Dear Shareholder,

Since June of last year we have made continued good progress in the growth and development of Firestone's exploration and mining project portfolio.

In Botswana, the Company acquired two new kimberlite exploration projects, increased the area held under licence by 150% to approximately 9,000 square kilometres and concluded two new joint ventures with De Beers over the Orapa and Jwaneng projects. An intensive exploration programme was initiated in the Mopipi and Orapa project areas, with more than 51,000 line kilometres of high-resolution geophysical surveys conducted. In February 2005, we announced that drilling of the first targets identified by these surveys had resulted in the discovery of three new kimberlites close to the Orapa Mine.

In South Africa, the Company increased the area held under licence in the Groen River Valley area by 150% to over 50,000 hectares. An intensive follow-up exploration and evaluation programme was developed for the Groen River Valley area and drilling in the area commenced at the end of 2004.

The main focus of our mining operations was at the Company's new Bonte Koe Mine. Construction of the gravel treatment plant, power line and pipe line, and refurbishment of buildings and accommodation were completed during the period, following which commissioning of the plant commenced, with the first diamonds being recovered in October.

REVIEW OF OPERATIONS
Exploration
Orapa and Mopipi Projects
The Mopipi project covers an area of approximately 3,600 square kilometers and is located close to the Orapa and Letlhakane diamond mines. In June 2004, the Company entered into a joint venture with De Beers over the Mopipi project, under the terms of which De Beers can earn a 61% interest in the project by taking it to completion of bankable feasibility.

During the period, the Company was awarded new prospecting licences for an area of approximately 1,300 square kilometers, also located close to the Orapa and Letlhakane diamond mines, known as the Orapa project. In December 2004, we announced that the Company had entered into a new joint venture with De Beers over the Orapa project, on the same commercial terms as those of the Mopipi joint venture.

An intensive exploration programme was initiated in the Mopipi and Orapa project areas. More than 51,000 line kilometres of high-resolution geophysical surveys, including airborne magnetics, ground gravity and ground magnetics, were conducted. Interpretation of the data from these surveys has identified 180 potential kimberlite drilling targets to date for further investigation. De Beers, which is project operator in the joint ventures with Firestone, has commenced drilling of selected targets.

In February 2005, the Company announced that three new kimberlites had been discovered in the Orapa project area, approximately 15 kilometres south of the Orapa Mine. Evaluation of the material recovered from drilling is currently being carried out at De Beers' laboratories in Johannesburg. Microprobe analysis of the kimberlitic indicator minerals and analysis of the size/distribution frequency of the microdiamond populations from each of the kimberlites is being undertaken so as to allow an initial evaluation of the economic potential of the kimberlites to be made.

In March 2005, the Company announced that it had entered into a joint venture with Daly City Ventures, a Botswana company that holds a prospecting licence in the Orapa region over an area of approximately 380 square kilometers. The Company is developing plans for the exploration of this area, which adjoins the Mopipi and Orapa project areas.

Groen River Valley, Namaqualand, South Africa
The Groen River Valley project in Namaqualand is Firestone's most promising exploration project in South Africa due to the high quality and large size of diamonds that have been mined in the area and the large area controlled by the Company. The pace of exploration activity increased significantly during the period.

Exploration drilling carried out last year had resulted in a very significant discovery and proved the presence of at least one very large gravel deposit that has been proven to be diamondiferous, known as the HL deposit. During the period, plans were developed for an intensive follow-up exploration and evaluation programme. This programme commenced in December 2004, and will include detailed drilling and bulk sampling on the HL deposit, follow-up drilling on targets identified by the last year's drilling programme, and drilling of new targets. As the HL deposit is known to be diamondiferous, the objective of the bulk sampling programme will be to estimate the grade of the deposit and diamond value in order to make an initial economic evaluation of the deposit.

