RNS Number:4136K
Firestone Diamonds PLC
31 March 2005
31 March 2005
Firestone Diamonds plc
Unaudited interim results for the six months to 31 December 2004
LONDON: 31 March 2005 - The Board of Firestone Diamonds plc, ("the Company"),
the AIM-quoted diamond mining and exploration company, announces unaudited
interim results for the six months to 31 December 2004.
HIGHLIGHTS
General
* After tax profits increased 11% to #162,501
* Rough diamond market very strong; prices increased 20% in 2004 and 3%
to date in 2005
* Share placements in July 2004 and March 2005 raised approximately #4.9
million after expenses
Orapa and Mopipi, Botswana
* Orapa project secured and joint venture signed with De Beers
* Intensive work programme under way in Orapa and Mopipi project areas
* 51,000 line kilometres of high-resolution geophysical surveys
conducted; 180 targets identified to date
* Three kimberlites discovered
Jwaneng, Botswana
* New project secured and joint venture signed with De Beers
* Initial work programme under way
Groen River Valley, South Africa
* Intensive drilling and bulk sampling programme planned; drilling has
commenced
* Prospecting permit issued for substantial new area
Bonte Koe Mine, South Africa
* Mine development and commissioning completed
* First diamonds produced and sold for $205 per carat
Oena Mine, South Africa
* Production increased 26% to 457 carats
* Average value of diamonds sold increased 10% to $1,158 per carat
Avontuur Mine, South Africa
* Production decreased 9% to 2,651 carats
* Average value of diamonds sold increased 11% to $125 per carat
New projects
* New exploration and mining projects being evaluated
Dear Shareholder,
Since June of last year we have made continued good progress in the growth and
development of Firestone's exploration and mining project portfolio.
In Botswana, the Company acquired two new kimberlite exploration projects,
increased the area held under licence by 150% to approximately 9,000 square
kilometres and concluded two new joint ventures with De Beers over the Orapa and
Jwaneng projects. An intensive exploration programme was initiated in the
Mopipi and Orapa project areas, with more than 51,000 line kilometres of
high-resolution geophysical surveys conducted. In February 2005, we announced
that drilling of the first targets identified by these surveys had resulted in
the discovery of three new kimberlites close to the Orapa Mine.
In South Africa, the Company increased the area held under licence in the Groen
River Valley area by 150% to over 50,000 hectares. An intensive follow-up
exploration and evaluation programme was developed for the Groen River Valley
area and drilling in the area commenced at the end of 2004.
The main focus of our mining operations was at the Company's new Bonte Koe Mine.
Construction of the gravel treatment plant, power line and pipe line, and
refurbishment of buildings and accommodation were completed during the period,
following which commissioning of the plant commenced, with the first diamonds
being recovered in October.
REVIEW OF OPERATIONS
Exploration
Orapa and Mopipi Projects
The Mopipi project covers an area of approximately 3,600 square kilometers and
is located close to the Orapa and Letlhakane diamond mines. In June 2004, the
Company entered into a joint venture with De Beers over the Mopipi project,
under the terms of which De Beers can earn a 61% interest in the project by
taking it to completion of bankable feasibility.
During the period, the Company was awarded new prospecting licences for an area
of approximately 1,300 square kilometers, also located close to the Orapa and
Letlhakane diamond mines, known as the Orapa project. In December 2004, we
announced that the Company had entered into a new joint venture with De Beers
over the Orapa project, on the same commercial terms as those of the Mopipi
joint venture.
An intensive exploration programme was initiated in the Mopipi and Orapa project
areas. More than 51,000 line kilometres of high-resolution geophysical surveys,
including airborne magnetics, ground gravity and ground magnetics, were
conducted. Interpretation of the data from these surveys has identified 180
potential kimberlite drilling targets to date for further investigation. De
Beers, which is project operator in the joint ventures with Firestone, has
commenced drilling of selected targets.
In February 2005, the Company announced that three new kimberlites had been
discovered in the Orapa project area, approximately 15 kilometres south of the
Orapa Mine. Evaluation of the material recovered from drilling is currently
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 undertaken so as to allow an initial evaluation of the
economic potential of the kimberlites to be made.
In March 2005, the Company announced that it had entered into a joint venture
with Daly City Ventures, a Botswana company that holds a prospecting licence in
the Orapa region over an area of approximately 380 square kilometers. The
Company is developing plans for the exploration of this area, which adjoins the
Mopipi and Orapa project areas.
