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!
lse:FDI Main Discussion Last top up for me today… average now finally below 10p; major shareholders’ averages must still be nearer 20p having not sold any at all - in for the long term. If FDI survive, the plan must surely be: keep production to schedule, year on year try to achieve better diamond sale returns, especially after the Argyle mine closes next year decision to do the 3rd cut - to double the potential volume of kimberlite which will be mined & substantially increase the NPV of the whole enterprise & company pay off the loans as rapidly as possible, to maximise profits thereafter & the share price. The current company market price is ridiculously low at just £3.1m given the cash in hand at £20m, the asset value of the mine & the diamond resource - but has been driven exceptionally low because of the debt still to be serviced & present electricity supply problems. It should be remembered that the share price is also moving substantially on very low volumes in reality; so could easily move the other way on the same basis - especially if FDI directors start to accumulate their holdings if the business turns around. I expect matters to improve once the electricity supply is re-stabilised and the Resolutions are approved on 17th October so the two main bond holders can continue to get shares (to average down their cost per share without being forced to make any offer for FDI as their shares increase above 34% each) in lieu of cash interest payments. Still very high risk… a lot more large, coloured, high quality diamond finds would make a great difference.
lse:FDI Main Discussion Average is 3p now! My highest purchase was as much as 50p. Getting back to 50p would be most welcome! (I’d be over the moon to see 3p again to be honest) I feel like it is possible but I’m not ruling out 0p either
lse:FDI Main Discussion I averaged down a bit more today, but my average is still above 10p… nevertheless, I’ve now got 100% more shares than a year ago whilst the major shareholders have added 10% going from 31% to 34% each - and must now have a higher average than mine. Keeping a close watch now, especially give the power problems at present - although this won’t stop the tipper trucks and waste clearance/ore stockpiling.
lse:FDI Main Discussion my timing is terrible, i averaged down last week at double this price! The risk seems to be the company being taken into private hands before diamond prices improve (if they do)
lse:FDI Main Discussion Have to wait and see… power from South Africa is flaky but the supply companies will have provided some service guarantees so will have to work on the problems urgently. Voltage fluctuations normally cause protection devices to trip out. Things will pick up with even a small rise in rough diamond prices once the Argyle mine closes next year and, I hope, once Brexit is behind us… I’m certainly not selling or trading except for minor top ups to average down. I expect another RNS later this week, once the service is stabilised… I hope. Moneywise, the Debt/Shareholders are still supporting the FDI management and working to get through the recession on diamonds as an asset.
lse:FDI Main Discussion your thoughts on todays news? Best Clem
lse:FDI Main Discussion For weeks now, every day until today, around 500,000 FDI shares have been put on the market for sale. Although this tends to have driven the SP down for a while, it is an alternate means to pay cash instead of shares to the two Major Bond Holders for the interest due. I topped up again a few times, awaiting this month’s diamond sales given there are some good gems & a backlog of unsold diamonds due to auction dates. If revenues improve after the Argyle mine closes next year, post Brexit transition too, and FDI can reinstate the 3rd waste cut to mine deeper, the company value should recover substantially. There is still risk on diamond recovery & quality but the better zones increase in volume as FDI go down the kimberlite, and they are still near the top at present.
lse:FDI Main Discussion Several pairs of very large trades today… look like bed & ISA or bed & SIPP to me ahead of sales of those two pink & large yellow diamonds in September & Argyle Mine closure in the next year which will reduce small diamond volumes in the market, and hopefully improve prices a bit.
