Firestone Diamonds - Transforming into a Major Diamond Producer

Oh dear....Firestone profits drop like a stone

http://www.sharecast.com/cgi-bin/sharecast/story.cgi?story_id=20495523

http://www.investegate.co.uk/Article.aspx?id=201202281059392581Y

Operations update for anyone still interested.

Have moved on from Diamonds myself , and am no longer looking at the sector

Hi All, let's move on. We're happy for any diamond investing-related comments on this thread as we don't have another active thread for that. Please avoid any ad hominem attacks, as they will just be moderated, and do keep the tone collaborative as that's what Stockopedia is all about. Best, Admin

Maybe if you hadn't been such a confrontational hibbert your excellent comments on the pitfalls of FDI would have accepted more readily. 

Let's review your contribution shall we - not only did you repeatedly attack Smarm, but you've now chosen to denigrate another poster who, according to yourself, has cluttered this forum with non FDI specific comments. The fact that DCP is also in the diamond business conveniently escapes you - as does your realisation that it isn't your thread,nor your right to dictate what people do or do not comment upon.

I personally found MadDutch's comments pretty informative because I haven't placed much emphasis in my portfolio on diamonds.

If only there was a "filter" option for what otherwise is a pretty informative thread.

"like a dog returning to its own vomit"

Extrader, nice to know you find my "vomit" tasty enough to warrant a comment from you.

I will decide when I have made my point not you and the issues I have posted recently are up to date involving the recent tender amongst other issues.

If you do not like the facts do not read them and certainly do not comment when all you can muster is of no use at all to anyone.

"Life's too short to be small" so don't be just as you have shown.

Hi amanpulo,

Your own contributions have been helpful - the first time.

But you keep on banging on about how right you were and how wrong everyone else was.

If you were a deramping shorter, I could understand your agenda. If you're not, I can't.

Life's too short to be small.

Having made your point, why not move elsewhere and apply your skills for the benefit of others ?

Discl.: I've never had shares in any diamond miner, the nearest was PDL when Sa'ad was a key investor, and that was on the basis of 'follow the money' more than anything else.

Good luck with your OTHER investments.

ATB

Fangorm,

Many thanks for the abuse. If you have nothing useful to contribute then I suggest you take your chavish behaviour elsewhere.

Good day ;-)

"Sorry but why are others cluttering this page with non related posts about another company, DCP"

Presumably because DCP is also in the diamond business and a comparative analysis to ascertain whether the problems were FDI specific or not.

Seriously, you have made some great comments but stop being arrogant. If you don't like the tangents this thread goes on bugger off back to Advfn. It isn't even your thread either so you've no right to police (as you are) what people write.

Sorry but why are others cluttering this page with non related posts about another company, DCP, and "The Geology of Diamonds" both of which serve no purpose to the current status of Firestone Diamonds.

The company has a huge amount of ground to make up and since the publication of the original article by 'smarm' on the 16th June the SP has declined by 52% (30.8p to 14.75P). It is also worth noting that the author has actually sold out.

Surely relevent current issues would be more worthy of discussion instead of another company or even how diamonds are formed or even the many facts I have previously highlighted about the poor preformance of the company in light of the huge salary award to PK or the comical SP predictions by the company just 2 years ago with just BK11 running or the misguided cashflow predictions of the new CEO just over a year ago when in fact they have done the complete opposite and raised over GBP35.95MILLION since that statment in April 2010 or GBP43.15MILLION since July 2009! 

The bullish initial posts following this bullish article have been very misguided indeed and I just hope some paid attention to my warnings instead of reporting them simply because they did not run parallel with the bullish opinions.

The Geology of Diamonds

Originally written for my fellow investors on TMF, it has been altered and updated in Sept 06. Also 27th September 2011 on Stockopedia.

Diamond a form of pure carbon which crystalises at about 1000 times atmospheric pressure and about 1000 degrees centigrade. Such conditions exist only a short distance from us, wherever we are in the world; only 60 miles away but are not accessible because the direction is straight down; we are discussing the deep molten rocks of the Earth's mantle. There are some parts of our planet's crust which lie over very ancient mantle, these are called plutons and cratons, vast rock formations which are very stable; stability which is believed to allow plumes of lava to gradually work their way up to the surface.

Then the vulcano erupts. When eruption ends, erosion starts and the cone erodes; the lava becomes clay and is washed downhill into river beds. There are 2 types of diamond deposit, alluvial and kimberlite, requiring completely different types of mining. They depend on where the diamonds were when the lava stopped flowing.