Groen River Valley, Namaqualand, South Africa
The Groen River Valley project in Namaqualand is Firestone's most promising
exploration project in South Africa due to the high quality and large size of
diamonds that have been mined in the area and the large area controlled by the
Company. The pace of exploration activity increased significantly during the
period.
Exploration drilling carried out last year had resulted in a very significant
discovery and proved the presence of at least one very large gravel deposit that
has been proven to be diamondiferous, known as the HL deposit. During the
period, plans were developed for an intensive follow-up exploration and
evaluation programme. This programme commenced in December 2004, and will
include detailed drilling and bulk sampling on the HL deposit, follow-up
drilling on targets identified by the last year's drilling programme, and
drilling of new targets. As the HL deposit is known to be diamondiferous, the
objective of the bulk sampling programme will be to estimate the grade of the
deposit and diamond value in order to make an initial economic evaluation of the
deposit.
In March 2005, we announced that the Company had been awarded a prospecting
permit for a substantial new area in the Groen River Valley region, increasing
the Company's land position by 150% to over 50,000 hectares. The ground covered
by the new prospecting permit adjoins the Company's current project area, and is
believed to contain significant extensions to the diamondiferous palaeo channels
previously identified by the Company in the region. Firestone will explore the
new area through its black-empowerment subsidiary, African Star Minerals.
Jwaneng, Botswana
During the period, the Company was awarded new prospecting licences for an area
of approximately 3,700 square kilometers, located close to the Jwaneng diamond
mine. 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. In
December 2004, we announced that the Company had entered into a new joint
venture agreement with De Beers over the Jwaneng project, on the same commercial
terms as those of the Mopipi joint venture.
Work commenced on the Jwaneng project in early 2005. Data from exploration
recently carried out by De Beers in the Jwaneng region is being integrated with
data from past kimberlite indicator mineral sampling in order to identify target
areas for follow-up work on the ground. High-resolution ground gravity and
magnetic surveys will be conducted on selected target areas to identify
potential kimberlite drilling targets. Initial drilling targets are expected to
be identified and drilled in the next six months.
US Exploration Project
Exploration at the Company's kimberlite exploration project in the United States
over the past two years indicates that at least one previously unknown
kimberlite field is located in the project area, and that some of these
kimberlites may be diamondiferous. In June 2004, the Company entered into a
joint venture over the US project with American Diamonds Inc, under the terms of
which American Diamonds can earn a 60% interest in the project through the
expenditure of $1 million. Follow-up sampling was carried out during the period
in high priority target areas identified by previous sampling, and the results
of this work are expected to be available shortly.
Mining
Bonte Koe Mine, Namaqualand, South Africa
The Company's black empowerment joint venture company, African Star Minerals,
continued with the development of new mining operations at the Bonte Koe Mine.
During the period construction of the gravel treatment plant, power line and
pipe line, and refurbishment of accommodation, workshop and office facilities
were completed. Commissioning of the gravel treatment plant and final recovery
sections commenced towards the end of the period. During this process a number
of modifications were made to the plant, including conversion of the feed
preparation section from dry screening to wet screening, in order to optimise
gravel throughput and diamond recovery efficiency. All of the required
modifications have now been made and commissioning of the plant has been
completed.
A total of 207 carats was recovered during commissioning of the gravel treatment
plant during the period. The average size of the diamonds was 0.51 carats per
stone, and 26% of the parcel was comprised of diamonds weighing more than 1
carat. A sample parcel of 80 carats was sold during the period for an average
price of $205 per carat, higher than the $200 per carat that was originally
expected for Bonte Koe production.
Mining operations at Bonte Koe have been focused on excavating and processing
material from a number of locations on the property with the objective of
improving the geological interpretation of the deposits on the mine and allowing
material from a number of mining areas to be blended. Grades from areas tested
to date range from 1 to 9 carats/100 tonnes.
In 2004, the Company decided to increase the capacity of the gravel treatment
plant at Bonte Koe and to construct a 10 km power line and a 35km water pipeline
to the mine, with the objective of securing other projects on the Buffels River
that could be exploited using this infrastructure. A number of opportunities in
the Buffels River have been identified and are currently being evaluated by the
Company.
