RNS Number:1129R
Firestone Diamonds PLC
31 March 2008
Firestone Diamonds plc
Unaudited interim results for the six months to 31 December 2007
Operations update
LONDON: 31 March, 2008
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 2007, and provides
an update on the Company's diamond mining and exploration projects in Botswana
and South Africa.
HIGHLIGHTS
Tsabong, Botswana
* Independent data review concludes that Tsabong has "real chances of
discovering an economic large sized diamondiferous kimberlite"
* MK1 initial grade estimate of 20 carats per hundred tonnes; estimate of
1.1 billion tonnes of kimberlite to 1,000 metres
* Commissioning of bulk sampling plant completed in Q1 2008
* Additional core drilling completed and large diameter drilling commenced
on MK1 in Q1 2008; microdiamond and macrodiamond results expected in Q2 2008
* Evaluation of other 13 priority A kimberlites continuing
Orapa and Jwaneng, Botswana
* New prospecting licences covering 4,000 square kilometres granted in
Orapa and Jwaneng areas
* Large diameter drilling of BK11 completed in Q1 2008; results
expected in Q2 2008
South Africa
* Bonte Koe toll treatment mining JV with De Beers at full production
Financial
* Turnover increased 224% to �1.9m (H1 2007: �0.6m)
* Profit of �2.4m (H1 2007: �0.1m); diluted earnings per share 3.7p
(H1 2007: 0.04p)
* Profit of �2.8 million on disposal of interest in African Diamonds plc
Dear Shareholder,
Activities during the period were primarily focused on Botswana, which is the
world's largest and lowest cost producer of diamonds. Firestone is the largest
holder of diamond exploration rights surrounding Botswana's kimberlite fields,
with approximately 26,000 square kilometres now under license, and has 92 known
kimberlites in its licence areas.
The most significant development during the period has been at the MK1
kimberlite in the Tsabong kimberlite field, where results from initial
evaluation work carried out have exceeded our expectations and show significant
economic potential.
We have continued to increase the pace of our activities in Botswana, with
between twenty five and thirty 100 tonne mini bulk samples planned in 2008. We
believe that it is likely that further major economic diamond discoveries will
be made in Botswana, and with our highly prospective portfolio and an
experienced technical and management team in place we believe that the Company
is in a very good position to do so.
Tsabong, Botswana
Tsabong is the Company's most important project. It contains 83 known
kimberlites, including the 180 hectare MK1 kimberlite, which is one of the
world's largest known diamondiferous kimberlites. An independent review of data
from Tsabong by Mineral Services (Pty) Limited of Cape Town, one of the
industry's leading diamond exploration and evaluation consultancies, was
completed during the period. The results of this review confirm that the
Tsabong field is located in a similar geological setting to the major Jwaneng
Mine and that it has the potential to contain economic large sized
diamondiferous kimberlite deposits.
Evaluation programme
Evaluation work at Tsabong was focused on 14 high priority kimberlites that were
selected for large diameter drill ("LDD") bulk sampling. High resolution ground
magnetic surveys covering approximately 9 square kilometres were undertaken over
5 kimberlites and approximately 1,650 metres of core drilling carried out during
the period.
MK1
A 508 metre deep core hole was completed on MK1 and samples of core were
submitted for microdiamond recovery. Results from this work were received in
February 2008, with 117 microdiamonds (greater than 0.075 mm) recovered from 561
kilogrammes of kimberlitic core treated. Independent analysis of the size
frequency distribution of the microdiamonds indicated an overall grade of 20
carats per hundred tonnes. The analysis also indicated an increase in grade
with depth, with the deepest sample, although small, indicating a potential
grade of 119 carats per hundred tonnes. These results are very encouraging,
although it should be noted that the grade estimates are preliminary and that
between 200-400 microdiamonds will be required to provide the necessary levels
of confidence. The data does indicate, however, that MK1 has the potential to
be significantly mineralised. Preliminary volumetric modelling indicates that
MK1 contains approximately 1.1 billion tonnes of kimberlite to a depth of 1,000
metres.