Diamonds which were below the original ground level before the volcanic eruption are still there today unless mined; in the ancient tube or pipe which carried the lava and the precious stones in it to the surface. They are still in the kimberlite (named after Kimberly where it was first discovered) which at the surface is the result of decomposition of the original lava into clay; but becomes a softish rock below the level of oxidation. It follows that all such diamonds are concentrated into the same place, an underground cone shaped zone of soft rock, surrounded by harder local geology, it tapers underground to the point of being uneconomic, usually around 2000 feet down. Kimberlites are found by digging into river bedrocks, looking for indicator minerals like pyrope garnet and illmenite which also occur in kimberlites. Their shapes are indicative of how far they have travelled in the river bed; the more waterworn, the further they are from the kimberlite source. A more modern method is using aerial survey, which identifies shapes of abnormalities in the magnetic or gravity fields. Promising ones are checked on the ground by digging pits. Once identified, drilling is used. Large diameter core drills up to 24 inches in diameter take samples at different depths so the shape of the pipe and the potential yield can be assessed. African Diamonds have published interesting computer generated models showing the shape of their kimberlite AK6 and others.

Mining is very easy because the pipe is undercut so the miners work in comfortable conditions, created by constructing an underground grid of many concrete cones with draglines under, and an underground railway underneath that. The ore falls down the pipe and into the cones, coming to the miners thanks to gravity. Under the cones, the ore is dragged to holes in the floor and falls into the railway ore carriers underneath. Security is not a big problem because some men have spent their working lives in kimberlite mines and never seen a diamond in the ore.

OTOH The alluvial stones are those that had been ejected from the original vulcano, or were in the volume of the cone shaped mountain plus all the lava flows from it. In the millions of years since, almost everything has been washed away by erosion, so today only the densest minerals remain, including the diamonds. Due to the nature of rivers which change course many times over millions of years, the alluvial material can cover dozens, hundreds or even thousands of square miles, though the best places to dig are close to the kimberlite due to their specific gravity (it is 3.5 times heavier than water). Miners try to find the course of an ancient river, and keep following it until digging is no longer economic. Mining involves hundreds of men with picks & shovels, or modern earth moving machines. Conditions are primitive and harsh. Many stones are picked up, and the ease of swallowing a valuable stone makes security a nightmare. This is one reason why management with considerable experience of diamond mining should run mines; not financial experts and bureaucrats.

The economics depend on the value of the diamonds (ratio of large valuable white gemstones to almost worthless small cracked brown industrials). Valuations should be treated with caution unless done by a reputable miner like De Beers, BHP or Rio Tinto. The amount of diamonds, expressed in CPHT - carats per hectaton - and the cost of recovering them, are the second and third factors in the valuation. CPHT is quite misleading because it sounds like something big. It is not! One metric carat is one fifth of a gram, or two hundred thousandths of a kilo. A one carat diamond is quite a big one, most are far smaller. A hectaton is 100 metric tonnes; whereas mining gold is quite difficult because the metal is in parts per million; diamond miners are seeking parts per billion. That is why they are a store of wealth, and very expensive. It is also why miners almost never see diamonds in kimberlite mining.

In addition, extracting diamonds from the ore is very diffficult and many stones are not found. For example, some stones do not stick to grease, which was the only way to process tons of ore quickly, up to the 1960s. Reworking old mine tips can be profitable, especially after advances in detection technology.

Don't get excited by "we have found a kimberlite BUY BUY BUY!" ramps. About one kimberlite in a hundred is economic, and many have no diamonds in them as all. I am (in 2005) invested in African Diamonds because they appear to have found a good one; and in Xceldiam because I believe they have a very good chance of doing the same. This is not a reccomendation to buy! (2011; it was a bad investment for me).

Diamonds are also found in lamprolite, the enormous Argyll mine in Australia is the best known example. Also Panna, the original diamond deposit in India, mined since pre history. Someone else will have to explain the geology.

Industrials are very important in engineering and mineral exploration, they are the stones that cannot be used in jewellery due to flaws and colour. There is an intermediate grade called "near gem" where the value of the stone is the same in either application. Vast quantities of tiny synthetic diamonds are made every year for use as abrasives in diamond tools, they are usually bright yellow under the microscope.

Large synthetics are a cause of fear to some investors, but not at all to me. A stone created by nature, 60 miles down and under the conditions describled above will be different from the conditions of manufacture of a man made copy out of a factory. The French chemist Verneuille discovered a process for making enormous perfect & flawless synthetic rubies and sapphires in 1904; the trade thought they would destroy the gemstone market and were wrong; they are made by the ton for use in lazers, watch jewels etc; and have made no difference whatsoever to the trade in natural gemstones, and selling them as real is a criminal fraud. Diamonds have been cleverly marketed by DeBeers as a symbol of love; would anyone really want a diamond ring containing a synthetic fake? I ignore the marketing puff from synthetic diamond factories, except to laugh at it.

