15 Dec 2010 07:00
Firestone Diamonds plc
Results of first diamond sales
LONDON: 15 December, 2010
Firestone Diamonds plc, ("Firestone" or "the Company"), the AIM-quoted diamond mining and exploration company (ticker: AIM:FDI), is pleased to announce the successful completion of its first diamond tender held at the Company's new sales office at Diamond Technology Park in Gaborone, Botswana.
HIGHLIGHTS
• | First diamond sale completed | |
| - | 14,673 carats sold by tender in Botswana, for gross proceeds of approximately $1.6 million |
| - | Tender attended by more than 30 local and international buyers |
• | Liqhobong | |
| - | 12,510 carats from the Main Pipe sold at average price of $98/carat |
| - | Price achieved is 14% higher than previous valuation of $86/carat |
| - | Diamond prices in excess of $100/carat expected in 2011 |
• | BK11 | |
| - | 2,162 carats sold at average price of $177/carat |
| - | Price achieved is in line with previous valuation of $175/carat |
| - | Higher diamond prices expected in 2011 as mining progresses into higher grade kimberlite |
• | Future diamond sales | |
| - | Nine diamond tenders planned in 2011 |
Philip Kenny, CEO of Firestone Diamonds, commented: "The successful completion of our first tender is a major milestone for Firestone and marks the completion of our transition into one of only three listed junior kimberlite producers worldwide. We are very pleased that the prices achieved for both Liqhobong and BK11 production were higher than expected, and we believe that further price increases will be achieved for production from both of these mines in 2011."
The Company has completed the first sale of diamonds from the Company's BK11 Mine in Botswana and Liqhobong Mine in Lesotho. A total of 14,673 carats were sold by tender at the Company's sales office at Diamond Technology Park in Gaborone, Botswana, for gross proceeds of $1,611,817. The tender ran from 29 November to 9 December 2010, and was attended by more than 30 diamond buyers from Belgium, Israel, India, Russia and Southern Africa.
Liqhobong
A total of 12,510 carats from the Main Pipe at Liqhobong were sold on behalf of the Company's 75% owned subsidiary, Liqhobong Mining Development Co. (Pty) Ltd, for $1,228,625. The average price achieved of $98/carat is 14% higher than the most recent valuation of $86/ carat. It should be noted that the Liqhobong parcel included 1,745 carats of boart (industrial diamonds). This is not considered to be representative of run of mine production, which is expected to contain a lower proportion of boart. The average price of the Liqhobong parcel increases to $113/carat when the boart is excluded. It should also be noted that there were no special or fancy coloured stones in the parcel sold, whilst the Main Pipe at Liqhobong is known to produce such goods. As a result, the Company expects that prices achieved for Liqhobong production in 2011 will be in excess of $100/carat.
The Company recently announced a £13 million financing that will allow production to recommence at the Main Pipe in Q1 2011, with production capacity to be tripled to 1.3 million tonnes per annum by Q4 2011.
BK11
A total of 2,162 carats from BK11 were sold on behalf of the Company's 90% owned subsidiary, Monak Venture (Pty) Limited, for $383,191. The average price achieved of $177/carat is in line with the most recent valuation of $175/ carat for diamonds from the west side of BK11, where current mining operations are focused. It should be noted that the majority of the diamonds sold were recovered from the treatment of low grade overburden, and are of lower quality and smaller average size compared to the run of mine production expected from the higher grade kimberlite that will be mined in 2011. The BK11 production plant is expected to be operational at the target production capacity of 1.5 million tonnes per annum by January 2011.
Future diamond sales
The Company plans to hold nine tenders in 2011. The average size of the BK11 tenders is expected to be approximately 12,000 carats, and the average size of the Liqhobong tenders is expected to start at approximately 15,000 carats, increasing to 50,000 carats by Q4 2011.
For further information, visit the Company's web site at www.firestonediamonds.com or contact:
Philip Kenny, Firestone Diamonds
| +44 20 8834 1028/+44 7831 324 645 |
Simon Edwards / Tim Redfern, Evolution Securities (Joint Broker)
| +44 20 7071 4330 / 4312 |
Rory Scott, Mirabaud Securities (Joint Broker)
| +44 20 7878 3360 |
Alexander Dewar, Brewin Dolphin (Nominated Adviser)
| +44 131 529 0276 |
Jos Simson / Emily Fenton, Conduit PR
| +44 20 7429 6603/+44 7899 870 450 |
Background information on Firestone Diamonds:
Firestone Diamonds plc is an international diamond mining and exploration company with operations focused on Lesotho and Botswana. Firestone operates the Liqhobong Mine in Lesotho and the BK11 Mine in Botswana. Firestone is also the largest holder of mineral rights in Botswana's diamondiferous kimberlite fields, controlling approximately 10,000 square kilometres around the major Orapa and Jwaneng mines and the entire Tsabong kimberlite field. In addition to Liqhobong and BK11, Firestone has 108 kimberlites in its portfolio, of which 30 have been proven to be diamondiferous.
Lesotho is emerging as one of Africa's significant new diamond producers, and hosts Gem Diamonds' Letseng Mine, Firestone's Liqhobong Mine as well as the Kao and Mothae development projects. Botswana is the world's largest and lowest cost producer of diamonds, with annual production worth over $2.5 billion, and is considered to be one of the most prospective countries in the world to explore for diamonds.
Review by Competent Person
The information in this statement has been reviewed by Mr. Tim Wilkes, BSc, Pr Sci Nat, who is a qualified person for the purposes of the AIM Guidance Note for Mining, Oil and Gas Companies. Mr. Wilkes is Chief Operating Officer of Firestone Diamonds plc and has over 29 years' experience in diamond exploration, mineral resource management and mining. Mr. Wilkes is a member of the sub-committee for diamonds of the South African Mineral Resource Committee (SAMREC).