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

40 pence I say........Andy thinks IQE is going to 6 pence from 11 pence at the moment........who's the tracker here.

Andy....said don't buy DMR at 0.30 pence and now at 0.60 pence.....who's the tracker here and keep on eye on how Andy is doing.

Sue,

I have been in FDI at various prices, from the lowest around 30p, upwards, and most have already qualified for the two year BATR, so I am already healthily in profit.

The reason I back FDI is mainly the quality and experience of the management, and also the strong institutional support the company has.

The free float is only around 15%, quite small for an AIM junior, and anyone taking a short position would have the MM's rubbing their hands with glee IMO!

All,

AGM today, is anyone here going?

If so, I will see you there, there are normally only a few PI's, along with the various analysts and brokers that fill out the room, so we normally end up chatting afterwards.

The FDI AGm is always a good presentation, and there is much to check the progress on this year.

I will write up a brief synopsis at the weekend if I have time.

Hi Andy - I'm not going unfortunately but a summary would be good - Always interested to hear your views.

queen1,

I will type up my thoughts tomorrow, but tired tonight.


I would just like to say hello to Ray, another MAM poster that I met at the AGM today.

Ray has yet to make his inaugral post on MAM, so I'm hoping he will share his thoughts re the AGM with us too!

Queen1,


Firestone Diamonds AGM 27/1/06, MWB Business Exchange, Cannon Street.

Approximately 30 people attended.

All resolutions were passed.


There then followed a presentation on current operations by CEO Philip Kenny, and Chief Operating Officer Tim Wilkes.


Bullet points;


Groen River -

Grade of 3 CPHT is VERY conservative!

Average value $300 - $500 also very conservative, $500 more likely to be the base price.

First 4 projects have a 5 year life.

Could commence 2007, with a 1 year ramp up to full production.

High revenue and profit margin, potential of greater than $3.2 billion value.

Low capex - 50 million SA Rand.

Short lead time to production.


HL deposit - Currently drilling 17 two hole clusters.

Cost (to De Beers) $4 million.

Samples to De Beers Kleinsee Mine end of February 2006.

Diamond valuation study March 2006.

Once done, a decision will be made on the HL deposit.


Firestone are currently seeking licences for Groen River 2!



Oena Mine, Orange River, South Africa.

Production effected for two years due to contractor dispute.

FDI to cease production at Oena, due to remoteness form other projects.

A contractor will be appointed in the near future to mine 100% at Oena, rather then the 50 : 50 split between FDI and previous contractors. The chosen cntreactor will have sufficient capital to invest in new plant and additional capacity to significantly ramp up production, to between 4 - 6 million TPA, grade .5 CPHT, average value $1,000.


Bonte Koe mine, Namaqualand, South Africa.

Bonte Koe grades have been disappointing thus far, but are improving.

Other projects possible in the vicinity.



Avontuur mine, Hondeklip Bay, Namaqualand, South Africa.

Avontuur is being remodelled and expanded, to increase production for the new JV with Trans Hex, and the forthcoming marine gravel project, which will also be processed at this site. This will involve gravels being trucked from nearby Hondeklip Bay.



USA

This project has been held up by the takeover of the American partner, and is now effectively on the back burner, as African projects have precedence.


Botswana.

Exploration and bulk sampling continue.

Some results expected in the near future.

Expect some news re Daly City Ventures this year.



De Beers airship now in use over Jawaneng, producing 2 - 4 times better resolution than previous systems.

Cost of processing kimberlite rock, examples, Canada $100 per ton, Angola $25 - 50, and Orapa, Botswana, $10 per ton!


Firestone currently have 55 million shares in issue, 63 million fully diluted.

Current market cap = 79 million.

Firestone shares are held by; Institutions 45%, directors and management 29%, and retail (private) investors, 26%.


Phil Kenny summed up the presentation with the comment - "revenue will INCREASE SUBSTANTIALLY in 2006"

Hi Andy, thanks for welcome! Not able to add to your excellent synopsis of agm. Been in and out of FDI some years now but last attended agm 4 yrs ago. However, Groen Riv prospect sounded really good - await good news soon when samples evaluated! FDI seem to have got it together with De Beers on board and having Tim Wilkes (formerly with De B) on board punches some weight - can't go with Sue Helen's short!
As a new poster, just to say I have some fun with a few tiddler with positions in FOGL, GKP, VLK, SEY, RTD, DTK, HTH at present - probably won't post often but read boards with interest.

Ray A - Welcome!

Andy - Excellent summary, many thanks. To my uneducated eyes most of the update sounds pretty encouraging. I wonder where we'll be with the sp this time next year.....?

Ray A,

Thanks, and welcome from me too!

I hold FOGL and SEY is my second largest holding, so we hold a few stocks in common.

The Groen really is key here, and provided De Beers make a decision to proceed with the HL deposit, the Sp will increase substantially IMO.

