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Firestone Commences Production at BK11

Jul 12, 2010 8:05 AM   By Jeff Miller
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RAPAPORT... Firestone Diamonds commenced phase-one production at its BK11 kimberlite property in Botswana through its subsidiary, Monak Venture. The mining company has 20 such properties in the Orapa area, 13 of which are proven to be diamondiferous, with BK16 identified as the most advanced, according to Firestone. The evaluation of satellite kimberlites at BK11 will commence once the property is in full production later this year.

Project development work commenced there in the first quarter and the first phase of the production plant, which has an annual capacity of approximately 650,000 tons, was completed in the second quarter. Work conducted in the second phase of production will boost BK11's production capacity to 1.5 million tons per year and be completed in the third quarter, with full production expected to begin in the fourth quarter.

Under the BK11 mining plan, approximately 11.5 million tons of kimberlite will be mined at an average grade of 8.5 carats per hundred tons, yielding total production of approximately 1 million carats for the life of the mine at an average price of $155 per carat, based on a March price valuation.

Philip Kenny of Firestone Diamonds said, "The commencement of production at BK11 is a major milestone for Firestone, as the company is now one of only three kimberlite producers worldwide outside of the major mining companies. It is an exceptional achievement to have reached this point in just over three years from being granted a prospecting license, which is a reflection of the significant capability of our management and staff in Botswana and South Africa. 

"The combination of cash flow from production at BK11, an extensive portfolio of kimberlites in the Orapa and Tsabong kimberlite fields and exciting toll treatment opportunities positions Firestone very well for significant growth in Botswana and with the substantial shortfall in rough diamond supply projected in the coming years we are confident about Firestone’s future prospects,” he added.

The mining license for BK11 was granted recently and is valid through June 30, 2022. It pays standard diamond royalty of 10 percent and offers unlimited carry-forward of tax losses, as well as 100 percent depreciation of capital expenditures. There is no government equity participation.

The resulting BK11 production will be sold through open tender in Botswana. Based on the terms of the license, tenders can also be held outside Botswana until the year 2013, with the potential for this deadline to be extended to 2015.

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Tags: Firestone, Government, Jeff Miller, Mining Companies, Production, South Africa, Tenders
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