FDI Firestone Diamonds Plc

RNS Number:4281H
Firestone Diamonds PLC
09 August 2006



                             Firestone Diamonds plc
                               Operations update


LONDON: 9 August 2006

SUMMARY

Groen River Valley

  *  Joint venture exploration project with De Beers; previous exploration
     recovered high value diamonds and identified13 deposits in project area
  *  Large diameter auger sampling completed in HL deposit; 133 square
     metres sampled, no diamonds recovered to date
  *  Bulk sampling pits being excavated in southern portion of HL deposit,
     close to previous diamond recoveries
  *  First pit completed, 1,300 square metres sampled; gravel to be
     processed by September
  *  Work programme for HL deposit and other 12 deposits in the project
     area to be revised once sample pits completed


Buffels River Mine

  *  Joint mine development with De Beers
  *  Agreement signed with De Beers to accelerate production from Buffels
     River project
  *  Production commenced in July; ramp up to full production in Q1 2007
  *  Operation expected to produce over 600,000 carats over 6 years
  *  Target annual revenue for Firestone at full production of #5 million
     and operating profit of #3.2 million


Botswana

  *  Exploration by Firestone and De Beers around the Orapa and Jwaneng
     mines, which are the two largest diamond mines in the world
  *  Firestone's position as the largest holder of diamond exploration
     rights around the Orapa and Jwaneng mines further improved with awarding 
     of nine new prospecting licences
  *  Ground held by Firestone increased from 8,000 to 17,000 square kilometres
  *  New kimberlite discovered in Orapa area
  *  Extensive exploration planned in Orapa and Jwaneng areas in H2 2006
  *  De Beers to complete Zeppelin surveys over Firestone ground and drill 
     initial targets in Jwaneng area in H2 2006


General

  *  Strong financial position, with liquid assets of approximately #15 million
  *  Investigating additional resources to exploit with De Beers in Namaqualand
  *  Project portfolio continues to expand


Firestone Diamonds plc ("Firestone" or "the Company"), the AIM-quoted diamond
mining and exploration company, provides an update on the Groen River Valley
joint venture exploration project with De Beers in South Africa, the Buffels
River mining project which is being developed in partnership with De Beers in
South Africa and its kimberlite exploration activities in the Orapa and Jwaneng
regions in Botswana.

Results have been received from large diameter auger ("LDA") sampling in the
central part of the HL deposit at the Groen River Valley.  A total area of 133
square metres has been sampled, with no diamonds recovered from processing of
material recovered.  These results are disappointing, given that the presence of
diamonds of high quality and large size has been proven in numerous locations in
the project area, and that diamonds have previously been recovered on the
southern portion of the HL deposit.  A series of bulk sampling pits are being
excavated in the southern portion of HL deposit, close to the location of
previous diamond recoveries.  These pits will sample a much larger area than the
LDA sampling, with the first pit, which has been completed, sampling an area of
1,300 square metres. Gravel from this pit will be processed in September.

An agreement has been signed with De Beers to accelerate production from the new
Buffels River mining project that is being developed by Firestone and De Beers
in South Africa.  Production commenced in July and is expected to ramp up to
full production in Q1 2007, with target annual revenue for Firestone at full
production of #5 million and operating profit of #3.2 million.

Significant progress has also been made at the Company's exploration projects in
Botswana. A new kimberlite has been discovered close to the Orapa Mine and is
currently being evaluated.  The Company has also has been awarded nine new
prospecting licences covering a substantial area in the Orapa and Jwaneng
regions, almost doubling the ground held by the Company to 17,000 square
kilometres.  Extensive exploration is planned in the Orapa and Jwaneng areas in
H2 2006, with De Beers expected to complete Zeppelin Airborne Gravity
Gradiometer surveys over Firestone's ground and to drill initial targets in the
Jwaneng area by the end of the year.

