Firestone Diamonds - Interim Results
April 26 2000 - 3:02AM
UK Regulatory
RNS Number:5662J
Firestone Diamonds PLC
26 April 2000
Firestone Diamonds plc
Unaudited interim results for the six month period to 31
December, 1999
HIGHLIGHTS
* 257% increase in diamond production from
Avontuur to 4,483 carats
* 6% increase in diamond prices to $103 per carat
* Operating profit and positive cash flow from
mining operations
* Acquisition of the Oena Mine in South Africa,
with estimated resources of 200,000 carats and
gross value of $175 million
* Encouraging results from exploration
* Increasing exploration acreage in Botswana and
South Africa
LONDON: April 26, 2000 - The Board of Firestone Diamonds
plc, ("the Company") announces unaudited interim results
for the six month period to 31 December, 1999.
The period saw excellent progress in the development of
Firestone's mining operations and exploration projects.
Production from the Avontuur Mine in South Africa
increased by 257% to 4,483 carats, and a strong diamond
market led to a 6% increase in prices achieved. Cash
flow from Avontuur increased substantially and financed
all the Company's operational and exploration
expenditures in South Africa during the period.
The Company increased its area under exploration at the
Mopipi joint venture project in Botswana from 85 square
kilometres to over 2,000 square kilometres. Exploration
results from Mopipi continued to exceed expectations and
to indicate the potential presence of diamondiferous
kimberlite in the Mopipi region. Current exploration
work aims to identify kimberlite targets for drilling
later in the year. Exploration at the Groen River Valley
project in South Africa produced positive results, on the
basis of which the Company has applied for additional
prospecting permits in the area.
The rough diamond market was strong during 1999, with the
De Beers-controlled CSO reaching record sales of $5.2
billion for the year, an increase of 56% on 1998. CSO
sales to date in 2000 have been exceptionally strong, and
are 54% up on the same period last year, with analysts
now forecasting another record year for CSO sales.
Firestone is now in a very strong position. The Company
is debt free and well positioned to develop its current
portfolio of projects. Since the end of the period,
Company made its most significant acquisition since
floating on the Alternative Investment Market (AIM) of
the London Stock Exchange, with the purchase of an 87.5%
interest in the Oena Mine. The Oena Mine adds
significantly to the value of the Company's project
portfolio and diamond reserves and resources. With
production scheduled to commence by June, Oena is
expected to make a significant contribution to the
Company's profits and cash flow in the future. This,
combined with further expected increases in cash flow
from the Avontuur Mine, ensures that the Company is well
positioned to achieve its objective of becoming a leading
independent diamond producer. The Company will continue
to investigate new diamond mining, exploration and
related projects during the year, both through internal
development and acquisition, and is extremely confident
about prospects for continued growth and development.
Mining
Avontuur Mine
During the period we continued to see the benefits of the
expansion programme carried out at the Avontuur Mine in
the last financial year. Production for the period
increased by 257% compared to the previous six months, to
a total 4,483 carats. Monthly production reached a
record of 1,583 carats in November. Diamonds produced
continued to be approximately 85% gem quality, with an
average size of 0.2 carats per stone.
Exploration at Avontuur continued during the period,
resulting in the discovery of two new gravel deposits.
These deposits will be sampled and evaluated during the
coming year. We are confident that this work will result
in an increase to the mine's reserves. On the basis of
data obtained from recent exploration, the Company has
identified new exploration potential in a number of areas
close to Avontuur and has applied for prospecting permits
over these areas. Exploration will start on these areas
as soon as the permits are granted, which is expected to
be later this year.
Demand for Avontuur production has continued to be
strong. The average price achieved for gem quality
diamonds from Avontuur during the period rose 6% from $97
to $103 per carat. With total reserves and resources
estimated at over 900,000 carats, representing an in situ
value of approximately $90 million, we are confident of
continued growth in production and profits from Avontuur
over its projected ten year life.
Oena Mine
In February the Company acquired an 87.5% interest in the
Oena Mine, which is located on the Orange River, close to
the Company's other operations in Namaqualand, South
Africa. The Orange River area is a well established
diamond producing area which produces diamonds comparable
to the best in the world, typically selling 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.
Previous mining operations at Oena have produced over
30,000 carats of diamonds with a value of $24 million.
The average stone size recovered was approximately 2
carats and the largest stone was 79 carats. Detailed
mapping, drilling and bulk sampling have been carried out
at Oena and have identified a resource of more than 40
million tonnes of diamondiferous gravel with an estimated
minimum grade of 0.5 carats/100 tonnes, giving a
potential resource of 200,000 carats. With a diamond
value of $880 per carat, which was the price achieved for
Oena production in 1999, the estimated in situ value of
the deposits is approximately $175 million.
The Company is in the process of re-establishing
operations at Oena, and it is expected that the mine can
be brought into production by June. As there is also
considerable exploration potential at Oena, an intensive
drilling programme will commence within the next few
months to identify and evaluate potential new deposits on
the property.
The Company believes that the Oena Mine has exceptional
potential and expect that it will make a significant
contribution to the Company's cash flow and profits over
its projected ten year life.
Exploration
South Africa
Exploration continued at the Groen River Valley project,
with continued encouraging results. Excavations were
carried out at the last of three high priority target
areas that had been identified by a combination of aerial
photography and satellite imagery analysis and drilling.