In March 2005, we announced that the Company had been awarded a prospecting permit for a substantial new area in the Groen River Valley region, increasing the Company's land position by 150% to over 50,000 hectares. The ground covered by the new prospecting permit adjoins the Company's current project area, and is believed to contain significant extensions to the diamondiferous palaeo channels previously identified by the Company in the region. Firestone will explore the new area through its black-empowerment subsidiary, African Star Minerals.

Jwaneng, Botswana
During the period, the Company was awarded new prospecting licences for an area of approximately 3,700 square kilometers, located close to the Jwaneng diamond mine. The Jwaneng Mine is the biggest diamond mine in the world, producing approximately 12 million carats per annum with a value of over $1.5 billion. In December 2004, we announced that the Company had entered into a new joint venture agreement with De Beers over the Jwaneng project, on the same commercial terms as those of the Mopipi joint venture.

Work commenced on the Jwaneng project in early 2005. Data from exploration recently carried out by De Beers in the Jwaneng region is being integrated with data from past kimberlite indicator mineral sampling in order to identify target areas for follow-up work on the ground. High-resolution ground gravity and magnetic surveys will be conducted on selected target areas to identify potential kimberlite drilling targets. Initial drilling targets are expected to be identified and drilled in the next six months.

US Exploration Project
Exploration at the Company's kimberlite exploration project in the United States over the past two years indicates that at least one previously unknown kimberlite field is located in the project area, and that some of these kimberlites may be diamondiferous. In June 2004, the Company entered into a joint venture over the US project with American Diamonds Inc, under the terms of which American Diamonds can earn a 60% interest in the project through the expenditure of $1 million. Follow-up sampling was carried out during the period in high priority target areas identified by previous sampling, and the results of this work are expected to be available shortly.

Mining
Bonte Koe Mine, Namaqualand, South Africa
The Company's black empowerment joint venture company, African Star Minerals, continued with the development of new mining operations at the Bonte Koe Mine. During the period construction of the gravel treatment plant, power line and pipe line, and refurbishment of accommodation, workshop and office facilities were completed. Commissioning of the gravel treatment plant and final recovery sections commenced towards the end of the period. During this process a number of modifications were made to the plant, including conversion of the feed preparation section from dry screening to wet screening, in order to optimise gravel throughput and diamond recovery efficiency. All of the required modifications have now been made and commissioning of the plant has been completed.

A total of 207 carats was recovered during commissioning of the gravel treatment plant during the period. The average size of the diamonds was 0.51 carats per stone, and 26% of the parcel was comprised of diamonds weighing more than 1 carat. A sample parcel of 80 carats was sold during the period for an average price of $205 per carat, higher than the $200 per carat that was originally expected for Bonte Koe production.

Mining operations at Bonte Koe have been focused on excavating and processing material from a number of locations on the property with the objective of improving the geological interpretation of the deposits on the mine and allowing material from a number of mining areas to be blended. Grades from areas tested to date range from 1 to 9 carats/100 tonnes.

In 2004, the Company decided to increase the capacity of the gravel treatment plant at Bonte Koe and to construct a 10 km power line and a 35km water pipeline to the mine, with the objective of securing other projects on the Buffels River that could be exploited using this infrastructure. A number of opportunities in the Buffels River have been identified and are currently being evaluated by the Company.

Avontuur Mine, Namaqualand, South Africa
Production for the period was 2,651 carats, a decrease of 9% compared to the same period last year. This was due to the temporary allocation of some mining equipment from Avontuur to Bonte Koe, although the impact of this was reduced by more effective utilization of other equipment at Avontuur. Grades from mining areas ranged from 2 to 25 carats/100 tonnes, and diamonds produced continued to be approximately 85% gem quality, with an average size of 0.23 carats per stone. Demand for Avontuur production remained strong, with the average price for gem quality diamonds sold during the period increasing 4%, to $137 per carat, and overall value of mine production increasing 11%, to $125 per carat.

