FDI.L Regulatory News (FDI)

18 Dec 2007 07:01

Firestone Diamonds PLC18 December 2007 Firestone Diamonds plc Preliminary unaudited results for the year ended 30 June, 2007 LONDON: 18 December, 2007 The Board of Firestone Diamonds plc, ("Firestone" or "the Company"), theAIM-quoted diamond mining and exploration company (ticker: AIM:FDI), announcespreliminary audited results for the year ended 30 June, 2007. HIGHLIGHTS Botswana • Prospecting licences granted over the Tsabong kimberlite field and BK11 kimberlite • 13 kimberlites discovered at Tsabong • Number of kimberlites in license areas increased to 92; number of diamondiferous kimberlites increased to 23 • Bulk sample plant being commissioned, with 25-30 bulk samples to be taken in 2008 • New prospecting licences covering 4,000 square kilometres granted in Orapa and Jwaneng areas since year end South Africa • Full production reached at Bonte Koe toll treatment mining JV with De Beers • Bonte Koe expected to produce £3.5m revenue and £2m operating profit in current financial year Financial • Turnover increased 173% to £1.6m (2006: £0.6m) • Profit of £100k (2006: £200k loss) • Profit of £2 million on disposal of interest in African Diamonds plc after the end of the financial year Outlook • Potential for significant economic kimberlite discovery in Botswana given high number of diamondiferous kimberlites in portfolio • Further expansion at Bonte Koe being evaluated • Pursuing new projects in Botswana Speaking today, Philip Kenny, Chief Executive of Firestone, said "Botswana isthe world's largest and lowest cost producer of diamonds, and Firestone hasassembled a dominant land position in Botswana's diamondiferous kimberlitefields, containing 92 known kimberlites. With bulk sampling of our mostprospective kimberlites to start in January and continue through the year, weexpect 2008 to be an exciting year and to make significant progress towardsidentifying the economic potential of our ground holdings." For further information, visit the Company's web site atwww.firestonediamonds.com, or contact: Philip Kenny, Firestone Diamonds +44 20 8834 1028/+44 7831 324 645 Jos Simson, Conduit PR +44 20 7429 6603/+44 7899 870 450 Mike Jones/Ryan Gaffney, Canaccord Adams (Joint Broker) +44 020 7050 6500 Jamie Cumming, Brewin Dolphin (Joint Broker) +44 141 314 8103/+44 7768 044 620 Ken Fleming, Brewin Dolphin (Nominated Adviser) +44 141 221 7733/+44 7971 835 070 Dear Shareholder, The past year has seen continued good progress in Firestone's growth anddevelopment. Activities were primarily focused on Botswana, where a number ofsignificant additions were made to the Company's kimberlite project portfolio. Botswana Tsabong The most significant development during the financial year was the granting inOctober 2006 of licences over 5,000 square kilometres covering the entireTsabong kimberlite field. Tsabong is one of the largest diamondiferouskimberlite fields in the world and includes the 180 hectare MK1 kimberlite,which is one of the largest known diamondiferous kimberlites. When we appliedfor these licenses we believed that the potential for an economic discovery wasgood, as the field is located in the same geological setting as the major Orapaand Jwaneng mines and none of the Tsabong kimberlites had ever been evaluated onan adequate scale or with modern techniques. Positive results from work carriedout over the past year have strengthened this belief. Our primary focus at Tsabong has been to identify and evaluate the kimberlitesin the field with the best economic potential as rapidly as possible.Approximately 5,300 metres of percussion drilling and 2,800 metres of coredrilling have been carried out, and extensive laboratory and kimberliticindicator mineral ("KIM") chemistry analysis undertaken. Based on the resultsof this work, 14 high priority kimberlites have been selected for large diameterdrill ("LDD") bulk sampling in 2008. MK1 and MK31 are the most significant ofthese as they are already proven to contain microdiamonds, have good KIMchemistry and are very large, at 180 and 75 hectares, respectively. A ten tonne per hour bulk sampling plant has been constructed and is currentlybeing commissioned at Tsabong. The bulk sampling plant will be the only sampletreatment facility in Botswana outside De Beers and will be a key asset for theCompany, as material will be processed rapidly and without the risk of delaysfrom commercial laboratories or contractors. The first bulk sample material isexpected to be processed early next year. There is significant potential for the discovery of new kimberlites at Tsabong.Excellent progress has been made and we are pleased to announce the discovery oftwo additional kimberlites, bringing the total discovered in the past year to 13and the total number of known kimberlites in the field to 83. Microdiamond, KIMchemistry and petrographic analysis are currently under way, on the basis ofwhich some of the kimberlites may be added to the high priority list for bulksampling. With many more geophysical targets to drill, the Company expects tocontinue to make new discoveries and the number of kimberlites in the field toincrease to more than 100 as exploration continues in 2008. BK11 In March 2007, the Company was awarded a prospecting licence for the BK11kimberlite, from which previous evaluation work produced grades of up to 16carats per hundred tonnes. BK11 is situated approximately 20 kilometres southeast of Debswana's Orapa