The important thing that interests us as investors is to recognise an diamond explorer's potential for transition from digging alluvials to a miner with a good kimberlite pipe. Lets pool our knowledge and try to identify the few winners!

Figures given here are from memory and approximate. This article was written 6 years ago, and I will update it when I have time to do so. I hope it is useful.

After this sour experience, the company is forced to call off two tenders planned before the end of this year, leaving it with only one tender expected in last quarter of 2011, for the company to sell the withdrawn diamonds. Firestone promised shareholders that the timing will be selected on the basis of financial market and rough diamond market conditions.

http://www.sundaystandard.info/article.php?NewsID=11922&GroupID=3

There for all to see

http://www.firestonediamonds.com/docs/pdf/Kopane_Offer_Admission_Document.pdf

Directors’ service agreements and terms of office

Page 441 article 7.2:

7.2 - As at 31 December 2009 Mr Kenny’s annual remuneration entitlement was £243,000 per annum. Mr Kenny is also entitled to such bonuses as the Board may decide and to participate in the Company’s life and permanent health insurance schemes. In addition the Company agreed to provide a pension contribution of 10 per cent. of salary and a car with a manufacturer’s list price of not more than £25,000.

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Now take this into consideration:

The company has raised £43.15MILLION in the last 2 years and during the last 2 years also the shares in issue has increased by 503% from 61,732,194 to today's 372,613,111.

Very interesting posts on ADVFN which are worth copying here:

"nothing wrong with generous rewards" for SUCCESSFUL businessmen

Cable: Force Firms To Justify Fat Cat Salaries - Yahoo!

PK drew his £243,000 annual remuneration entitlement plus the company agreed to provide a pension contribution of 10% of salary which is approx £24,300, plus his bonuses, plus his life and permanent health insurance schemes, and his company car up to £25,000 regardless of the performance of the company. I understand that PK only holds 0.14% of the company in shares so the SP does not effect him so much at all. He still gets his wedge despite the shocking performance of the company.

The company has raised £43.15MILLION in the last 2 years and during the last 2 years also the shares in issue has increased by 503% from 61,732,194 to today's 372,613,111. Let us see what salary Mr Wilkes is given but since his time at the helm the SP has decreased by 38% in 7 months. Not a great start and no help at all to narrow the "credibility gap" therefore would his salary be the same as PK when he was CEO at £243,000 annual remuneration entitlement plus the company agreed to provide a pension contribution of 10% of salary which is approx £24,300, plus his bonuses, plus his life and permanent health insurance schemes, and his company car up to £25,000 regardless of the performance of the company.

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Firestone Diamonds? Kenny remains confident despite disappointing diamond sales - Proactiveinvestors (UK)

Seriously, is this guy for real!

"August is a quiet time in the diamond market in any case, the 'trade' only really comes back to business at the end of August.

“On top of that we had global instability in the financial markets. So when the buyers came back to work at the end of August they were questioning where the market was going next"

SO WHY THE HELL HOLD A TENDER AT THIS TIME IF THE COMPANY KNEW IT WAS A QUIET TIME!

“Selling bigger parcels would actually better for us because with bigger parcels we can attract bigger buyers.

"These bigger buyers pay better prices. That’s generally because the smaller buyers are middlemen who need to simply make a margin and sell on the diamonds. So for Firestone selling more diamonds in fewer parcels has its advantages"

SO WHY THE HELL WERE YOU PREDICTING 9 TENDERS DURING 2011 WHEN YOU NOW CLAIM IT IS BETTER TO HOLD FEWER AND LARGER TENDERS. YOU HAVE BEEN IN THE GAME A VERY LONG TIME SO WHY THE SUDDEN CHANGE OF MIND!

"We just completed a £15.5 million funding in July, so our cash position is secure and we have a lot of flexibility.”

REALLY, SO WHY WAS IT REPORTED TO BE £13.5 MILLION!

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Charles Stanley Cuts Firestone Diamonds to hold

News Headlines

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Interesting facts indeed, the SP continues to drop and still no clarity regarding the (unmentioned) inclusion of the 'specials' and also also the total carat split between BK11 and Liqhobong.

I see Petra Diamonds is reporting on Monday(LSE:PDL)

Should make an interesting read on the diamond market regarding pricing, sales etc.

Very sneaky selective reporting by FDI regarding the latest tender sales.

Firstly, some may have noticed that the average price paid for Liqhobong has increased significantly from the June/July tender sold for $149/carat to the most recent average carat price of $231/carat. A huge increase despite declining prices which was the excuse FDI put forward for failing to sell 86% of their total carats.

