1 Jun 2011 07:00
Firestone Diamonds plc
Corporate and operations update
LONDON: 1 June, 2011
Firestone Diamonds plc, ("Firestone" or "the Company"), the AIM-quoted diamond mining and exploration company (ticker: AIM:FDI), is pleased to provide an update on the Company's mining operations in Lesotho and Botswana.
HIGHLIGHTS
Liqhobong Mine, Lesotho
• | Production | |
- | Plant 1 now operating at rated capacity of 0.4 mtpa | |
- | Mining grade of 32 cpht, 15% higher than resource grade of 28 cpht | |
• | Plant 1 expansion | |
- | Phase 1 expansion to 0.6 mtpa on target for completion by end Q2 2011 | |
- | Plans for Phase 2 expansion to 1.3 mtpa by end 2011 in progress | |
• | Mine Planning | |
- | Open pit reserves increased approximately 15% to 70 million tonnes, containing 23 million carats | |
BK11 Mine, Botswana
• | Production plant | |
- | Secondary crushing circuit currently being commissioned to improve diamond liberation | |
• | Mining | |
- | Mining operations ahead of schedule, with two million tonnes mined between January and April 2011 | |
Diamond Sales
• | Next tender to be held in Gaborone, Botswana, in late June |
• | Sale expected to be significantly larger than the last tender in April 2011 |
Corporate
• | Conditions for Standard Chartered Bank $6 million loan facility satisfied |
• | Mirabaud Securities LLP appointed as sole broker |
Tim Wilkes, CEO of Firestone Diamonds, commented: "We are very excited with the progress that we have made at Liqhobong in the three months since production commenced. We believe that Liqhobong will soon become a large scale profitable mining operation, particularly once we commence mining the high grade K5 and K6 units in the second half of this year. We also expect to reach full production levels at BK11 shortly."
Liqhobong Mine, Lesotho
Continued good progress has been made at Firestone's 75% owned Liqhobong Mine in Lesotho.
Plant 1 Production
Following the commencement of production at Liqhobong in February 2011 and the completion of a number of modifications to the processing plant, Plant 1 is now operating at its rated capacity of 0.4 million tonnes per annum "mtpa".
Mining operations at the Main Pipe during April and May have been focused on the K2 and K4 kimberlite units. The average grade recovered from K2 and K4 during this period was 32 carats per hundred tonnes ("cpht"), which is approximately 15% higher than the resource grade for these units of 28 cpht.
Work on the expansion of Plant 1, which will triple production capacity to 1.3 mtpa, is on schedule for completion in Q4 2011. The first phase of this expansion, which will increase capacity to 0.6 mtpa and will allow the processing for the first time of the high grade K5 and K6 kimberlite units, is on schedule for completion at the end of Q2 2011.
At full production capacity Plant 1 is expected to generate revenue of $57 million per annum, based on the average price achieved in April 2011 for diamonds from the Main Pipe of $130/carat.
Plant 2 Development
Work is continuing on the specifications and design for Plant 2, which has a target production capacity of 4.2 mtpa. The Company expects to be in a position to make the decision to commence construction of Plant 2 by the end of 2011. Plant 2 is expected to commence operation in 2013 and to generate revenue of $185 million per annum at full production. Plant 1 will remain fully operational until Plant 2 is brought into full production. With estimated revenue of $44/tonne for the Main Pipe and estimated operating costs for Plant 2 of $13-15/t, the Company expects Liqhobong to be a profitable, long term mining operation.
Mine Planning
Following the recent increase in value of production from the Main Pipe to $130/carat, a new pit optimisation study has been completed. The results of this study indicate that open pit mining operations can be undertaken to a depth of 520 metres, which would result in the mining of approximately 70 million tonnes of kimberlite and 23 million carats, an increase of approximately 15%, over a period of approximately 20 years.
BK11 Mine, Botswana
Good progress has also been made at Firestone's 90% owned BK11 Mine in Botswana.
Production
As reported in the announcement dated 29 March 2011, a number of problems were encountered with the crushing and scrubbing circuits at the BK11 plant during Q1 2011, resulting in lower than anticipated diamond liberation from the material being processed. Substantial progress has been made since then to improve diamond liberation. A secondary crushing circuit based on mobile crushers has been designed. The mobile crushers have been secured and commissioning is currently under way and expected to be completed by the end of Q2 2011, following which diamond liberation is expected to be significantly improved.
Mining
Additional mining capacity has been employed at BK11 to accelerate the deepening of the pit into the softer ore at depth, which is the principal material that the processing plant was designed to process. Diamond liberation is expected to be much higher from processing of this material. Mining operations at BK11 are now ahead of plan, with approximately two million tonnes of overburden and kimberlite mined between January and April 2011.
Diamond Sales
The Company plans to hold its second diamond sale of 2011 during the last two weeks of June at its diamond sales office at Diamond Technology Park in Gaborone, Botswana. The sale is expected to be significantly larger than the last sale in April 2011.
Corporate
In March 2011 the Company announced that it had agreed terms with Standard Chartered Bank of Botswana for a $6 million, 3 year, 6.5% fixed rate credit facility. The Company has satisfied all the conditions for this facility, which is now available for drawdown. This facility will give the Company greater flexibility in planning and financing its activities in Botswana and in Lesotho.
The Company also announces that Mirabaud Securities LLP has been appointed as sole broker to the Company with immediate effect.
For further information, visit the Company's web site at www.firestonediamonds.com or contact:
Philip Kenny, Firestone Diamonds Tim Wilkes, Firestone Diamonds
| +44 20 8834 1028/+44 7831 324 645 +27 78 457 6623/+267 713 77686 |
Rory Scott, Mirabaud Securities (Nominated Broker)
| +44 20 7878 3360 |
Alexander Dewar, Brewin Dolphin (Nominated Adviser)
| +44 131 529 0276 |
Jos Simson / Emily Fenton, Tavistock Communications | +44 20 7920 3150/+44 7899 870 450 |
Background information on Firestone Diamonds:
Firestone Diamonds plc is an international diamond mining and exploration company with operations focused on Lesotho and Botswana. Firestone operates the Liqhobong Mine in Lesotho and the BK11 Mine in Botswana. Firestone is also the largest holder of mineral rights in Botswana's diamondiferous kimberlite fields, controlling approximately 10,000 square kilometres around the major Orapa and Jwaneng mines and the entire Tsabong kimberlite field. In addition to Liqhobong and BK11, Firestone has 108 kimberlites in its portfolio, of which 30 have been proven to be diamondiferous.
Lesotho is emerging as one of Africa's significant new diamond producers, and hosts Gem Diamonds' Letseng Mine, Firestone's Liqhobong Mine as well as the Kao and Mothae development projects. 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.