Kalan, I fully accept that investing in FDI is not without risk, and positive returns may not be quick (certainly compared to the prospects of FRR, ZIOC, VOG & JLP).
I equally did not expect FDI to make the placement price so low (at 10p); which has re-set the current Share Price too. The price of rough diamonds is weak at present, especially the smaller stones. A lot of money that might buy diamonds is tied up in bonds and Bitcoin "gambles". Nevertheless, 80% of the areas mined from the Main Pipe so far have been poorer areas for the larger/best gem stones, and the most prospective K4 & K5 zones have only just been reached - and are smaller in area near the top of the Liquobong kimberlite.
The placement and Open Offer price per share, I'm sure, is partially designed to allow major shareholders and PIs to average down their cost per share whilst increasing overall shares of the company. They do need the extra cash to help meet their debt repayments without breaking into their contingency funds.
The revised 9 year programme will concentrate on mining the best zones first (so I'm guessing the hole could be oval above the K4 & K5 zones for a few years before widening); there has been no reduction in the forecast total volume of carats that might be extracted from the Main Pipe - but revenues to date have forced the change in plans and thus the write-down of the asset value. This value, and further development could rapidly be written back in if diamond prices improve with expected shortages against demand over the next few years, and/or if larger/fancy diamonds are found more often (the top area is often not the best for the biggest stones, due to wear and tear).
The backing from the Major Shareholders and the additional purchases in the Placement by the some of the other directors, especially by the CEO (Stuart Brown) is still encouraging at this stage. But, this isn't currently a company to "bet the house on".
It will be another year, I feel, before we get a better view of how the FDI finances are improving, or not. Many diamond companies are struggling at present... but this may cause closure of some of the deeper, older diamond mines earlier.
As for SAR, I'm sticking with this for the longer term - although not a lot of cash - as I'm keen to see how the technology gets used and the impact on health improvements over the next few years. As for JLP, the SP disappoints...
Just back off holiday HPC (thanks again for |SA|R tip - made 24% there) and a bit surprised the placing was so low - going to get my calculator out - it looks like they could spend 9 years mining and not pay back all the debt which would make the company worthless - need to look in detail as the sp would be even lower if that's the case - so I must be missing something at first glance.
FDI have not revised downward the total numbers and quality of the diamonds, but in a 9 year programme concentrating on mining the best (K4 and K5) zones should generate more, larger diamonds with far less removal of waste, over-burden and surrounding ground. Financially this will be far more attractive whilst debts have to be paid and diamond prices are historically low.
Personally, I feel diamond prices will recover strongly as forecast with mine closures (which may be hastened due to the lower prices) and expected growth in demand. Also, should some of the Bitcoin and Bond "bubbles" burst, gold and diamonds should be assets that do well thereafter; also if the banks have a hard time with debt defaults.
New entrants buying FDI shares below 15p have the greatest opportunity but those who take up the 10p offer may do well too (as per FDI directors and major shareholders - who are also incentivised to avoid the company getting into default positions)... but still lots of risk, so we all have to make our own choices.
Can't comment on Audley Capital - not seen much of a mention for a while, and Julian Treger is off leading new business opportunities I read somewhere.
Not sure how much extra cash I want to add here myself, as I'm 80% down now having almost broken even just a year ago. The major shareholders can't be very happy either... but it has taken a long time to reach the better zones, undiluted, and the best zones improve with depth - so should improve longer term - although maybe more of my money should be in ZIOC or FRR or VOG, etc.
Can you clarify why they are changing the life span from 14 yrs to 9 to save money? and it also says 13.9 m carats to 7.7 million in the revised plan so they obviously think there is not as much there as was thought.
Also it mentions Pacific Road and RcF taking more shares what happened to Audley.
Thanks in advance for any clarification I may need to average down
I fully agree (typical of AIM companies)...nevertheless this has been taken as an opportunity for most of the major investors to average down, from their original 30p (post consolidation) and higher investments to build the mine, to nearer 22p (184,842 represents 57% extra shares).
The chairman (Lucio Genovese) is buying 26% more shares, the CEO (Stuart Brown) 72% more and another Director (Keith Johnson) 39% more - reasonably substantial numbers for individuals. This gives me some extra confidence for the longer term, when diamond prices should improve and diamond recoveries increase in the better areas only just being reached.
