Firestone Diamonds’ 75% owned Liqhobong Diamond Mine, in Lesotho remained on care and maintenance during the quarter ended 30 June 2020 at a cost of $3.2 million.
The decision to place the mine onto care and maintenance was due to the COVID-19 pandemic which resulted in nationwide lockdowns in South Africa from 26 March 2020 and Lesotho from 29 March 2020.
It was also taken in order to preserve the group's cash resources for as long as possible, in light of the uncertainty regarding the ability to sell and likely prices to be realised at future diamond sales.
"The company has gone through a painful process to implement the care and maintenance phase which we believe is in the best interest of its shareholders and lenders,” said Firestone chief executive Paul Bosma.
“We are determined to make our cash last as long as possible so that operations can resume once the market recovers for the categories of diamonds predominantly recovered from Liqhobong.”
He said Firestone’s focus will be on concluding financing arrangements with ABSA bank for a capital deferral and continue to work closely with shareholders and bondholders to chart the way forward.
Net working capital outflows for the quarter were $3.1 million and comprised mainly payments to creditors which resulted in a reduction in creditors' balances from $3.4 million at the end of March 2020, to $1.0 million at the end of June 2020.
Meanwhile, Firestone said no sales of diamonds took place during the quarter.
The company had 64 700 carats of diamond inventory which it intends to split into separate parcels to be sold in the future to test the market in order to determine if prices have recovered sufficiently to justify restarting the mine.
Firestone forecasts to dispose of the first parcel of diamonds during the fourth quarter of the 2020 calendar year in order to generate cash to fund operational requirements.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
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