FDI.L Regulatory News (FDI)

11 Oct 2005 07:01

Firestone Diamonds PLC11 October 2005 Firestone Diamonds plc Groen River Valley joint venture exploration update LONDON: 11 October 2005 Firestone Diamonds plc ("Firestone" or the "Company") today announces an updateon exploration at its Groen River Valley project (the "GRV Project") in SouthAfrica. In June 2005, as previously announced, Firestone entered into a jointventure over the GRV Project with De Beers Consolidated Mines Limited ("De Beers"), under the terms of which De Beers can earn a 61% interest in theproject by financing and carrying out all exploration and evaluation work, up tocompletion of bankable feasibility studies. HIGHLIGHTS • Geological modeling of Firestone and De Beers data completed - 13 deposits identified - total size of deposits estimated at 360 million tonnes - confirms potential as a significant new alluvial diamond producing area• Potential value of deposits - regional grades of 2 to 3 carats per hundred tonnes - potential of 9 million carats - diamond values up to $1,000 per carat proven in the area - conservative modeled diamond value of $300 to $500 per carat indicates potential gross value of $2.7 billion to $4.5 billion• Bulk sampling of HL Deposit - 17 million tonnes of gravel indicated by geophysical data - potential of 500,000 carats, with gross value of $150 million to $250 million - 2,000 metres of probe drilling carried out since July 2005 - bulk sampling to commence in November 2005• Probe drilling on new deposits - over 8,000 metres of probe drilling carried out by De Beers on KK and KR deposits - drilling planned on RH deposit Philip Kenny, CEO of Firestone Diamonds, commented: "We are very pleased withthe substantial progress that has been made since the signing of our jointventure with De Beers. The results of the integration and modeling ofFirestone's and De Beers' data confirm our view that the Groen River Valley hasthe potential to become a major new alluvial diamond area producing high qualitydiamonds. We consider the Groen River Valley to be one of the largest and mostattractive undeveloped alluvial diamond areas in the world, and we expect thatthe results of the next phase of work on the project will confirm its economicpotential." Geological Modeling Since the signing of the joint venture with De Beers, extensive work has beencarried out by Firestone and De Beers personnel on the GRV Project. The primaryfocus of this work has been to combine data from exploration carried out byFirestone in the project area with data from De Beers' past exploration into anintegrated computerised geological model of the area. Exploration carried outby Firestone comprised Landsat and aerial photo interpretation, groundgeological mapping, and extensive probe drilling and sampling of diamondiferousgravels at over 160 locations in the project area. De Beers has also carriedout extensive drilling and small scale mining in the project area, and hasconducted a Spectrem high-resolution airborne electromagnetic (AEM) survey,which has been used to generate a detailed 3D model of the bedrock topography inthe area. The integration of this data has been completed and computer modeling of thedata has been carried out to produce a more detailed geological interpretationof the palaeo-drainage systems in the project area. Thirteen deposits have beenidentified in the project area by this work, with an estimated size of 360million tonnes. Although grades of up to 10 carats per hundred tonnes ("cpht") have beenrecovered from historical sampling in the GRV Project area, using a conservativeestimate of between 2 and 3 cpht indicates a potential resource of approximately9 million carats in the project area. The average value of diamonds in theproject area varies, from up to and exceeding $1,000 per carat from marinedeposits at the coast, which have a large average size exceeding 1 carat perstone, to $500 per carat from palaeo-river deposits inland. However, formodeling purposes a conservative diamond value of $300 to $500 per carat hasbeen used, giving a potential gross value of $2.7 billion to $4.5 billion forthe deposits in the project area. Further drilling and sampling will berequired to increase the confidence levels of grade and diamond value estimates,but these initial results confirm that the GRV Project has the potential tobecome a major new high quality diamond producing area. A systematic multi-phase programme of drilling and bulk sampling is now beingundertaken to further evaluate the economic potential of the deposits identifiedin the area to date. The first phase of this programme will include bulksampling on the HL Deposit, which is one of four in the project area at anadvanced stage of exploration, and probe drilling on the other three deposits. Bulk Sampling The HL Deposit, which was discovered by Firestone in 2003, is 7 kilometres longand up to 700 metres wide. Probe drilling has proven that gravels in thedeposit average 2.5 metres in thickness, with average overburden depths of 20metres. The HL Deposit is considered to be a very attractive target, as itcontains a significant tonnage of well developed gravels, while results fromdrilling indicate significant geological similarities to the major Megalodondeposit currently being evaluated by De Beers further north in Namaqualand. Since July 2005, approximately 2,000 metres of probe drilling has been carriedout over 89 holes on the HL Deposit in order to produce a more