Firestone Diamonds Ltd., which operates a mine for the gems in Lesotho, said it expects to see a recovery in prices for the stones as it arranged funding to develop a project in the southern African country.
“There’s an element of confidence there,” Chief Executive Officer Stuart Brown said in a telephone interview today. “By 2016, we see the market to be much more positive.”
Diamond producers have struggled to find large new mines, while output at many of the biggest sites is falling as supplies of accessible diamonds near the surface are depleted. Global diamond production fell to 128 million carats in 2012 from 176 million carats in 2006, according to Bain & Co.
Firestone said today it had raised $222 million by selling shares and taking on debt to fund the development of its Liqhobong mine in Lesotho. The company, which has previously struggled to develop the project, targets annual production of 1 million carats by 2016.
Firestone rose 25 percent to 4 pence by 2:18 p.m. in London, the largest intraday advance for 13 years. The volume of shares traded was more than eight times the daily average for the last three months. The stock fell 23 percent last year, its fourth straight annual decline.
Brown, a former chief financial officer at De Beers, the world’s biggest diamond producer, said while he expects to 2014 to be “marginally positive” for prices, much depends on a continued global recovery and levels of production.