As I understand it, some of the largest stones (excepting the two 100+ carat light yellow ones worth about $1 million each) found so far in the "softer" middle are not gem quality diamonds, but brown to yellow boart (i.e. are crystalized). Also, note that dark yellow gem stones are worth 10x the light ones...
However, lots of small/medium size yellow and clear diamonds are being found, and a few very large 200+ carat Type II clearer gem stones have been found in the Main Pipe before, albeit broken by the old, smaller gap crusher. Ore recovery and processing remains at the target, 24x7 level.
It is hoped that good diamond recovery will improve from the lower, not weathered kimberlite, a bit away from the middle; statistically the chances are good, but there are no guarantees in nature.
Thank you HPC you have explained this very well.
So does this mean that if the big type 2's are there then they are actually mining that very prospective area at the top of the main pipe now and we can expect to see some exceptional stones being recovered shortly or should we expect a longer time scale.. am I being too optimistic? Happy New Year ....We live in hope
The shares offered in the Open Offer to shareholders were fully underwritten by the placement, so they just clawed those unsold back. Thus FDI did get all the extra cash wanted. The deal with ABSA was important to preserve cash in the next 18 months in particular.
The revised mining plan just does the original Cuts 1 and 2, leaving out Cut 3 which would deepen the hole. It is 2.5 years until they actually have to make a decision to proceed with Cut 3 or not, but the assumption for those financing the venture is no Cut 3 whilst diamond recoveries are poor and rough stone prices are historically low.
They are now about to take the next spiral of cuts in the kimberlite out from the centre, down one level from the starting top level which was quite "weathered" and diluted with waste.
The quarterly figures due end January, with the results of three sales, will give us a better guide for the future.
All resolutions passed... Chairman & CEO (Stuart Brown) attended
Nothing very significant reported... diamond prices are weak but improving a bit behind other commodities.
Debt is too high, hence the re-structuring.
Mining is pretty well to schedule in terms of cuts and tonnes of ore processed - the 9 year plan will just dig a smaller hole - starting from the middle in consecutive rings. The final decision on Cut 3 doesn't need to be taken for 2.5 years... although company value is now predicated on the revised plan pending revenue improvements.
Can't see much movement in the share price in the near term right now unless some good gem stones start to be found again.
Off to the FDI AGM today, so will provide an update...
Agree this is still high risk as the better areas grow in volume with increasing depth, and larger diamonds still have to be found, unbroken, in much greater quantities than they have done so far. Then it would only take a few really big, good quality stones...
I didn't take it up .You couldn't make it up..
They had every chance to get this right ..Years of preparation, they failed to think that they needed to prove the basic investment premise.
Investors were led to believe that there are big type two stones a plenty to be had and yet they didn't bother to mine that prospective area ?
So they failed to pay back the mounting debt had to borrow more money on the facility and then the ,money ran out and they had to go groveling to the major investors.
What would Sir Alan have said to these Apprentices????
They may be incompetent ,They may be spinning us a yarn, many AIM companies do.
You cant call it bad luck They know where the big stones are but they say that they didn't mine them .How do they expect us to believe them.Why would I give them more money when I have Legg Mason Japan and Lucara Diamonds in my Portfolio?
Why have they opted to subscribe to the offer Perhaps they were told they had to as a condition ..To be certain if they had not taken it up the stock would have crashed,so they had no choise,but I have and they are not getting my money until I see pay dirt..
Prove you can do what you said and then and only then will I buy in again.My bet is that it will be some considerable time before this proof materialises and in the mean time there is plenty of opportunity for further weakness.
It's midnight on 14th December, so the door is now closed on the Open Offer at 10p a share...
Personally, I've sought to add 43% to my overall FDI share holding, to average down and retain my overall share percentage in the company. Given the Major Shareholders and Directors who have committed to the firm placement are excluded from bidding for Open Offer shares, I'm hopeful I will get all the shares I've requested.
Only time will tell now as to whether this was a good idea, or not, but I don't feel the CEO and others would have bought so many extra shares without reasonable justification in full knowledge of the structure of the Main Pipe and likely diamond content.
Having said this, I do wonder whether I should have put this extra money in some other investment opportunities, but I am following my "gut feel" based on studying the Liquobong resource and diamond outputs to date for many years.
One day, FDI will start finding more, very large gem stones, and the future will be bright - especially if diamond prices strengthen as forecast over the next few years and beyond. It is disappointing, however, that new FDI share buyers on the open market will have a much lower share price cost average than mine.
fully agree with all you say HPC - this sp could be bargain basement but we need more info. Took profits on SAR for now but intend being back in for the longer term. Your bitcoin comment rings true plus some other punters favourites - everyone seems to want instant success - refreshing to see you sticking buy the shares you have investigated and invested in - the market just doesn't seem fair at times. FDI production timing is very unfortunate.
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.
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