Firestone Diamonds

Final Results

RNS Number:8241V
Firestone Diamonds PLC
16 December 2005

Firestone Diamonds plc

Preliminary statement of results

for the year ended 30 June, 2005


LONDON: 16 December, 2005 - The Board of Firestone Diamonds plc, ("Firestone" or
"the Company"), the AIM-quoted diamond mining and exploration company, announces
preliminary results for the year ended 30 June, 2005.


HIGHLIGHTS


Groen River Valley

* Joint venture signed with De Beers in June 2005

* Potential resource of 9 million carats and gross value of $2.7 to
$4.5 billion

* Confirms potential as a significant new alluvial diamond producing
area

* Bulk sampling under way



Orapa

* Orapa joint venture signed with De Beers in December 2004

* Intensive work programme under way at Orapa and Mopipi

* Four new kimberlites discovered; three kimberlites bulk sampled

* Joint venture signed with Daly City Ventures in March 2005



New exploration projects

* Applications pending for new areas around Orapa and Jwaneng

* Applications submitted for substantial new area similar to Groen
River Valley

* New project identified in Botswana and applications submitted



Mining operations

* Mining operations to be refocused following strategic review

* Negotiations at advanced stage for new project and expansion to
Bonte Koe Mine

* Oena Mine to transition to mining contractor in Q1 2006

* Resource evaluation programme planned for new Hondeklip Bay projects



Corporate

* Acquired 7.28% interest in African Diamonds plc in October 2005

* Appointed Tim Wilkes to position of Chief Operating Officer in
December 2005



Financial

* Turnover for FY 2005 in line with FY 2004; operating loss due to
development expenditure at Bonte Koe

* #10 million equity financing completed in November 2005



Diamond market

* Rough diamond market remains strong; prices increased 20% in 2004
and 6% in 2005



Outlook

* New production stage projects identified and being evaluated in
South Africa

* Significant improvement expected in turnover and financial
performance in coming year


Dear Shareholder,

The past year has seen continued good progress in the growth and development of
Firestone's exploration and mining project portfolio.


Exploration Summary

One of our key objectives for the year was to increase the scale of the
Company's exploration activities and to work with joint venture partners in
order to allow us to accelerate the development of our exploration project
portfolio. We made significant progress in this regard during the year in both
South Africa and Botswana

One of the highlights of the year was the substantial progress made at the Groen
River Valley, which is the Company's most promising exploration project. During
the year, the Company increased its license position in the Groen River Valley
by 150%, to over 500 square kilometres, and in June 2005 the Company announced
that it had entered into a joint venture with De Beers over the project.
Substantial exploration work has been carried out since then.

In October 2005, the Company announced that 13 alluvial deposits had been
identified in the area, with a potential resource of approximately nine million
carats and gross value of $2.7 billion to $4.5 billion. These results confirm
that the Groen River Valley project has the potential to become a major new
alluvial diamond mining area, producing high quality diamonds, and support our
view that it is one of the most attractive undeveloped alluvial diamond projects
in the world.

An extensive programme of drilling and bulk sampling is being undertaken to
further evaluate the economic potential of the area. The first phase of this
programme includes bulk sampling of the HL, KK and KR deposits, to provide an
indication of the diamond content and value of the deposits. The bulk sampling
programme is now under way, with initial results expected in the first quarter
of 2006.

Substantial progress was also made in Botswana. During the year, two new
kimberlite exploration projects were secured close to the Orapa and Jwaneng
Mines, increasing the area held by the Company by 150%, to approximately 9,000
square kilometres. Two new joint ventures were signed with De Beers over these
projects during the year, in addition to the joint venture signed over the
Mopipi project in 2004.

An intensive exploration programme has been carried out in the Orapa and Mopipi
areas, resulting in the identification of 180 geophysical targets for further
follow up. A total of 51 targets have been drilled to date, resulting in the
discovery of four new kimberlites. Following the recovery of microdiamonds from
three kimberlites, 100 tonne bulk samples were taken to test for the presence of
macrodiamonds. Full results and analysis from bulk sampling of all three
kimberlites are expected to be available in early 2006.

With many targets still to be followed up in the Orapa and Mopipi areas, the
Company considers it likely that more kimberlites will be discovered as drilling
continues in 2006. Given the fact that more than 10% of the 75 known
kimberlites in the region are economic, we believe that the prospects for new
economic discoveries in the area are very good.

During the year, the Company entered into an agreement to acquire an 81%
interest in Daly City Ventures, which controls an area of approximately 380
square kilometres in the Orapa region. Exploration work in this area is
currently under way.


Mining Operations Summary

Firestone's mining operations play an important role in contributing cash flow
to finance the Company's exploration activities.

