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lse:FDI Main Discussion

lse:fdi

#1

This is my attempt to start a thread of replies for FDI under a single Topic post creation of this “challenging” new II Web Site.

It is aimed at those who actually own shares in FDI, or are seriously considering investing in the company, currently struggling in regard to finance and the share price.

Until there are better Topics for FDI to reply to, I will only reply here with news, feedback from AGMs, etc.


#2

fhanks


#3

Given that FDI are now in amongst the better kimberlite zones, down a bit from the weathered top of the Main Pipe, I would hope, with strengthening diamond prices, that FDI’s recoveries and revenue will be greatly improved in 2nd Qtr 2018 and rest of the year. Coloured gem stones are found frequently, but we are all still waiting for a few much larger, good quality Type II high value stones - as previously found in broken bits after crushing (old crushers, before new ones installed with larger gaps).

Most of the larger FDI stock trades in recent weeks have been in pairs, e.g. 200,000 (several) @5.4p on 18/6; 500,000 @5.5p on 18/6; 228,900 @6.0p on 8/6, which look more likely to be Bed & ISA or Bed & SIPP transactions.

There is no sign of directors or major shareholders selling out… and they probably don’t care about any short term share price slippage - being in for the promise of a much greater return through dividends and share price improvements once debts are cleared and the market more fully recovers with shortages of diamonds expected in 2020 onwards.

As a consequence, I decided to add another 63,296 FDI shares @5.37p this morning… time will tell on whether this was sensible or not - but any price below 6p is much better than the 10p Open Offer last December’17.


#4

Last top up for me now, c.36,000 more at 5.1p. This finally brings my average price down below the original Major Shareholder investment at 30p (equivalent post consolidation)accepting they have averaged down a bit through last December’s 10p Placement & Open Offer.

FDI production facilities continue to be fully operational, 24x7, and diamond yields are improving. The next quarter results will tell us more.

None of largest shareholders are selling, even the ex-CEO. Diamond value in situ is unchanged. No one seems worried about the share price being low at present, it’s just an opportunity for BED & ISA or BED & SIPP for larger shareholding’s.

Before end 2018, we will know a lot more about how profitable the company should be; but if some very large, valuable gem stones are found soon - over due in probability, the financial position will change rapidly.

I’ve made my final investment here now and pray for a successful outcome. FDI’s staff have done a really good job over the last three years, supported by the local community in Lesotho, and deserve some success themselves.


#5

Another large pair of FDI stock trades today, 2 x 500,000@ 5p, which looks likely to be another Bed & ISA or Bed & SIPP transaction. Significant holders are not actually selling down their FDI stock - believing, as I do, that FDI will have a good future - eventually.


#6

Hi HPC
I have held FDI for over 8 years now and cant believe the current market cap 28mil with a new mine up
and running.

They always aimed to mine 1mil carats a year so it will be interesting to see what the short fall is.

Do you think they have enough cash to keep going now and whats the chance of being taken over.

C<I<A.

Clem


#7

I have held FDI for even longer than you, originally through European Diamonds (EPD) & later KDD; with a lot of Open Offer buys, some sells and many additional buys in an attempt to average my FDI share price down; recently to just under 30p a share.

This could make any FDI share buys at 5p very lucrative, but the risks remain high because FDI are yet to find any serious quantities of very large (>100 carat) gem stones of good quality - as they have done in the Liqhobong Main Pipe in the past. This means carat recoveries are significantly lower than hoped at present; with revenues down over the last 9 months through diamond price weakness as well.

Debt was pushed back and more cash was added through the 10p placement and Open Offer last December, to buy time until the better regions of un-weathered could be mined. Q1 in 2018 was impacted by very wet weather, good for the water supplies but bad for ore extraction where flooded. Q2 should be much better in terms of carats recovered and revenues… but we won’t know for a couple more weeks.

Good results could see the SP rise back to 10p progressively, but quite a few large, high quality stones need to be recovered every year (if not quarter) for FDI to achieve its original expectations worth at least 40p a share in the short term, much more longer term.

The decision to mine to a lower depth, to reduce costs, can easily be reversed if diamond recoveries and revenues do improve back to original expectations. None of the major shareholders have reduced their holdings. Some significant holders have taken the low price opportunity to ‘Bed & SIPP’ or ‘Bed & ISA’ FDI stock to reduce tax expectations - which still shows some confidence.

The 24x7 operation is generally working well… another year and we will know a lot more…

In answer to your questions,

a) end Q1 guidance was carat recovery in 2018 near to 800,000 - so lower than their 1,000,000 per annum target, but within the 800,000 to 850,000 forecast for the year whilst they are still clearing a lot of waste and weathered top layers of kimberlite.

b) YES they should have enough cash, and

c) NO, I don’t see any chance of a take-over until the mine is clearly going to be very profitable - and debts are cleared (or will easily be cleared given revenue forecasts over a few years.

p.s. Are any of the other FDI holders still reading this discussion board? That includes:- gliderpilot2, chiromawa54, dragonslayer, baddogrex, helium1, coolkarl, rob1stuart. Views welcomed from you all…


#8

Cheers HPC

Look forward to next update .

