MASERU — The London-based Firestone Diamonds is raising £13 million to restart production at Liqhobong mine which the company sees as one of the most attractive undeveloped kimberlites in the world.
The AIM-listed company on Friday announced it had placed 52 million shares with institutional and other investors to raise £13 million to resume and boost production at Liqhobong’s Plant One, previously known as the Satellite Pipe.
The new funds will also go towards the remaining work on the definitive feasibility study for Plant Two, previously known as the Main Pipe, which is to be undertaken in 2011.
Liqhobong is situated on the Maluti range of mountains, 120km northeast of the capital Maseru.
Firestone, which also operates another mine in Botswana, has a 75 percent interest in Liqhobong, with the government of Lesotho holding the remaining 25 percent stake.
Production at the Satellite Pipe was mothballed on December 1 2008 after tumbling diamond prices put at risk the profitability of the operation.
Since it started production in 2005, it was running at 160 carats a year.
The mine is however now set to resume production following Firestone’s acquisition of Kopane Diamond Developments, which was previously operating Liqhobong, on September 29 this year.
Firestone sees production capacity, once operations resume in the first quarter of next year, tripling to 1.3 million tonnes per annum.
The company expects to make a decision to commence construction of Plant Two — where a resource of approximately 31 million carats has been defined — in 2012, with production to start in 2013.
“We believe that the Liqhobong mine has the potential to be a highly profitable mining operation and the company is now well financed to restart production and commence work on the planned Plant One expansion programme in Q1 2011,” Firestone chief executive Philip Kenny said on Friday.
“With BK11 (mine in Botswana) in full production in 2011 and the expanded Plant One at Liqhobong expected to reach full production capacity in Q4 2011, Firestone is very well positioned to reach its target of producing one million carats per annum by 2014.”
Lesotho is emerging as one of Africa’s significant new diamond producers, with Gem Diamonds-owned Letseng Mine as well as the Kao and Mothae development projects.