JOHANNESBURG (miningweekly.com) – Debswana has decided to proceed with the construction of a modular tailings treatment project (MTTP) at its Jwaneng mine, in Botswana, with Aim-listed Firestone Diamonds saying that the conclusion of contractual agreements between the two parties were at an advanced stage.

Firestone had been selected by Debswana, which is jointly owned by De Beers and the government of Botswana, to finance, build and operate the MTTP.

Subject to the conclusion of the contractual agreements, as well as suitable financing for the required $55-million capital expenditure being arranged, construction could start during the first half of next year.

“We are very pleased that Debswana has decided to move forward with the Jwaneng tailings project. This project is a key component of our strategy of developing toll treatment opportunities to supplement our own mining operations at BK11 and the evaluation and development of our other kimberlites in the Orapa and Tsabong kimberlite fields,” Firestone CEO Phillip Kenny told shareholders in a statement on Wednesday.

Negotiations between Debswana and Firestone were supposed to have been concluded last year, but were delayed owing to Debswana’s decision to temporarily suspend some of its mining operations.

However, given the improved diamond market, the De Beers subsidiary has decided to proceed with the MTTP.

The plant was now expected to start producing in early 2012, with full output of two-million tons a year scheduled for later that year.

The Jwaneng plant would serve as a pilot facility to demonstrate the economics and capability of the modular plant concept on the Jwaneng tailings resource.

If successful, the plant concept could potentially be deployed to other Debswana mines to exploit similar tailing resources.

Jwaneng had an estimated tailings resource of 30-million tons.

The MTTP was expected to contribute up to $150-million in toll treatment revenues for Firestone.

The Aim-listed company intends to finance the plant through a special purpose vehicle that would arrange debt finance for the project against the contract with Debswana. Discussions with a number of lenders have been held.

In line with its strategy, Firestone had, in March, been selected as the preferred candidate to build and operate a new dredge and a 11,5-million-ton a year floating treatment (FTP) plant for Namdeb, another De Beers subsidiary working in joint venture with the government of Namibia.

The FTP was also expected to start production in 2012.

BK11 DEVELOPMENT

Meanwhile, Firestone was awaiting the award of a mining licence for its 1,5-million-ton a year BK11 project, with the first phase of its production plant ready to start operating.

As part of its phase-one development, the production plant had a capacity of 650 000 t/y.

Phase two, which would see output increase to 1,5-million tons a year, was on track for completion by the third quarter of the year.

Firestone had applied for a mining licence for BK11 during the first quarter of the year and it was expecting the “imminent” issuing of the licence.

“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 position 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,” commented Kenny.

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