News

April 14, 2008

A Rollercoaster Ride Or A Long And Winding Road? The Shape Of The Future For Firestone Diamonds Hangs On The MK1 Kimberlite

By Alastair Ford

“We’ve really turned the company upside down since I came across from De Beers”, says Firestone Diamonds’ chief operating officer Tim Wilkes. Indeed the company is rather going against the London grain in reining back its focus on production, and instead focusing on big impact exploration. But in diamonds there’s production and there’s production. Firestone’s alluvial properties in the west of South Africa have always generated a bit of cash, but as Mr Wilkes says, “there was a lot of effort going in to make that money. The industry is desperate for some good news, and it’s not going to come from some small alluvial mines”. Ain’t that the truth. But more to the point, the London mantra, which arose a few years ago, that mining companies should generate their own cash flow to keep the lights on, hasn’t been wholly abandoned. The company’s long-held Bonte Koe alluvial property stays, says Mr Wilkes. It makes £2 million per year in pre-tax profit, which covers all Firestone’s corporate overheads, and what’s more makes a small contribution to exploration too.

The market certainly seems to appreciate the new focus on exploration – Firestone’s shares are up by 50 per cent since the beginning of the year. Firestone has held exploration ground in Botswana for many years now - indeed it’s one of the largest holders of ground in the country. But the interest recently has come from a relatively new set of licenses down in the south at Tsabong. Tsabong hadn’t shown up on anyone’s radar until recently simply because the overburden, at up to 80 metres,...