FIRESTONE Diamonds is proof that: “There’s many a slip twixt cup and lip” – particularly in mining. Liqhobong diamond mine, built in a steep and remote Lesotho valley, represented a feat of engineering efficiency when it was completed on time and on budget. It even looked as if Firestone would have some cash in hand when commercial mining began. Unfortunately, the diamond values have proven disappointing in the first months, with the exception of a single 133-carat yellow diamond. At an average of $82/carat, the company is not delivering the $107/carat that was projected in the feasibility study, and was needed to repay debt. Shouldn’t geologists crawl under a rock when this sort of thing happens? Firestone is also selling its diamonds into a weak market. Brown has, no doubt, had some difficult conversations with lenders to restructure debt repayments and has had to offer shares at an eye-watering 49.4% discount to raise £18.5m. Firestone has a new mine plan to deliver more cash and, hopefully, higher-carat diamonds in the short term, while retaining the flexibility to revert to the original 14-year mine plan if diamond prices recover.
LIFE OF STUART
Brown spent 20 years in De Beers Group’s finance operations, including in Botswana and at Premier mine, rising to become CFO for five years. He was joint CEO for a year before he resigned in 2011. He took two years of “gardening leave” before agreeing to join Firestone to oversee Liqhobong to completion because he missed the mining industry. Bet he wishes he’d stuck to gardening.
- Web Address: www.firestonediamonds.com