However, if it's a negative, then there will be a knee jerk reaction form the market, so position sizing prior to this occurring is paramount IMO.

Queen1,

Well I think it's fair to say we could be on the cusp in 2006, and IF things turn out ok then the SP will certainly begin with a '2' IMHO.

PK seemed confident over the Groen River project, but slightly less so regarding Botswana, if my reading of the body language was correct, and I may be totally wrong.

I'm pleased they are ramping up production, and in particular about to appoint a financially capable and experienced contractor at Oena, because there are high value stones here, and the revenue from them has been missed.

I had the impression Avontuur Mine will be processing more in the near future too, though no timetable was mentioned.

PK did mention the trading range for the SP, and he certainly feels the price should be higher, and can't understand why it isn't. Whilst I agree with him, I think it's up to FDI to improve revenue and prove to the market that they can deliver.

I mentioned to him that I thought the website needed some improvement, and he confirmed that Tim Wilkes has that in hand, and a new and greatly improved website is on the horizon in the not too distant future.

Thanks Andy. I'm excited by the prospect...but then I still get excited by Christmas!

To all FDI holders, please beware, I have received a letter from Berkeley Wyatt offering a "free" report on FDI!

This is a trick used to introduce themselves and give them permission to call you, getting around the FSA cold calling rule!

If you check condition 15 on the rear of the blue slip it says;

"you expressly invite us AND OUR ASSOCIATED COMPANIES to telephone you between the hours of 9am to 9pm (Uk time) on weekdays to discuss particular securities, and our services generally".

I have seen similar wording on invitations from boiler rooms!

Andy,

Thanks for info on oil sands company, Ald.

Aldwickk,

My pleasure, I hope that was the correct one.

I received the email again yesterday.

Thanks for the tip-off Andy.

............made a nice paper plane from Berkeley Wyatt's letter ! Get the same sort of thing from owning Chorion shares.

hobst,

LOL!

I have just noticed that the registered office for Berkley Wyatt is Madrid, Spain!

Nothing further needs to be said!

This new article is quite positive for FDI, published today 24/02/2006.
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Firestone Diamonds Still Sets Much Store By The Groen River Alluvial Project

By Henry Sandford

AIM listed Firestone Diamonds has high hopes for its Groen River Valley alluvial diamond project, which it sees as one of the largest, and maybe even the largest, undeveloped deposits of its type in the world. The company combines this with kimberlitic exploration in Botswana and a small South African production base.

Firestones Managing Director Phillip Kenny calls Groen River the most significant project in the company, and expects an initial bulk sampling programme now underway to be finished in March, after which a more detailed bulk sampling programme, largely for the purposes of resource definition, can get going. This could in turn be finished by some time in the third quarter and a feasibility study completed by the end of the year, paving the way for first production in 2007.

There are thirteen deposits outlined with the Groen River project area, which is covered in entirety by a joint venture agreement clinched last June with De Beers. The deal with De Beers essentially provides for De Beers to gain 61 per cent ownership of any deposit within the project area, in return to taking that deposit to bankable feasibility stage. At this stage, Firestone can either put up its share of mine financing, or allow De Beers to increase its stake to 70 per cent in return for putting up all the funds required to bring an operation on stream.

The initial bulk sampling is now underway and the more detailed work that is likely to follow focuses on the four most advanced deposits in the Groen River joint venture area, and it is one or more of these that Firestone hopes will be ready for production in 2007. Thanks to the terms of the joint venture, Firestone is presently spending next to nothing at Groen River, leaving the company free to allocate funds to other areas.

For example, Firestone has recently been applying for exploration ground in areas best described as further upstream of the Groen River project, in the hope that significant diamond deposits will be found there also. In the longer term, this could result in some exciting exploration, and perhaps eventually another mine, this time one that Firestone could develop without De Beers. That said, De Beers is also reported by Kenny to be looking seriously for ground upstream of Groen River with a similar idea in mind, and if Firestone gets its hands on any parcels that De Beers covets, then the major might decide to do another deal.

Firestone also has significant joint ventures with De Beers in Botswana. One of the benefits of this is that new geophysical data is likely to be obtained this year from De Beers just commissioned, airship mounted geophysical surveying package, which according to Kenny will be over-flying some of Firestone and De Beers joint ventured ground in Botswana. De Beers has been making great claims about the exploration capabilities of this equipment, and it will be interesting to see how it performs.

Firestone is also about to ring some changes at its Bonte Koe alluvial mine in South Africa. Although the mines production is minor next to the potential output of the Groen River project, revenue from Bonte Koe comes in handy for Firestone, and there is a scheme brewing involving additional local resources that the company believes will increase the operations output by a fair amount. At Firestones other producing operation, the Oena mine, which is also alluvial and also in South Africa, the company is switching wholly to contract mining in order to try and improve efficiency.

