RNS Number:0395U
Firestone Diamonds PLC
30 March 2007
Firestone Diamonds plc
Unaudited interim results for the six months to 31 December 2006
Exploration and mining operations update
LONDON: 30 March 2007
The Board of Firestone Diamonds plc, ("Firestone" or "the Company"), the
AIM-quoted diamond mining and exploration company (ticker: AIM:FDI), announces
unaudited interim results for the six months to 31 December 2006, and provides
an update on the Company's diamond mining and exploration projects in South
Africa and Botswana.
HIGHLIGHTS
Tsabong, Botswana
* Prospecting licences granted over the Tsabong kimberlite field, one
of the largest diamondiferous kimberlite fields in the world
* 74 known kimberlites of which 17 are proven to be diamondiferous
* Exploration programme commenced in Q4 2006
- more than 80 geophysical targets identified
- 10,000 metres of exploration drilling planned in 2007
- seven large kimberlites discovered between 8 and 28 hectares in size
* Evaluation programme commenced in Q1 2007
- 6,000 metres of core drilling planned on proven diamondiferous
kimberlites
- bulk sampling on selected kimberlites to commence in H2 2007
* Potential for significant economic kimberlite discovery
BK11, Botswana
* New prospecting license granted for highly prospective diamondiferous BK11
kimberlite in Botswana
* Located 20 km from the Orapa Mine and 5 km from African Diamonds' AK6
kimberlite
* Historical grades of up to 16 carats per hundred tonnes; size estimated
at 6.5 hectares
* Core drilling to take place in Q2 2007 and bulk sampling in H2 2007
Jwaneng and Orapa, Botswana
* Firestone is the largest holder of diamond exploration rights around
the Orapa and Jwaneng mines, with 17,000 square kilometres under licence
* De Beers conducting Zeppelin surveys over Firestone ground in Jwaneng;
targets to be drilled in H2 2007
* Geophysics and drilling to continue in the Orapa area in 2007
Groen River Valley, South Africa
* High quality gem diamonds recovered from bulk sampling on HL deposit
* Mobile sampling plant being erected
* Bulk sampling planned on GR2 deposit in Q2 2007
Bonte Koe Mine, South Africa
* Production commenced from joint venture mining operation with De Beers in
August 2006
* Full operating capacity reached in Q1 2007
* Expected to produce average #3.5 million revenue and #2 million operating
profit per annum over life of project
Financial
* Production increased 91% to #572k (H1 2006: #302k) and is expected to
further increase in FY 2007
* Operating profit of #161k (H1 2006: #351k loss); profit per share rose to
0.4p (H1 2006: 0.8p loss)
* Liquid assets of approximately #10 million at December 2006 - #4 million
in cash and #6 million shareholding in African Diamonds plc
* Fundamentals in rough diamond market remain very strong; diamond prices
expected to increase for next 5 to 7 years
Dear Shareholder,
Firestone continued to make good progress in the development of its project
portfolio during the period. The Company's activities were primarily focused on
Botswana, the world's largest producer of diamonds, where the Company made a
number of significant additions to its kimberlite project portfolio.
In October 2006 the Company was granted licences over the Tsabong kimberlite
field in Botswana. Rapid progress has been made, with the first kimberlite
being discovered in November 2006. A further six kimberlites have been
discovered since then, bringing the number of kimberlites in our licence area to
74, of which 17 are proven to be diamondiferous. An evaluation programme to
assess the economic potential of the Tsabong kimberlites commenced in Q1 2007.
This programme will be initially focused on the most prospective of the
diamondiferous kimberlites, and bulk sampling is expected to commence in H2
2007. With the prospect of more discoveries being made as exploration
continues, we believe that Tsabong has the potential to produce a major economic
discovery.
In March 2007 the Company was granted a licence for the highly prospective BK11
kimberlite in the Orapa region of Botswana. Bulk sampling on BK11 has produced
grades of up to 16 carats per hundred tonnes ("cpht"). With the location of
BK11 in close proximity to the infrastructure around the mines at Orapa,
Letlhakane and Damtshaa, the threshold for economic viability is low. An
accelerated evaluation programme is planned, which will consist of ground
geophysics, core drilling and large diameter drill ("LDD") bulk sampling. Core
drilling is expected to commence in Q2 2007. Bulk sampling results are expected
to be available in H2 2007 and will enable an assessment of the economic
potential of BK11 to be made.
