Thursday, August 18, 2022

Firestone sales revenue declines

Firestone, the AIM/BSE quoted diamond production and exploration group, said this week that as a result of the recent uncertainty in international financial markets, it’s third diamond sales revenue for 2011 tenders has gone down sharply.

According to its recent market update, the uncertainty, which has driven a significant volatility in prices for selected categories of diamonds has also dropped the overall rough diamond prices by approximately 15 to 20 percent since the beginning of August 2011.

The London-based company, which operates the Liqhobong Mine in Lesotho and the BK11 Mine in Botswana, therefore, saw its $2 million (about P14 million) revenue recorded from the second tender suddenly crashing down by $1,136,936 during the sales concluded last week.

The update noted that, out of 24, 109 carats available for sale, 20 000 carats, principally comprising of smaller diamonds, failed to achieve reserve prices and they were withdrawn.

“Only 3,395 carats were sold for gross proceeds of $863,037. 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,” reads the update.

Failure to achieve reserve prices came at a time when the company recorded an increased diamond value and grade carats from its mining operations, expected to continue moving to the higher grade and higher value K5 and K6 units later this year.

Tim Wilkes, CEO of Firestone, said the company increased production and is bound to reach full capacity for higher sales revenue, as diamond liberation significantly improved in July after commissioning secondary crushing circuit.

“We have continued to make significant progress at both Liqhobong and BK11, with a 69 percent 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,” said Wilkes.

After this sour experience, the company is forced to call off two tenders planned before the end of this year, leaving it with only one tender expected in last quarter of 2011, for the company to sell the withdrawn diamonds. Firestone promised shareholders that the timing will be selected on the basis of financial market and rough diamond market conditions.

The company CEO said, “We expect stability to return to the rough diamond market later in 2011. The shortfall in rough diamond supply will limit any further significant decreases in rough diamond prices.”

He added that with continued growth expected in demand from China and India, the prospects for diamond prices remain positive.

Firestone is currently the only company selling diamonds by tender in Botswana. The tenders are managed by First Element Pty Ltd, a 100 percent owned subsidiary of the Johan Erikson Group from South Africa.

The group is also the largest holder of mineral rights in Botswana’s diamondiferous kimberlite fields.

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