The Company expects to be able to make higher confidence grade estimates through
the recovery of additional microdiamonds from core drilling and macrodiamonds
from LDD bulk sampling. This work has advanced rapidly. Two additional core
holes were completed in January 2008 and samples have been submitted for
microdiamond recovery, with results expected during Q2 2008. Four 100 tonne LDD
mini bulk samples are planned for MK1 and the LDD rig commenced drilling ahead
of schedule in March 2008. Commissioning of the Company's bulk sampling plant
at Tsabong was completed in the first quarter of 2008 and the plant is ready to
process material from MK1 as it becomes available.
If results from the core drilling and LDD bulk sampling confirm that significant
mineralisation is present, a second phase of drilling and bulk sampling will be
undertaken with the objective of developing a resource.
Exploration programme
There is significant potential for the discovery of new kimberlites at Tsabong.
Two additional kimberlites were discovered during the period. Microdiamond,
indicator mineral chemistry and petrographic analysis are currently being
carried out on these kimberlites and the other 11 kimberlites discovered since
November 2006, on the basis of which some of the kimberlites may be added to the
high priority list for bulk sampling. With many more geophysical targets to
drill, the Company expects to continue to make new discoveries and the number of
kimberlites in the field to increase to more than 100 as exploration continues
in 2008.
BK11, Botswana
The BK11 kimberlite is situated approximately 20 kilometres south east of
Debswana's Orapa Mine and 5 kilometres north east of the AK6 kimberlite, on
which De Beers and African Diamonds are developing a new mine. Previous
evaluation work produced grades of between 2 and 16 carats per hundred tonnes.
BK11 is estimated to be approximately 8 hectares in size and overburden is
shallow, at less than 20 metres.
Approximately 2,500 metres of core drilling was carried out on BK11 during the
period in order to develop a 3D geological model of the kimberlite and to select
locations for LDD bulk sampling. LDD drilling was undertaken in Q1 2008. Three
200 tonne samples were taken and transported to the bulk sampling plant at
Tsabong, where they are currently being processed. Results are expected to be
available in Q2 2008.
Orapa and Jwaneng, Botswana
Continued progress was made in the Jwaneng and Orapa areas, where some of the
Company's licences are being explored by De Beers in joint venture with
Firestone. De Beers completed its high resolution airborne geophysical surveys
over the Jwaneng joint venture area during the period. Data from these surveys
is now being processed and interpreted to select targets for drilling, which is
expected to take place in the second half of 2008.
During the period the Company was granted new prospecting licences over an area
of approximately 1,000 square kilometres in the Orapa region and approximately
3,000 square kilometres in the Jwaneng region. Exploration on these areas will
be carried out by Firestone and is expected to commence later in 2008.
South Africa
Activities in South Africa were focused on the Company's toll treatment joint
venture project with De Beers at the Bonte Koe Mine. The expanded plant at
Bonte Koe reached its full design capacity of one million tonnes per annum
during the period. Discussions continued during the period in relation to
further increases in production capacity in order to exploit additional De
Beers' resources in the area.
With the Company's strategic focus increasingly directed towards Botswana, the
Company announced in December 2007 that it intended to limit its future
activities in South Africa to low risk toll treatment and joint venture mining
opportunities such as Bonte Koe, and that the Company's other alluvial assets in
South Africa would be sold or joint ventured.
Financial
Turnover for the period increased 224% to �1.9 million compared to the same
period last year, principally as a result of Bonte Koe reaching full production
capacity. Turnover for the current financial year is also expected to be
significantly ahead of last year. The Company produced a profit for the period
of �2.9 million, primarily as a result of the disposal of its interest in
African Diamonds plc, which resulted in a gain of �2.8 million. Diluted
earnings per share rose to 3.7 pence (0.04 pence loss per share for the same
period last year).
