JOHANNESBURG (miningweekly.com) – Africa-focused Firestone Diamonds narrowed its 2015 interim loss to $4.4-million, as its Liqhobong project, in Lesotho, moved into the construction phase in the six months ended December 31.
The Aim-listed company on Thursday said construction on the $185.4-million project, which had started in late June 2014, was progressing well, was on schedule and within budget. The project was expected to be completed by mid-2016.
A relatively mild winter had enabled the project to start well and the project team to get ahead on a number of work streams before the start of the rainy season in November.
“[However,] the above-average rainfall experienced in November and December and delays experienced in the issuing of work permits to the civils and earthworks contractor had an initial negative impact, necessitating a rescheduling of certain works and increased work load,” the company pointed out.
The project team also encountered areas where excess top soil needed to be removed which, in combination with the wet weather, caused days to be lost through personnel not being able to work safely.
These issues were not unexpected and were within normal anticipated deviations owing to the nature of the environment. Additional crews were deployed to ensure the project remained on schedule and within budget.
Firestone CEO Stuart Brown said the company was pleased that the project had moved from the concept stage to construction in the six months under review.
"The period has been one of intense operational effort with the creation of about 1 000 jobs in Lesotho. All major construction contracts have been finalised and good progress has been made, to date.”
Work on the residue tailings facility starter wall and the accommodation terraces was also progressing well. Overall, as at the end of December, the project was marginally ahead of schedule with significant progress being made on the construction of the tailings dam wall, as well as other earthworks and site preparations.
The provision of R165-million electrical infrastructure to connect the mine to grid power was also progressing as planned. Connection to grid power was expected during the second half of this year, ahead of the initial schedule, which could then enable the company to realise savings against the project's budget, as it would be able to use grid power instead of more expensive diesel-generated power.
At the end of December, a total of R1.28-billion in orders out of the total budgeted R1.43-billion engineering, procurement and construction management (EPCM) contract was placed.
The three largest subcontracts under the EPCM contract, totalling R943-million, had been agreed on a fixed price/cost basis to remove price escalation risk. The total project spend, excluding power expenditure, as at the end of December, was R460-million. Advance payments were made as part of the upfront fixed price agreements reached with certain suppliers.
Meanwhile, Firestone reported that its BK11 mine, in Botswana, would remain on care and maintenance, costing the company $46 000 a month.
Management initiated a formal disposal process for the BK11 mine in August 2014, in line with the strategy to focus company resources on Liqhobong.