Firestone Diamonds plc , the AIM-quoted diamond mining and exploration company, said it has conditionally placed 35,873,480 new ordinary shares on the market in a bid to raise money for mine development around Tsabong area that is slated to start production by mid next year.
“The company has conditionally placed 35, 873,480 new ordinary shares at 20 pence per share to raise gross proceeds of approximately ┬ú7.2 million (about P72 million).
“Net proceeds of the placing to be used to develop and commission a mine at BK11, commence resource development at BK16 and provide general working capital for the Company,” it said in a statement.
The move comes at a time when the resource value at BK 11 has increased by 11 percent to US $ 135 per carat since March 2009 while operating costs have remained static at US $ 6.50 per ton.
Philip Kenny, Chief Executive Officer of Firestone Diamonds said: “The Company has made significant progress on BK11 since March and we continue to be encouraged by the results of our work.
“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,” he said.
“The decision to proceed with the mine production will be made in the second half of this year. We are very confident that the decision will be a positive one,” Kenny said in an interview with Sunday Standard from his office in London.
He said they are looking at an open pit mine that will produce around 150,000 carats per annumÔÇöwith most of the diamonds being of “a very good quality”.
“Following the decision of mine development, we will start the mine construction which is expected to take nine months,” Kenny added in an interview.
Further, Firestone signaled “significant progress” made regarding the Jwaneng Tailings Project, which provides an excellent opportunity for the company to further expand its operations in Botswana.
The Jwaneng Tailing exercise will involve trying to find better quality stone that might have escaped the old technology that have been in use at the mine since the beginning of the mine in 1980s.
“We are very pleased to have had such a positive response to our fundraising from both existing and new investors. 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 Q1 2009, we remain confident about Firestone’s prospects,” Firestone said.
The recovery in the rough diamond prices is in line with analysts’ predictions made during the last quarter of last year when prices hit their lows as a result of the global financial crisis.
Since the beginning of the second quarter of this year, rough diamond prices have recovered by 25 percent after slumping down to 68 percent by last year and even into the first half of this year.
The move has forced the giant diamond producing companies, like Debswana, to suspend some of the mining operation for four months in a bid to avoid a glut in the diamond pipeline.
“Negotiations with Debswana on toll treatment agreement are on schedule for contract to be signed in the second half of 2009,” Firestone said.
Firestone is the largest holder of mineral rights in Botswana’s diamondiferous kimberlite fields, controlling over 29,000 square kilometers 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. Sixteen of Firestone’s kimberlites are at the bulk sampling stage, of which BK11 is the most advanced.
In June 2008, the Company entered into an agreement under which it can earn an 87.5% interest in the BK16 kimberlite, which is located 20 kilometers from BK11.