Our journey

The Firestone Diamonds Journey…

Since 2014, Firestone Diamonds has undergone a rapid transformation, turning its focus to the development of its Lesotho-based Liqhobong Diamond Mine (‘Liqhobong’), whilst exploring ways to unlock and maximise value from its Botswana and Finnish assets. With its expected future production from Liqhobong, the Company is well positioned to benefit from the shortage of new diamond mines and potential decline in production from the ageing portfolio of current large scale producers coming on stream and the ongoing rising demand for rough diamonds.

Liqhobong was acquired by Firestone Diamonds during September 2010. It is one of the most attractive undeveloped kimberlite resources in the world and provides the Company with a strong platform for future growth opportunities within the industry.

The Firestone Diamonds Journey…

Building a world-class diamond mine

Following the positive restructuring initiatives of 2013 and successful $225 million fundraising in 2014, Firestone is a major step closer to realising its strategy of becoming a mid-tier diamond producer.

Firestone originally completed a definitive feasibility study (“DFS”) for Liqhobong in October 2012 which set out the basis for an open pit mine with a 15 year life and a Main Treatment Plant (“MTP”) capable of producing in excess of 1 million carats per annum.  This study has since been further updated to reflect the trial mining production from the Pilot Plant between July 2011 and October 2013, in which 325,000 carats were produced. On 5 November 2013, the Company announced an update to the DFS which included a revalidated initial capital expenditure for Liqhobong of US$185.4 million, now incorporating the full cost of the grid power infrastructure required for the Liqhobong project. At a project level the updated DFS confirmed the strong base case economics, setting out a compelling project level base case post tax NPV (using US$107 per carat and applying an 8 per cent. discount rate) of approximately US$379 million and post tax IRR of 30 per cent. and a significant upside post tax NPV, taking account of the potential revenues from larger stones (100 carats plus) (using US$156 per carat and applying an 8 per cent. discount rate) of approximately US$728 million and post tax IRR of 45 per cent.

The Firestone Diamonds Journey

Building a world-class diamond mine

Following the publication of the updated DFS, the Board focussed its efforts on raising the necessary funding to develop Liqhobong and the required infrastructure. In November 2013, the Company secured a US$82.4 million (£50.3 million) of project finance from Absa Bank in South Africa and in May 2014, Firestone confirmed it had entered into its financing agreements, including the Absa Debt Facility, raising, in aggregate, approximately US$225.2 million (£137.3 million) to build and commission the MTP at Liqhobong with expected full nameplate production by Q4 2016.

Firestone recruited an experienced project management team who are responsible for delivering and building the MTP at Liqhobong on time and on budget. A significant step was made in this regard with the appointment of Glenn Black to the Senior Management Team as Chief Project Officer which was announced on 27 February 2014.

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The Firestone Diamonds Journey…

Building a world-class diamond mine

As at end of September 2015, project construction was 49% complete versus the 50% target under the revised timetable announced in June 2015, and on track for initial production in Q4 2016

  • Zero lost time injury record has been maintained, with over 1.3 million man hours worked to date;
  • Capital budget to commencement of production of ZAR2.1 billion, including optimisation projects and reclassification of expenditure from operating expenses to capital, remains within the original US$185.4 million budget;
  • The grid power project for Liqhobong has been completed significantly ahead of schedule and within budget;
  • Diamond Resource and Diamond Reserve have been updated based on new geological model, increased bottom cut-off (“BCO”) and exclusion of boart carats;
  • Base case life of mine US$ per carat (“US$/ct”) increased by 13% from an escalated average of US$146/ct to US$165/ct; and
  • The New Mine Plan is now complete and a strong base case project economics has been reconfirmed:

Base case post financing NPV at an 8% discount rate of US$389 million versus previous base case pre-financing NPV at an 8% discount rate of US$379 million with an improved Project IRR of 42% versus previous base case pre-financing IRR of 30% and improved payback period of 4.1 years versus previous 4.6 years.

Firestone commenced a disposal process for all its assets in Botswana. In July 2015 the Company entered into a conditional agreement for the disposal of these operations, including the BK11 mine, to Tango Mining Limited (TSXV: TGV) for a total cash consideration of US$8.0 million. Subsequent to the year end, on 2 October 2015, Tango formally requested an extension of time regarding the second tranche of a deposit that was payable on 30 September 2015 of US$0.3 million.

Firestone is in discussions with Tango and anticipates the agreement will be finalised in early 2016. In relation to the regulatory approvals required for the Disposal, the Botswana Competition Authority provided its unconditional approval of the Disposal on 28 September 2015.


The Firestone Diamonds Journey…

Board of Directors

In line with Firestone’s transition to the development and construction phase at Liqhobong and in terms of the funding requirements the following changes to the Board were implemented in June 2014.  The appointments of Ken Owen as an independent Non-Executive Director and Niall Young as Pacific Road Capital’s nominated Non-Executive Director of the Company at the same time Julian Treger stepped down from the Board.

In May 2015 Mr Keith Johnson was appointed as Resource Capital Fund VI L.P.’s nominated Non-Executive Director of the Company.

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