TIDMFDI
RNS Number : 4035Z
Firestone Diamonds PLC
15 March 2012
Firestone Diamonds plc
Unaudited interim results for the six months to 31 December
2011
LONDON: 15 March 2012
The Board of Firestone Diamonds plc, ("Firestone" or "the
Company"), the AIM-quoted diamond mining and exploration company
(ticker: AIM: FDI), announces its unaudited interim results for the
six months ended 31 December 2011 (H1 2012).
HIGHLIGHTS
Liqhobong Mine, Lesotho
-- Pilot Plant
o 207,845 tons treated in H1 2012 (H2 2011: 72,991 tons)
o 70,192 carats produced (H2 2011: 23,296 carats) at a grade of
33.77 carats per hundred tons (cpht)
o Further plant improvements underway to reduce large stone
breakages and increase throughput
-- Main Treatment Plant
o Definitive Feasibility Study (DFS) on track for completion in
June 2012
-- Diamond sales
o 42,802 carats sold during H1 2012 (H2 2011: 17,082 carats) at
an average price of $59/carat (H2 2011: $140/carat).
o H1 2012 $/carat reduction attributable to general diamond
price weakening and the average smaller size of stones included in
the tender.
BK11 Mine, Botswana
-- Operations
o 9,910 carats produced at 2.5 cpht
o Further plant improvements including connection to lower cost
main electrical power grid
o Operations placed on care and maintenance on 27 February
2012
-- Diamond sales
o 8,168 carats sold in H1 2012 (H2 2011: 4,277 carats) at an
average price of $133/ct (H2 2011: $233/carat).
Financial & Board
-- Financing activities
o GBP12.8 million net of expenses raised in July and August 2011
from a private share placement
-- Investment activities
o GBP5.6 million invested in property, plant and equipment
-- GBP4.2 million cash on hand on 31 December 2011
-- Board changes
o Mr Abraham Jonker appointed as non-executive director and
James Kenny resigned as non-executive director during December
2011
o Mr Philip Kenny resigned as executive chairman during January
2012 and Mr Lucio Genovese appointed in his stead as non-executive
chairman.
Post Period-end Summary
-- Conditional placing of GBP14.7 million and Capital Reorganisation
Outlook
-- Further investments in the Pilot Plant at Liqhobong expected
to reduce diamond breakages and increase plant throughput
-- Strategic focus now on major development at Liqhobong.
Tim Wilkes, CEO of Firestone Diamonds, commented: "The higher
than expected cash outflows in H1 2012 are mainly due to the
general weakness in the diamond price experienced from July 2011
combined with technical challenges experienced at both the
Liqhobong and BK11 plants. With the restructuring that has been
undertaken, the Company is now focused on increasing Liqhobong's
revenue per carat production in 2012 and in developing the Main
Treatment Plant in order to reach our target of producing over 1
million carats per annum by 2015, whilst achieving the required run
rate by Q4 2014".
Extracts of the Interim Results appear below with a full version
available on the Company's website. For further information, visit
the Company's web site at www.firestonediamonds.com or contact:
+267 713 77686 / +44 20
Tim Wilkes, Firestone Diamonds 8741 7810
Rory Scott, Mirabaud Securities
(Nominated Broker) +44 20 7878 3360
Robert Beenstock, N+1 Brewin
(Nominated Adviser) +44 20 3201 3170
Jos Simson / Emily Fenton, Tavistock +44 20 7920 3150/+44 7899
Communications 870 450
Dear Shareholder,
The disappointing operating and financial results reported for
the period can be attributed to the weakening diamond market and
technical issues at the BK11 and Liqhobong processing plants. As a
result, the Company has undergone a strategic review which has
resulted in the focus on developing Liqhobong's full potential for
long term value creation with the emphasis on the Main Treatment
Plant, where a DFS is on track for completion in June of this year.
Furthermore, the BK11 Mine in Botswana has been placed on temporary
care and maintenance as of 27 February 2012. This is as a
precautionary measure due to the technical challenges encountered
combined with a weaker diamond market for the smaller stones. We
remain fully committed to BK11 and the care and maintenance
programme has been designed to enable a rapid re-start when the
technical and market challenges have been resolved.
Liqhobong, Lesotho
Production at Liqhobong has been increased from 65 tons per hour
to 85 tons per hour during the period under review and will be
increased to over 100 tons per hour during the second half of the
2012 financial year due to further planned improvements to the
Pilot Plant which will also reduce large diamond stone
breakages.
