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You are spot on. Duffy feels the pressure on covenants if the rough diamonds price continue to decline. It dropped 4% from his project 2022 price basis, another 4 more % drop in diamond price, amber light will lit up.
He feels the anxiety.
Taking a punt here, as it looks like diamond price index starting to flat out. Who know?
Nonetheless, a few blue diamonds will make a real difference on average mines diamond price for pdl. All stake now on Culinan and Finsch.
GLA to pdl fans.
https://www.miningmx.com/top-story/38587-every-little-bit-helps-for-duffy-as-he-opens-account-at-debt-laden-petra-diamonds/#
A good latest article with Duffy comments. Sound like Tesco. Hope his strategy with Noodles will pay out in current low diamond price, direct channel marketing.
Currently De Beers busy with marine diamond recovery in Namibia since 2017. Doubt they will move to buy mines to restrict rough diamond supply. Anyway De Beers estimate world rough diamond supply will drop in 2021 naturally. Alrosa Russia just operating in Zimbabwe and Angola.Both Alrosa and De Beers have half world market share. The Canadian may not be interested, thus limited buyers either Russian or Chinese but market cap is ridiculously low for pdl, if this stay that way for considerable time, someone will be interested.
500+ debts can be reduced down to 300 to 400 Mln with a few big carats find. Life of mine already extended.
Just need to ensure good efficient operation to attract takeover buyer. Africa is always risky, but if pdl can perform well continuously like now, that is good news.
Clearly some of the existing big shareholders are off loading, could still be Rowe clearing out or smaller
Holder like Cobas. Hopefully not standard Life Aberdeen. They have 15%.
However still good to kick in 500k shares, 6.99p.
Expect some more clearing on Monday, end of Sept books by hedge fund. pDL market cap too low for some funds to hold.
Looks like next step to break 6.92p is imminent.
The usual jump up early Monday and then back to break 6.92p. Looks like easily broken.
6.5p line up next week.
GLA, this dog will take considerable time to turn around; may be only after 21Oct.
The covenants has been renegotiated by Duffy, first thing he did onboard. 2020 and 2021 covenants limit , personally I think it is a joke, the bar too low. Meet with ease.
The only thing Duffy still not doing, and skirting around the issue is debt reduction. Fcf is obviously very important, but shareholders are looking at debts reduction target to boost sp. Otherwise all the carats and Capex will just service the interests 7+%.
Learnt like PMO, fcf is important but eventually forced to put in debts reduction targets. Duffy can get away from debts reduction by focusing on fcf for a year, beyond that debts reduction target will bite. If sp continues to be low, this is a takeover target, Duffy will be out.
Banks are very accommodating becos they want their interest 7+% and principle, and they know the assets value above 1bln. So, no urgency to withdraw loan. Culinan have been revived with good long term prospect.
This sp takes time, 7 to 8 p are good opportunities.
If this goes to 5 to 6p, that even more brilliant buy opportunity.
Doubt Duffy would buy since he has performance shares granted. Why pay if he can get for free. He set the bar low on project 2022 and renego bank covenants.
The next chairman would. Good to have got rid of Adonis and John Dip. Spend spree on Capex.