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									                                                                                                                             Firestone Diamonds                                                              Buy
            BASIC DATA                                                                                                       Valuation
Price:                         60p
Range:              57½p – 117½p                                                                                             Project                    Value           Valuation Basis                          Value
Market Cap:                  £13m                                                                                            Avontuur Mine              £21.4m          Discounted cash flow                     95p
Gearing:                       Nil
                                                                                                                             Exploration Projects       £4m             Exploration cost/market value            17p
Asset Valuation:          £25.4m
Reuters Code:               FDI.L                                                                                            Total                      £25.4m                                                   112p
Sector:                       AIM
NMS:                  1,000 shares
Year End:                     June
Next Results:                April                                                                                           Expanding Production and Excellent
            SHARE PRICE PERFORMANCE                                                                                          Exploration Potential
                            LSE FIRESTONE DIAMND, Close(Last Trade) [Line] Daily
                                                                                                   01Aug98 - 17Apr99
                                                                                                                       Pr
                                                                                                                             Firestone has the potential to become a significant independent producer of
                                                                                                                       GBp
                                                                                                                             alluvial diamonds as a result of the recently completed expansion of its
                                                                                                                       110



                                                                                                                       105
                                                                                                                             Avontuur Mine. The company has a strong portfolio of exploration projects,
                                                                                                                       100
                                                                                                                             particularly in the Groen River Valley area, where it hopes to be able to start
                                                                                                                       95
                                                                                                                             developing commercial mining operations later this year.
                                                                                                                       90



                                                                                                                       85
                                                                                                                             Firestone has a highly experienced management team which includes one of the
                                                                                                                       80
                                                                                                                             leading diamond explorationists in the business. With the company’s current
                                                                                                                       75    cash position and future cash flow from Avontuur expected to be able to fund all
                                                                                                                       70    planned exploration programmes, the company is in a strong position for
                                                                                                                       65    continued growth.
                                                                                                                       60


  20Aug98   17Sep   15Oct     12Nov            10Dec             07Jan             04Feb   04Mar       01Apr                 We estimate the value of the company to be £25.4 million. The Avontuur Mine
                                                                                                                             accounts for £21.4 million (95p per share) of this amount, and on this basis
                    BUSINESS ANALYSIS                                                                                        alone, the shares represent good value. We have valued the company’s
                                                                                                                             exploration projects on the conservative basis of cost/market value at £4 million
Independent alluvial diamond
producer and explorer in South Africa                                                                                        (17p per share), and as any one of these projects could add value similar to or
and Botswana.                                                                                                                greater than that of Avontuur, the shares also have substantial upside potential.
                                                                                                                             We consider that Firestone’s balanced portfolio of production, advanced
                                                                                                                             exploration and early stage exploration projects gives it a significantly lower
                                                                                                                             risk profile than most of its sector peers.




Charles Dampney                                                                                                                        Charles Stanley & Co. Ltd acts as stockbroker to Firestone Diamonds plc
14th April 1999                                                                                                                              Investors should be aware of the higher risks of AIM stocks
     The information given in this report is based upon sources we believe to be reliable, but its accuracy cannot be guaranteed. Recommendations are given in good faith but without legal
    responsibility and are subject to change without notice. The information does not constitute advice or a personal recommendation and you are recommended to seek advice concerning
 suitability from your investment advisor. Charles Stanley & Co. Ltd. and connected companies, their directors, members, employees and members of their families may have positions in the
securities mentioned. Investors should be aware that past performance is not necessarily a guide to the future and that the price of shares, and the income derived from them, may fall as well as
                                                                rise and the amount realised may be less than their original sum.
                               Charles Stanley & Co. Ltd.  Member of the London Stock Exchange  Regulated by the Securities and Futures Authority
                                                      25 Luke Street, London EC2A 4AR Tel: 0171 739 8200 Fax: 0171 410 9405
    Also at: Bath, Bedford, Birmingham, Bournemouth, Cambridge, Guernsey, Ipswich, Lincoln, Manchester, Milton Keynes, Newbury, Norwich, Nottingham, Oxford, Plymouth, Reigate,
                                                                                      Southampton, Southend
                                                                  Summary
           UK-based alluvial diamond                              Firestone Diamonds plc is a UK-based company which has the potential to
               producer and explorer                              become a significant independent producer of alluvial diamonds as a result of
                                                                  the recently completed expansion of its Avontuur Mine, and has a portfolio of
                                                                  several significant prospects in known diamond producing areas. Firestone is a
                                                                  diamond producing company and is one of the few “pure” diamond plays quoted
                                                                  on an international stock exchange. All of Firestone’s operations in South Africa
                                                                  are focused on alluvial diamond deposits and the company has one kimberlite
                                                                  prospect in Botswana. Both countries have stable governments and liberal
                                                                  economic regimes.

