TIDMFDI
RNS Number : 9856R
Firestone Diamonds PLC
14 November 2011
Firestone Diamonds plc
Preliminary announcement of results for the year ended 30 June
2011
LONDON: 14 November, 2011
The Board of Firestone Diamonds plc, ("Firestone" or "the
Company"), the AIM-quoted diamond mining and exploration company
(ticker: AIM:FDI), announces preliminary audited results for the
year ended 30 June, 2011.
HIGHLIGHTS
Liqhobong Mine, Lesotho
-- Acquisition of Kopane Diamond Developments plc
- Acquisition completed in September 2010
- 91 Mt resource identified at an average grade
of 34 cpht; contains 31 million carats with a
gross value of $3.4 billion
-- Production Plant 1
- Grades and diamond quality from initial production
in line with expectations
- Plant capacity expanded to 0.65 mtpa and further
expansion in progress
- Q1 FY2012 production increased 551% from Q3 FY2011,
to approximately 34,000 carats
- Expected revenue of approximately $45m pa, when
full production capacity reached in Q4 FY2012
-- Production Plant 2
- Planning for Plant 2 now at an advanced stage,
with target capacity of 4.2 mtpa and annual production
of $135m
BK11 Mine, Botswana
-- Mining
- Mining licence granted in July 2010
- 11.5 Mt of kimberlite to be mined at an average
grade of 8.5 cpht
- Pre-stripping of overburden and low grade kimberlite
completed in Q2 FY2012
- Mining operations progressing well, with pit deepened
to 50 metres
- Sampling from base of the mining pit indicates
grades of 8-10 cpht, in line with resource grade
-- Production
- New secondary crushing circuit has significantly
improved diamond liberation; circuit to be placed
in line with scrubbing and DMS circuits in November
2011.
- Q1 FY2012 production increased 80% from Q3 FY2011,
to approximately 4,500 carats
- Significant increase in production expected as
production increases to full operating capacity
of 1.5 mtpa in Q4 FY2012
Botswana Evaluation Projects
-- Prospecting licences granted over Kokong kimberlite
field, containing 68 kimberlites
-- Firestone now holds prospecting licences containing
a total of 174 kimberlites in Botswana, of which
43 are diamondiferous
-- Potential for economic kimberlites to be identified
is very good
Rough diamond market and diamond sales
-- Four diamond sales held at the Company's tender office
in Botswana since December 2010
-- Prices increased to record highs in the first half
of 2011, but have recently fallen back, primarily
due to uncertainty in international financial markets
-- Fundamentals remain positive, with demand from China
and India and shortfall in supply expected to continue
to support prices in the long term
Financial & Board
-- Financial
- GBP13 million raised in December 2010 and GBP13.5
million in August 2011 from share placements
- $6 million credit facility established with Standard
Chartered Bank of Botswana
- Financial position secure, with $15m in cash and
$3m in diamond stocks as of October 2011
-- Board changes
- Philip Kenny appointed as Executive Chairman and
Tim Wilkes appointed as Chief Executive Officer
during the year
- New Finance Director and Non-executive Director
appointed
Outlook
-- Significant increases in production from BK11 and
Liqhobong during FY2012
-- Rough diamond prices to recover in 2012 driven by
long term shortfall in supply.
-- Target production level of 1 million carats pa by
2014
Tim Wilkes, CEO of Firestone Diamonds, commented: "The past year
has seen Firestone move into a select group as one of the few
listed kimberlite producers worldwide. We expect to see significant
increases in production from the Liqhobong Mine in Lesotho and the
BK11 Mine in Botswana in the current year. Firestone's prospects
are now better than at any time in its history and the Company is
well positioned to reach its target of producing 1 million carats
per annum by 2014."
Analyst conference call, Monday 14 November 2011 - 11:00am
(GMT)
Firestone Diamonds plc will be hosting a conference call today
at 11:00am (GMT) for interested parties.
To access the conference call, please dial: +44 (0) 20 3140 0668
and enter the PIN number: 180383#.
To access the live webcast presentation, go to:
https://www.anywhereconference.com/; webcast login: 113380830; PIN
code; 180383.
A webcast of the presentation will be available on the Company's
website from 4pm today.