Mine and 5 kilometres north east of the AK6 kimberlite,on which De Beers and African Diamonds are developing a new mine. BK11 isestimated to be approximately 8 hectares in size and overburden is shallow, atless than 20 metres. With its location close to the infrastructure around themines in the Orapa region, the grade required for BK11 to be economically viableis expected to be modest. Detailed ground geophysical surveys and approximately 3,000 metres of coredrilling have been carried out, from which a detailed 3D geological model of thekimberlite has been developed. LDD bulk sampling will be carried out in early2008 in order to establish a representative grade for the kimberlite and torecover sufficient macro diamonds to provide an estimate of the diamond value.Subject to the results of this work, additional LDD sampling and resourcedelineation work will be undertaken in 2008. Orapa and Jwaneng 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. Some of these areas are being explored by De Beers in joint venture withFirestone. De Beers undertook high resolution airborne geophysical surveys overapproximately 50% of the Jwaneng joint venture area during the year. Thesesurveys are expected to be completed in 2008, following which drilling oftargets will take place. De Beers undertook a number of additional geophysicaland geochemical surveys in the Orapa joint venture area during the year, andfurther exploration drilling is planned in 2008. The Company also announces that it has been granted new prospecting licencesover an area of approximately 1,000 square kilometres in the Orapa region andapproximately 3,000 square kilometres in the Jwaneng region. These new licencesincrease Firestone's position as the largest holder of diamond explorationrights in Botswana's kimberlite fields, with approximately 26,000 squarekilometres now under license. Exploration on these areas will be carried out byFirestone, and work is expected to commence in 2008. South Africa Activities in South Africa were primarily focused on the Company's tolltreatment joint venture project with De Beers at the Bonte Koe Mine. Processingof material for De Beers commenced at the start of the year and continued whilework was being undertaken to expand the capacity of the plant. The expansionwas completed in the second half of the financial year and the plant is nowoperating at its full design capacity of one million tonnes per annum. Thisproject is very significant for Firestone, as it provides the Company withassured revenue and cash flow for the six year duration of the project.Discussions are currently under way in relation to further increases inproduction capacity in order to exploit additional De Beers' resources in thearea. Limited work was undertaken at Firestone's other alluvial mining and explorationprojects in South Africa during the year. With Botswana being the primary focusfor the Company's exploration activities and with the Bonte Koe operation inSouth Africa now in full production, the Company intends to focus its futureactivities in South Africa on low risk toll treatment and joint venture miningopportunities. As a result, the Company has decided to sell or joint ventureits other assets in South Africa at the Oena Mine, the Avontuur Mine and theGroen River Valley and has agreed to terminate its joint venture with De Beersat the Groen River Valley. Financial Turnover for the year increased 173% to £1.6 million, principally as a result ofthe commencement of the toll treatment project at Bonte Koe. The Companyproduced a profit for the year of £100,000. Revenue for the current financialyear is expected to continue to rise significantly, with Bonte Koe contributingat full capacity for the whole year. The Company disposed of its interest inAfrican Diamonds plc after the end of the financial year, generating a profit ofover £2 million, and intends to use the proceeds to accelerate exploration andevaluation work at Tsabong and BK11. Outlook Botswana is the world's largest and lowest cost producer of diamonds and webelieve that it is likely that further major economic discoveries will be madethere. With 92 known kimberlites in our licence areas, the likelihood of morediscoveries being made in 2008, and positive results received from work carriedout over the past year, we believe that Firestone has a very good chance ofmaking such a discovery. We intend to substantially increase the pace of ouractivities in Botswana. We plan to process between twenty five and thirty 100tonne mini bulk samples in 2008, which will allow us to make significantprogress towards identifying the economic potential of our kimberlites by theend of the year. Firestone has made considerable progress over the past year and we areincreasingly confident about the Company's long term prospects. With a highlyprospective portfolio in Botswana, the financial resources to develop theportfolio and a very experienced technical and management team in place, webelieve that we are well placed to take advantage of what we expect will beseveral years of rising prices in the rough diamond market. Finally, I would like to record the Board's appreciation of the continueddedication and commitment of our senior management and staff, who havecontributed to the Company's continued growth and development over the pastyear. James F. KennyChairman 17 December 2007 FIRESTONE DIAMONDS PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 JUNE 2007 2007 2006 As