                                                                  The company’s current portfolio of projects is unusual for a natural resources
                                                                  company at a relatively early stage of its development, as it includes a producing
                                                                  mine with significant expansion potential and both advanced and early stage
                                                                  exploration projects. Firestone markets its diamonds independently of the De
                                                                  Beers’ Central Selling Organisation (CSO) which ensures that it is able to secure
                                                                  the highest prices for its stones.
Operating mine with estimated life
of 12 years and reserves/resources                                Firestone’s main mining asset is the Avontuur Mine, located near the coastal
         worth approx. £62 million                                town of Hondeklip Bay in Namaqualand. The Avontuur Mine covers an area of
                                                                  over 2,600 acres and is estimated to have diamond reserves/resources of
                                                                  approximately 900,000 carats with a gross value of approximately £62 million,
                                                                  which is expected to support a viable mining operation for at least 12 years.
  Exciting exploration potential at
 Groen River Valley and elsewhere                                 Firestone’s most advanced exploration project covers an area of 74,000 acres in
                                                                  the Groen River valley in Namaqualand, which is highly prospective for
                                                                  economic alluvial diamond deposits. The Groen River Valley is now the only
                                                                  palaeo river system in the Namaqualand coastal area with significant potential
                                                                  as a source of diamonds which has not been prospected by the major diamond
                                                                  companies. Firestone has some 20 kilometres of this palaeo channel system in
                                                                  its project area and it is considered likely that this system will contain numerous
                                                                  prospective mining areas.
 Avontuur Mine expansion recently
                       completed                                  The expansion of the Avontuur Mine and the capital expenditure which was
                                                                  planned at the time of coming to the market have been completed, and the
                                                                  company’s cash position is good, with remaining cash from the placing and cash
                                                                  flow from increased diamond production at the Avontuur Mine expected to
                                                                  provide funding for the company’s continuing exploration and development
                                                                  programmes.
      Exceptional track record in the
                   diamond business                               Firestone has a highly qualified management team with extensive experience in
                                                                  the financing and development of natural resource projects. Hugh Jenner-
                                                                  Clarke, deputy chairman and exploration director, is recognised as one of the
                                                                  most prominent and experienced diamond explorationists in the industry and, in
                                                                  particular, as the foremost expert on alluvial diamond deposits in Namaqualand.
                                                                  He has been responsible for a number of commercial diamond discoveries.
  Diamond prices have been stable
 thanks to De Beers and prices are                                The financial crisis in the Far East led to a significant drop in demand for
             now beginning to rise                                diamonds during 1998, but prices remained stable as the CSO limited supplies
                                                                  to the market. Confidence is now returning to the diamond business, with CSO
                                                                  sales in the first two months of 1999 increasing by 32% over the same period in
                                                                  1998 and prices beginning to increase. Analysts are now projecting a 10%
                                                                  increase in CSO sales for the year.
     The information given in this report is based upon sources we believe to be reliable, but its accuracy cannot be guaranteed. Recommendations are given in good faith but without legal
    responsibility and are subject to change without notice. The information does not constitute advice or a personal recommendation and you are recommended to seek advice concerning
 suitability from your investment advisor. Charles Stanley & Co. Ltd. and connected companies, their directors, members, employees and members of their families may have positions in the
securities mentioned. Investors should be aware that past performance is not necessarily a guide to the future and that the price of shares, and the income derived from them, may fall as well as
                                                                rise and the amount realised may be less than their original sum.
                               Charles Stanley & Co. Ltd.  Member of the London Stock Exchange  Regulated by the Securities and Futures Authority
                                                      25 Luke Street, London EC2A 4AR Tel: 0171 739 8200 Fax: 0171 410 9405
    Also at: Bath, Bedford, Birmingham, Bournemouth, Cambridge, Guernsey, Ipswich, Lincoln, Manchester, Milton Keynes, Newbury, Norwich, Nottingham, Oxford, Plymouth, Reigate,
                                                                                      Southampton, Southend
                                                                  Firestone has 22.58 million shares in issue (24.71 million on a fully diluted
                                                                  basis), and with a market capitalisation of approximately £13 million, the
                                                                  company offers good value with substantial upside potential and lower risk
                                                                  than most companies in its sector. There is considerable scope for a
                                                                  substantial uprating of Firestone’s shares as production and profits rise
                                                                  and positive exploration results are obtained.

