Firestone Diamonds plc, in its production update for the quarter ended December 31, 2019 (Q2 FY2020) said that diamond recoveries fell as fewer tonnes of ore were treated on account of the disruption in power supply to the mine in October. The company added that it was revising its production guidance for the full year as a result.

Giving details, Firestone reported that diamond recoveries for the period stood at 138,000 carats (Q1: 201,091 carats) with fewer waste ore tonnes moved for the quarter (Q2: 1,070,854 tonnes / Q1: 1,379,758 tonnes) and fewer ore tonnes being treated (Q2: 668,120 tonnes / (Q1: 963,986 tonnes).

However, the recovered grade of 21 cpht was unchanged from the previous quarter and continued to be lower than the expected reserve grade.

The company said that as announced previously, power supply to the mine was disrupted from October 1 to November 30, causing the processing plant to be shut down until October 26, when it was restarted with the help of diesel generators. These operated the plant at about 90% capacity till grid power was restored on December 1.

Operating costs for the quarter were US$1.1 million higher as they included the additional costs associated with renting and operating the diesel generators. The total impact of the power disruption to the business is estimated to be US$4.6 million.

Firestone reported that wo sales took place during the quarter at which 132,885 carats were sold (Q1: 168,612 carats), realising revenue of US$ 9.7 million (Q1: US$ 10.6 million) at an average value of US$ 73 per carat (Q1: US$ 63 per carat). This was due to a number of larger and better-quality diamonds that were recovered and sold including one plus 100 carat diamond and two plus 90 carat diamonds.

Paul Bosma, Chief Executive Officer, commented: "The unexpected power disruption had a devastating impact on production and revenue generation. As a result, we have reduced our guidance for the year in respect of diamond recoveries and ore tonnes treated.”

He added that the company has signed non-binding term sheets for a debt repayment standstill until 31 March 2021, our bondholders providing for a working capital facility of US$6 million for the same period.

Bosma also stated that the company was working to reduce costs in order to survive the prolonged market downturn, and among other things is also delisting from AIM and reducing the size of the Board.

Firestone also said that due to the power disruption and a subsequent review of the mine plan, the production guidance for FY2020 has been revised with diamond recoveries of between 720,000 and 750,000 carats (previously between 820,000 and 870,000 carats)