Firestone Diamonds, the London listed development outfit said its Botswana project is still under care and maintenance as it continues with the process of disposing the asset.
When announcing the unaudited Interim Results for the six months to 31┬áDecember┬á2014, the company revealed that the disposal process for BK11 mine announced in August 2014 was ongoing. Firestone had decided to sell the mine as it wants to focus on Liqhobong Mine in Lesotho.
“The mine 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,” the company said.
“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,” it added.
Firestone has already de-listed from the domestic bourse and wants to sell its local operations and revealed bids have been considered for the local operations as a complete sale package only.
BK11 is the company’s principal investment in Botswana and following a strategic review, the mine was placed under care and maintenance in February 2012, when Firestone board decided to focus on the company’s interests in Lesotho, for which it raised US$225.2 million earlier this year.
“In response to the technical issues experienced, the increased capital requirements of BK11 and the weakening of the diamond market, the company underwent certain restructuring initiatives during its 2012 financial year,” said the company.
The company then appointed Questco Pty Limited, the South Africa-based corporate finance adviser, with prior experience in the successful sale of other diamond assets in Sub-Saharan Africa, to manage the sale process.
“The most significant of these initiatives was a shift in operational and financial focus to the company’s Liqhobong Mine in Lesotho. ┬áThis shift in focus resulted in the Botswana operations being placed on care and maintenance as the company considered its strategy in relation to its exploration portfolio.”
BK11 mine is located in the Orapa kimberlite field in northern Botswana, approximately 7km north-west and 20km south-east of Debswana’s Letlhakane and Orapa mines respectively, and is within 5km of Karowe mine which is currently operated by Lucara Diamond Corp.
The company is of the view that its Botswana operations present a rare opportunity that has the ability to deliver strong returns under the ownership of an operator or operators for whom it would be a core asset.
As of 30 June 2013, the combined tax loss in respect of the Botswana operations was estimated to be approximately BWP399 million/US$45 million. The BK11 mining licence was granted in July 2010. ┬áUnder the current BK11 mine plan, approximately 11.5Mt of kimberlite was planned to be mined at an average grade of 8.5cpht, resulting in total production of approximately a million carats over a 10 year mine life. ┬á
Firestone began mining operations at BK11 during the third quarter of 2010. ┬áIn February 2012, BK11 began to experience technical problems in respect of the BK11 Treatment Plant’s ability to successfully liberate diamonds due to the absence of secondary and tertiary crushing circuits. In addition to the technical problems experienced, further capital investment is required in order to confirm higher grade kimberlite at depth.
Firestone added that in addition to the BK11 mine, the remaining assets in the Botswana operations sale package include a 5tph bulk sampling plant, a 25tph pilot plant and a self-contained diamond recovery grease plant.