FDI.L Regulatory News (FDI)

31 Mar 2008 07:02

Firestone Diamonds PLC31 March 2008 Firestone Diamonds plc Unaudited interim results for the six months to 31 December 2007 Operations update LONDON: 31 March, 2008 The Board of Firestone Diamonds plc, ("Firestone" or "the Company"), theAIM-quoted diamond mining and exploration company (ticker: AIM:FDI), announcesunaudited interim results for the six months to 31 December 2007, and providesan update on the Company's diamond mining and exploration projects in Botswanaand South Africa. HIGHLIGHTS Tsabong, Botswana • Independent data review concludes that Tsabong has "real chances of discovering an economic large sized diamondiferous kimberlite" • MK1 initial grade estimate of 20 carats per hundred tonnes; estimate of 1.1 billion tonnes of kimberlite to 1,000 metres • Commissioning of bulk sampling plant completed in Q1 2008 • Additional core drilling completed and large diameter drilling commenced on MK1 in Q1 2008; microdiamond and macrodiamond results expected in Q2 2008 • Evaluation of other 13 priority A kimberlites continuing Orapa and Jwaneng, Botswana • New prospecting licences covering 4,000 square kilometres granted in Orapa and Jwaneng areas • Large diameter drilling of BK11 completed in Q1 2008; results expected in Q2 2008 South Africa • Bonte Koe toll treatment mining JV with De Beers at full production Financial • Turnover increased 224% to £1.9m (H1 2007: £0.6m) • Profit of £2.4m (H1 2007: £0.1m); diluted earnings per share 3.7p (H1 2007: 0.04p) • Profit of £2.8 million on disposal of interest in African Diamonds plc Dear Shareholder, Activities during the period were primarily focused on Botswana, which is theworld's largest and lowest cost producer of diamonds. Firestone is the largestholder of diamond exploration rights surrounding Botswana's kimberlite fields,with approximately 26,000 square kilometres now under license, and has 92 knownkimberlites in its licence areas. The most significant development during the period has been at the MK1kimberlite in the Tsabong kimberlite field, where results from initialevaluation work carried out have exceeded our expectations and show significanteconomic potential. We have continued to increase the pace of our activities in Botswana, withbetween twenty five and thirty 100 tonne mini bulk samples planned in 2008. Webelieve that it is likely that further major economic diamond discoveries willbe made in Botswana, and with our highly prospective portfolio and anexperienced technical and management team in place we believe that the Companyis in a very good position to do so. Tsabong, Botswana Tsabong is the Company's most important project. It contains 83 knownkimberlites, including the 180 hectare MK1 kimberlite, which is one of theworld's largest known diamondiferous kimberlites. An independent review of datafrom Tsabong by Mineral Services (Pty) Limited of Cape Town, one of theindustry's leading diamond exploration and evaluation consultancies, wascompleted during the period. The results of this review confirm that theTsabong field is located in a similar geological setting to the major JwanengMine and that it has the potential to contain economic large sizeddiamondiferous kimberlite deposits. Evaluation programme Evaluation work at Tsabong was focused on 14 high priority kimberlites that wereselected for large diameter drill ("LDD") bulk sampling. High resolution groundmagnetic surveys covering approximately 9 square kilometres were undertaken over5 kimberlites and approximately 1,650 metres of core drilling carried out duringthe period. MK1 A 508 metre deep core hole was completed on MK1 and samples of core weresubmitted for microdiamond recovery. Results from this work were received inFebruary 2008, with 117 microdiamonds (greater than 0.075 mm) recovered from 561kilogrammes of kimberlitic core treated. Independent analysis of the sizefrequency distribution of the microdiamonds indicated an overall grade of 20carats per hundred tonnes. The analysis also indicated an increase in gradewith depth, with the deepest sample, although