Clem


#9

Should get the next quarterly Operations update between 16th & 27th July… which must be better but there have been no recent reports of large diamond finds.

Director changes reported today, strengthening the financial support & reducing efforts on searching out new diamond mine opportunities. These changes are sensible in my mind.

I’m preparing a spreadsheet with graphs on progress, with values per quarter, against the various recovery & cost/price targets set - waiting on the next set of numbers to be more meaningful.


#10

Pibian88.
Thank you HPC- Follower for your insights to what is happening.


#11

Interesting that Sustainable Capital Ltd. have recently increased their FDI share holdings by 34%, to 59,128,295 shares, 11.47% - up from 8.17%.

No clues on who is selling down though… but there were 28% of the shares outside of Major Shareholder hands.

Whether this is a good move is uncertain yet, waiting on next Operations Report for April/May/June quarter.


#12

Are we beginning to creep up?


#13

Hi all,
Have held fdi since early 2000s and like many of you, wish I had cashed in when it was around 55p. Am surprised by the slip down to 5p considering the original plan was to make the company a profitable concern with special value diamonds as an extra bonus -which is why I invested. Still, it is early days, the company has yet to have a full year mining at full capacity in decent areas, so my feeling is that as long as it can keep up operations it is good value at this price. But then I would have said that when it was 50p…


#14

Good progress in last quarter operationally reported in today’s RNS. Targets are now being hit in terms of tonnes mined & carats extracted but not many larger stones are being found near the surface yet meaning the average per carat is the bare $75 per carat set for debt funding. This must surely improve with depth, in the next two quarters in particular.

I expect to see some share price recoveries now as they are at least growing cash at $2.5m a quarter now.


#15

Now we have some FDI numbers for the quarters since the Main Pipe plant was commissioned, I’ve been able to put some graphs together which I hope to update and re-present quarterly in the future:-

The volumes are now on target, but bigger & higher quality stones need to be extracted (as hoped/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. At $71 a carat, this is just about the minimum promised in re-structuring the debt about 6 month ago. If diamond prices strengthen, this will also assist of course.


#16

Thanks for the graphs HPC, they clearly show that fdi is falling down on one factor, value per carat, which is not really within its control. This should go up as better areas are mined, the diamond market starts to favour suppliers, and even the Holy Grail of a few larger diamonds may be recovered. Simply Wall St tipped fdi as a growth stock to tuck into today - not the most reliable of sources, but better than nothing.


#17

Hi All

Big thanks fo HPC for ongoing analysis and information.

Looks like we could mine 1mil carats this FY just wondering how much the capital repayments
are Per annum when they restart in 12 months

TIA

Clem


#18

Re-payment of the outstanding $81m ABSA Debt plus interest due is now scheduled to re-commence end June 2019, and be completed by end December 2023. If the payments are equal, this amounts to about $4.5m a quarter plus interest on the balance outstanding. The other debts are much lower.

$4.5m has to be measured against the last quarter increase in cash of $2.5m, so FDI do need to increase the average quarterly financial returns over the next few years in particular. To smooth matters over, FDI do have about $28m cash…

I will be keeping a close watch in the coming months, but life would be much easier if they could re-start recovery of more good quality gem stones above 10 to 30 carats, and above 100 carats in particular.

It should be noted that Stuart Brown, the CEO who recently stood down having largely completed his job in getting the mine fully operational, still holds all his 876,834 shares as far as I can tell and none of the major shareholders have reduced their holdings yet either.

One very good quarter would make a big difference here.


#19

Last trade today was a 100,000 FDI share sell at just 5.00p a share - which was actually enabled because I had two 50,000 limit buy orders in - MY LAST TOP UP…

The next quarterly results should show a significant improvement through mining better areas, in good weather whilst the Rand is relatively low to keep costs contained. Slightly worried that there are no large diamond finds yet, but I am sure they will start to be found as they go deeper in the Main Pipe kimberlite.

I am encouraged that none of the Main Holders have sold any of their FDI shares… which could be faith in the total diamond content & recoveries; or a reflection of the very low FDI share price at present.

FDI did send a link to an article which showcases yellow diamonds (FDI’s?) in special arrangements prepared by Tiffany for their prestigious customers, which may be of interest:-
https://www.bloomberg.com/news/videos/2018-09-04/inside-tiffany-s-private-suite-for-vips-video

FDI are clearly helping out on the marketing front… and could get a better percentage of the final diamond value through direct selling of their most special gem stones.


#20

Thanks again HPC

I have also topped up 100000 at below 5p .

It would be interesting to know if they are mining the areas where they were finding the broken
stones with the old kit which prompted the new kit and crushers I hope they were right about the
broken stones .

Market cap now 25 mil surely undervalued.

Regards

Clem