Work is also continuing at the Company's other kimberlite exploration projects
in Botswana, where the Company is the largest holder of diamond exploration
rights around the Jwaneng and Orapa mines
In respect of the Company's mining operations, processing of gravel from the
Buffels River joint venture mining project with De Beers at the Bonte Koe Mine
commenced in August 2006, as a result of which production rose substantially,
increasing by 90% compared to the same period last year. Production is expected
to continue to increase during the rest of the year with the expanded Bonte Koe
operation now in full production. The Company produced a profit for the period,
largely due to operations at Bonte Koe.
The Company's financial position is secure, with Bonte Koe now generating cash
flow and liquid assets of over #10 million at the end of the period, comprising
#4 million in cash and a shareholding in African Diamonds plc worth
approximately #6 million. The fundamentals of the diamonds business remain very
positive, with substantial, sustained shortfalls in supply projected for at
least the next five to seven years, and we remain confident about the Company
achieving its objective of becoming a leading mid-tier diamond mining and
exploration company.
Exploration Highlights
Tsabong, Botswana
In October 2006 the Company was granted prospecting licences over the Tsabong
kimberlite field, which is one of the largest diamondiferous kimberlite fields
in the world. Tsabong contains 74 known kimberlites, of which 17 are
diamondiferous, including the 180 hectare M1 kimberlite, which is one of the
largest known diamondiferous kimberlites.
With rough diamond prices estimated to have tripled since the Tsabong field was
discovered in the early 1980's, the threshold for economic viability in the area
is modest, and a kimberlite with a moderate grade of 20 cpht and average quality
diamonds of $100 per carat would support a large-scale, profitable mining
operation.
Evaluation Programme
A detailed evaluation programme commenced in January 2007 with a review of all
data from previous exploration. The most prospective diamondiferous kimberlites
have been identified and ranked, based on diamond content, kimberlite indicator
mineral chemistry and size. Approximately 6,000 metres of core drilling will be
carried out on the top ranked kimberlites in 2007. A vertical hole will be
drilled to a depth of 500 metres into each kimberlite to obtain material for
microdiamond, mineral chemistry and petrographic analyses. The results of these
analyses will be used to select the most prospective kimberlites for follow-up
work. This work will comprise additional core drilling, 3D geological modelling
of the kimberlites and bulk sampling. A more intensive evaluation programme
will be carried out on the 180 hectare M1 kimberlite, due to its size and the
fact that previous work has proven that it contains macro diamonds.
Exploration Programme
Exploration at Tsabong is targeting approximately 80 well defined geophysical
anomalies that have been identified by aeromagnetic survey data. Very rapid
progress has been made, with the first kimberlite being discovered in November
2006, 3 weeks after the licences were granted. The Company has discovered a
further six kimberlites since then. Modelling of these kimberlites based on
airborne and ground geophysical data indicates that they are large, with
estimated sizes ranging from 8 to 28 hectares. Results of microdiamond, mineral
chemistry and petrographic analysis are awaited from these discoveries. With
many more targets to drill, the Company expects to continue to make new
discoveries as exploration continues in 2007.
BK11, Botswana
In March 2007 the Company's 80% owned Botswana subsidiary, Monak Venture (Pty)
Limited, was awarded a prospecting licence for the highly prospective BK11
kimberlite. BK11 is situated approximately 20 kilometres south east of De
Beers' Orapa Mine and 5 kilometres north east of the AK6 kimberlite, on which De
Beers and African Diamonds are developing a major new mine. BK11 is estimated
to be approximately 6.5 hectares in size and overburden is shallow, at less than
20 metres.
In the early 1990's bulk sampling carried out by Debswana Diamond Company
yielded a grade of 16 cpht from BK11 and 17 cpht from AK6. Larger scale bulk
sampling carried out by De Beers in 2005 yielded a substantially higher grade of
25 cpht from AK6, but only 2.4 cpht from BK11. A subsequent review of ground
geophysical data for BK11 indicated that the bulk sample hole was sited on a
small feature which represents about 10% of the surface area of the kimberlite.
