Firestone Diamonds PLC Hemscott News Alert - Firestone Diamonds PLC by 24hgold

RNS Number : 4035Z

Firestone Diamonds PLC

15 March 2012

???

Firestone Diamonds plc

Unaudited interim results for the six months to 31 December 2011

LONDON: 15 March 2012

The Board of Firestone Diamonds plc, ("Firestone" or "the Company"), the AIM-quoted Diamond mining and exploration company (ticker: AIM: FDI), announces its unaudited interim results for the six months ended 31 December 2011 (H1 2012).

HIGHLIGHTS

Liqhobong Mine, Lesotho

? Pilot Plant

o 207,845 tons treated in H1 2012 (H2 2011: 72,991 tons)

o 70,192 carats produced (H2 2011: 23,296 carats) at a grade of 33.77 carats per hundred tons (cpht)

o Further plant improvements underway to reduce large stone breakages and increase throughput

? Main Treatment Plant

o Definitive Feasibility Study (DFS) on track for completion in June 2012

? Diamond sales

o 42,802 carats sold during H1 2012 (H2 2011: 17,082 carats) at an average price of $59/carat (H2 2011: $140/carat).

o H1 2012 $/carat reduction attributable to general Diamond price weakening and the average smaller size of stones included in the tender.

BK11 Mine, Botswana

? Operations

o 9,910 carats produced at 2.5 cpht

o Further plant improvements including connection to lower cost main electrical power grid

o Operations placed on care and maintenance on 27 February 2012

? Diamond sales

o 8,168 carats sold in H1 2012 (H2 2011: 4,277 carats) at an average price of $133/ct (H2 2011: $233/carat).

Financial & Board

? Financing activities

o ?12.8 million net of expenses raised in July and August 2011 from a private share placement

? Investment activities

o ?5.6 million invested in property, plant and equipment

? ?4.2 million cash on hand on 31 December 2011

? Board changes

o Mr Abraham Jonker appointed as non-executive director and James Kenny resigned as non-executive director during December 2011

o Mr Philip Kenny resigned as executive chairman during January 2012 and Mr Lucio Genovese appointed in his stead as non-executive chairman.

Post Period-end Summary

? Conditional placing of ?14.7 million and Capital Reorganisation

Outlook

? Further investments in the Pilot Plant at Liqhobong expected to reduce Diamond breakages and increase plant throughput

? Strategic focus now on major development at Liqhobong.

Tim Wilkes, CEO of Firestone Diamonds, commented: "The higher than expected cash outflows in H1 2012 are mainly due to the general weakness in the Diamond price experienced from July 2011 combined with technical challenges experienced at both the Liqhobong and BK11 plants. With the restructuring that has been undertaken, the Company is now focused on increasing Liqhobong's revenue per carat production in 2012 and in developing the Main Treatment Plant in order to reach our target of producing over 1 million carats per annum by 2015, whilst achieving the required run rate by Q4 2014".

Extracts of the Interim Results appear below with a full version available on the Company's website. For further information, visit the Company's web site at www.firestonediamonds.com or contact:

Tim Wilkes, Firestone Diamonds	+267 713 77686 / +44 20 8741 7810

Rory Scott, Mirabaud Securities (Nominated Broker)	+44 20 7878 3360
Robert Beenstock, N+1 Brewin (Nominated Adviser)	+44 20 3201 3170
Jos Simson / Emily Fenton, Tavistock Communications	+44 20 7920 3150/+44 7899 870 450

Dear Shareholder,

The disappointing operating and financial results reported for the period can be attributed to the weakening Diamond market and technical issues at the BK11 and Liqhobong processing plants. As a result, the Company has undergone a strategic review which has resulted in the focus on developing Liqhobong's full potential for long term value creation with the emphasis on the Main Treatment Plant, where a DFS is on track for completion in June of this year. Furthermore, the BK11 Mine in Botswana has been placed on temporary care and maintenance as of 27 February 2012. This is as a precautionary measure due to the technical challenges encountered combined with a weaker Diamond market for the smaller stones. We remain fully committed to BK11 and the care and maintenance programme has been designed to enable a rapid re-start when the technical and market challenges have been resolved.

Liqhobong, Lesotho

Production at Liqhobong has been increased from 65 tons per hour to 85 tons per hour during the period under review and will be increased to over 100 tons per hour during the second half of the 2012 financial year due to further planned improvements to the Pilot Plant which will also reduce large Diamond stone breakages.

