Company announcements

June 2012 quarterly results

31 July 2012

Quarterly Activities Report

for the Period to 30 June 2012

The Board of Firestone Energy Limited (ASX/JSE: FSE) (“Firestone” or the “Company”) is pleased to provide shareholders with its Quarterly Activities Report for the 3 month period ended 30 June 2012.

Highlights

  • Signed Funding Agreement - A$40.7m
  • Undertaking to procure project funding up to US$400m
  • Increased Technical Resources
  • Appointment of SRK Consulting to complete a Feasibility Study
  • Amended Eskom MoU

Funding Facility

On 7 May 2012 the Board announced that it had entered into a conditional termsheet for the provision of A$30.7million of funding by Ariona Company SA (Ariona). Firestone has now executed an Investment Agreement with Ariona to provide funding to the Company for the increased amount of A$40.7million. Firestone has been actively engaged in carrying out the necessary works required to negotiate the terms and complete the documentation, which remains a primary focus of the Company.

Through the execution of the agreement and subject to certain conditions precedent, Ariona will provide A$40.7million to the Company under a secured convertible note facility replacing the current convertible notes. With this increased facility, and based on current budgeted expenditure, Firestone is fully funded up to and including the completion of the Feasibility Study. Post the finalisation of the feasibility Study, project funding will be required to undertake development and operation of the Waterberg Coal Project and Ariona have undertaken to procure funding of up to US$400m for this purpose.

Technical Update

The technical team has recently been increased to provide further resources to assist in completing the feasibility study. Further drilling and assessments are required to re-model and scope the resource for the increased production rate. In addition, the integrated water use licence requirements will be aligned to the proposed production levels. This will be addressed in the current Feasibility Study.

SRK Consulting (SRK) have been appointed to carry out the necessary works to complete a feasibility study to a bankable level. The technical teams from both SRK and the Sekoko Joint-Venture are fully engaged and working closely.

Corporate

During the quarter the short-term Funding Facility for A$2.2m announced to the market on 22 March 2012 was partially drawn down by the Company.

On 3 April 2012, the Company announced to the market that it decided to reject the offer from Tata Power Company Ltd, for reasons including that in the opinion of the directors the offer materially undervalued the inherent value in the project.

During the period, the Company announced that Sekoko Coal (Pty) Ltd, it’s South African black-owned Joint Venture Partner, signed a memorandum of understanding with Eskom Holdings Limited to supply thermal coal from it’s Waterberg Coal Project. Under the MoU, the parties will enter into a coal supply agreement enabling the Firestone / Sekoko joint –venture to supply a minimum of 10 million tonnes per annum of thermal coal for a minimum period of 30 years. The production of coal is estimated to commence in 2014 and will ramp up over a 5 year period to 10 million tonnes per annum. This MoU replaces the earlier MoU with Eskom which was announced to the market on 2 February 2011.

Outlook

The Company has continued to make good progress in securing funding to advance the development of the project and is committed to delivering a feasibility study to a bankable level for the proposed increased production rate. Firestone remains confident that following the successful completion of the initiatives carried out to-date it will unlock the value of the Waterberg Project.

FOR FURTHER INFORMATION:

David Knox
CEO
david.knox@firestoneenergy.com.au
www.firestoneenergy.com.au

About Sekoko Resources

Sekoko Resources (Pty) Ltd is a South African-based black-owned energy and minerals company developing the coal, magnetite iron ore and PGMs Projects in the Limpopo Province of South Africa. This includes a significant exploration program and development of the Waterberg Coal Joint Venture Project based on significant Coal Zone Resources.

About Firestone Energy

Firestone Energy Limited is an independent, Australian exploration and development company listed on the Australian Stock Exchange Ltd (ASX) and the Johannesburg Stock Exchange (JSE). Firestone Energy has entered into a Joint Venture with Sekoko Resources (Pty) Ltd through which Firestone Energy has acquired the right to 60% participation interests in the Waterberg Coal Project located in Lephalale area, Limpopo Province, South Africa. The first stage of the project is to develop the Smitspan mine which has a substantial measured thermal coal resource and to develop the Vetleegte mine which is a substantial metallurgical coal deposit. Firestone Energy is committed to becoming a profitable independent coal and energy producer at its projects in South Africa, thereby making a substantial contribution to the social and economic development of the Lephalale area and South Africa. Corporate Details
ASX: FSE
JSE: FSE

Issued Capital:
3,114 million ordinary shares

Major Shareholders:
Sekoko Resources (Pty) Ltd
Linc Energy Ltd
BBY Nominees Ltd
Bell Potter Nominees Ltd

Directors and Officers

Non Executive Directors:
Tim Tebeila (Chairman)
David Perkins (Deputy Chairman)
Dr Pius Kasolo
Mr Ben Mphahlele
Mr Kobus Terblanche

Officers:
Mr David Knox (CEO)
Mr Jerry Monzu (Company Secretary)

Contact:
Suite B9, 431 Roberts Road
Subiaco, Western Australia 6008
Tel: +61 (0)8 9287 4600
Web: www.firestoneenergy.com.au

Johannesburg
31 July 2012

Sponsor
River Group

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