small, indicating a potentialgrade of 119 carats per hundred tonnes. These results are very encouraging,although it should be noted that the grade estimates are preliminary and thatbetween 200-400 microdiamonds will be required to provide the necessary levelsof confidence. The data does indicate, however, that MK1 has the potential tobe significantly mineralised. Preliminary volumetric modelling indicates thatMK1 contains approximately 1.1 billion tonnes of kimberlite to a depth of 1,000metres. The Company expects to be able to make higher confidence grade estimates throughthe recovery of additional microdiamonds from core drilling and macrodiamondsfrom LDD bulk sampling. This work has advanced rapidly. Two additional coreholes were completed in January 2008 and samples have been submitted formicrodiamond recovery, with results expected during Q2 2008. Four 100 tonne LDDmini bulk samples are planned for MK1 and the LDD rig commenced drilling aheadof schedule in March 2008. Commissioning of the Company's bulk sampling plantat Tsabong was completed in the first quarter of 2008 and the plant is ready toprocess material from MK1 as it becomes available. If results from the core drilling and LDD bulk sampling confirm that significantmineralisation is present, a second phase of drilling and bulk sampling will beundertaken with the objective of developing a resource. Exploration programme There is significant potential for the discovery of new kimberlites at Tsabong.Two additional kimberlites were discovered during the period. Microdiamond,indicator mineral chemistry and petrographic analysis are currently beingcarried out on these kimberlites and the other 11 kimberlites discovered sinceNovember 2006, on the basis of which some of the kimberlites may be added to thehigh priority list for bulk sampling. With many more geophysical targets todrill, the Company expects to continue to make new discoveries and the number ofkimberlites in the field to increase to more than 100 as exploration continuesin 2008. BK11, Botswana The BK11 kimberlite is situated approximately 20 kilometres south east ofDebswana's Orapa Mine and 5 kilometres north east of the AK6 kimberlite, onwhich De Beers and African Diamonds are developing a new mine. Previousevaluation work produced grades of between 2 and 16 carats per hundred tonnes.BK11 is estimated to be approximately 8 hectares in size and overburden isshallow, at less than 20 metres. Approximately 2,500 metres of core drilling was carried out on BK11 during theperiod in order to develop a 3D geological model of the kimberlite and to selectlocations for LDD bulk sampling. LDD drilling was undertaken in Q1 2008. Three200 tonne samples were taken and transported to the bulk sampling plant atTsabong, where they are currently being processed. Results are expected to beavailable in Q2 2008. Orapa and Jwaneng, Botswana Continued progress was made in the Jwaneng and Orapa areas, where some of theCompany's licences are being explored by De Beers in joint venture withFirestone. De Beers completed its high resolution airborne geophysical surveysover the Jwaneng joint venture area during the period. Data from these surveysis now being processed and interpreted to select targets for drilling, which isexpected to take place in the second half of 2008. During the period the Company was granted new prospecting licences over an areaof approximately 1,000 square kilometres in the Orapa region and approximately3,000 square kilometres in the Jwaneng region. Exploration on these areas willbe carried out by Firestone and is expected to commence later in 2008. South Africa Activities in South Africa were focused on the Company's toll treatment jointventure project with De Beers at the Bonte Koe Mine. The expanded plant atBonte Koe reached its full design capacity of one million tonnes per annumduring the period. Discussions continued during the period in relation tofurther increases in production capacity in order to exploit additional DeBeers' resources in the area. With the Company's strategic focus increasingly directed towards Botswana, theCompany