Acquisition of Bonte Koe Mine

RNS Number:7013N
Firestone Diamonds PLC
18 July 2003


                             Firestone Diamonds plc


  To acquire and redevelop Bonte Koe Mine through African Star Minerals black
                           empowerment joint venture
                      Exploration restarts at Groen River
                   Placing to raise approximately #2 million


LONDON:  18 July, 2003


Firestone Diamonds plc ("Firestone" or "the Company"), the AIM-quoted diamond
mining and exploration company, today announces that it has agreed to acquire
and intends to redevelop mining operations at the Bonte Koe Mine in South Africa
through the Company's recently formed black empowerment joint venture, African
Star Minerals (Pty) Limited ("African Star").

The Bonte Koe Mine is located on the Buffels River in the Namaqualand region of
the Northern Cape Province of South Africa.  The Buffels River is the second
most important source of diamonds for Namaqualand after the Orange River, where
Firestone's Oena mine is located.  The Buffels River has been a significant
diamond producing area for the past 40 years, with mining operations by De
Beers, Trans Hex and others producing an estimated total of over 3 million
carats, with a current value of over $750 million.

Bonte Koe covers an area of approximately 2,500 hectares and lies immediately
downstream of De Beers' Nuttabooi and Langhoogte mines, and upstream of their
new Dikgat mining lease area.  The geology of the Buffels River is well
understood as a result of the extensive mining carried out in the area.
Diamonds recovered from the Buffels River are an average of 0.4 carats per
stone, with 90 to 95% being of gem quality, and have an estimated value of $200
per carat.  The Bonte Koe Mine is not currently operational, but previous
operations at the mine produced approximately 180,000 carats, with a current
value of $36 million, at an average grade of approximately 44 carats per hundred
tonnes.

As part of the evaluation of Bonte Koe, Firestone and African Star engaged De
Beers Namaqualand Mines to carry out a due diligence investigation, with the
principal objective of evaluating and reviewing the diamond resources on the
property.  Based on data from drilling, trenching, sampling and mining on Bonte
Koe and on De Beers' adjoining Nuttabooi and Stryd River properties, De Beers
estimates that over 1.5 million tonnes of proto gravel remain at Bonte Koe, with
an average grade of approximately 10 carats per hundred tonnes.  This gives a
resource of approximately 158,000 carats, with a current value of over $31
million.  With breakeven grades of between 3 to 4 carats per hundred tonnes,
average operating margins are projected to be approximately 75%.  Bonte Koe also
contains a substantial quantity of lower grade meso gravels, but as these have
not been properly evaluated, a resource estimate has not been made for them at
this stage.

Firestone and African Star intend to re-establish mining operations at Bonte Koe
in the first half of 2004.  Contractors will be used for earthmoving operations,
and a new gravel treatment plant will be established on the property.  De Beers
has assisted Firestone's metallurgical consultants, Namaqualand Metallurgical
Services, in the specification of the treatment plant to be used at Bonte Koe,
based on the characteristics of the gravel deposits at their Nuttabooi and
Langhoogte mines and elsewhere on the Buffels River.  Accommodation, workshop
and office facilities on the mine will be refurbished and power and water supply
re-established while the new plant is being fabricated and commissioned.

It is planned to mine the proto gravels at Bonte Koe over a four year period,
during which time drilling and sampling of the meso gravels will also be carried
out to identify additional possible mineable resources.  Firestone and African
Star have also identified a number of other projects close to Bonte Koe which
could further extend the mine life, and these projects will be investigated once
mining operations have been re-established at Bonte Koe.

Mr. Philip Kenny, Chief Executive of Firestone, said today: "The Bonte Koe Mine
is an ideal first project for our African Star Minerals joint venture.  Since
the gravel resources at Bonte Koe are already very well defined we expect to be
able to establish our new mining operations at Bonte Koe in the first half of
2004, and that operations at Bonte Koe will be very cash generative by the end
of the first full year of operation.."

