Trading Statement
September 02 2010 - 2:00AM
UK Regulatory
TIDMFDI
RNS Number : 0192S
Firestone Diamonds PLC
02 September 2010
Firestone Diamonds plc
Operational and Corporate Update
LONDON: 2 September, 2010
Firestone Diamonds plc, ("Firestone" or "the Company"), the AIM-quoted diamond
mining and exploration company (ticker: AIM:FDI), is pleased to provide an
update on the Company's operations in Botswana and corporate activities in
advance of the Company's general meeting to be held on 3 September 2010.
HIGHLIGHTS
BK11
+----+----------+----------+----------------------------------------------------+
| | - | Mining operations |
+----+----------+---------------------------------------------------------------+
| | | - | Pre-stripping of topsoil and low grade kimberlite |
| | | | ahead of schedule |
+----+----------+----------+----------------------------------------------------+
| | | - | Phase 1 production plant commissioning completed |
| | | | on schedule in July 2010 |
+----+----------+----------+----------------------------------------------------+
| | | - | Plant currently running 23% ahead of target of 150 |
| | | | tph |
+----+----------+----------+----------------------------------------------------+
| | | - | Construction of Phase 2 production plant on |
| | | | schedule for completion in September 2010 |
+----+----------+----------+----------------------------------------------------+
| | - | Diamond Sorting Facility |
+----+----------+---------------------------------------------------------------+
| | | - | Commissioning of diamond sorting facility in |
| | | | Gaborone completed |
+----+----------+----------+----------------------------------------------------+
| | | - | First diamond concentrate shipments from BK11 to |
| | | | Gaborone sorting facility completed on 27 August |
| | | | 2010 |
+----+----------+----------+----------------------------------------------------+
| | | - | Plans being finalised for first diamond sale in Q4 |
| | | | 2010 |
+----+----------+----------+----------------------------------------------------+
| | - | High value diamond recovered |
+----+----------+---------------------------------------------------------------+
| | | - | Initial diamond recoveries include a large, high |
| | | | quality 13.74 carat diamond; value estimated at |
| | | | $5,000/carat |
+----+----------+----------+----------------------------------------------------+
| | | - | Increases raw value of diamonds from bulk sample |
| | | | excavation by 68% from $149/carat (March 2010 |
| | | | valuation) to over $250/carat |
+----+----------+----------+----------------------------------------------------+
| | | - | Company expects significant increase to current |
| | | | modelled value of $155/carat |
+----+----------+----------+----------------------------------------------------+
Jwaneng Tailings Project
+----+----------+------------------------------------------------------+
| | - | Debswana to delay implementation of the project due |
| | | to other priorities |
+----+----------+------------------------------------------------------+
| | - | Project remains strategically important for Debswana |
+----+----------+------------------------------------------------------+
| | - | Work expected to resume as soon as Debswana's other |
| | | priorities allow |
+----+----------+------------------------------------------------------+
Offer for Kopane Diamond Developments
+----+----------+------------------------------------------------------+
| | - | Development of plans for Liqhobong continuing and at |
| | | an advanced stage |
+----+----------+------------------------------------------------------+
| | - | Firestone and Kopane general meetings to vote on the |
| | | offer to be held on 3 September 2010 and 6 September |
| | | 2010, respectively |
+----+----------+------------------------------------------------------+
Philip Kenny, CEO of Firestone Diamonds, commented: "We are very pleased with
the progress that we have made at BK11 since production commenced in July. To
have reached our target earthmoving and production plant capacity ahead of
schedule and only seven weeks after the start of production is an exceptional
achievement and demonstrates the capability of our team. We are also delighted
that early diamond recoveries included a high value 13.74 carat stone. This
recovery is very significant and confirms our expectation that larger diamonds
will be recovered at BK11, and we believe that the average value of production
from BK11 will be significantly higher than previously expected. While the
delay to the Jwaneng Tailings Project is disappointing, it will give us the
opportunity to focus our development capability on the exciting Liqhobong
kimberlite project, which we plan to return to production, subject to the offer
that Firestone recently made to acquire AIM-quoted Kopane Diamond Developments
securing the necessary shareholder approvals."
BK11
On 12 July 2010 the Company announced that a mining licence had been granted to
the Company's 90% owned subsidiary, Monak Venture (Pty) Limited, for BK11 and
that commercial production had commenced. Significant progress has been made
since then, with both earthmoving and production plant operations running ahead
of target. The mine commenced continuous operations (24 hours a day, 7 days a
week) as planned at the beginning of August. Shipments of diamond concentrates
have commenced from BK11 to the Company's diamond sorting facility in Gaborone,
and initial diamond recoveries have been very encouraging, including a high
quality 13.74 carat diamond, the largest recovered to date from BK11.