announced in December 2007 that it intended to limit its futureactivities in South Africa to low risk toll treatment and joint venture miningopportunities such as Bonte Koe, and that the Company's other alluvial assets inSouth Africa would be sold or joint ventured. Financial Turnover for the period increased 224% to £1.9 million compared to the sameperiod last year, principally as a result of Bonte Koe reaching full productioncapacity. Turnover for the current financial year is also expected to besignificantly ahead of last year. The Company produced a profit for the periodof £2.9 million, primarily as a result of the disposal of its interest inAfrican Diamonds plc, which resulted in a gain of £2.8 million. Dilutedearnings per share rose to 3.7 pence (0.04 pence loss per share for the sameperiod last year). James F. Kenny Chairman 31 March 2008 For further information, visit the Company's web site atwww.firestonediamonds.com, or contact: Philip Kenny, Firestone Diamonds +44 20 8834 1028/+44 7831 324 645Leesa Peters, Jos Simson, Conduit PR +44 20 7429 6600/+44 7812 159 885Mike Jones/Ryan Gaffney, Canaccord Adams (Joint Broker) +44 020 7050 6500Jamie Cumming, Brewin Dolphin (Joint Broker) +44 141 314 8103/ +44 7768 044 620Ken Fleming, Brewin Dolphin (Nominated Adviser) +44 141 221 7733/ +44 7971 835 070 Unaudited consolidated financial statements for the six month period to 31 December 2007 Consolidated Income Statement Six months Six months Year ended 30 ended 31 ended 31 June December December 2007 2006 2007 £'000 £'000 £'000 Restated Restated Revenue 1,899 586 1,633 Changes in inventories (82) (14) 85Raw materials and consumables used (159) (82) (274)Employee benefits expense (203) (103) (320)Depreciation and amortisation (513) (65) (523)Other operating expenses (889) (154) (664)Operating profit 53 168 (63) Financial income 165 64 98Financial expense (174) (14) (135)Gain on sale of available-for-sale investments 2,721 - -Fair-value gains/(losses) on derivative financial 30 (692) (752)instrumentsNet financial income/(expense) 2,742 (642) (789) Profit/(loss) before tax 2,795 (474) (852) Taxation (438) 242 (451) Profit/(loss) for the period 2,357 (232) (1,303) Attributable to:Equity shareholders of the parent 2,302 (246) (1,282)Minority interests 55 14 (21) 2,357 (232) (1,303) Basic earnings per share - pence 4.1p (0.04p) (2.3p) Diluted earnings per share - pence 3.7p (0.04p) (2.3p) All amounts relate to continuing operations. 31 December 31 December 30 JuneConsolidated Balance Sheet 2007 2006 2007 £'000 £'000 £'000 Restated RestatedNon-current assetsGoodwill 2,058 2,058 2,058Intangible assets 10,892 8,992 9,590Property, plant and equipment 13,912 12,574 12,568 26,862 23,624 24,216Current assetsInventories 291 63 275Trade and other receivables 2,189 1,246 2,510Available-for-sale investments - 6,022 5,537Cash and cash equivalents 4,774 4,161 1,119 7,254 11,492 9,441 Total assets 34,116 35,116 33,657 Equity and liabilities Equity attributable to ordinary shareholdersShare capital 11,158 11,152 11,158Share premium 19,182 19,133 19,182Merger reserve (1,076) (1,076) (1,076)Fair-value reserve - 3,173 3,435Translation reserve 1,084 - -Retained earnings (1,840) (1,201) (4,210)Total equity attributable to ordinary shareholders 28,508 31,181 28,489Minority interests (156) (191) (211)Total equity 28,352 30,990 28,278 Non-current liabilitiesInterest-bearing loans and borrowings 2,104 2,118 2,163Deferred tax 638 102 257Provisions 364 432 339 3,106 2,652 2,759 Current liabilitiesInterest-bearing loans and borrowings 571 271 636Derivative financial instruments - 572 662Trade and other payables 2,087 631 1,322 2,658 1,474 2,620 Total equity and liabilities 34,116 35,116 33,657 Consolidated Cash Flow Statement Six months Six months Year ended 31 ended 31 ended 30 December December June 2007 2006 2007 £'000 £'000 £'000 Restated RestatedCash flows from operating activitiesProfit/(loss) before tax 2,795 (474) (852)Adjustments for:Depreciation and amortisation 513 380 523Interest payable 168 137 1,070Equity-settled share-based payment expenses 67 64 