lse:FDI Main Discussion FDI share price is down 16% today based on just two sells amounting to less than 100,000 shares @ 0.6p. Cash still healthy, well above the market value of the whole company & debt repayments deferred whilst diamond prices are very weak. At current prices there will be no significant new diamond mine investment, and reduced spend on searching too. Closure of the Argyle mine in 2020 due to diamond depletion should help all the miners or, very soon, supply will start to dry up as miners are forced to cut costs & production. That would impact the whole diamond chain of work & deliverables for rings, etc
lse:FDI Main Discussion FDI are managing well in difficult circumstances… diamond supply globally is going to reduce until rough prices improve. RNS Number : 5613X Firestone Diamonds PLC 20 December 2019 20 December 2019 Firestone Diamonds plc (“Firestone”, the “Group” or the “Company”) Final results for the year ended 30 June 2019 Firestone Diamonds (AIM: FDI), a diamond producer with operations focused in Lesotho, announces its final audited results for the year ended 30 June 2019. Summary A disappointing year for the Company despite a solid operational performance, which saw revenues decline due to a weak diamond market and a reduction in carats sold. Liqhobong Diamond Mine (“Liqhobong”, the “Project” or the “Mine”) · Lost Time Injury Frequency Rate of 0.23 compares favourably to the Group’s peers; · Strong operational performance: o 21% increase in total tonnes mined to 8.1 million tonnes (“mt”) (2018: 6.7 mt); o Marginally lower ore tonnes treated of 3.7 mt (2018: 3.8 mt); o 53% increase in waste tonnes mined to 4.4 mt (2018: 2.9 mt); o Higher grade of 22.6 carats per hundred tonnes (“cpht”) (2018: 22.0 cpht); o Lower operating cost per tonne treated of US$11.48 (2018: US$11.62); o 829 458 carats recovered (2018: 835 832 carats); and o 774 830 carats sold (2018: 831 637 carats). · Largest diamond recovered to date in October 2018 was a 311 carat near-gem diamond; and · Most valuable diamond sold to date in March 2019 was a white makeable diamond which realised US$1.6 million. Financial · Lower revenue of US$57.2 million (2018: US$62.2 million); · Lower average diamond value per carat realised of US$73 (2018: US$75); · Loss of US$56.9 million (2018: US$14.2 million), which includes an impairment charge of US$41.6 million and a deferred tax charge of US$6.3 million; · Higher adjusted EBITDA1 of US$11.7 million (2018: US$7.7 million); · Cash balance of US$26.3 million (2018: US$18.4 million); o US$17.5 million unrestricted (2018:US$9.7 million unrestricted); and · Loss per share of 8.2 US cents (2018: 2.8 US cents). 1 The measure of operational cash performance calculated as earnings before interest, tax, depreciation, amortisation and non-cash share-based payments expense. Post Period · Power supply issue: o Power disruption from 1 October due to 'Muela Hydro-Power Station shutdown; o Operations resumed from 26 October using diesel generated power; o The disruption caused by the electricity supply issue has exacerbated a difficult outlook for the Company, resulting in an inability to meet the scheduled debt repayments in the near term; · December ABSA capital repayment of US$2.0 million deferred; · ABSA signed non-binding term sheet received for deferral of capital repayments for a 15-month period to 31 March 2021; and · Non-binding term sheets received from the bondholders to provide a US$6.0 million working capital facility until 31 March 2021. Paul Bosma, Chief Executive Officer, commented: "The year’s performance was solid from an operational perspective, as we delivered results within our guidance range for all items within our control. From a diamond pricing perspective, it was a tough year, particularly for the smaller, lower value goods and these conditions are expected to persist for the foreseeable future until the end of 2020 when global rough supply is expected to reduce. Due to the expectations of a continued subdued pricing environment, combined with the recent power disruption to operations, the Company has continued to engage with its debtholders and has made good progress to ensure it can sustain operations through the current downturn. More information in this regard is contained in this announcement as well as the Annual Report."
lse:FDI Main Discussion agreed! fingers crossed. We need a couple of things, improved prices and more diamonds! Stating the bleeding obvious! I was comfortable once the mine was built and we were producing, I even bought some at 50p. Didn’t think we wouldn’t be able to service the debt properly
lse:FDI Main Discussion This rise reverses the heavy drop when FDI lost their power supply two months ago… I agree the risks are still high & even I will be tempted to top slice some cash if we get back to 3.5p a share unless the sand is a lot firmer with good sales, debt being cleared & the 3rd cut back in the plan.
lse:FDI Main Discussion My fear is it is a classic jump on the bandwagon, get a few quid, and jump off leaving others holding the baby. I’ve been holding this baby for years. Managed to get my average down to 3.5p though. If they can pump it up to anything near those levels I will be tempted to cut and run. My expectation is a drop back down again tomorrow. This rise is built on sand . I really hope not!