James F. Kenny
Chairman
31 March 2008
For further information, visit the Company's web site at
www.firestonediamonds.com, or contact:
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
Mike Jones/Ryan Gaffney, Canaccord Adams (Joint Broker) +44 020 7050 6500
Jamie Cumming, Brewin Dolphin (Joint Broker) +44 141 314 8103/
+44 7768 044 620
Ken Fleming, Brewin Dolphin (Nominated Adviser) +44 141 221 7733/
+44 7971 835 070
Unaudited consolidated financial statements for the six month period to 31
December 2007
Consolidated Income Statement
Six months Six months Year ended 30
ended 31 ended 31 June
December December
2007 2006 2007
�'000 �'000 �'000
Restated Restated
Revenue 1,899 586 1,633
Changes in inventories (82) (14) 85
Raw materials and consumables used (159) (82) (274)
Employee benefits expense (203) (103) (320)
Depreciation and amortisation (513) (65) (523)
Other operating expenses (889) (154) (664)
Operating profit 53 168 (63)
Financial income 165 64 98
Financial expense (174) (14) (135)
Gain on sale of available-for-sale investments 2,721 - -
Fair-value gains/(losses) on derivative financial 30 (692) (752)
instruments
Net financial income/(expense) 2,742 (642) (789)
Profit/(loss) before tax 2,795 (474) (852)
Taxation (438) 242 (451)
Profit/(loss) for the period 2,357 (232) (1,303)
Attributable to:
Equity shareholders of the parent 2,302 (246) (1,282)
Minority interests 55 14 (21)
2,357 (232) (1,303)
Basic earnings per share - pence 4.1p (0.04p) (2.3p)
Diluted earnings per share - pence 3.7p (0.04p) (2.3p)
All amounts relate to continuing operations.
31 December 31 December 30 June
Consolidated Balance Sheet 2007 2006 2007
�'000 �'000 �'000
Restated Restated
Non-current assets
Goodwill 2,058 2,058 2,058
Intangible assets 10,892 8,992 9,590
Property, plant and equipment 13,912 12,574 12,568
26,862 23,624 24,216
Current assets
Inventories 291 63 275
Trade and other receivables 2,189 1,246 2,510
Available-for-sale investments - 6,022 5,537
Cash and cash equivalents 4,774 4,161 1,119
7,254 11,492 9,441
Total assets 34,116 35,116 33,657
Equity and liabilities
Equity attributable to ordinary shareholders
Share capital 11,158 11,152 11,158
Share premium 19,182 19,133 19,182
Merger reserve (1,076) (1,076) (1,076)
Fair-value reserve - 3,173 3,435
Translation reserve 1,084 - -
Retained earnings (1,840) (1,201) (4,210)
Total equity attributable to ordinary shareholders 28,508 31,181 28,489
Minority interests (156) (191) (211)
Total equity 28,352 30,990 28,278
Non-current liabilities
Interest-bearing loans and borrowings 2,104 2,118 2,163
Deferred tax 638 102 257
Provisions 364 432 339
3,106 2,652 2,759
Current liabilities
Interest-bearing loans and borrowings 571 271 636
Derivative financial instruments - 572 662
Trade and other payables 2,087 631 1,322
2,658 1,474 2,620
Total equity and liabilities 34,116 35,116 33,657
Consolidated Cash Flow Statement Six months Six months Year
ended 31 ended 31 ended 30
December December June
2007 2006 2007
�'000 �'000 �'000
Restated Restated
Cash flows from operating activities
Profit/(loss) before tax 2,795 (474) (852)
Adjustments for:
Depreciation and amortisation 513 380 523
Interest payable 168 137 1,070
Equity-settled share-based payment expenses 67 64 208
Profit on sale of non-current assets - - (23)
Other reserve movements (3,435) - -
Cash flows from operating activities before changes in 108 107 926
working capital and provisions
(Increase)/decrease in trade and other receivables 322 641 (624)
(Increase)/decrease in inventories (15) 2 (211)
(Decrease)/increase in trade and other payables 1,130 596 (171)
Cash generated from/(absorbed) by operating activities 1,545 1,346 (80)
Cash flows from investing activities
Acquisition of intangible assets (1,073) (1,915) (2,581)
