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Agreed wigwammer,
we just need to confirm last mont’s high as this month’s floor - so we can reach new highs next months. The pattern will repat itself the coming months. And it will get a lot - a lot ! - higher than the current 115ish
Reg Russian diamonds: either they find a market and then the future is just bright because demand is exploding in China and US, production is up, and pdl is well on its way to make a record killing revenue and fcf year! And then next year will be even better. Alternatively, the Russian diamonds must stay at home, and then the laws of demand and supply will be determining the price to move up further than it would otherwise. The market seems to be sitting on the fence a bit here, it is, after all, a complicated situation… and the price is already very high and projectet to increase even without the Russian issue.
Either way, all is good for pdl shares’ future!

Carats: Your argument is completely incoherent, to put it mildly, that “pdl shares are not worth it since the market is pricing pdl shares at a low rate”. The current trend since december is a steep rise. Carats, this might be your last chance to get back on the train before we it is too late ;-)
Furthermore, the implied alternative seems to be that one should buy the shares when the market has seen the full potential of pdl…
But. Then. It. Will. Be. Too. Late…

Altough todays RNS follows the trend from the 80% announcement 25th Feb '22, it is still noteworthy.
Since, if the numbers add up, with PDL in 2022 FY to date have sold 2,3 m carats at about $405M - then the FY22 should land above $600M revenue... that is a record breaking lot!

Richard (CEO) just mentioned that they have engaged the credit rating agencies Moodys and S&P for a rerate, and he expects Moodys to deliver an updated rating in March, and S&P "maybe sooner than that".
This should open doors for further sp improvements...

Furthermore, just noted from the CFO presentation, that the new capex will be internally funded through operational cashflow (not new debt), and PDL remains committed to further reducing its gross debt, with a capital allocation priority to early redemption (as mentioned this opportunity opens up for the rest of the gross debt after March 2023).

Hi Fre,
indeed, e.g. the CTO just said that PDL increases its target for project 2022 to +$200M annual net free cashflow !

The currency exchange risk is also highlighted here: https://www.stockmarketwire.com/article/7230132/Petra-Diamonds-underlying-profit-rises-amid-higher-gem-prices.html :
"Petra Diamonds underlying profit rises amid higher gem prices
- 22 February 2022 | 07:45am StockMarketWire.com
- Diamond miner Petra Diamonds said its first-half profit fell due to foreign exchange movements, though its underlying earnings improved amid a rise in gem prices. Net profit for the six months through December dropped to $49.1 million, down from $67.6 million year-on-year..."

hi Nelson,
I agree that the increased capex can be covered by operational cashflow in the years to come. But to be correct, as far as I can tell from PDL reports, PDL can repay its debt as og March 2023, but at a premium of around 4-5%...
Regarding todays report: I am a little surprised that 22H1 vs. 21H1 shows a $70m loss on exchange rate - why do they not hedge their currency risk?
Equity: The current testing of the 90-ish level was expected after the 12 months high last week, and will serve to establish the new floor before further sp increases.

Furthermore, many investors might take 5% as a satisfactory cashflow yield level. In that casem the numbers begin to look like the historical levels... and the two perspectives merge...

Like this: Assuming management FY22 guidance of free cashflow is right, around £150M, a yield level of 5% would require £3000M of total equity (=20*150).
Therefore, it is worth a thought that for the past ten years, the 3000 sp level was the historical low - right until the debt trap went off for real with warnings of debt breach etc., and the sp crashed below 3000 in June 2018...
Either way, my conclusion is the same as always:
Saddle up Petrarians - we are in for a good ride!

An alternative to historical benchmarks could be cashflow yield or enterprise value.

Enterprise Value: has been at the 1500 level, which would suggest that the equity of a debt free PDL could reach 7 times the current level. However, last time PDL had such a high EV, the debt was crippling and the EV might not have been realistic. So, a little less could do it, sat, 5 times current level.

Cashflow yield: is 10% a good level for a miner? In that case we are looking at about 10*m150gbp = 1500 or 6 times current level of equity…

My best guess is that the current investors are looking at the cashflow, which would point to the latter as the best theoretical method for identifying exit points… or?