For further information, visit the Company's web site at
www.firestonediamonds.com or contact:
+44 20 8741 7810/+44 7831
Philip Kenny, Chairman, Firestone 324 645
Diamonds +27 78 457 6623/+267 713
Tim Wilkes, CEO, Firestone Diamonds 77686
Rory Scott, Mirabaud Securities
(Nominated 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 past year has been a transformational one for Firestone and
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 Mine, Lesotho
A resource of 91 million tonnes ("mt") has been identified at
the Main Pipe at Liqhobong at an average grade of 34 carats per
hundred tonnes ("cpht") and containing 31 million carats. With a
contained value of approximately $3.4 billion, Liqhobong is
considered by the Company to be one of the most attractive
undeveloped kimberlites in the world. The Company owns a 75%
interest in Liqhobong.
Plant 1 Production
Excellent progress has been made at Liqhobong since its
acquisition in September 2010. Production commenced at Liqhobong in
Q3 FY 2011 and Plant 1 reached its operating capacity of 0.4
million tonnes per annum "mtpa" on schedule in Q4 FY 2011.
Construction work on the first phase of the planned Plant 1
expansion was completed during Q1 FY 2012, and, following a two
month commissioning period, the target production capacity of 0.65
mtpa was reached in October 2011. The modifications made to the
plant allow the processing for the first time of significant
amounts of material from the higher grade K5 and K6 kimberlite
units. Production grades have been in line with expectations, with
current production grades averaging 37 cpht, which is 8% higher
than the average resource grade of 34 cpht.
A summary of quarterly production data is provided below.
Q3 FY 2011 Q4 FY 2011 Q1 FY 2012
----------------------------- ----------- ----------- -----------
Production plant throughput
(t) 22,421 49,796 92,659
----------------------------- ----------- ----------- -----------
Production (cts) 5,210 18,158 33,930
----------------------------- ----------- ----------- -----------
Production grade (cpht) 23.2 36.5 36.6
----------------------------- ----------- ----------- -----------
In Q1 FY 2012 the Company retained Dowding Reynard and
Associates ("DRA") to review the current Plant 1 design with the
objective of optimising its throughput and efficiency and
increasing production capacity. This work is now at an advanced
stage and production is expected to increase each quarter until
Plant 1 reaches its target capacity in Q4 FY 2012, at which point
it is expected to generate revenue of approximately $45 million per
annum.
The Company has awarded a contract to operate the production
plant at Liqhobong to Minopex (Pty) Limited. Minopex is one of the
leading specialists in the operation of mineral processing
facilities in the coal, platinum and diamond industries in Southern
Africa, and operates the processing plants at Gem Diamonds' Letseng
Mine, and Namakwa Diamonds' Kao Mine in Lesotho.
Diamond Sales
Diamond values from the Main Pipe increased significantly during
the year. The table below provides results from the first three
sales from December 2010 onwards.
Dec 2010 Apr 2011 Jul 2011
------------------------- --------- --------- ---------
Main Pipe diamond value
($/ct) $98 $130 $149
------------------------- --------- --------- ---------
A further diamond tender was held in August 2011, but rough
diamond prices were very volatile at the time due to uncertainty in
global financial markets. Reserve prices for most of the smaller
diamonds were not achieved at the tender and they were
withdrawn.
Mining Operations
In Q3 FY 2011 Matekane Mining Investment Company (Pty) Limited,
("Matekane") was awarded a contract to undertake all mining and
earth moving operations at Liqhobong. Matekane is one of the
largest earthmoving and mining contractors in Lesotho, and is
currently responsible for mining operations at Gem Diamonds'
Letseng Mine.
Mining operations at the Main Pipe during the year were
primarily focused on the lower grade K2 and K4 kimberlite units,
which have an average grade of 28 cpht. Since the end of the
financial year mining operations have been focused on the higher
grade K5 unit, which will be the primary focus for mining
operations for the next two years.
Plant 2 Development Plans
The Company has signed a letter of intent with DRA under which
DRA will complete a Definitive Feasibility Study ("DFS") and
commence detailed engineering studies for the planned 4.2 mtpa
Plant 2 at Liqhobong. Work on the specifications and design for
Plant 2 is progressing well. Plant 2 is expected to commence
operation in 2013 and to generate revenue of $135 million per annum
at full production.
