BK11 Production Commencement
July 12 2010 - 2:00AM
UK Regulatory
TIDMFDI
RNS Number : 1649P
Firestone Diamonds PLC
12 July 2010
Firestone Diamonds plc
Mining licence granted and production commenced at BK11
LONDON: 12 July, 2010
Firestone Diamonds plc, ("Firestone" or "the Company"), the AIM-quoted diamond
mining and exploration company (ticker: AIM:FDI), is pleased to announce that
following the granting of a mining licence for the BK11 kimberlite in Botswana
to the Company's 90% owned subsidiary, Monak Venture (Pty) Limited ("Monak"),
commercial production has commenced at the mine.
HIGHLIGHTS
+----+-+----------------------------------------------------+
| - | Mining licence granted |
+----+------------------------------------------------------+
| | -| Valid for 12 years to 30 June 2022 |
+----+-+----------------------------------------------------+
| | -| Standard diamond royalty of 10% |
+----+-+----------------------------------------------------+
| | -| Standard mining company corporation tax |
+----+-+----------------------------------------------------+
| | -| Unlimited carry forward of tax losses and 100% |
| | | depreciation of capital expenditures |
+----+-+----------------------------------------------------+
| | -| No government equity participation |
+----+-+----------------------------------------------------+
| | -| Production to be sold by open tender in Botswana; |
| | | tenders can also be held outside Botswana up to |
| | | 2013, with possible extension to 2015 |
+----+-+----------------------------------------------------+
+----+-+----------------------------------------------------+
| - | Commercial production commenced |
+----+------------------------------------------------------+
| | -| Phase 1 production plant (650,000tpa capacity) now |
| | | in operation |
+----+-+----------------------------------------------------+
| | -| Phase 2 production plant (850,000tpa additional |
| | | capacity) targeted for completion on schedule in |
| | | Q3 2010 |
+----+-+----------------------------------------------------+
| | -| Mine plan of 11.5 Mt of kimberlite at average |
| | | grade of 8.5 cpht and diamond value of $155/carat |
+----+-+----------------------------------------------------+
| | -| Expected 10 year mine life |
+----+-+----------------------------------------------------+
+----+-+----------------------------------------------------+
| - | Orapa satellite kimberlites |
+----+------------------------------------------------------+
| | -| Company has 21 other kimberlites in the Orapa |
| | | area, of which 13 are proven to be diamondiferous, |
| | | and BK16 is the most advanced |
+----+-+----------------------------------------------------+
| | -| BK11 infrastructure to be used to evaluate, |
| | | develop and exploit economic potential of these |
| | | kimberlites rapidly and at relatively low cost |
+----+-+----------------------------------------------------+
| | -| Evaluation of satellite kimberlites to commence |
| | | once BK11 is in full production |
+----+-+----------------------------------------------------+
Philip Kenny, CEO of Firestone Diamonds, commented: "The commencement of
production at BK11 is a major milestone for Firestone as the company is now one
of only three listed kimberlite producers worldwide outside of the major mining
companies. It is an exceptional achievement to have reached this point in just
over 3 years from being granted a prospecting licence, which is a reflection of
the significant capability of our management and staff in Botswana and South
Africa, and of the valuable cooperation that we have received from the Botswana
Geological Survey, Department of Mines, and Ministry of Minerals, Energy & Water
Resources. The combination of cash flow from production at BK11, an extensive
portfolio of kimberlites in the Orapa and Tsabong kimberlite fields and exciting
toll treatment opportunities positions Firestone very well for significant
growth in Botswana, and with the substantial shortfall in rough diamond supply
projected in the coming years we are confident about Firestone's future
prospects."