Buy low, sell high - right?
Now, we know the basic support level is at 60, currently good support at 85 / 90 etc, with an all time low of 45 (29th Nov 2021). Personally, I am green at 75p. So much for good entry points.

But what are your thinking on exit points in a 1-3 year timeline?
I am assuming the debt problem is solved, the productivity is normal and the market radically improved. On that basis, why should PDL not be able to reach at least the level of end 2019 (500p) or 2018 (2000). Given the likely net cash situation next year, we might even reach the end of 2017 level (4000).

Some might think that 25, 50 or 100% profit on their current badeline in itself justifies as an exitpoint. I respect such methods.
But if you are looking to maximise the value of your current PDL shares - when would you start to look for the exit-signs?

As expected we just had to test the 85 as support, before the next leg up.

Thanks Dog, now, that was funny LOL

Whether 90 is broken for a short test of the 85 support is not important to me, as long as we see the continuation of the current rising trend on a weekly basis in search of the new resistance level, whereever it may roam,-)

Hi Carats,
I had actually expected more turbulence around the break of 90-level given previous experience.
However, we had high volume buying yesterday for the break upward through resistance: A break upward through resistance is a buy signal. Especially if volume is also increasing. It looks like the sellers who used to be at this level are gone, but there is still buy pressure in the stock.
Now, if that is really the case, maybe we can rest for a few weeks until the 22. Feb, with 90 behind us as support (!) and then the next leg should go up...

exactly

Hi AV,
yes, PDL have a significant inventory, which will turn to cashflow at some point. But bear in mind that the reduced net debt position does not in itself mean that the actual debt is being repaid. So although PDL has repaid some of its debt, it is not to the same degree as the net debt is being reduced.
Also, I do not think it is the current cash balance nor next diamond auction of inventories, which will drive the SP forward from here. There are larger patterns on the move...
So, two comments to your points:
1) inventory is just one of many factors counted into the net debt position, which is a better measure for overall financial health.
2) None of us really know what the debt for equity price was, since it was traded in a closed circle. What matters is whether the new 91% shareholders, after having reduced their stake somewhat can now begin to take on the role of investors instead of selling everything on the short term to reduce risk.

Actually, what is really important is the strategic interest of large investors, and their willingness to take risk. Therefore, as I mentioned before, the breaking of the 90-level is a significant event. Furthermore, when PDL gets its rerate from Moodys or similar, the risk level for investors goes down, and I expect this will give us a jump upwards in SP. Finally, given an historic pre 2017 level that was about 100 times the current share price, but with an unsustainable balancesheet, poor market conditions, and bad management - my guess is that even if we take the full effect of the 9:1 dilution into account - we still have a share with a huge potential here!

Hi Sam,
yes, it is looking good today!
I really hope we can avoid the usual selling backlash at every move upwards from the former bondholders. We will know more tomorrow. So far, the development is looking sustainable.
Longer term, I think it is more a question of when - not if - we will get back to the pre-corona levels.
I recognise that the dilution created a lot of new shares *9, so the points in time are not directly comparable. Nonetheless, even with a 9:1 dilution, the equity has a lot of headroom to former days of glory. And with both the company and the market in seriously better shape than pre2017... I sleep well at night.
FYI: I focused my portfolio to 95% PDL about a year ago, just after the dilution. It has also been a loong wait. Not as long as yours though! Anyhow, you can still do it ,-) All the best...

But the market and I do not always agree on timing…
So, without any significant positive news, we may have to wait until April/May before something like an actual breakthrough has gathered momentum. I hold.

Hi Jingle,
yes, I have given the 90-ish resistance level a lot of comments along the way in previous posts.
Hitting 90, at first, there will be turbulence and sell-offs, but if demand is strong enough, and sp manages to stay above the 90-mark, it means we have broken a significant pattern of resistance that has held the sp down at the 60-90 level after the crash landing caused by covid hitting the world markets.
Then, once we actually leave the current regime of sub-90 sp, because we now have a markedly lower net debt, strong diamond market prices, great operational and financial results and good management team, the true value of PDL will shine like a diamond and cause a significant improvement of the sp - I believe ,-)
After 90, my next target is 120, then 150 and after that anything goes...

Hi Wigwammer, completely agree.
As I said, I am not sceptical nor worried.