Firestone Diamonds - Bulk Sampling Results
RNS Number : 5664X
Firestone Diamonds PLC
26 June 2008
Firestone Diamonds plc
Positive bulk sample results from BK11
Acquisition of BK16
Botswana operations update
LONDON: 26 June 2008
Firestone Diamonds plc, ('Firestone' or 'the Company'), the AIM-quoted diamond
mining and exploration company (ticker: AIM:FDI), today announces results from
bulk sampling at its BK11 project, the acquisition of a controlling interest in
BK16 and an
update on evaluation and exploration work at its Orapa and Tsabong projects in
Botswana.
HIGHLIGHTS
Orapa
BK11
* Positive results from bulk sampling of crater unit
* * Sample grade of 10 cpht, with high grade zones up to 33 cpht
* Modelled grade of 15-20 cpht
* High quality diamonds recovered; value estimated at $200/carat
* Robust economic potential, with estimated gross value of $30/t and
operating costs of $7-8/t
* Estimate of 17 million tonnes to 120 metres depth
* Development decision expected by end 2009
BK16
* Firestone to acquire 87.5% interest in BK16 kimberlite
* Brings total kimberlites in Firestone's Orapa licence areas to 10
* Good economic potential
* Historic grades up to 15 cpht
* High quality diamonds recovered from sampling
* Bulk sampling to be undertaken in H2 2008
Satellite Mining Project
* Scoping study commenced
* Targeting exploitation of BK11 and BK16 with combined 4M tonne per annum
operation
Tsabong
MK1
* Grade estimate increased to 25 cpht based on additional microdiamond
recoveries
* Bulk sampling progress
* * Two large diameter drill holes completed
* 3 macrodiamonds recovered from initial sampling
* Processing hampered by high clay and concentrate yields
* Concentrates being sorted off site
Bulk sampling
* Bulk sampling programme continuing on 13 other high interest kimberlites
Exploration
* 2 new kimberlites discovered, bringing total in Tsabong to 85
* New prospecting licences granted for 2,500 square kilometres
Philip Kenny, CEO of Firestone Diamonds, commented: 'The bulk sampling results
from BK11 are very encouraging and are the highlight of our recent activities in
Botswana. With an estimated value of $30 per tonne for the upper portion of BK11
and
operating costs in the Orapa area of $7-8 per tonne, the economic potential
looks very good. Based on these results we have decided to establish a second
bulk sampling plant in Botswana to support evaluation and development work at
Orapa. With the
operational capability we have put in place in Botswana we expect to be able to
fast track BK11 to a development decision by the end of 2009. This is the first
of 15 kimberlites selected for bulk sampling from our Botswana portfolio and we
believe that
the prospects for identifying further economic kimberlites are very good.'
Orapa
BK11
Firestone's 80% owned BK11 kimberlite is situated approximately 20 kilometres
south east of Debswana's Orapa Mine and 5 kilometres north east of the AK6
kimberlite, on which De Beers and African Diamonds are developing a new mine.
BK11 has a surface
area of 8.5 hectares and overburden ranges from 0 to 17 metres.
Bulk sampling completed
The first stage bulk sampling programme on BK11, which commenced in Q1 2008, has
been completed, with very good results. Three 24 inch diameter large diameter
drill ('LDD') holes were completed and 348 tonnes of drill sample material were
processed at
the Company's bulk sampling plant at Tsabong. A total of 197 diamonds weighing
17.0 carats were recovered. Details of the sampling results are provided below:
Geological unit Average depth (m) Sample size (t) Diamonds recovered
Sample grade Modelled grade
(carats) (cpht) (cpht)
Crater 0 to 120 135 13.6 10.0 15-20
Basalt breccia 120 to 250 213 3.4 1.6 nc
Note: nc = not calculated
The most significant result came from the crater unit, which extends to a depth
of approximately 120 metres. This material produced 155 diamonds weighing 13.6
carats, which represents a sample grade of 10.0 cpht, and had a number of high
grade zones
with grades of up to 33 cpht. With the relatively small sample size taken to
date, the Company believes that the sample grade is likely to be understated.
This is supported by analysis of the size frequency distribution of
microdiamonds and macrodiamonds
recovered from the crater unit, from which a modelled grade of 15-20 cpht has
been calculated. This estimate is consistent with the historical reported grade
of 16 cpht and is very encouraging.
The highly diluted basalt breccia unit below the crater contains very little
kimberlite and produced a low grade of 1.6 cpht. No further work is planned on
this unit at this time. A diatreme unit consisting of fragmental kimberlite
breccia was
intersected below the basalt breccia. Very little of this material was sampled
by the LDD drilling and further investigation of this unit is planned.
Diamond value
The quality of diamonds recovered was very good, comprising mostly clear white
gemstones. No industrial diamonds were recovered in the coarse fractions,
compared to the more typical average of 20% to 50% from Botswana's current
kimberlite mines. The
parcel contained three stones of approximately 1 carat in size, which is also
very encouraging in relation to diamond value. The value of diamonds recovered
is estimated at approximately $200 per carat, although a larger parcel will be
required to develop
a higher confidence estimate.