Exploration activity continued on targets that had been identified by data from a high-resolution airborne electromagnetic survey conducted over the mine area and which were drilled last year. Bulk sampling of the first of these targets is being planned for later this year. The Company has also identified a number of new mining and exploration opportunities in areas close to the mine that could be exploited using the infrastructure at Avontuur, and it is expected that progress will be made in this regard in the coming year.

Oena Mine, Namaqualand, South Africa
Meso gravel mining operations were carried out by the Company at the Oena terrace during the period. Discussions were initiated with a number of potential mining contractors with the objective of restarting mining operations at the Blokwerf and Sandberg terraces. These discussions are still under way. Production from the Company's mining operations at Oena increased 26% to 457 carats compared to the same period last year. Grades from mining areas continued in line with last year, and ranged from 0.06 to 1 carats/100 tonnes, with diamonds produced averaging 1.17 carats per stone.

With continued shortages of supply at the high end of the diamond market, demand for Oena production remained strong. The average price for diamonds sold increased 10% to $1,158 per carat, primarily due to the sale of a number of large, high value stones. A number of special diamonds were recovered during the period, including stones of 62.24 and 32.57 carats that sold for approximately $204,000 and $120,000, respectively.

THE DIAMOND MARKET
Prices in the rough diamond market continued to increase during the year, 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 has continued into 2005, with De Beers raising rough diamond prices by 3% in January. With De Beers' stocks now at minimum working levels, and the rough diamond supply deficit expected to continue for the next 3-5 years, the outlook for diamond prices continues to be very positive.

FINANCIAL
Turnover from Firestone's mining operations increased 7% to £506,310 compared to the same period last year, with profits rising 11% to £ 162,501, despite the continued strength in the rand.

In July 2004, the Company completed a share placing with institutional and other investors to raise approximately £1.3 million net of expenses. In March 2005, the Company completed a further share placing with institutional and other investors to raise approximately £3.6 million net of expenses. The primary purpose of these financings was to increase the pace of exploration at the Company's key exploration projects and to support further expansion of the Company's project portfolio.

OUTLOOK
Through its joint ventures with De Beers and ground that is held exclusively by the Company, Firestone is the largest holder of diamond exploration rights in the Orapa region. Firestone is also the only significant holder of diamond exploration rights, other than De Beers, in the Jwaneng region. In addition, the Company has pending applications for a further 15,000 square kilometres in the Orapa and Jwaneng areas, which, if awarded, would increase the area held by the Company in Botswana by 170% to 24,000 square kilometres.

Much of the area around the Orapa and Jwaneng mines is still considered to be highly prospective for the discovery of new diamondiferous kimberlites, as modern geophysical and other exploration techniques have not been fully applied in these areas. This is supported by the recent discovery of three new kimberlites in the Orapa project area. We are confident that further kimberlite discoveries will be made in our Botswana project areas as drilling continues in the coming months. Given the fact that more than 10% of the 75 known kimberlites in the Orapa region are economic, the Company continues to believe that the prospects for new economic discoveries are very good.

The Company has now established a dominant land position in the Groen River Valley. We believe that the current phase of work will make significant progress towards confirming the economic potential of the area, and that the Groen River Valley has the potential to become an important new alluvial diamond producing region.

We will continue to focus the Company's resources on the identification of new exploration and mining projects, and expect to be able to announce a number of new projects as a result of this work in the coming year. We will also continue to work with joint venture partners on a selective basis in order to allow us to accelerate the development and expansion of our project portfolio.

The Company has a strong management team, an exciting portfolio of exploration and mining projects and is well funded. With the strength in the rough diamond market expected to continue in the medium term, we remain confident about the Company's long term prospects.

