31 Mar 2003

Firestone Diamonds

Market Cap: Array
PE Forecast: Array

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Chairman Philip Kenny says Firestone, whose interim profits to December fell £80,000 to £167,422 despite a 23 per cent gem production increase to £446,000, is in advanced negotiations with one of the world’s three big diamond producers – De Beers. BHP Billiton or Rio Tinto about a joint venture at Mopipi, Firestone’s pet project in Botswana. Kenny says he hopes to have a deal, giving Firestone a free carried interest, agreed by the company’s year end in June. Last year’s failure to find a kimberlite diamond source at Mopipi severely dented market confidence in Firestone, but Kenny contends later work suggests Mopipi has even more potential than originally thought. Despite problems with clay at the company’s south-west South African project at Avontuur, Kenny professes satisfaction with Firestone’s high-grade deposit at Oena and with prospects for its much larger Groen River project. Group interim operating costs showed a fourfold increase to £290,330, but Kenny insists was a return to normal levels after an unusually light interim cost burden in the first half of 2001. At 33p, the shares are barely a third of recent highs. The right deal for Mopipi could transform sentiment, despite longer term concerns over South Africa’s new mining regime. Firestone has sometimes disappointed followers in the past with optimism deferred, but now it could repay a medium-term punt, if the right deal comes through.

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