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Under the Heads of Terms, the initial loan will have a short term expiring on 31 August 2021 and a coupon of 14.5 per cent. per annum. It is expected that the initial loan will be refinanced through the future issue of the CLN to Teichmann, the CLN totalling £1.61m will have a strike price of 40p, a three and half -year term and a 14.5 per cent. coupon compounding annually. Interest will roll up and be paid at maturity, repayment or on conversion. The CLN will be convertible three months after issue at any time by Teichmann and by BlueRock if the Company's share price is above 60p.
So, as I understand this, and I obviously must be wrong, even after the CLN are vested and the Teichmann Group have increased their holding to 49%, BRD will still have to pay them some £930k in interest. Is this correct are am I totally wrong. If I’m correct, why wasn’t there a standard rights issue offered to all shareholders offering them the same terms?
Extremely good results except the cash burn which is buried after the highlights. Without the exceptional August this would be in hanging on.
Revised 2021 guidance
Previous 2021 guidance
2022 guidance
2020 actual
Carats produced
22,000 to 26,000
24,000 to 28,000
40,000 to 43,000
15,371
Grade
4.0 to 4.3
4.0 to 4.5
4.0 to 4.3
3.8
Value per carat USD
400 to 440
400 to 440
400
295
Revenue USDm
8.8 to 11.6
9.6 to 12.3
16.0 to 17.2
3.6
Ludicrous Mkt. Cap. and very few shares available have not led to a 100% rise in the SP but I'm not losing patience just yet.
Has anyone else noticed that they do have a habit of putting doubt into shareholders minds on what is going on which dilutes the positive news on sales of the stones!
Henrik.
I am still holding my profit here, but you are right. I would welcome a lower price to reinvest. This has so much potential here and hopefully the mine is on the cusp of profitability.
People here clearly try to talk down the share price. Superroty was long just a few weeks ago now sold out. The finance agreement with Teichmann was done in May when the company situation was challenging, nothing new to talk about really. Since May the diamond market recovered further and BRD found a 58.6 carat diamond (unfortunately the condition was not perfect but still sold for 585k$). New plant is about to get commissioned. The find of the 58.6 carat diamond confirm that diamonds of this size exists in the pipes. What if they find another one or several with perfect condition (it could sell for a large part of the mcap/EV) on top of the normal production flow which will soon double.
Just when the tide turns and profits are being made, this will be taken private and I've no doubt PI's will be shafted.
That was the point I was driving at. And 'asset grab' seems to be appropriate. The revenue from the last diamond sales could have made a dent in the loan. Agree, a further raising would have been cheaper. The note at the bottom of the AGM document implies that Teichmann still have a right to make an offer for the company even if the right is deferred at this time.
I've said before that the scheme to upgrade the processing plant doesn't appear to have been planned well but accept that some things such as the riots in S.A. are outside the company's control. But the need for either raisings or this loan has turned the project into a money pit. The loan deal was awful and forces the SP back down to around 40p which is where it is heading.
This is a diamond mine with an in-the-ground resource value of well over US$150 million and the BRD current market cap. is £7 million. The whole deal gives Teichmann the opportunity to take the asset / mine for a 'song'.
Some basic maths, but for £1,610,000 the note holders are getting 31% of the company, we are then paying them £900k in interest for the privilege. This means that 31% of the company is actually worth £700k, valuaing the overall company at £2.2m. Seems like the worst deal ever, especially at a time that we have the highest cash flow. IMO this is an asset grab and raises questions over the BOD relationship with the largest shareholder.
Why not just do a discounted placing? At £7m mcap could have raised twice the amount and not paid £1m for the privilege.
Just averaged up. Over 2m turnover in August, 1m of which was 'normal' operations. Even without the big gems that's so much more than the current mcap. Think revenue last year was under 5m so we're looking at between 150 and 200% increase surely.
The M’s & Art’s state ( I’m led to believe) that even is a bid is forthcoming from the main shareholder, they have to have over 90% of the outstanding 51% shareholders agree. So it isn’t just a walk in the park or a back door cheap takeover.
Agreed Henrik. A bit of scaremongering going on here i think.
Good points thanks
:)
The Convertible Loan has been known since May, at that time BRD was in a much worse situation but operational development and pricing (cash flow) improved a lot since that. If for some reason there is an issue with the Convertible loan, BRD would need to make a placing instead. But it is kind of just the same effect as if Teichmann would later exercise the right to convert to shares. Overall shareholders should look at this as the 6,5m shares to Teichmann will get issued sooner (placing) or later (exercise of warrants from convertible loan). At 20m shares and Share Price 50P Company would have Mcap 10m£ and be in a strong financial position. Then look at the fundamentals and potential for large diamonds, BRD can easily make 10m$ annual profit from operations (450-225)$*45000 carats.
The Convertible Loan has been known since May, at that time BRD was in a much worse situation but operational development and pricing (cash flow) improved a lot since that. If for some reason there is an issue with the Convertible loan, BRD would need to make a placing instead. But it is kind of just the same effect as if Teichmann would later exercise the right to convert to shares. Overall shareholders should look at this as the 6,5m shares to Teichmann will get issued sooner (placing) or later (exercise of warrants from convertible loan). At 20m shares and Share Price 50P Company would have Mcap 10m£ and be in a strong financial position. Then look at the fundamentals and potential for large diamonds, BRD can easily make 10m$ annual profit from operations (450-225)$*45000 carats.
This is precisely why I have totally derisked here. I am now on a free ride with just my profit. I am sure things will be okay here, especially when we are so close to ramping up production but another discounted dilution would not be a shock to me.
I think that this clause sums up the present situation pretty succinctly: RECOMMENDATION
Should the Resolution not be approved at the General Meeting then, in the absence of alternative funding arrangements being made available and based on the current
anticipated cash flow requirements of the Company, the Directors believe that current cash resources of the Company are only sufficient to enable the Company to continue trading for a maximum of a further one month in particular as the Company will be required to redeem the Simple Loan Notes in accordance with their terms.
It would be wise to read the documents provided by the company ahead of the AGM and understand their implications - e.g.
https://www.bluerockdiamonds.co.uk/files/20210901ProjectTigerWhitewashCircular-clean.pdf
Still madness to sell imo. I bought 30k around the 40p mark and am holding for much higher prices. The company is on the cusp of serious expansion which can only be a good thing for all holders.
I can only assume that the recent drop in the SP is the punters who bought in at the last cash raising exercise at 40p are selling having made a decent turn.
Perhaps they can use the money to pay off the Teichmann loans....? It's probably Teichmann's percentage holding that's putting the market off. Hopefully, once the plant is fully commissioned, there won't be a need to get loans or do raisings for operating costs or capital costs.
Disappointing reaction so far considering we have taken in 20% of our market cap in revenue in just one month. Still under the radar but hopefully some positive coverage later will get us noticed. Also could be anytime they find another big stone considering they found 3 just in August