The Bonte Koe Mine on the Buffels River was the primary focus for the Company's
mining operations during the year, and mine construction and commissioning were
completed in the first quarter of 2005. Initial grades from gravel processed
were below the expected average of 10 carats/100 tonnes, but grades have since
improved and production is expected to continue to increase in 2006. Activities
at Avontuur have been focused on preparations to take over the adjacent
Hondeklip Bay Mine and Marine Concession 7a from Trans Hex, while production was
limited at Oena, as we had not identified a suitable replacement mining
contractor for the mine.

We strengthened our management team during the year with the appointment of Tim
Wilkes as Director, Resource Development. Prior to joining Firestone, he was
General Manager - Mineral Resource Management for De Beers and was the Competent
Person responsible for the management of De Beers' mineral resources worldwide.
Mr. Wilkes has led a strategic review of the Company's mining operations and new
mining and development project opportunities. As a result of this review, which
has recently been completed, the Company intends to focus only on projects that
have potential for significant scale, while smaller scale projects will be joint
ventured or contracted out. A number of decisions have been made in respect of
the Company's current projects, as follows:

Bonte Koe will continue to be the primary focus for the Company's mining
operations. The Company is at an advanced stage in negotiations in respect of a
significant production stage project in the Buffels River area, close to the
Bonte Koe mine. This project is expected to result in a significant expansion
to the scale of operations and production at the mine in the coming year.

The Company intends to make a significant expansion to operations at Avontuur to
exploit the substantial resources at the Hondeklip Bay Mine and Marine
Concession 7a. A detailed resource evaluation programme, comprising geophysics,
drilling and bulk sampling, is currently being developed for both projects and
is expected to result in a significant increase in the Company's diamond
resources and production in Hondeklip Bay. This programme will be the focus of
the Company's activities in the area in 2006.

At Oena, we intend to replace the Company's own mining operations with a
significantly larger scale operation by appointing a mining contractor on a
revenue sharing basis. After extensive discussions, a shortlist of two suitably
qualified mining contractors has been selected. Both contractors have indicated
that they are willing to make a significant capital commitment to operations at
Oena, which should result in increased turnover at the mine. An appointment is
expected to be made in the first quarter of 2006.


Corporate

With the growth in the Company's mining and exploration project portfolio over
the past year and the further expansion now being planned, we recently decided
to create the position of Chief Operating Officer, with responsibility for
managing all operational aspects of the company's portfolio of mining and
exploration projects. Tim Wilkes has been promoted to this position, and we
expect him to play a central role in helping Firestone to achieve its objective
of becoming a leading mid-tier diamond mining and exploration company.

In October 2005, the Company further expanded its interests in Botswana through
the acquisition of a 7.28% interest in African Diamonds plc. African Diamonds
has a joint venture with De Beers in the Orapa region, over ground which adjoins
Firestone's Orapa and Mopipi projects.


Financial

Turnover from mining operations was broadly in line with last year, although it
should be noted that Bonte Koe did not make a significant contribution during
the financial year, as commissioning was only completed at the end of the third
quarter.

Operations showed a small loss, primarily as a result of increased staff costs
during the development and commissioning stage of the Bonte Koe project, which
have since reduced, and interest payments, which rose significantly during the
year as a result of project financing facilities used by the Company to finance
part of the development costs at Bonte Koe.

We expect to see a substantial improvement in the Company's turnover and
financial performance in the coming year, as the planned expansion and
refocusing of the Company's mining operations take place.

Since the end of the year, the most significant development has been the
completion of a #10 million equity financing in November 2005. These funds will
be used to finance the planned expansion of the Company's mining and exploration
activities in South Africa and Botswana.


The Diamond Market

Prices in the rough diamond market continued to increase, driven by the growing
shortage in rough diamond supply across all segments of the market. Rough
diamond prices increased by about 20% in 2004 and this trend continued into
2005, with De Beers raising rough diamond prices by 6% during the year. De
Beers' sales for 2005 are expected to reach a record level of $6.4 billion, a
12% increase from the previous record set in 2004. With De Beers' stocks now at
minimum working levels, and the rough diamond supply deficit expected to
continue for the next three to five years, the outlook for diamond prices
continues to be very positive.


Outlook

We expect to see continued development of our exploration and mining project
portfolio in the coming year.

In South Africa, there will be substantial activity at the Groen River Valley,
with exploration drilling and bulk sampling expected to continue throughout the
year.

On the basis of positive results from the Groen River Valley, the Company has
decided to pursue new exploration projects further inland on the Groen River
Valley palaeo river systems. A significant amount of work has been carried out
and a number of prospective areas have been identified which the Company
believes have the potential to host significant resources of large, high quality
diamonds. We are pleased to announce that, based on this work, the Company has
recently applied for three new prospecting