Acquisition of property, plant and equipment (1,242) (1,613) (2,893)
Sale of investments 4,664 - -
Disposal of non-current assets 19 2 95
Net cash from investing activities 2,368 (3,526) (5,379)
Cash flows from financing activities
Proceeds from the issue of share capital - - 55
Proceeds from interest-bearing borrowings - 1,667 2,132
Repayment of interest-bearing borrowings (124) (62) (226)
Interest paid (134) (15) (134)
Net cash from financing activities (258) 1,590 1,827
Net increase/(decrease) in cash and cash equivalents 3,655 (590) (3,632)
Cash and cash equivalents at the beginning of the period 1,119 4,751 4,751
Cash and cash equivalents at the end of the period 4,774 4,161 1,119
Statement of Changes in Shareholders Equity Total
For the period ended 31 Share Share Merger Fair-value Translation Retained Shareholders Minority Total
December 2007
Restated Capital Premium Reserve Reserve Reserve Earnings Equity Interests Equity
�'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000
Balance at 1 July 2007 11,158 19,182 (1,076) 3,435 - (4,210) 28,489 (211) 28,278
Profit after tax for the - - - - - 2,303 2,303 55 2,358
period
Total recognised in income - - - - - 2,303 2,303 55 2,358
and expense for the period
Arising on revaluation of - - - (3,435) - - (3,435) - (3,435)
investments
Foreign exchange gain on - - - - 1,084 - 1,084 - 1,084
translation of foreign
subsidiaries
Total gains/(losses) - - - (3,435) 1,084 - (2,351) - (2,351)
recognised in equity
Shares issued in the period - - - - - - - - -
Equity-settled share-based - - - - - 67 67 - 67
payments
Balance at 31 December 2007 11,158 19,182 (1,076) - 1,084 (1,840) 28,508 (156) 28,352
Statement of Changes in Shareholders Total
Equity
For the period Share Share Merger Fair-value Translation Retained Shareholders Minority Total
ended 31
December 2006
Restated Capital Premium Reserve Reserve Reserve Earnings Equity Interests Equity
�'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000
Balance at 1 11,152 19,133 (1,076) 4,569 - (1,028) 32,750 (205) 32,545
July 2006
Loss after tax - - - - - (246) (246) 14 (232)
for the period
Total - - - - - (246) (246) 14 (232)
recognised in
income and
expense for
the period
Arising on - - - (1,396) - - (1,396) - (1,396)
revaluation of
investments
Foreign - - - - - 9 9 - 9
exchange loss
on translation
of foreign
subsidiaries
Total gains/ - - - (1,396) - 9 (1,387) - (1,387)
(losses)
recognised in
equity
Shares issued - - - - - - - - -
in the period
Equity-settled - - - - - 64 64 - 64
share-based
payments
Balance at 31 11,152 19,133 (1,076) 3,173 - 1,201 31,181 (191) 30,990
December 2006
Statement of Changes in Shareholders equity Total
For the year ended 30 June Share Share Merger Fair-value Translation Retained Shareholders Minority Total
2007 Restated
Capital Premium Reserve Reserve Reserve Earnings Equity Interests Equity
�'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000
Balance at 1 July 2006 11,152 19,133 (1,076) 4,569 - (1,028) 32,750 (205) 32,545
Loss after tax for the year - - - - - (1,303) (1,303) (21) (1,324)
Total recognised in income - - - - - (1,303) (1,303) (21) (1,324)
and expense for the year
Arising on revaluation of - - - (1,134) - - (1,134) - (1,134)
investments
Foreign exchange loss on - - - - - (2,087) (2,087) 15 (2,072)
translation of foreign
subsidiaries
Total gains/(losses) - - - (1,134) - 2,087 (3,221) 15 (3,206)
recognised in equity
Shares issued in the year 6 49 - - - - 55 - 55
Equity-settled share-based - - - - - 208 208 - 208
payments
Balance at 30 June 2007 11,158 19,182 (1,076) 3,435 - (4,210) 28,489 (211) 28,278
1 Corporate information
Firestone Diamonds Plc ("the Company") is a company incorporated in England and Wales and listed on
the London Stock Exchange's Alternative Investment Market.
