Firestone Diamonds plc
Buffels River Toll Treatment Update
LONDON: 9 February, 2009
Firestone Diamonds plc, ("Firestone" or "the Company"), the AIM-quoted diamond mining and exploration company (ticker: AIM:FDI), today announces that the toll treatment agreement at the Company's Bonte Koe Mine on the Buffels River has been terminated by De Beers Consolidated Mines ("De Beers"). De Beers has made a payment of approximately £2.5 million to the Company as compensation for early termination.
Firestone has been notified by De Beers that it has completed a review of its Namaqualand Mines operations in South Africa, which include the toll treatment joint venture with Firestone at its Bonte Koe Mine on the Buffels River. While Firestone has achieved all of the required throughput and operational targets since commencement of operations in 2006, a decrease in revenue received by De Beers from diamonds recovered and an increase in mining costs have resulted in De Beers deciding to suspend its Buffels River operations indefinitely. Under the terms of the toll treatment agreement De Beers has made a payment to Firestone of approximately £2.5 million as compensation for early termination. Firestone retains ownership of the toll treatment plant under the agreement.
Firestone's operations at Bonte Koe have now been suspended. The Bonte Koe plant, which has a capacity of approximately 1.5 million tonnes per annum, would be suitable for use at the Company's BK11 kimberlite project in Botswana. This would substantially reduce the time and cost to develop a new mining operation at BK11 and also significantly improve the economics of the project. The Company is currently making provisional plans to relocate the Bonte Koe plant and infrastructure to BK11, subject to results from bulk sampling which are expected to be available later this quarter.
Philip Kenny, Chief Executive of Firestone Diamonds commented: "While we would like to have been able to continue with what was a very successful toll treatment operation at Bonte Koe, in current market conditions the £2.5 million termination payment that we have received strengthens the Company's financial position. We are continuing to pursue a number of significant new toll treatment opportunities and with our experience working for De Beers at Bonte Koe having proven that we have the capability to design, build and operate efficient, cost effective mining operations to a high standard, we are confident that we can continue to develop our toll treatment business."
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 |
Gareth Tredway, Jos Simson, Conduit PR | +44 20 7429 6603/+44 7899 870 450 |
Mike Jones/Ryan Gaffney, Canaccord Adams (Joint Broker) | +44 020 7050 6500 |
Jerry Keen, Blue Oar (Joint Broker) | +44 20 7448 4492/+44 777 069 7358 |
Alexander Dewar, Brewin Dolphin (Nominated Adviser) | +44 131 529 0276 |
Background information on Firestone Diamonds:
AIM quoted Firestone Diamonds plc ("FDI.L") is an international diamond mining and exploration company with operations in Botswana and South Africa. 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.
Firestone is the largest holder of mineral rights in Botswana's diamondiferous kimberlite fields, controlling over 29,000 square kilometres around the major Orapa and Jwaneng mines and the entire Tsabong kimberlite field. Firestone has 95 kimberlites in its portfolio, of which 24 have been proven to be diamondiferous. Sixteen of Firestone's kimberlites are at the bulk sampling stage, of which BK11 is the most advanced.
RNS news service provided by Hemscott Group Limited.
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