Avontuur Mine, Namaqualand, South Africa
Production for the period was 2,651 carats, a decrease of 9% compared to the
same period last year. This was due to the temporary allocation of some mining
equipment from Avontuur to Bonte Koe, although the impact of this was reduced by
more effective utilization of other equipment at Avontuur. Grades from mining
areas ranged from 2 to 25 carats/100 tonnes, and diamonds produced continued to
be approximately 85% gem quality, with an average size of 0.23 carats per stone.
Demand for Avontuur production remained strong, with the average price for gem
quality diamonds sold during the period increasing 4%, to $137 per carat, and
overall value of mine production increasing 11%, to $125 per carat.
Exploration activity continued on targets that had been identified by data from
a high-resolution airborne electromagnetic survey conducted over the mine area
and which were drilled last year. Bulk sampling of the first of these targets
is being planned for later this year. The Company has also identified a number
of new mining and exploration opportunities in areas close to the mine that
could be exploited using the infrastructure at Avontuur, and it is expected that
progress will be made in this regard in the coming year.
Oena Mine, Namaqualand, South Africa
Meso gravel mining operations were carried out by the Company at the Oena
terrace during the period. Discussions were initiated with a number of
potential mining contractors with the objective of restarting mining operations
at the Blokwerf and Sandberg terraces. These discussions are still under way.
Production from the Company's mining operations at Oena increased 26% to 457
carats compared to the same period last year. Grades from mining areas
continued in line with last year, and ranged from 0.06 to 1 carats/100 tonnes,
with diamonds produced averaging 1.17 carats per stone.
With continued shortages of supply at the high end of the diamond market, demand
for Oena production remained strong. The average price for diamonds sold
increased 10% to $1,158 per carat, primarily due to the sale of a number of
large, high value stones. A number of special diamonds were recovered during
the period, including stones of 62.24 and 32.57 carats that sold for
approximately $204,000 and $120,000, respectively.
THE DIAMOND MARKET
Prices in the rough diamond market continued to increase during the year, driven
by the growing shortage in rough diamond supply across all segments of the
market. Rough diamond prices increased by about 20% in 2004, and this trend has
continued into 2005, with De Beers raising rough diamond prices by 3% in
January. With De Beers' stocks now at minimum working levels, and the rough
diamond supply deficit expected to continue for the next 3-5 years, the outlook
for diamond prices continues to be very positive.
FINANCIAL
Turnover from Firestone's mining operations increased 7% to #506,310 compared to
the same period last year, with profits rising 11% to # 162,501, despite the
continued strength in the rand.
In July 2004, the Company completed a share placing with institutional and other
investors to raise approximately #1.3 million net of expenses. In March 2005,
the Company completed a further share placing with institutional and other
investors to raise approximately #3.6 million net of expenses. The primary
purpose of these financings was to increase the pace of exploration at the
Company's key exploration projects and to support further expansion of the
Company's project portfolio.
OUTLOOK
Through its joint ventures with De Beers and ground that is held exclusively by
the Company, Firestone is the largest holder of diamond exploration rights in
the Orapa region. Firestone is also the only significant holder of diamond
exploration rights, other than De Beers, in the Jwaneng region. In addition,
the Company has pending applications for a further 15,000 square kilometres in
the Orapa and Jwaneng areas, which, if awarded, would increase the area held by
the Company in Botswana by 170% to 24,000 square kilometres.
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. This is supported by the recent discovery of three new
kimberlites in the Orapa project area. We are confident that further kimberlite
discoveries will be made in our Botswana project areas 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 are very good.
The Company has now established a dominant land position in the Groen River
Valley. We believe that the current phase of work will make significant
progress towards confirming the economic potential of the area, and that the
Groen River Valley has the potential to become an important new alluvial diamond
producing region.
We will continue to focus the Company's resources on the identification of new
exploration and mining projects, and expect to be able to announce a number of
new projects as a result of this work in the coming year. We will also continue
to work with joint venture partners on a selective basis in order to allow us to
accelerate the development and expansion of our project portfolio.
The Company has a strong management team, an exciting portfolio of exploration
and mining projects and is well funded. With the strength in the rough diamond
market expected to continue in the medium term, we remain confident about the
Company's long term prospects.
