from the last diamond sale in July 2011. Approximately 3,395 carats were sold for gross proceeds of $863,037. A further 20,000 carats, principally comprising smaller diamonds, were available for sale, but reserve prices for these diamonds were not achieved at the tender and they were withdrawn. The diamonds sold included 1,846 carats from Liqhobong, which sold for an average of $231/carat, and 1,549 carats from BK11, which sold for an average of $282/carat. Subsequent to the closing of the tender the Company has received a number of enquiries in relation to the withdrawn diamonds, but these will be held until the next diamond sale.
Rough diamond market
The results of the diamond sale reflect a drop in overall rough diamond prices of approximately 15 to 20% since the beginning of August 2011 and significant volatility in prices in selected categories of diamonds. This has been primarily driven by recent uncertainty in international financial markets.
Rough diamond prices increased approximately 40% in the first half of 2011 driven by significant growth in demand from China and India. With continued growth expected in demand from China and India and insufficient new production to address the current shortfall in supply, the prospects for rough diamond prices remain positive.
Future diamond sales
The Company expects that stability will return to the rough diamond market later in 2011 and that the shortfall in rough diamond supply will limit any further significant decreases in rough diamond prices. Following the completion of the £13.5 million financing announced in July 2011, the Company's cash position remains secure, and the Company has the ability to withhold any production that does not achieve reserve prices until stability returns to the rough diamond market later in 2011 or in early 2012. The next diamond sale will be held in Q4 2011, with the timing to be selected on the basis of financial market and rough diamond market conditions.
Tim Wilkes, CEO of Firestone Diamonds, commented: "We have continued to make significant progress at both Liqhobong and BK11, with a 69% increase in production available for sale from the last tender in July 2011. Although demand for smaller diamonds has decreased, it has remained firm for larger, better quality diamonds, and we are confident that we will see increased demand for our full range of production later in 2011."
For further information, visit the Company's web site at www.firestonediamonds.com or contact:
Philip Kenny, Chairman, Firestone Diamonds Tim Wilkes, CEO, Firestone Diamonds
| +44 20 8834 1028/+44 7831 324 645 +27 78 457 6623/+267 713 77686 |
Rory Scott, Mirabaud Securities (Nominated Broker)
| +44 20 7878 3360 |
Alexander Dewar, Brewin Dolphin (Nominated Adviser)
| +44 131 529 0276 |
Jos Simson / Emily Fenton, Tavistock Communications
| +44 20 7920 3150/+44 7899 870 450 |
Background information on Firestone Diamonds:
Firestone Diamonds plc is an international diamond mining and exploration company with operations focused on Lesotho and Botswana. Firestone operates the Liqhobong Mine in Lesotho and the BK11 Mine in Botswana. Firestone is also the largest holder of mineral rights in Botswana's diamondiferous kimberlite fields, controlling approximately 10,000 square kilometres around the major Orapa and Jwaneng mines and the entire Tsabong kimberlite field. In addition to Liqhobong and BK11, Firestone has 108 kimberlites in its portfolio, of which 30 have been proven to be diamondiferous.
Lesotho is emerging as one of Africa's significant new diamond producers, and hosts Gem Diamonds' Letseng Mine, Firestone's Liqhobong Mine as well as the Kao and Mothae development projects. Botswana is the world's largest and lowest cost producer of diamonds, with annual production worth over $2.5 billion, and is considered to be one of the most prospective countries in the world to explore for diamonds.