LIQHOBONG Diamond Mine recorded a slightly improved performance in the first half of its 2018/19 financial year which ended on 31 December 2018.
The unaudited interim results for the six months ended 31 December 2018 (H1 2019) were published on 28 March 2019 by the majority shareholder Firestone Diamonds.
The mine also reduced its operating loss from US$7, 8 million during the first half of the 2017/18 financial year to US$6, 6 million during the first half of the current financial year.
Liqhobong mine, which is located in Butha-Buthe, is 75 percent owned by Firestone while 25 percent is controlled by the government. The mine commenced commercial production in July 2017.
The mine also recorded an increase in its cash flow of US$2, 1 million in 2017/18 financial year to US$6.7 million generated from operations during the current period. Revenue improved to US$27, 4 million from three sales for the period compared to US$26 million from four sales of the first half of 2018.
The mine is also on track to meet its full year target of treating between 3, 6 million tonnes (mt) to 3, 8mt of ore. Currently the mine has 1, 9mt.
Recoveries improved during the period to 465 680 carats as compared to 379 716 carats recovered in the 2017/18 financial year. This performance is also in line to meet the full year target range of 820 000 to 870 000 carats recovered.
The period’s total carats include the recovery of the mine’s largest diamond to date, which is a 326-carat light yellow makeable stone.
“The Group has once again performed well from an operational perspective with all of its key metrics on track to meet guidance by the year-end,” Chief Executive Officer of Firestone Paul Bosma said.
“We have demonstrated that the production plant is capable of treating ore at rates exceeding its nameplate capacity which has assisted in making up processing shortfalls which have resulted from unexpected interruptions as mentioned previously.
He however, indicated that the development of the mine is behind schedule although there are plans to make up for the slow growth.
“Mine development is slightly behind schedule. However, plans are in place to increase waste mining over the coming months and we expect to achieve our guidance range of between 4, 3mt and 4, 8mt by the year-end.
“Operating costs remain well managed and even though we anticipate an increase over the second half of the year due to higher waste tonnages, we still expect these to remain well below the lower end of guidance of between US$15 and US$16 per tonne treated.
“The average value realised for the three sales during the first half of the financial year was disappointing and unfortunately, this was mainly due to the downturn in the market for smaller diamonds.
“On a positive note, we saw a modest improvement in pricing for this segment at the recent sale and we are hopeful that this trend will continue as the over-stocking works its way through the pipeline.
“Despite the weaker pricing environment, the Group generated positive cash flow of US$6,7 million from operations during the period. Pleasingly, pricing has remained robust for the larger, better quality diamonds,” Mr Bosma said.
However, Mr Bosma said the prices were beginning to stabilise.
“The second half of 2018 saw a global price slump in the smaller, lower value goods which negatively impacted our average dollar per carat achieved. Since then, prices have stabilised at these lower levels and we are looking forward to some improvement once inventory levels in the midstream of the diamond market normalise.
“Production is on track to meet guidance and we once again did well to manage costs, which are well below full year guidance.
“Pleasingly, we sold our most valuable stone to date at the recent sale, a 70-carat makeable recovered in January and aided by a modest price increase in the smaller fraction we realised our highest average sale price since declaring commercial production in mid-2017 of US$90 per carat,” Mr Bosma said.