TIDMFDI
RNS Number : 9717D
Firestone Diamonds PLC
31 March 2011
Firestone Diamonds plc
Unaudited interim results for the six months to 31 December
2010
LONDON: 31 March, 2011
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 2010.
HIGHLIGHTS
Liqhobong Mine, Lesotho
-- Acquisition of Kopane Diamond Developments plc
- Acquisition completed at the end of September
2010
- 91 Mt resource identified at an average grade
of 34 cpht; contains 31 million carats with a
gross value of $3 billion
-- Production Plant 1
- Production commenced ahead of schedule in February
2011
- Grades and diamond quality from initial production
in line with expectations
- Plans to triple capacity of Plant 1 by end 2011
on schedule
-- Production Plant 2
- Development decision for Plant 2, with planned
capacity of 4.2 mtpa and expected revenue of $140
million per annum, to be accelerated to end 2011
-- Diamond sales
- 12,510 carats sold at average price of $98/carat
BK11 Mine, Botswana
-- Mining
- Mining licence granted and production commenced
in July 2010
- Mining progressing well, with pit depth now approximately
30 metres
- 11.5 Mt of kimberlite to be mined at an average
grade of 8.5 cpht
-- Production plant
- Phase 1 and Phase 2 of the production plant operational
in Q1 2011; throughput reached 90% of target capacity
of 1.5 million tpa
- Plant modifications to improve diamond liberation
to be completed in Q2 2011
- Quality of diamonds produced consistent with previous
production
-- Diamond sales
- 2,162 carats sold at average price of $177/carat
Financial & Board
-- Financings
- GBP13 million raised in December 2010 from share
placement
- Terms agreed for $6 million credit facility with
Standard Chartered Bank
- Cash position of approximately GBP9.5 million
following draw down of credit facility
-- Secondary listing on Botswana Stock Exchange
- Application delayed due to new stock exchange
regulations
- Listing expected to take place in Q2 2011
-- Board changes
- P Kenny appointed as Executive Chairman
- T Wilkes to join the board as Chief Executive
Officer
- New Finance Director expected to be appointed
in Q2 2011
Outlook
-- Liqhobong and BK11 on track for full production in
2011
-- Continued strength in the rough diamond market
-- Target production level of 1 million carats per annum
by 2014
Tim Wilkes, CEO of Firestone Diamonds, commented: "The prospects
for Firestone have been transformed since July 2010. We believe
that the Company is very well positioned to become a significant
diamond producer in 2011 and to reach its target of producing 1
million carats per annum by 2014".
For further information, visit the Company's web site at
www.firestonediamonds.com or contact:
+44 20 8834 1028/+44 7831
324 645
Philip Kenny, Firestone Diamonds +27 78 457 6623/+267 713
Tim Wilkes, Firestone Diamonds 77686
Tim Redfern/Neil Elliot, Evolution
Securities (Joint Broker) +44 20 7071 4312
Rory Scott, Mirabaud Securities
(Joint Broker) +44 20 7878 3360
Alexander Dewar, Brewin Dolphin
(Nominated Adviser) +44 131 529 0276
Jos Simson / Emily Fenton, Tavistock +44 20 7920 3150/+44 7899
Communications 870 450
Dear Shareholder,
The period under review was transformational for Firestone and
probably the most significant in the Company's history. The
commencement in July 2010 of mining operations at the BK11 Mine in
Botswana resulted in Firestone becoming one of only three junior
listed kimberlite producers worldwide. In September 2010 Firestone
completed the acquisition of Kopane Diamond Developments plc
("Kopane"). This acquisition gave Firestone control of the
Liqhobong Mine in Lesotho, which we consider to be a world class
asset and one of the most attractive undeveloped kimberlites in the
world.
Liqhobong, Lesotho
Firestone owns a 75% interest in the Liqhobong Mine, where a
resource of 91 million tonnes ("mt") has been identified at the
Main Pipe at an average grade of 34 carats per hundred tonnes
("cpht") and containing 31 million carats. With an average diamond
value of $98/carat and a contained value of approximately $3
billion, Liqhobong is considered by the Company to be one of the
most attractive undeveloped kimberlites in the world. The current
Liqhobong mine plan provides for the mining of approximately 60 mt
of kimberlite from the Main Pipe over a period of approximately 17
years and the production of an estimated 19 million carats.