Mine Infrastructure
Substantial work was carried out in Q1 FY 2012 to expand the
current tailings dam capacity. The extensions to the tailings dam
have been designed to be able to accommodate further capacity
expansions to handle tailings from Plant 2 when it commences
operation. A de-grit plant has also been erected and has resulted
in significant improvements in management of tailings and water
recovery from the tailings dam. Approximately 200,000 tonnes of
kimberlite was mined during the year from the Satellite Pipe, which
is now mined out and being used as a raw water storage dam to
supply Plant 1. Significant work was undertaken during the year on
the access road to Liqhobong. The road is greatly improved, and
provides access for the large trucks that are required to transport
equipment for the Plant 1 expansion to site.
BK11 Mine, Botswana
A mining licence for BK11 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. The Company owns a 90% interest in BK11.
Mining Operations
Mining operations during Q1 and Q2 FY 2011 were primarily
focused on pre-stripping of overburden and low grade kimberlite.
Pre-stripping was completed in December 2010, following which the
first kimberlite ore was available for processing. Mining
operations have progressed well since then and the floor of the pit
has now been deepened to bench 5 at a depth of 50 metres.
Production
Commissioning of the production plant was carried out using low
grade kimberlite from the pre-stripping that was carried out up to
December 2010. Results from processing of the first ore that was
available in Q3 FY 2011 indicated that the crushing and scrubbing
circuits were providing insufficient diamond liberation, with up to
70% of head feed reporting to the oversize stockpile and only 30%
reporting to the DMS. A secondary crushing circuit based on mobile
crushers was designed to address these problems and testing of this
circuit commenced in July 2011. Significant increases in diamond
liberation and grade have been achieved with this circuit, and it
is now planned to place the secondary crushing circuit in line with
the current scrubbing and DMS circuits. This work will be completed
in November 2011.
While recovered grades have been low due to the crushing and
diamond liberation problems, based on the percentage of head feed
reporting to the oversize stockpile the average grade of the ore
that has been processed is estimated to be 8 cpht. This estimate
has been confirmed by the processing of large samples of ore
through the BK11 bulk sampling plant, which has an in line
secondary crushing circuit. The results from the bulk sampling
plant indicate grades of 8-10 cpht, which is in line with the
resource grade of 8.5 cpht.
A summary of production data since processing of ore commenced
in January 2011 is provided below.
Q3 FY 2011 Q4 FY 2011 Q1 FY 2012
----------------------------- ----------- ----------- -----------
Production plant throughput
(t) 118,745 212,479 185,009
----------------------------- ----------- ----------- -----------
Production (cts) 2,508 1,812 4,523
----------------------------- ----------- ----------- -----------
Recovered grade (cpht) 2.1 0.9 2.4
----------------------------- ----------- ----------- -----------
Estimated ore grade
(cpht)(1) 7 3 8
----------------------------- ----------- ----------- -----------
Note: 1. Estimated ore grade is calculated based on 70% of head
feed reporting to the oversize stockpile and 30% reporting to the
DMS
The production plant is currently operating at a capacity of 1
mtpa and following completion of the final work on the secondary
crushing circuit is expected to reach its full operating capacity
of 1.5 mtpa in Q4 FY 2012.
Diamond Sales
Diamond values from BK11 increased significantly during the
year. The table below provides results from the first three sales
from December 2010 onwards.
Dec 2010 Apr 2011 Jul 2011
-------------------- --------- --------- ---------
BK11 diamond value
($/ct) $177 $230 $235
-------------------- --------- --------- ---------
Reserve prices for smaller, lower quality diamonds from BK11
were also not achieved at the August 2011 tender and they were
withdrawn.
Mine Infrastructure
The connection to the new power line being constructed by
Botswana Power Corporation is expected to be completed in Q2 FY
2012. This is expected to result in both lower costs and improved
production plant availability.
Botswana Evaluation Projects
Since the end of the financial year the Company has been granted
prospecting licences over the Kokong kimberlite field in Botswana.
Firestone now holds prospecting licences containing a total of 174
kimberlites in Botswana - 22 in the Orapa field, 84 in the Tsabong
field and 68 in the Kokong field - of which 43 have been proven to
be diamondiferous. The Company considers the results from
exploration and evaluation work carried out by it and other
companies in these areas to be very encouraging, and that the
potential for economic kimberlites to be identified is very
good.
While the primary focus in the short term will continue to be on
completing the expansion projects and reaching target production
levels at Liqhobong and BK11, the Company 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
2012.
Diamond Sales
During the year a diamond sorting and sales facility was
constructed at the Diamond Technology Park in Gaborone, Botswana.
