Firestone Diamonds plc is a UK-based international diamond mining and exploration company with operations in the Namaqualand region of South Africa and Botswana. Namaqualand, which is located on the west coast of South Africa, has been one of the 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. Botswana is the world's largest producer of diamonds by value, with annual production of over 20 million carats worth over $1.6 billion.

Firestones strategy has been to build a portfolio comprising advanced development and production projects to provide sustainable cash flow to fund ongoing exploration programmes and to provide an early return on investment, together with large scale exploration projects which have the potential to yield significant reserves of gem quality diamonds.

The company operates the Avontuur Mine and the Oena Mine of Namaqualand, which produces high quality alluvial diamonds, and has a growing portfolio of advanced and early stage exploration projects in known diamond producing areas in Namaqualand and Botswana.



Since 1996 the company has increased reserves and resources more than thirty two times from 34,000 carats to over 1.1 million carats at present, with an estimated gross value of approximately 260 million. Firestone is debt free and well funded and has a highly qualified management team with extensive experience in the financing and development of diamond and other natural resource projects. Firestone is quoted on the Alternative Investment Market (AIM) of the London Stock Exchange and trades under the symbol FDI.L.

Firestone also has an exploration project in the USA.



Main Mining Pit, Avontuur Mine, Namaqualand, South Africa.






For FDI Corporate information : http://www.firestonediamonds.com/frcorporate.htm

For FDI homepage : http://www.firestonediamonds.com/index.htm

Firestone Dimaonds shares in issue: 65m 20p Ords

Firestone Diamonds PLC - Major Shareholders

Major Shareholders ---- Amount --- % Holding
Elfin Trust Company Ltd 7,200,000 16.68
Aurora Investment Trust 7,200,000 16.68
Gartmore Investment Mgt 5,418,116 12.56

Hmmm ........ dont know quite what to make of this announcement ........ is it an indication of the confidence Firestone feels in its future or a case of learning to run before it can walk. I suppose you have to give the benefit of the doubt to Messrs Kenny and Co but even so I was expecting some drilling news rather than corporate action.

hobbst,

I expected drilling news, or something from the Groen, but certainly not this, although there have been rumours for a few months regarding FDI and AFD.

Maybe the game has moved into the second half, and some consolidation and/or co-operation between the junior diamond miners is coming?

Petra have recently taken out Kalahari (why?) and now Mano River, and now we see Firestone taking a "strategic stake" in their neighbour on the ground in Botswana, AFD!

Many people seem to think the AFD's AK6 and AK8 pipes will become mines, so a 7% stake may at least become a more valuable asset in time, if nothing else.

On the otherhand, with the current wave of consolidation, it may be a timely move, as FDI are De Beers' friendly, to prevent Petra/BHP form gaining a foothold in the Orapa, as the current AFD directors, as well as MS are subjec to the De Beers pre emption over their shares!

All in all, some intereting times ahead I think.

hobst,

I found this article, first published 29/6/05 on the web, from a mining magazine, and it certainly highlights the potential at the Groen River IMO.

-----------------------

Exploration JV to fast track SA gem project

The South African arm of the world's largest diamond-miner and AIM-listed Firestone Diamonds yesterday announced details of a new exploration joint venture that was signed recently.

The joint venture builds on an announcement made by Firestone in March this year.

The deal sees De Beers Consolidated Mines retaining the right to market any diamonds recovered through the joint venture, as well as being on call to provide Firestone with loan finance.

In total, De Beers could earn a 70% share in the area.

The company will take over exploration and evaluation work with the intention of fast-tracking the project.

The end of 2004 saw Firestone start carrying out exploration drilling on previously identified targets.

De Beers will carry on this work and its three-dimensional topography model aims to identify the most attractive exploration targets.

The work is already at an advanced stage and two new targets for further drilling have been identified.

De Beers' review of work previously carried out focused on the HL gravel deposit, which is thought to be similar to the largest Namaqualand deposit discovered so far - the Megalodon deposit.

Evaluation of the HL deposit is a high priority for the joint venture and plans for bulk sampling to take place in the second half of this year are being accelerated.

Results of the sampling are hoped to provide an indication of the grade of the deposit as well as a value of the diamonds.

Bulk sampling will be carried out by using a Bauer specialised large-diameter auger drill.

Firestone CEO Philip Kenny points out that this is the fourth joint venture agreement with De Beers in the last twelve months.

He hopes the agreement will bear out the company's belief that Groen River has the potential to become a major new alluvial diamond-producing region.