                                                                  Company Background
   Corporate strategy is to use cash                              Firestone was incorporated in early 1996 to raise funds in Europe for diamond
    flow from mining operations to                                mining and exploration projects developed by Asam Minerals, a private South
                   fund exploration                               African company which had been involved in diamond exploration and mining
                                                                  worldwide for over 30 years. Firestone’s strategy has been to build a portfolio
                                                                  comprising advanced development and production projects, which have the
                                                                  capacity to provide sustainable cash flow to fund ongoing exploration
                                                                  programmes and an early return on investment, together with large scale
                                                                  exploration projects which have the potential to yield significant reserves of
                                                                  gem quality diamonds.

 Only operates in politically stable                              All Firestone’s projects are located either in the Namaqualand region of South
   countries, such as South Africa                                Africa or in Botswana. Namaqualand, which is located on the west coast of
                    and Botswana                                  South Africa, has been a major diamond producing region for the past 60 years.
                                                                  Total alluvial diamond production from Namaqualand to date is estimated to be
                                                                  worth a minimum of $2-3 billion, and De Beers currently produces over 600,000
                                                                  carats a year, estimated to be worth over $60 million, from its Namaqualand
                                                                  operations. Botswana is the world’s largest producer of diamonds by value,
                                                                  with annual production of over 20 million carats and a value of over $1.6
                                                                  billion.

                                                                  The governments of South Africa and Botswana are considered to be the most
                                                                  stable in Africa and have fiscal regimes which are among the least restrictive in
                                                                  the developing world, allowing repatriation of dividends and profits. The
                                                                  mining industry, especially diamonds, is a major contributor to both economies
                                                                  and accounts for a significant share of their export earnings.

      Quality operations, strong                                  Firestone provides a unique investment opportunity; it is an independent
management and long term growth                                   diamond company with growing high quality gemstone production from its
                       potential                                  Avontuur Mine, plus an extensive portfolio of exploration projects in known
                                                                  diamond producing areas which are located in one of the most prospective
                                                                  regions of the world for alluvial diamonds. The company’s ability to make and
                                                                  develop economic discoveries can be shown in the increase of attributable
                                                                  reserves and resources at the Avontuur Mine more than twenty five times from
                                                                  34,000 carats in 1996 to over 900,000 carats currently, as shown in the chart
                                                                  below. The company should no longer be considered a "speculative" investment
                                                                  and will increasingly be seen as a serious mining company with high quality
                                                                  operations and long term growth potential




     The information given in this report is based upon sources we believe to be reliable, but its accuracy cannot be guaranteed. Recommendations are given in good faith but without legal
    responsibility and are subject to change without notice. The information does not constitute advice or a personal recommendation and you are recommended to seek advice concerning
 suitability from your investment advisor. Charles Stanley & Co. Ltd. and connected companies, their directors, members, employees and members of their families may have positions in the
securities mentioned. Investors should be aware that past performance is not necessarily a guide to the future and that the price of shares, and the income derived from them, may fall as well as
                                                                rise and the amount realised may be less than their original sum.
                               Charles Stanley & Co. Ltd.  Member of the London Stock Exchange  Regulated by the Securities and Futures Authority
                                                      25 Luke Street, London EC2A 4AR Tel: 0171 739 8200 Fax: 0171 410 9405
    Also at: Bath, Bedford, Birmingham, Bournemouth, Cambridge, Guernsey, Ipswich, Lincoln, Manchester, Milton Keynes, Newbury, Norwich, Nottingham, Oxford, Plymouth, Reigate,
                                                                                      Southampton, Southend
         Twenty five fold increase in
     reserves and resources over the                                                               Firestone Reserves & Resources
                    past three years                                                                           (Carats)