Diamonds from Liqhobong and BK11 are sold by competitive tender at
this facility. The first tender was held in December 2010, and a
total of four tenders have been held to date.
Rough diamond prices increased strongly during the year, rising
approximately 40% in the six months to June 2011, driven largely by
significant growth in demand from China and India. The uncertainty
in global financial markets since August 2011 has resulted in
significant volatility in the rough diamond market, and prices have
dropped by about 30% from their highs in July 2011. The Company's
last tender, which commenced in August 2011, was affected by this
volatility, and the majority of the diamonds offered for sale did
not achieve reserve prices and were withdrawn.
Prices now appear to have stabilised and it is expected that De
Beers and Alrosa, who are the two largest diamond producers in the
world, will limit their volume of sales in the short term in order
to promote a stable pricing environment. The Company remains
positive about the fundamentals of the diamond market, as long term
demand is expected to continue to outstrip supply.
The schedule for and frequency of diamond sales in 2012 has not
yet been finalised, but will be determined by both market
conditions in the rough diamond market and production levels at
Liqhobong and BK11. Results of diamond sales will in future be
announced on a quarterly basis after the end of each quarter.
Financial
The acquisition of Kopane was the most significant event during
the year. The acquisition was implemented by way of the issuance of
0.4657 Firestone shares for every Kopane share, which resulted in
Kopane shareholders being issued with shares equivalent to 52% of
the Company's enlarged share capital at the time. The financial
accounts for the year reflect the consolidation of the Kopane
accounts from the acquisition date of 29 September 2010. Revenue
generated during the year was from both Liqhobong and BK11.
In December 2010 the Company raised GBP13 million to finance the
recommencement of production at Liqhobong. In August 2011 the
Company raised a further GBP13.5 million, primarily to support and
accelerate the expansion of production capacity at Liqhobong.
During the year the Company agreed terms with Standard Chartered
Bank of Botswana for a $6 million, three year, 6.5% fixed rate
credit facility. This facility was drawn down in June 2011.
Discussions have also commenced with a number of banks in respect
of a debt facility to finance the construction of Plant 2 at
Liqhobong.
The Company intends to take a cautious approach to further
capital commitments until it is clear that sufficient stability has
returned to both international financial markets and the rough
diamond market. In the meantime, the Company's financial position
remains secure, with $15 million in cash and diamond stocks with an
estimated value of $3 million as of October 2011.
Board
A significant number of changes were made to the Company's Board
of Directors during the year, with three new directors being
appointed and two resigning. Philip Kenny, who had been Chief
Executive Officer of the Company since it was admitted to AIM in
1998, was appointed as Executive Chairman, and Tim Wilkes, who had
been Chief Operating Officer of the Company since 2005, was
appointed to the Board as Chief Executive Officer. Angus Ogilvie
was appointed as Finance Director and Paul Sobie was appointed as a
Non-executive Director. A further Non-executive Director
appointment is also currently being considered. The Board has been
significantly strengthened by these changes and is now well
positioned to provide the guidance needed as the Company makes the
transition to becoming a significant mid-tier diamond producer.
Outlook
With a world class asset at the Liqhobong Mine and a portfolio
of exciting kimberlite projects in Botswana, significant increases
in production expected at both Liqhobong and BK11 during the coming
year, and a very favourable long term outlook for diamond prices,
we believe that Firestone's prospects are better than at any time
in its history and that the Company is well positioned to reach its
target of producing 1 million carats per annum by 2014.
Philip Kenny
Executive Chairman
11 November 2011
Consolidated statement of comprehensive income
Note 2011 2010
GBP000 GBP000
Revenue 2 2,453 3
Raw materials and consumables
used (819) (180)
Employee costs (829) (477)
Compensation payments to former (585) -
employees of Kopane
Amortisation and depreciation (899) (369)
Impairment of property, plant
and equipment - (200)
Release of rehabilitation provisions - 528
Acquisition expenses - (1,234)
Other operating expenses (1,383) (490)
_________ _________
Operating loss (2,062) (2,419)
Finance income 19 24
Finance expense (753) (11)
_________ _________
Loss before tax (2,796) (2,406)
Taxation (317) -
Loss after tax for the year _________ _________
Other comprehensive income:
Exchange differences on translating
foreign operations net of tax 789 1,135
Total comprehensive income and _________ _________
expense for the year
(2,324) (1,271)
_________ _________
Loss after tax for the year attributable
to:
Equity holders of the parent (2,998) (2,478)
Non-controlling interests (115) 72
_________ _________
(3,113) (2,406)
_________ _________
Total comprehensive income for
the year attributable to:
Equity holders of the parent (2,274) (1,346)
Non-controlling interests (50) 75
_________ _________
(2,324) (1,271)
_________ _________
Basic loss per share (1.1)p (2.4)p
_________ _________
Diluted loss per share (1.1)p (2.4)p
_________ _________
All amounts relate to continuing
operations.