Given the results from previous bulk sampling, the Company believes that this
grade may not be representative of the entire kimberlite.
The Company plans to carry out a detailed evaluation programme on BK11 to
provide better estimates of grade and to recover sufficient macro diamonds to
provide an estimate of diamond value. This programme will consist of follow-up
ground geophysics, core drilling and LDD bulk sampling. Drilling is expected to
commence in Q2 2007, with bulk sampling results available in H2 2007. Subject
to the results of this work, resource delineation work would be undertaken in
2008.
Jwaneng & Orapa, Botswana
Continued progress was made in the Jwaneng and Orapa areas, where the Company is
the largest holder of diamond exploration rights around the Jwaneng and Orapa
mines. The major development was the introduction of De Beers' new Zeppelin
Airborne Gravity Gradiometer system. The Zeppelin system produces a five to
ten-fold improvement in data quality compared to other airborne gravity systems.
De Beers started conducting Zeppelin surveys over the Jwaneng joint venture
areas at the start of the period. The Zeppelin airship has been out of
operation since the end of 2006 for servicing and surveys are expected
recommence in April 2007. Drilling of targets identified by the surveys is now
expected to take place in H2 2007. A number of additional geophysical and
geochemical surveys were undertaken in the Orapa area during the period, and
further exploration drilling is planned in the area during the year on targets
identified by this work.
Groen River Valley, South Africa
Exploration continued during the period at the Groen River Valley joint venture
project with De Beers, where previous exploration has proven the presence of
large, high quality diamonds and 13 deposits have been identified. Bulk
sampling on the HL deposit produced five high quality gem diamonds weighing 1.11
carats. Evaluation of the other 12 deposits in the project area is continuing.
A mobile sampling plant is currently being erected in the Groen River Valley,
and bulk sampling will be carried out on the GR2 deposit in the first half of
2007. The Company expects that the next phase of sampling in the Groen River
Valley will provide a good indication of the economic potential of the area.
Mining Operations Highlights
Bonte Koe Mine, South Africa
The primary focus of the Company's mining operations during the period continued
to be at Bonte Koe. In May 2006 the Company entered into an agreement with De
Beers to develop a new mining operation based around the Bonte Koe Mine, with
the objective of exploiting deposits on the Buffels River over which De Beers
holds mining rights.
Processing of De Beers' gravel commenced on a limited basis in August 2006 and
continued while work was undertaken to expand the capacity of the plant and
upgrade the crushing circuit. Commissioning of the modifications commenced on
schedule in January 2007 and has been completed. The plant is now operating at
full capacity.
The agreement with De Beers is very significant for Firestone, as it provides
the Company with assured revenue and cash flow for the duration of the Buffels
River project. The new mining operation is expected to provide Firestone with
average annual revenue of approximately #3.5 million and annual operating
profits of #2 million. Firestone's revenue and profits from the project could
increase further through an increase in mineable resources in the Buffels River
area and through profit sharing arrangements with De Beers.
Oena Mine and Avontuur Mine, South Africa
Mining operations continued at Oena Mine during the period, with production of
296 carats. Oena continues to produce high value diamonds, with current
production valued at approximately $1,595 per carat. Additional drilling and
bulk sampling was carried out with the objective of increasing the identified
resources at the mine, which the Company expects will allow it to secure better
terms for a revenue-sharing agreement with a mining contractor. The planned
expansion of mining operations at Avontuur remains on hold pending approval from
the Department of Minerals & Energy of the acquisition of the adjoining
Hondeklip Bay Mine from Trans Hex, which is expected later in the year.