                                                                      1,000,000

                                                                        800,000
                                                                                                                                                       Inferred
                                                                        600,000
                                                                                                                                                       Measured & Indicated
                                                                        400,000                                                                        Proven & Probable

                                                                        200,000

                                                                                0
                                                                                            1996              1997            1998


                                                                  Source: Independant Technical Consultant’s report, Firestone Diamonds plc prospectus, August
                                                                  1998 and company information



                                                                  THE DIAMOND BUSINESS

                                                                  The Market for Rough Diamonds
                                                                  The rough (uncut) diamond market consists of three very different segments –
                                                                  “gem”, “near-gem” and “industrial”. Gem and near-gem diamonds are used in
                                                                  jewellery and can vary in colour from pure blue-white, through pale yellow and
                                                                  brown, to the rarest pink or blue diamonds. Industrial diamonds, because of
                                                                  their inferior quality or undesirable colour, are used in industry for cutting,
   Alluvial deposits produce ~ 80%                                grinding, polishing, drilling and other technical and scientific applications. As
    gem quality diamonds, the most                                indicated in the chart below, gem diamonds make up only 18% of world
   valuable segment of the diamond                                production by weight, but account for 66% by value. Alluvial diamond deposits
                             market                               typically have a high gem content, of 80% and above.

                                                                                Global Diamond Production                                  Global Diamond Production
                                                                                        (by weight)                                                 (by value)

                                                                                                   Gem
                                                                                                   18%                                                     Near gem
                                                                                                                                                             30%
                                                                                    Industrial
                                                                                      52%          Near gem                                                 Industrial
                                                                                                                                                Gem
                                                                                                     30%                                                       4%
                                                                                                                                                66%



                                                                  Source: Firestone Diamonds plc company information
 Firestone benefits from stability in
     diamond prices brought by De                                 Approximately 75 per cent of the world’s annual production of rough diamonds
  Beers’ control of rough diamond                                 is marketed through the De Beers-controlled CSO, which markets all De Beers’
                             market                               production as well as production bought from other mines both on long term
                                                                  contracts and on the open market. The CSO aims to preserve an orderly market
                                                                  for diamonds and has managed diamond prices by controlling supply in times of
                                                                  over production or economic recession. As a result, the diamond market has
                                                                  been less prone to the cyclical price fluctuations which are typical of many
                                                                  commodities, as is shown in the following chart. Rough diamond prices
                                                                  increased at an average annual rate of approximately 5.4 per cent between 1985
                                                                  and 1996.




     The information given in this report is based upon sources we believe to be reliable, but its accuracy cannot be guaranteed. Recommendations are given in good faith but without legal
    responsibility and are subject to change without notice. The information does not constitute advice or a personal recommendation and you are recommended to seek advice concerning
 suitability from your investment advisor. Charles Stanley & Co. Ltd. and connected companies, their directors, members, employees and members of their families may have positions in the
securities mentioned. Investors should be aware that past performance is not necessarily a guide to the future and that the price of shares, and the income derived from them, may fall as well as
                                                                rise and the amount realised may be less than their original sum.
                               Charles Stanley & Co. Ltd.  Member of the London Stock Exchange  Regulated by the Securities and Futures Authority
                                                      25 Luke Street, London EC2A 4AR Tel: 0171 739 8200 Fax: 0171 410 9405
    Also at: Bath, Bedford, Birmingham, Bournemouth, Cambridge, Guernsey, Ipswich, Lincoln, Manchester, Milton Keynes, Newbury, Norwich, Nottingham, Oxford, Plymouth, Reigate,
                                                                                      Southampton, Southend
Diamond prices have substantially
                                                                                                    Diamond, Oil & Gold Price Index
   outperformed oil and gold over
                     recent years                                                                              Oil    Gold    Diamonds