Kenny added that De Beers' interest in the project indicates that it also recognises the potential for a new, large-scale source of high quality diamonds.

In its interim results in March this year, Firestone announced that it had signed a joint venture agreement with De Beers and that an initial work programme was already under way at the Namaqualand-based dig.

Described as Firestone's most promising exploration project in South Africa because of the high quality and large size of diamonds that have previously been mined, the area shows good potential.

It is reported to have ancient river channels, which were responsible for transporting the high-quality large-sized diamonds previously mined.

Diamonds from the valley have recorded values of over $1 000 per carat.

The agreement entitles De Beers to earn a 61% interest by financing and carrying out all exploration and evaluation work, up to completion of bankable feasibility studies on any deposits identified by exploration in the project area.

Also in March this year, Fieldstone announced that it had been awarded a prospecting permit for a substantial new area in the Groen River Valley region.

This effectively increased its land position by 150% to over 50 000 ha.

The land is believed to contain significant extensions to the diamondiferous palaeochannels previously identified in the region.

Firestone said that it will explore the new area through its black-empowerment subsidiary, African Star Minerals.

After a bankable feasibility study is completed, the companies will be responsible pro rata for their share of mine construction costs.

Despite this, Firestone will have the option to call on De Beers to provide additional loan finance for its share of these costs.

This would entitle De Beers to an extra nine per cent interest.

De Beers is also to contribute its mineral rights to the joint venture, which cover an area of some 90 km2.

The world's most prolific diamond-miner is no stranger to the area, having explored there before.

The company has already conducted a geological due-diligence review on the results of Firestone's exploration.

Included in the due-diligence was a review and interpretation of the material recovered from drilling, a geological interpretation of drilling logs and profiles, a review of the location and value of diamonds recovered by exploration in the area, and the grade of the deposits from which the diamonds were recovered.

De Beers also looked into Firestone's palaeo drainage interpretation for the area, which it found to be consistent with its own interpretation.

Andy,

Its all good positive stuff. IMO this company is sitting in a very strong position with the might of De Beers behind it. When compared to companies like Tanzanite One Ltd (TNZ) who albeit are a niche player in the gems market, the valuation of Firestone leaves masses of potential upside.

hobst,

I agree, sadly the price is down again today, we really do need some newsflow the market can understand, ie numbers from the Groen River deposit.

Firestone Diamonds PLC
11 October 2005


Firestone Diamonds plc

Groen River Valley joint venture exploration update

LONDON: 11 October 2005


Firestone Diamonds plc ('Firestone' or the 'Company') today announces an update
on exploration at its Groen River Valley project (the 'GRV Project') in South
Africa. In June 2005, as previously announced, Firestone entered into a joint
venture over the GRV Project with De Beers Consolidated Mines Limited ('De
Beers'), under the terms of which De Beers can earn a 61% interest in the
project by financing and carrying out all exploration and evaluation work, up to
completion of bankable feasibility studies.


HIGHLIGHTS

Geological modeling of Firestone and De Beers data completed
- 13 deposits identified
- total size of deposits estimated at 360 million tonnes
- confirms potential as a significant new alluvial diamond producing
area
Potential value of deposits
- regional grades of 2 to 3 carats per hundred tonnes
- potential of 9 million carats
- diamond values up to $1,000 per carat proven in the area
- conservative modeled diamond value of $300 to $500 per carat indicates
potential gross value of $2.7 billion to $4.5 billion
Bulk sampling of HL Deposit
- 17 million tonnes of gravel indicated by geophysical data
- potential of 500,000 carats, with gross value of $150 million to $250
million
- 2,000 metres of probe drilling carried out since July 2005
- bulk sampling to commence in November 2005
Probe drilling on new deposits
- over 8,000 metres of probe drilling carried out by De Beers on KK and
KR deposits
- drilling planned on RH deposit


Philip Kenny, CEO of Firestone Diamonds, commented: 'We are very pleased with
the substantial progress that has been made since the signing of our joint
venture with De Beers. The results of the integration and modeling of
Firestone's and De Beers' data confirm our view that the Groen River Valley has
the potential to become a major new alluvial diamond area producing high quality
diamonds. We consider the Groen River Valley to be one of the largest and most
attractive undeveloped alluvial diamond areas in the world, and we expect that
the results of the next phase of work on the project will confirm its economic
potential.'



