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#42

Hi Hpc

So you are saying the big share holders are happy with the low share price which currently gives a Cap of less than the money we have in the bank its astounding .

Cheers

Clem


#43

I would be happy to see firestone diamonds go in with gem diamonds I think the two would be a good mix. Find it hard to believe the two management teams have not considered this. Perhaps HPC could ask at AGM. Just my opinion.


#44

No really “happy” but since they will have no incentive to sell their holdings for a few years, possibly post receipt of dividends, all being well, there is no compelling reason to try & push the share price up at present.


#45

Not at all likely in my view… Gem Diamonds are doing well at present but their remaining mine life is much shorter than FDI’s; and FDI will not wish to dilute its mine value just when they are starting to extract ore from better zones, below the weathered top level.

There would be negligible cost savings as most of the equipment is tied to their respective mines & overheads are relatively low.

What we really need is for FDI’s diamond recoveries to reach current GEMD levels & gemstone standards - noting that GEMD didn’t do particularly well for their first few years of production.

I might ask a more general question about any need for a merger with peers in Lesotho… also, whether there is any advantage to be gained in trying to add Lemphane’s ore into the mix given this is only 5 kms away.


#46

Sorry, Not really “happy”… but also note that the cash in hand has to be offset by the loan debt outstanding; the positive overall market value reflecting the risked value of asset/diamond returns/revenue, less operational/overhead costs, plus cash-in-hand, less debt/interest/tax.

Picture will be a lot clearer by end 2019… hopefully much better than now.


#47

Off-topic, but InitiativeQ ought to be of interest to many of you here who have invested in FDI.

InitiativeQ is an attempt by ex-PayPal guys to create a new payment system instead of credit cards that were designed in the 1950s. The system uses its own currency, the Q, and to get people to start using the system once it’s ready they are allocating Qs for free to people that sign up now (the amount drops as more people join - so better to join early).

Signing up is free and they only ask for your name, an email address and a password of your choosing. There’s nothing to lose but if this payment system becomes a world leading payment method your Q’s could be worth a lot. If you missed getting bitcoin seven years ago ( as I did) you wouldn’t want to miss this.

Once signed up, you will be able to invite others, to gain more Q’s… more than 2 million now assigned, increasing rapidly.

Here is my invite link: https://initiativeq.com/invite/SZxnHq2jX

This link will stop working once I’m out of invites. After you have registered, I will verify you through my InitiativeQ access; to allow you greater access to your own account, invite others yourself to see your record of Q’s assigned.

There is also a lot of information on the InitiativeQ web site will help you understand their plans and strategy.


#48

Anyone else going to the FDI AGM on 28th Nov?


#49

Would love to but think I will be working away that week as things stand. Hope they may be able to present a positive outlook going forward - we need some decent stones reporting over the next 6 to 12 months


#50

Those of you who used my link, don’t forget there are time limits on how long you can collect extra Q’s through inviting others… only get one chance here to top up through your own invitations.

Nothing here to lose as I see it, like receiving a free lottery ticket; good potential longer term.

See https://www.techinasia.com/talk/founder-challenge-visa-global-currency for some extra information.


#51

No stopping the fall in SP, looking ominous for holders, big stones needed sooner rather later.


#52

Very low volumes… no Major Holder is selling their shares. Could sink a bit more, but has stabilised around 4p a share for a few weeks now.

May hear more at the AGM, but certainly need more good, large gem stones - especially vivid colours where FDI has an advantage in the market.


#53

No major holders selling but FDI seems to drop on very low volume with no upward movement on higher volumes than those sold. Seems like its being manipulated down. Are we in danger of a takeover bid or merger at a discounted SP?


#54

yes in my opinion. Gem diamonds most likely looks like a good fit for them.


#55

Good morning HPC, looking forward to your insight on the AGM today .


#56

Just a few shareholders… all resolutions passed, the latter few with some votes against due to uncertainty on how much might be spent, and on what.

Production & carat recoveries are still in line with the revised plan, costs down a bit but revenue on the border line for breaking even after paying interest due & keeping revenue to pare down the debt… ABSA capital repayments re-starting middle of 2019.

Real problem at the moment, in the absence of finding some big, good quality gem stones, is that 80% of the carats found are Run of Mine (ROM), diamonds under 3 grams, which are largely sold into the Indian market for finishing & cheaper end of jewellery. The Rupee is weak right now & this is reducing purchases; plus two new mines apart from FDI have entered the market adding c. 7.5m carats each year. On the plus side, other new entrants are negligible in foreseeable future & Rio Tinto’s Argyle mine is to close in 2020, which will reduce the carats produced by 10 to 15 million per year. Indeed, the FDI Annual Report shows a steepening shortage thereafter…

The market for Lab Grown diamonds (typically clear) is splitting, especially given DeBeers action in recent months, with cheaper lab grown diamonds moving towards fashion accessories, whilst diamonds hold their premium for jewellery that will have sentimental value, e.g. engagement & eternity rings… high end jewellery with coloured stones for those who are rich.

