FDI Firestone Diamonds Plc

RNS Number:9182J
Firestone Diamonds PLC
18 March 2005

                             Firestone Diamonds plc                             
              New projects acquired in Orapa and Groen River areas              
                 Significant expansion planned in Jwaneng area                  
                         Placing to raise #3.7 million                          

LONDON: 18 March 2005

Firestone Diamonds plc ("Firestone" or "the Company"), the AIM-quoted diamond
mining and exploration company, today announces significant expansions to its
exploration projects in the Orapa and Jwaneng areas in Botswana, and in the
Groen River Valley area in South Africa.

New joint venture in Orapa area

The Company has entered into an agreement to acquire an 81% interest in Daly
City Ventures (Proprietary) Limited ("Daly City"), a private Botswana company.
Daly City is the holder of Prospecting Licence 40/2003 in the Orapa area, which
hosts the Orapa, Letlhakane and Damtshaa diamond mines. Orapa is the second
largest diamond mine in the world in terms of carat production, producing
approximately 16 million carats per annum with a value of over $800 million. 

PL 40/2003 covers an area of approximately 380 square kilometres and is located
approximately seven kilometres north of the Letlhakane Mine. Under the terms of
the agreement, Firestone will finance and carry out all exploration and
evaluation work on PL 40/2003, up to and including the completion of bankable
feasibility studies on any kimberlites discovered in the project area. There is
already one known kimberlite in PL40/2003, in which Firestone can earn a 76%
interest. This kimberlite will be re-evaluated by Firestone as part of its
planned work programme. 

The Company considers the prospects for the discovery of further kimberlites in
this area to be very good. The initial work programme for PL40/2003 is currently
being developed and is expected to commence during the second quarter of 2005.

New prospecting permit, Groen River Valley

The Company is pleased to announce that it has been awarded a prospecting permit
for a substantial new area in the Groen River Valley region, which results in
the Company's land position increasing 150%, from approximately 20,000 hectares
to over 50,000 hectares. The Groen River Valley project is the Company's most
promising exploration project in South Africa, due to the high quality and large
size of diamonds that have been mined in the region and the substantial land
position controlled by the Company. 

The ground covered by the new prospecting permit is adjacent to the Company's
current project area, and is believed to contain significant extensions to the
diamondiferous palaeo channels identified by the Company through work carried
out in the region in recent years. The new area will be explored by Firestone
through its black-empowerment subsidiary, African Star Minerals.

New applications in Jwaneng area

The Jwaneng Mine is the biggest diamond mine in the world, producing
approximately 12 million carats per annum with a value of over $1.5 billion.
Firestone is already active in the Jwaneng region, where the Company's Jwaneng
Project, which covers an area of approximately 3,700 square kilometers, is being
explored by De Beers in joint venture with Firestone. 

As much of the region around Jwaneng is still considered to be highly
prospective for the discovery of new diamondiferous kimberlites, the Company
decided in 2004 to significantly expand its licence interests in the region, and
submitted applications for areas covering approximately 2,900 square kilometers.
The Company is awaiting the granting of prospecting licences for these areas,
and has recently submitted further applications for an additional 2,800 square
kilometers. 

Update on Orapa and Mopipi Projects

Firestone's Orapa and Mopipi projects, which cover a total area of approximately
4,900 square kilometers and are located in the Orapa area, are being explored by
De Beers in joint venture with Firestone. Drilling of targets identified by
high-resolution geophysical surveys carried out in 2004 is under way. The
Company announced in February that three new kimberlites had been discovered
approximately 15 kilometres south of the Orapa Mine. Evaluation of the material
recovered from drilling is being carried out at De Beers' laboratories in
Johannesburg. Microprobe analysis of the kimberlitic indicator minerals and
analysis of the size/distribution frequency of the microdiamond populations from
each of the kimberlites is being carried out to allow an initial evaluation of
the economic potential of the kimberlites to be made. 