42,802 carats were sold at an average price of $59/carat
realising $2.5 million. This price is well off the $123/carat
realised at our June 2011 tender and was negatively affected by the
general decrease in diamond prices that affected the smaller near
gem quality part of the assortment as well as the average smaller
size stones included in the tender.
The Main Treatment Plant's DFS commenced during the period under
review and is scheduled to be completed in June 2012.
BK11, Botswana
The BK11 plant has been negatively affected by the lack of
in-line secondary and tertiary crushing and the processing of lower
grade material in the first 40 - 60 m of the ore body. In-line
secondary crushing units were installed in December 2011, as was
the connection to the national electricity power grid.
Cut one stripping has been completed and cut two needs to
commence to expose the higher grade coarser ore body prevalent from
50 m below surface. At a stripping cost of $5m management has
deemed it prudent to put BK11 on temporary care and maintenance to
conserve cash and allow diamond prices to recover prior to making
these considerable investments.
Botswana Evaluation Projects
Kimberlite prospecting licences in the Kokong area of Botswana
have been added to our Tsabong and Orapa satellite licences.
Firestone possesses the largest and arguably the best diamond
prospecting licences in Botswana and with Botswana having the best
worldwide success rate in converting exploration interests into
mines, these assets are well positioned to be developed into
producing mines. The Company is currently assessing ways to unlock
the potential value of its exploration portfolio.
Financial
GBP13.5 million gross (GBP12.8 million net of expenses) was
raised in a private placement in July and August at 27.75 pence.
The Company's cash balance at 31 December was GBP4.2 million.
Outflow of funds totalled GBP12.8m during the period under
review and included expenditure of GBP1.3m on debt and interest
repayments, GBP5.6m on property, plant and equipment, and GBP5.9m
from operations. The outflow from operations was affected by
reduced diamond sales prices resulting in GBP2.2m less revenue than
expected. This fall reflects the global reduction in diamond
prices. Increased working capital absorbed GBP0.6m. There were
GBP3.1m of increased operational expenses due to ramp-up
delays.
The principal mining assets of the Group are held in Lesotho and
Botswana. During the period under review the Lesotho Loti has
devalued 15.5% and the Botswana Pula 10.5% when compared to
Sterling. This has resulted in a fall in the Sterling value of the
Group's assets denominated in these currencies, which is reflected
as a negative exchange difference in the translation of foreign
assets of GBP6.75m included in other comprehensive income. For
further clarity, these exchange differences are not included in the
Group's earnings per share calculation.
Firestone also gained a secondary listing on the Botswana Stock
Exchange in July 2011.
Board Changes
Mr Abraham (Braam) Jonker was appointed as a non-executive
director on 14 December 2011 and Mr James Kenny resigned as
non-executive director on 30 December 2011
Mr Philip Kenny resigned as executive chairman on 16 January
2012 and Mr Lucio Genovese was appointed in his stead on 17 January
2012 as non-executive chairman.
Placing and Capital Reorganisation
The Company also announces today a GBP14.7 million placing and
Capital Reorganisation. The completion of both the placing and
capital reorganisation is conditional on shareholder approval, and
is the culmination of a significant review by the Board over the
past few months as Firestone continues to develop its major assets.
I believe that this transaction will give the Company a strong
platform to execute on its strategic objectives.
Outlook
The strategic focus of the Company has now shifted to improved
diamond value management and the development of the Main Treatment
Plant at Liqhobong. To this end, planned investments in the pilot
plant at Liqhobong are expected to increase production and reduce
diamond breakages over the short term and the Main Treatment
Plant's DFS is on track for completion in June 2012.
The Company is also in the process of reviewing its strategy in
relation to its exploration portfolio and will provide an update to
the market in this regard in due course.