Economic assessment
Based on a minimum modelled grade of 15 cpht and a diamond value of $200 per
carat, the BK11 crater unit has an estimated gross value of $30 per tonne. With
operating costs in the Orapa area estimated at $7-8 per tonne and with the
crater unit
estimated to contain approximately 17 million tonnes of kimberlite material,
this clearly indicates that BK11 has significant economic potential.
Evaluation and development plans
The Company intends to accelerate its evaluation work, with the objective of
establishing a mineable resource in the BK11 crater. A 36 inch diameter LDD
programme is planned for the second half of 2008, on the basis of which the
Company expects to be
able to define an Inferred Resource. Material from this programme will be
processed at the Tsabong bulk sampling plant.
Additional 36 inch LDD drilling and bulk sample trenching will then be
undertaken with the objective of being able to define an Indicated Resource and
commence mine development by the end of 2009. As this work will require a new
bulk sampling plant to
be established in the Orapa area, the Company has decided to relocate the
processing plant from its Avontuur Mine in South Africa, which is currently on
care and maintenance, to Orapa. Using the Avontuur plant will save 6 to 9 months
in construction time
for the new plant and will also reduce capital costs. The Avontuur plant has a
capacity of 25 tonnes per hour headfeed and will allow large bulk samples to be
processed rapidly. It is expected that the plant will be on site in Orapa by the
end of 2008 and
ready to process material in early 2009.
BK16
The Company is pleased to announce that it has entered into agreements with
SouthernEra International Limited ('SouthernEra'), a wholly owned subsidiary of
Mwana Africa plc, and SouthernEra's Botswana joint venture partner, under which
Firestone can
acquire an 87.5% interest in the BK16 kimberlite in return for carrying all
costs to completion of bankable feasibility and a cash payment of �60,000.. This
will bring the number of kimberlites in Firestone's Orapa licence areas to 10.
BK16 is
situated approximately 22 kilometres north east of BK11 and 12 kilometres north
of the Letlhakane Mine. SouthernEra will retain a carried 12.5% interest in the
project to completion of bankable feasibility.
Past evaluation work
BK16 was discovered by De Beers in the 1970's and a grade of 15 cpht was
reported from bulk sampling. Limited work has been carried out on BK16 since
then, until SouthernEra acquired control of the project in 2007. SouthernEra has
carried out high
resolution ground geophysical surveys and drilled 19 core and percussion holes
totalling approximately 2,300 metres. Based on this work BK16 is estimated to be
a minimum of 3.5 hectares in size and to contain approximately 17 million tonnes
of kimberlite
to a depth of 200 metres.
Economic assessment
Grades from sampling of BK11 and AK6 (being developed by African Diamonds/De
Beers) that was carried out around the same time as the BK16 sampling have been
shown by more recent work by Firestone and De Beers, respectively, to be
reliable estimates.
The Company believes that a grade of 15 cpht is achievable on BK16. Diamonds
recovered by the limited sampling carried out by SouthernEra and others has
recovered predominantly high quality, white gemstones, with few industrial
diamonds. This indicates
that diamonds from BK16 are likely to have a high average value, possibly
similar to BK11.
Evaluation plans
Firestone intends to carry out 36 inch LDD bulk sampling in the second half of
2008 in order to confirm representative grades and diamond values for BK16.
Subject to the results of this work, a resource development programme would be
undertaken on
BK16 similar to that planned on BK11.
Satellite Mining Project
Firestone has commenced work on a scoping study to evaluate the feasibility of
establishing a low cost satellite mining project ('SMP') in the Orapa area to
exploit multiple kimberlites using smaller independent mining operations and
processing plants
at each kimberlite, with final recovery carried out at a larger central
facility. The SMP study will initially be focused on the exploitation of BK11
and BK16 with a 4 million tonne per annum operation.
Following the completion by De Beers of their initial exploration programme over
some of Firestone's prospecting licences in the Orapa region, De Beers and
Firestone have agreed to terminate the Orapa joint venture. Firestone intends to
reprocess
geophysical data acquired by De Beers under the joint venture to identify
geophysical targets that were too small for De Beers to select as drilling
targets. This work has already commenced and a number of high interest targets
have been selected for
drilling in the second half of 2008. The Company is confident that it will be
successful in discovering new kimberlites in the Orapa area.
Firestone also intends to re-evaluate the known kimberlites in these licence
areas, including the 6 new kimberlites discovered by De Beers under the joint
venture, as they could provide additional material for exploitation by the SMP.
Formal
termination of the De Beers joint venture is expected to take place in the next
few weeks after final handover of exploration data to Firestone.
Tsabong
MK1
Microdiamond results
MSA Geoservices in South Africa has completed processing material from core hole
MK1-102 and additional material from core hole MK1-101, from which initial
results were announced in February 2008. A total of 133 microdiamonds were
recovered, bringing
the total number of microdiamonds recovered to date to 250. Analysis of the
size frequency distribution of the microdiamonds has been undertaken, from which
a high confidence macrodiamond grade estimate of 25 cpht has been made. These
results are very
encouraging and continue to indicate that MK1 has the potential to have a
significantly higher grade than was previously estimated based on the shallow
drilling and limited evaluation work carried out in the 1980's.
