FDI Firestone Diamonds Plc

RNS Number:1487B
Firestone Diamonds PLC
23 July 2004

                             Firestone Diamonds plc

                Bonte Koe Mine to commence production in August
               Drilling and bulk sampling planned at Groen River
                Significant expansion of exploration programmes
                         Placing to raise #1.4 million



LONDON:  23 July, 2004



Bonte Koe Mine

*        Mine development at an advanced stage
*        First diamonds expected to be produced in August



Groen River Valley

*        Preparations for the next phase of exploration at an advanced stage
*        Bulk sampling to be carried out on HL deposit
*        Major drilling programme to be undertaken



New Exploration Projects

*        Significant expansion planned in new exploration activity in South
         Africa
*        Placing of #1.4 million to finance acquisition and development of new
         projects
*        Planning under way for major new exploration project
*        Additional new exploration projects identified



Firestone Diamonds plc ("Firestone" or "the Company"), the AIM-quoted diamond
mining and exploration company, today announces an update on development work at
its new Bonte Koe Mine and plans for a significant expansion to its exploration
programmes in South Africa.



Bonte Koe Mine

In July 2003, the Company announced that it had agreed to acquire the Bonte Koe
Mine in Namaqualand, and that it intended to re-establish mining operations
through its black-empowerment joint venture, African Star Minerals.  Development
work at Bonte Koe is now almost complete.  In early 2004 the Company decided to
upgrade the power and water infrastructure planned for Bonte Koe, and to
construct a 10 km power line and to lay a 35km water pipeline to the mine.
While work on the diamond recovery plant has progressed on schedule,
construction of the power line has been delayed by 6 weeks.  The power line is
now scheduled for completion by mid August, following which commissioning of the
processing plant will start.  Pre-stripping of overburden in the planned mining
areas has already started in order to ensure that gravel will be available when
the processing plant is fully commissioned.  The first diamonds are expected to
be produced in August.  Bonte Koe is expected to make a significant contribution
to overall group turnover during the current financial year, and to become the
Company's most profitable mining operation.



Groen River Valley

Preparations are at an advanced stage for the next phase of work at the Groen
River Valley exploration project.  This work will include detailed drilling and
bulk sampling on the major deposit that was delineated by drilling last year
(known as the HL deposit), follow-up drilling on targets that were drilled last
year, and drilling of new targets.  The HL deposit has already been proven to be
diamondiferous, so the objective of bulk sampling will be to determine grade and
diamond value.  With the high quality and large size of diamonds that have been
proven in the area, which are comparable in value to those from the Orange
River, the Company is confident that the Groen River Valley has the potential to
become an important new diamond producing region.  It is expected that the next
phase of work on the project will confirm this potential.  Based on the
substantial land position that Firestone holds in the area, this project has the
potential to make a significant contribution to the Company's future growth.



New Exploration Projects

Following the recent signing of joint ventures with De Beers over the Mopipi
kimberlite exploration project in Botswana, and with American Diamonds Inc. over
the Company's kimberlite exploration project in the United States, the Company
plans to significantly increase its exploration activity in South Africa.  This
will focus on exploiting the data that the Company has on more than forty years
of diamond exploration in Namaqualand and elsewhere, to identify new, large
scale exploration projects that have the potential to yield significant reserves
of gem quality diamonds.



Planning has commenced for the Company's next exploration project in
Namaqualand, which covers a significant palaeo river system that has already
been proven to contain high quality gem diamonds.  Initial satellite and aerial
photo interpretation in this area has identified palaeo channels over a length
of approximately 20 kilometres, and geological characteristics that are similar
to those at the Groen River Valley HL deposit.  The first phase of work on the
project will consist of drilling to delineate the palaeo channels and bulk
sampling to determine grade and diamond value.



Firestone has also made significant progress in identifying new areas in South
Africa similar in geological setting and in potential scale to the Groen River
Valley area, and expects to secure new projects as a result of this work in the
coming year.



Placing

The Company also announces that it is placing 2,187,500 new ordinary shares of
20 pence each in the Company with institutional investors at a price of 64 pence
per share to raise #1.4 million before expenses.  The proceeds of the placing
will be used to accelerate the pace of acquisition, exploration and development
of new projects and for general working capital purposes.  These new ordinary
shares will rank pari passu in all respects with the existing ordinary shares in
the Company.  Application will be made for the new ordinary shares to be
admitted to trading on the Alternative Investment Market of the London Stock
Exchange, and it is expected that trading will commence on 2 August 2004.



Mr. Philip Kenny, Chief Executive of Firestone, said today: "With two of our
exploration projects being financed and managed by joint venture partners,
Firestone now has the capacity to aggressively pursue new projects in
Namaqualand and elsewhere.  With the opportunities that are available to us and
with the rough diamond market continuing to strengthen, we are confident about
the Company's long term prospects."



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

Laurence Read, Conduit PR               +44 797 995 5923 

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



                       Website: www.firestonediamonds.com



Background information:

Firestone Diamonds plc is a UK-based international diamond mining and
exploration company with operations in South Africa, Botswana and the United
States.  Firestone is quoted on the London Stock Exchange's Alternative
Investment Market (AIM).



Firestone operates the Bonte Koe, Oena and Avontuur alluvial diamond mines in
Namaqualand.  Namaqualand, which is located on the west coast of South Africa,
has been one of the world's largest alluvial diamond producing regions for the
past 60 years, with total production to date estimated to be 32 million carats,
with a current value of more than $3 billion.  Firestone has a number of
exploration properties in Namaqualand, of which the most advanced is the Groen
River Valley project.



Firestone has recently established a joint venture with De Beers over the
Company's Mopipi kimberlite exploration project in Botswana.  Botswana is the
world's largest producer of diamonds by value, with annual production of over 20
million carats worth over $1.6 billion, accounting for over 23% of worldwide
production by value.  Botswana hosts De Beers' Orapa, Letlhakane and Jwaneng
mines and is considered to be one of the best countries in the world for
kimberlite exploration.  Firestone's Mopipi project is located adjacent to the
Orapa and Letlhakane mines, which produce approximately 13 million carats per
annum, worth approximately $800 million.  Under the terms of the joint venture
agreement, De Beers can earn a 61% interest in the Mopipi project by taking the
project to completion of bankable feasibility.



Firestone has established a joint venture with American Diamonds Inc. over the
Company's US kimberlite exploration project.  Under the terms of the joint
venture agreement, American Diamonds can earn a 60% interest in the project
through expenditure of $1 million.


                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

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