Importantly, and the reason for the STRONG BUY now, FDI shares can now be bought by non-Qualifying investors (or "out at present") in the open market for under 15p a share, which is a 34% or better discount to the amounts that will have been paid on average by the major shareholders and directors post this arrangement... (N.B. 13 to 15p is potentially a good entry point compared to your 19p target Kalan) - with the terms of the re-financing deal now known.
We have been shafted just like all AIM investors through the ages.This is appalling The only thing I can say is F##k those incompetent tw#ts that we put our faith in.
From almost 60p to bug#er all what a wonderful achievement .
Thank the lord that I kept my investment in Lucara and didn't switch all of the profit into FDI
Learn one important lesson from this never believe what directors of AIM companies tell you and never never invest more than you can afford to loose in one stock Gutted.
Ouch placing @ 10p (49% discount to closing sp)... a real kick in the nuts for lth.
I've been sitting on the sidelines since selling in April @ 48p+ but this latest fiasco strikes FDI from the watch list too at least for now. I had thought FDI was a well run outfit but this panic placing just smacks of a lack of contingency planning.
You could be right... it's all gone very quiet since they stated they needed to re-plan the initial production phase (to get at a higher proportion of the most prospective areas for larger diamond finds whilst prices are weak - which would involved some re-phasing of loan payments, and, I fear, another placement/Open Offer.
Alternatively, now they have also just reached some of the better areas, and recently announced another >100 carat diamond find, current production and sales could have significantly improved.
SAR dropped on placing HPC - bought in - all indicators are positive - 3.7% dilution marked by a 20% fall - bang on the bottom of the rising trend - so I have got another one of yours - thanks.
If topping up I would go for SAR now, JLP late Friday / early next week (3.8p to 3.9p buy) and then VRS as soon as the RSI turns (expecting 18p to 20p bottom but gap at 16.8p possible).
FDI in waiting room until finance sorted (would like 17p).
A fair old list there HPC.
I am in JLP and SAVP mainly (suspended) with bits of VRS and Petra.
Waiting to buy more VRS, and JLP when charts suggest (JLP getting close)
Also waiting to buy SAR, FRR, VOG, FDI and WRES if they get to my target entry points
I am doing a lot of waiting at the moment but worth it to get in lower. Petra is a bit of a punt and I may pull out if the rise is weak.
I'm still watching FDI closely too... not sure yet what the financial implications of any change to the mining plan might be, nor whether there will be another placement... I hope not but there do seem to be quite a few placements going through at the moment for quite a few companies in my span of interest. FDI could also find some more, large diamonds now they have reached the better areas at the surface of the Main Pipe, which might also change things. Not worried longer term, but cash flow does have to be managed very carefully in the early years of mining before debt is paid back.
My investment in ZIOC is suddenly doing very well, but I'm unsure when to top slice perhaps 25% of my holding to top up on JLP, FDI and, perhaps, BMR (near 2p placement) and SAR (near 0.7p placement). The NPV of ZIOC's Congo project (their 50%) gives a share price over £3 - so I probably shouldn't sell any below 30p a share even if it has taken 4 years to get back to 22p. I usually sell too early so will see how far the "bull" runs for the moment given that Glencore still have a Second Call option to buy 'Zanaga Iron Ore' out.
Still unsure about VRS as many of the potential usages of their nano sheet materials are untested/unproven at present. Could also buy into 88E if the share price drops to 1p again.
And then there are my shares in FRR and VOG... what might happen to their market values when the flow test results come through - and some of the longer term . Fortunately I jumped out of EME ahead of the latest gas test results with a reasonable profit - although some of the higher 6 remaining gas sand levels could yet come good - I didn't like the "gas shows" without any high pressure readings.
Had a flutter with my trading pot there this morning - bargain hunters are out and the chart analysis looks good - not sure how strong the rise will be - so a bit of a gamble.
FDI still in the prolonged drop - watching and waiting for signs of life.
I think it's often easier to see a shares path when we don't own it HPC - my view of FDI (when talking to glider pilot) was that it would bounce from 19p to 23p where he could sell and then buy back in at around 17p or the placing price which may be on it's way. So far so good - except I suggested he could put his money into JLP in the meantime after selling at 23p and re-invest more money at 17p as JLP was about to take off. JLP has just delivered an excellent RNS and gone down to sideways. JLP is a share I own - not so good at predicting that. Undeterred I still think JLP will soar on the next RNS which is due soon.
