25 Sep 2009 07:00
FIRESTONE DIAMONDS plc
Botswana operations update
LONDON: 25 September, 2009
Firestone Diamonds plc ("Firestone" or "the Company"), the AIM-quoted diamond mining and exploration company (ticker: AIM:FDI), is pleased to announce an update on its BK11 and Jwaneng tailings projects in Botswana.
Highlights
BK11
Substantial progress made with bulk sampling
250,000 tonnes mined since July
Mining target of 325,000 tonnes to be reached in October 2009
Mining rate of 5,000 tones per day achieved
Pilot production plant fully operational
Concentrate sorting and diamond recovery being undertaken in Gaborone
Mine development decision expected to be made in Q4 2009
Jwaneng Tailings
Negotiations with Debswana on toll treatment progressing towards target for agreement to be signed in Q4 2009
Project finance discussions progressing
Philip Kenny, CEO of Firestone Diamonds, commented: "We are very pleased with the progress that we have made since July. We continue to work towards making a mine development decision on BK11 and to signing an agreement with Debswana on the Jwaneng tailings project before the end of the year. With the Company fully financed to production at BK11, and with prices in the rough diamond market continuing to recover from their recent lows, we remain confident about Firestone's prospects."
BK11
In March 2009 the Company announced an inferred resource of 12 million tonnes containing approximately 830,000 carats with an overall modelled value of $123/carat. In July 2009 the Company announced that the modelled value had increased to $135/carat and that work on the final phase of evaluation on BK11 had commenced. Substantial progress has since been made.
Bulk sampling
The objective of the final phase of evaluation is to process a bulk sample of approximately 20,000 tonnes and recover a sufficiently large parcel of diamonds in order for a high confidence diamond valuation to be obtained. This data is expected to be sufficient to allow a mine development decision to be made by the end of the year. The bulk sample trench is planned to extend to a depth of 30 metres and will require the excavation of approximately 325,000 tonnes of overburden and kimberlite. The location for the bulk sample trench was selected so as to intersect both the higher and lower grade kimberlite units that have been identified by large diameter drilling.
The pit has now advanced to a depth of 20 metres with approximately 250,000 tonnes of material mined. Mining of the remaining kimberlite is scheduled to be completed in October 2009. The material selected for sampling will be processed as twenty separate 1,000 tonne samples in order to provide information on grade and geological variability. The remaining excavated kimberlite of approximately 180,000 tonnes will be stockpiled for processing at a later stage.
Performance of the mining equipment on site has been very good, with mining rates now averaging over 5,000 tonnes per day. This indicates that the target mining capacity of 1.5 million tonnes per annum is likely to be achievable with the Company's existing equipment. Commissioning of the 25 tonne per hour pilot production plant was completed in July and the plant is now running continuously, with concentrate being transported to the Company's office in Gaborone for sorting and diamond recovery.
The Company expects to be in a position to make a decision to commence mine development based on the results of this work in Q4 2009, as planned, subject to which production is expected to commence in mid 2010.
Mine development planning
Much of the infrastructure that has been established to support the pilot production plant has been designed to support full scale mining operations, which will reduce the time and cost of mine development. Sufficient water supply and storage capacity is now in place for the target production capacity of approximately 1.5 million tonnes per annum. Work has continued on preparing the production plant at the Company's Bonte Koe Mine in South Africa for relocation to BK11, subject to results from bulk sampling.
Jwaneng Tailings Project
In February 2009, Firestone announced that it had been selected by Debswana Diamond Company ("Debswana") as the preferred bidder to supply, construct and operate a modular tailings treatment plant at the Jwaneng Mine in Botswana on a toll treatment basis. Debswana is a joint venture between the Government of the Republic of Botswana and De Beers and is the world's leading diamond producer by value. The Jwaneng plant is intended to serve as a pilot facility to demonstrate the economics and capability of the modular plant concept on the Jwaneng tailings resource, which is estimated to be in excess of 30 million tonnes.
Firestone and Debswana have established a joint steering committee for the project to negotiate and agree detailed technical and commercial provisions for the project. This work has continued to progress towards the target of finalising and signing an agreement in Q4 2009.
Discussions are also progressing with a number of interested lenders in relation to debt financing of the capital costs of the project through a special purpose vehicle. The Company expects to be in position to finalise these arrangements shortly after the Debswana agreement is signed.
Recent photographs of operations at BK11 will be available at www.firestonediamonds.com. For further information, visit the Company's web site or contact:
| Philip Kenny, Firestone Diamonds | +44 20 8834 1028/+44 7831 324 645 |
| Simon Edwards / Tim Redfern, Evolution Securities (Joint Broker) | +44 20 7071 4330 / 4312 |
| Rory Scott, Mirabaud Securities (Joint Broker) | +44 20 7878 3360 |
| Alexander Dewar, Brewin Dolphin (Nominated Adviser) | +44 131 529 0276 |
| Jos Simson / Leesa Peters, Conduit PR | +44 20 7429 6603/+44 7899 870 450 |
Background information on Firestone Diamonds:
Firestone Diamonds plc ("FDI.L") is an international diamond mining and exploration company with operations in Botswana and South Africa. Botswana is the world's largest and lowest cost producer of diamonds, with annual production worth over $2.5 billion, and is considered to be one of the most prospective countries in the world to explore for diamonds.
Firestone is the largest holder of mineral rights in Botswana's diamondiferous kimberlite fields, controlling over 29,000 square kilometres around the major Orapa and Jwaneng mines and the entire Tsabong kimberlite field. Firestone has 95 kimberlites in its portfolio, of which 24 have been proven to be diamondiferous. Sixteen of Firestone's kimberlites are at the bulk sampling stage, of which BK11 is the most advanced.
Notes:
1. 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 Operating Officer of Firestone Diamonds plc and has over 27 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).
2. All grades and diamond values are based on a bottom cut off of 1mm.
3. The resource estimates in this statement have been compiled in accordance with the SAMREC code.