Botswana-focused Firestone Diamonds PLC (AIM: FDI) said it has conditionally placed 35,873,480 new shares at 20 pence each to raise approximately £7.2 million before expenses, with the money to be used to commission a mine at BK11, commence resource development at BK16 and provide general working capital.
In a statement, it said mine development planning is continuing for the BK11 kimberlite, and production could continue in 2010. “We believe that we will be able to make a decision to develop a new mining operation on BK11 following completion of the final phase of evaluation work, with production commencing in mid 2010,” it said.
Regarding the Jwaneng tailings project, Firestone said negotiations with Debswana Diamond Co on a toll treatment agreement are on schedule for a contract to be signed in the second half of 2009. Plant design work is underway and on schedule.
Firestone intends to finance the project through a special purpose vehicle which will arrange debt finance for the whole of the project against the contract with Debswana. The estimated capital cost for the project is US$40 million. Discussions are progressing well with a number of interested lenders and investors, and Firestone expects to be in position to finalise these arrangements shortly after the Debswana contract is signed.
CEO Philip Kenny commented: “The company has made significant progress on BK11 since March and we continue to be encouraged by the results of our work. We have also made good progress with the Jwaneng tailings project, which provides an excellent opportunity for the company to further expand its operations in Botswana.”
“With the company now fully financed to develop and commission a mine at BK11, and with with prices in the rough diamond market continuing to recover from their lows in Q1 2009, we remain confident about Firestone's prospects,” he added.
With the company's operations now focused exclusively on Botswana, Firestone is reviewing the prospects for its South African assets which were placed on care and maintenance in December 2007.
As a result of the ongoing review of the carrying value of these assets, it is possible that the company will be required to make further impairment charges over and above the total charges made to date of approximately £4.8 million, it added.