Details of the samples and diamonds recovered are provided in the table below:
Core hole Sample weight (kg) Microdiamonds Stones per Stones per
Macrodiamond grade
recovered tonne 20 kg estimate (cpht)
MK1-101 898 182 203 4.1 25
MK1-102 280 68 243 4.9 35
Total 1,178 250 212 4.2 25
Note: MK1-101 data includes results reported in February 2008
Bulk sampling
Two LDD holes were drilled during Q2 2008. Details of the drilling are provided
in the table below:
LDD hole Depth (m) Material recovered (t)
MK1-301 404 79
MK1-302 514 91
Processing of bulk sample material commenced following completion of the BK11
bulk samples, but was severely hampered by high clay content, high concentrate
yields of up to 7% and large quantities of zircon, of up to 20 carats per tonne.
Zircon has
similar density and luminescence to diamond and reports to the X-ray
concentrates making final recovery on site extremely difficult and time
consuming. No diamonds were recovered from initial sorting on site and the
concentrates from holes 301 and 302
have been sent to laboratories in South Africa for specialised processing and
picking. Three macrodiamonds have been recovered to date from picking of
concentrate from hole 301, but no picking of concentrate from hole 302 has been
undertaken yet.
These results are inconclusive pending completion of picking of the concentrates
and review of plant efficiency. Further bulk sampling on MK1 has been suspended
pending modifications to the plant to allow it to process MK1 material more
effectively.
This is expected to take 6-8 weeks to complete. In the meantime, the LDD rig and
bulk sampling plant will continue to work on the other 13 high interest
kimberlites in Tsabong.
Potential new kimberlite cluster
MK45 is one of the high interest kimberlites that has been selected for LDD
drilling. Age dating of material recovered from MK45 has indicated an age of 670
million years, compared to an age of 60-90 million years for the other known
kimberlites at
Tsabong. MK45 also shows as a magnetic low on geophysical surveys, while nearly
all of the other kimberlites discovered at Tsabong to date show as magnetic
highs. This provides a good illustration of the geological diversity of the
kimberlites in license
area, and may indicate the presence of a cluster of much older kimberlites at
Tsabong. Kimberlite age is considered significant, and it is interesting to note
the three oldest kimberlites being mined in southern Africa - Jwaneng (250
million years),
Venetia (500 million years) and Cullinan (1,200 million years) - are all
significantly mineralised. MK45 is expected to be sampled in the second half of
2008.
New kimberlites discovered
Exploration for new kimberlites has continued in parallel with the evaluation
programme. The Company is pleased to announce that two new kimberlites have been
discovered, bringing the total in the Tsabong field to 85.
New licences granted
New prospecting licences have been granted to the Company over an area of
approximately 2,500 square kilometres. The new licences adjoin the existing
licence area to the north and east. The Company intends to expand its
geophysical programmes in the
Tsabong area to cover the new licence areas in 2008.
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
Leesa Peters, Jos Simson, Conduit PR +44 20 7429 6600/ +44 7812 159 885
Mike Jones/Ryan Gaffney, Canaccord Adams (Joint Broker) +44 20 7050
6500
Jerry Keen, Blue Oar (Joint Broker) +44 20 7448 4492/+44 777 069 7358
Elizabeth Kennedy, Brewin Dolphin (Nominated Adviser) +44 141 221 7733/+44 777 161 1362
Note: The information in this statement has been reviewed by Mr. Tim Wilkes, B
Sc, 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 Operating Officer of
Firestone
Diamonds plc and has over 27 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).
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 and 16 are
currently at bulk sampling stage. Firestone's mining operations in South Africa
include a toll treatment operation in joint venture with De Beers at the Bonte
Koe Mine.
Background information on Orapa:
The Orapa kimberlite field is located in northern Botswana and contains the
Orapa, Letlhakane and Damtshaa mines. The Orapa Mine is the largest diamond mine
in the world. With 8 economic kimberlites out of 75, the Orapa field has an
economic ratio of
more than 10%, one of the highest in the world. Access to the area is via
tarred road from Gaborone and infrastructure in the area is very good.
Background information on Tsabong:
The Tsabong kimberlite field is located in south western Botswana, approximately
280 km south west of the Jwaneng Mine, which is the world's most profitable
diamond mine. Tsabong is one of the largest diamondiferous kimberlite fields in
the world,
containing 85 known kimberlites, of which 18 have been proven to be
diamondiferous. Tsabong is noted for the exceptionally large size of many of its
kimberlites, in particular the 180 hectare MK1 kimberlite, which is one of the
largest known
diamondiferous kimberlites. The Tsabong field also contains 5 kimberlites larger
than 50 hectares and 32 kimberlites between 20 and 50 hectares in size. Access
to the area is via tarred road from Gaborone and infrastructure in the area is
good.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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