208Profit on sale of non-current assets - - (23)Other reserve movements (3,435) - -Cash flows from operating activities before changes in 108 107 926working capital and provisions (Increase)/decrease in trade and other receivables 322 641 (624)(Increase)/decrease in inventories (15) 2 (211)(Decrease)/increase in trade and other payables 1,130 596 (171)Cash generated from/(absorbed) by operating activities 1,545 1,346 (80) Cash flows from investing activitiesAcquisition of intangible assets (1,073) (1,915) (2,581)Acquisition of property, plant and equipment (1,242) (1,613) (2,893)Sale of investments 4,664 - -Disposal of non-current assets 19 2 95Net cash from investing activities 2,368 (3,526) (5,379) Cash flows from financing activitiesProceeds from the issue of share capital - - 55Proceeds from interest-bearing borrowings - 1,667 2,132Repayment of interest-bearing borrowings (124) (62) (226)Interest paid (134) (15) (134)Net cash from financing activities (258) 1,590 1,827 Net increase/(decrease) in cash and cash equivalents 3,655 (590) (3,632)Cash and cash equivalents at the beginning of the period 1,119 4,751 4,751Cash and cash equivalents at the end of the period 4,774 4,161 1,119 Statement of Changes in Shareholders Equity Total For the period ended 31 Share Share Merger Fair-value Translation Retained Shareholders Minority Total December 2007 Restated Capital Premium Reserve Reserve Reserve Earnings Equity Interests Equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 July 2007 11,158 19,182 (1,076) 3,435 - (4,210) 28,489 (211) 28,278Profit after tax for the - - - - - 2,303 2,303 55 2,358period Total recognised in income - - - - - 2,303 2,303 55 2,358and expense for the period Arising on revaluation of - - - (3,435) - - (3,435) - (3,435)investments Foreign exchange gain on - - - - 1,084 - 1,084 - 1,084translation of foreign subsidiaries Total gains/(losses) - - - (3,435) 1,084 - (2,351) - (2,351)recognised in equity Shares issued in the period - - - - - - - - -Equity-settled share-based - - - - - 67 67 - 67payments Balance at 31 December 2007 11,158 19,182 (1,076) - 1,084 (1,840) 28,508 (156) 28,352 Statement of Changes in Shareholders Total Equity For the period Share Share Merger Fair-value Translation Retained Shareholders Minority Total ended 31 December 2006 Restated Capital Premium Reserve Reserve Reserve Earnings Equity Interests Equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 11,152 19,133 (1,076) 4,569 - (1,028) 32,750 (205) 32,545July 2006 Loss after tax - - - - - (246) (246) 14 (232)for the period Total - - - - - (246) (246) 14 (232)recognised in income and expense for the period Arising on - - - (1,396) - - (1,396) - (1,396)revaluation of investments Foreign - - - - - 9 9 - 9exchange loss on translation of foreign subsidiaries Total gains/ - - - (1,396) - 9 (1,387) - (1,387)(losses) recognised in equity Shares issued - - - - - - - - -in the period Equity-settled - - - - - 64 64 - 64share-based payments Balance at 31 11,152 19,133 (1,076) 3,173 - 1,201 31,181 (191) 30,990December 2006 Statement of Changes in Shareholders equity Total For the year ended 30 June Share Share Merger Fair-value Translation Retained Shareholders Minority Total 2007 Restated Capital Premium Reserve Reserve Reserve Earnings Equity Interests Equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 July 2006 11,152 19,133 (1,076) 4,569 - (1,028) 32,750 (205) 32,545Loss after tax for the year - - - - - (1,303) (1,303) (21) (1,324)Total recognised in income - - - - - (1,303) (1,303) (21) (1,324)and expense for the year Arising on revaluation of - - - (1,134) - - (1,134) - (1,134)investments Foreign exchange loss on - - - - - (2,087) (2,087) 15 (2,072)translation of foreign subsidiaries Total gains/(losses) - - - (1,134) - 2,087 (3,221) 15 (3,206)recognised in equity Shares issued in the year 6 49 - - - - 55 - 55Equity-settled share-based - - - - - 208 208 - 208payments Balance at 30 June 2007 11,158 19,182 (1,076) 3,435 - (4,210) 28,489 (211) 28,278 1 Corporate information Firestone Diamonds Plc ("the Company") is a company incorporated in England and Wales and listed on the London Stock Exchange's Alternative Investment Market. 