In December 2010 Firestone raised GBP13 million to finance the
recommencement of production at Liqhobong. Production commenced
ahead of schedule in February 2011 and grades from initial
production have been in line with expectations.
In December 2010 approximately 12,500 carats recovered from
mining operations at Liqhobong in 2008 were sold for an average
price of $98/carat. About 5,000 carats have been recovered since
production recommenced in February 2011. A high quality 15 carat
white gem stone, which is a fragment of a larger stone, and two
yellow gem stones, of 45 carats and 14 carats, have been recovered
in the first six weeks of operation, which is very encouraging.
Plans to triple the capacity of Plant 1 to 1.3 million tonnes
per annum ("mtpa") by the end of 2011 are on schedule. At full
capacity Plant 1 is expected to generate revenue of $43 million per
annum, based on current diamond prices. The Company now plans to
accelerate the decision to commence construction of Plant 2, which
will have a production capacity of 4.2 mtpa, to the end of 2011.
Plant 2 is expected to commence operation in 2013 and to generate
revenue of $140 million per annum at full production.
BK11, Botswana
A mining licence for BK11, which is 90% owned by the Company,
was granted in July 2010. Under the current BK11 mine plan
approximately 11.5 mt of kimberlite is expected to be mined at an
average grade of 8.5 cpht, giving total production of approximately
1 million carats over a 10 year mine life at an average value of
$155/carat. In the KW area, where the current mining pit is
located, an average diamond value of $175/carat is expected.
Commissioning of Phase 1 and Phase 2 of the production plant,
which have a combined capacity of 1.5 mtpa, was completed during
the period. Material processed through the production plant during
the period was sourced from low grade kimberlite stockpiles pending
completion of pre-stripping work to expose the target kimberlite
ore. Approximately 2,200 carats were recovered from BK11 during the
period. These diamonds were sold in December 2010 for an average
price of $177/carat.
Pre-stripping was completed in Q4 2010, following which the
first kimberlite ore was available for processing. Mining
operations are progressing well in 2011. While the production plant
has reached 90% of target capacity, a number of problems were
encountered with the crushing and scrubbing circuits at the plant,
the principal problem being insufficient diamond liberation. Plans
to improve diamond liberation are at an advanced stage and expected
to be implemented in Q2 2011. Under the current mine plan, an
average head feed grade of 9-10 cpht is expected to be achieved in
2011, and the Company is confident that its 2011 production targets
will still be achieved.
Botswana Evaluation Projects
In addition to BK11, Firestone controls 21 other kimberlites in
the Orapa kimberlite field, of which 13 have been proven to be
diamondiferous, and 86 kimberlites in the Tsabong kimberlite field,
of which 16 have been proven to be diamondiferous. The Company
believes that the likelihood of further economic discoveries being
made in these kimberlites is very good. While Liqhobong and BK11
will be the Company's primary focus in 2011, Firestone intends to
use cash flow from its mining operations to evaluate these
kimberlites with the objective of identifying additional resources
that can be developed and brought into production. This work is
expected to commence in the second half of 2011.
Financial
The acquisition of Kopane was the most significant event during
the period. The acquisition was implemented by way of the issuance
of 0.4657 Firestone shares for every Kopane share. As a result of
this acquisition, Kopane shareholders were issued with new
Firestone shares equivalent to 52% of Firestone's enlarged share
capital. In December 2010 the Company raised GBP13 million through
the issue of 52 million ordinary shares at 25 pence per share.
The financial accounts for the period reflect the consolidation
of the Kopane accounts from the acquisition date of 29 September
2010. Revenue generated during the period was from mining
operations at BK11.
The Company's application for a secondary listing of its shares
on the Botswana Stock Exchange, which had been expected to be
approved in 2010, has been delayed due to additional requirements
being imposed following the introduction of additional listing
rules by the Botswana Stock Exchange. The Company expects these
additional requirements to be satisfied and the listing to take
place in Q2 2011.