Philip Kenny, CEO of Firestone Diamonds, commented: "While the results of
initial sampling at the Groen River Valley project are disappointing, the
sampling covers only a small portion of one deposit, which still needs
significant work, and there are 12 other deposits in the project area to be
evaluated. We still believe that the area has the potential to become a major
new producing area of high quality diamonds. The commencement of production
from the Buffels River project marks a major milestone for Firestone.  We now
look forward to significant assured revenues and cash flows from this project
for at least the next six years and are also actively investigating other known
resources in the Namaqualand region that we can jointly exploit with De Beers.
We are encouraged by the latest kimberlite discovery in the Orapa area and the
further extension of Firestone's position as the largest holder of diamond
exploration rights around the Orapa and Jwaneng mines. With the substantial
exploration planned by Firestone and De Beers in the Orapa and Jwaneng areas, in
particular the introduction of the Zeppelin system, we continue to believe that
the prospects for new economic discoveries in these areas are very good.  The
Company's overall position continues to improve. Our cash and liquid assets
amount to approximately #15 million.  With cash flow from the Buffels River
starting this month, and with our portfolio of assets continuing to expand, we
remain very confident about the Company's prospects for continued growth."

Detailed Project Review
Groen River Valley

Results have been received from the initial phase of bulk sampling on the HL
deposit.  Twenty-seven LDA drill holes have been completed on a 700 metre long
section of the central portion of the HL deposit, producing approximately 620
tons of gravel from a sampled area of approximately 130 square metres.
Processing of this gravel has been completed, with no diamonds being recovered.

De Beers' and Firestone's technical staff are currently reviewing data from
exploration completed to date, with the objective of gaining a better
understanding of the geology of the HL deposit.  To assist in this process the
bulk sampling programme has been moved to the southern portion of the HL
channel, close to the area of previous diamond recoveries and where shallower
overburden will allow larger samples to be taken using bulk sample pits.  A
series of pits is planned, the first of which has been completed, with gravel in
the process of being transported to the sample treatment plant.  The first pit
will sample an area of approximately 1,300 square metres, which is ten times
larger than the area sampled by the entire LDA programme.  Results from the
first pit are due in September and are expected to improve the understanding of
the geology of the HL deposit.  Following completion of this work, a revised
work programme for the HL deposit and the 12 other deposits in the Groen River
Valley project area will be developed.

Buffels River Mine development

In May 2006 Firestone announced that it had entered into an agreement with De
Beers to cooperate on the development of a joint mining operation based around
the Company's Bonte Koe Mine to exploit deposits on the Buffels River over which
De Beers holds mining rights.  The Buffels River mining operation is expected to
produce over 600,000 carats from approximately 5.5 million tonnes of gravel over
a six year period.

The Company is in the process of upgrading the DMS capacity and crushing circuit
at the Bonte Koe processing plant in order to meet the requirements of the
agreement.  This work is at an advanced stage, and is expected to be completed
by the end of 2006.  As these modifications do not require the existing plant to
be shut down, Firestone and De Beers have agreed to accelerate production from
the Buffels River area by using the plant at Bonte Koe in its current
configuration to process additional gravel resources located in the Buffels
River area.  Firestone started processing De Beers gravel through the Bonte Koe
plant in July 2006.  Monthly tonnages processed are expected to rise from
approximately 45,000 tonnes per month initially to a target rate of 80,000 per
month by the time that the plant modifications have been completed.

Based on an agreed minimum gravel delivery rate of 950,000 tonnes per annum,
Firestone's annual revenues are expected to be a minimum of #3.7 million, with
operating profits of approximately #2 million.  With an estimated maximum plant
capacity of 1,250,000 tonnes per annum, Firestone's target annual revenues could
increase to #5 million, with operating profits of #3.2 million.  The Buffels
River agreement also has a profit sharing provision under which Firestone will
have the right to participate in profits generated by the project once De Beers'
target return from the project has been reached.

Botswana Exploration

Orapa Region

De Beers Joint Venture Area

Twenty eight new geophysical targets have been drilled in the De Beers joint
venture area around Orapa since the beginning of 2006, resulting in the
discovery of one kimberlite.  The new kimberlite, known as BK56, is located
approximately 8 kilometres north west of the Letlhakane Mine.  The discovery
hole encountered kimberlite at a depth of 3 metres.  Basalt was encountered from
23 metres to 130 metres, when kimberlite was intersected again.  The hole was
terminated in kimberlite at a depth of 200 metres.

Kimberlite samples have been collected and are currently being processed to
recover material for microdiamond and mineral chemistry analysis and
petrographic studies, in order to allow a preliminary evaluation of the economic
potential of the kimberlite to be made.  An inclined core hole is also being
drilled approximately 100 metres south of the discovery hole to provide further
material for analysis and a better indication of the size of the kimberlite,
which is estimated to be up to 3 hectares.