Earthmoving
Pre-stripping of topsoil and near-surface low grade kimberlite commenced
following granting of the mining licence in July 2010. By the end of August
over 170,000 tonnes of material had been removed, which is ahead of the
earthmoving budget for the period. The first kimberlite blast took place during
August, and blasting is now planned on a weekly basis as earthmoving capacity
continues to ramp up. Pre-stripping work is planned to continue in September
and it is expected that the higher grade kimberlite targeted for mining in the
KW area will be available for treatment from October onwards as planned.
Production Plant
Phase 1 of the BK11 production plant commenced operation in July 2010.
Commissioning was successfully completed by the end of July and the average
plant throughput of 185 tonnes per hour ("tph") currently being achieved is 23%
ahead of the target of 150 tph. With earthmoving operations focused on
deepening the pit at BK11 to expose the higher grade kimberlite targeted for
mining in the KW area, the material processed through the production plant since
July has been sourced from low grade kimberlite stockpiles that were stripped
and mined as part of the final bulk sampling exercise conducted on BK11 in 2009.
Construction of Phase 2 of the production plant, which will more than double
production capacity, has been running in parallel with production from Phase 1
and is on schedule for completion in Q3 2010. Based on the performance of the
Phase 1 plant to date, the Company expects that the target production capacity
of 1.5 million tonnes per annum will be comfortably exceeded by the time that
Phase 2 commissioning has been completed in Q4 2010.
Diamond Sorting Facility
The Company has recently completed the commissioning of its diamond sorting
facility at the Diamond Technology Park ("DTP") in Gaborone. Diamond
concentrate from BK11 and the Company's other projects will from now on be
shipped to DTP for sorting, acidisation and preparation for sale. The facility
has been designed to accommodate diamond tenders and the Company plans to hold
its first tender in Q4 2010, the dates for which have not yet been finalised.
Diamond Recovery
With the diamond sorting facility at DTP now operational the first diamond
concentrate shipment from BK11, consisting of 10 concentrate canisters, was
completed on 27 August 2010, following which diamond recovery commenced. A
large, high value 13.74 carat diamond has been recovered from the first canister
of concentrate sorted. The diamond is octahedral in shape, colourless, and does
not have any visible inclusions, other than a small cavity filled with altered
olivine on one surface and a small crack on another surface. An initial
independent valuation of the diamond has indicated a value of $5,000/carat,
although this will be reviewed after deep acid boiling of the stone.
This recovery is very encouraging for two reasons. First, the Company has
previously indicated that it expects average diamond size and value to increase
as mining progresses into the grain flow deposits that have been identified in
BK11 at depth. This demonstrates that large, high value stones are present, and
at much shallower levels than anticipated. Second, it increases the raw value
of the diamonds recovered from the bulk sample excavation by 68% from $149/carat
(March 2010 valuation) to over $250/carat. While it is too early to conclude
whether this is a representative valuation for BK11, the Company expects the
value of run of mine production to be significantly higher than the current
modelled value of $155/carat. The other diamonds recovered at the diamond
sorting facility have been of similar quality to those recovered from previous
bulk sampling operations.
Jwaneng Tailings Project
On 30 June 2010, Firestone and Debswana Diamond Company ("Debswana") announced
that Debswana had decided to proceed with a toll treatment project with
Firestone under which Firestone would supply, construct and operate a modular
tailings treatment plant ("MTTP") at the Jwaneng Mine, subject to the conclusion
of contractual arrangements and suitable financing arrangements being put in
place. Contract negotiations have been ongoing since then between the Debswana
and Firestone project teams. The MTTP was expected to proceed into the
execution phase once Firestone's and Debswana's project teams finalised the
contractual arrangements and financing proposals for the project, with
construction expected to commence in H1 2011 and full production to be reached
in late 2012.
Firestone has been informed that Debswana has recently undertaken a review of
all current and proposed projects, including the MTTP project. Following
completion of this review a decision has been made by Debswana to delay the
implementation of the MTTP project in order to allow Debswana to focus its
resources on a number of significant projects at the Orapa and Jwaneng mines
that are already in progress. Debswana has confirmed that the MTTP remains a
strategically important project for Debswana and that it expects work on the
project to resume as soon as the higher priority projects have been advanced.