                                                                               180

                                                                               160

                                                                               140

                                                                               120

                                                                               100
                                                                           %
                                                                                80
                                                                                 60
                                                                                 40
                                                                                 20
                                                                                     0
                                                                                     1984
                                                                                             1986
                                                                                                        1988
                                                                                                                     1990
                                                                                                                               1992
                                                                                                                                           1994
                                                                                                                                                       1996
                                                                                                                                                                    1998

                                                                  Source: Rapaport Diamond Report, industry information


                                                                  The diamond market experienced a very challenging year in 1998, as demand
    Rough diamond sales and prices
                                                                  for diamonds in the Far East dropped significantly as a result of the financial
            on the increase in 1999
                                                                  crisis in the region. The CSO responded by severely restricting its sales, which
                                                                  ended the year down 28% on 1997, in order to ensure that supply and demand
                                                                  remained in balance. This strategy was successful, as rough diamond prices
                                                                  remained stable and trade inventories were run down substantially. This year
                                                                  has started off on an extremely positive note, with the mood in the market much
                                                                  more confident as a result of the combination of increased worldwide demand
                                                                  and low stock levels due to De Beers’ recent restrictive sales policy. There has
                                                                  been a marked improvement in demand from the Far East, particularly from
                                                                  Japan and Indonesia, with Japanese buyers taking advantage of the weakness of
                                                                  the dollar against the yen. Strong overall demand and a shortage of certain
                                                                  categories of diamonds allowed the CSO to increase its sales in the first two
                                                                  sights of 1999 by 32% on 1998, and CSO sales for 1999 are forecast to rise 10%
                                                                  to $3.7 billion.

                                                                  Alluvial Diamonds
                                                                  Alluvial diamonds are diamonds that have been eroded from their primary
                                                                  kimberlite and lamproite source rocks and carried down ancient river systems
                                                                  towards the sea. Over millions of years the uppermost parts of the kimberlites
  Alluvial diamond exploration and
                                                                  in Southern Africa were removed by erosion. The diamonds released by this
   development costs relatively low
                                                                  process were transported westwards by ancient river systems and deposited in
                                                                  gravel beds in the rivers, or in the Atlantic Ocean where the rivers entered it,
                                                                  and subsequently redistributed along the coast by the prevailing current.
                                                                  Alluvial diamond deposits typically have a gem content of 80% or more, as
                                                                  most of the flawed and low quality diamonds are broken up during transport,
                                                                  whereas the higher quality gemstones are mostly unaffected.            Alluvial
                                                                  diamonds also have the advantage that exploration can be conducted rapidly and
                                                                  at relatively low cost and that the development of economic reserves requires
                                                                  relatively low levels of capital investment. Positive cash flow can often be
                                                                  achieved within a comparatively short space of time from commencement of
                                                                  mining.


     The information given in this report is based upon sources we believe to be reliable, but its accuracy cannot be guaranteed. Recommendations are given in good faith but without legal
    responsibility and are subject to change without notice. The information does not constitute advice or a personal recommendation and you are recommended to seek advice concerning
 suitability from your investment advisor. Charles Stanley & Co. Ltd. and connected companies, their directors, members, employees and members of their families may have positions in the
securities mentioned. Investors should be aware that past performance is not necessarily a guide to the future and that the price of shares, and the income derived from them, may fall as well as
                                                                rise and the amount realised may be less than their original sum.
                               Charles Stanley & Co. Ltd.  Member of the London Stock Exchange  Regulated by the Securities and Futures Authority
                                                      25 Luke Street, London EC2A 4AR Tel: 0171 739 8200 Fax: 0171 410 9405
    Also at: Bath, Bedford, Birmingham, Bournemouth, Cambridge, Guernsey, Ipswich, Lincoln, Manchester, Milton Keynes, Newbury, Norwich, Nottingham, Oxford, Plymouth, Reigate,
                                                                                      Southampton, Southend
                                                                  MINING OPERATIONS

                                                                  Avontuur Mine, Namaqualand, South Africa
  Avontuur Mine located between 2                                 Firestone’s Avontuur Mine covers an area of over 2,600 acres and is located
        major operating mines with                                near the coastal town of Hondeklip Bay in Namaqualand. Hondeklip Bay is a
   historical production worth over                               well established alluvial diamond producing area and hosts De Beers’
                          $1 billion                              Koingnaas Mine and Trans Hex’s Hondeklip Bay Mine. These mines have been
                                                                  producing diamonds for 20 years and 15 years respectively and are estimated to
                                                                  have yielded in excess of 10 million carats with an estimated value of over $1
                                                                  billion at current market prices.