2 Basis of preparation
These interim financial statements of the Company and its subsidiaries ("the Group") for the six months
ended 31 December 2007 have been prepared in accordance with International Financial Reporting Standards
(IFRSs and IFRIC interpretations) as adopted by the European Union and also in accordance with the Companies
Act 1985. The comparative periods for the six months ended 31 December 2006 and the year ended 30 June 2007
have been restated to reflect the adoption of IFRSs by the Group.
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 2007, 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 the Registrar of Companies.
3 Earnings per share
The calculation of the basic earnings per share for the six month period to 31 December 2007 is based
upon the following:
Six months ended Six months Year ended 30
31 December ended 31 June
December
Basic 2007 2006 2007
�'000 �'000 �'000
Restated Restated
Earnings/(loss) per share - pence 4.1p (0.04p) (2.3p)
Profit/(loss) attributable to equity shareholders �2,302,000 (�246,000) (�1,282,000)
Weighted average number of shares in issue 55,791,445 55,757,901 55,758,177
Diluted
Earnings/(loss) per share - pence 3.7p (0.04p) (2.3p)
Profit/(loss) attributable to equity shareholders �2,302,000 (�246,000) (�1,282,000)
Weighted average number of shares in issue 62,409,144 55,757,901 55,758,177
4 Changes in accounting policies
The following adjustments have been made to the opening shareholders equity to reflect the changes
required by the adoption by the Group of International Financial Reporting Standards as adopted by the
European Union.
Share Fair-value Retained Effect on
Option
At 1 July 2006 Reserve Reserve Earnings Equity
�'000 �'000 �'000 �'000
Note 1 Note 2 Note 3
Opening equity - - - 27,892
As presented under previous GAAP 244 - (1,356) -
Transfer to retained earnings (244) - 244 -
Changes in fair value of - 4,569 - 4,569
available-for-sale investments
Fair value of derivative financial - - 84 84
instruments
Restated 1 July 2006 - 4,569 (1,028) 32,545
Share Fair-value Retained Effect on
Option
At 1 July 2007 Reserve Reserve Earnings Equity
�'000 �'000 �'000 �'000
Note 1 Note 2 Note 3/4
Opening equity - - - 26,097
As presented under previous GAAP 453 - (3,409) -
Transfer to retained earnings (453) 453 -
Reversal of amortisation of goodwill - 13 13
Changes in fair value of - 3,435 - 3,435
available-for-sale investments
Fair value of derivative financial - - (1,267) (1,267)
instruments
Restated 1 July 2007 - 3,435 (4,210) 28,278
Notes
1 The amounts attributable to equity arising from the share-based payment charges in the income
statement have been transferred to retained earnings.
2 The fair-value reserve is the amount of the fair-value gain arising from the mark-to-market valuation
of available-for-sale investments held in equity until disposal.
3 Changes in value of investments in derivative financial instruments comprising future currency options
and future share purchase agreements have been recognised in the income statement and balance sheet.
4 Goodwill recognised at 30 June 2006 is carried at this value and is no longer amortised. Goodwill is
subject to an annual review for potential impairment.
5 Dividend
The directors are not declaring a dividend for the period.
6 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 Brewin Dolphin, 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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