(Sharecast News) - Firestone Diamonds plans to cancel its listing on AIM to cut costs and ease pressure on its finances caused by falling diamond prices.
The company said the costs of its listing, including broker, legal and regulatory expenses, provided little benefit and could be used to preserve cash. With diamond prices expected to be depressed for some time and lack of liquidity in Firestone's shares there is little value in staying on AIM, Firestone said. The company will also reduce the size of its board.
Firestone also cut its production guidance for 2020 to 720,000-750,000 carats from 820,000-870,000 carats and said the amount of ore treated would be reduced. It blamed a previously disclosed power disruption for reduced production and higher costs.
Paul Bosma, Firestone's chief executive, said: "Due to the production setback and continued lacklustre market conditions, the Board has decided that it is imperative that it does all it can to reduce costs in order to survive the prolonged downturn. This includes delisting from AIM and reducing the size of the board."
The company's shares lost two-thirds of their value, dropping 67% to 0.65p at 11:07 GMT. The company will hold a meeting on 13 March to seek the approval of at least 75% of shareholders for the delisting.
Firestone said that since production started in 2017 at its Liqhobong mine in Lesotho it had not achieved its $107 per carat target price. Its Liqhobong Mining Development has struggled to service its debt and has agreed a second debt repayment standstill with its lenders.
Diamond producers have been hit by sharp falls in gem prices, particularly for the smaller stones produced at the Liqhobong mine. Firestone said the market could recover but not as quickly as expected and that it needed to hold on to as much money as it can.
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