Diamondcorp Share Discussion Threads

[smarm] 07/6/2015 21:14

Wisecat - ROFL played a blinder.

In 2007 they were admitted to AIM at 90p with a market cap of £30.6 million and 33,987,078 Ordinary Shares.

In 2015 the price is 10.75p mid, with a market cap of £35m and 355,202,478 share in issue post the latest placing.

So that's 10x more shares than at launch and price down over 87% since launch.

....if that's your idea of a blinder then we must agree to disagree.

Thankfully as a trader I bought low and I'm sure you did too. Management, who I have met over the years, have done well to get this mine built against a very difficult financial background but in doing so - make no mistake - shareholders have been crucified.

S

[jaf1948] 07/6/2015 20:37

Wisecat,

Thanks. I have held these for over 4 years and I feel the management have been in a different class to that usually found on AIM. It is annoying, but par for the course, to read ill-informed comments about the company when we have overcome so many potential problems and are now only months away from production.

I don't mind criticism or different opinions about the company when they are backed by rational argument (see the above chat with tiger) and if people don't want to buy or hold these, that's fine by me as well.

[wisecat2] 07/6/2015 20:17

Understood and appreciate all your posts

[jaf1948] 07/6/2015 20:02

Wisecat,I didn't expect an answer from him - I only put my post on here so other people wouldn't take his comment at face value.

[wisecat2] 07/6/2015 19:56

Sorry Jaf you won't get anything sensible back. I'm surprised smarm holds shares in a company where he has nothing but negative thoughts and disrespects management who have played a blinder for the shareholders benefit.

[jaf1948] 07/6/2015 19:22

Or, alternatively, a better option came along rather than lose $56m to a finance house. There is nothing to suggest the deal fell through but you have now mentioned it twice although no one else (to my knowledge) has mentioned it at all.

Please give your reasons why you think it fell through.

[smarm] 07/6/2015 18:16

A discounted placing nobody saw coming - imo almost certainly the finance deal fell through. There is still money to be made here, just not as much. Typical AIM really....but what's done is done. We are approaching the end game and will soon know what quality and quantity is coming out of the ground.

S

[tiger60] 05/6/2015 20:21

And you and appreciate the debate even though i am a grunpy....

[jaf1948] 05/6/2015 20:19

It's lucky that all investors don't feel the same way otherwise we would all want to buy and sell at the same time.

Maybe it's just a half-full / half-empty viewpoint but I don't see today as losing 25% of my potential profit - I see it as saving $56m in the future and making our future profitability more secure.

Have a good weekend.

[tiger60] 05/6/2015 20:13

Using your figures and example you are saying i shouldnt care about a reduction in profits of 25% because i still make money. All hypothetical but doesnt make any sense. So over the course of one day my investment return reduced by 25%, along with yours, but you still argue it is a good deal? Strange logic but the starting premise doesnt do justice to dcp's decision.

Again my issue is timing and mgmt statements . If i invested based on my analysis of the year end results which included reference to the financing agreement just days ago, along with a forward statement for the coming year i would be extremely angry at what happened today purely from a trust point of view. At that point they had all the information available and knew about the placing.

[hutch_pod] 05/6/2015 19:57

I have to agree Tiger. While the $56m est payment to Acrux is a big giveaway, I think the placing 'gives away' even more.

But it's not as if DCP is anywhere near fully valued and higher (than forecast) revenues will of course be very welcome.

[jaf1948] 05/6/2015 19:43

I understand where you're coming from but it's not the view I have. That's fine by me.

Let me use some numbers to show why I am not concerned. Let's say you bought 100,000 shares at 5p (cost £5,000) and the share price gets to 15p (before today's news). You would make a profit of £10,000. After today's news, you quote a dilution of 15%, therefore the share price would 'only' get to 12.75p. That would give a profit of £7,750 or 150% on top of your initial stake. Clearly not as good as £10,000 but better than most shares will ever produce. I do not care about a potential hypothetical loss of £2,500 - for all I know, the new shareholders will be so enamoured with the company that they will want even more shares and the share price could end up even higher !

Holder (but more happy than yesterday).

[tiger60] 05/6/2015 19:39

I prefer a clear and concise strategy with every statement marrying up to the previous ones.

To me the open offerring needs to be done quickly but I have a feeling it will not be done by the time we get the testing update. Which seems odd as a bad update would see this below 10p and no take up.

In my experience the share price drifts to the placement price anyway and would not be surprised if this happened which makes eligibility and uptake % academic. To me this throws up a flag but I am definitiely in the minority here (although the share price dropped 5% so the mkt doesnt think it is that great either) time will tell.