James F. Kenny
Chairman
31 March 2005
FIRESTONE DIAMONDS PLC
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS TO 31 DECEMBER 2004
2004 2003
# #
Turnover 506,310 475,134
Change in stocks of finished goods and in
work in progress (10,993) (7,191)
Production 495,317 467,944
Other operating income - 3,105
Raw materials and consumables (59,800) (57,853)
Staff costs (115,709) (76,597)
Depreciation and amortisation
(62,192) (57,639)
Other operating charges (104,417) (149,479)
Operating profit 153,199 129,481
Interest receivable and similar income 9,428 19,306
Interest payable and similar charges (126) (2,446)
Profit on ordinary activities before
taxation 162,501 146,341
Deferred tax on profit on ordinary
activities (22,489) (11,938)
Profit on ordinary activities after taxation
Minority interests 140,012 134,404
(6,423) (4,357)
Retained profit for the period 133,588 130,047
Earnings per share
Basic profit per share 0.3p 0.3p
Diluted profit per share 0.3p 0.3p
Turnover is wholly derived from continuing activities.
FIRESTONE DIAMONDS PLC
UNAUDITED CONSOLIDATED BALANCE SHEET
31 DECEMBER 2004
2004
# #
FIXED ASSETS
Intangible assets 11,739,143
Tangible assets 4,658,739
Investments 660,960
17,058,842
CURRENT ASSETS
Stocks 109,785
Debtors 312,504
Cash at bank and in hand 497,933
920,221
CREDITORS
Amounts falling due within one year (797,280)
NET CURRENT ASSETS 122,941
TOTAL ASSETS LESS CURRENT LIABILITIES 17,181,783
CREDITORS
Amounts falling due after one year (1,638,554)
PROVISIONS FOR LIABILITIES AND CHARGES
Other provisions (1,061,934)
Deferred taxation (469,013)
(1,530,947)
NET ASSETS 14,012,281
CAPITAL AND RESERVES
Called up share capital 8,737,372
Share premium account 5,320,353
Merger reserve (1,076,399)
Profit and loss account 1,033,414
EQUITY SHAREHOLDERS' FUNDS 14,014,740
Minority equity interests
(2,459)
14,012,281
Note:
As no interim balance sheet was produced in 2003, comparative numbers are not
available
FIRESTONE DIAMONDS PLC
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS TO 31 DECEMBER 2004
2004
# #
Net cash (outflow)/inflow from operating activities 1,016,879
Returns on investments and servicing of finance
Interest received 9,428
Interest element of finance lease payments (126)
Net cash inflow from returns on
investments and servicing of finance 9,301
Capital expenditure and financial investment
Payments to acquire intangible fixed assets (1,094,310)
Payments to acquire tangible fixed assets (1,081,354)
Receipts from sales of tangible fixed assets -
Payments to acquire investments 2,051
Net cash outflow from capital expenditure
and financial investment (2,173,613)
Net cash outflow before use of
liquid resources and financing (1,147,433)
Financing
New long term loans -
Issue of ordinary share capital 1,384,849
Finance lease payments (80,806)
1,384,849
Increase/(decrease) in cash 156,610
Note:
As no interim cash flow statement was produced in 2003, comparative numbers are not
available
Notes:
1. The financial statements have been prepared in accordance with
applicable UK accounting standards and under the historical cost convention.
The principal accounting policies of the group are set out in the group's 2004
annual report and financial statements.
2. The financial information set out above does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985.
Statutory accounts for the twelve months to 30 June 2004, on which the report of
the auditors was unqualified and did not contain a statement under section 237
of the Companies Act 1985, have been filed with Registrar of Companies.
3. Basic earnings per share is based on the weighted average number
of shares in issue for the period of 42,860,459. Diluted earnings per share is
based on the weighted average number of shares in issue for the period plus
potential dilutive ordinary shares arising from share options for the period of
47,565,943.
4. The directors are not declaring a dividend for the period.
5. Copies of this report are being sent to all shareholders.
Additional copies will be available to the public from the offices of Bell
Lawrie White, 48 St Vincent Street, Glasgow, G2 5TS and will be posted on the
Company's website at www.firestonediamonds.com.
For further information:
Philip Kenny, Firestone Diamonds +44 20 7370 6452 / +44 7831 324 645
Leesa Peters, Conduit PR +44 20 7936 9095 / +44 7812 159 885
Laurence Read, Conduit PR +44 797 995 5923
Jamie Cumming, Bell Lawrie White +44 141 314 8103
Website: www.firestonediamonds.com
This information is provided by RNS
The company news service from the London Stock Exchange
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