The gravels tested at this location were proven to be
diamondiferous, as the first two locations tested had
also been. On the basis of data obtained from this work,
the Company decided to expand its exploration area in the
Groen River. A number of additional areas through which
the target palaeo channels are believed to run have been
identified and the Company has applied for prospecting
permits over these areas. It is expected that the new
permits will be granted later this year.
We remain confident that the Groen River Valley has the
potential to become an important new alluvial diamond
producing region. With the substantial land position
that Firestone holds in the Groen River area, this
project has the potential to make a significant
contribution to the Company's future growth.
Botswana
Botswana, which is the world's largest producer of
diamonds by value, continued to be the focus for the
Company's kimberlite exploration efforts. During the
period the Company substantially increased its land
position in the Mopipi area, located about 50 kilometres
west of the De Beers' Orapa Mine, from 85 square
kilometres to over 2,000 square kilometres. The Company
was granted two new prospecting licences, known as Mopipi
South and Mopipi West, and entered into an option
agreement over another area, known as Mopipi North.
Previous exploration at the original Mopipi joint venture
project, now known as Mopipi Central, resulted in the
identification of a number of clusters of significant
kimberlitic indicator mineral anomalies which coincide
with aerial photo and aeromagnetic anomalies and the
recovery of a diamond from soil samples. Geochemical
analysis of the indicator minerals confirmed that they
are derived from diamond-bearing kimberlite, indicating
that it is likely that diamondiferous kimberlite is
present in the area surrounding Mopipi.
Most of the exploration work carried out during the
period focused on the Mopipi South area. Aerial
photography, satellite imagery and aeromagnetic data were
acquired and initial interpretation and analysis
completed. This work identified a number of high
priority target areas containing geological structures
and features possibly associated with kimberlitic
occurrences. Sampling of the high priority target areas
was completed during the period and resulted in the
identification of several areas with high kimberlitic
indicator mineral anomalies. These areas are currently
being subjected to further detailed soil sampling to
identify the sources of the indicator mineral anomalies
and to select potential new drilling targets.
Analysis of aerial photography and aeromagnetic data and
soil sampling were also carried out in the Mopipi North
area during the period. This work is still ongoing, but
has already identified a number of anomalies which are
considered to be potential drilling targets.
The recent results from the Mopipi South and Mopipi North
areas confirm the potential presence of diamondiferous
kimberlite in the Mopipi region, and the Company
continues to be encouraged about the indications for the
discovery of a new kimberlite field. Results of the work
in these areas will be reviewed, along with those from
Mopipi Central, to identify and prioritise targets for
further evaluation and drilling later in the year.
Financial
Results for the period show a modest profit, in line with
expectations. The Company is debt free and well
positioned to develop its current portfolio of projects.
In February 2000, the Company completed a placement of
shares to raise approximately #1.5 million, the primary
purpose of which was to finance the acquisition and
development of the Oena Mine. As a result of this and
other recent share issues, the Directors consider that
the various authorisations relating to the allotment and
issuance of shares approved at the Annual General Meeting
in January no longer provide the flexibility needed to
effectively pursue other opportunities which may arise in
the future. The Company therefore plans to hold an
Extraordinary General Meeting at 11am on 31 May, 2000 to
consider resolutions to replace those approved at the
Annual General Meeting.
James F. Kenny
Chairman
Firestone Diamonds plc
Unaudited Interim Consolidated Profit and Loss Statement
For the six months to 31 December, 1999
Six months Six months Period
to 31 to 31 from 24
December, December, June,
1999 1998 1998 to
30 June,
1999
(Unaudited) (Unaudited) (Audited)
# # #
Turnover 274,856 64,661 84,809
Change in stocks of finished
goods (46,940) - 50,601
and in work in progress
-------- ------- -------
Production 227,916 64,661 135,010
Other operating income - - 15,639
Raw materials and (29,812) (14,144) (29,515)
consumables
Staff costs (42,876) (28,168) (58,782)
Depreciation and
amortisation (18,906) (22,541) (45,119)
-------- ------- -------
Operating profit/(loss)
before administrative costs 136,322 (192) 17,233
Other operating charges (32,561) (31,368) (97,889)
-------- ------- -------
Operating profit/(loss) 103,761 (31,560) (80,656)
Interest receivable and
similar income 9,962 33,298 43,070
Interest payable and similar
charges - - (2,599)
-------- ------- --------
Profit/(Loss) on ordinary
activities before taxation 113,723 1,738 (40,185)
Deferred tax on profit on
ordinary activities (41,595) - (22,674)
======== ======== ========
Profit/(Loss) on ordinary
activities after taxation 72,128 1,738 (62,859)
======== ======== ========
Earnings per share
Basic earnings/(loss) per
share 0.31p 0.01p (0.3)p
Diluted earnings/(loss) per
share 0.31p 0.01p (0.3)p
======== ======== ========
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 1999 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 period from 24 June, 1998 to 30 June, 1999, on
which the report of the auditors was unqualified and
did not contain any statement under Section 237 of the
Companies Act 1985, have been filed with the Registrar
of Companies.
3 The earnings per share has been calculated on the
basis of the weighted average number of shares in
issue for the period of 23,379,712.
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
members of the public from the offices of John East &
Partners Limited, Crystal Gate, 28-30 Worship Street,
London EC2A 2AH.
For further information:
Website: www.firestonediamonds.com
Philip Kenny
Firestone Diamonds plc 020 7370 6452 / 07831 324 645
Leesa Peters
Ludgate Communications 020 7216 4512 / 0410 593 724
Charles Dampney
Charles Stanley & Co Ltd 020 7551 0260 / 0378 0690546
END
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