42,802 carats were sold at an average price of $59/carat realising $2.5 million. This price is well off the $123/carat realised at our June 2011 tender and was negatively affected by the general decrease in Diamond prices that affected the smaller near gem quality part of the assortment as well as the average smaller size stones included in the tender.

The Main Treatment Plant's DFS commenced during the period under review and is scheduled to be completed in June 2012.

BK11, Botswana

The BK11 plant has been negatively affected by the lack of in-line secondary and tertiary crushing and the processing of lower grade material in the first 40 - 60 m of the ore body. In-line secondary crushing units were installed in December 2011, as was the connection to the national electricity power grid.

Cut one stripping has been completed and cut two needs to commence to expose the higher grade coarser ore body prevalent from 50 m below surface. At a stripping cost of $5m management has deemed it prudent to put BK11 on temporary care and maintenance to conserve cash and allow Diamond prices to recover prior to making these considerable investments.

Botswana Evaluation Projects

Kimberlite prospecting licences in the Kokong area of Botswana have been added to our Tsabong and Orapa satellite licences. Firestone possesses the largest and arguably the best Diamond prospecting licences in Botswana and with Botswana having the best worldwide success rate in converting exploration interests into mines, these assets are well positioned to be developed into producing mines. The Company is currently assessing ways to unlock the potential value of its exploration portfolio.

Financial

?13.5 million gross (?12.8 million net of expenses) was raised in a private placement in July and August at 27.75 pence. The Company's cash balance at 31 December was ?4.2 million.

Outflow of funds totalled ?12.8m during the period under review and included expenditure of ?1.3m on debt and interest repayments, ?5.6m on property, plant and equipment, and ?5.9m from operations. The outflow from operations was affected by reduced Diamond sales prices resulting in ?2.2m less revenue than expected. This fall reflects the global reduction in Diamond prices. Increased working capital absorbed ?0.6m. There were ?3.1m of increased operational expenses due to ramp-up delays.

The principal mining assets of the Group are held in Lesotho and Botswana. During the period under review the Lesotho Loti has devalued 15.5% and the Botswana Pula 10.5% when compared to Sterling. This has resulted in a fall in the Sterling value of the Group's assets denominated in these currencies, which is reflected as a negative exchange difference in the translation of foreign assets of ?6.75m included in other comprehensive income. For further clarity, these exchange differences are not included in the Group's earnings per share calculation.

Firestone also gained a secondary listing on the Botswana Stock Exchange in July 2011.

Board Changes

Mr Abraham (Braam) Jonker was appointed as a non-executive director on 14 December 2011 and Mr James Kenny resigned as non-executive director on 30 December 2011

Mr Philip Kenny resigned as executive chairman on 16 January 2012 and Mr Lucio Genovese was appointed in his stead on 17 January 2012 as non-executive chairman.

Placing and Capital Reorganisation

The Company also announces today a ?14.7 million placing and Capital Reorganisation. The completion of both the placing and capital reorganisation is conditional on shareholder approval, and is the culmination of a significant review by the Board over the past few months as Firestone continues to develop its major assets. I believe that this transaction will give the Company a strong platform to execute on its strategic objectives.

Outlook

The strategic focus of the Company has now shifted to improved Diamond value management and the development of the Main Treatment Plant at Liqhobong. To this end, planned investments in the pilot plant at Liqhobong are expected to increase production and reduce Diamond breakages over the short term and the Main Treatment Plant's DFS is on track for completion in June 2012.

The Company is also in the process of reviewing its strategy in relation to its exploration portfolio and will provide an update to the market in this regard in due course.

Lucio Genovese

Non- Executive Chairman

15 March 2012

Firestone Diamonds Plc

Unaudited Consolidated financial statements for the six months period to 31 December 2011

Consolidated Income Statement
	Six months ended 31 December		Six months ended 31 December		Year ended 30 June
	2011		2010		2011
			Restated		Restated
	?'000		?'000		?'000

Revenue		1,973		1,051		2,453

Raw materials and consumables used		(4,966)		10		(819)
Employee costs		(2,273)		(634)		(829)
Compensation to former employees of Kopane		-		-		(585)
Amortisation and depreciation		(2,094)		(267)		(899)
Exploration expenses		-		(187)		(217)
Other operating expenses		(623)		(1,611)		(1,383)
Impairment of intangible assets		(615)		-		-
Operating loss		(8,598)		(1,638)		(2,279)

Financial income		21		14		19
Financial expense		(182)		(207)		(753)
Loss before tax		(8,759)		(1,831)		(3,013)

