FDI.L Regulatory News (FDI)

18 Mar 2005 07:00

Firestone Diamonds PLC18 March 2005 Firestone Diamonds plc New projects acquired in Orapa and Groen River areas Significant expansion planned in Jwaneng area Placing to raise £3.7 million LONDON: 18 March 2005 Firestone Diamonds plc ("Firestone" or "the Company"), the AIM-quoted diamondmining and exploration company, today announces significant expansions to itsexploration projects in the Orapa and Jwaneng areas in Botswana, and in theGroen River Valley area in South Africa. New joint venture in Orapa area The Company has entered into an agreement to acquire an 81% interest in DalyCity Ventures (Proprietary) Limited ("Daly City"), a private Botswana company.Daly City is the holder of Prospecting Licence 40/2003 in the Orapa area, whichhosts the Orapa, Letlhakane and Damtshaa diamond mines. Orapa is the secondlargest diamond mine in the world in terms of carat production, producingapproximately 16 million carats per annum with a value of over $800 million. PL 40/2003 covers an area of approximately 380 square kilometres and is locatedapproximately seven kilometres north of the Letlhakane Mine. Under the terms ofthe agreement, Firestone will finance and carry out all exploration andevaluation work on PL 40/2003, up to and including the completion of bankablefeasibility studies on any kimberlites discovered in the project area. There isalready one known kimberlite in PL40/2003, in which Firestone can earn a 76%interest. This kimberlite will be re-evaluated by Firestone as part of itsplanned work programme. The Company considers the prospects for the discovery of further kimberlites inthis area to be very good. The initial work programme for PL40/2003 is currentlybeing developed and is expected to commence during the second quarter of 2005. New prospecting permit, Groen River Valley The Company is pleased to announce that it has been awarded a prospecting permitfor a substantial new area in the Groen River Valley region, which results inthe Company's land position increasing 150%, from approximately 20,000 hectaresto over 50,000 hectares. The Groen River Valley project is the Company's mostpromising exploration project in South Africa, due to the high quality and largesize of diamonds that have been mined in the region and the substantial landposition controlled by the Company. The ground covered by the new prospecting permit is adjacent to the Company'scurrent project area, and is believed to contain significant extensions to thediamondiferous palaeo channels identified by the Company through work carriedout in the region in recent years. The new area will be explored by Firestonethrough its black-empowerment subsidiary, African Star Minerals. New applications in Jwaneng area The Jwaneng Mine is the biggest diamond mine in the world, producingapproximately 12 million carats per annum with a value of over $1.5 billion.Firestone is already active in the Jwaneng region, where the Company's JwanengProject, which covers an area of approximately 3,700 square kilometers, is beingexplored by De Beers in joint venture with Firestone. As much of the region around Jwaneng is still considered to be highlyprospective for the discovery of new diamondiferous kimberlites, the Companydecided in 2004 to significantly expand its licence interests in the region, andsubmitted applications for areas covering approximately 2,900 square kilometers.The Company is awaiting the granting of prospecting licences for these areas,and has recently submitted further applications for an additional 2,800 squarekilometers. Update on Orapa and Mopipi Projects Firestone's Orapa and Mopipi projects, which cover a total area of approximately4,900 square kilometers and are located in the Orapa area, are being explored byDe Beers in joint venture with Firestone. Drilling of targets identified byhigh-resolution geophysical surveys carried out in 2004 is under way. TheCompany announced in February that three new kimberlites had been discoveredapproximately 15 kilometres south of the Orapa Mine. Evaluation of the materialrecovered from drilling is being carried out at De Beers' laboratories inJohannesburg. Microprobe analysis of the kimberlitic indicator minerals andanalysis of the size/distribution frequency of the microdiamond populations fromeach of the kimberlites is being carried out to allow an initial evaluation ofthe economic potential of the kimberlites to be made. With a total of 180 targets identified to date for follow up in the Orapa andMopipi project areas, the Company considers that it is likely that morekimberlites will be discovered as drilling continues in the coming months. Giventhe fact that more than 10% of the 75 known kimberlites in the Orapa region areeconomic, the Company continues to believe that the prospects for new economicdiscoveries in the area are very good. Results from further drilling andevaluation work will be provided as they become available. Philip Kenny, Chief Executive of Firestone, said today: "Firestone hasexceptional exploration potential through its projects in the Orapa, Jwaneng andGroen River Valley regions. Much of the area around the Orapa and Jwaneng minesis still considered to be highly prospective for the discovery of newdiamondiferous kimberlites, as modern geophysical and other explorationtechniques have not been fully applied in these areas. We also believe that theGroen River has the potential to become an important new alluvial diamondproducing region. Today's announcements indicate that we have made substantialprogress towards our objective of becoming the biggest holder of explorationrights in these key regions." Placing The Company also announces that it is placing 2,475,000 new ordinary shares of20 pence each in the Company with institutional investors at a price of £1.50per share to raise £3.7 million before expenses. The proceeds of the placingwill be used to accelerate the pace of exploration and development of theCompany's exploration projects, and for general working capital purposes. Thesenew ordinary shares will rank pari passu in all respects with the existingordinary shares in the Company. Application will be made for the new ordinaryshares to be admitted to trading on the Alternative Investment Market of theLondon Stock Exchange, and it is expected that trading will commence on 24 March2005. Interim Report The Company will announce its interim results for the six month period to 31December 2004 at the end of March. Production from the Company's miningoperations for the period will show an increase from the prior six month period,in line with expectations. Detailed updates on the Company's mining operationsand exploration projects will be provided in the Interim Report. For further information: Philip Kenny, Firestone Diamonds +44 20 7370 6452 / +44 7831 324 645Leesa Peters, Conduit PR +44 20 7618 8708/ +44 7812 159 885Jamie Cumming, Bell Lawrie White +44 141 314 8103Website: www.firestonediamonds.com Background information: Botswana Botswana is the world's largest producer of diamonds, with annual production ofapproximately 30 million carats, worth over $2.5 billion and accounting for over25% of worldwide production by value. Botswana hosts Debswana's Jwaneng, Orapa,Letlhakane, and Damtshaa mines and is considered to be one of the best countriesin the world to explore for kimberlite - the primary source rock for diamonds.Debswana is owned in equal shares by the Botswana Government and De Beers. Firestone Diamonds Firestone has extensive diamond exploration interests in Botswana, as follows: • The Orapa Project covers approximately 1,300 square kilometers and is located close to the Orapa and Letlhakane diamond mines. • The Mopipi Project covers approximately 3,600 square kilometers and is located close to the Orapa and Letlhakane diamond mines. • The Jwaneng Project covers approximately 3,700 square kilometers and is located close to the Jwaneng Mine. Firestone entered into separate joint ventures with De Beers over all three ofthese projects in 2004. Under the terms of the joint venture agreements, DeBeers can earn a 61% interest in each project by financing and carrying out allexploration and evaluation work, up to and including the completion of bankablefeasibility studies on any kimberlites discovered in the project area. Firestone is also active in the Namaqualand region of South Africa, one of themost prolific alluvial diamond producing regions in the world, where theCompany's Bonte Koe, Avontuur and Oena mines are located. The Company hasextensive exploration properties in Namaqualand, including the Groen RiverValley exploration project. Firestone also has a large scale kimberliteexploration project in the United States, in which American Diamonds is earninga 60% interest. Firestone is quoted on the London Stock Exchange's Alternative Investment Market(AIM). This information is provided by RNS The company news service from the London Stock Exchange