FDI.L Regulatory News (FDI)

7 Nov 2005 07:00

Firestone Diamonds PLC07 November 2005 Firestone Diamonds plc Expansion of mining and exploration activities in South Africa and Botswana Placing to raise £10 million LONDON: 7 November 2005 Firestone Diamonds plc ("Firestone" or "the Company"), the AIM-quoted diamondmining and exploration company, today announces plans to significantly expandits diamond mining and exploration activities in South Africa and Botswana. TheCompany also announces that it is raising £10 million via a placing of newordinary shares with institutional and other investors. HIGHLIGHTS • Significant expansion planned to Firestone's mining and exploration activities in South Africa and Botswana • Exploration projects - New exploration projects identified in South Africa similar in scale and geological setting to Groen River Valley project - Prospecting licence applications submitted covering substantial new areas in Botswana • Mining projects - Review of mining operations completed - Preparations for Avontuur Mine expansion under way - Expansion potential at Bonte Koe Mine being evaluated - New production stage projects identified and being evaluated • Placing - Placing of 7,692,308 new ordinary shares at £1.30 per share to raise £10 million Exploration Projects South Africa In June 2005, Firestone entered into a joint venture with De Beers over theCompany's Groen River Valley exploration project (the "GRV Project") in SouthAfrica. In October 2005, the Company announced results of the first phase ofwork carried out by the joint venture, which indicate a potential resource inthe project area of approximately 9 million carats and a gross value of $2.7billion to $4.5 billion. These results confirm that the GRV Project has thepotential to become a major new alluvial diamond producing area, and the Companyconsiders it to be one of the most attractive undeveloped alluvial diamondprojects in the world. On the basis of these results, the Company intends to pursue new explorationprojects elsewhere on the Groen River Valley palaeo river systems. Asignificant amount of work has already been carried out on these systems,resulting in the identification of a number of prospective areas similar inscale and geological setting to the GRV Project area. The Company believesthese areas have the potential to host significant resources of large, highquality diamonds. These areas will be the primary focus for Firestone'sexpanded exploration activities in South Africa, and the Company expects to beable to announce developments in this regard in the coming months. Botswana Over the past 18 months, Firestone has entered into three joint ventures with DeBeers around the Orapa and Jwaneng mines, where the Company is the largestholder of diamond prospecting licences. Exploration work is continuing on allthree projects, and the Company is currently awaiting results from bulk samplingof three kimberlites discovered by De Beers in the Orapa area earlier this year. The Company now plans to further expand its exploration activities in the Orapaand Jwaneng regions and in other areas in Botswana considered to be prospectivefor the discovery of diamondiferous kimberlites. Prospecting licenceapplications have been submitted covering substantial new areas in a number oflocations in Botswana, and the Company expects to be able to announcedevelopments in this regard shortly. Mining Operations Since the appointment in May 2005 of Tim Wilkes, formerly General ManagerMineral Resource Management at De Beers, as Director - Resource Development, theCompany has carried out a detailed review of its current and planned miningoperations. A number of changes are planned as a result of this review. The Bonte Koe Mine on the Buffels River will be the primary focus for theCompany's current mining operations. Grades at Bonte Koe have continued toimprove as new mining areas have been opened up and production is expected toincrease significantly in 2006. The Company is also at an advanced stage inevaluating a number of other projects in the Buffels River area which couldresult in a significant expansion to the scale of operations and production atBonte Koe. The Company is in the process of expanding its operations at the Avontuur Mine.Activities at Avontuur have been focused on preparations to take over theadjacent Hondeklip Bay Mine and Marine Concession 7a from Trans Hex, asannounced in July 2005. This is expected to take place in the first half of2006 and to result in a significant increase of the Company's production andresource base at Avontuur. As a result of the mining operations review, a number of new production stageand cash-flow generating projects have been identified and are currently beingevaluated. The Company will announce developments in this regard in due course.As previously announced, revenue from the Company's mining operations for the2005 financial year is expected to be in line with 2004, with a significantincrease expected in the coming year as a result of the plans outlined above. Placing The Company also announces that it is placing 7,692,308 new ordinary shares of20 pence each in the Company with institutional and other investors at a priceof £1.30 per share to raise £10 million before expenses. The proceeds of theplacing will be used to accelerate the development of the company's existingmining and exploration projects in South Africa and Botswana, to secure newmining and 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 14November 2005. For further information: Philip Kenny, Firestone Diamonds +44 20 8834 1028 / +44 7831 324 645Leesa Peters, Conduit PR +44 20 7618 8708 / +44 7812 159 885Jamie Cumming, Bell Lawrie +44 141 314 8103 / +44 7768 044 620 Website: 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