James F. Kenny
Chairman
31 March 2005

Firestone Diamonds plc
Unaudited Consolidated Profit and Loss Account
For the six months to 31 December, 2004

	2004	2003
	£	£
Turnover	506,310	475,134
Change in stocks of finished goods and in work in progress	(10,993)	(7,191)
Production	495,317	467,944
Other operating income	-	3,105
Raw materials and consumables	(59,800)	(57,853)
Staff costs	(115,709)	(76,597)
Depreciation and amortisation	(62,192)	(57,639)
Other operating charges	(104,417)	(149,479)
Operating profit	153,199	129,481
Interest receivable and similar income	9,428	19,306
Interest payable and similar charges	(126)	(2,446)
Profit on ordinary activities before taxation	162,501	146,341
Deferred tax on profit on ordinary activities	(22,489)	(11,938)
Profit on ordinary activities after taxation	140,012	134,404
Minority interests	(6,423)	(4,357)
Retained profit for the period	133,588	130,047
Earnings per share
Basic profit per share	0.3 p	0.3 p
Diluted profit per share	0.3 p	0.3 p

Turnover is wholly derived from continuing activities.

Firestone Diamonds plc
Unaudited Consolidated Balance Sheet
31 December 2004

	2004
	£	£
Fixed Assets
Intangible assets		11,739,143
Tangible assets		4,658,739
Investments		660,960
		17,058,842
Current Assets
Stocks	109,785
Debtors	312,504
Cash at bank and in hand	497,933
	920,221
Creditors
Amounts falling due within one year	(797,280)
Net Current Assets		122,941
Total Assets Less Current Liabilities		17,181,783
Creditors
Amounts falling due after one year		(1,638,554)
Provisions for Liabilities and Charges
Other provisions	(1,061,934)
Deferred taxation	(469,013)
		(1,530,947)
Net Assets		14,012,281
Capital and Reserves
Called up share capital		8,737,372
Share premium account		5,320,353
Merger reserve		(1,076,399)
Profit and loss account		1,033,414
Equity Shareholders' Funds		14,014,740
Minority equity interests		(2,459)
		14,012,281

Note:
As no interim balance sheet was produced in 2003, comparative numbers are not available

Firestone Diamonds plc
Unaudited Consolidated Cash Flow Statement
For the six months to 31 December 2004

	2004
	£	£
Net cash (outflow)/ inflow from operating activities		1,016,879
Returns on investments and servicing of finance
Interest received	9,428
Interest element of finance lease payments	(126)
Net cash inflow from returns on investments and servicing of finance		9,301
Capital expenditure and financial investment
Payments to acquire intangible fixed assets	(1,094,310)
Payments to acquire tangible fixed assets	(1,081,354)
Receipts from sales of tangible fixed assets	-
Payments to acquire investments	2,051
Net cash outflow from capital expenditure and financial investment		(2,173,613)
Net cash outflow before use of liquid resources and financing		(1,147,433)
Financing
New long term loans	-
Issue of ordinary share capital	1,384,849
Finance lease payments	(80,806)
		1,384,849
Increase/(decrease) in cash		156,610

Note:
As no interim cash flow statement was produced in 2003, comparative numbers are not available

Notes:

1. The financial statements have been prepared in accordance with applicable UK accounting standards and under the historical cost convention. The principal accounting policies of the group are set out in the group’s 2004 annual report and financial statements.
2. The financial information set out above does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. Statutory accounts for the twelve months to 30 June, 2004, on which the report of the auditors was unqualified and did not contain any statement under Section 237 of the Companies Act 1985, have been filed with the Registrar of Companies.
3. Basic earnings per share is based on the weighted average number of shares in issue for the period of 42,860,459. Diluted earnings per share is based on the weighted average number of shares in issue for the period plus potential dilutive ordinary shares arising from share options for the period of 47,565,943.
4. The directors are not declaring a dividend for the period.
5. Copies of this report are being sent to all shareholders. Additional copies will be available to the public from the offices of Bell Lawrie White, 48 St Vincent Street, Glasgow, G2 5TS and will be posted on the Company's website at www.firestonediamonds.com.