Firestone to commission plant 'within weeks'

Staff Writer | Friday April 23, 2010 00:00

According to Reuters, the company is due to commission a processing plant at its BK11 mine in a matter of weeks, Chief Operating Officer Tim Wilkes told a diamond conference.

'We will be cash flow positive by September and we will have £10 million of cash flow in 2011,' he said. Talks are underway for a joint venture partner for the company's Tsabong project and a deal is due to be signed later this year, he added. Firestone has conditionally placed 30 million new ordinary shares to raise US$14.6 million (P102million).

Approximately £2.3 million (US$3.5 million) will be used to cover additional capital required to bring the BK11 mine in Tsabong into production in the second quarter of 2010 while approximately £2.2 million (US$3.4 million) will go towards covering earthmoving costs that have been brought forward into the first year of operation at BK11.

The remaining funds will be used to continue the development of the company's project portfolio and for general working capital purposes. In a statement, Philip Kenny, CEO of Firestone Diamonds, commented: 'We are very pleased to have received significant support from existing and new shareholders for this financing. 

'While we are still progressing, discussions with our bankers in Botswana in relation to debt financing for BK11, the completion of this equity financing and expected cash flow from production at BK11 substantially strengthens the company's financial position and will allow us to increase the pace of development of our portfolio of over 100 kimberlites and our toll treatment projects. 

'With Firestone shortly to become one of only three kimberlite producers worldwide outside of the major mining companies and the significant shortfall in rough diamond supply projected in the coming years, we remain confident about Firestone's future prospects.'Firestone, which is aiming for a secondary listing on the BSE, recently said it is also currently in discussions with its bankers in Botswana to raise the additional $3 million (P21 million) required to finance development of the BK11 project and to facilitate expansion of the plant's capacity.

With most of Firestone's current operations now focused on Botswana and production due to start at the company's BK11 kimberlite in the second quarter of 2010, the company had been granted local asset status by the Non-Bank Financial Institutions Regulatory Authority of Botswana.

Firestone Diamonds has also identified a number of high interest kimberlites at the Orapa diamond field where it has completed a review of the kimberlites that form part of a joint venture (JV) with Tawana Resources. Last December, the diamond miner and JSE-listed Tawana Resources entered into a JV agreement over eight kimberlite exploration and evaluation projects in the country in terms of which Firestone could earn up to 85 percent interest in these kimberlites.Firestone conducted a review of the kimberlites, known as BK19 to BK26, which included historical exploration work done by De Beers, Tawana and other exploration companies on the kimberlites.