Terms of Mining Licence
Following the successful completion of the final phase of evaluation work in
December 2009, a mining licence application was submitted on behalf of the
Company's 90% owned subsidiary, Monak Venture (Pty) Limited, to the Ministry of
Minerals, Energy & Water Resources during Q1 2010. Processing of the
application has been completed and the mining licence has now been granted. The
key terms of the mining licence are as follows:
+----+------------------------------------------------------+
| - | Valid for 12 years to 30 June 2022, with right to |
| | renew if required |
+----+------------------------------------------------------+
| - | Standard diamond royalty of 10% on the gross market |
| | value of production |
+----+------------------------------------------------------+
| - | Standard mining company corporation tax according to |
| | Twelfth Schedule of the Income Tax Act |
+----+------------------------------------------------------+
| - | Unlimited carry forward of tax losses and 100% |
| | depreciation of capital expenditures |
+----+------------------------------------------------------+
| - | Government of the Republic of Botswana elected not |
| | to exercise option to acquire an equity stake in |
| | Monak |
+----+------------------------------------------------------+
| - | Production to be sold by open tender in Botswana; |
| | approval also granted for tenders to be run outside |
| | Botswana up to December 2013, with possible |
| | extension to December 2015 |
+----+------------------------------------------------------+
Commencement of commercial production
Development work commenced at BK11 at the beginning of 2010 and Phase 1 of the
production plant, which has a capacity of approximately 650,000 tonnes per
annum, was completed on schedule in Q2 2010. Phase 1 of the production plant
has now commenced operation following grant of the mining licence. Work on
Phase 2 of the production plant, which will increase capacity to 1,500,000
tonnes per annum, is on target for completion as originally scheduled in Q3
2010, and full production is expected to be reached in Q4 2010.
Under the BK11 mine plan approximately 11.5 Mt of kimberlite will be mined at an
average grade of 8.5 carats per hundred tonnes ("cpht"), giving total production
of approximately 1 million carats over a 10 year mine life at an average price
of $155/carat (March 2010 valuation). In the KW area, where the current mining
pit is located, approximately 5.4 Mt of kimberlite is expected to be mined at an
average grade of 12.6 cpht, and at a diamond value of $175/carat (March 2010
valuation).
Orapa satellite kimberlites
Firestone controls 21 other satellite kimberlites in the Orapa kimberlite field,
of which thirteen have been proven to be diamondiferous. The Company intends to
use the infrastructure that has now been established at BK11 to evaluate the
economic potential of these kimberlites rapidly and at relatively low cost, and
believes that it has the potential to develop a sizeable satellite mining
operation based around BK11 and multiple other kimberlites in the Orapa area.
The BK16 kimberlite is at the most advanced stage of evaluation, with high
quality diamonds and encouraging grades recovered from historical work, and will
be the first of the satellite kimberlites to be evaluated. The Company intends
to commence evaluation work, which will initially consist of core drilling and
large diameter drill bulk sampling, on the satellite kimberlites once BK11
reaches full production.
For further information, visit the Company's web site or contact:
+----------------------------------+--------------------------+
| Philip Kenny, Firestone Diamonds | +44 20 8834 1028/+44 |
| | 7831 324 645 |
+----------------------------------+--------------------------+
| Simon Edwards / Tim Redfern, | +44 20 7071 4330 / 4312 |
| Evolution Securities (Joint | |
| Broker) | |
| | |
+----------------------------------+--------------------------+
| Rory Scott, Mirabaud Securities | +44 20 7878 3360 |
| (Joint Broker) | |
| | |
+----------------------------------+--------------------------+
| Alexander Dewar / Neil McDonald, | +44 131 529 0276 |
| Brewin Dolphin Corporate | |
| Advisory & Broking | |
| (Nominated Adviser) | |
| | |
+----------------------------------+--------------------------+
| Jos Simson / Leesa Peters, | +44 20 7429 6603/+44 |
| Conduit PR | 7899 870 450 |
| | |
+----------------------------------+--------------------------+
Background information on Firestone Diamonds:
Firestone Diamonds plc ("FDI.L") is an international diamond mining and
exploration company with operations focused on Botswana. Botswana is the
world's largest and lowest cost producer of diamonds, with annual production
worth over $2.5 billion, and is considered to be one of the most prospective
countries in the world to explore for diamonds.
Firestone is the largest holder of mineral rights in Botswana's diamondiferous
kimberlite fields, controlling over 16,500 square kilometres around the major
Orapa and Jwaneng mines and the entire Tsabong kimberlite field. Firestone has
108 kimberlites in its portfolio, including BK11, which commenced production in
July 2010, and 31 other kimberlites that have been proven to be diamondiferous.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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