How on earth can this be possible?

I know, very selective reporting by the company as seen previously with a 13.74 carat stone from BK11 which was bulled up then very sneakily slipped into a tender with no mention at all. Here we have another sneaky move by management who have included stones previously bulled up in the July 20th operational update, such as the 33 carat white, 9 carat vivid yellow, the high quality 8 carat white octahedron and the very attractive 1.7 carat pink diamond. Some, if not all of these stones have no doubt been included in the most recent sale with no mention at all to the shareholders.

A very sneaky move in my book and I have warned about exactly this previously in my post numbered 32 on the 31st July.

More selective reporting can be clearly seen from the company in their noticeable failure to declare exactly how many of the total carats for sale came from BK11 and how many from Liqhobong. The company have been very clear on informing us of the carat split on all other tender results in the past so why the sudden change of not reporting this information in the latest particular tender.

In my opinion the failure to report these details is a clear sign that BK11 may not be doing as well had hoped of even the other way around and it is BK11 now doing well and Liqhobong not doing as well as planned. Either way, it is a clear case of selective reporting which can only be described as a noticeable change from the normal reporting procedures and also total lack of clarity.

Taking the above facts into consideration on top of the abysmal result that they only sold 14% of the total carats for sale it can only be described as very disappointing at best accompanied with total lack of clarity.

I also know of other investors who have noticed this clear lack of clarity who have pursued the company for these details above, all with no response at the present time.

Overall, yet another disappointment, yet another over promise and under delivery but what else can you expect from a company with over a decade disappointments, habitual under achievers.

Ah understandable madD.

I've not really looked at the diamond market at all. FDI was more a curiosity at the time. Just wondered if you'd gone any further from your initial musings. Having had family in the diamond business is sure a bonus :)

Surprising that they've sold so little of their haul(12% approx) with the large fall in diamond prices yes. It will indeed be enlightening to see how other producer sales have gone.

On my watchlist too but can't say i pay much attention to the diamond market. Wonder if MadDutch has any thoughts.

Might help to add a link to the news rather than your unhelpful "Oh dear"

In fact I'd go as far as to suggest "Give it a break"


http://www.moneyam.com/action/news/showArticle?id=4220764

Never got round to investing myself, so a fortunate escape.Not great news at all.

Oh Dear!

Hi Mad Dutch,

Since you have declared "I know a bit about diamonds" and also asked if "anyone here done any serious research into Firestone" it would be interesting to know if you have conducted any form of assessment/evaluation of Firestone Diamonds?

Has anyone here done any serious research into Firestone?

Such as valuations per carat from independently confirmed sales.

Plus audited cts/hexaton?

MadDutch.
My family owned a London quoted diamond business, and I know a bit about diamonds; so if anyone has a question, I may know the answer. I was a guest of De Beers for 5 months in 1964/5, and visited most mines including Fincham before mining started, Letsangledrai, Premier, CDM in Namibia and all the Kimberley pipes.

Eh I was here because I follow FDI and thought that the numerous posts intimated that something new was up!

As it turned out, it was nothing more than nitpicking, on your part, in an otherwise interesting two way discussion on the merits of the company as an investment......nothing more.And certainly not to just back up the author who I don't know.

FYG I actually missed the Admin message on future discussion as I was typing my response, presumably at the same time Murakami was.....(we were 3mins apart as you can see in submitting)

I more than happy to admit when others have a better understanding of a company, or sector, and am not one to merely repeat what has already been said purely to comment, one way or another.

Anyway time to move on I suspect. Have a good w/e.

Fangorn,

Thanks for your reply but it is obvious you are only here to support the author and Admin have very recently stated "future discussion on the specific topic of FDI's future prospects and its investment case".

Additional to this you have confessed "I simply don't have time to provide anything constructive" and "there are many more investors with far greater insight into a particular company or sector than myself so there's little chance of adding anything that hasn't been said before".

I am sure Susan appreciates your support but I was looking for you to add something valuable and informative which is company related.

Thanks

I agree you are entitled to make the point but is it necessary to keep on doing so.Surely once is enough? It's fairly minor is it not, and most people I'm sure, similar to yourself, would have seen her declaration of the Advfn board. That aside I have read your insightful qualifications to here investment proposition with interest. I end to spend most of my time lurking on many boards as I simply don't have time to provide anything constructive that hasn't already been said. FDI would only been a small highly speculative punt and not(I'm readily willing to admit) a company I would engage in deep research of...but that's just my investment style. I also appreciate that there are many more investors with far greater insight into a particular company or sector than myself so there's little chance of adding anything that hasn't been said before.

