FDI Firestone Diamonds Plc

RNS Number:9133O
Firestone Diamonds PLC
15 July 2005

         Firestone Diamonds provides update on South Africa operations
          Joint venture with Trans Hex Group over Marine Concession 7a
             Acquisition of Hondeklip Bay Mine from Trans Hex Group
              South African mining and exploration progress report


LONDON:  15 July 2005


HIGHLIGHTS


Marine Concession 7a, South Africa

     *    Joint venture signed with Trans Hex Group

     *    Firestone to manage the concession on revenue share basis

Hondeklip Bay Mine, South Africa

     *    Agreed to acquire from Trans Hex Group

     *    Will integrate with operations at Avontuur Mine

Namaqualand Mining Operations

     *    Production for FY 2005 in line with FY 2004

     *    Significant increase expected in FY2006

Namaqualand Exploration

     *    Targeting new projects similar to Groen River Valley


Firestone Diamonds plc ("Firestone" or the "Company") is pleased to announce
that it has entered into a joint venture agreement with Trans Hex Group Limited
("Trans Hex") over Marine Concession 7a in South Africa and that it has entered
into an agreement to acquire the Hondeklip Bay Mine in Namaqualand from Trans
Hex.  The Company also provides an update on its exploration and mining 
activities in South Africa.

Marine Concession 7a Joint Venture

Firestone has entered into a joint venture agreement over Marine Concession 7a
("Concession 7a") with Trans Hex.  Concession 7a is located on the west coast of
South Africa and is owned by Trans Hex, the second largest diamond producer in
South Africa.  The concession covers a 1 kilometre wide strip in the sea,
adjacent to and parallel to the coast, and extends approximately 33 kilometres
along the coast.  The concession lies adjacent to De Beers' mining operations at
Koingnaas in the north and Langklip and Mitchell's Bay in the south.  The
coastal town of Hondeklip Bay, where Firestone's Avontuur Mine is located, is
close to the midpoint of Concession 7a.

Mining operations in the shallow water "a" concessions in South Africa are
typically carried out by independent contractors using boat-mounted pumping
equipment to produce screened gravel, which is then processed onshore.  Mining
operations on Concession 7a are very limited at present as there have been no
facilities available at Hondeklip Bay to handle or process gravel from the
concession since Trans Hex ceased mining operations at the Hondeklip Bay Mine in
2003.

Under the terms of the joint venture agreement, Firestone will be responsible
for securing, supporting and managing contractors for Concession 7a.  Firestone
will provide facilities to offload gravel from and provide logistical support to
boats operating on the concession, and will use its gravel treatment plant at
the Company's Avontuur Mine to process the gravel.  Revenue from mining
operations on the concession will be shared between Firestone and Trans Hex.
Details of the revenue sharing arrangements, including provisions for the
payment of royalties and marketing fees for the sale of diamonds produced, are
currently being finalised and will be announced in due course.

Firestone will initially focus on recruiting contractors to work on Concession
7a on a revenue sharing basis.  This will ensure short term cash flow, with
limited capital cost and operating cost exposure for the Company.  Firestone
also intends to undertake geophysical surveys on the concession to identify
areas where high grade deposits that have been mined by De Beers and others
onshore extend into the sea.  These areas will be the primary targets for
exploration and mining on the concession in the medium term.  The processing
plant at the Avontuur Mine will require a number of modifications in order to be
able to process marine gravel from contractors and to comply with Trans Hex's
security requirements.  Planning for these modifications is now at an advanced
stage.

Hondeklip Bay Mine Acquisition

Firestone has entered into an agreement with Trans Hex to acquire the Hondeklip
Bay Mine for Rand 4 million (approximately #340,000).  The Hondeklip Bay Mine
covers an area of 2,200 hectares and is located close to the town of Hondeklip
Bay.  The Hondeklip Bay Mine adjoins Firestone's Avontuur Mine and De Beers'
Koingnaas Mine.  The Hondeklip Bay Mine hosts marine terraces and
palaeo-channels related to those mined at Koingnaas to the north, and which
extend into De Beers' Langklip and Mitchell's Bay operations to the south.
Mining operations at the Hondeklip Bay Mine have produced more than one million
carats over a twenty year period up to 2003.  Firestone believes that there are
still substantial gravel resources at the mine that can be exploited using the
Company's plant and equipment at the Avontuur Mine.

