FDI.L Regulatory News (FDI)

2 Apr 2007 13:09

Firestone Diamonds PLC02 April 2007 Firestone Diamonds plc Unaudited interim results for the six months to 31 December 2006 LONDON: 2 April 2007 The RNS announcement (RNS No: 0395U) dated 30 March 2007 from Firestone Diamondsplc, ("Firestone" or "the Company"), which included the Company's unauditedinterim results for the six months to 31 December 2006, contained an error. Operating charges for the six months to 31 December 2006 were understated by£1,564 and should have been (£155,909). The announcement has been updated toreflect the correct figure. For further information: Philip Kenny, Firestone Diamonds +44 20 8834 1028 / +44 7831 324 645Leesa Peters/Jos Simson, Conduit PR +44 20 7429 6600 / +44 7812 159 885Jamie Cumming, Bell Lawrie +44 141 314 8103 / +44 7768 044 620Ken Fleming, Bell Lawrie +44 141 221 7733 / +44 7971 835 070 www.firestonediamonds.com HIGHLIGHTS Tsabong, Botswana • Prospecting licences granted over the Tsabong kimberlite field, one of the largest diamondiferous kimberlite fields in the world • 74 known kimberlites of which 17 are proven to be diamondiferous • Exploration programme commenced in Q4 2006 - more than 80 geophysical targets identified - 10,000 metres of exploration drilling planned in 2007 - seven large kimberlites discovered between 8 and 28 hectares in size • Evaluation programme commenced in Q1 2007 - 6,000 metres of core drilling planned on proven diamondiferous kimberlites - bulk sampling on selected kimberlites to commence in H2 2007 • Potential for significant economic kimberlite discovery BK11, Botswana • New prospecting license granted for highly prospective diamondiferous BK11 kimberlite in Botswana • Located 20 km from the Orapa Mine and 5 km from African Diamonds' AK6 kimberlite • Historical grades of up to 16 carats per hundred tonnes; size estimated at 6.5 hectares • Core drilling to take place in Q2 2007 and bulk sampling in H2 2007 Jwaneng and Orapa, Botswana • Firestone is the largest holder of diamond exploration rights around the Orapa and Jwaneng mines, with 17,000 square kilometres under licence • De Beers conducting Zeppelin surveys over Firestone ground in Jwaneng; targets to be drilled in H2 2007 • Geophysics and drilling to continue in the Orapa area in 2007 Groen River Valley, South Africa • High quality gem diamonds recovered from bulk sampling on HL deposit • Mobile sampling plant being erected • Bulk sampling planned on GR2 deposit in Q2 2007 Bonte Koe Mine, South Africa • Production commenced from joint venture mining operation with De Beers in August 2006 • Full operating capacity reached in Q1 2007 • Expected to produce average £3.5 million revenue and £2 million operating profit per annum over life of project Financial • Production increased 91% to £572k (H1 2006: £302k) and is expected to further increase in FY 2007 • Operating profit of £161k (H1 2006: £351k loss); profit per share rose to 0.4p (H1 2006: 0.8p loss) • Liquid assets of approximately £10 million at December 2006 - £4 million in cash and £6 million shareholding in African Diamonds plc • Fundamentals in rough diamond market remain very strong; diamond prices expected to increase for next 5 to 7 years Dear Shareholder, Firestone continued to make good progress in the development of its projectportfolio during the period. The Company's activities were primarily focused onBotswana, the world's largest producer of diamonds, where the Company made anumber of significant additions to its kimberlite project portfolio. In October 2006 the Company was granted licences over the Tsabong kimberlitefield in Botswana. Rapid progress has been made, with the first kimberlitebeing discovered in November 2006. A further six kimberlites have beendiscovered since then, bringing the number of kimberlites in our licence area to74, of which 17 are proven to be diamondiferous. An evaluation programme toassess the economic potential of the Tsabong kimberlites commenced in Q1 2007.This programme will be initially focused on the most prospective of thediamondiferous kimberlites, and bulk sampling is expected to commence in H22007. With the prospect of more discoveries being made as explorationcontinues, we believe that Tsabong has the potential to produce a major economicdiscovery. In March 2007 the Company was granted a licence for the highly prospective BK11kimberlite in the Orapa region of Botswana. Bulk sampling on BK11 has producedgrades of up to 16 carats per hundred tonnes ("cpht"). With the location ofBK11 in close proximity to the infrastructure around the mines at Orapa,Letlhakane and Damtshaa, the threshold for economic viability is low. Anaccelerated evaluation programme is planned, which will consist of groundgeophysics, core drilling and large