Been out of VOG for a while now - the drill campaign didn't impress and the cost is very high - they got the gas though as expected - ijust think we will have some bad financial news before we get good news or possibly at the same time - giving with one hand and taking away with the other.
Will check out OBT as it could be my next trading share or small gamble.
Wish FDI would get on with it and grasp the financial nettle, the uncertainty isn't helping - a short sharp shock is better than the death slide the sp has been on for ages now.
I doubt there will many FDI shares available to pick up below 19p, but there could be some ahead of any significant diamond finds or the possible revised mining plan whose financial impact is unknown.
On the plus side, BOD did just re-find 8 kimberlites, which helps me a bit.
OBT is another medium term opportunity, although not like FRR which could leap up over the next few months (or collapse). Missed out on EME I feel now as I took my profit far too early after being burnt by failed well drills in the past - but EME's prospects now look good but with a share price too high to risk buying in again. Still FRR have 100% holdings and EME only a 30% interest in their current gas project.
I do wish VOG would successfully complete their current well soon and sign a good deal for the gas delivery; or GKP to become prosperous again; or NANO could get their long awaited orders; or ASA could resolve their problems and return from administration with the new foundry in use - long term investments which are taking far too long to be profitable for me...
Quarterly report shows steady progress,close to low end of targets whilst in early months of production in less value areas at the top of the main pipe so far.
Any changes now will be cautious and I can't now see the need for any large placement which may dilute holdings.
HOLD pending more news I feel.
The more valuable areas of the pipe improve with depth and FDI will do noticeably better in the future, especially once debts are paid off and either the US dollar strengthens of diamond prices improve due to the weaker dollar. We are in transition here...
Spot on Glider pilot Howevr we did expect that they would do this, as you know its part of the plan B funding program .We have to keep in sight of the fact that 450,000 volume at 20p is not a significant amount of money.
good read, If it proves popular with investors it will increase demand for diamonds .I was surprised to see synthetic diamonds have" no resale value". At some point demand for real diamonds will outstrip supply, I will be holding my shares in firestone for the foreseeable future.
Your guess on up/down is as good as mine Kalan... it depends on a) the volume and size/quality of diamonds being found now they have reached the K5/K6 zones (which are relatively small in area at the top of the kimberlite), b) how the price of rough diamonds hold up; c) on the financial re-structuring which I am pretty sure will happen sometime in October/November to enable the better optimised mining plan, and d) any need for a placement/open offer and whether this is at a significant discount to the current share price or not.
it is interesting that the two Eurobond providers are the two major shareholders, so they may not want to see the share move down much further, if this will weaken the company overall.
I will watch carefully and may yet top up one last time if the share price drops below 20p again.
The last time shares were issued in lieu of interest it was a shade under 1.1m shares. With the fall in share price since and the news of further dilution to come I would expect the number this time to be considerably increased.
I'd be interested to know where your figure of around 1.04 comes from?
Macquarie Capital (Europe) Limited is the new Company's Nominated Adviser ("Nomad") and sole Corporate Broker.
I see this as a cost saving measure, so they don't have to pay Mirabaud Securities LLP (Joint Broker) as well as Macquarie; although they may also want to concentrate any broking through just the one agent for ease, maximum control and consistency.
This week, we can expect FDI to issue, in aggregate, c. 520,000 shares each to both "Pacific Road") and Resource Capital Fund VI L.P. in respect of the interest due on the Eurobonds, for the quarter ended 30 September 2017. I expect these to be held as these two parties grow their overall share holdings in FDI.
One late trade last Friday was worth £105,435 = 450,000 shares; not reported until 16:37... but was this a buy or a sell; and what was the justification for a relatively large trade?
Another find of large diamonds or a poor financial re-structuring deal for shareholders could still make a bid difference to the share price and the market capital value of FDI, which has shrunk by nearly 60% over the last 9 months, one way or another.
The FDI directors and the major shareholders hold c.70% of the shares, so have a great incentive to decide what they honestly believe will be best for all the shareholders; assuming that any equity placement (at about 20p a share, assuming a 10% discount) for extra cash will also be matched with an Open Offer. I do hope, however, that significant dilution can be avoided.