Lucio Genovese
Non- Executive Chairman
15 March 2012
Firestone Diamonds Plc
Unaudited Consolidated financial statements for the six months
period to 31 December 2011
Consolidated Income Statement
Six months Six months
ended ended Year ended
31 December 31 December 30 June
2011 2010 2011
Restated Restated
GBP'000 GBP'000 GBP'000
Revenue 1,973 1,051 2,453
Raw materials and consumables used (4,966) 10 (819)
Employee costs (2,273) (634) (829)
Compensation to former employees of
Kopane - - (585)
Amortisation and depreciation (2,094) (267) (899)
Exploration expenses - (187) (217)
Other operating expenses (623) (1,611) (1,383)
Impairment of intangible assets (615) - -
Operating loss (8,598) (1,638) (2,279)
Financial income 21 14 19
Financial expense (182) (207) (753)
Loss before tax (8,759) (1,831) (3,013)
Taxation 29 - (317)
Loss after tax for the period (8,730) (1,831) (3,330)
Other comprehensive (loss)/income:
Exchange differences on translating
foreign operations net of tax (6,750) 3,222 106
-------------- -------------- ------------
Total comprehensive income and expense
for the period (15,480) 1,391 (3,224)
-------------- -------------- ------------
Loss after tax for the period attributable
to:
Equity shareholders of the parent (7,780) (1,988) (3,215)
Non-controlling interest (950) 157 (115)
-------------- -------------- ------------
(8,730) (1,831) (3,330)
-------------- -------------- ------------
Total comprehensive income for the
period attributable to:
Equity shareholders of the parent (14,530) 1,263 (3,109)
Non-controlling interest (950) 128 (115)
(15,480) 1,391 (3,224)
-------------- -------------- ------------
Basic loss per share - pence (2.2p) (1.2p) (1.2p)
-------------- -------------- ------------
Diluted loss per share - pence (2.2p) (1.2p) (1.2p)
-------------- -------------- ------------
All amounts relate to continuing operations.
31 December 31 December 30 June
Consolidated statement of financial
position 2011 2010 2011
Restated Restated
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Intangible assets - 615 615
Property, plant and equipment 69,847 65,179 73,698
69,847 65,794 74,313
------------- ------------- ----------
Current assets
Inventories 2,525 705 1,853
Trade and other receivables 1,664 3,674 2,479
Derivative financial instruments 64 - 781
Cash and cash equivalents 4,194 10,832 4,256
------------- ------------- ----------
8,447 15,211 9,369
------------- ------------- ----------
Total assets 78,294 81,005 83,682
------------- ------------- ----------
Equity and liabilities
Equity
Share capital 74,523 64,149 64,792
Share premium 42,271 39,151 39,198
Merger reserve (1,076) (1,076) (1,076)
Translation reserve (6,187) 3,708 563
Accumulated losses (44,655) (35,728) (36,922)
------------- ------------- ----------
64,876 70,204 66,555
Non-controlling interests 537 (84) 1,779
Total equity 65,413 70,120 68,334
------------- ------------- ----------
Non-current liabilities
Interest-bearing loans and borrowings 2,024 524 2,736
Deferred tax 2,933 5,702 3,308
Other payables 368 - -
Provisions 1,353 97 1,247
-------------
6,678 6,323 7,291
-------------
Current liabilities
Interest-bearing loans and borrowings 1,795 1,358 2,362
Trade and other payables 3,976 2,675 5,197
Provisions 432 529 498
6,203 4,562 8,057
------------- ------------- ----------
Total liabilities 12,881 10,885 15,348
------------- ------------- ----------
Total equity and liabilities 78,294 81,005 83,682
------------- ------------- ----------
Six months
Consolidated statement of cash ended 31 Six months Year ended
flows December ended 31 December 30 June
2011 2010 2011
Restated Restated
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Loss before tax (8,759) (1,831) (3,013)
Adjustments for:
Depreciation, amortisation and
impairment 2,709 267 1,435
Effect of foreign exchange movements 613 2,022 (85)
Interest payable 58 93 116
Equity-settled share-based payment 47 97 13
(Profit)/loss on sale of non-current
assets (20) 206 -
Loss on sale of derivative financial
instruments - - 637
Net cash flow from operating
activities before changes in
working capital (5,352) 854 (897)
Increase in inventories (672) (54) (1,202)
Decrease in trade and other receivables 1,532 2,036 895
(Decrease)/increase in trade
and other payables (1,488) (2,348) 1,516
Decrease/(increase) in provisions 40 69 (59)
------------
Net cash flow from operating
activities (5,940) 557 253
------------ -------------------- ------------
Investing activities
Payments for property, plant
and equipment (5,606) (7,502) (17,628)
Cash acquired with subsidiary - 959 956
Disposal of non-current assets 20 - 13
Net cash flow from investing
activities (5,586) (6,543) (16,659)
------------ -------------------- ------------
Financing activities
Issue of ordinary shares 13,500 13,094 13,786
Share issue expenses (697) (1,122) (1,122)
Proceeds from long-term borrowings - - 3,633
Repayment of long-term borrowings (1,248) (686) (1,049)
Repayment of lease finance (33) (20) (40)
Interest paid (58) (93) (191)
------------ -------------------- ------------
Net cash from financing activities 11,464 11,173 15,017
------------ -------------------- ------------
Net increase in cash and cash
equivalents (62) 5,187 (1,389)
Cash and cash equivalents at
the beginning of the period 4,256 5,645 5,645
------------ -------------------- ------------
Cash and cash equivalents at
the end of the period 4,194 10,832 4,256
------------ -------------------- ------------
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1 Corporate information
Firestone Diamonds Plc ("the Company") is incorporated in England
and Wales and quoted on the London Stock Exchange's AIM market.
