FDI Firestone Diamonds Plc

RNS Number:3939Z
Firestone Diamonds PLC
03 June 2004

                             Firestone Diamonds plc

       Promising results from kimberlite exploration in the United States
                   Letter of intent signed for joint venture


LONDON:  3 June, 2004

Firestone Diamonds plc ("Firestone" or the "Company") today announces results
from work that is has been carrying out on a kimberlite exploration project in
the United States (the "US Project").  Firestone also announces that it has
signed a letter of intent to enter into a joint venture over the US Project with
American Diamonds Inc. ("ADI").  ADI is owned by Dunsmuir Ventures Limited and
Majescor Resources Inc, both Canadian diamond exploration companies and listed
on the TSX Venture Exchange in Canada.

Mr. Philip Kenny, Chief Executive of Firestone, said today: "We are very pleased
with the results of our exploration in the United States, which indicate the
potential for diamondiferous kimberlite in our project area.  We expect that the
next phase of exploration, which will be fully funded by our new joint venture
partner, American Diamonds, will carry us through to the identification and
drilling of potential kimberlite targets."


Project Area
The US Project is located on the North American Laurentia craton, which is the
largest area of prospective diamond potential in the world.  Approximately half
of the Laurentia craton is located in Canada, where it hosts the Ekati and
Diavik diamond mines, operated by BHP Billiton and Rio Tinto, respectively.  The
other half of the Laurentia craton is located in the United States.  Significant
parts of the Laurentia craton in the United States, including the US Project
area, have never been explored systematically for diamonds.

A detailed interpretation of structural features, faults and zones of crustal
weakness was carried out to identify the areas most favourable for emplacement
of diamondiferous kimberlite in the United States.  The US Project, which covers
an area comprising five contiguous States, is located in what is considered to
be the best of these areas in terms of geological potential.  The project area
is easy to access for carrying out exploration.  Most mineral rights in the
project area are privately held, and Firestone will only seek to secure mineral
rights once exploration in the project area has defined specific targets for
detailed follow-up work.  The location of the US Project has not been disclosed
in order to protect the Company's position and will remain confidential until
the necessary mineral rights have been secured.

The US Project is subject to a 4% carried interest in favour of Howard
Coopersmith and Bram Janse, who were responsible for developing the geological
interpretation upon which the US Project is based, the selection of the project
area, and the planning and implementation of exploration programmes.  Firestone
has the right to buy back a 2% carried interest at any time for a consideration
of US$2 million.


Exploration results
Following the selection of the project area, regional sampling for kimberlitic
indicator minerals ("KIMs") was undertaken, with follow-up sampling carried out
on anomalous areas.  More than 750 samples have been taken to date, of which
more than one third contained KIMs, including peridotitic garnet, eclogitic
garnet, megacrystic garnet, chrome diopside, Cr-rich chromite, and
picroilmenite.  Microprobe analysis, which was carried out on selected KIMs, has
confirmed that some of the grains originated at depths within the diamond
stability field, including a number of G10's (diamond associated garnets) and
diamond associated chromites. Trace element analyses indicate a cool geothermal
gradient, which is also positive for diamond potential in the area.

Follow-up sampling has resulted in the identification of high priority targets
in the more advanced parts of the project area.  These targets have been
identified on the basis of exceptionally high counts of KIMs (in excess of 1,000
per sample in some cases), angular KIMs and significant numbers of chrome
diopsides (which indicate proximity to source), and surface structural and
topographic anomalies.

The results obtained to date indicate that at least one previously unknown
kimberlite field, and possibly more, is located in the project area, and that
some of these kimberlites may be diamondiferous.

A high density KIM sampling programme is planned in the coming months to follow
up on the priority areas identified to date.  The objective of this work is to
delineate specific targets for subsequent follow-up with geophysics and/or
drilling.  Regional sampling will also continue elsewhere in the project area.

Joint venture
Firestone has signed a letter of intent ("LOI") to enter into a joint venture
over the US Project with ADI.  Under the terms of the LOI, ADI will pay
US$60,000 towards Firestone's exploration costs to date, following which it can
earn an interest in the US Project by financing exploration on the Project Area
as follows:

  * ADI can earn a 30% interest by incurring exploration expenditures of
    US$140,000 in Year 1 and US$205,000 in Year 2
  * ADI can earn an additional 20% interest by incurring exploration
    expenditures of US$345,000 in Year 3
  * ADI can earn an additional 10% interest by incurring exploration
    expenditures of US$275,000 in Year 4.

Firestone will be required to contribute its pro rata share of further
expenditures after ADI has satisfied its earn-in obligations.  ADI will be
operator for the joint venture while it is earning its interest, or while it
holds an interest of more than 50% in the project.  ADI will also contribute its
pro-rata share towards the 4% carried interest to which the US Project is
subject.  Howard Coopersmith and Bram Janse will continue to provide geological
consultancy and assistance to the joint venture.

Under the terms of the LOI , Firestone and ADI have also agreed to enter into a
second joint venture to explore for kimberlite elsewhere in the United States.
No significant work is expected to be undertaken in this respect until the US
Project reaches a more advanced stage.

Background information
Howard Coopersmith and Bram Janse, who have directed Firestone's exploration
work on the US Project, are very experienced diamond exploration geologists.
Mr. Coopersmith has over 25 years of experience in diamond exploration,
evaluation, development and mining worldwide.  He has been responsible for the
discovery of over 30 kimberlites and lamproites, including the Kelsey Lake
kimberlite in Colorado, which was the first diamond mine in the United States,
and is considered to be one of the most experienced diamond exploration
geologists in the United States.  Dr. Janse has over 40 years of experience in
all aspects of diamond exploration for both primary and alluvial diamond
deposits worldwide, and has worked for De Beers, Selection Trust and BP
Minerals.


For further information:

Philip Kenny, Firestone Diamonds            +44 20 7370 6452 /  +44 7831 324 645

Leesa Peters, Conduit PR                    +44 20 7936 9095/ +44 7812 159 885

Jamie Cumming, Bell Lawrie White            +44 141 314 8103 / +44 776 8044 620

Website: www.firestonediamonds.com




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            The company news service from the London Stock Exchange
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