FDI.L Regulatory News (FDI)

11 Oct 2006 07:01

Firestone Diamonds PLC11 October 2006 Firestone Diamonds plc Prospecting licences granted over the Tsabong kimberlite field in Botswana LONDON: 11 October 2006 HIGHLIGHTS • Prospecting licences granted over the Tsabong kimberlite field in Botswana, one of the largest diamondiferous kimberlite fields in the world, with 67 known kimberlites, of which 17 are diamondiferous • Tsabong contains many large kimberlites, including the 180 hectare M1 kimberlite and 5 kimberlites larger than 50 hectares • Known kimberlites have not been evaluated with modern techniques • Good potential for discovery of new, large diamondiferous kimberlites • Threshold for economic viability in the Tsabong area is modest - 20-25 cpht and diamond value of $100 per carat • Exploration and evaluation plans to be finalised by end October 2006, following which field work will commence Firestone Diamonds plc ("Firestone" or "the Company"), the AIM-quoted diamondmining and exploration company, is pleased to announce that it has been grantednew prospecting licences over an area of approximately 5,000 square kilometres,covering the entire Tsabong kimberlite field in Botswana. The Tsabong kimberlite field is located in south western Botswana, approximately280 km south west of the Jwaneng Mine, which is the world's biggest diamondmine. Tsabong is one of the largest diamondiferous kimberlite fields in theworld, containing 67 known kimberlites, of which 17 have been proven to bediamondiferous. Tsabong is noted for the exceptionally large size of many ofits kimberlites, in particular the 180 hectare M1 kimberlite, which is one ofthe largest diamondiferous kimberlites in the world. The Tsabong field alsocontains 5 kimberlites each larger than 50 hectares and 30 kimberlites between20 and 50 hectares in size. Philip Kenny, CEO of Firestone Diamonds, commented today: "The acquisition of anentire diamondiferous kimberlite field in Botswana is a very significantdevelopment for Firestone. With the kimberlite exploration and evaluationexpertise that we now have in the Company, and with our cash and cash flow frommining operations in South Africa, we will be able to move the Tsabong projectforward rapidly and aggressively. The probable development by De Beers andAfrican Diamonds of a new diamond mine in the Orapa area on the AK6 kimberlite,which was originally discovered and evaluated in the 1970's and considered atthat time to be a small, low-grade kimberlite, provides an indication of thepotential that still remains in Botswana. I look forward to updatingshareholders on our plans for Tsabong as they develop in due course." Data Review The Company has conducted a detailed review of data from work carried out on theTsabong field. This review has confirmed the diamond-bearing potential of theTsabong area and indicates that none of the kimberlites have been evaluatedeither on an adequate scale or with modern techniques. The Company has alsoconducted a review of data from modern airborne magnetic surveys in the Tsabongarea, which indicates that the potential for the discovery of new, large-tonnagediamondiferous kimberlites is good. Economic potential With rough diamond prices estimated to have tripled since the Tsabong field wasdiscovered in the early 1980's, the threshold for economic viability in theTsabong area has been reduced substantially. An analysis of the economics ofBotswana's existing diamond mines indicates that a 20 hectare kimberlite in theTsabong area with a moderate grade of 20-25 cpht and average quality diamonds of$100 per carat would support a large-scale, profitable mining operation. Exploration and evaluation plans The Company plans to carry out two parallel work programmes at Tsabong. Thefirst work programme will be focused on a detailed and systematic evaluation ofall the known kimberlites in the field. The second work programme will befocused on exploration for new kimberlites. Planning for these programmes is atan advanced stage and is expected to be completed by the end of October 2006,following which preparations for field work will commence. Access to the areais via tarred road from Gaborone and infrastructure in the area is good, so nosignificant difficulties are expected in carrying out field work. Background information on exploration at Tsabong: The Tsabong kimberlite field was discovered by Falconbridge in the 1970's.Between 1977 and 1981 Falconbridge discovered a total of 35 kimberlites in theTsabong area, including the M1 kimberlite. A limited amount of evaluation wascarried out on these kimberlites, primarily due to fact that most of them werecovered by between 40 and 80 metres of overburden, which was considered at thetime to be deep and close to the limit for effective evaluation and miningpurposes. In addition, the microdiamond and kimberlite indicator mineralanalysis techniques available at the time were at an early stage of developmentand primitive by comparison to current techniques. Following the extended slumpin commodity prices in the early 1980's, Falconbridge ceased work on the Tsabongfield and withdrew from all of its diamond exploration projects worldwide. No further work was carried out on the Tsabong kimberlites until the mid 1990's.Exploration work was carried out on an intermittent basis between 1994 and2004 by a number of small Canadian and Australian exploration companies, butexploration budgets were limited and did not allow any significant newexploration or evaluation work to be carried out. Despite this, an additional32 kimberlites were discovered during this period. Limited evaluation work wasundertaken on these new discoveries, primarily using a 50 kg sample from asingle hole in the centre of each kimberlite. Note: The information in this statement has been reviewed by Mr. Tim Wilkes,BSc, MSAIMM, who is a qualified person for the purposes of the AIM Guidance Notefor Mining, Oil and Gas Companies. Mr. Wilkes is Chief Operating Officer ofFirestone Diamonds plc and has over 25 years experience in diamond mining andexploration. Mr. Wilkes is a member of the sub-committee for diamonds of theSouth African Mineral Resource Committee (SAMREC). For further information: Philip Kenny, Firestone Diamonds +44 20 8834 1028 / +44 7831 324 645Leesa Peters, Conduit PR +44 20 7429 6600 / +44 7812 159 885Jamie Cumming, Bell Lawrie +44 141 314 8103 / +44 7768 044 620 www.firestonediamonds.com 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, which is being explored by De Beers in joint venture withFirestone, 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