FDI Firestone Diamonds Plc

RNS Number:2009G
Firestone Diamonds PLC
25 February 2000


Firestone to develop second diamond mine in South Africa

Buys majority interest in Oena Mine for $2.1 million

LONDON: 25 February 2000 - Firestone Diamonds plc, ("Firestone" or "the
Company"), (FDI.L) the UK-based diamond mining and exploration company, today
announces that it has acquired an 87.5% interest in the Oena Mine, an alluvial
diamond mine located on the lower Orange River in Namaqualand, Northern Cape
Province, South Africa.  The consideration is $1 million in cash and $1.1
million in Firestone shares, issued at a price of (72p) per share.

The Orange River is a well established diamond producing area, and the quality
of diamonds which it produces is considered to be comparable to the best in
the world and typically sell at prices between $700-$900 per carat.  The Oena
Mine is located upstream of the Auchas Mine, operated by De Beers, and the
Baken Mine, operated by Trans Hex, South Africa's second largest diamond
producer.  Baken, which is considered to be one of the premier alluvial
diamond mines in the world, was discovered by Firestone's Deputy Chairman,
Hugh Jenner-Clarke, and is estimated to have produced about 1 million carats
over the past 30 years, worth approximately $700 million at current prices.

The Oena Mine covers an area of 8,800 hectares and extends 15 kilometres along
the banks of the lower Orange River.  In the early 1990's the mine produced
over 30,000 carats of diamonds with a value of $24 million, representing an
average of $880 per carat.  Mining operations were focused on two small high
grade 'proto' gravel deposits which were mined out by 1995, following which
operations were suspended.  The average stone size recovered was approximately
2 carats and the largest stone was 79 carats.  

Firestone intends to re-establish mining operations at Oena in order to
exploit the extensive 'meso' gravel deposits which still remain.  Detailed
mapping and drilling have identified a substantial resource of more than 40
million tonnes of diamondiferous meso gravel.  Based on data from bulk
sampling at Oena and from other mining operations on the Orange River, the
overall grade of these deposits is estimated to be a minimum of 0.5 carats/100
tonnes, with localised high grade areas of 5-10 carats/100 tonnes. 
Small-scale mining operations carried out at Oena last year produced over 330
carats, which were sold at an average price of $880 per carat.  On this basis,
Firestone estimates the potential in situ value of the deposits to be
approximately $175 million.

Much of the mine infrastructure and equipment has been maintained and is still
in place, comprising gravel processing equipment, power, water supply,
airstrip, accommodation and office facilities, and some mining equipment. 
This will significantly reduce the cost and time to re-establish commercial
scale mining operations at Oena.  Staff and additional equipment are already
being mobilised and will arrive on site in March, with production scheduled to
restart by the end of June. 

There is also considerable exploration potential at Oena.  Detailed mapping
and drilling have identified a number of locations where it is likely that
high-grade proto gravels have been buried beneath the extensive meso deposits.
 An intensive drilling programme is planned to confirm this potential, which,
if proven, could add significantly to reserves and production at Oena. 

Mr. Philip Kenny, Chief Executive of Firestone, said today: "The Oena Mine
represents an exceptional opportunity for Firestone, particularly because of
the large size and high quality of diamonds that it contains, which are in
increasingly short supply. The diamond market is very strong at the moment,
with De Beers reporting record diamond sales in 1999 and projecting similar
sales levels for 2000.  De Beers announced a price rise last week, and prices
for diamonds such as those produced at Oena in particular have also been
rising strongly. 

"We have a high degree of confidence in Oena, as our Deputy Chairman, Hugh
Jenner-Clarke, is recognised as a leading authority on the area and was
responsible for some of the first commercial discoveries on the lower Orange
River, at the Baken, Octha and Lorelei mines. 

"The Oena Mine is the most significant acquisition that we have made since we
came to AIM 18 months ago, and it will establish Firestone as one of the
leading independent diamond producers in Namaqualand.  We expect Oena to add
significantly to the value of our project portfolio and to make a significant
contribution to the Company's revenue and profits over its expected 10 year
life. "

Background information
Firestone mines and explores for diamonds in the Namaqualand region of the
Northern Cape Province, South Africa, one of the most prolific alluvial
diamond producing areas in the world, and explores for diamonds in Botswana,
which is the largest diamond producer in the world by value, with annual
production worth over $1.6 billion, accounting for over 23% of worldwide
production.  The Company operates the Avontuur Mine in Namaqualand, and its
main exploration projects are the Groen River Valley project in Namaqualand
and the Mopipi project in Botswana.  

Firestone is quoted on the London Stock Exchange's Alternative Investment
Market (AIM). Firestone now has a total of 30,345,713 shares in issue, of
which some 47% is free float. 
Announcements and other information on Firestone are available on the
Company's website at www.firestonediamonds.com.

For further information:

Philip Kenny, Firestone Diamonds plc       020-7370-6452 / 0831-324-645
Keith Irons, Bankside Consultants          020-7220-7477 / 0585-356-639 


END

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