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

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.

Firestone Diamonds Already Counting The Benefits Of JV With De Beers At Groen River Alluvial Project

By Sally White

Lines of communication are pretty short in the mining community, which is probably why most rumours bear at least some resemblance to the truth. So it turned out with stories that Firestone Diamonds was after African Diamonds, its Botswana exploration neighbour and fellow De Beers joint venturer. What has just transpired is a share-deal in which Firestone is taking a 7.3% stake in African Diamonds. The terms give Firestone 4.88million shares in African Diamonds in return for 1.88million new Firestone shares.

Now there are new rumours. These are that Firestone would not mind having more, but that was all it could get from the fall-out from African Diamonds noisy January boardroom split. Firestones CEO Philip Kenny is only saying that he had the opportunity to buy the stock. The purchase was in continuation of our strategy of maximising the already extensive Botswana assets that we have had in place for some time. He added that it was a strategic investment, with Firestone having no plans to make an offer for the whole company.

Meanwhile, African Diamonds is not saying very much either. It has just confirmed that it has granted De Beers, rumoured competing bidder, pre-emptive rights over 17million of its shares, 25.4 per cent, plus first refusal on shares African Diamonds directors offer for sale.

Kenny is more interested in talking about what happened next, making the African Diamond deal look insignificant. This was breaking the news that thirteen deposits have been identified in one of its three De Beers partnerships its three-month old joint venture at Groen River Valley. This is a relatively unexplored ancient river system on the west coast of South Africa, its other major country of operation. Diamonds found have been of large size and high quality, similar or even better than those recovered from the Orange River.

Firestones prospecting permits cover 500 sq. kilometres in the area. Under the JV, De Beers can earn a 61 per cent interest by financing and carrying out all the exploration and evaluation work up to completion of bankable feasibility studies. De Beers also contributed minerals rights covering around 90 sq. kilometres.

Total size of the 13 deposits is being put at 360 million tonnes. As Kenny says, it is looking as though the region has the potential to become a major new alluvial diamond area producing high quality diamonds". Indicated potential gross value is put at $2.7billion n to $4.5billion. No wonder the shares, already improving post the African Diamonds stake news, immediately shot up another 15p to 153p.

Putting together the Firestone modelling work with data from De Beers past exploration in the area has brought rapid progress in assessing the area. The deposits show regional grades of two to three carats per hundred tonnes, with the potential of nine million carats. Modelled diamond values are put at a conservative US$300 to US$500 per carat. Potential as shown by geophysical data and probe drilling is 500,000 carats, with a gross value of US$150million to US$250million.

Now a systemic multi-phase programme of drilling and bulk sampling has started. If the early work goes well, then the pace will be stepped up to check the grade and value of the diamonds to a high level of confidence. Completion of this work is expected in the second half of 2006. Last word to Philip Kenny, 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.

Aldwickk,

That's an interesting article, thanks for posting it.

It would not surprise me if FDI return to AFD and pick up another tranche of shares at some time in the future.

Very disappointed with FDI at the moment in terms of sp performance. All we've had is good news recently but it seems to make little difference. Admittedly the general markets have been poor for the last couple of weeks but today things are much improved yet FDI is down sharply again. Perplexed.

queen1,

So am I to be quite honest.

I am not aware of any bad news, and FDI are never 'leaky', so unless we have a large seller disposing of a quantity of stock, I can't fathom the drop.

I still believe in the long term value potential here, so not too worried, and, unlike the other AIM juniors, they have production, and make a profit!

One of the problems in a tightly held stock can be the MM's not being able to fill an order, and so they may be tempted to "shake the tree" in order to try and skae out some hoders.

Conversley of course, holders may hang on thinking this when it's not a "shake" at all, and lose out if the price falls further.

Oh for an open and honest system like the US have, rather than this manipulated system that we have.

petra is also seeing heavy selling - no reason for either fall that i can see