2 Basis of preparation
These condensed interim financial statements of the Company and
its subsidiaries ("the Group") for the six months ended 31 December
2011 have been prepared using accounting policies consistent with
International Financial Reporting Standards (IFRSs). With the
exception of the change in accounting policy referred to in note
5 below, 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 2011.
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 2011. The auditors' opinion on these Statutory Annual
Accounts was unqualified. The auditor's report also did not contain
a statement under Section 498 (2) or 498 (3) of the Companies
Act 2006.
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
Interim Financial Reporting.
The comparative figures presented are for the six months ended
31 December 2010 and the year ended 30 June 2011.
3 Going concern
The Company's business activities, together with the factors likely
to affect its future development are set out in the Chairman's
Statement. As discussed in the Chairman's Statement, the Company's
focus in 2012 is on increasing production and reducing diamond
breakages at the Liqhobong pilot plant and completing the feasibility
study of the Liqhobong main treatment plant.
On 15 March 2012, the Directors announced that the Company has
conditionally raised GBP14.7 million, subject to shareholders
approval. On that basis, the directors continue to adopt the going
concern basis in preparing these financial statements. Though
the directors are confident that the Company will continue to
have the ability to access sufficient levels of finance to continue
the Group's projects for the foreseeable future, there can be
no certainty that these funds will be available.
4 Loss per share
The calculation of the basic loss per share for the six months
ended 31 December 2010 is based upon the following:
Six months Six months
ended 31 ended 31 Year ended
December December 30 June
2011 2010 2011
GBP GBP GBP
Loss per share - pence (2.2p) (1.2p) (1.2p)
---------------- ----------------- --------------
Loss attributable to
shareholders
of the parent GBP7,780,000 GBP1,988,000 GBP3,215,000
---------------- ----------------- --------------
Weighted average number
of shares in issue 356,484,910 167,821,340 264,731,812
---------------- ----------------- --------------
The diluted loss per share for all periods is the same as the
basic loss per share as the potential ordinary shares to be issued
do not have an anti-dilutive effect.
5 Change of accounting policy
The Company has revised its treatment of exploration costs.
Previously these costs were carried forward as an intangible
asset if the rights of tenure for an area was current and it
was considered probable that these costs would be recovered
through successful development and exploitation of the area
of interest. The Group is now focussed upon the development
of and production from its mining activities and the Group
has reached the conclusion that a policy of immediately expensing
exploration expenditure provides more relevant information
to shareholders than a policy of capitalisation and such a
policy more accurately reflects the on-going activities of
the Group. Future exploration costs will be expensed in the
period in which they are incurred.
This represents a change in accounting policy and is reflected
within these interim financial statements as a prior year adjustment
with the opening balance sheet as at 30 June 2010 being restated.
There are also consequential restatements of the financial
statements as at 31 December 2010 and 30 June 2011 representing
the write off of historically incurred exploration expenditures
as at 30 June 2010 and in expenditure incurred since that date.
The effect of the restatement of the 30 June 2010, 31 December
2010 and 30 June 2011 financial statements is set out in note
8 below.
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, 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 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).
8 Effect on the net assets and loss after tax
Previously Adjustment Restated
stated
GBP'000 GBP'000 GBP'000
Net assets:
30 June 2010 35,280 (18,991) 16,289
------------------ ---------------- -----------
31 December 2010 90,492 (20,372) 70,120
------------------ ---------------- -----------
30 June 2011 88,174 (19,840) 68,334
------------------ ---------------- -----------
Loss after tax attributable
to equity shareholders:
31 December 2010 (1,801) (187) (1,988)
------------------ ---------------- -----------
30 June 2011 (2,998) (217) (3,215)
------------------ ---------------- -----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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