I personally pay little attention myself to most people's "declarations" because they are fluid, continually changing with change in sentiment for small specialist companies such as these. Have to admit when I read the header article I initially didn't even see the disclosure she made...

In order to allow this thread to move on to more substantive company-related matters, the footer of the above article has been amended to make clear that this was a historic position.

Please keep future discussion on the specific topic of FDI's future prospects and its investment case (bullish or bearish). Thanks!

Fangorn,

The fact remains that the declaration at the foot of the article is incorrect regardless of all other issues.

For your information I do not own shares in FDI, much like your self, but I am more than entitled to comment and provide my opinions on this thread simply because I choose to, again, much like your good self despite not owning a single share.

Similarly, like you, I have been a follower and investor in FDI for many years which resulted in significant profit therefore I feel I am knowledgeable of all aspects and operations to comment on past and future events and projects. Maybe you could add something useful company related someday instead of simple support for the author.

I feel is thread lacks balance and despite valid points which I have constantly raised Susan refuses to debate them. A little one sided, misleading and non factual.

I have to say I agree with Smarm - I set a mental stop loss where I will sell, if a non core stock falls to that level, whether or not the fundies have changed. It's often about capital preservation,and if market sentiment changes dramatically, then I'm prone to lighten my non core holdings....if it is a core holding where I am still of the belief that value will out then I'll buy more eg Aviva, Bae.

All depends on your personal approach and to call Smarm out because she was stopped out, despite saying she looks at both Fundies and TA(ergo she is being contradictory in here approach) is plainly ridiculous.

Frankly I can't believe she has engage with you for so long on this pointless discussion. As to expecting her o declare her position every time, that's plainly ridiculous. Despite some very interesting constructive points you seem intent on focusing on something which is, in my view, irrelevant to the discussion.

Do you hold shares in Firestone diamonds? If not, why are you continually commenting on this thread? (A pointless question I know, similar to your declaration that she no longer holds so why is she discussing the pros and cons of this company)

And no, I don' hold either, but have been a potential investor hence I've followed her musings(and some of your responses) with interest - always good to see other people's thoughts.

Smarm,

I am sorry that you misunderstand but you appear to change the facts to suit yourself.

You declared on ADVFN "I am out of FDI.....price fell through my stop". Therefore this indicates that you created a stop loss. This action alone contradicts your statement which sits at the right of this page clearly stating "I use a blend of fundamentals and TA ".

You now sit at a loss and do not hold an active invested interest therefore the disclosure at the foot of the article is incorrect. Very clear and obvious.

Also, I do not take to kindly to threats of moderation. I am simply providing the facts to other readers which you appear to change, misconstrue and dodge. I have also provided factual details of many FDI issues which you have failed to discuss. This thread is for debate and opinion and your threat of moderation is clearly unfair simply because you do not agree with a less than positive opoinion. Balance posts should be the order of the day. Also, I think you will find that your short term opinion of the company have been very far from current day hence the reason of the significant decline in the SP which started way before this weeks market collapse. Infact I correctly predicted this which you did not. My correct opinion again which you seem to take affense to.

May I remind you that this is a free BB and you of all posters should not be misleading posters and readers regarding your vested interest in this company when it is simply not true. You were stopped out and it is as simple as that. Additional to this, despite the solid fundamentals which you claim, you still set up a stop loss which flies in the face of your bullish stance of this company.

Come on Susan, lets not get away from the real facts.

For the fact ledger and the benefit of all onlookers, despite the disclosure at the foot of the article the author DOES NOT hold shares in this company.

smarm, 

I think it is only fair that you confirm to the many readers of this article that you are no longer invested in Firestone Diamonds. Afterall the disclosure at the foot of the article is now misleading and totally inaccurate.

You recently declared on ADVFN that you have had your stop losses triggered therefore you no longer hold your position.

Given this fact it is obvious you are sitting at a loss. Also, given the fact that you declare you invest in the fundamentals of a company I find it very contradictory that you would even set up a stop loss.

Strange and and a costly lesson for all that have taken your advice.

I note that you have not addressed any of the issues which I have correctly stated.

Please continue with your head in the sand totally oblivious of the current situation of company you are invested in/promoting and its many misleading contradictory comments as highlighted by me and also "soundingman" on iii.

smarm,

You appear to misunderstand yet again.

What about the ADDITIONAL £3.5M for Liqhobong Plant 1 or the need for £2.1M working capital which you fail to mention?

May I remind you that ALL of the expense going forward was supposed to come from proceeds of diamond sales from BK11 and Liqhobong. It does not take a genius to know that sales have been minimal and costs have been massive hence the reason for the placing. Problems still exist at both mines.

