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Corporate Overview

Corporate Overview. February 2009. Disclaimer

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Corporate Overview

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  1. Corporate Overview February 2009

  2. Disclaimer The information contained in this presentation ("Presentation") has been prepared by Firestone Diamonds plc (the "Company") and is being communicated for general background informational purposes only. The Presentation has not been independently verified and the information contained within is subject to updating, completion, revision, verification and further amendment. While the information contained herein has been prepared in good faith, neither the Company, nor its shareholders, directors, officers, agents, employees, or advisors give, has given or has authority to give, any representations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this Presentation, or any revision thereof, or of any other written or oral information made or to be made available to any interested party or its advisers (all such information being referred to as "Information") and liability therefore is expressly disclaimed. Accordingly, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers take any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortuous, statutory or otherwise, in respect of the accuracy or completeness of the Information or for any of the opinions contained herein or for any errors, omissions or misstatements or for any loss, howsoever arising from this Presentation. In communicating this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may become apparent. Information contained in this Presentation is the property of the Company. It is made available strictly for the purposes referred to above. The Presentation and any further information made available to any recipient may not be reproduced, used or disclosed without the prior written consent of the Company. This Presentation is confidential and shall not be copied, published, reproduced, or distributed in whole or in part at any time without the prior written consent of the Company. This Presentation should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. Each party to whom this Presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. In particular, any estimates or projections or opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumption and each recipient should satisfy itself in relation to such matters. Neither the communication of this Presentation nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed with any transaction. In no circumstances will the Company be responsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of the Company. This Presentation does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to subscribe for or purchase any securities in the Company, nor shall it, or the fact of its communication, form the basis of, or be relied upon in connection with, or act as any inducement to enter into, any contract or commitment whatsoever with respect to such securities. The communication of this Presentation in or to persons in certain jurisdictions may be restricted by law and persons who may receive communication of this Presentation should inform themselves about, and observe any such restrictions in advance of communication to them of this Presentation. Any failure to comply with these restrictions may constitute a violation of the laws of the relevant jurisdiction. In particular, this Presentation has not been approved by an authorised person pursuant to Section 21 of the Financial Services and Markets Act 2000 ("FSMA") and accordingly it is being delivered in the United Kingdom only to persons to whom this Presentation may be delivered without contravening the financial promotion prohibition in Section 21 of the FSMA. Those persons are described in the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 ("Order") and include persons who have professional experience in matters relating to investments and who fall within the category of person set out in Article 19 (investment professionals) of the Order and high net worth entities as defined in Article 49(2) of the Order. Any activity to which this Presentation relates in the United Kingdom is available to, and will only be engaged with such persons and this Presentation should not be acted or relied upon in the United Kingdom by persons of any other description. This Presentation has not been approved as a prospectus by the United Kingdom Listing Authority ("UKLA") under Section 87A of FSMA and has not been filed with the UKLA pursuant to the United Kingdom Prospectus Rules. No offer of securities in the Company is being or will be made in the United Kingdom in circumstances which would require such a prospectus to be prepared. In addition, other than a limited number of persons reasonably believed to be qualified institutional buyers (as defined in Rule 144A under the US Securities Act of 1933, as amended) or accredited investors (as defined in the National Instrument 45/106), neither this Presentation nor any copy of its may be transmitted into the United States of America or Canada or distributed directly or indirectly, in the United States of America or Canada, or to any resident thereof except in compliance with the applicable securities laws. Any failure to comply with these restrictions may constitute a violation of applicable US or Canadian securities laws. Nor shall this Presentation be taken, transmitted or distributed into Australia, Ireland, Japan, South Africa or the Republic of Ireland, or any other jurisdiction which prohibits the same except in compliance with applicable securities laws. By accepting communication of this Presentation, the recipient represents and warrants that it is a person to whom this Presentation may be communicated without a violation of the laws of any relevant jurisdiction. This Presentation is not to be communicated to any other person or used for any other purpose and any other person who receives communication of this Presentation should not rely or act upon it.