2 Basis of preparation These interim financial statements of the Company and its subsidiaries ("the Group") for the six months ended 31 December 2007 have been prepared in accordance with International Financial Reporting Standards (IFRSs and IFRIC interpretations) as adopted by the European Union and also in accordance with the Companies Act 1985. The comparative periods for the six months ended 31 December 2006 and the year ended 30 June 2007 have been restated to reflect the adoption of IFRSs by the Group. The financial information set out above does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. Statutory accounts for the twelve months to 30 June 2007, on which the report of the auditors was unqualified and did not contain a statement under section 237 of the Companies Act 1985, have been filed with the Registrar of Companies. 3 Earnings per share The calculation of the basic earnings per share for the six month period to 31 December 2007 is based upon the following: Six months ended Six months Year ended 30 31 December ended 31 June DecemberBasic 2007 2006 2007 £'000 £'000 £'000 Restated Restated Earnings/(loss) per share - pence 4.1p (0.04p) (2.3p) Profit/(loss) attributable to equity shareholders £2,302,000 (£246,000) (£1,282,000) Weighted average number of shares in issue 55,791,445 55,757,901 55,758,177 Diluted Earnings/(loss) per share - pence 3.7p (0.04p) (2.3p) Profit/(loss) attributable to equity shareholders £2,302,000 (£246,000) (£1,282,000) Weighted average number of shares in issue 62,409,144 55,757,901 55,758,177 4 Changes in accounting policies The following adjustments have been made to the opening shareholders equity to reflect the changes required by the adoption by the Group of International Financial Reporting Standards as adopted by the European Union. Share Fair-value Retained Effect on Option At 1 July 2006 Reserve Reserve Earnings Equity £'000 £'000 £'000 £'000 Note 1 Note 2 Note 3 Opening equity - - - 27,892 As presented under previous GAAP 244 - (1,356) - Transfer to retained earnings (244) - 244 - Changes in fair value of - 4,569 - 4,569 available-for-sale investments Fair value of derivative financial - - 84 84 instruments Restated 1 July 2006 - 4,569 (1,028) 32,545 Share Fair-value Retained Effect on Option At 1 July 2007 Reserve Reserve Earnings Equity £'000 £'000 £'000 £'000 Note 1 Note 2 Note 3/4 Opening equity - - - 26,097 As presented under previous GAAP 453 - (3,409) - Transfer to retained earnings (453) 453 - Reversal of amortisation of goodwill - 13 13 Changes in fair value of - 3,435 - 3,435 available-for-sale investments Fair value of derivative financial - - (1,267) (1,267) instruments Restated 1 July 2007 - 3,435 (4,210) 28,278 Notes 1 The amounts attributable to equity arising from the share-based payment charges in the income statement have been transferred to retained earnings. 2 The fair-value reserve is the amount of the fair-value gain arising from the mark-to-market valuation of available-for-sale investments held in equity until disposal. 3 Changes in value of investments in derivative financial instruments comprising future currency options and future share purchase agreements have been recognised in the income statement and balance sheet. 4 Goodwill recognised at 30 June 2006 is carried at this value and is no longer amortised. Goodwill is subject to an annual review for potential impairment. 5 Dividend The directors are not declaring a dividend for the period. 6 The information in this statement has been reviewed by Mr. Tim Wilkes, B Sc, 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 25 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). 7 Copies of this report are being sent to all shareholders. Additional copies will be available to the public from the offices of Brewin Dolphin, 48 St Vincent Street, Glasgow, G2 5TS and will be posted on the Company's website at www.firestonediamonds.com. This information is provided by RNS The company news service from the London Stock Exchange