Mr. Ali Erasmus, General Manager, De Beers Namaqualand Mines, commented "De
Beers Namaqualand Mines is keen to encourage and support the development of new
black empowerment entrants into the diamond mining sector.  We consider the
Bonte Koe Mine to be a very attractive project and are pleased to have been able
to assist African Star Minerals in their evaluation of Bonte Koe and the
development of their mining plans.  We believe that the combination of Firestone
Diamonds' geological and operating capabilities, together with African Star
Investments' close connections to the Namaqualand region, gives African Star
Minerals an excellent foundation from which to build a substantial presence in
Namaqualand, and we look forward to continuing to work closely with them in the
future."

Dr. Franklin Sonn, Chairman of African Star Investments, added: "We are very
excited about the potential of Bonte Koe.  De Beers' assistance has been of
great value to African Star Minerals in evaluating Bonte Koe, and we hope to be
able to continue developing this relationship in the future.  We have identified
a number of additional projects in the Buffels River area that could be
supported from our mining operations at Bonte Koe, and expect to be able to
secure these projects in the coming year."

Mining update

The Company previously reported that production for the first half of the 2003
financial year increased 26%.  Production for the full financial year ending
June 2003 also increased in line with market expectations.

Continued progress was made at the Oena Mine during the year, with production
doubling compared to the previous year.  Demand for Oena production continued to
rise with the average value of production sold increasing to $872 per carat.
Two large diamonds, weighing 63.23 and 47.02 carats, were recently recovered at
Oena and were sold for $2,000 and $2,300 per carat, respectively.  Production at
Avontuur was unchanged during the second half of the 2003 financial year due to
the planned addition of a scrubbing circuit to the new dense media separation
plant (DMS) to break up any clay or conglomerate in the gravels.  This work was
completed in June and the DMS has now been put back into operation.

Exploration Update

The Company's exploration activities over the past six months have been
primarily focused on the Groen River Valley.  Drilling has commenced on a number
of significant targets that were identified last year by ground mapping and
aerial photo and satellite analysis.  Once drilling has been completed, the most
promising targets will be selected for bulk sampling later in the year.

Joint venture discussions on the Company's Mopipi kimberlite exploration project
in Botswana have continued to progress, and it is expected that a joint venture
agreement will be concluded in the near future.

Placing

The Company also announces it proposes to place 6,065,000 new ordinary shares of
20 pence each in the Company with institutional and other investors at a price
of 33 pence per share to raise approximately #2m before expenses.  The proceeds
of the placing will be used to finance the Bonte Koe acquisition costs of
$400,000, to finance the redevelopment of mining operations at Bonte Koe and for
general working capital purposes.  These new ordinary shares will rank pari
passu in all respects with the existing ordinary shares in the Company.
Application will be made for the new ordinary shares to be admitted to trading
on the Alternative Investment Market of the London Stock Exchange, and it is
expected that trading will commence on 1 August 2003.

Background information on Firestone Diamonds plc and African Star Minerals

Firestone Diamonds plc is a UK-based international diamond mining and
exploration company with operations in the Namaqualand region of South Africa
and Botswana.  Namaqualand, which is located on the west coast of South Africa,
has been one of the world's largest alluvial diamond producing regions for the
past 60 years, with total production to date estimated to be 32 million carats,
with a current value of more than $3 billion.

African Star Minerals was recently established as a strategic joint venture
partnership between Firestone Diamonds and African Star Investments (Pty)
Limited, a leading South African black empowerment group, to acquire and develop
new diamond exploration and mining projects in South Africa.  Firestone Diamonds
holds a 75% interest in the joint venture and African Star Investments holds a
25% interest and an option to purchase an additional 24% at market value.

Firestone Diamonds' strategy has been to build a portfolio comprising advanced
development and production projects to provide sustainable cash flow to fund
large scale exploration projects that have the potential to yield significant
reserves of gem quality diamonds.  Firestone Diamonds operates the Oena and
Avontuur alluvial diamond mines in Namaqualand.  Firestone Diamonds' principal
exploration projects are the Groen River Valley alluvial diamond project in
Namaqualand and the Mopipi kimberlite exploration project in Botswana.

For further information:

Philip Kenny, Firestone Diamonds           [phone] /[phone]


Leesa Peters, Conduit PR                   [phone] / [phone]


Jamie Cumming, Bell Lawrie White           [phone] / [phone]


Franklin Sonn, African Star Investments    [phone]


Website: www.firestonediamonds.com





                      This information is provided by RNS
            The company news service from the London Stock Exchange

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