  3. Topics

  4. 1 The Diamond Business 4

  5. Current Market Conditions • Polished prices down less than other commodities Source: Resource Investor, Polished Prices • Rough diamond prices affected by global financial turmoil • Prices up 10-15% in H1 08 to record highs • Prices dropped 35-40% since, primarily driven by trade and inventory financing issues 5

  6. Rough and Polished Price Index 2002 2003 2004 2005 2006 2007 2008 6

  7. US Retail Diamond Sales Source: Idex, Dec 08 7

  8. Declining Reserves 1983 Jwaneng and Argyle start production ramp up 1982 Jwaneng and Argyle start production 1986 Argyle starts full production 1971 Orapa starts production 1998 Ekati 2003 Diavik Reserves of major operating mines / annual production Reserves of major operating mines / annual production (years) Source: BHP Billiton, De Beers, Firestone estimates 8

  9. Long Term Supply Deficit • Rio Tinto forecast, Diamonds Annual Review, May 2008 • “Even in the most optimistic supply scenario there is a sizeable supply gap, resulting in sustained price growth over the next decade... • ...real diamond jewellery demand growth of approximately 3% a year for the next decade... • ... increase in mine production of approximately 1% per annum in volume between 2006 and 2020” • Gareth Penny, De Beers, January 2009 • “With approximately only 20 years of known diamond reserves left in the ground …demand is likely to significantly outpace what is forecast to be lower levels of diamond supply for many years to come… • …even in the most optimistic supply scenario there is a sizeable supply gap, resulting in sustained price growth over the next decade... 9

  10. Long Term Supply Deficit • WWW International Diamond Consultants forecast 10

  11. 2 Company Background 11

  12. Company Background Management team Philip Kenny – CEO; Tim Wilkes – COO, formerly Competent Person at De Beers Focused on kimberlite exploration in Botswana largest land position in Botswana kimberlite fields – 29,000 sq km 95 kimberlites 18 discoveries in past 24 months 24 diamondiferous, 14 at bulk sampling, 2 at advanced evaluation Cash flow from toll treatment JV with De Beers in South Africa 12

  13. Why Botswana? World’s largest diamond producer 30% by value geology is favourable for new discoveries World’s lowest cost producer good climate and infrastructure stable politics - multiparty democracy since 1966 A2 Credit rating by Moody’s (better than Japan) Lowest economic threshold of major kimberlite producing regions Northern Canada, Russia ~ $100-120/tonne Angola, DRC ~ $25-50/tonne Botswana ~ $8-10/tonne 13

  14. Botswana Kimberlite Fields Kokong • 79 kimberlites • 19 with diamonds • Rio Tinto evaluating Orapa • 8 out of 75 economic • Orapa Mine ~ $1B revenue p.a., 70% margin Gope • 1 out of 9 economic • Gem doing feasibility Martin’s Drift • 5 out of 7 economic • Mine being developed Jwaneng • 3 out of 11 economic • Jwaneng Mine ~ $2B revenue p.a., >90% margin Tsabong • Firestone evaluating Economic ratio worldwide: 1% Economic ratio Botswana: 7% 14

  15. Firestone Interests in Botswana Tsabong • 7,500 sq km • 85 kimberlites, 18 with diamonds • 14 kimberlites at bulk sampling Orapa • 14,000 sq km • 2 kimberlites at advanced evaluation Jwaneng • 4,600 sq km 15

  16. 3 Jwaneng Tailings 16

  17. Debswana Modular Tailings Project Objective Prove economics and capability of modular tailings plants Background Pre-qualification June 2007 Request for proposal June 2008 Selected as preferred bidder Feb 2009 Initially deploy at Jwaneng coarse tailings dump >30 million tonnes $5/t operating charge $40m capex Roll out to tailings dumps at other mines Estimated to be ~200 million tonnes Potential $1b revenue 17

  18. Jwaneng Mine Mining Pit • 2 km x 1 km Coarse Tailings Dump Fine Tailings Dump 18

  19. Jwaneng Coarse Tailings Dump First tailings dump at the mine Materials only crushed to 35 mm (currently crushed to 12 mm) >30 million tonnes Initial production rate >2 million tonnes per annum Timetable Sign contracts - Q3 2009 Commence construction – Q4 2009 Commence commissioning – Q4 2010/Q1 2011 Full production ($10m revenue pa) – 2011 Double capacity – 2012? Debswana supplies power, water and tailings facilities 19

  20. Plant Location Main Plant Final Recovery Building Location of Tailings Plant 20

  21. Plant Layout Debswana “Red Zone” Firestone “Green Zone” Firestone Security Gate 21 21

  22. Plant Design 22

  23. Plant Schedule 23

  24. Financing plans Capital to be financed by “Plantco” SPV with financing partner Approx $40m per plant Minimises Firestone equity dilution Attracts better rates and higher debt/equity ratio Firestone to finance and operate “Opco” Bonte Koe contract 2009 rate - $5/t Similar contract to Bonte Koe toll treatment project 24

  25. Summary Long term, predictable revenue stream Jwaneng dump ~ $150m Other Debswana dumps ~ >$1b Low capital and operating cost risk Similar scale and complexity as Bonte Koe toll treatment project (1 mtpa) Bonte Koe built on time and on budget Operated successfully to De Beers’ standards for 3 years Firestone revenues not tied to diamond price or grade Other benefits Shares overhead with BK11 and other Botswana projects Strategic relationship with Debswana 25