Taxation		29		-		(317)

Loss after tax for the period		(8,730)		(1,831)		(3,330)

Other comprehensive (loss)/income:
Exchange differences on translating foreign operations net of tax		(6,750)		3,222		106

Total comprehensive income and expense for the period		(15,480)		1,391		(3,224)

Loss after tax for the period attributable to:
Equity shareholders of the parent		(7,780)		(1,988)		(3,215)
Non-controlling interest		(950)		157		(115)
		(8,730)		(1,831)		(3,330)

Total comprehensive income for the period attributable to:
Equity shareholders of the parent		(14,530)		1,263		(3,109)
Non-controlling interest		(950)		128		(115)
		(15,480)		1,391		(3,224)


Basic loss per share - pence		(2.2p)		(1.2p)		(1.2p)

Diluted loss per share - pence		(2.2p)		(1.2p)		(1.2p)

All amounts relate to continuing operations.

	31 December	31 December		30 June
Consolidated statement of financial position	2011	2010		2011
		Restated		Restated
	?'000	?'000		?'000
Assets
Non-current assets
Intangible assets	-	615	615
Property, plant and equipment	69,847	65,179	73,698
	69,847	65,794	74,313
Current assets
Inventories	2,525	705	1,853
Trade and other receivables	1,664	3,674	2,479
Derivative financial instruments	64	-	781
Cash and cash equivalents	4,194	10,832	4,256
	8,447	15,211	9,369

Total assets	78,294	81,005	83,682
Equity and liabilities
Equity
Share capital	74,523	64,149	64,792
Share premium	42,271	39,151	39,198
Merger reserve	(1,076)	(1,076)	(1,076)
Translation reserve	(6,187)	3,708	563
Accumulated losses	(44,655)	(35,728)	(36,922)
	64,876	70,204	66,555

Non-controlling interests	537	(84)	1,779

Total equity	65,413	70,120	68,334

Non-current liabilities
Interest-bearing loans and borrowings	2,024	524	2,736
Deferred tax	2,933	5,702	3,308
Other payables	368	-	-
Provisions	1,353	97	1,247
	6,678	6,323	7,291

Current liabilities
Interest-bearing loans and borrowings	1,795	1,358	2,362
Trade and other payables	3,976	2,675	5,197
Provisions	432	529	498
	6,203	4,562	8,057

Total liabilities	12,881	10,885	15,348

Total equity and liabilities	78,294	81,005	83,682

Consolidated statement of cash flows	Six months ended 31 December	Six months ended 31 December	Year ended 30 June
	2011	2010	2011
		Restated	Restated
	?'000	?'000	?'000

Cash flows from operating activities
Loss before tax	(8,759)	(1,831)	(3,013)
Adjustments for:
Depreciation, amortisation and impairment	2,709	267	1,435
Effect of foreign exchange movements	613	2,022	(85)
Interest payable	58	93	116
Equity-settled share-based payment	47	97	13
(Profit)/loss on sale of non-current assets	(20)	206	-
Loss on sale of derivative financial instruments	-	-	637
Net cash flow from operating activities before changes in working capital	(5,352)	854	(897)

Increase in inventories	(672)	(54)	(1,202)
Decrease in trade and other receivables	1,532	2,036	895
(Decrease)/increase in trade and other payables	(1,488)	(2,348)	1,516
Decrease/(increase) in provisions	40	69	(59)
Net cash flow from operating activities	(5,940)	557	253

Investing activities
Payments for property, plant and equipment	(5,606)	(7,502)	(17,628)
Cash acquired with subsidiary	-	959	956
Disposal of non-current assets	20	-	13
Net cash flow from investing activities	(5,586)	(6,543)	(16,659)

Financing activities
Issue of ordinary shares	13,500	13,094	13,786
Share issue expenses	(697)	(1,122)	(1,122)
Proceeds from long-term borrowings	-	-	3,633
Repayment of long-term borrowings	(1,248)	(686)	(1,049)
Repayment of lease finance	(33)	(20)	(40)
Interest paid	(58)	(93)	(191)
Net cash from financing activities	11,464	11,173	15,017

Net increase in cash and cash equivalents	(62)	5,187	(1,389)
Cash and cash equivalents at the beginning of the period	4,256	5,645	5,645
Cash and cash equivalents at the end of the period	4,194	10,832	4,256

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Corporate information

Firestone Diamonds Plc ("the Company") is incorporated in England and Wales and quoted on the London Stock Exchange's AIM market.