diameter drill ("LDD") bulk sampling. Coredrilling is expected to commence in Q2 2007. Bulk sampling results are expectedto be available in H2 2007 and will enable an assessment of the economicpotential of BK11 to be made. Work is also continuing at the Company's other kimberlite exploration projectsin Botswana, where the Company is the largest holder of diamond explorationrights around the Jwaneng and Orapa mines In respect of the Company's mining operations, processing of gravel from theBuffels River joint venture mining project with De Beers at the Bonte Koe Minecommenced in August 2006, as a result of which production rose substantially,increasing by 90% compared to the same period last year. Production is expectedto continue to increase during the rest of the year with the expanded Bonte Koeoperation now in full production. The Company produced a profit for the period,largely due to operations at Bonte Koe. The Company's financial position is secure, with Bonte Koe now generating cashflow and liquid assets of over £10 million at the end of the period, comprising£4 million in cash and a shareholding in African Diamonds plc worthapproximately £6 million. The fundamentals of the diamonds business remain verypositive, with substantial, sustained shortfalls in supply projected for atleast the next five to seven years, and we remain confident about the Companyachieving its objective of becoming a leading mid-tier diamond mining andexploration company. Exploration Highlights Tsabong, Botswana In October 2006 the Company was granted prospecting licences over the Tsabongkimberlite field, which is one of the largest diamondiferous kimberlite fieldsin the world. Tsabong contains 74 known kimberlites, of which 17 arediamondiferous, including the 180 hectare M1 kimberlite, which is one of thelargest known diamondiferous kimberlites. With rough diamond prices estimated to have tripled since the Tsabong field wasdiscovered in the early 1980's, the threshold for economic viability in the areais modest, and a kimberlite with a moderate grade of 20 cpht and average qualitydiamonds of $100 per carat would support a large-scale, profitable miningoperation. Evaluation Programme A detailed evaluation programme commenced in January 2007 with a review of alldata from previous exploration. The most prospective diamondiferous kimberliteshave been identified and ranked, based on diamond content, kimberlite indicatormineral chemistry and size. Approximately 6,000 metres of core drilling will becarried out on the top ranked kimberlites in 2007. A vertical hole will bedrilled to a depth of 500 metres into each kimberlite to obtain material formicrodiamond, mineral chemistry and petrographic analyses. The results of theseanalyses will be used to select the most prospective kimberlites for follow-upwork. This work will comprise additional core drilling, 3D geological modellingof the kimberlites and bulk sampling. A more intensive evaluation programmewill be carried out on the 180 hectare M1 kimberlite, due to its size and thefact that previous work has proven that it contains macro diamonds. Exploration Programme Exploration at Tsabong is targeting approximately 80 well defined geophysicalanomalies that have been identified by aeromagnetic survey data. Very rapidprogress has been made, with the first kimberlite being discovered in November2006, 3 weeks after the licences were granted. The Company has discovered afurther six kimberlites since then. Modelling of these kimberlites based onairborne and ground geophysical data indicates that they are large, withestimated sizes ranging from 8 to 28 hectares. Results of microdiamond, mineralchemistry and petrographic analysis are awaited from these discoveries. Withmany more targets to drill, the Company expects to continue to make newdiscoveries as exploration continues in 2007. BK11, Botswana In March 2007 the Company's 80% owned Botswana subsidiary, Monak Venture (Pty)Limited, was awarded a prospecting licence for the highly prospective BK11kimberlite. BK11 is situated approximately 20 kilometres south east of DeBeers' Orapa Mine and 5 kilometres north east of the AK6 kimberlite, on which DeBeers and African Diamonds are developing a major new mine. BK11 is estimatedto be approximately 6.5 hectares in size and overburden is shallow, at less than20 metres. In the early 1990's bulk sampling carried out by Debswana Diamond Companyyielded a grade of 16 cpht from BK11 and 17 cpht from AK6. Larger scale bulksampling carried out by De Beers in 2005 yielded a substantially higher grade of25 cpht from AK6, but only 2.4 cpht from BK11. A subsequent review of groundgeophysical data for BK11 indicated that the bulk sample hole was sited on asmall feature which represents about 10% of the surface area