Things are looking up for this Christmas period and some replenishment of rough diamond stocks is expected in H1 of FDI’s financial year. $75 per carat on average is the critical number to beat across the whole stock being sold with the present plan.

Met the new CEO, Paul Bosma, who I think we can trust to do all he can operationally & cost wise. Clearly, if a few large gemstones can be unearthed, the position for FDI would change rapidly. The near-gemstone >300 carats proved that they shouldn’t break new stones up to that size at least - but that quality of stone won’t bring in more than $100,000 whilst a clear gemstone would be worth $5 to $10 million & a pink one (god willing) would be potentially worth $50 million. None of us can control if and when such stones will be found.

20% of the carats are clear & coloured gem stones of good quality, lots of yellow fancies & one good pink (3.7 carat) stone so far. The price for these is holding up well fortunately.

A Finance Committee has been set up to manage the debt re-payments very closely, with frequent discussions with the bond holders (who are also the major shareholders) & the ABSA bank (which has some insurance against loan payment default & assurance against Liqhobong assets. So far, whilst FDI are hitting their production targets, it seems that they will try and see out this period of weak diamond prices given that the carat recoveries are also to target even if there is a shortage of the larger stones which have been proven to be there. The FDI diamonds are always packaged up in “like” diamond (size, colour, clarity, etc.) groups by a specialist broker, and sold by tender against sealed bids. There are typically 40-50 bidders.

It is not only FDI which is being hit by the low prices for diamonds at present… the whole industry is being impacted at present, hence the Petra problems, Argyle closure soon, etc.

I did ask whether they had considered merging with a cash rich company like Gem Diamonds, who have found quite a few big stones in the last year after a couple of poor years. They would not comment on this, but did say that all options were currently on the table, which I assume includes loan re-structuring, more equity releases, mergers, new loans, etc.

I said that I wasn’t in favour of more equity releases whilst the share price was so low. 4p a share effectively rates FDI as just being able to survive over the next few years, yet the assets are still worth in excess of $1 billion at historically average prices per carat. The FDI board need to buy time until market conditions & diamond recoveries improve.

The present (two cut) 9 year mining plan is deemed conservative as there are still some options to reduce costs & increase mining rates. Ideally, FDI will move back to the full 14 year mining plan, with the 3rd cut maximising carat recovery from above ground. This needs the average diamond price nearer $100 a carat than $75 a carat. An early move in that direction would do wonders for the FDI share price as this will enable re-instatement of the larger value of the assets and potentially reduce dilution if any extra cash is needed through equity release.

The $18 million they have in cash will help smooth over any cracks in debt payments, but they really do need to see the price of ROM stones back up again asap. Post 2022, especially once debt is cleared, the cash flows in should be much better, possibly enabling dividends which will further promote share price recovery.

Right now, risks are still high… I can’t recommend buying more shares until either more good quality stones are found or the price of rough diamonds materially improves. Risks are also impacted by the strength of US Dollar and the Rand in particular. I am so far down on my investment, I will HOLD and hope…

Once again, the next year will be critical to FDI’s future, and to returns on investment by FDI shareholders.


#57

Many thanks for taking the time to compile that report HPC, a well written and detailed review of the topics discussed. Will continue to hold and hope.


#58

Thanks for your detailed insight HPC, like you say we need to find more large diamonds which will change every thing, if they go it alone, or find a partner. Still reason to be positive, Though the miserable share price does not reflect this, I will hold my shares .its tempting to buy more at this price.


#59

FDI and our CEO Paul Bosma were at Mines and Money in London this week on a diamond mining panel. Along side him were ex CEO Stuart Brown and Gem Diamonds Glenn Turner, interesting…checkout the FDI tweet below

Check out @FDIplc’s Tweet: https://twitter.com/FDIplc/status/1067469333562105857?s=08


#60

Good news today… both very timely to better ensure that revenues will be sufficient to pay of the debt; and increase the likelihood that the 3rd cut will be re-instated & increase the reserve levels back to where they were.

RECOVERY OF 46 CARAT WHITE GEM DIAMOND

Firestone Diamond plc is pleased to announce the recovery of a 46 carat white, makeable diamond from its Liqhobong Mine in Lesotho. The stone was recovered undamaged and will go on sale at the next tender which is scheduled to take place at the end of January 2019.

The company is also pleased to report a stabilisation in pricing for the smaller, lower value stones (-3 grainers) at the recent sale which was concluded on 7 December and which confirms the trend reported by other producers.

Further details will be included in the Q2 production update.

An image of the diamond is available on the Company’s website: https://www.firestonediamonds.com/sales-marketing/special-stones

Paul Bosma, Chief Executive Officer, commented: “The recovery of the white 46 carat stone is good news as we start mining across the pit towards the northern side of the orebody over the coming months. We are also pleased by the fact that the prices of our smaller, lower value goods have stabilised and we look forward to further improvement as we head into the new year on the back of an expected positive diamond jewellery retail season”.


#61

Yes good news on 2 counts with the smaller stone price having improved of late. Should at least stabilise the SP