Consolidated statement of financial position
2011 2010
GBP000 GBP000
Assets
Non-current assets
Intangible assets 11,212 20,129
Property, plant and equipment 82,941 14,568
_________ _________
94,153 34,697
_________ _________
Current assets
Inventories 1,853 29
Trade and other receivables 2,479 1,013
Derivative financial instruments 781 -
Cash and cash equivalents 4,256 5,645
_________ _________
9,369 6,687
_________ _________
Total assets 103,522 41,384
_________ _________
Equity and liabilities
Equity
Share capital 64,792 25,578
Share premium 39,198 25,380
Merger reserve (1,076) (1,076)
Translation reserve 1,153 429
Accumulated losses (17,975) (15,106)
_________ _________
Total equity attributable to equity
holders of the parent 86,092 35,205
Non-controlling interests 2,082 75
_________ _________
Total equity 88,174 35,280
_________ _________
Non-current liabilities
Interest-bearing loans and borrowings 2,736 1,193
Deferred tax 3,308 -
Provisions 1,247 -
_________ _________
7,291 1,193
_________ _________
Current liabilities
Interest-bearing loans and borrowings 2,362 1,168
Trade and other payables 5,197 3,045
Current tax liabilities - 229
Provisions 498 469
_________ _________
8,057 4,911
Total liabilities 15,348 6,104
_________ _________
_________ _________
Total equity and liabilities 103,522 41,384
_________ _________
Consolidated Share Share Merger Translation Accumulated Total Non-controlling Total
statement of capital premium reserve reserve losses interests equity
changes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
in equity
At 1 July 2009 12,346 22,768 (1,076) (703) (12,905) 20,430 - 20,430
Comprehensive
income
Loss for the year - - - - (2,478) (2,478) 72 (2,406)
Other
comprehensive
income for
the year
Exchange
differences on
translating
foreign
operations - - - 1,132 - 1,132 3 1,135
Total
comprehensive
income/(loss)
for the year - - - 1,132 (2,478) (1,346) 75 (1,271)
Shares issued in
the year 13,232 3,480 - - - 16,712 - 16,712
Share issue
expenses - (868) - - - (868) - (868)
Share-based
payment
adjustment - - - - 277 277 - 277
At 30 June 2010 25,578 25,380 (1,076) 429 (15,106) 35,205 75 35,280
--------- --------- --------- ------------ ------------ -------- ---------------- --------
At 1 July 2010 25,578 25,380 (1,076) 429 (15,106) 35,205 75 35,280
Comprehensive
income
Loss for the year - - - - (2,998) (2,998) (115) (3,113)
Other
comprehensive
income for
the year
Exchange
differences on
translating
foreign
operations - - - 724 - 724 65 789
--------- --------- --------- ------------ ------------ -------- ---------------- --------
Total
comprehensive
income/(loss)
for the year - - - 724 (2,998) (2,274) (50) (2,324)
Shares issued in
the year 39,214 14,940 - - - 54,154 - 54,154
Share issue
expenses - (1,122) - - - (1,122) - (1,122)
Arising on the
acquisition of
Kopane - - - - - - 2,057 2,057
Share-based
payment
adjustment - - - - 129 129 - 129
--------- --------- --------- ------------ ------------ -------- ---------------- --------
At 30 June 2011 64,792 39,198 (1,076) 1,153 (17,975) 86,092 2,082 88,174
--------- --------- --------- ------------ ------------ -------- ---------------- --------
The following describes the nature and purpose of each reserve
within owners' equity:
Share capital Amount subscribed for shares at nominal value.
Share premium Amount subscribed for share capital in excess of nominal
value.
Merger reserve Amounts arising from the merger of subsidiary investments.