lse:FDI Main Discussion 1 July 2019 GOOD NEWS Firestone Diamonds plc (“Firestone” or the “Company”) Bank and Bondholder Support for Covenant Waiver Firestone is pleased to announce that, with the support of its Bondholders, Pacific Road Resources Fund II L.P., Pacific Road Resources Fund II and Resource Capital Fund VI L.P. (“Bondholders”), its 75% owned subsidiary LiqhobongMining Development Company (Pty) Ltd (“Liqhobong”), has received a waiver from ABSA Bank Limited (“ABSA”) for certain of its covenants measured as at 30 June 2019 in terms of the US$82.4 million Senior Secured Term Facility Agreement. The waiver is supported by the Export Credit Insurance Corporation of South Africa (“ECIC”), which has provided commercial and political risk insurance to ABSA.The next measurement date will be 30 June 2020. Background Mining operations at the Liqhobong Mine have performed well, as detailed in the quarterly operational updates reported for the first nine months of the current financial year. Tonnes mined and treated were in line with theCompany’s plans and operating costs remained below budget. However, despite the recovery of several higher value diamonds at the Liqhobong Mine during the 2019 financial year, and an average value realised for the third quarter of US$80 per carat, the average value realised for thethree quarters ended 31 March 2019 remained below expectation at US$74 per carat. The lower average value was impacted mainly by lower prices realised for the smaller, lower value goods, which has also affected many other diamond mining companies and the wider diamond industry. Certain of the ABSA covenants are forward looking and require forecast assumptions to be made. In light of the current pricing climate, lower average dollar-per-carat values have been employed by Firestone in these covenantcalculations, which has adversely affected the covenant measurement and given rise to the need for waivers in respect of two of the six covenants. Despite these factors, the mine continued to generate positive cash flows after finance costs and the Group continues to be in a strong liquidity position with a cash balance of US$26.2 million as at 30 June 2019. The cashbalance is stated after the first capital repayment to ABSA of US$1.9 million, following an 18 month capital grace period which came to an end on 30 June 2019. Waiver condition As a condition to ABSA’s covenant waiver, the Company has obtained an undertaking from the Bondholders to waive the requirement for the Company to pay quarterly interest in cash or in shares on the Series A Eurobonds for the12 month period from 1 July 2019 to 30 June 2020, subject to an agreement on alternative arrangements being reached with the Bondholders. Previously the Company has issued ordinary shares to pay quarterly interest amounts due. However, due to consequences of the UK takeover Code, in the absence of shareholder approval to permit the Bondholders to receive ordinaryshares thereby increasing their shareholding to above 30% without triggering a mandatory offer to minorities, the Company would be unable to issue further ordinary shares at the next interest due date, being 30 September 2019. The Company has undertaken to work collaboratively with the Bondholders and other stakeholders including minority shareholders to agree a means through which the Company can continue to fulfil its obligations to service intereston the Eurobonds and satisfy the requirements of all its lenders. Paul Bosma, Chief Executive Officer, commented: “We are grateful for the strong support we have received from ABSA, the ECIC and our Bondholders in what is a tough period for the smaller stone segment of the diamond market. Operations continue to perform well, and we aimto ensure that we remain in a strong position to benefit from an improvement in the pricing environment in the future.”
lse:FDI Main Discussion Good News - RECOVERY OF 72 CARAT YELLOW DIAMOND & TWO OTHER FINDS Firestone Diamonds plc is pleased to announce the recovery of a 72 carat yellow, makeable diamond from its Liqhobong Mine in Lesotho, during the past weekend. The 72 carat diamond was recovered together with a 22 carat makeable white stone,followed by an 11 carat fancy light-pink stone. These diamonds will go on sale at the next tender which is scheduled to take place during May 2019. This is the second c.70 carat stone recovered from the operation this calendar year, following the 70 carat white, makeable which was sold in the March auction at a record overall price for a Liqhobong diamond. Further details of the sale will be included in the Q4 production update. Paul Bosma, Chief Executive Officer, commented: “It was a good weekend for us, recovering the 72 carat diamond as well as the two smaller, high quality stones from within the northern, lower grade part ofthe pit. These recoveries will certainly assist in supporting the average value of the next sale in May.”
lse:FDI Main Discussion Production is within targets, diamond prices are strengthening a bit & if they add the 3rd cut back, the Balance Sheet will see $100m added back into the value of company. Clearly a few more large gem stone finds would help a lot too. Topped up today with 70,000 more @ 2.08p to reduce my average down to nearer 18p. High risk but still a buying opportunity whilst I feel some are bailing out and, this time of year, using the losses to offset gains elsewhere from a capital gains tax perspective.
lse:FDI Main Discussion HI When do the capital repayments start and how much are they a month. Best Clem