Firestone Diamonds

Liqhobong Diamond Mine

Firestone Diamonds is developing its flagship asset, the Liqhobong Diamond Mine located at the head of the Liqhobong Valley in the Maluti Mountains of northern Lesotho in Southern Africa. The Liqhobong Diamond Mine is owned 75% by Firestone Diamonds, and 25% by the Kingdom of Lesotho.

Construction of the Liqhobong Diamond Mine treatment plant and associated infrastructure commenced in July 2014. At the time of writing, the project remains on time and on budget, and it is anticipated full production will commence in mid 2016.  At least 89% of orders and lead items under engineering, procurement and construction budget have been placed.  Key related infrastructure, including connection to the main power grid, is expected to be achieved in the second half of 2015, ahead of schedule. RCF Senior Project Director Allan Brownrigg chairs the Project Steering Committee for Firestone Diamonds’ Liqhobong Mine.

The project team is fully in place, and the development has already created over 400 jobs, which will increase over the course of the project, and is maintaining its target of zero lost time injuries.

Once constructed, it is anticipate the mine will produce diamonds at a rate of 1.1 million carats per annum.

RCF’s Investment

In early 2014, RCF VI provided a bridge facility in an amount of US$5M, a mezzanine facility in an amount of US$10M and an equity subscription in an amount of US$30M, which with other funding (including other funding facilities from third parties, project finance debt, and a public equity raising of US$40M) completed a total funding package of US$222.4M, that should fully fund development of the Liqhobong Mine.

In addition, in April 2015, RCF provided a further standby debt facility of US$15M. This provides the company with a buffer in developing the project. The funding also satisfied a condition that would allow the company to drawdown on a project debt facility of up to US$82.4 million provided by Absa, one of Africa’s major financial services providers. As the project is on time and on budget, it is not anticipated that the standby facility will be needed.

Supportive Investment Structuring

RCF’s Firestone Diamonds investment is an example of how the firm can provide flexible funding options to meet the needs of companies as well as long-term patient capital that supports emerging companies to process the development of projects. In April 2015, RCF Managing Partner James McClements acknowledge that it had been a tough time recently for the mining sector with falling commodity prices and weak public markets impacting cash flows of operating companies.

“At RCF we take a long term view of value, and so are pleased to partner with Firestone Diamonds to provide development funding and support for the Liqhobong Diamond project,” said RCF Partner Mason Hills.