detailedgeological model of the deposit and to allow locations for bulk sampling to beselected. This drilling is still in progress, but geological modeling of thedeposit using data from the AEM survey indicates that it contains approximately17 million tonnes of gravel. Using an estimated grade of 3 carats per hundredtonnes and a conservative diamond value of $300 to $500 per carat, this gives apotential resource for the HL Deposit of 500,000 carats, with a value of $150million to $250 million. Bulk sampling of the HL deposit will be undertaken using a Bauer BG36C largediameter bucket auger drill ("LDA"), which is extensively used by De Beers forsampling alluvial deposits. An initial phase of LDA drilling, which willcomprise approximately 20 LDA holes, is planned with the objective of providingan initial indication of the grade of the HL deposit. LDA drilling is scheduledto commence in November 2005, and is expected to be completed within threemonths. Gravels recovered from LDA drilling will be transported to De Beers'Koingnaas Mine, approximately 75 kilometres to the north, for processing,following which valuation of diamonds recovered will be carried out at De Beers'facilities in Kimberley. Depending on the results from the initial phase of sampling, a more intensivefull scale evaluation sampling programme is planned to determine both the gradeand value of diamonds to a high level of confidence. This work is expected tobe completed in the second half of 2006. Exploration Drilling Probe drilling has been carried out on the next two high priority deposits,known as the KK and KR deposits. Approximately 8,400 metres of probe drillinghas been carried out over 234 holes on these deposits and has confirmed thepresence of alluvial gravels. Probe drilling is now planned on the RH deposit,which is the next priority target in the area. It is also planned to drill a number of LDA holes on the KK, KR and RH depositsin order to provide an initial indication of the diamond content of thesedeposits. Based on the results of this work, a decision will be made whether toproceed to bulk sampling on these deposits. For further information: Philip Kenny, Firestone Diamonds +44 20 8834 1028 / +44 7831 324 645Leesa Peters, Conduit PR +44 20 7618 8708 / +44 7812 159 885Jamie Cumming, Bell Lawrie +44 141 314 8103 / +44 7768 044 620 Website: www.firestonediamonds.com Background information on the Groen River Valley Project The Groen River Valley project is Firestone's most important exploration projectin South Africa. This is due to the fact that the Groen River is the last majorunexplored ancient river system on the west coast of South Africa, and thatmining by De Beers and others has proven the presence of diamonds of large sizeand exceptional quality in the area. Diamonds from the Groen River Valley areconsidered to be similar to or of better quality than those recovered from theOrange River. Diamonds recovered downstream from the joint venture area at themouth of the Groen River have recorded values up to and exceeding $1,000 percarat. Firestone holds prospecting permits covering all of the most prospective groundin the lower reaches of the Groen River, covering an area of approximately 500square kilometres. In June 2005, Firestone entered into a joint venture with De Beers over theGroen River Valley project under the terms of which De Beers can earn a 61%interest in the project by financing and carrying out all exploration andevaluation work, up to completion of bankable feasibility studies on anydeposits identified by exploration in the project area. De Beers has alsocontributed mineral rights that it holds in the Groen River Valley region to thejoint venture, covering an area of approximately 90 square kilometres. Background information on Firestone Diamonds plc: Firestone Diamonds plc is an international diamond mining and explorationcompany with operations in the Namaqualand region of South Africa, Botswana andthe United States. Firestone has extensive interests in Botswana, which is the world's largestproducer of diamonds, with annual production of approximately 30 million caratsworth over $2.5 billion. Botswana is considered to be one of the best countriesin the world to explore for kimberlite - the primary source rock for diamonds.Firestone's Mopipi, Orapa and Jwaneng projects are located close to the majorOrapa and Jwaneng mines and are all being explored by De Beers in joint venturewith Firestone. Firestone is also exploring for kimberlite in the US on theLaurentia craton, which extends into Canada, where it hosts a number ofdiamondiferous kimberlite deposits. Namaqualand, which is located on the west coast of South Africa, has been one ofthe world's largest alluvial diamond producing regions for the past 60 years,with total production to date estimated to be worth more than $3 billion.Firestone's mining operations in Namaqualand include the Bonte Koe, Avontuur andOena Mines, all of which produce high quality alluvial diamonds, and a growingportfolio of early stage and advanced exploration projects, of which the GroenRiver Valley project is the most important. Firestone has a highly qualified management team with extensive experience inthe exploration, evaluation and development of diamond projects. Firestone isquoted on the Alternative Investment Market (AIM) of the London Stock Exchangeand trades under the symbol FDI.L. This information is provided by RNS The company news service from the London Stock Exchange