Firestone have made slow progress in 2011 and that’s certainly led to their share price decline coupled with the broader market woes – it’s not been a pretty year for them. Add to this that Diamond prices have fallen 30% over the last few months and it’s not hard to see why FDI are trading at near Jan 2009 levels.
Today’s Diamond Sale RNS is welcome and a reminder that FDI have the potential to generate significant revenue once they get production properly moving from both mines. At today’s sp of 10.875p, they are certainly one to watch in 2012.
Firestone Diamonds plc, 5 December 2011
Diamond sale results
Firestone Diamonds plc, (“Firestone” or “the Company”), the AIM-quoted diamond mining and exploration company (ticker: AIM:FDI), announces results from its fourth diamond sale of 2011.
Results of tender
-- 47,576 carats sold for gross proceeds of $2.8 million -- All diamonds offered at the tender were sold -- Run of mine value of production from Liqhobong and BK11 estimated to be $95/carat and $180/carat, respectively
Rough diamond market
-- Prices have fallen approximately 30% from their highs in July 2011 -- Some stability has returned to the market, with growing demand from China and India and shortfall in supply expected to support prices -- Prices for Liqhobong and BK11 production expected to increase in 2012
Tim Wilkes, CEO of Firestone Diamonds, commented "We are pleased to have been able to sell all of the diamond production offered at our recent tender, the results of which indicate that some stability has returned to the rough diamond market after the volatility of the past few months. We remain positive about the fundamentals of the diamond market, with long term demand, which is largely driven by growth in India and China, expected to continue to outstrip supply, and expect to see prices for both Liqhobong and BK11 production increase in 2012."
A total of 47,576 carats was sold for gross proceeds of $2.8 million. The diamonds sold were comprised of approximately 27,000 carats of new production from the Liqhobong Mine and the BK11 Mine, and approximately 20,000 carats, principally comprising smaller diamonds from both mines, that had been withdrawn from the previous diamond tender in September 2011. The number of buyers attending and interest in the tender was significantly higher than in September and back to the levels seen at the July tender.
All of the diamonds offered at the tender were sold, and results indicate that the value of run of mine production from Liqhobong and BK11 have dropped by about 30% from their highs in July 2011. This is in line with the Company’s expectation, as indicated in the preliminary announcement of results for the year ended 30 June 2011 that was released on 14 November 2011 (the “Preliminary Announcement”). On this basis, the value of run of mine production from Liqhobong and BK11 are estimated to be $95/carat and $180 /carat.
As indicated in the Preliminary Announcement, the Company intends to announce a summary of results of both production and diamond sales on a quarterly basis. The next update, which will be for Q4 2011, will be provided in Q1 2012.