lse:FDI Main Discussion 200% up as I write, probably helped by the insurance claim being not far off the ridiculously low market price of the whole company for the last couple of months. Just for once, I’m really glad I was able top up with 1.1m shares at an average below 1p over the last 6 months or so, to bring my overall average price below 7p. Doubt we will stay 200% up by end of the day, but much more hopeful of steady improvements rather than the steady down drift we have seen more months. Will we get back to 40p a share, still possible, but needs those larger high quality diamond finds & improved rough diamond prices in next few years. The Major Shareholder averages are still above 20p a share though, even after getting lots more shares in lieu of bond interest payments over last year or so in particular. There are therefore still significant incentives to get the SP up well beyond 20p…
lse:FDI Main Discussion 164% up is a pretty good recovery in my eyes, if it holds as it should.
lse:FDI Main Discussion RNS Number : 6410V Firestone Diamonds PLC 04 December 2019 FIRESTONE DIAMONDS Plc (“Firestone”, the “Group” or the “Company”) Stable grid power restored at Liqhobong Mine Firestone Diamonds plc (AIM: FDI), is pleased to announce that stable grid power has been restored at its Liqhobong Diamond Mine (“Liqhobong”). Further to the announcements on 15 and 23 October 2019 and on 1 November, the Lesotho Electricity Company’s Muela Hydropower Station was brought back into operation on 1 December following a two month shut down period for maintenance work. As a consequence, stable grid power was restored to the Liqhobong Mine, enabling the processing plant to operate once again at full capacity. The power interruption occurred from 1 October and the processing plant resumed production on 26 October when diesel generators were commissioned, which provided sufficient power for the plant to operate at between 80% and 90% capacity. Additional costs associated with operating the rented diesel generators during this period were approximately US$1.1 million and an insurance claim in respect of the loss of profit and the additional operating costs is in the process of being compiled. At the end of November, the Group had a cash balance of US$17.0 million, of which US$9.3 was unrestricted. The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (“MAR”).
lse:FDI Main Discussion Yes there will be some ore backed up, but not a lot extra given the temporary power supplies until early in December. More resources is going into removing waste in the higher areas around the main pipe. There is no firm date for Argyle that I know of, just a forecast for sometime in 2020. If diamond prices stay lower, this could be sooner. If they improve, they might manage a few extra profitable months until any residual ore is too hard to get out or diluted with waste around it. It would be best for FDI to see rough diamond prices improve right now, strengthening more once Argyle closes. We should get an RNS once the power is fully back on the hydro-electric supply, once settled in. The FDI share price dropped 40% on news of the power outage, so it would to good to see a significant recovery. Haven’t seen any mention of an AGM in December, perhaps because of the more recent GM. As ever, we could really do with recoverying a few large, high quality gem stones, unbroken and valuable. The fact that the kimberlite is now hardening implies the pressure was greater when formed at lower depths, with the top closed off, which ought to improve the diamond quality in theory. Still got a lot, perhaps too much, invested here - but so do the Major Share Holders at a much higher average price per share than the current price. Finally, we still need that decision on the 3rd cut, which should come in 2020, to be able to add back the NPV/value of the additional block of diamonds, which should then be mined, into the company Balance Sheet.
lse:FDI Main Discussion So I presume the powercut does not effect the digging and there will be a lot of ore backed up waiting to be crushed ? Best Clem P.S be nice to know exact date Argyle is closing
lse:FDI Main Discussion Good to see production restarted today, but a 40% drop in SP post the grid power supply problem was only partially recovered today. Still looks like early December for full hydroelectricity grid supply return.
lse:FDI Main Discussion FDI Graphs October 2019.jpg960x720 68.1 KB The volumes are still close to targets, but bigger & higher quality stones still need to be extracted (as expected by FDI Management) from the better areas below the weathered top level in order to increase the average value per carat above the current level. Diamond prices are forecast to strengthen during 2020 as some of the largest mines, e.g. Argyle, close down due to depletion of kimberlite ore. De Beers are also reducing production levels to stimulate prices. Just a 10% recovery will make a big difference to all the struggling diamond miners suffering at present. Hopefully, production will also restart soon now, using diesel generators until the hydro-electricity plant comes back on stream early in December. The FDI share price, at about 25% of cash, never mind asset values, is very low right now - and will recover rapidly if the NPV of FDI improves with rough diamond prices - especially if the 3rd cut is approved. High Risk, but I’m not selling my shares…
lse:FDI Main Discussion Should hear more tomorrow but the provision of rented generators for a couple of months will help production continuation. Phasing of sales does impact cash flow but they still have reasonable headroom. Above all, they need raw diamond prices to improve - which is true for all the diamond miners right now. FDI stands to gain the most when the Argyle mine closes in 2020 due to the large quantity of smaller diamonds, also because the price of coloured gem stones is holding up better than clear ones. The next year will be critical & I hope FDI will be able to commence the 3rd cut soon to substantially increase the total revenue then expected.
lse:FDI Main Discussion I have noticed the cash in hand went down significantly from since the summer over 4 million and that was before the power problem are they going to able to raise cash going forward as I would say they have got 12 months at best would you agree. Also another head wind is the synthetic diamonds coming into the market its hard to see a positive here at the moment very worrying tbh Best Clem
lse:FDI Main Discussion You are right to mention the low volume. It has fallen precipitously on a few hundred quid!