Holder (but less happy than yesterday)

[jaf1948] 05/6/2015 19:33

Tiger,

Once production starts and the company makes a profit, I don't think anyone will either remember or care that there has been a 15% dilution. I certainly won't.

Personally, I prefer a CEO who can change his mind when circumstances change. The board have got it mostly right up to now - I see no reason to doubt their ongoing performance.

[tiger60] 05/6/2015 19:14

But the open offering will be a drag on the share price How look will it take? A while I suspect.

Are we not talking 52m shares so a 15% dilution?

Personally wary of a chairman that champions a financing deal saying it is in the best interest of the company when he clearly doesnt see it like that.. I understand the new info available and the economics I dont understand the timing and the placement price.

Also why so vague about production date - with months to go there must have a better idea than when they first forecast end of Qtr2. The strike according to their calculations only cost 3 weeks (1 week lost for each two weeks of the strike) add in new efficiencies found. Why are we still not on for July/Aug?


I find them sending contradictory messages

[hpcg] 05/6/2015 18:48

The share price reaction shows you how happy people are with the placing. I suspect I won't be able to pick up many additional in the open offer. The other good thing about having the cash is it will be available to pay anyone who wants to convert their debt holding.

[jaf1948] 05/6/2015 17:54

tiger,

Possibly but who knows. I totally support what the board have done today.

The article that I referred to in 1211 says that some brokers had not been happy with the royalty plan. Northland calculated Acrux could receive around $56m in royalties for its $7m up-front loan (someone else on another board came up with similar figures). On that basis, our board made a very good commercial decision and there is very little point in speculating what might have happened if they had waited.

[hutch_pod] 05/6/2015 17:54

Yes it seems to make good economic sense for the company's cashflow and those that participate in the placing, especially with rising revenues.

But for existing non-participating shareholders, 9% dilution seems to be worse than the 3% net royalty - which is circa 5% EPS dilution. And this seems irrespective of the revenue level.

[tiger60] 05/6/2015 17:22

But surely a higher placement could of been achieved if they had waited until after the bulk uk4 results?

[jaf1948] 05/6/2015 17:10

JAF1948 26 May'15 - 08:47 - 1169 of 1210
I can never blame people for profit taking but with production so close, it does seem a strange thing to do.

I said this two weeks ago but I'll reiterate it today as I feel that anyone selling on this RNS might not have understood the benefits to both the company and the shareholders of this decision. There is a link on proactiveinvestors.co.uk which explains it very well but I am unable to show the link on here.

[hpcg] 05/6/2015 12:29

I am actually delighted. I've almost written several times that I think they should be using equity but danced around rather than directly said it. I have cash waiting for this as it is so obviously the right thing to do.

[smarm] 05/6/2015 11:22

Hutch - thanks.

S

[hutch_pod] 05/6/2015 10:47

Versus Northland.

DiamondCorp (LON:DCP) – BUY: Funding update
Market Cap: £35.6m; Current Price: 11.5p; Target Price: 16.6p (from 16.4p)

NORTHLAND CAPITAL PARTNERS VIEW: Based on the discovery of 4.38ct D Type IIA white diamond from K6 development kimberlite, DiamondCorp has concluded that the royalty arrangement will not be in the Company’s best interest. Following the completion of the placing, the management team believes that it will have enough cash to make up for both the base-case shortfall (disclosed 26/05/15) of £1.8m and the sensitised-case of £2.8m. As a result, Lace should now be fully funded to commercial production. The additional funds raised from the open offer will be used for working capital and enhancing the mines economics. We have updated our forecasts with the result of the placing and the removal of the Acrux royalty but we have not included the open offer as the quantum of the funds raised is uncertain at this stage. The net result is actually relatively minor increase in our price target to 16.6p (from 16.4p) as the near term dilution from the placing is outweighed by the longer term benefit of not having the 3% royalty. We assume a long term diamond price of US$160/ct but if the discovery of the high value D Type IIA white diamond proves to be the first of other similar stones there could be a significant increase to our long term dollar per carat valuation, at which point the placing would have significant benefits to our valuation over the royalty.

[hutch_pod] 05/6/2015 10:36

SpAngel summary:

Buy - Target Price 17.6 pence (previously 20 pence) T

Conclusion: Raising fund raise through shareholders replaces the proposed royalty arrangement with Acrux. This increases dilution in the short term but does not change the fundamentals for the stock. We have reduced our target price to reflect the potential dilution from new shares. While the royalty would have been non-dilutive the right to repurchase the arrangement after 8 years would have been subject to a valuation at that time and this uncertainty has now been removed.

[smarm] 05/6/2015 08:48

So the optimistic positive here is that revenues are expected to be higher making the placing better value than the financing deal.

Nothing to do but wait and see.

S