Additional exploration work is planned in the area around BK56 during the second
half of 2006.  Indicator mineral sampling will be carried out to identify
kimberlite targets whose geophysical signature is masked by the noise of the
basalt country rock, as was the case with BK56.  A ground gravity survey will be
undertaken in the areas around the AK6 and AK10 kimberlites.  Results are
awaited from follow-up core drilling carried out earlier this year on BK53,
which was discovered in 2005.

Daly City Ventures Area

Parts of the Daly City licence area close to the Letlhakane Mine and other known
kimberlites have never had detailed aeromagnetic surveys conducted over them.
These areas are likely to contain high interest geophysical targets.  A high
resolution helicopter-borne magnetic and radiometric survey has recently been
completed over an area of 140 square kilometres.  The data is currently being
processed, and it is expected that drilling will be undertaken on kimberlite
targets identified by this work in the second half of 2006.

New licences

Firestone has been awarded nine new prospecting licences in the Orapa region.
Eight of the licences are located to the north and west of the Orapa area and
cover an area of approximately 7,300 square kilometres.  Field work on this
area, known as Orapa North, commenced in July 2006.  The ninth licence is
located to the east of Letlhakane and covers an area of approximately 1,000
square kilometres.  The Company is currently drawing up plans for the
commencement of field work in this area, known as Letlhakane East.

Jwaneng Region

De Beers Joint Venture Area

Planning has been completed for the commencement of geophysical surveys over the
joint venture area using De Beers' new Zeppelin Airborne Gravity Gradiometer
system.  The Zeppelin system is the most advanced airborne gravity system in the
world.  Results from surveys conducted by De Beers in the first half of 2006
over the area immediately surrounding the Jwaneng Mine have been exceptionally
good, showing a five to ten-fold improvement in data quality compared to other
airborne gravity systems.  It is expected that most of the joint venture area
will be surveyed in the second half of 2006, following which drilling will be
carried out on any kimberlite targets that are identified.

New licences

Firestone has been awarded eight new prospecting licences in the Jwaneng region.
These licences are located to the south and east of the Jwaneng Mine and cover
an area of approximately 1,000 square kilometres.  The Company is currently
drawing up plans for the commencement of field work in this area.

Note: The information in this statement has been reviewed by Mr. Tim Wilkes,
BSc, MSAIMM, who is a qualified person for the purposes of the AIM Guidance Note
for Mining, Oil and Gas Companies.  Mr. Wilkes is Chief Operating Officer of
Firestone Diamonds plc and has over 25 years experience in diamond mining and
exploration.  Mr. Wilkes is a member of the sub-committee for diamonds of the
South African Mineral Resource Committee (SAMREC).


For further information:

Philip Kenny, Firestone Diamonds             +44 20 8834 1028 / +44 7831 324 645
Leesa Peters/Angus Prentice, Conduit PR      +44 20 7429 6600 / +44 7812 159 885
Jamie Cumming, Bell Lawrie                   +44 141 314 8103 / +44 7768 044 620


                           www.firestonediamonds.com

Background information on Firestone Diamonds plc:

Firestone Diamonds plc is an international diamond mining and exploration
company with operations in the Namaqualand region of South Africa, Botswana and
the United States.

Firestone has extensive 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.  Botswana is considered to be one of the best countries
in the world to explore for kimberlite - the primary source rock for diamonds.
Firestone's Mopipi, Orapa and Jwaneng projects are located close to the major
Orapa and Jwaneng mines and are all being explored by De Beers in joint venture
with Firestone.  Firestone is also exploring for kimberlite in the US on the
Laurentia craton, which extends into Canada, where it hosts a number of
diamondiferous kimberlite deposits.

Namaqualand, which is located on the west coast of South Africa, has been one of
the world's largest alluvial diamond producing regions for the past 60 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, of which the Groen
River Valley project, which is being explored by De Beers in joint venture with
Firestone, is the most important.

Firestone has a highly qualified management team with extensive experience in
the exploration, evaluation and development of diamond projects. Firestone is
quoted on the Alternative Investment Market (AIM) of the London Stock Exchange
and trades under the symbol FDI.L.




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