During the period the Company agreed terms with Standard
Chartered Bank of Botswana for a $6 million, three year, 6.5% fixed
rate credit facility. Documentation for the facility is currently
being finalised and it is expected to be available for draw down in
April 2011. This facility will give the Company greater flexibility
in planning and financing its activities elsewhere in Botswana and
in Lesotho. Following draw down of this facility in April the
Company's cash position is estimated to be approximately GBP9.5
million. Discussions have also commenced with a number of banks in
respect of a debt facility to finance the construction of Plant 2
at Liqhobong.
Board
During the period Firestone indicated that it intended to make a
number of changes to its Board of Directors. The Company recently
announced the appointment of Philip Kenny, who had been Chief
Executive Officer of the Company since it was admitted to AIM in
1998, as Executive Chairman. Mr. Kenny replaced Michael Hampton,
who had been acting as Chairman on an interim basis and will remain
as a non executive director of the Company. Tim Wilkes, who had
been Chief Operating Officer of the Company since 2005, was
appointed to the Board as Chief Executive Officer. A new Finance
Director with significant experience in mining in Africa is
expected to be appointed in Q2 2011.
Outlook
With both Liqhobong and BK11 on track to be in full production
in 2011, an exciting portfolio of kimberlites to be evaluated in
Botswana, and the continued positive outlook for the rough diamond
market, we believe that the prospects for Firestone are very good.
The Company is now well positioned to reach its target of producing
1 million carats per annum by 2014.
Philip Kenny
Chairman
31 March 2011
Consolidated Income Statement
Six Six Year
months months ended
ended 31 ended 31 30
December December June
2010 2009 2010
GBP'000 GBP'000 GBP'000
Revenue 1,051 - 3
Changes in inventories 18 - -
Raw materials and consumables used (8) (96) (180)
Employee benefits expense (634) (134) (477)
Amortisation and depreciation (267) (533) (369)
Impairment of mineral properties - 332 -
Impairment of property, plant and
equipment - - (200)
Release of rehabilitation provisions - - 528
Acquisition expenses - - (1,234)
Other operating expenses (1,611) (605) (490)
Operating loss (1,451) (1,036) (2,419)
Financial income 14 19 24
Financial expense (207) (7) (11)
Loss before tax (1,644) (1,024) (2,406)
Taxation - - -
Loss after tax for the period (1,644) (1,024) (2,406)
Other comprehensive income/(loss):
Exchange differences on translating
foreign operations net of tax 3,378 (1,151) 1,135
---------- ---------- ---------
Total comprehensive income and expense
for the period 1,734 (2,175) (1,271)
---------- ---------- ---------
Loss after tax for the period
attributable to:
Equity shareholders of the parent (1,801) (1,024) (2,478)
Non-controlling interest 157 - 72
---------- ---------- ---------
(1,644) (1,024) (2,406)
---------- ---------- ---------
Total comprehensive income for the
period attributable to:
Equity shareholders of the parent 3,379 (1,151) (1,346)
Non-controlling interest (1) - 75
3,378 (1,151) (1,271)
---------- ---------- ---------
Basic loss per share - pence (1.0p) (1.1p) (2.3p)
---------- ---------- ---------
Diluted loss per share - pence (1.0p) (1.1p) (2.3p)
---------- ---------- ---------
All amounts relate to continuing
operations.