Translation reserve Gains/(losses) arising on retranslating the net assets
and net income of overseas subsidiary companies denominated
in foreign currencies into sterling.
Accumulated losses Cumulative profit/(loss) of the Group attributable to
equity shareholders.
Consolidated statement of cash flows
2011 2010
GBP000 GBP000
Cash flow from operating activities
Loss before taxation (2,796) (2,406)
Adjustments for:
Depreciation, amortisation and impairment 1,435 570
Effect of foreign exchange movements (85) 157
Interest payable 116 11
Equity-settled share-based payments 13 277
Loss on derivative financial instruments 637 -
_________ _________
Net cash flow from operating activities
before changes
in working capital (680) (1,391)
Increase in inventories (1,202) -
Decrease/(increase) in trade and
other receivables 895 (426)
Increase in trade and other payables 1,516 1,926
Decrease in provisions (59) (739)
_________ _________
Net cash flow from operating activities 470 (630)
_________ _________
Investing activities
Payments for property, plant and
equipment (17,845) (5,472)
Payments for intangible assets - (3,991)
Cash acquired with subsidiary 956 -
Disposal of non-current assets 13 -
_________ _________
Net cash flow from investing activities (16,876) (9,463)
_________ _________
Financing activities
Issue of ordinary shares 13,786 16,712
Share issue expenses (1,122) (868)
Proceeds from long-term borrowings 3,633 -
Proceeds from lease finance arrangements - 140
Repayment of long-term borrowings (1,049) (1,082)
Repayment of lease finance (40) (12)
Interest paid (191) (171)
_________ _________
Net cash flow from financing activities 15,017 14,719
_________ _________
Net (decrease)/increase in cash and
cash equivalents in the year (1,389) 4,626
Cash and cash equivalents at the
beginning of the year 5,645 1,019
_________ _________
Cash and cash equivalents at the
end of the year 4,256 5,645
_________ _________
On 29 September 2010 the Company acquired Kopane Diamond
Developments plc for a non-cash consideration of GBP40,369,000.
Notes
1. Basis of preparation
While the financial information included in this announcement
has been prepared in accordance with International Financial
Reporting Standards (IFRS), this announcement does not contain
sufficient information to comply with IFRS. The Company will
publish full financial statements that comply with IFRS in November
2011.
The financial information set out in the announcement does not
constitute the Company's statutory accounts for the year ended 30
June 2011 or the year ended 30 June 2010. The financial information
for the year ended 30 June 2011 and the year ended 30 June 2010 are
extracted from the statutory accounts of Firestone Diamonds plc.
The auditor, PKF (UK) LLP, reported on those accounts; their report
was unqualified and did not contain a statement under section
498(2) or 498(3) of the Companies Act 2006.
The 2011 accounts have been prepared on a basis consistent with
the accounting policies set out in the 2010 accounts.
Following a review of the Company's financial position and the
projected cash flows from the Liqhobong Mine and the BK11 Mine, the
directors have concluded that sufficient financial resources will
be available to meet the Company's current and foreseeable
investment and working capital requirements. On this basis, they
consider it appropriate to prepare the financial statements on a
going concern basis.
2 Revenue
An analysis of the Group's revenue is as follows:
2011 2010
GBP000 GBP000
Sales of diamonds 3,005 -
Sale of other goods and services - 3
_________ _________
Total revenues 3,005 3
Amounts offset against intangible mining (552) -
assets under development
_________ _________
Net revenue 2,453 3
_________ _________
Revenues in the year arise from the sale of diamonds. An amount
of GBP552,000 relating to the sale of diamonds recovered during the
commissioning and testing of mining and processing operations at
the BK11 Mine has been allocated against the costs incurred in
developing the mine. An additional amount of GBP251,000 arising
from the sale of diamonds recovered from the BK11 Mine has been
classified as incidental revenue. In relation to the application of
accounting policies, the Liqhobong Mine is considered to have
commenced commercial production on 1 June 2011 and the BK11 Mine on
1 July 2011.
An analysis of the Group's revenue by country of origin is:
2011 2010
GBP000 GBP000
Botswana 803 -
Lesotho 2,202 -
South Africa - 3
_________ _________
Total revenues 3,005 3
_________ _________
3. Loss per share
The calculation of the basic loss per share is based upon the
net loss after tax attributable to ordinary shareholders of
GBP2,998,000 (2010: loss of GBP2,478,000) and a weighted average
number of shares in issue for the year of 264,731,812 (2010:
103,197,603).