With a total of 180 targets identified to date for follow up in the Orapa and
Mopipi project areas, the Company considers that it is likely that more
kimberlites will be discovered as drilling continues in the coming months. Given
the fact that more than 10% of the 75 known kimberlites in the Orapa region are
economic, the Company continues to believe that the prospects for new economic
discoveries in the area are very good. Results from further drilling and
evaluation work will be provided as they become available.

Philip Kenny, Chief Executive of Firestone, said today: "Firestone has
exceptional exploration potential through its projects in the Orapa, Jwaneng and
Groen River Valley regions. Much of the area around the Orapa and Jwaneng mines
is still considered to be highly prospective for the discovery of new
diamondiferous kimberlites, as modern geophysical and other exploration
techniques have not been fully applied in these areas. We also believe that the
Groen River has the potential to become an important new alluvial diamond
producing region. Today's announcements indicate that we have made substantial
progress towards our objective of becoming the biggest holder of exploration
rights in these key regions."

Placing 

The Company also announces that it is placing 2,475,000 new ordinary shares of
20 pence each in the Company with institutional investors at a price of #1.50
per share to raise #3.7 million before expenses. The proceeds of the placing
will be used to accelerate the pace of exploration and development of the
Company's exploration projects, and for general working capital purposes. These
new ordinary shares will rank pari passu in all respects with the existing
ordinary shares in the Company. Application will be made for the new ordinary
shares to be admitted to trading on the Alternative Investment Market of the
London Stock Exchange, and it is expected that trading will commence on 24 March
2005.

Interim Report

The Company will announce its interim results for the six month period to 31
December 2004 at the end of March. Production from the Company's mining
operations for the period will show an increase from the prior six month period,
in line with expectations. Detailed updates on the Company's mining operations
and exploration projects will be provided in the Interim Report.

For further information:

Philip Kenny, Firestone Diamonds        +44 20 7370 6452 / +44 7831 324 645
Leesa Peters, Conduit PR                +44 20 7618 8708/ +44 7812 159 885
Jamie Cumming, Bell Lawrie White        +44 141 314 8103
Website: www.firestonediamonds.com

 

Background information:

Botswana

Botswana is the world's largest producer of diamonds, with annual production of
approximately 30 million carats, worth over $2.5 billion and accounting for over
25% of worldwide production by value. Botswana hosts Debswana's Jwaneng, Orapa,
Letlhakane, and Damtshaa mines and is considered to be one of the best countries
in the world to explore for kimberlite - the primary source rock for diamonds.
Debswana is owned in equal shares by the Botswana Government and De Beers.

 

Firestone Diamonds

Firestone has extensive diamond exploration interests in Botswana, as follows:

* The Orapa Project covers approximately 1,300 square kilometers and is
  located close to the Orapa and Letlhakane diamond mines.

* The Mopipi Project covers approximately 3,600 square kilometers and is
  located close to the Orapa and Letlhakane diamond mines.

* The Jwaneng Project covers approximately 3,700 square kilometers and is
  located close to the Jwaneng Mine.

Firestone entered into separate joint ventures with De Beers over all three of
these projects in 2004. Under the terms of the joint venture agreements, De
Beers can earn a 61% interest in each project by financing and carrying out all
exploration and evaluation work, up to and including the completion of bankable
feasibility studies on any kimberlites discovered in the project area.

Firestone is also active in the Namaqualand region of South Africa, one of the
most prolific alluvial diamond producing regions in the world, where the
Company's Bonte Koe, Avontuur and Oena mines are located. The Company has
extensive exploration properties in Namaqualand, including the Groen River
Valley exploration project. Firestone also has a large scale kimberlite
exploration project in the United States, in which American Diamonds is earning
a 60% interest.

Firestone is quoted on the London Stock Exchange's Alternative Investment Market
(AIM).

                      This information is provided by RNS
            The company news service from the London Stock Exchange
END
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