Firestone on expansion tack
Article Date: Jul 19 2002Philip Kenny, head of southern African gem miner and Aim-listed Firestone Diamonds, claims revenues, which topped £951,000 in 2001, should be running at an annual rate of more than £3 million by the end of the year – helped by production of large stones worth $1,000 a carat or more from the Sandberg deposit at its Oena mine on the Orange River. Robert Tyerman reports.
Firestone made £387,545 pre-tax last year, down from £413,249 in 2000. But the company reckons the picture could be transformed by production from Sandberg, where it claims operating margins of 80 per cent on its larger stones. One 30.25-carat Sandberg stone recently fetched $104,200 (£665,000), or $3,460 a carat.
The company has targeted eventual annual revenues of up to £8 million from Sandberg, where full-scale mining is scheduled to start before the end of the year. The deposit is deep and Firestone expects water problems, although it is confident these can be overcome.
Firestone has two mines already in production, at Avontuur and Oena, with a third, Groen River, due to start what is expected to be high-value production next.
The wild card is Mopipi in Botswana, which Kenny says shows many signs of being a major world-class diamond mine. Drilling results later this year should indicate how likely it is to live up to these high hopes. If all goes well, Kenny reckons Firestone could generate revenues of £40-50 million over the next three years.
Firestone shares have traded between 104p and 56p over the past 12 months. Analysts reckon today's price of 67.5p will appear cheap if it looks like achieving its goals.
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