Firestone completes inaugural diamond tender

Brian Benza
Staff Writer | Friday December 17, 2010 00:00

 

The tender ran from 29 November to 9 December 2010, and was attended by more than 30 diamond buyers from Belgium, Israel, India, Russia and southern Africa.

The diamonds sold at the tender were from its BK11 Mine in Botswana and Liqhobong Mine in Lesotho. 'The company sold a total of 14, 673 carats by tender at the Diamond Technology Park in Botswana for total proceeds of US$1.6m,' the company says in a statement.

'Of the total parcel of diamonds sold, 12, 510 carats came from the main pipe at Liqhobong and were sold on behalf of the company's 75 percent-owned subsidiary for US$1.2 million while 2,162 carats were from BK11 and were sold on behalf of Firestone's 90 percent-owned subsidiary for US$0.38 million.' Commented Firestone Diamonds CEO, Philip Kenny: 'The successful completion of our first tender is a major milestone for Firestone and marks the completion of our transition into one of only three-listed junior kimberlite producers worldwide.  

'We are very pleased that the prices achieved for both Liqhobong and BK11 production were higher than expected, and we believe that further price increases will be achieved for production from both of these mines in 2011.' The company noted that the average price achieved at BK11 of US$177/carat is in line with the most recent valuation of US$175/carat. The diamonds sold were recovered from the treatment of low-grade overburden and are of lower quality and smaller average size compared to production expected from the higher grade kimberlite that will be mined in 2011. The BK11 production plant is expected to be operational at the target production capacity of 1.5 million tonnes per annum (mtpa) by January 2011.

Firestone plans to hold nine tenders in 2011, with the average size from BK11 tenders expected to be approximately 12, 000 carats. African Diamonds, which owns AK6 Mine, is also expected to sell part of its production through tenders.

Construction of AK6 Mine started last month and production is expected in the fourth quarter of 2011. The tender comes at a time when Botswana's much-anticipated pioneering diamond trading facility is set to be operational from the second half of next year. According to the promoters of the trading project, the Diamond Technology Park (DTP), the platform will include a state-of-the-art tendering facility and a host of other diamond-related services.

The introduction of tenders is part of the government's plan to develop diamond trading in the country as it seeks to diversify.

To that end, the government has been negotiating a new sales contract with De Beers that will see a chunk - possibly 10 percent - of Debswana production being sold outside the DTC framework in the future. As part of efforts to transform Botswana into a diamond-trading centre, the government has also expanded the airport and built a diamond security facility there to ensure that fraud is kept to a minimum. The tendering facility comes at a time when there has been revived efforts by emerging diamondbuying countries such as India and China to source diamonds directly from Botswana.

The opening of the independent marketing channel is also expected to give Botswana an independent 'window' on the market and enable a better assessment of market conditions.