of the kimberlite.Given the results from previous bulk sampling, the Company believes that thisgrade may not be representative of the entire kimberlite. The Company plans to carry out a detailed evaluation programme on BK11 toprovide better estimates of grade and to recover sufficient macro diamonds toprovide an estimate of diamond value. This programme will consist of follow-upground geophysics, core drilling and LDD bulk sampling. Drilling is expected tocommence in Q2 2007, with bulk sampling results available in H2 2007. Subjectto the results of this work, resource delineation work would be undertaken in2008. Jwaneng & Orapa, Botswana Continued progress was made in the Jwaneng and Orapa areas, where the Company isthe largest holder of diamond exploration rights around the Jwaneng and Orapamines. The major development was the introduction of De Beers' new ZeppelinAirborne Gravity Gradiometer system. The Zeppelin system produces a five toten-fold improvement in data quality compared to other airborne gravity systems. De Beers started conducting Zeppelin surveys over the Jwaneng joint ventureareas at the start of the period. The Zeppelin airship has been out ofoperation since the end of 2006 for servicing and surveys are expectedrecommence in April 2007. Drilling of targets identified by the surveys is nowexpected to take place in H2 2007. A number of additional geophysical andgeochemical surveys were undertaken in the Orapa area during the period, andfurther exploration drilling is planned in the area during the year on targetsidentified by this work. Groen River Valley, South Africa Exploration continued during the period at the Groen River Valley joint ventureproject with De Beers, where previous exploration has proven the presence oflarge, high quality diamonds and 13 deposits have been identified. Bulksampling on the HL deposit produced five high quality gem diamonds weighing 1.11carats. Evaluation of the other 12 deposits in the project area is continuing.A mobile sampling plant is currently being erected in the Groen River Valley,and bulk sampling will be carried out on the GR2 deposit in the first half of2007. The Company expects that the next phase of sampling in the Groen RiverValley will provide a good indication of the economic potential of the area. Mining Operations Highlights Bonte Koe Mine, South Africa The primary focus of the Company's mining operations during the period continuedto be at Bonte Koe. In May 2006 the Company entered into an agreement with DeBeers to develop a new mining operation based around the Bonte Koe Mine, withthe objective of exploiting deposits on the Buffels River over which De Beersholds mining rights. Processing of De Beers' gravel commenced on a limited basis in August 2006 andcontinued while work was undertaken to expand the capacity of the plant andupgrade the crushing circuit. Commissioning of the modifications commenced onschedule in January 2007 and has been completed. The plant is now operating atfull capacity. The agreement with De Beers is very significant for Firestone, as it providesthe Company with assured revenue and cash flow for the duration of the BuffelsRiver project. The new mining operation is expected to provide Firestone withaverage annual revenue of approximately £3.5 million and annual operatingprofits of £2 million. Firestone's revenue and profits from the project couldincrease further through an increase in mineable resources in the Buffels Riverarea and through profit sharing arrangements with De Beers. Oena Mine and Avontuur Mine, South Africa Mining operations continued at Oena Mine during the period, with production of296 carats. Oena continues to produce high value diamonds, with currentproduction valued at approximately $1,595 per carat. Additional drilling andbulk sampling was carried out with the objective of increasing the identifiedresources at the mine, which the Company expects will allow it to secure betterterms for a revenue-sharing agreement with a mining contractor. The plannedexpansion of mining operations at Avontuur remains on hold pending approval fromthe Department of Minerals & Energy of the acquisition of the adjoiningHondeklip Bay Mine from Trans Hex, which is expected later in the year. James F. KennyChairman 30 March 2007 FIRESTONE DIAMONDS PLC UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS TO 31 DECEMBER 2006 2006 2005 £ £Production 572,368 302,359 Turnover 585,969 253,903Change in stocks of finished goods and in work in progress (13,602) 48,455 Other operating income 1,564 -Raw materials and consumables (82,233) (124,004)Staff costs (102,792) (175,502)Depreciation and amortisation (71,797) (159,553)Other operating charges (155,909) (193,871) Operating profit 161,201 (350,572) Interest receivable and