FDI.L Share News (FDI)

Diamond miner Firestone Diamonds is to start development of commercial mining operations on its BK11 prospect in Botswana.Production at the mine is set to start ahead of schedule in the second quarter of 2010, with full production levels equivalent to 1.5m tonnes per annum slated to be achieved in the third quarter.Development costs will be funded from existing cash reserves. The company has increased its stake in BK11 from 80% to 90% in return for funding the development cost portion of its minority partner.The company said that the final phase of bulk sampling from the prospect yielded results in line with expectations, with the overall modelled value of $137 per carat being a 1% improvement from June’s preliminary estimate.The KW area on the west side of BK11 yielded a modelled valye of $157 per carat, up 9% from June 2009’s estimate, and this is the area where Firestone will initially target.Mining of the KW area at BK11 is expected to produce annual revenues of around $24m a year at operating margins of 60%. After completing resource delineation work on BK11 the company has revised its resource estimates to 12m tonnes, containing approximately 800,000 carats to a depth of 120 metres.Around 6m tonnes of this resource is in the KW area, with an average grade of 10 carats per 100 tonnes, of which some 2.3m tonnes is in the indicated resource category.The company believes that actual mining grades have the potential to increase significantly due to the use of selective mining and the presence of higher grade zones which are expected at depth.