31 December 31 December 30 June
Consolidated statement of
financial position 2010 2009 2010
GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill - - -
Intangible mining assets 66,136 17,848 20,129
Property, plant and equipment 20,030 11,091 14,568
Deferred tax asset - - -
86,166 28,939 34,697
------------- ------------- ----------
Current assets
Inventories 705 29 29
Trade and other receivables 3,674 988 1,013
Cash and cash equivalents 10,832 2,438 5,645
------------- ------------- ----------
15,211 3,455 6,687
------------- ------------- ----------
Total assets 101,377 32,394 41,384
------------- ------------- ----------
Equity and liabilities
Equity attributable to ordinary
shareholders
Share capital 64,149 19,521 25,578
Share premium 39,151 22,388 25,380
Merger reserve (1,076) (1,076) (1,076)
Translation reserve 4,846 1,755 429
Accumulated losses (16,810) (14,923) (15,106)
------------- ------------- ----------
Total equity attributable to
ordinary shareholders 90,260 27,665 32,205
Non-controlling interests 232 98 75
Total equity 90,492 27,763 35,280
------------- ------------- ----------
Non-current liabilities
Interest-bearing loans and
borrowings 524 1,491 1,193
Deferred tax 5,702 - -
Provisions 97 - -
-------------
6,323 1,491 1,193
-------------
Current liabilities
Interest-bearing loans and
borrowings 1,358 1,146 1,168
Trade and other payables 2,675 1,354 3,045
Current tax liabilities - - 229
Provisions 529 640 469
4,562 3,140 4,911
------------- ------------- ----------
Total liabilities 10,885 1,831 6,104
------------- ------------- ----------
Total equity and liabilities 101,377 32,394 41,384
------------- ------------- ----------
Six months
Consolidated statement of ended 31 Six months Year ended
cash flows December ended 31 December 30 June
2010 2009 2010
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Loss before tax (1,644) (1,024) (2,406)
Adjustments for:
Depreciation, amortisation
and impairment 267 609 570
Effect of foreign exchange
movements 2,022 642 157
Interest payable 93 7 11
Equity-settled share-based
payment 97 144 277
Loss on sale of
non-current assets 206 - -
Net cash flow from
operating activities
before changes in working
capital and provisions 1,041 378 (1,391)
Increase in inventories (54) - -
Decrease/(increase) in
trade and other
receivables 2,036 (46) (426)
(Decrease)/increase in
trade and other payables (2,348) (453) 1,926
Decrease/(increase) in
provisions 69 (270) (739)
------------
Cash generated
from/(absorbed) by
operating activities 744 (391) (630)
------------ -------------------- ------------
Cash flows from investing
activities
Payments for property,
plant and equipment (3,997) (2,241) (5,472)
Payments for non-current
intangible assets (3,692 (2,256) (3,991)
Cash acquired with
subsidiary 959 - -
Net cash from investing
activities (6,730) (4,497) (9,463)
------------ -------------------- ------------
Cash flows from financing
activities
Proceeds from the issue of
share capital 13,094 7,175 16,712
Share issue expenses (1,122) (380) (868)
Proceeds from long-term
borrowings - - 140
Repayment of long-term
borrowings (686) (357) (1,082)
Repayment of lease
finance- (20) (7) (12)
Interest paid (93) (124) (171)
------------
Net cash from financing
activities 11,173 6,307 14,719
------------ -------------------- ------------
Net increase in cash and
cash equivalents 5,187 1,419 4,626
Cash and cash equivalents
at the beginning of the
period 5,645 1,019 1,019
------------ -------------------- ------------
Cash and cash equivalents
at the end of the period 10,832 2,438 5,645
------------ -------------------- ------------
Notes to unaudited consolidated financial statements
1 Corporate information
Firestone Diamonds Plc ("the Company") is a company incorporated
in England and Wales and quoted on the London Stock Exchange's
Alternative Investment Market.
2 Basis of preparation
These condensed interim financial statements of the Company and
its subsidiaries ("the Group") for the six month period ended 31
December 2010 have been prepared using accounting policies consistent
with International Financial Reporting Standards (IFRSs). The same
accounting policies, presentation and methods of computation are
followed in these financial statements as were applied in the Group's
latest audited financial statements for the year ended 30 June
2010.
These condensed interim financial statements have not been audited,
do not include all of the information required for full annual
financial statements, and should be read in conjunction with the
Group's consolidated annual financial statements for the year ended
30 June 2010. The auditors' opinion on these Statutory Accounts
was unqualified.
While the financial figures included within this half-yearly report
have been computed in accordance with IFRSs applicable to interim
periods, this half-yearly report does not contain sufficient information
to constitute an interim financial report as set out in IAS34.