"This average realised value per carat represents the continued lower than expected occurrence of larger, better quality diamonds and a subdued market, as was experienced in the previous quarter. The board of Firestone (the "Board") believes that this is due to two factors;
· Firstly, the overall market environment, where a combination of oversupply and the previously reported Indian de-monetisation programme is still having an impact on the lower quality Run of Mine goods, as well as the fact that the summer months are traditionally the quietest time in the rough selling season; and,
· Secondly, the lower-than-expected occurrence of larger, better quality diamonds at Liqhobong. The Board believes that the lower frequency of higher value diamonds to date is potentially a function of the mining that has taken place since commissioning in the lower grade areas within the open pit, and which is now nearing completion. Over time, mining will progress into all areas of the open pit and the Board expects the average value per carat to improve. "
Previous presentations/reports have identified the K5 and K6 areas (K5 of which increases with depth) as holding the highest proportion of carats per hundred tonnes of kimberlite ore - and past reports have identified these with larger gem stones being found. They must be getting very close if not into these zones given the RNS above. I have no guarantees on this, but if the RNS is to be believed, the chances of more large gem stones being found in the next few months must increase.
This will, I fear, not change the need to re-structure the financing a bit to enable a new mining plan for FDI to have a much better chance of generating enough revenue to meet interest and capital repayment obligations.
HPC, What makes you think that this find came from the 'better areas' (K5)? TheRNS states that OVER TIME they will move to the better areas.
Good news today, one of the most sensible posts I have ever read on these boards from BADDOG, and a good rise. Concern must be another RNS in the next few days re issue of more shares to pay debt interest which send's it back down again.
Well, FDI have tried to answer your question today... large, gem quality and light yellow. At 134 carat, this should be worth a bit more than the $1m obtained for the last such stone.
It is encouraging that such stones are not being broken.
The reasons for mining some of the poorer areas first are:-
1. Commissioning needed a lot of the equipment to be tested and adjusted to collect the maximum value of the diamonds flowing through, enough of the smaller ones and all of the larger diamonds;
2. Better areas were avoided initially to minimise any damage or missing of larger diamonds
3. Stock-piled areas needed to be cleared first, and these were diluted with waste material
4. Before going down the Mine Pipe, so the trucks can wind round the outside, the top of the Main Pipe has to be levelled, so the highest areas have to be mined first.
5. Coverings above the Main Pipe and around the edges of the Main Pipe have to be The volumes here will vary over time and dependent on the cuts planned.
Large diamond finds may cause FDI to re-think their mining plan and re-structuring of the financing... but they will want to minimise the risk of running out of cash in this early phase of development and production.
I'm glad now that I topped up a bit last week, under 20p a share... don't think anyone anticipated this latest diamond find so rapidly after potentially changing their mining plans.
I personally still feel FDI will do better than Lucara over the next few years... but one can always spread the investments... also STEL perhaps...
You could not make this up a weekago this dropped like
a brick on concerns we are mining in the wrong place uncertainty's
about what was down there and the potential for investors and
so on then on a turn of a shovel it has all changed.
(If i new then what i know now i would be a very rich man)
Insight/ cognizance /astuteness/ and dare i say corruption.
The report does seem to indicate that diamond stocks have been over-sold... which I suspect will correct itself as diamonds become rarer (as generally forecast with mine exhaustion of resources expected over the next few years) assuming the biggest companies will manage their sales to ensure there isn't any over supply which would damage the value of their own assets.
If FDI can find a few more large diamonds in the next few weeks, as is quite likely in the K5 zone, this should minimise the cost of any debt re-structure; indeed FDI might change their mind on the mining plan and stick with the original plan if this will save enough cost.
Important message from the Financial Conduct Authority:
Posting inside information that is not public knowledge, or information that is false or misleading, may constitute market abuse.
This could lead to an unlimited fine and up to seven years in prison.
If you have any information, concerns or queries about market abuse, click here.
The content of the messages posted represents the opinions of the author, and does not represent the opinions of Interactive Investor Trading Limited or its affiliates and has not been approved or issued by Interactive Investor Trading Limited.
You should be aware that the other participants of the above discussion group are strangers to you and may make statements which may be misleading, deceptive or wrong.
Please remember that the value of investments or income from them may go down as well as up and that the past performance of an investment is not a guide to its performance in the future.
The discussion boards on this site are intended to be an information sharing forum and is not intended to address your particular requirements.
Whilst information provided on them can help with your investment research you need to consider carefully whether you should make (or refraining from making) investment or other decisions based on what you see without doing further research on investments you are interested in.
Participating in this forum cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you.