Firestone intends to combine data from exploration drilling carried out by Trans
Hex on the property with geophysical data in order to generate a detailed 3D
model of the bedrock topography in the mine area.  The model will be used to
identify new gravel resources for follow-up exploration and evaluation work.
This work is already at an advanced stage and has identified a number of high
interest areas.  The acquisition is subject to the approval of the Department of
Minerals and Energy.

Namaqualand Mining Operations

Mining operations at the Bonte Koe Mine since March 2005 have been focused on
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 areas to be blended.  Grades from areas
processed to date are below the expected average, but as mining has been
operating at full scale for only a few months, it is expected that grades will
improve as mining progresses and new mining blocks are opened up.  Following the
completion of construction and commissioning activities at Bonte Koe, the
Company has now focused its efforts on the securing of a new mining contractor
for the Oena Mine, and progress is expected to be made in this regard in the
coming months.  While some equipment from the Avontuur Mine has been temporarily
transferred to Bonte Koe, activities at Avontuur have been focused on
preparation and planning to support the expansion of the operation to exploit
the Company's new projects at the Hondeklip Bay Mine and Concession 7a.  Overall
production from the Company's mining operations for the 2005 financial year is
expected to be in line with 2004, with a significant improvement expected in
2006.

Namaqualand Exploration

Firestone has continued to pursue new large scale exploration projects in
Namaqualand.  Following the recent signing of a joint venture with De Beers over
the Groen River Valley project, the Company has decided to increase its focus on
the identification of new projects similar to the Groen River Valley project
that have the potential to host significant reserves of large, high quality
diamonds.  A number of suitable projects have already been identified, and the
Company expects to be able to announce developments in this regard in the coming
months.

Philip Kenny, CEO of Firestone Diamonds, commented today: "We have made very
substantial progress in South Africa over the past six months, with the signing
of joint ventures with De Beers and Trans Hex and an acquisition from Trans Hex.
The Hondeklip Bay Mine and Marine Concession 7a are attractive projects, and
we are particularly excited about the prospects for our Groen River Valley
project, which we believe has the potential to become a world class alluvial
diamond producing area."

For further information:

Philip Kenny, Firestone Diamonds:        +44 20 7370 6452 /  +44 7831 324 645
Leesa Peters, Conduit PR:                +44 20 7618 8707/ +44 7812 159 885
Jamie Cumming, Bell Lawrie White:        +44 141 314 8103 / +44 776 8044 620


                       Website: www.firestonediamonds.com


BACKGROUND INFORMATION

Firestone Diamonds plc is an international diamond mining and exploration
company with operations in South Africa, Botswana and the United States.
Firestone is quoted on the London Stock Exchange's Alternative Investment Market
(AIM), and trades under the symbol FDI.L.

Firestone has extensive diamond exploration interests in Botswana, which is the
world's largest producer of diamonds, with annual production of approximately 30
million carats, worth over $2.5 billion.

Firestone's interests in Botswana are as follows:

     *    The Orapa and Mopipi Projects, which cover an area of approximately
          4,900 square kilometers, are located close to the Orapa and Letlhakane 
          diamond mines and are being explored by De Beers in joint venture with 
          the Company.

     *    The Jwaneng Project, which covers an area of approximately 3,700 
          square kilometers, is located close to the Jwaneng Mine and is being 
          explored by De Beers in joint venture with the Company.

     *    The Daly City joint venture project covers an area of approximately 
          380 square kilometers and is located close to the Orapa and Letlhakane 
          diamond mines. The Company is in the process of earning an 81% 
          interest in this project.

Firestone also has extensive diamond mining and exploration interests in
Namaqualand, which is located on the west coast of South Africa and has been one
of the world's largest alluvial diamond producing regions for the past seventy
years, with total production to date estimated to be worth more than $3 billion.

Firestone's mining operations in Namaqualand include the Bonte Koe, Avontuur and
Oena Mines, all of which produce high quality alluvial diamonds, and a growing
portfolio of early stage and advanced exploration projects.  In June 2005, the
Company entered into a joint venture with De Beers over the Company's Groen
River Valley exploration project, under the terms of which De Beers can earn a
61% interest in the project by financing all work up to completion of bankable
feasibility studies on the project.

Firestone also has a large scale kimberlite exploration project in the United
States.  In 2004 the Company entered into a joint venture with American
Diamonds, which is in the process of earning a 60% interest in the project.


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