Shareholders approve Firestone's BSE exit
Mbongeni Mguni | Thursday December 5, 2013 17:51
In October, the British diamond producer placed its suspended BK11 mine in the Boteti sub-district up for full or partial sale, hoping to recover all or part of the operation’s carrying value of 10.2 million British pounds (P142 million). The planned disposal of BK 11 also includes Firestone’s exploration leases in Orapa, Tsabong and Kokong, which are projected to hold more than 170 kimberlites or rocks containing diamonds.
Although details of the voting were unavailable at Press time, Firestone officials said all resolutions, including the planned delisting, had been passed at London’s AGM last Friday.
Directors had previously said the planned delisting was due to both low liquidity on the BSE and the disposal plans.
“Since listing on the Botswana Stock Exchange less than 0.02 percent of the Company’s issued shares have been moved onto the BSE and trading on the BSE has been negligible,” directors said ahead of the AGM.
“The company is in the process of seeking to unlock value from the company’s Botswana assets through disposal or joint venture.
“In light of these circumstances the directors have formed the view that the administrative costs of the BSE listing are no longer justifiable.” The junior miner, whose flagship operations are in Lesotho, is yet to announce the future of its Botswana Stock Exchange investors.
However, a recent BSE “delistee”, Aviva Corporation, offered its local shareholders a share sale facility which was accessible for up to six weeks after delisting. Shareholders who did not participate in the facility, were transferred to Aviva’s Australian primary listing at the company’s expense.. A similar transfer to Firestone Diamonds’ primary listing on the London Stock Exchange would benefit BSE investors, particularly in the event that the BK11 and lease disposal is of a partial nature.
Local shareholders will be hoping a share sale facility will offer them some premium on the P0.60. Firestone Diamonds has been stuck on the BSE since plummeting by P1.16 on January 25. The exit price, however, is not expected to be anywhere near the P3.35 Firestone Diamonds debuted at on the BSE in 2010.
The latest developments are a far cry from the optimism that obtained at Firestone’s BSE listing in June 2011 when then chairman, Philip Kenny, said the move was being done to “offer Botswana-based investors the opportunity to participate in the growth that we expect”.
The British company had commenced production at BK11 in July 2010, racking up diamond sales worth 800,000 British pounds (P11.1 million) in 2011.
In February 2012, BK11 was placed under care and maintenance due to what executives described as “a combination of operational challenges and weak market demand for the precious stones”.