The announcement was made as part of the company’s unaudited interim results for the six months ended 31 December 2015 (H1, 2016).
With the project 68% complete, as at end of December 2015, the production target will be met the company says. All critical path civils and earthworks have been completed and the focus is now on the erection of the main plant.
The revised capital budget of R2.1 billion, remains within the original project budget of US$185.4 million due to the depreciation of the South African Rand against the US Dollar. At the same date, R1.3 billion ($116 million) or 63% had been spent on the project against a revised capital budget of R2.1 billion.
A total of R1.67 billion in orders out of the total revised budgeted R1.77 billion engineering, procurement, construct and manage (EPCM) contracts had been placed at the end of December, representing 94% of the total EPCM budget. This was done to remove cost escalation risk.
Grid power for the project has been completed within budget and ahead of schedule in October 2015.
“I am pleased to report on an extremely successful period for Firestone Diamonds. The six months to 31 December 2015 saw substantial development at Liqhobong and importantly, we have continued this into 2016,” says Firestone Diamonds CEO Stuart Brown.
“In October 2015 we were pleased to announce the completion of a new mine plan and project economics, the culmination of over a year’s work, which further de-risked the project and enhanced its economics. In addition, during October we also completed the grid power project, connecting Liqhobong to the grid, allowing for a consistent supply of electricity at site for the remainder of construction and through to production.”
Once full production is achieved during 2017, the mine will enable Firestone Diamonds to achieve its goal of becoming a leading global mid-tier diamond producer, recovering one million carats per annum.
Although delays were experienced at the beginning of the project, these delays are now largely behind the company and the late arrival of the 2015 summer rains has allowed the project to make good progress.
Firestone Diamonds updated mine plan
The company was also pleased to announce in October 2015 an updated mine plan, which was the culmination of over a year’s work by the project team.
[quote]The new plan, which took into account revised diamond resource and reserves, updated for a new geological model, increased bottom cut-off and the exclusion of boart carats, together with the revised base case life of mine average of $165/carat (escalated at 3% per annum), reconfirmed the project’s strong base case economics.
During the period, the project team commenced preparation of operational readiness ahead of production commencing in the fourth quarter of 2016.
This includes procurement of critical plant spares, recruitment of staff, negotiating various operational agreements and implementing the necessary systems, policies and procedures in order to facilitate the smooth start-up of the mining and processing operations during commissioning.
Following a concerted effort, Firestone Diamonds has also made significant progress in obtaining the majority of the work permits required for the SMPP contractors, currently fully established on site.
Firestone maintains a positive working relationship with all the relevant departments of the Government of the Kingdom of Lesotho.
As previously announced, the BK11 mine (BK11) remains on care and maintenance following its conditional disposal to Tango Mining, to be completed by no later than 8 April 2016.