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

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.

Queen1,

Well a nice jump today, and I'm told that a large sell was cleared yesterday.

In addition, the increasing value of AFD also increses the value of FDI's holding in thet company, and at current the valuation, we have nearly 6 million of AFD shares now!

Very promising Andy. It was a good sp performance yesterday against the wider market decline so let's hope this is the start of a push back to the highs of 190p.

queen1,

That would be nice!

FDI, an oasis of blue in a sea of red.

Indeed - I took an absolute hammering today :-(

queen1,

FDI started where it left off yesterday, and the holding in AFD is now worth nearly 8 million!

With the 10 million in cash FDI recently raised, the AFD holding, and continuing production at three mines, FDI look to be in a healthy position financially speaking.

Queen1,

There is a broker buy note out, from Hargreave Hale.

Splendid Andy. Cash & recomendations. 190p+ here we come!!

queen1,

Well according to Hargreave Hale, 185p for starters!

queen1

One snippet from the HH report.

"We believe the value we have placed on the company is conservative."

They forecast revenue for 2006/7 of 8.1m, net earnings of 1.8m, eps of 3p, for 2007/8 the figures are 25.1m, 9m, and 16p respectively.

They have used a price of $350 per carat for the Groen river which is understood to be conservative.

I'm in agreement with that Andy. It may be a little blinkered but I can't see too many things stopping FDI from marching off away into the sunset trailing a soaring sp in its wake. Am I missing anything obvious?

queen1,

I certainly hope not!

I believe the interims are due next week, and if so I trust FDI will take the opportunity to update us on developments since the December 2005 finals.

Andy,

Yes, interims scheduled 31 Mar and would expect some report on Groen river evaluation then. SP seems to show remarkably little anticipation so far. Crossing everything for a big +!!!!

RAy A,

Hello again, good to see you are still here!

Yes I beleive they will update us on the company's various operations with the interims, but anything major such as Groen River news would have to be RNS'd at the time, so would be a seperate announcement.

Clearly Groen River's potential is a company maker on it's own, but until that news is released, I want to see FDI moving towards increasing revenues, and I'll be particularly looking for news of the Oena contractor being appointed, and estimations of production there for the remainder of this year.

They are looking to appoint a contractor "with substance" to upgrade the processing plant in order to greatly enhance production, which will clearly take time, so I would like to hear that this is well in hand, and maybe that a decision has been made on the contractor and they have been appointed.

Otherwise, I expect flat interims, with maybe the hope that Bonte Koe has increased production since the finals, but nothing more.

FDI is well positioned financially, as they have around 10 million in cash, are producing and making a profit, and own nearly 4.8 million AFD shares at a value of 1.60p each!

Financially at least, FDI is in a very strong position for an exploration company, and I hope they may take advantage of the sort of opportunity that may become available to them because they are in a position to make a decision and move quickly.

I am looking forward to seeing what is released.

ray a, queen1,

Well a nice rise the last couple of days, maybe some news is coming in addition to the interims?

Maybe Andy. A new high for the last year hit today although still a little way to go to the heady days of 195p when you and I were wondering whether the sky would be the limit!

queen1,

Looks like I spoke too soon!.

We are back down a little today, on light volume so far.

Interims are either tomorrow or Friday, and my guess would be Friday.

We are due updates on some of the following; Groen River, Oena contractor appointment progress, Bonte Koe grades, marine gravel project, Botswanan drilling, Daly City Ventures, Hoendiklip Bay / Avontuur mine refurbishment, and maybe even something from the USA exploration.

Last year's interim statement was quite lengthy as it dealt with project progress, and I expect this year's to be lengthy too.

FDI interims are out.

They can be viewed HERE


Highlight is a new deal with De Beers to process their Buffels River alluvials at FDI's Bonte Koe mine.

Disappointing that the AK21,22 and 23 did not produce better results in Botswana, but the continued sampling on other kimberlites gives hope, and the use of the De Beers' Zeppelin over FDI's Jawaneng licence in mid 2006 is a real boost!

Prouction reduced due to refurbishment at Hoendiklip Bay resulted in a small operating loss, but the exanded production due to start there, and at Bonte Koe, in the near future, should result in much higher production, and a return to profit, during 2006.

Groen River results predicted at the end of May, so we probably won't hear until the middle of June I would imagine, most miners have some slippage.

A mixed bag overall, IMO, and I would like to see some clarification of the revenue FDI are likely to receive from the Buffels River project with De Beers.