Geological Modeling

Since the signing of the joint venture with De Beers, extensive work has been
carried out by Firestone and De Beers personnel on the GRV Project. The primary
focus of this work has been to combine data from exploration carried out by
Firestone in the project area with data from De Beers' past exploration into an
integrated computerised geological model of the area. Exploration carried out
by Firestone comprised Landsat and aerial photo interpretation, ground
geological mapping, and extensive probe drilling and sampling of diamondiferous
gravels at over 160 locations in the project area. De Beers has also carried
out extensive drilling and small scale mining in the project area, and has
conducted a Spectrem high-resolution airborne electromagnetic (AEM) survey,
which has been used to generate a detailed 3D model of the bedrock topography in
the area.

The integration of this data has been completed and computer modeling of the
data has been carried out to produce a more detailed geological interpretation
of the palaeo-drainage systems in the project area. Thirteen deposits have been
identified in the project area by this work, with an estimated size of 360
million tonnes.

Although grades of up to 10 carats per hundred tonnes ('cpht') have been
recovered from historical sampling in the GRV Project area, using a conservative
estimate of between 2 and 3 cpht indicates a potential resource of approximately
9 million carats in the project area. The average value of diamonds in the
project area varies, from up to and exceeding $1,000 per carat from marine
deposits at the coast, which have a large average size exceeding 1 carat per
stone, to $500 per carat from palaeo-river deposits inland. However, for
modeling purposes a conservative diamond value of $300 to $500 per carat has
been used, giving a potential gross value of $2.7 billion to $4.5 billion for
the deposits in the project area. Further drilling and sampling will be
required to increase the confidence levels of grade and diamond value estimates,
but these initial results confirm that the GRV Project has the potential to
become a major new high quality diamond producing area.

A systematic multi-phase programme of drilling and bulk sampling is now being
undertaken to further evaluate the economic potential of the deposits identified
in the area to date. The first phase of this programme will include bulk
sampling on the HL Deposit, which is one of four in the project area at an
advanced stage of exploration, and probe drilling on the other three deposits.


Bulk Sampling

The HL Deposit, which was discovered by Firestone in 2003, is 7 kilometres long
and up to 700 metres wide. Probe drilling has proven that gravels in the
deposit average 2.5 metres in thickness, with average overburden depths of 20
metres. The HL Deposit is considered to be a very attractive target, as it
contains a significant tonnage of well developed gravels, while results from
drilling indicate significant geological similarities to the major Megalodon
deposit currently being evaluated by De Beers further north in Namaqualand.

Since July 2005, approximately 2,000 metres of probe drilling has been carried
out over 89 holes on the HL Deposit in order to produce a more detailed
geological model of the deposit and to allow locations for bulk sampling to be
selected. This drilling is still in progress, but geological modeling of the
deposit using data from the AEM survey indicates that it contains approximately
17 million tonnes of gravel. Using an estimated grade of 3 carats per hundred
tonnes and a conservative diamond value of $300 to $500 per carat, this gives a
potential resource for the HL Deposit of 500,000 carats, with a value of $150
million to $250 million.

Bulk sampling of the HL deposit will be undertaken using a Bauer BG36C large
diameter bucket auger drill ('LDA'), which is extensively used by De Beers for
sampling alluvial deposits. An initial phase of LDA drilling, which will
comprise approximately 20 LDA holes, is planned with the objective of providing
an initial indication of the grade of the HL deposit. LDA drilling is scheduled
to commence in November 2005, and is expected to be completed within three
months. Gravels recovered from LDA drilling will be transported to De Beers'
Koingnaas Mine, approximately 75 kilometres to the north, for processing,
following which valuation of diamonds recovered will be carried out at De Beers'
facilities in Kimberley.

Depending on the results from the initial phase of sampling, a more intensive
full scale evaluation sampling programme is planned to determine both the grade
and value of diamonds to a high level of confidence. This work is expected to
be completed in the second half of 2006.


Exploration Drilling

Probe drilling has been carried out on the next two high priority deposits,
known as the KK and KR deposits. Approximately 8,400 metres of probe drilling
has been carried out over 234 holes on these deposits and has confirmed the
presence of alluvial gravels. Probe drilling is now planned on the RH deposit,
which is the next priority target in the area.

It is also planned to drill a number of LDA holes on the KK, KR and RH deposits
in order to provide an initial indication of the diamond content of these
deposits. Based on the results of this work, a decision will be made whether to
proceed to bulk sampling on these deposits.