Basis of preparation

These condensed interim financial statements of the Company and its subsidiaries ("the Group") for the six months ended 31 December 2011 have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRSs). With the exception of the change in accounting policy referred to in note 5 below, the same accounting policies, presentation and methods of computation are followed in these financial statements as were applied in the Group's latest audited financial statements for the year ended 30 June 2011.

These condensed interim financial statements have not been audited, do not include all of the information required for full annual financial statements, and should be read in conjunction with the Group's consolidated annual financial statements for the year ended 30 June 2011. The auditors' opinion on these Statutory Annual Accounts was unqualified. The auditor's report also did not contain a statement under Section 498 (2) or 498 (3) of the Companies Act 2006.

While the financial figures included within this half-yearly report have been computed in accordance with IFRSs applicable to interim periods, this half-yearly report does not contain sufficient information to constitute an interim financial report as set out in IAS34 Interim Financial Reporting.

The comparative figures presented are for the six months ended 31 December 2010 and the year ended 30 June 2011.

Going concern

The Company's business activities, together with the factors likely to affect its future development are set out in the Chairman's Statement. As discussed in the Chairman's Statement, the Company's focus in 2012 is on increasing production and reducing Diamond breakages at the Liqhobong pilot plant and completing the feasibility study of the Liqhobong main treatment plant.

On 15 March 2012, the Directors announced that the Company has conditionally raised ?14.7 million, subject to shareholders approval. On that basis, the directors continue to adopt the going concern basis in preparing these financial statements. Though the directors are confident that the Company will continue to have the ability to access sufficient levels of finance to continue the Group's projects for the foreseeable future, there can be no certainty that these funds will be available.

Loss per share

The calculation of the basic loss per share for the six months ended 31 December 2010 is based upon the following:

Six months ended 31 December

Year ended 30 June

2011

2010

2011

Loss per share - pence

(2.2p)

(1.2p)

Loss attributable to shareholders of the parent

?7,780,000

?1,988,000

?3,215,000

Weighted average number of shares in issue

356,484,910

167,821,340

264,731,812

The diluted loss per share for all periods is the same as the basic loss per share as the potential ordinary shares to be issued do not have an anti-dilutive effect.

Change of accounting policy

The Company has revised its treatment of exploration costs. Previously these costs were carried forward as an intangible asset if the rights of tenure for an area was current and it was considered probable that these costs would be recovered through successful development and exploitation of the area of interest. The Group is now focussed upon the development of and production from its mining activities and the Group has reached the conclusion that a policy of immediately expensing exploration expenditure provides more relevant information to shareholders than a policy of capitalisation and such a policy more accurately reflects the on-going activities of the Group. Future exploration costs will be expensed in the period in which they are incurred.

This represents a change in accounting policy and is reflected within these interim financial statements as a prior year adjustment with the opening balance sheet as at 30 June 2010 being restated. There are also consequential restatements of the financial statements as at 31 December 2010 and 30 June 2011 representing the write off of historically incurred exploration expenditures as at 30 June 2010 and in expenditure incurred since that date.

The effect of the restatement of the 30 June 2010, 31 December 2010 and 30 June 2011 financial statements is set out in note 8 below.

6	Dividend
	The directors are not declaring a dividend for the period.

7 Other

The information in this statement has been reviewed by Mr. Tim Wilkes, BSc, Pr Sci Nat, who is a qualified person for the purposes of the AIM Guidance Note for Mining, Oil and Gas Companies. Mr Wilkes is Chief Executive Officer of Firestone Diamonds plc and has over 25 years' experience in Diamond exploration, mineral resource management and mining. Mr Wilkes is a member of the sub-committee for diamonds of the South African Mineral Resource Committee (SAMREC).

8	Effect on the net assets and loss after tax

	Previously stated		Adjustment		Restated
	?'000		?'000		?'000
Net assets:

30 June 2010		35,280		(18,991)		16,289

31 December 2010		90,492		(20,372)		70,120

30 June 2011		88,174		(19,840)		68,334

Loss after tax attributable to equity shareholders:

31 December 2010		(1,801)		(187)		(1,988)

30 June 2011		(2,998)		(217)		(3,215)

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR SFFSMIFESELD

To unsubscribe from alerts, please visit Firestone Diamonds PLC's website.

Legends
	Production
	Mine development
	Discovery
	Exploration
	Past producer
On Google Earth, click on the button, to show property information, and access to project page or company page.