The comparative figures presented are for the six months ended
31 December 2009 and the year ended 30 June 2010.
The results for the six month period ended 31 December 2009 have
been restated to reflect a change in the treatment of share issue
costs of GBP380,000. Initially these costs were expensed in profit
and loss. For the full year ended 30 June 2010 these costs were
allocated to the share premium account. There is no change to total
equity.
3 Segmental analysis
A segment is a distinguishable component of the Group that is engaged
in providing products or services in a particular business sector
(business segment) or in providing products or services in a particular
economic environment (geographic segment), which is subject to
risks and rewards that are different to those in other segments.
The Group operated during the period in one segment, diamond mining,
exploration and development, and in one principal geographic area
- Southern Africa. Operations in Botswana and Lesotho are considered
to be linked operations.
The Group also conducts business within the U.K., including the
ad hoc raising of funds which are subsequently passed to subsidiary
companies, and incurring of expenditure in relation to the Company's
activities as a holding company. None of this activity is considered
to be significantly different to the principal activity of the
Group within the Southern African region.
Financial reports received by the Board are compiled as relating
to the single activity based in Southern Africa.
4 Earnings per share
The calculation of the basic loss per share for the six month
period ended 31 December 2010 is based upon the following:
Six months Six months
ended 31 ended 31 Year ended
December December 30 June
2010 2009 2010
GBP GBP GBP
Loss per share - pence (1.1p) (1.1p) (2.3p)
-------------- -------------- --------------
Loss attributable to
shareholders of the
parent GBP1,801,000 GBP1,024,000 GBP2,406,000
-------------- -------------- --------------
Weighted average number
of shares in issue 167,821,340 93,121,489 103,197,603
-------------- -------------- --------------
The diluted loss per share for all periods is the same as the
basic loss per share as the losses have an anti-dilutive
effect.
5 Acquisition of Kopane Diamond Developments plc
On 29 September 2010 the Company acquired the whole of the
issued share capital of Kopane Diamond Developments plc ("Kopane").
Kopane is a diamond exploration and mining company whose
principal asset is the Liqhobong Mine in Lesotho. Kopane
was quoted on AIM until the date of acquisition by the Company
(the "Acquisition").
The Acquisition was implemented by means of a scheme of arrangement
under Part 26 of the Companies Act 2006 (the 'Act') which
involved a reduction of capital under Section 641 of the
Act. Under the terms of the Acquisition Kopane shareholders
received 0.4657 of a new ordinary share in Firestone for
every 1 Kopane share held.
The Kopane acquisition has been accounted for by the purchase
method of accounting and the results of Kopane are included
in the interim financial statements for the period 30 September
2010 to 31 December 2010. The provisional book values and
fair-values of the Kopane assets and liabilities acquired
are set out below.
On 29 September 2010 the Company acquired the whole of the
issued share capital of Kopane Diamond Developments plc ("Kopane").
Kopane is a diamond exploration and mining company whose
principal asset is the Liqhobong Mine in Lesotho. Kopane
was quoted on AIM until the date of acquisition by the Company
(the "Acquisition").
Provisional
Book
value fair value
Unaudited Unaudited
GBP000 GBP000
Goodwill 925 -
Intangible mining
assets 6,089 40,505
Property plant and
equipment 3,520 1,630
Investment in joint
venture - -
Other investments - -
Derivative financial
instruments 891 2,982
Inventories 540 622
Trade and other
receivables 2,793 1,715
Cash 1,043 959
Trade and other
payables (374) (924)
Provisions (64) (87)
Deferred tax - (5,378)
_________ _________
15,363 42,024
_________
Fair-value of
consideration 42,024
_________
Goodwill -
_________
The fair-value of the acquired assets is provisional due
to the short time available to the Company to assess and
investigate the more detailed information on Liqhobong that
became available information to it after completion of the
Acquisition. Final values will be determined after the assessment
is completed and no later than 29 September 2011.
The fair-value of the purchase consideration arises from the
issue of 140,413,477 ordinary shares of 20p at a price of 28.75p
per share, being the market price at 29 September 2010 together
with the cost of settling share option arrangements for Kopane
employees.
6 Dividend
The directors are not declaring a dividend for the period.
7 Other
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 Executive 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).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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