For further information:

Philip Kenny, Firestone Diamonds +44 20 8834 1028 / +44 7831 324 645
Leesa Peters, Conduit PR +44 20 7618 8708 / +44 7812 159 885
Jamie Cumming, Bell Lawrie +44 141 314 8103 / +44 7768 044 620


Website:
www.firestonediamonds.com

Much better! Although based on past sp performance and the news released today I would have expected the sp to have gone higher today. Any thoughts?

Aldwick,

Isn't that one beautiful RNS!

What a surprise to be greeted with that at 09:30 this morning!

I've been to Minesite today, and just arrived home.


This is what was needed, some numbers for the analysts to crunch, and now finally they can set about to determine the true value of the Groen River project, and apply them to FDI's market cap.

queen1,

yes I agree, I would have thought the price would have jumped much more than that to be honest.

It's a shame they couldn't have announced when they had the run up to 160p recently, as the momentum would have carried them higher IMO.

I do think that once the analysts have checked the numbers, they may add a few more pence at least.

I was at Minesite today, and the attendees that hold FDI, (and there are quite a few!), were excited about the news, and as mystified as me as to why the price didn't go higher.

I believe FDI are presenting in the city next week, so we may see a rise after that.

queen1,

Well FDI has just turned positive, albeit only by 0.5p!

I had hoped for a follow through from yesterday's excellent news, but it seems the PR is lacking.

I think FDI need to consider changing their PR company, this news should have raised the price considerably more IMO.

Surely it shouldn't be the PR company that is responsible for whether an sp rises or not! It is more likely the perception in the Market.

Takahe,

Correct, but it's the PR company's job to ensure the market is aware of the news, and I don't feel this has really occurred since the two RNS in July, and what was, IMHO, excellent news yesterday, seems to have been largely missed by the city.

In hindsight, the RNS issued in July came out when the city was on holiday, and lessened the impact of what was some excellent news IMO. they had to announce of course, because it was price sensitive, but sadly at the wrong time of year to maximise the impact.

I wonder if any newspaper is carrying the news today?

The volume today is a pitiful 50,000 so far.

The market seems a bit quiet, generally...

Word is out, this will climb from here 200% with the odd day or two to allow for profit taking.

driftwood1 - not sure what you're smoking but if they do climb 200% I'll have a puff!

Andy - I've been out all day and was disappointed to come back to find such a small rise. However, most of my portfolio saw red today so any blue is a bonus!

driftwood,

In the longer term, that is certainly possible, IMO.



Queen1,


Yes today was a poor day for the market, and yet we rose, so mustn't complain I guess.

FDI have now put numbers out, it's now a question of waiting until the city analysts digest them!

let's hope we don't have to wait too long!

I find it difficult to formulate an opinion to the true worth of Firestone with all the ifs, buts and maybes that exist, but even to a novice the current market cap of just over 70m takes very little account of the potential (and highly probable) earnings capacity of this company. Perhaps if Messrs Kenny and Co allowed a bit more liquidity in this stock by placing some of their substantial holdings, the City may feel a bit more comfortable in investing in a more fluid stock.

Whilst I would also like a smoke on driftwoods pipe, I cant believe that Firestone will be ignored for too much longer and we can all enjoy a rollercoaster ride.

hobbst,

I agree, the market cap does not take account of the potential here, particularly after the numbers that were released in the latest RNS.

If the Groen comes in, FDI have a 39% holding (31% if De Beers finance it) of up to their conservatively assessed $4.5 billion, spread over the number of years of mine life.

IMHO that has to be worth more than a market cap of 75 million by itself, and we still have exisiting Namaqualand production, and Botswana and American exploration to go!

liquidity?

Yes that may be a problem, around 80% of the shares are tightly held by directors and long term holders I believe, but if I was Phil kenny, I would NOT release any at this price, with the potential we have both identified, would you?

PR?

The PR company could do a whole lot better IMO, let's see if they do now they have some real numbers for the city to chew on.

Andy,

I take your point on liquidity, but I suspect that in order for a more realsitic market valuation of the company to be achieved, investors may be deterred by the lack of influence they can muster on what is in effect a 'closed company'. I have no doubt that the directors have had this discussion with their advisors on numerous occasions, but I agree that with the current SP, they would be selling on the cheap. It may take a compromise to please everyone.

Hobbst,

Yes you have a valid point, one for them to discuss with their broker, which as you suggest, they probably already have.

The directors and their associated trusts hold around 33% I beliieve, and then the institutions hold around 18%, I believe, so in effect, you are correct.

The institutions could hold sway of course, so there is some degree of assurance.