Firestone Diamonds - Interim Results
April 30 1999 - 3:30AM
UK Regulatory
RNS No 4756t
FIRESTONE DIAMONDS PLC
30 April 1999
Firestone Diamonds plc
Unaudited interim results to 31 December, 1998
LONDON: April 30, 1999 - The Board of Firestone Diamonds plc, ("the
Company") announces unaudited interim results for the period from 24
June, 1998 to 31 December, 1998.
The period saw a number of major developments. Following Firestone's
shares being admitted to trading on the AIM market of the London Stock
Exchange in August 1998, substantial progress was made in the
development of the Company's mining operations and exploration
projects. In South Africa, a major expansion was completed at the
Avontuur Mine, and a new exploration and evaluation programme
commenced in the Groen River Valley, from which initial results have
been very encouraging. Exploration results from the Mopipi project in
Botswana have continued to exceed expectations and indicate the likely
presence of several kimberlites in the project area, as a result of
which we have decided to increase our focus on the project. Firestone
has also continued to expand its exploration portfolio, with an
additional prospecting license granted in Botswana and a new project
acquired in South Africa.
Avontuur Mine, South Africa
The Company embarked on a significant expansion programme at the
Avontuur Mine in September. This expansion was substantially
completed by the end of 1998, resulting in earthmoving capacity being
more than doubled to over 1 million tonnes per annum, gravel treatment
plant capacity being increased by 60% to approximately 320 tonnes per
day and exploration and development drilling capability being
increased ten-fold. As part of the expansion, operations at Avontuur
were integrated with those on the neighbouring Nova and Gras Kom
properties so that the area covered by the expanded Avontuur
operations has increased from 700 acres to over 2,600 acres.
Production increased significantly at the end of the year following a
period of restricted mining activity while the expansion programme
was being completed. We expect production to continue to increase
during this year as the mine reaches full operating capacity and new
mining areas are brought into production. In addition to mining
activity, a programme of exploration and evaluation drilling was
carried out in the fourth quarter of 1998, resulting in the discovery
of three new gravel deposits. While further evaluation of these
deposits is required, we are confident that they will result in an
increase in the mine's reserves.
Although there was a significant drop in demand for diamonds during
1998 as a result of the financial crisis in the Far East, rough
diamond prices remained relatively stable as the De Beers-controlled
CSO limited supplies to the market. Demand for high quality gem
diamonds such as those produced at Avontuur remained strong, and
prices achieved by the Company in recent sales averaged over $100 per
carat and were at similar levels to those obtained in the first half
of 1998.
Work at Avontuur in 1999 has focused primarily on bringing the
expanded operations up to their full rated capacity and on continuing
the drilling and evaluation programme. As there are a still a number
of unexplored areas on the property with significant potential, we
have decided to expand our exploration programme by conducting a high
resolution electrical resistivity survey over those areas. This
recently developed technique is expected to significantly accelerate
the exploration for and evaluation of new deposits at the mine, and
will be carried out in the next few months.
Groen River Valley, South Africa
A comprehensive exploration and evaluation programme commenced in the
Company's Groen River Valley project area in November 1998 and is
still ongoing. The programme consists of drilling to establish the
location and depth of gravels, followed by excavation and testing of
the gravels for diamond content and grade. Excavations in the first
location tested in November resulted in the recovery of gem quality
diamonds, proving that the gravels identified are diamondiferous.
Analysis of the diamonds and associated heavy minerals recovered
indicate that they belong to one of the targeted palaeo river systems
which are known to carry diamonds of large size and exceptional
quality. On the basis of these positive results, the Company decided
to establish a permanent exploration base in the Groen River Valley at
the end of 1998.
The Company made a significant addition to the Groen River Valley
project in January 1999 by acquiring exploration rights over a
property known as Eiland Punt Noord, which adjoins Firestone's other
properties in the area. As Eiland Punt Noord is known to host gravel
deposits similar to those mined by De Beers immediately to the north,
it has become the primary focus of the Company's exploration programme
in the Groen River Valley. Drilling commenced on the property in
February and has already identified gravel in two locations.
Earthmoving and gravel treatment equipment were moved to the property
in March in preparation for bulk sampling of these gravels. While we
expect that it will take several months to complete the bulk sample,
preliminary results have confirmed that the gravels are diamondiferous
and that they belong to the targeted palaeo river system. A high
resolution electrical resistivity survey will also be carried out over
Eiland Punt Noord, and is expected to significantly accelerate
exploration and evaluation of the property.
We are very encouraged by the results obtained to date and remain
confident that the area has the potential to become a major new
alluvial diamond producing region and that we will be able to
establish commercial mining operations in the Groen River Valley by
the end of the year.
Mopipi, Botswana
Substantial progress was made during the period on the Company's
Mopipi joint venture project, located approximately 50 km west of De
Beers' Orapa Mine. The initial phase of exploration consisted of
aerial photo analysis to identify potential kimberlitic structures,
and soil sampling throughout the area to recover and evaluate
kimberlite-associated indicator minerals. More than 140 soil samples
were taken and a number of kimberlite targets have been identified by
the presence of significant indicator mineral anomalies. On the basis
of these results, a new prospecting license for an additional area of
3,620 acres adjoining the existing joint venture area was applied for
and granted, bringing our joint venture's total area in Mopipi to over
20,000 acres.
A follow up sampling programme focusing on these targets commenced at
the end of 1998 and has recently been completed, with some 60
additional samples collected. Examination of the heavy minerals
recovered from these samples has confirmed that they come from local
kimberlite sources. Selected kimberlite indicator minerals have been
submitted for electron microscope analysis to determine if the
kimberlite sources are likely to be diamondiferous. Results from this
analysis will be used to identify and select potential drilling
targets.
Future prospects
We are pleased with the significant progress which the Company has
made since August of last year. We expect to continue to develop our
key projects and to expand our project portfolio, both through
internal development and acquisition. We are also pleased to note
that CSO rough diamond sales have increased substantially in 1999.
With CSO sales so far this year up 37% over the same period in 1998,
and with rough diamond prices becoming firmer, we expect to achieve
higher prices for Avontuur production during the year. With the staff
and infrastructure that we have put in place, we believe that we have
established a solid foundation for our continued growth and remain
confident about the Company's prospects.
James F. Kenny
Chairman
Contacts:
James F Kenny, Chairman 0171 370 6452
Philip Kenny, Chief Executive 0171 370 6452
Firestone Diamonds plc
Unaudited Interim Consolidated Profit and Loss Statement
For the period from 24 June, 1998 to 31 December, 1998
#
Turnover 64,661
Operating costs (64,853)
_______
Gross loss (192)
Administrative expenses (31,368)
_______
Operating loss (31,560)
Other income 33,298
_______
Profit on ordinary activities
before taxation 1,738
Taxation -
Profit on ordinary activities
after taxation 1,738
=====
Earnings per share 0.01 p
Notes:
1. The unaudited interim financial statements for the period from 24
June, 1998 to 31 December, 1998 do not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985.
2. As this is the first period for which the Company is reporting
results, no comparative figures are available.
3. The earnings per share has been calculated on the basis of the
weighted average number of shares in issue for the period of
17,497,920.
4. No dividends have been declared for the period from 24 June, 1998
to 31 December, 1998.
5. Copies of this report are being sent to all shareholders.
Additional copies are available to members of the public from the
offices of John East & Partners Limited, Crystal Gate, 28-30 Worship
Street, London EC2A 2AH.
END
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