The recent placing are ADDITIONAL funds which even Mr Wilkes stated would not be required just 2 months ago at the Proactive event as detailed by "Soundingman" over on iii where he asked the direct question.

Please see below and I have provided links for validation:

Some iii bulls absolutely scathing, namely "soundingman", at FDI management regarding the recent placing.

It appears he feels that Mr Wilkes recently filled him with a load of bullcaca regarding funds going forward.

2011-06-02 10:28

"Cash left was £5.5m plus US$6m just borrowed. Makes £10m and adequate for the rest of the year and Liqhobong upgrade"

http://www.iii.co.uk/investment/detail?code=cotn%3AFDI.L&display=discussion&threshold=0&action=detail&id=8337686

Thursday 10:01am:

"Responding to a direct question from me at Proactive Wilkes confirmed cash available was enough to bring Liqhobong to 1.3 mio tons pa"

http://www.iii.co.uk/investment/detail?code=cotn%3AFDI.L&display=discussion&action=detail&id=8588530

today 13:44:

"The timing of the placing is worrying, about one month from the next auction, I know not the procedure - whether cash on the nail or the buyers get credit!

Either:-

1. I have not been told the truth in a spectacular fashion.
2. Financial engineering to favour Institutional Investors is in process.

I will stop before I get angry, roll on November AGM, some searching questions are in order"

http://www.iii.co.uk/investment/detail?code=cotn%3AFDI.L&display=discussion&action=detail&id=8594312

You may like to consider also that "Soundingman" has a very good reputation and has attended many FDI presentations whilst holding FDI in very high regard.

Obviously he is now thinking along different lines after this misleading info given to him.

Anyway, this dog continues its merry slide just as predicted.

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Adding to this I suggest you pay close attention to the very recent presentation on the FDI website which confirms these additional funds such as the ADDITIONAL £3.5M for a "New wet front end will address the problem" due to "Excessive fines" hindering DMS process.

Regardless of the recent £13.5 million placing the estimated CapEx of Liqhobong going forward remains exactly the same at $70m as detailed in the most recent presentation which clearly states "Plant 2 capex of $70m to be funded by 70% debt/30% equity and out of cash flow".

As any sensible balanced investor can clearly see significant additional dilution is required going forward, not to mention a hefty debt with its % interest..

Many clued up investors predicted this recent placing and past performance. I suggest you start listening to them and stop burying you head in the sand.

PS: You may also like to view the bulled up stones which are shown on the presentation. In my opinion the "Vivid Yellow" is just "Fancy Yellow", the "very attractive 1.7 carat pink diamond" is hardly "Pink" at all, the "33 carat white" has some very serious inclusion and the "high quality 8 carat white octahedron" may turn out to be the best of the lot in terms of sale value. Lets just hope they detail the values of each of these this time instead of hiding it like the 13carat stone which they previously bulled up.

"Development in 2011 is funded by December 2010 financing, and steady state production has been achieved in Q2 2011 (Source: Firestone)"

Oh dear smarm, I would assume the additional recent placing of £13.5 million may have taken you by surprise given your stated belief in your article. It did not surprise me in the slightest as certain balanced observers were fully expecting this as detailed over on ADVFN despite the rosy eyed bulls dismissal.

I did highlight the suspect capabilities of management in my previous contributions which have been very evident during their existence. Even Mr Wilkes recently acknowledged the "credibility gap" and here we have another slug of exactly that involving the recent placing.

I fully expect much more disappointment along the way as this dog continues its slide despite "Exceptional" tender results, a supposed positive update AND a "shock" placing of an additional £13.5 million to those out of touch.

"Tenders such as this certainly will not inspire the market at all"

As can be clearly seen, very far from 'Exceptional' in the eyes of the general market.

In fact it is very disappointing in my opinion after such a totally inappropriate title heading. Very embarrassing indeed and I sense the "credibility gap" has just become a little wider.

Sorry but far from 'Exceptional' in my book.

I am of the opinion that the use of the word is totally incorrect and it is used simply to bull it up again.

$600k more than previous tender and it is clear the recovery at BK11 is still posing problems with a mere 2,035 carats being sold.

Tenders such as this certainly will not inspire the market at all.

smarm,

It is very obvious what you are implying.

I have contacted Mr Kenny regarding this matter and I assume he will be very keen to clarify his position which has been clearly put in serious doubt.

smarm,

So it appears you are implying they never mentioned the deal to get a "good price".

That does concern me regardless of being a shareholder or not given the comments of Mr Kenny which I have highlighted previously and also below to refresh:

Published: May 10 2010 13:02 | Last updated: May 10 2010 13:02

One of the companies that is currently on the market is Kopane Diamond Developments, with assets in Lesotho and Finland.

