{"id":1167657,"date":"2020-02-25T07:09:10","date_gmt":"2020-02-25T13:09:10","guid":{"rendered":"https:\/\/www.mining.com\/?p=1015034"},"modified":"2020-02-25T07:09:10","modified_gmt":"2020-02-25T13:09:10","slug":"firestone-to-delist-axe-board-size-on-tough-diamond-market","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1167657","title":{"rendered":"Firestone to delist, axe board size on tough diamond market"},"content":{"rendered":"<p>Africa-focused&nbsp;Firestone Diamonds&nbsp;(LON:FDI) has <a href=\"https:\/\/otp.investis.com\/clients\/uk\/firestone_diamonds_plc\/rns\/regulatory-story.aspx?cid=1527&amp;newsid=1374732\"  rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">decided to leave the London Stock Exchange<\/a> and reduce the size of its board in an attempt to reduce costs and ride out a lingering weakness in the global diamond market.<\/p>\n<div class='d-flex justify-content-center d-xs-block d-sm-block d-md-none'>\n<div id='div-gpt-ad-1561499308230-0'><script>googletag.cmd.push(function() {googletag.display('div-gpt-ad-1561499308230-0');});<\/script><\/div>\n<\/div>\n<p>Shares in the company, currently traded<br \/>\non the AIM exchange \u2014 the LME\u2019s submarket for juniors \u2014 , have collapsed in<br \/>\nrecent years. From 56.8p a piece in October 2016, the stock has fallen to just<br \/>\n0.30p as of Tuesday at 12:15 pm local time, leaving it with a market cap of \u00a32.7<br \/>\nmillion ($4.7 million).<\/p>\n<p>Firestone\u2019s investors are expected<br \/>\nto vote on the delisting on March 13. The miner, which has been on the AIM<br \/>\nsince 1998, needs over 75% of voting shareholders to approve the motion for it to<br \/>\ngo ahead.<\/p>\n<p>The company, which began mining at Liqhobong, Lesotho, almost four years ago, said it become clear in 2017 that it wouldn\u2019t achieve the anticipated average value per carat.<\/p>\n<p>As a result, the 75%-owned<br \/>\nsubsidiary operating the mine ran into problems paying back debt to South<br \/>\nAfrica&#8217;s Absa Bank Ltd. A fundraise and debt restructuring occurred in 2017,<br \/>\nincluding a standstill agreement lasting until mid-2019 during which<br \/>\nFirestone&#8217;s subsidiary only paid back interest on debt.<\/p>\n<p>\u201cThe board still believes the<br \/>\ndiamond market has the potential to improve but that it will take longer than<br \/>\nhad been previously anticipated, and therefore everything possible needs to be<br \/>\ndone to ensure the company can survive the current downturn using its existing<br \/>\ncash resources,\u201d the miner said.<\/p>\n<p>The news came on the same day Firestone reported diamond recoveries of 138,000 carats <a href=\"https:\/\/otp.investis.com\/clients\/uk\/firestone_diamonds_plc\/rns\/regulatory-story.aspx?cid=1527&amp;newsid=1374744\"  rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">in its financial second quarter ended December<\/a>, down 31% from the first quarter.<\/p>\n<p>Firestone said the slump was the<br \/>\nconsequence of power disruptions at its only operating mine, Liqhobong. That led<br \/>\nto shutting down the processing plant for most of October. The mine then ran on<br \/>\n<a href=\"https:\/\/www.mining.com\/firestone-diamonds-liqhobong-mine-back-at-full-tilt-as-power-returns\/\">generator<br \/>\npower until the start of December<\/a>, at a marginally lower capacity.<\/p>\n<p>Owing to the costs associated with<br \/>\nrenting and operating the generators, the company\u2019s operating costs for the<br \/>\nquarter under review were $1.1-million higher year-on-year.<\/p>\n<p>Firestone estimated the total<br \/>\nimpact of the power disruption on the business was $4.6 million.<\/p>\n<p>As a result of lower second-quarter<br \/>\noutput, the miner cut guidance for its 2020 year, ending June, to between<br \/>\n720,000 and 750,000 carats. It had previously estimated to produce between 820,000<br \/>\nto 870,000 carats.&nbsp;<\/p>\n<p>The company is just one of the many<br \/>\ndiamond miners and traders affected by ongoing weak market conditions. Producers<br \/>\nof small stones have been hit the hardest, due to an oversupply in that segment<br \/>\nthat has dragged prices down.<\/p>\n<p>Increasing demand for synthetic<br \/>\ndiamonds has also weighed on prices. Man-made stones require less investment<br \/>\nthan mined ones and can offer more attractive margins.<\/p>\n<p>Big companies have not been immune to the downward trend. De Beers, the world\u2019s No. 1 diamond miner, reported last week its <a href=\"https:\/\/www.mining.com\/web\/de-beers-posts-lowest-profit-since-end-of-diamond-monopoly\/\"  rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">worst set of earnings<\/a> since Anglo American (LON:AAL) acquired it in 2012.<\/p>\n<p>The company said demand for rough<br \/>\ndiamonds from polishers and cutters was weak last year due to the impact of<br \/>\nUS-China trade tension and the closure of US retail outlets. Many companies in<br \/>\nthe so-called midstream are struggling to obtain financing, it said.<\/p>\n<p>Increasing demand for synthetic<br \/>\ndiamonds has also weighed on prices. Man-made diamonds require less investment<br \/>\nthan mining natural stones and can offer more attractive margins.<\/p>\n<p>Industry consultant Bain &amp; Co.,<br \/>\nhowever, believes that while glut that\u2019s depressing the diamond market will<br \/>\nprobably be cleared early this year, it will take at least another 12 months<br \/>\nfor the market to fully recover.<\/p>\n<p>\u201cThe industry\u2019s first and strongest opportunity to rebalance and regain growth will be 2021,\u201d said Bain&nbsp;in a <a href=\"https:\/\/www.bain.com\/insights\/global-diamond-industry-report-2019\/\"  rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">report released in&nbsp;December<\/a>, adding that supply could fall 8% that year.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Decisions seek to reduce costs and ride out the sector&#8217;s lingering weakness.<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[369,4],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1167657"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1167657"}],"version-history":[{"count":11,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1167657\/revisions"}],"predecessor-version":[{"id":1167727,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1167657\/revisions\/1167727"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1167657"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1167657"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1167657"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}