restated £ £ ------------ ------------ Turnover 1,633,393 598,290 Change in stocks of finished goods 85,109 (41,007)and in work in progress ------------ ------------ Raw materials and consumables (274,143) (189,813)Staff costs (319,990) (165,637)Depreciation and amortisation (536,105) (184,557)Other operating charges (664,353) (588,250) Operating (loss) (76,089) (570,974) Interest receivable and similar income 280,834 209,983Interest payable and similar charges (134,335) (136,963) Profit/(loss) on ordinary activities before taxation 70,410 (497,954) Deferred tax on profit/(loss) on ordinary activities (35,730) 158,497 Profit/(loss) on ordinary activities after taxation 34,680 (339,457) Minority interests 20,323 144,859 Profit/(loss) for the year 55,003 (194,598) Earnings/(loss) per shareBasic profit/(loss) per share 0.1p (0.4)pDiluted profit/(loss) per share 0.1p (0.4)p Turnover is wholly derived from continuing activities. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 30 JUNE 2007 £ £ As restated Profit/(loss) for the financial year 55,003 (194,598)Currency translation differences (1,799,559) (1,521,627)Deferred tax on exchange differences (308,755) 279,173 Total recognised gains and losses for the year (2,053,311) (1,437,052) FIRESTONE DIAMONDS PLC CONSOLIDATED BALANCE SHEET 30 JUNE 2007 2007 2006 As restated £ £ £ £FIXED ASSETSIntangible assets 11,404,238 9,149,294Tangible assets 12,568,132 11,255,607Investments 3,078,550 3,078,550 27,050,920 23,483,451CURRENT ASSETSStocks 275,508 64,570Debtors 2,510,435 1,886,790Cash at bank and in hand 1,118,790 4,750,506 3,904,733 6,701,866CREDITORSAmounts falling due withinone year (2,064,097) (940,193) NET CURRENT ASSETS 1,840,636 5,761,673 TOTAL ASSETS LESS CURRENT LIABILITIES 28,891,556 29,245,124 CREDITORSAmounts falling due after one year (2,163,178) (450,130) PROVISIONS FOR LIABILITIESOther provisions (338,756) (580,909)Deferred tax (294,161) (323,328) (632,917) (904,237) NET ASSETS 26,095,461 27,890,757 CAPITAL AND RESERVESCalled up share capital 11,158,290 11,151,581Share premium account 19,181,560 19,132,921Merger reserve (1,076,399) (1,076,399)Profit and loss account (3,409,640) (1,356,329)Share option reserve 452,852 244,385 EQUITY SHAREHOLDERS' FUNDS 26,306,663 28,096,159Minority equity interests (211,202) (205,402) 26,095,461 27,890,757 Approved and authorised for issue by the Board on 17 December 2007 P KennyDirector FIRESTONE DIAMONDS PLC CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2007 2007 2006 £ £ £ £ Net cash outflow from operating activities (585,161) (2,401,275) Returns on investments andservicing of financeInterest received 98,001 209,983Interest element of finance lease payments (30,682) (34,049)Interest paid on loans (103,653) (102,914) Net cash (outflow)/inflow from returns oninvestments and servicing of finance (36,334) 73,020 Capital expenditure and financial investmentPayments to acquire intangible fixed assets (2,202,029) (3,569,192)Payments to acquire tangible fixed assets (2,893,420) (1,112,274)Receipts from sales of tangible fixed assets 94,696 118,169 Net cash outflow from capital expenditureand financial investment (5,000,753) (4,563,297) Net cash outflow before use ofliquid resources and financing (5,622,248) (6,891,552) Liquid resourcesAmounts paid into short term deposits - (2,066,694)Amounts paid out of short term deposits 2,066,694 - 2,066,694 (2,066,694)FinancingLong term loans 2,132,115 -Repayment of long term loans (6,847) (210,854)Issue of ordinary share capital 55,348 9,884,975Finance lease payments (219,342) (104,991) 1,961,274 9,569,130 (Decrease)/increase in cash (1,594,280) 610,884 1. Basis of preparation The financial statements have been prepared in accordance with applicable UKaccounting standards and under the historical cost convention. 2. Profit per share Basic profit per share is based on a profit of £55,003 (2006: loss of £194,598)and a weighted average number of shares in issue of 55,758,177 (2006:52,383,903). Diluted profit per share is based on the weighted average numberof shares in issue for the period plus potential dilutive ordinary sharesarising from share options for the period of 6,617,699. 3. Publication of non-statutory accounts The financial information set out above does not constitute statutory accountsas defined in section 240 of the Companies Act 1985. The consolidated profitand loss account, balance sheet and cash flow statement and associated noteshave been extracted from the Company's 2007 statutory financial statements,which were approved by the Board on 17 December 2007. The auditors havereported on these accounts; their report is unqualified and does not containstatements under section 237(2) or (3) of the Companies Act 1985. The financialstatements will be filed with the Registrar of Companies in due course. Thereport and accounts will be posted to shareholders in the near future. 4. Annual General Meeting The company's Annual General Meeting will be held at MWB Business Exchange, 60Cannon Street, London EC4N 6NP on 31 January, 2008 at 11.00 a.m. 5. Dividends The directors do not recommend the payment of a dividend for the period. 6. Qualified person review Note: 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 GuidanceNote for Mining, Oil and Gas Companies. Mr. Wilkes is Chief Operating Officerof 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). This information is provided by RNS The company news service from the London Stock Exchange