Avontuur production >80% gem                                      Diamonds produced from Avontuur average approximately 0.2 carats in weight
quality                                                           and more than 80 per cent are of gem quality and good, white colour. The
                                                                  largest diamond recovered to date weighed 1.9 carats. Firestone markets its
                                                                  diamonds independently of the CSO through private tenders which are held
                                                                  several times a year in South Africa. The high quality of the Avontuur
                                                                  gemstones ensures that Firestone receives better than average prices for its
                                                                  diamonds, and in recent tenders prices have ranged between $100 and $110 per
                                                                  carat.

                                                                  In line with the plans outlined at the time of the company’s flotation last August,
                                                                  Firestone has recently completed a major expansion programme at the Avontuur
                                                                  Mine, resulting in the integration of two previously separate but adjoining
Estimated mine life of 12 years,                                  operations on the Nova and Gras Kom properties into a single expanded
with total revenue of £62 million                                 operation centred on the Avontuur Mine. Earthmoving capacity has been more
                                                                  than doubled to over 1 million tonnes per annum, gravel treatment capacity has
                                                                  been increased by 60% to approximately 320 tonnes per day, and exploration
                                                                  drilling capacity has been increased ten fold. The Avontuur Mine has estimated
                                                                  diamond reserves/resources of approximately 900,000 carats and is expected to
                                                                  support a viable mining operation for at least 12 years, producing total revenues
                                                                  of approximately £62 million at current prices. Future cash flow from mining
                                                                  operations at Avontuur, combined with the company’s current cash position, is
                                                                  expected to be able to fund all planned exploration programmes in the future.

                                                                  At the end of 1998 three new mining excavations were opened. These
Reserves expected to increase as                                  excavations are expected to go into full scale production in 1999 and will enable
new deposits are discovered at the                                gravel feed to the treatment plants to be blended for the first time, allowing
mine                                                              greater control and predictability of production. Recent drilling on the mine has
                                                                  also led to the discovery of three new gravel deposits, and while further
                                                                  evaluation of these deposits is required, the company is confident that they will
                                                                  result in an increase in the mine’s reserves.


                                                                  EXPLORATION PROJECTS

                                                                  Groen River Valley, Namaqualand, South Africa
                                                                  Firestone’s Groen River Valley project covers an area of over 74,000 acres of
                                                                  the lower reaches of the Groen River valley in Namaqualand. A considerable
                                                                  amount of prospecting has been carried out in this region, resulting in the
                                                                  identification of the ancient river channels which were responsible for
                                                                  transporting the diamonds of large size and exceptional quality which have been
                                                                  mined near the mouth of the Groen River by De Beers and other operators. The
                                                                  Groen River Valley is now the only palaeo river system in the Namaqualand
     The information given in this report is based upon sources we believe to be reliable, but its accuracy cannot be guaranteed. Recommendations are given in good faith but without legal
    responsibility and are subject to change without notice. The information does not constitute advice or a personal recommendation and you are recommended to seek advice concerning
 suitability from your investment advisor. Charles Stanley & Co. Ltd. and connected companies, their directors, members, employees and members of their families may have positions in the
securities mentioned. Investors should be aware that past performance is not necessarily a guide to the future and that the price of shares, and the income derived from them, may fall as well as
                                                                rise and the amount realised may be less than their original sum.
                               Charles Stanley & Co. Ltd.  Member of the London Stock Exchange  Regulated by the Securities and Futures Authority
                                                      25 Luke Street, London EC2A 4AR Tel: 0171 739 8200 Fax: 0171 410 9405
    Also at: Bath, Bedford, Birmingham, Bournemouth, Cambridge, Guernsey, Ipswich, Lincoln, Manchester, Milton Keynes, Newbury, Norwich, Nottingham, Oxford, Plymouth, Reigate,
                                                                                      Southampton, Southend
                                                                  coastal area with significant potential as a source of diamonds which has not
                                                                  been prospected by the major diamond companies. The system has been
                                                                  compared favourably with the Orange River and Buffels River systems to the
                                                                  north, which have a history of producing large, high quality gem diamonds.
                                                                  Firestone has some 20 kilometres of this palaeo channel system in its project
                                                                  area and it is considered likely that this system will contain numerous
                                                                  prospective mining areas.