Firestone’s Chief Executive Officer Philip Kenny however, told this news service that the company is not actively searching for deals at the moment.

http://www.ft.com/cms/s/2/1a9c58f2-5c2a-11df-95f9-00144feab49a.html#axzz1OyJAE4Sf

Yet on July 21st, a little over 2 months later, they revealed they had made an offer for KDD. Surely they were conducting DD before the release of the article or if not it was certainly a rushed deal.

This along with the cash flow comment of Mr Wilkes raises some very serious questions in my opinion.

You as a shareholder can dodge the issues raised but history validates their inability to deliver and I fully expect many more disappointments along the way.

smarm,

I am not at all interested on what kind of deal they got.

I am concerned about the fact that 2 months previous to the deal the CEO, Mr Kenny, stated "company is not actively searching for deals at the moment" or words to that effect as clearly detailed below:

http://www.ft.com/cms/s/2/1a9c58f2-5c2a-11df-95f9-00144feab49a.html#axzz1OyJAE4Sf

If this was the case it certainly was a rushed deal, if this was not the case and you are implying they never mentioned the deal to get a "good price", well, that has serious implications!

I stated what I feel and it all revolves around the facts in my previous post which I detailed and their dreadful accessment of BK11.

Magic Pixie,

You are correct about "lot of hype in the past and significant underperformance". It has been ongoing for more than a decade.

BK11 has been utterly comical and if they never jumped on the Liqhobong deal despite only a few months before stating they were not interested at all I hate to think where they would be now.

Below I have provides the link which details they were not interested in Liqhobong:

Published: May 10 2010 13:02 | Last updated: May 10 2010 13:02

One of the companies that is currently on the market is Kopane Diamond Developments, with assets in Lesotho and Finland.

Firestone’s Chief Executive Officer Philip Kenny however, told this news service that the company is not actively searching for deals at the moment.

http://www.ft.com/cms/s/2/1a9c58f2-5c2a-11df-95f9-00144feab49a.html#axzz1OyJAE4Sf

Yet on July 21st, a little over 2 months later, they revealed they had made an offer for KDD. Surely they were conducting DD before the release of the article or if not it was certainly a rushed deal. I am of the opinion that the knew BK11 was a problem.

More evidence of my suspicion can be clearly seen by comments of Mr Wilkes back in April 2010 detailed below regarding BK11 cash flow:

Tim Wilkes told a diamond conference that the junior miner, would soon commission a processing plant at its BK11 kimberlite project. “We will be cash flow positive by September (2010)"

http://www.rough-polished.com/en/news/38482.html

Oh dear, this has been very far wide of the mark and I think you will find BK11 has suffered constant delay aswell as being massively over budget and only provided approx $900k of sales revenue despite being in production for nearly 1 full year! Additional to this you will find that OpEx has recently increased significantly.

So the facts based on the above, in April 2010 they stated positive cash flow from September 2010 from BK11 and the following month, May 2010, they stated they were not interested in Liqhobong but just 2 months later, July 2010, they surprise the market with Liqhobong/KDD deal and, 1 year on of commercial production, BK11 has produced an abysmal $900k in sales revenue!

Currently Mr Wilkes has only achieved at Liqhobong what KDD had when they had it running in 2008. Simply the restart of a mothballed plant. Maybe investors should consider the habitual failure over the last decade by the same team despite the usual hype at previous projects such as Mopipi, Avontuur, Bonte Koe, Groen River Valley and Oena after declaring their vast potential only for them to disappear off their portfolio completely.

How about the tailings project with Debswana after talking it up for over a year or the JV with Tawana at Orapa, how about Tsabong.

Fact is that after more than 10 years and massive expenditure they still do not have a mine producing at satisfactory commercial scale level. I am also of the opinion they 'jumped' onto the KDD for this exact reason. Afterall, if they had to relay on BK11 and their portfolio without Liqhobong the SP would now be sitting below 10p.

After years of over promising and under delivering they may have one last reprieve with Liqhobong but that also has its pitfalls not to mention a colossal CapEx bill too going forward for Phase 2 before any meaningful revenues are realised.

Does anybody know when FDI are going to announce the results of the latest diamond sale? There has been a lot of hype in the past and significant underperformance! It is time to deliver!
I just realised that I have held stock in this comany since march 2004 its been a long wait!!

Interesting article Smarm, thanks for bringing it to the attention of all who reside on these boards.

Certainly an intriguing punt, with significant upside potential as you illustrate. Of course, for such reward comes significant risk(one that I'm happy to take).