  26. 4 Orapa Projects 26

  27. Orapa Licence area 27

  28. Firestone kimberlites ORAPA DAMTSHAA BK 16 BK 53 AK 21 AK 22 & 23 BK11 LETLHAKANE AK6 28

  29. Kimberlite bulk sampling 29

  30. BK11 Diamonds • High quality colours and shapes for kimberlite parcel • Relatively large average diamond size • Minimal industrial diamonds – typical kimberlite is 20-50% industrial • Estimated value $200/ct (June 2008) 5 mm Note - diamonds not yet acidised 30

  31. Phase 1 Geological Model 0 20 m Crater sediments Basalt wedge Kimberlite Basalt breccia 250 m Work programme • 2,500 m core drilling • 3 LDD holes • 350 t sample Results • Grade 10-15 cpht • estimated diamond value $200/carat • In-situ value $20-30/t • Estimated operating cost $7-8/t Diatreme kimberlite 31

  32. Phase 2 Evaluation Programme • 1,500m of 4” core drilling completed • 6 x 36” LDD diameter holes completed • Results from first LDD hole – 10 cpht; results from other 5 holes in Q1 09 • Independent CPR in progress, completion Q1 09 • Middle-High Inferred Resource Q1 09 32

  33. Phase 2 Gemcom Geological Model K1 CRB K2U Shale Phase 1 Evaluation K3 K4 Facing NW 33

  34. Phase 2 Resource Status Q1 09 Deposit Inferred Indicated Measured 0 30 70 90 100 77 Geological Model Grade Model Volume Model Revenue Model Overall 55 73 43 62 May be sufficient for mine development decision, based on results 34

  35. Phase 3 – Resource definition, 2009 LDD drilling on 50m grid for mine planning 20,000 t bulk sample trench to recover 3,000 carats Pilot plant ready to ship from South Africa 35

  36. Resource Status – Q3 2009 Deposit Inferred Indicated Measured 0 30 70 90 100 Geological Model Grade Model Volume Model Revenue Model Overall Latest time for mine development decision 36

  37. BK16 • Background • Sampled by De Beers in 1990’s – 15 cpht • ~20 km from BK11 • SouthernEra Diamonds acquired 2007 • Firestone/SouthernEra JV agreement signed June 2008 • To acquire 87.5% interest for carrying to bankable feasibility • Diamonds similar to/better quality than BK11 • Estimated value approx $200/ct (June 08) 37

  38. Orapa Satellite Mining Project • Scoping study targets • 34m tonnes and 5.1m carats from BK11 and BK16 • 2m tonnes per annum at both BK11 and BK16 • 9 year life • Average $120m revenue per annum, 75% margin • Ramp up plan • Start with 1.5m tpa at BK11 • $15-20m capex • $45m revenue; $34m pre-tax • Production in 2010 • Use cash flow to double capacity at BK11, develop BK16 38

  39. 5 Tsabong 39

  40. Tsabong Kimberlite Field One of the largest diamondiferous kimberlite fields in the world 85 known kimberlites; 18 diamondiferous MK1 kimberlite - 180 hectares, diamondiferous MK1 180ha MK38 ~20ha MK45 25ha Catoca 66ha Jwaneng 45ha Mir 7ha Udachnaya 20ha Orapa 111ha Kimberley 4ha Premier 32ha Kimberlite mine Firestone kimberlite 40

  41. High Interest Kimberlites 41

  42. High Interest Kimberlites NS = Not yet sampled 42

  43. Tsabong 2008 developments LDD drilling completed on 6 kimberlites MK1, MK38, MK45, M51,MK52 and MK84 Macrodiamonds recovered from MK1 and MK38 Sampling results expected in Q1 09 43

  44. Tsabong Exploration MK6 MK4 MK51 MK1 MK37 MK42 • >80 geophysical targets identified • 18 kimberlites discovered since Nov 06 • many kimberlites still to be discovered 44

  45. 6 Outlook 45

  46. Outlook Focus on cash and cash flow Sufficient cash until 2010 Debswana toll treatment is highest priority Resource development projects BK11 and 2010 production target is top priority BK16 is next priority Exploration and evaluation projects Significant potential at Tsabong; joint venture discussions under way All other exploration driven by available cash flow from operations 46

  47. Corporate Information Shares in issue: 61 million, 74 million fully diluted ~27% management; ~25% top 4 institutions; ~48% retail & other Market cap £12 million Major shareholders AXA/Framlington - 8% JPMorgan - 6% Artemis - 6% Gartmore - 5% 47

  48. Summary Experienced management team Cash flow Highly prospective kimberlite portfolio Evaluation and exploration news flow 48

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