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Bonte Koe Mine, South Africa
The Bonte Koe mine covers an area of approximately 2,500 hectares along the Buffels River in Namaqualand, a region that has been a significant diamond producing area for the past 40 years. Mining operations in the area have produced an estimated total of over 3 million carats, with an estimated current value of over $750 million. The Buffels River area produces diamonds with an average size of approximately 0.4 carats per stone and a value of over $200 per carat.
In 2006, Firestone entered into an agreement with De Beers to develop a new mining operation around Bonte Koe to exploit deposits on the Buffels River over which De Beers holds mining rights. Under the terms of the agreement, Firestone will use the plant and infrastructure at Bonte Koe to process gravel mined by De Beers on a toll-treatment basis.
The agreement with De Beers is very significant for Firestone as it provides the Company with assured revenue and cash flow for the duration of the Buffels River project. The operation is expected to provide Firestone with average annual revenue of approximately £3.5 million and operating profits of £2 million. Firestone's revenue and profits from the project could increase further through an increase in mineable resources in the Buffels River area, which would extend the life of the project to beyond 2013, and through profit sharing provisions in the agreement with De Beers.
With the plant at Bonte Koe now dedicated to processing De Beers' gravel, Firestone plans to resume exploiting its own gravel resources at Bonte Koe after processing of De Beers' gravels has been completed.
Firestone's interest in the Bonte Koe Mine is held through African Star Minerals, the Company's black empowerment subsidiary.
