Africa-focused Firestone Diamonds (LON:FDI) reported Wednesday a fall in first-quarter revenue due mainly to a fall in recoveries at its Liqhobong mine in Lesotho, the company’s only operating mine, and lower sale prices.
In three months to September, Petra’s first quarter of its 2020 financial year, it recovered 201,091 carats, down from 208,572 carats in the final quarter of 2019.
During the quarter, a single sale of 168,612 carats took place, generating revenue of $10.6 million, down from $12.7 million in the previous quarter. The average value was $63 per carat, down from $71.
Operating costs, however, fell to $10.32 per tonne — below guidance — from $12.57 per tonne.
FIRESTONE EXPECTS TO RESUME OPERATIONS AT LIQHOBONG’S TREATMENT PLANT IN EARLY NOVEMBER.
Firestone is to review 2020 guidance, it said on Wednesday, following “unexpected” power cuts at Liqhobong, where the treatment plant may not be able to fully resume operations until early November.
The miner had previously said it expected diamond recoveries to be between 820,000 and 870,000 carats, with ore tonnes treated between 3.6 million and 3.8 million tonnes.
Diamond miners are struggling across the board, especially those producing cheaper and smaller stones, where there is an over-supply.
Increasing demand for synthetic diamonds has also weighed on prices. Man-made diamonds require less investment than mining natural stones and can offer more attractive margins.
Buyers, those that polish and cut diamonds for retailers, have been hit this year by lower prices and tighter credit, prompting them to delay purchases.
Tiffany’s reported in August a 3% decline in like-for-like sales, while shares in Signet, the world’s largest retailer of diamond jewellery, have lost more than 60% of their value this year.
De Beers, the world’s No.1 diamond miner by value, has responded by axing production — with a target of 31 million carats this year compared with 35.3 million in 2018. It has also given buyers more room to maneuver, by allowing them to refuse half the stones in many of the diamond parcels.
Firestone’s chief executive, Paul Bosma, said he expected prices for smaller diamonds to increase towards the end of 2020, in part due to the closure of Rio Tinto’s Argyle mine in Australia.