Firestone Diamonds (AIM: FDI) has entered into a JV (joint venture) agreement with Tawana Resources, giving it the right to earn up to an 85% interest in Tawana’s kimberlite exploration and evaluation projects in Botswana, including eight kimberlites in the Orapa field.
Firestone can now earn a 70% interest in the projects by covering costs for first stage bulk sampling and an additional 15% by funding the projects through to mine development decision if Tawana’s option to fund the remaining 30% interest is not exercised.
The Orapa license covers 57 sq km (square kilometres) containing eight kimberlites, which will bring the total number of Firestone’s kimberlites in the area to 15. The project is located close to Debswana’s Damtshaa mine and only 26 kilometres away from Firestone’s BK11 mine development project.
“We are excited about the potential of Tawana's kimberlites in the Orapa area...with production from our planned new mine at BK11 due to commence in Q2 2010, we will be able to use the infrastructure at BK11 to develop and exploit economic potential at other satellite kimberlites in the Orapa area quickly and at relatively low cost,” said Chief Executive of Firestone Diamonds Philip Kenny.
The acquisition also includes the Francistown prospecting licenses, which span over 1,500 sq km and are said to be located in the “right geological setting for discovery of diamondiferous kimberlites.”
The results of the initial review of historical data for both Orapa and Francistown licenses are expected early next year.
Firestone said earlier this month that production from the BK11 kimberlite was expected ahead of schedule after the resource and grade of the deposit increased as a result of the final phase of bulk sampling.
The work on modifying the production plant at the company’s Bonte Koe mine in South Africa, which will be used by BK11, is also progressing ahead of schedule. The plant will be relocated and commissioned in two phases, with production to commence ahead of schedule in Q2 2010 with a plant capacity of approximately 650,000 tpa (tonnes per annum), increasing to the targeted 1.5 million tpa in Q3 2010.
Firestone is currently in negotiations with the Botswana Power Corporation for the construction of a 14 km long power line from Orapa to BK11, but the company has planned sufficient generating capacity available to operate the plant. This will add approximately US$1/tonne to operating costs until grid power is available.
Shares in the company added nearly 2.5% on the announcement.