                                                                  Firestone has recently made a strategic addition to its Groen River valley
    Exciting advanced exploration                                 properties with the acquisition of exploration rights over a property known as
 project, which is expected to yield                              Eiland Punt Noord, which covers a total area of 4,316 acres and adjoins
   the company’s next commercial                                  Firestone’s other properties in the area. This acquisition is significant for a
                  mining operation                                number of reasons:

                                                                  1. Eiland Punt Noord is one of the few remaining properties on the coast of
                                                                     Namaqualand which is not controlled by De Beers or other major diamond
                                                                     mining companies and is considered to have excellent potential for the
                                                                     discovery of economic deposits of diamond-bearing gravels.
                                                                  2. Mining operations on De Beers’ property immediately to the north are
                                                                     reported to have produced large diamonds of exceptional quality from
                                                                     marine gravel deposits located close to the coast, and recent exploration
                                                                     work has identified extensions of these deposits on Eiland Punt Noord and
                                                                     resulted in the recovery of diamonds from the property.
                                                                  3. This recent work has also proved that the ancient Groen River entered the
                                                                     sea at a point immediately to the south of Eiland Punt Noord. This point is
                                                                     considered to have been the source of the diamonds mined by De Beers to
                                                                     the north of Eiland Punt Noord, as diamonds deposited in the ocean on the
                                                                     Namaqualand coast are known to have been transported in a northerly
                                                                     direction by the prevailing current.

                                                                  Firestone has established a permanent exploration base in the Groen River
                                                                  valley and a large scale, systematic exploration and evaluation programme
                                                                  commenced in the Groen River Valley project area at the end of 1998. The
                                                                  programme consists of drilling to establish the exact location and depth of river
                                                                  channels, followed by excavation and testing of the gravels for diamond content
                                                                  and grade. The first excavations have already resulted in the recovery of several
                                                                  gem quality diamonds from the target palaeo river system. In parallel with this
                                                                  programme, bulk sampling of the gravel deposits on Eiland Punt Noord will
                                                                  commence in early 1999. The company is confident that it will be able to
                                                                  develop its first commercial mining operations in the Groen River valley by the
                                                                  end of the year and believes that the Groen River valley has the potential to
                                                                  become a major new alluvial diamond producing area

                                                                  Breektand, Van Rhynsdorp, South Africa
                                                                  The Breektand project, which covers an area of approximately 7,400 acres, is
   Growing portfolio of exploration                               located in the foothills of the Bushmanland Plateau some 75 kilometres inland
    projects with excellent potential                             from the mouth of the Groen River. Work to date on this project has been
                                                                  confined to geological mapping. The area has a history of small scale diamond
                                                                  mining and Firestone has identified a palaeo drainage system on the property
                                                                  that is considered likely to contain alluvial diamond deposits. The company is
                                                                  planning an extensive exploration programme, consisting mainly of bulk
                                                                  sampling of the gravels that have been delineated by mapping. The first phase
                                                                  of this work is expected to be completed during 1999.
     The information given in this report is based upon sources we believe to be reliable, but its accuracy cannot be guaranteed. Recommendations are given in good faith but without legal
    responsibility and are subject to change without notice. The information does not constitute advice or a personal recommendation and you are recommended to seek advice concerning
 suitability from your investment advisor. Charles Stanley & Co. Ltd. and connected companies, their directors, members, employees and members of their families may have positions in the
securities mentioned. Investors should be aware that past performance is not necessarily a guide to the future and that the price of shares, and the income derived from them, may fall as well as
                                                                rise and the amount realised may be less than their original sum.
                               Charles Stanley & Co. Ltd.  Member of the London Stock Exchange  Regulated by the Securities and Futures Authority
                                                      25 Luke Street, London EC2A 4AR Tel: 0171 739 8200 Fax: 0171 410 9405
    Also at: Bath, Bedford, Birmingham, Bournemouth, Cambridge, Guernsey, Ipswich, Lincoln, Manchester, Milton Keynes, Newbury, Norwich, Nottingham, Oxford, Plymouth, Reigate,
                                                                                      Southampton, Southend
                                                                  Mopipi, Botswana
                                                                  In neighbouring Botswana, Firestone is participating in the Mopipi joint
                                                                  venture, which is exploring an area of over 20,000 acres located some 50 km
                                                                  west of De Beers' Orapa mine, where current diamond output is over 6 million
                                                                  carats a year. Firestone has the right under the joint venture agreement to earn a
                                                                  75 per cent interest in the project.