James F. Kenny
Chairman
30 March 2007
For further information:
Philip Kenny, Firestone Diamonds +44 20 8834 1028 / +44 7831 324 645
Leesa Peters/Jos Simson, Conduit PR +44 20 7429 6600 / +44 7812 159 885
Jamie Cumming, Bell Lawrie +44 141 314 8103 / +44 7768 044 620
Ken Fleming, Bell Lawrie +44 141 221 7733 / +44 7971 835 070
www.firestonediamonds.com
FIRESTONE DIAMONDS PLC
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS TO 31 DECEMBER 2006
2006 2005
# #
Production 572,368 302,359
Turnover 585,969 253,903
Change in stocks of finished goods and in work in progress (13,602) 48,455
Other operating income 1,564 -
Raw materials and consumables (82,233) (124,004)
Staff costs (102,792) (175,502)
Depreciation and amortisation (71,797) (159,553)
Other operating charges (154,344) (193,871)
Operating profit 161,201 (350,572)
Interest receivable and similar income 64,469 33,436
Interest payable and similar charges (13,945) (50,724)
Profit on ordinary activities before taxation 211,725 (367,860)
Deferred tax on profit on ordinary activities - -
Profit on ordinary activities after taxation 211,725 (367,860)
Minority interests (13,679) (13,714)
Retained profit for the period 198,047 (381,574)
Earnings per share
Basic profit per share 0.4 p (0.8 p)
Diluted profit per share 0.3 p (0.8 p)
FIRESTONE DIAMONDS PLC
UNAUDITED CONSOLIDATED BALANCE SHEET
31 DECEMBER 2006
2006 2005
# # # #
Fixed Assets
Intangible assets 10,813,553 7,023,984
Tangible assets 12,573,893 12,627,225
Investments 3,078,523 3,078,549
26,465,969 22,729,758
Current Assets
Stocks 63,092 189,050
Debtors 1,245,556 675,645
Cash at bank and in hand 4,161,025 8,999,951
5,469,673 9,864,646
Creditors
Amounts falling due within one year (902,184) (1,490,161)
Net Current Assets 4,567,489 8,374,485
Total Assets less Current Liabilities 31,033,458 31,104,243
Creditors
Amounts falling due after one year (2,493,808) (774,842)
Provisions for Liabilities and Charges
Other provisions (55,972) (1,098,867)
Deferred taxation (309,580) (474,647)
(365,552) (1,573,515)
Net assets 28,174,098 28,755,887
Capital and Reserves
Called up share capital 11,151,581 11,172,975
Share premium account 19,132,921 19,145,753
Merger reserve (1,076,399) (1,076,399)
Share option reserve 308,617 148,836
Profit and loss account (1,150,899) (595,064)
Equity Shareholders' Funds 28,365,821 28,796,101
Minority equity interests (191,723) (40,214)
28,174,098 28,755,887
FIRESTONE DIAMONDS PLC
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS TO 31 DECEMBER 2006
2006 2005
# # # #
Net cash inflow from operating activities (550,560) (978,530)
Returns on investments and servicing of finance
Interest received 64,471 33,436
Interest element of finance lease payments (15,078) (75,289)
Net cash inflow from returns on
investments and servicing of finance 49,393 (41,853)
Capital expenditure and financial investment
Payments to acquire intangible fixed assets (1,599,924) (1,074,727)
Payments to acquire tangible fixed assets (1,253,014) (334,945)
Receipts from sales of tangible fixed assets 1,564 -
Payments to acquire investments (2,848,111)
Net cash outflow from capital expenditure
and financial investment (2,851,374) (4,556,361)
Net cash outflow before use of
liquid resources and financing (3,352,541) (5,576,744)
Financing
New long term loans 1,638,786 101,475
Issue of ordinary share capital 761,015 12,417,784
Finance lease payments (96,564) (203,079)
2,303,237 12,316,180
Increase/(decrease) in cash (1,049,304) 8,552,911
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 2006
annual report and financial statements.
2. The company adopted Financial Reporting Standard 20 - Share-based
payments during the period. This represents a change in accounting policy
resulting in a charge of #6,423 being made to the profit and loss account (6
months ended 31 December 2005: #10,183) and an amount of #57,809 capitalised as
deferred exploration during the period (6 months ended 31 December 2005:
#133,952).
3. 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 2006, 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.
4. Basic earnings per share is based on the weighted average number of
shares in issue for the period of 55,757,901. 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
61,692,791.
5. The directors are not declaring a dividend for the period.
6. Note: The information in this statement has been reviewed by Mr. Tim
Wilkes, B Sc, Pr Sci Nat, 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
exploration, mineral resource management and mining. Mr. Wilkes is a member of
the sub-committee for diamonds of the South African Mineral Resource Committee
(SAMREC).
7. 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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