Firestone Diamonds, the London AIM – listed outfit, said it had opened negotiations with its bankers in Botswana, aimed at strengthening the company’s financial position as it gears up for diamond production in the country during the second half of the year.
The company, which announced its intention of seeking a secondary listing on the Botswana Stock Exchange (BSE) last month, indicated that the said negotiation will go side-by-side with the 9.45 million pound Sterling (about P 1000 million) share offer that was put to the institutional investors last week.
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.”
The 9.45 million pounds sterling capital raising will be done through the conditional placement of 30,000,000 new ordinary shares at 20 pence each. The funds are aimed at covering the capital requirement of brining BK 11ÔÇönear Orapa mine to production, operations expense and further exploration activities of the company.
The diamond exploration company, with a specific emphasis on Botswana and to a certain extent South Africa, is the third major company to announce plans to list on BSE since the beginning of the year, giving indications that the local economy might be emerging out of the worse economic downturn since World War II.
Wilderness Safaris has listed and Absa Capital is expected to follow with the trail-blazing Exchange Traded Fund product.
The company is currently eyeing to start production at BK 11ÔÇösome 20 kilometers south-east of Orapa mine and five kilometers north east of African Diamonds’ AK 6 proposed mineÔÇö during the second quarter of 2010.
The move is expected to coincide with its listing, which will also bolster the presence of the company in the local scene. Firestone Diamonds Plc is also involved in diamond exploration near Jwaneng mine and Tsabong areas where its finds have been described as “ encouraging.”
“Firestone has made a substantial investment in its Botswana operations, which are now the primary focus for the Company. With BK11 due to commence production shortly, and more than 100 kimberlites in our licence areas in the Orapa, Jwaneng and Tsabong regions, we believe that we have a successful future ahead of us in Botswana and look forward to growing our shareholder base in Botswana,” Chief Executive Officer of Firestone Diamonds Plc, Philip Kenny, has said.
Further, the company indicated on Monday that it has applied for and been granted Local Asset Status by the Non-Bank Financial Institutions Regulatory Authority of Botswana. The ability of Botswana-based institutional investors to invest in Botswana Stock Exchange listed companies is significantly improved by the granting of Local Asset Status.
Last year, Firestone Diamonds said it was embolden by the results from BK11 especially with the resource from KW which has a “high confidence grade” and diamond and diamond value estimates to be made. This is based on inferred resource of 12 million tones defined containing approximately 830,000 carats for the area.
The west side of BK11 were valued between 9-15 carats which the value was estimated at US $ 175 per carat out of 7 million tonnes.
“The quality of diamonds recovered from sampling was very good, comprising mostly of clear white gemstones and very little boart. The parcel contained four stones of over one carat in size which is very encouraging in relation to diamond value, with the biggest stone being recovered being 1.93 carats and valued at US $ 910 per carat,” the company said in a statement.
By Monday, Matsake said that they are awaiting for documents from Firestone Diamonds Plc so that they can formally launch an application with BSE for secondary listing.