                                                                  The initial exploration work carried out in the joint venture area consisted of
                                                                  aerial photo analysis to identify potential kimberlitic structures and soil
                                                                  sampling throughout the area to recover and evaluate kimberlite-associated
                                                                  heavy minerals. Results of this work are very encouraging, and a number of
                                                                  target areas with clear photo features and strong heavy mineral anomalies have
                                                                  been identified. The number and type of heavy minerals recovered indicate that
                                                                  there are several potential kimberlite targets in the license area. A follow-up
                                                                  programme to recover larger soil samples directly from the surface of these
                                                                  targets is under way, results of which will be used to select targets for drilling.


                                                                  DIRECTORS AND MANAGEMENT

      Management has substantial                                  Firestone has a highly qualified management team with many years’ of
      experience in the exploration                               experience in the financing and development of natural resource projects, and
 sector in general and in diamonds                                with extensive experience in the diamond business in particular. The company
                       in particular                              has a lean organisation and a small management team led by the three executive
                                                                  directors, which allows corporate overheads to be kept low.

                                                                  James F. Kenny, BA, LLB, MSc, is chairman of the company and has over 20
                                                                  years’ experience in natural resources exploration and production in the oil and
                                                                  gas, gold, diamonds, base-metals and industrial minerals sectors.

                                                                  Hugh C. D. Jenner-Clarke, BSc, FGS, is deputy chairman and is based in
                                                                  Cape Town, from where he leads the company’s diamond exploration and
                                                                  development programmes. He has over 40 years’ experience in the diamond
                                                                  business as a geologist and exploration manager and is recognised as one of the
                                                                  foremost diamond explorationists in the world today. He has been involved in
                                                                  diamond exploration in Namaqualand for over thirty years, where he was
                                                                  responsible for the discovery of a number of commercial diamond deposits. He
                                                                  has also assisted in the discovery and development of diamond mining
                                                                  operations elsewhere in South Africa, Australia, the USA and South America.

                                                                  Philip Kenny, BE, MBA, is chief executive and has over 10 years’ experience
                                                                  in the natural resources sector in the US and Europe, in the oil and gas,
                                                                  diamonds and industrial minerals sectors.

                                                                  The company has three non-executive directors with substantial experience in
                                                                  financing and development of projects in the commodities, mining, oil and gas
                                                                  and engineering sectors and in Africa.




     The information given in this report is based upon sources we believe to be reliable, but its accuracy cannot be guaranteed. Recommendations are given in good faith but without legal
    responsibility and are subject to change without notice. The information does not constitute advice or a personal recommendation and you are recommended to seek advice concerning
 suitability from your investment advisor. Charles Stanley & Co. Ltd. and connected companies, their directors, members, employees and members of their families may have positions in the
securities mentioned. Investors should be aware that past performance is not necessarily a guide to the future and that the price of shares, and the income derived from them, may fall as well as
                                                                rise and the amount realised may be less than their original sum.
                               Charles Stanley & Co. Ltd.  Member of the London Stock Exchange  Regulated by the Securities and Futures Authority
                                                      25 Luke Street, London EC2A 4AR Tel: 0171 739 8200 Fax: 0171 410 9405
    Also at: Bath, Bedford, Birmingham, Bournemouth, Cambridge, Guernsey, Ipswich, Lincoln, Manchester, Milton Keynes, Newbury, Norwich, Nottingham, Oxford, Plymouth, Reigate,
                                                                                      Southampton, Southend

								
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