Firestone Diamonds
Firestone Diamonds plc is an international diamond mining and exploration company with operations in Botswana and South Africa, which are the world's largest and fourth largest producers of diamonds, respectively, and the lowest cost producers among major diamond producing countries. Firestone has extensive interests in Botswana, which produces over 34 million carats per annum, worth over $3.5 billion. Botswana is considered to be one of the top countries in the world to explore for kimberlite - the primary source rock for diamonds.
Firestone is the largest holder of exploration rights around the Orapa Mine, including the BK11 evaluation project, and around the Jwaneng mine. In addition, De Beers has entered into joint ventures with Firestone over some of Firestone's ground holdings in the Orapa and Jwaneng areas. The company also holds exploration rights over the entire Tsabong kimberlite field in south-west Botswana, which is one of the largest diamondiferous kimberlite fields in the world.
Firestone is also exploring for kimberlite in the US on the Laurentia craton, which extends into Canada, where it hosts a number of diamondiferous kimberlite deposits.
Firestone's mining operations include the Bonte Koe, Avontuur and Oena Mines, which are located on the west coast of South Africa, in Namaqualand. Namaqualand 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. Firestone has entered into a mining joint venture with De Beers at the Bonte Koe Mine, which provides the company with guaranteed cash flow for processing gravel mined by De Beers in the area surrounding Bonte Koe.
Firestone Diamonds FY revenues rise 22%, talks over Jwaneng plant and kimberlites development in Orapa ongoing
South Africa and Botswana operating diamond miner Firestone Diamonds (AIM: FDI) reported higher revenues for the full year, which saw a number of operational successes, and said it would now concentrate on developing a mining operation on the BK11 kimberlite and finalizing the contract with Debswana for the design, construction and operation of a tailings plant at the Jwaneng mine.
Revenues for the year ended 30 June amounted to £4 million, marking a 22% year on year increase, while operating profit narrowed to £0.7 million from last year’s £2.1 million. Pre-tax losses amounted to £10.55 million after impairment charges of £11.2 related to Firestone’s South African alluvial assets.
The financial performance was impacted by the changes in diamond prices, which reached record highs in the first half of the previous year, but declined 50% in the final quarter of 2008, while wholesale prices dropped 20%.
However, Firestone Diamonds said that the long term prospects for diamonds were positive as the price declines have prompted major producers like De Beers, Debswana and Alrosa to cut production and will likely result in a 35% decline in supplies 2009, driving the prices back up. Shortfalls in supply have already caused a 30% increase in diamond prices since their recent lows.
The most significant operational results included the confirmation of the significant economic potential of the Orapa area in Botswana. The high grade areas identified at BK11 could produce revenues of US$20 million per annum and operating margins in excess of 50%. Firestone said contract negotiations with Debswana over the construction and operation of a tailings plant at the Jwaneng Mine in Botswana were at an advanced stage and were now expected to be concluded in Q1 2010 instead of Q4 2009. Initial production of 2 million tonnes per annum is targeted to commence at the Jwaneng project in 2011.
While obtaining good results from bulk sampling carried out at its 100% owned Tsabong project, the company said it would now focus on developing a new mining operation at BK11 and concluding Jwaneng tailings contract next year, also being in negotiations for new kimberlites in the Orapa area, where it already has five, and a significant new toll treatment project.
Having raised £7.2 million in July 2009 on top of the £5 million raised a year ago, the company said it was well funded and confident about its prospects in Botswana.
The BK 11 kimberlite is located 7 kilometres north-west and 20 kilometres south-east of De Beers’ Letlhakane and Orapa mines respectively. A sample of 135 tonnes of kimberlite produced a sample grade of 10 cpht (carats per hundred tones) and a modeled grade of 15 cpht. BK11 contains a total 17 million tones of kimberlite material. Phase 2 evaluation is currently underway and is expected to provide sufficient data to define an inferred resource.
BK11, in which Firestone owns an 80% interest, is expected to be brought into production in mid 2010.
Shares in Firestone added 5.6% on the news this morning.
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Other Firestone Diamonds articles
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01/02/10 Firestone Diamonds: right place, right time, right pipe
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10/12/09 Firestone Diamonds expects BK11 kimberlite production to start ahead of schedule as resource and grades rise
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18/02/09 Firestone Diamonds: A big step closer to a hard rock diamond mine
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06/10/08 Firestone Diamonds ploughs ahead with kimberlite evaluation programs
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27/06/08 Firestone Diamonds - starting to sparkle?
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02/11/06 Firestone Diamonds gets Excited about Tsabong Kimberlites
Other Firestone Diamonds news
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28/01/10 Firestone Diamonds plans to evaluate kimberlites at Orapa in Botswana after historical data review
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21/01/10 Firestone Diamonds upbeat about BK11 diamond project in Botswana
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21/12/09 Firestone Diamonds acquires up to 85% interest in Orapa and Francistown kimberlite licenses in Botswana
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16/11/09 Evolution retains ‘buy’ rating for Firestone Diamonds, target price reduced due to Jwaneng delays
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25/09/09 Firestone Diamond Makes Progress in Botswana, Key Developments Expected by Years End
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08/07/09 Firestone Diamonds raises £7.2 mln in placing, Botswana operations making progress
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31/03/09 Firestone Diamonds extends gains after interims report
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30/03/09 Firestone Diamonds indentifies higher grade diamond zone at BK11 kimberlite
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27/03/09 Investors push Firestone Diamonds higher on Tsabong Kimberlite Project update
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19/02/09 Firestone Diamonds and ADP named preferred bidders for De Beers JV’s Botswana tailings plant