Despite this delay, Firestone plans to continue to pursue the development of its
toll treatment opportunities, which provide a relatively low risk way of
generating cash flow as such projects are not dependant on mining grade or rough
diamond prices
Offer for Kopane Diamond Developments
In July 2010 the Company announced that the boards of Firestone and Kopane
Diamond Developments plc ("Kopane") had reached agreement on the terms of a
unanimously recommended all share offer (the "Offer") by Firestone for Kopane.
Firestone believes that the combination of the Firestone and Kopane project
portfolios will enable Firestone to become one of the leading mid-tier diamond
producers, with a target production level of one million carats by 2014.
Subject to the Offer securing the necessary shareholder approvals at the
upcoming Firestone and Kopane general meetings, the Company's kimberlite
development activities will be focused on the resumption of production at
Kopane's Liqhobong kimberlite and the completion of the Definitive Feasibility
Study for the development of a significantly larger scale operation at
Liqhobong. Firestone has continued to develop its plans in relation to
Liqhobong, which are now at an advanced stage, and will update shareholders
accordingly in due course.
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.
Review by Competent Person
The information in this statement has been reviewed by Mr. Tim Wilkes, BSc, 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 29 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).
Forward-Looking Statements
This Announcement contains certain forward-looking statements with respect to
the financial condition, results of operations and business of Firestone and
certain plans and objectives of the Firestone Directors with respect thereto.
These forward-looking statements can be identified by the fact that they do not
relate only to historical or current facts. Forward-looking statements often
use words such as "anticipate", "target", "expect", "estimate", "intend",
"plan", "goal", "believe", "will", "may", "should", "would", "could" or other
words of similar meaning. These statements are based on assumptions and
assessments made by the Firestone Directors in light of their experience and
their perception of historical trends, current conditions, expected future
developments and other factors they believe appropriate. By their nature,
forward-looking statements involve risk and uncertainty, because they relate to
events and depend on circumstances that will occur in the future and the factors
described in the context of such forward-looking statements in this Announcement
could cause actual results and developments to differ materially from those
expressed in or implied by such forward-looking statements. Although the
Firestone Directors believe that the expectations reflected in such
forward-looking statements are reasonable, they can give no assurance that such
expectations will prove to have been correct and assume no obligation to update
or correct the information contained in this document and Firestone therefore
caution investors not to place undue reliance on these forward-looking
statements which speak only as at the date of this Announcement.
Nothing in this Announcement is intended to be a profit forecast and the
statements in this Announcement should not be interpreted to mean that the
earnings per Firestone Share for the current or future financial periods will
necessarily be greater than those for the relevant preceding financial period.
The statements contained herein are made as at the date of this Announcement,
unless some other time is specified in relation to them, and the issue of this
Announcement shall not give rise to any implication that there has been no
change in the facts set forth herein since that date. Nothing contained herein
shall be deemed to be a forecast, projection or estimate of the future financial
performance of Firestone except where otherwise stated.
Dealing disclosure requirements
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any
class of relevant securities of an offeree company or of any paper offeror
(being any offeror other than an offeror in respect of which it has been
announced that its offer is, or likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer period and,
if later, following the announcement in which any paper offeror is first
identified.
An Opening Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant securities of
each of (i) the offeree company and (ii) any paper offeror(s). An Opening
Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no
later than 3.30 p.m. (London time) on the 10th business day following the
commencement date of the offer period and, if appropriate, by no later than 3.30
p.m. (London time) on the 10th business day (being, in the case of Firestone, 4
August 2010) following the announcement in which Firestone is first identified.
Relevant persons who deal in the relevant securities of Kopane or Firestone
prior to the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%
or more of any class of relevant securities of the offeree company or of any
paper offeror must make a Dealing Disclosure if the person deals in any relevant
securities of the offeree company or of any paper offeror. A Dealing Disclosure
must contain details of the dealing concerned and of the person's interests and
short positions in, and rights to subscribe for, any relevant securities of each
of (i) Kopane and (ii) Firestone, save to the extent that these details have
previously been disclosed under Rule 8. A Dealing Disclosure by a person to
whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time)
on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire an interest in relevant securities of
Kopane or Firestone, they will be deemed to be a single person for the purposes
of Rule 8.3.
Opening Position Disclosures must also be made by Kopane and Firestone and
Dealing Disclosures must also be made by Kopane, by Firestone and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and the offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made can
be found in the Disclosure Table on the Takeover Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. If you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure, you should contact
the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.
Firestone is a paper offeror for the purposes of the above disclosure
requirements.
Publication on websites
A copy of this Announcement and certain information published or otherwise made
available by Firestone is available at www.firestonediamonds.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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