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Switch to Smaller Rough Dents Liqhobong Prices

Firestone modifies processing plant after failing to capture finer stones.
Jul 17, 2017 6:06 AM   By Joshua Freedman
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RAPAPORT... The average selling price of rough diamonds from Firestone Diamonds’ Liqhobong mine lagged behind the company’s forecast for the fourth fiscal quarter as the company recovered more lower-value stones.

The miner sold 182,786 carats for $14.1 million at an average price of $77 per carat in the three months ending June 30, it said Monday. This was lower than the average of about $100 per carat which the company expects the mine to yield when operations are working fully to plan, Firestone CEO Stuart Brown said in an interview with Rapaport News. Sales for the full fiscal year totaled $27.8 million from 310,376 carats at an average price of $90 per carat.

Production at the mine in Lesotho started in October, with the company reaching commercial production on July 1. In the early stages of production, the company was failing to capture some of the smaller stones that it had been intending to recover. However, this had the effect of lifting the average selling price, Brown explained. The company made changes to the mine’s processing plant to prevent it from missing these finer diamonds, but this also meant prices subsequently fell.

Sales in the fourth quarter also featured fewer “exceptional” diamonds than during the third quarter, dampening the average price.

In addition, India’s demonetization program dragged Liqhobong sales down by about 8% compared with initial estimates. The government policy reduced liquidity among smaller- and medium-sized diamond companies in India, sapping demand for lower-value rough.

“Firestone does not expect a recovery in the lower-priced category goods in the short-to-medium term, as supply remains readily available and demand is seen to be reducing slightly,” the company said.

“Firestone has, however, continued to see strong interest and support for its higher-quality and better-value goods in all four of its sales,” it added.

Production stood at 204,000 carats for the fourth quarter, bringing full-year output to 365,000 carats. Last month, Firestone increased its production forecast 20% to 360,000 carats for the year. The company recovered 54 “special” stones — those weighing 10.8 carats or more — in the fourth quarter, and 112 in the full year.

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Tags: Firestone, Joshua Freedman, Liqhobong, Liqhobong mine, Rough Diamonds, rough prices, stuart brown
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