similar income 64,469 33,436Interest payable and similar charges (13,945) (50,724) Profit on ordinary activities before taxation 211,725 (367,860) Deferred tax on profit on ordinary activities - - Profit on ordinary activities after taxation 211,725 (367,860)Minority interests (13,679) (13,714) Retained profit for the period 198,047 (381,574) Earnings per shareBasic profit per share 0.4 p (0.8p) Diluted profit per share 0.3 p (0.8p) FIRESTONE DIAMONDS PLC UNAUDITED CONSOLIDATED BALANCE SHEET 31 DECEMBER 2006 2006 2005 £ £ £ £Fixed AssetsIntangible assets 10,813,553 7,023,984Tangible assets 12,573,893 12,627,225Investments 3,078,523 3,078,549 26,465,969 22,729,758 Current AssetsStocks 63,092 189,050Debtors 1,245,556 675,645Cash at bank and in hand 4,161,025 8,999,951 5,469,673 9,864,646 CreditorsAmounts falling due within one year (902,184) (1,490,161) Net Current Assets 4,567,489 8,374,485 Total Assets less Current Liabilities 31,033,458 31,104,243 CreditorsAmounts falling due after one year (2,493,808) (774,842) Provisions for Liabilities and ChargesOther provisions (55,972) (1,098,867)Deferred taxation (309,580) (474,647) (365,552) (1,573,515) Net assets 28,174,098 28,755,887 Capital and ReservesCalled up share capital 11,151,581 11,172,975Share premium account 19,132,921 19,145,753Merger reserve (1,076,399) (1,076,399)Share option reserve 308,617 148,836Profit and loss account (1,150,899) (595,064) Equity Shareholders' Funds 28,365,821 28,796,101Minority equity interests (191,723) (40,214) 28,174,098 28,755,887 FIRESTONE DIAMONDS PLC UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS TO 31 DECEMBER 2006 2006 2005 £ £ £ £ Net cash inflow from operating activities (550,560) (978,530) Returns on investments and servicing of financeInterest received 64,471 33,436Interest element of finance lease payments (15,078) (75,289) Net cash inflow from returns oninvestments and servicing of finance 49,393 (41,853) Capital expenditure and financial investmentPayments to acquire intangible fixed assets (1,599,924) (1,074,727)Payments to acquire tangible fixed assets (1,253,014) (334,945)Receipts from sales of tangible fixed assets 1,564 -Payments to acquire investments (2,848,111) Net cash outflow from capital expenditureand financial investment (2,851,374) (4,556,361) Net cash outflow before use ofliquid resources and financing (3,352,541) (5,576,744) FinancingNew long term loans 1,638,786 101,475Issue of ordinary share capital 761,015 12,417,784Finance lease payments (96,564) (203,079) 2,303,237 12,316,180 Increase/(decrease) in cash (1,049,304) 8,552,911 Notes: 1. The financial statements have been prepared in accordance withapplicable UK accounting standards and under the historical cost convention.The principal accounting policies of the group are set out in the group's 2006annual report and financial statements. 2. The company adopted Financial Reporting Standard 20 - Share-basedpayments during the period. This represents a change in accounting policyresulting in a charge of £6,423 being made to the profit and loss account (6months ended 31 December 2005: £10,183) and an amount of £57,809 capitalised asdeferred exploration during the period (6 months ended 31 December 2005:£133,952). 3. The financial information set out above does not constitute statutoryaccounts as defined in section 240 of the Companies Act 1985. Statutoryaccounts for the twelve months to 30 June 2006, on which the report of theauditors was unqualified and did not contain a statement under section 237 ofthe Companies Act 1985, have been filed with Registrar of Companies. 4. Basic earnings per share is based on the weighted average number ofshares in issue for the period of 55,757,901. Diluted earnings per share isbased on the weighted average number of shares in issue for the period pluspotential dilutive ordinary shares arising from share options for the period of61,692,791. 5. The directors are not declaring a dividend for the period. 6. Note: The information in this statement has been reviewed by Mr. TimWilkes, B Sc, Pr Sci Nat, who is a qualified person for the purposes of the AIMGuidance Note for Mining, Oil and Gas Companies. Mr. Wilkes is Chief OperatingOfficer of Firestone Diamonds plc and has over 25 years experience in diamondexploration, mineral resource management and mining. Mr. Wilkes is a member ofthe sub-committee for diamonds of the South African Mineral Resource Committee(SAMREC). 7. Copies of this report are being sent to all shareholders. Additionalcopies will be available to the public from the offices of Bell Lawrie White, 48St Vincent Street, Glasgow, G2 5TS and will be posted on the Company's websiteat www.firestonediamonds.com. This information is provided by RNS The company news service from the London Stock Exchange