Will definitely keep an eye on this one.Just catching up after 11 days away in Kenya.....thousands of emails,board postings to go through.Market has been pretty volatile in my absence it seems.

smarm, it is your opinion just as I stated in my previous post with my comment "it is just your opinion based on " where Firestone MIGHT be going". Your opinion is not based on "a factual comparison with the 3 "majors" you refer to" (which you seemingly refuse identified after asking many times).

Firestone have got the ex-KDD mothballed operations at Liqhobong back to sometime like 2008 levels and there is a very long way to go yet which is accompanied with a huge CapEx bill in the region of approx $70 million. It is also well known that they have habitually failed to deliver throughout their history. Even Mr Wilkes very recently commented on a "credibility gap"!

You state "We can chat again after the forthcoming diamond sale" as if it is already accepted that this forthcoming sale will be a massive success. In all probability it will be much better than the previous one but what you fail to mention is that the last tender dramatically failed to produce anything like the numbers they stated to their share holders, not to mention that they only have had one tender this year when they originally planned nine. In fact the total produce for tender was a massive 73% down on published numbers 3 months previous!

One good tender will not reverse it all and they need to prove they are the right people for the job which they have not done well at for a very long time hence the comment which Mr Wilkes embarrassingly had to admit recently.

Additional to this you mention their exploration areas in the Orapa and Tsabong kimberlite fields. These have stagnated for a long time despite bullish talk of great JV's and untold riches. Instead they chose to pile vast amounts of funds from constant placings and time into BK11, look where that has ended up. I dare say if these areas are anything like BK11, such as BK16 was mentioned in the same vein, they may as well leave them as they are and save the CapEx.

Just my opinion and I have made a good job job of calling this one right in the past.

GL

johnweaver,

You appear to have totally misunderstood also and I am more than capable of sucking eggs.

I do not need the list you have provided, I finished with that basic simple lesson a very long time ago.

By the way, you forgot the most obvious in relation to Liqhobong within the list of companies you mention regarding development assets.

GL

Amanpulo
http://en.wikipedia.org/wiki/List_of_diamond_mines
This link gives you somewhere to start deciding on how to compare output in terma of value or weight.
Most of those on the list are established and therefore are in the main fully valued.
Firestone, Diamond Corp and Stellar may be on the point of developing something new. New to investors that is, so they may be where value, the liklihood of and increase in share price, is to be found.

Thank you smarm for the summary. any thoughts on DIA or Stella?
j

Thanks smarm,

So it is just your opinion based on " where Firestone MIGHT be going" and not a factual comparison with the 3 "majors" you refer to. Although you have not told us who exactly are the "majors" you refer to despite asking thrice now.

I suppose the exact same could be said for most of the junior diamond miners currently listed in relation to being a "major producer".

Firestone is well known for habitually over promising and under delivering which has been listed more than 10 years, longer than most others in the sector, and still failed to deliver value to its shareholders. After countless projects maybe this time they might do a good job but first they need to find the huge CapEx requirement which is needed to progress Liqhobong bringing its full potential.

Thanks for your opinion, partial clarification and good luck with this one but rather you than me.

Betasurfer,

I appreciate your concern but the intent is perfectly clear given the title and certain comments in the article which I have highlighted.

I look forward to the authors detailed reply.

Surely the intent was to suggest that Firestone is about to be promoted as "a commissioned military officer ranking next below a lieutenant colonel"... 

:-)

Hi smarm,

Sorry but you appear to have misunderstood my post completely.

I am very well versed regarding what Firestone are supposed to be doing and that was not my question in the slightest.

Again, who are the "majors" you refer to?

Also, given the title of your article I trust you have done all your comparable research examining every single aspect which has enabled you to come to the conclusion that Firestone will be in the same league as these "majors" you refer to. Therefore do you have these comparable calculations and would you mind publishing them to justify your bold lofty comparisons?

I am sure you will agree, without stating any of the "majors" you refer to and also lack of any comparable data it is fair to assume your article is simply based on your very own opinion only rather than fact.

Many thanks in advance and I look for to your comparable reply.

Hi Susan,

Just a quick observation and follow up questions if I may.

Do you not feel the title of this article is not exaggerated?

You go on to comment "Firestone is one of just 3 listed kimberlite producers outside the majors" therefore taking this comment in relation to the title you are expecting Firestone to "transform" and obtain the same stature and prominence of one of these vaguely mentioned "majors".

Firstly, would you care to inform us exactly who are the "majors" you have in mind?

Also, have you ever made a comparative chart examining revenues, production, costs and every other comparable issue to justify your claim that Firestone can and will be in the same league as these "majors"?

Many thanks in advance and I look for to your comparable reply.