Firestone Diamonds (LON:FDI) today released its progress report for the “transformational” year to 30 June, during which it made key decisions that made its prospects “brighter than at any time in history”.
During the year, Firestone made the development decision for the BK11 mine in Botswana with production starting in July, making Firestone one of only three junior listed kimberlite producers worldwide.
Firestone plans to mine 11.5 million tonnes (Mt) of kimberlite at an average grade of 8.5 carats per hundred tonnes (cpht).
Phase 1 of the production plant is fully operational and Phase 2 on schedule to reach full capacity by end 2010.
Meanwhile, the company reported that diamond recoveries continue to be of good quality including a high quality 13.74 carat diamond.
First diamond sale is to commence end November by open tender in Botswana.
In addition to BK11, Firestone controls 21 other kimberlites in the Orapa kimberlite field, of which 13 have been proven to be diamondiferous, and 86 kimberlites in the Tsabong kimberlite field, of which 16 have been proven to be diamondiferous.
Firestone said that the likelihood of further economic discoveries being made in these kimberlites is very good.
Firestone added another major asset after the end of the period, purchasing the Liqhobong Mine in Lesotho, which contains 31 million carats with a gross value of US$2.7 billion in a resource of 91 Mt at an average grade of 34 cpht.
Mining operations in Lesotho are set to recommence in 2011.
Plant 2 development plan has been completed with target capacity of 4.2 million tonnes per annum (Mtpa) and annual production of US$116 million.
The company’s ambitious plans include establishing production at 1 million carats annually by 2014.
“The acquisition of Liqhobong in Lesotho in September 2010 gave Firestone control of one of the most attractive undeveloped kimberlites in the world.
“Together with our extensive portfolio of kimberlites in the Orapa and Tsabong kimberlite fields in Botswana and the significant shortfall in rough diamond supply projected in the coming years, Firestone is now very well positioned to become a significant diamond producer,” said chief executive Philip Kenny.
While Liqhobong and BK11 will be the company's primary focus in 2011, Firestone intends to use cash flow from its mining operations to evaluate the other kimberlites in its portfolio to identify additional resources that can be developed and brought into production.
On the financial side, Firestone raised £7.2 million in July 2009 and £9.45 million in April 2010 from share placements, while also agreeing on terms for a US$6 million credit facility in respect of the BK11 Mine.
Pre-tax losses for the period were reduced significantly from £10.99 million a year earlier to £2.4 million. Basic losses per share fell from 17.9 pence to 2.3 pence.