Firestone Diamonds’ reverse takeover of Kopane Diamond last September, which saw it gaining a 75 percent interest in the Liqhobong diamond project, in Lesotho coupled with BK11 project (in Botswana)’s achievement of a full design capacity of 1.5Mtpa end of 2010, as well as a successful tender outside of De Beers’ system last December, has left the diamond miner convinced that its future was gleam.
Rough & Polished’s Mathew Nyaungwa spoke with Group Exploration and Mineral Resources Manager at Firestone Diamonds, Polite Khutjwe on the sidelines of the Mining Indaba, which was held recently, in Cape Town to get an insight into the company’s operations.
Firestone reported that the Liqhobong project in Lesotho was set to recommence production in February ahead of schedule. What has necessitated this early resumption of work?
We managed to get the plant up and running, you remember it had been mothballed for the last two years since the recession started. The previous owners (Kopane Diamonds) stopped production in 2008. So, we managed to get in there since we took over in September 2010 and managed to refurbish the plant and get it to a state where it can start running. So as we speak the plant is running and we are back into production.
What is the projected output at this mine?
The current plant is a 65 tonnes an hour plant, however, we already have a project in the goal, as well as on site, basically to push the plant to 120 tonnes an hour by April this year and to 200 tonnes an hour by August or September this year. So, overall, with the changes we are going to make to the plant we are expecting around 850 to 860 tonnes, which should give us plus or minus 350 000 carats by the end of this year.
Is your target of producing 1 million carats by 2014 achievable?
That is achievable, I mean, when we took over the project (Liqhobong) from Kopane, they had done quite a lot of work on the Definitive Feasibility Study (DFS). The plant had been already designed and we believe we can do some re-engineering to make sure that it meets our own requirements and some other work on the environmental side, an impact assessment that needs to be done. So our plans are that by the end of this year we would have finished all of that work so that sometime, early next year the board of Firestone Diamonds should make a decision on the way forward for the new plant and therefore construction will start thereafter leading to production in 2014.
Can you provide a production update on Botswana’s BK11 project?
When we built the plant, we did a phased approach, so initially we had the first phase, which was commission in July and August last year and [BK11] had been in production since then, as you remember in December, we had our first major sale in Gaborone at our sorting and tender facility. The second phase of that plant was commissioned in December and January, so basically we were just de-bottlenecking some of the areas within the second phase. So BK 11 is now almost at full production.
What is your projected output at BK11?
We should be able to do just over 1.4 million tonnes, which should give us plus or minus 100,000 carats for 2011.
What are your plans for the BK16 project in Botswana?
Well, BK16 is our advanced next project; we have already done some drilling and obviously that was just minimal to be able to give us indicative grades. Before the end of this year we would have done a lot of core-drilling.
What is Firestone Diamonds’ contribution towards Botswana’s plans to become a diamond hub in Africa?
Well, we have confidence, currently like I indicated; we have got the first private tender house outside of the De Beers or DTC system. So that is in place, and it is working. We had the highest interest from diamond buyers last year (in December) when we did our first tender. You know, the facility is relatively small, we could only handle a maximum of 40 buyers within the 10 days that were allocated, which means they were a lot of other people that were interested in coming, but unfortunately we could not handle all those numbers. There is a lot of interest, and it is the vision of the Botswana government to create that space for diamond selling, diamond tendering industry in the country. We are there; we have told the government that we are part and parcel of their vision as well. We have gone ahead, and we actually did it.
From which countries did your buyers came from during the December tender?
The buyers came from Antwerp, in Belgium; they came from Israel, India, South Africa and of course there was a strong presence of the Botswana-based diamond cutting and polishing factories and if I remember well there were also other buyers from Namibia. So, you can see that we have quite a wide spectrum of buyers, obviously looking for the various types of goods that they are interested in.
Does this private tender put you in an advantageous position compared with other miners that sell their diamonds through De Beers?
Well, I cannot speak for them but speaking for Firestone Diamonds, we know it does, it is the best thing ever. We are in control of what happens, there are a lot of customers out there that want to buy diamonds and they are not necessarily included in the other systems that are currently in place as set up by the Diamond Trading Company, so obviously those customers have another channel of getting diamonds and of course they are in the majority. Even other players that are allowed to buy from De Beers are our customers as well. They need diamonds as they obviously don’t get everything that they need from De Beers.
A diamond analyst Chaim Even-Zohar said most diamond companies were failing to vigorously market their diamonds. What is Firestone doing to market its stones?
It is true, however, I think, we have just started in terms of production and it’s all about attracting people and tell them what sort of goods you have. To me the customer base we have been in a position to build over a short space of time does indicate that we have gone out there and told people what we have and they have in turn supported us. There is actually still a lot of interest. Almost every day you get an email, you get a phone call from people saying, well, we want to be included in the tenders, which means there is a lot of people out there and I don’t even know how many they will be in the next tender but certainly I think it will be close to 100 or even more.
How many tenders are you planning to conduct this year?
For 2011, we are looking at seven to eight tenders.
Has Firestone Diamonds recovered from the battering the diamond industry had as a result of the global economic downturn?
Firestone has recovered quite magnificently; you know that the downturn was so devastating to a lot of companies especially junior companies. Yes, we have survived; we had a strategy on how we needed to go through the recession. We managed to sample and finish making a decision on BK11 during the recession. We went on to develop the mine and put it into production as the recession was almost tapering off. We also managed to acquire the Liqhobong Mine last year, almost towards the end of the recession tail and put it back into production. We have money in the bank now to take us through our expansion programmes for the Liqhobong plant and most importantly kick-start our exploration programmes, you know; we have a number of kimberlites.
What is the state of diamond mining at the moment?
It is very good, it has recovered remarkably, if you look at where we were in 2008 we are almost past the position we were just before the recession started in 2008. That is how the diamond industry has recovered. Analysts have all pointed out to a significant recovery within the next coming years mainly due to the supply, and demand side. The supply side is quite limited at the moment, so the prices have come up quite positively.
Apart from the supply and demand factor what else is driving the recovery?
Well, there is a lot of confidence within the industry, especially the diamond cutting and polishing, where there were a lot of challenges during the recession but certainly the industry has recovered to such an extent that a lot of people have started going back buying stock for their factories.
Mathew Nyaungwa, Rough&Polished, from Namibia