Diluted loss per share
The diluted loss per share in 2011 and 2010 is the same as
the basic loss per share as the potential ordinary shares
to be issued have an anti-dilutive effect.
On 3 August 2011 the Company issued new equity totalling
28,865,000 ordinary shares and on 31 August 2011 the Company issued
new equity totalling 19,784,000 ordinary shares. The Company has
11,435,000 shares potentially issuable in respect of equity and
share option incentives issued to employees.
4 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 is
a diamond producer, developer and explorer whose principal assets
are located in Lesotho in Southern Africa. Kopane was quoted on AIM
until the date of acquisition by the Company.
The acquisition was implemented by means of a scheme of
arrangement under Part 26 of the Companies Act 2006. The terms of
the arrangement were that Kopane shareholders received 0.4657 of a
new ordinary share for every 1 Kopane share held.
Both the Company and Kopane are diamond exploration and
development companies with a geographical focus on Southern Africa.
The majority of Firestone's assets are located in Botswana and
Kopane's principal asset is located in Lesotho. Liqhobong is
considered by the Directors to be one of the most attractive
undeveloped kimberlites in the world. The Company has resumed
production at Liqhobong and is currently completing a definitive
feasibility study in respect of the construction of a significantly
larger processing plant at Liqhobong.
The Kopane acquisition has been accounted for using the purchase
method of accounting and Kopane's accounts have been consolidated
within the Group financial statements from 29 September 2010.
The book values and fair values of the assets and liabilities
acquired are set out below.
Book value Fair-value
GBP000 GBP000
Goodwill 925 -
Intangible mining assets 6,089 38,926
Property plant and equipment 3,520 1,630
Derivative financial instruments 891 891
Inventories 540 622
Trade and other receivables 2,793 2,887
Cash 1,043 956
Trade and other payables (374) (386)
Provisions (64) (87)
Deferred tax - (3,013)
Non-controlling interests 145 (2,057)
_________ _________
15,508 40,369
_________
Fair-value of consideration 40,369
_________
Goodwill -
_________
The fair value of the purchase consideration arises from the
issue of 140,413,477 ordinary shares at a price of 28.75p per
share, being the market price of an ordinary share as of the date
of acquisition.
Kopane had a number of employee share options outstanding as at
the date of acquisition. As part of the acquisition the Company
amended the Kopane option agreements to substitute options over
ordinary shares in place of the Kopane options at an exercise price
of price of 21.47 pence. All of the Kopane options have either been
exercised or expired.
There were no contingent arrangements affecting the
consideration paid. No contingent liabilities have been recognised.
The Company has received no indemnities from the previous
shareholders or management.
The transaction costs incurred in relation to the acquisition of
Kopane were GBP1,689,000 of which GBP1,234,000 was expensed in 2010
and GBP454,000 deducted from the Company's share premium account in
2011.
A non-controlling interest of 25% of the Liqhobong Mining
Development Limited is held by the Government of Lesotho.
The fair value of the intangible mining asset was determined by
an analysis of the market value of the consideration paid for each
Kopane ordinary share and was supported by the results of a
risk-adjusted discounted cash flow analysis. No other intangible
assets have been recognised.
The results of Kopane for the year to 30 June 2011 and for the
period after acquisition from 29 September 2010 to 30 June 2011 are
set out below:
Year ended Period 29 September
30 June
2011 2010 to 30
June 2011
GBP000 GBP000
Revenue 2,202 2,202
_________ _________
Loss before taxation (1,191) (1,578)
Taxation - -
_________ _________
Loss after taxation (1,191) (1,578)
Other comprehensive income 2,073 341
_________ _________
Total comprehensive income and
expense for the year/period 882 (1,237)
_________ _________
5. Annual General Meeting
The company's Annual General Meeting will be held at the office
of Tavistock Communications, 131 Finsbury Pavement, London EC2A 1NT
on 14 December 2011 at 2.30 pm.
6. Dividends
The directors do not recommend the payment of a dividend for the
period.
7. Qualified person review
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 a director of the Company and its Chief
Executive Officer 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. Announcement and Annual Report
This announcement was approved by the board on 11 November 2011.
The Annual Report for the year ended 30 June 2011, including the
auditors' report, will be posted to shareholders and will be
available from the same date to be downloaded from 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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