As well as revenue from its producing operations, Firestone has what remains of the proceeds from a 10million placing done in November, so the companys cash position is a strong one. De Beers contribution to the Groen River project is currently allowing Firestone to divert a much larger portion of its own funds to exploration for kimberlites in Botswana than would otherwise be the case, giving the companys shareholders two major areas to keep an eye on, with the prospect of a third being added upstream of the Groen River project.

Companies featured in this Story
Firestone Diamonds Plc (AIM-FDI)

I attended this excellent event, and fully concur with this article.

Firestone is featured from about halfway.
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Diamonds from juniors and mid-tier operators
By: Rhona O'Connell
Posted: '01-MAR-06 13:00' GMT Mineweb 1997-2004

LONDON (Mineweb.com) -- If the attendance at Mining Journals 20:20 Diamond Day Conference in London this week was anything to go by, then the junior and mid-tier diamond sector is well and truly set for great things. Hordes of us were there, from investors to analysts, producers, contractors, consultants and the room was bursting with familiar faces along with a lot of new blood.

A number of companies presented, the majority either juniors or exploration companies, along with Petra Diamonds, which is looking to position itself in the mid-tier, filling the void between the four majors (which control between 85% and 90% of the worlds rough diamond output)and the juniors.

David Hargreaves, a recognised expert on the market, laid the foundations with a bullish fundamental assessment of the prospects for the diamond market. He opined that despite the fact that the De Beers cartel has been broken, the company retains a very strong grip on the market. The value of rough diamond output is approximately $10 billion, while by the time they have travelled down the value chain the retail volume is closer to five times that much. Hargreaves pointed out that the United States, which with 5% of the population accounts for 50% of diamond demand, is the major market driver sand warned that if the US sneezes then the rest of us are likely to catch a cold. Some of the producers disagreed with this, arguing that the market can withstand a slowdown, with one commenting that a senior BHP Billiton executive said recently that, at current rates of offtake, the market will need a new Ekati every thirty months or so.

Growth will continue to be driven by the majors (De Beers, BHP Billiton and Rio Tinto) and the market can look forward to plenty of joint ventures, amalgamations and take-overs so the corporate finance departments in the City can presumably look forward to a healthy business flow. Hargreaves also suggested that the market should keep its eyes on Alrosa, given that Russia has vast untapped diamond resources, but is in need of substantial quantities of capital. He also pointed out that as yet there is no inter-government cohesion within the industry, but that this is likely to change.

Following on with the industry theme, Philip Kenny of Firestone Diamonds identified the economic thresholds (i.e. operating costs) for different countries as follows:
The North West Territories in Canada; $100/tonne
Angola; $25-50/tonne
Orapa in Botswana and also South Africa; $10/tonne.

He went on to show that known diamond mines currently have less than 20 years demand in resources, whereas twenty years ago there was roughly 85 years identified resources. The recent supply shortfall has been filled by De Beerss stockpile sales; this stockpile is now depleted and new production is therefore essential.

Firestone was one of the producing companies to present. The company has three mines in production in South Africa, two under evaluation, three advanced exploration projects and one early stage exploration joint venture in the United States, but the focus is determinedly on southern Africa.

The most important prospect is Groen River in Namaqualand. This lies in an area that has enjoyed thirty years of exploration, mining, surface mapping, satellite imagery, airborne electro-magnetic surveys and over 20,000 metres in probe drilling. As a result, ancient river channels have been identified that were responsible for transporting the high quality large stones that have been mined by De Beers and others near the mouth of the Groen River. Firestone intends to determine the routes of these channels and this will be addressed in the second phase of the development.

Firestone is one of the companies in joint venture with De Beers and believes that Groen River is the first alluvial joint venture that the major has signed. De Beers will take the whole project to bankable feasibility study and earn 61% as a result. The area averages a width of 40 kilometres east-west, with 50 kilometres at maximum. The initial phase is to develop the four known deposits, of which the first (the HL) covers seven kilometres by 700 metres. Probe drilling extends to 10,000 metres so far and bulk sampling is underway. Seventeen two-hole clusters have been drilled at a cost of US$4 million using new De Beers technology that drills holes of two metres in diameter to a depth of 60 metres. This new drill has, in Kennys words, revolutionised alluvial exploration and Firestone believes that this deposit has a potential resource of 360 million tonnes at roughly 3.0 carats per hundred tonnes (cpht) with a content of 10.8 million carats. Modelling at $300 - $500 per carat (although the stones are high quality and the company is expecting over $1,000/carat) gives potential revenue of between $3.2 billion and $5.4 billion.

Firestone is listed on AIM (ticker FDI.L) and the current market capitalisation is 75 million ($132 million). The company has a strong cash position following a 10 million ($17.6 million) financing conducted last November in order to fund the second phase, the search for the rest of the system.

Thanks again Andy. I'm hoping to see some movement upwards out of the very narrow trading range we seem to have stumbled into. Still a great story with very long legs IMO.