Mmegi/The Reporter (Gaborone)
Wanetsha Mosinyi
10 July 2009
Botswana-focused Firestone Diamonds said it has conditionally placed 35,873,480 new shares at 20 pence each to raise approximately £7.2 million (P85.3 million) before expenses. The money will be used to commission a mine at BK11 near Orapa, commence resource development at BK16 and provide general working capital.
In a statement on Wednesday, Firestone said mine development planning is continuing for the BK11 kimberlite, and production commence 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.
The company said negotiations with Debswana Diamond Company on a toll treatment agreement for the Jwaneng tailings project are on schedule and a contract might be signed this year. Plant design work is underway and on schedule.Firestone intends to finance the project through a special purpose vehicle.
The special purpose vehicle will arrange debt finance for the whole of the project against the contract with Debswana. The estimated capital cost for the project is $40 million (P277. 2 million). Discussions are progressing well with a number of interested lenders and investors, and Firestone expects to be in a position to finalise these arrangements shortly after the Debswana contract is signed.
"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," Firestone chief executive officer Philip Kenny said."With the company now fully financed to develop and commission a mine at BK11, and with prices in the rough diamond market continuing to recover from their lows in first quarter of 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.Speaking at the Botswana Resource Sector conference last month, the company's chief geologist, Polite Khutjwe, said Firestone was putting all its resources behind its BK11 diamond project in order to begin production on schedule in June next year.
He said Firestone is ready to move one of the plants from another project in South Africa to Botswana. The plant has a production capacity of 1.5 metric tonnes per annum at $6.50 per tonne.
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, Firestone said.
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