Two Canadian Diamond Miners Facing Stock Delisting

Mining and Exploration
26/08/2019 14:14

Two major Canadian diamond miners, Stornoway and Mountain Province, have been put on notice and will be facing a delisting review from respectively the Toronto Stock Exchange and Nasdaq, as an extremely soft market has punished their recent results and their share prices have plummeted.

Stornoway Diamonds

Stornoway Diamonds announced on August 22 that the Toronto Stock Exchange (TSX) is reviewing the eligibility of the corporation’s securities for continued listing on the TSX and has been granted 120 days to comply with all requirements for continued listing. If Stornoway cannot demonstrate that it meets all TSX requirements on or before December 20, 2019, Stornoway’s securities will be delisted 30 days from such date, the company explained. They caution that "There can be no assurance that the Corporation will successfully regain compliance with the TSX listing requirements within this time period, in which case the Corporation’s common shares and convertible debentures would cease to trade on the TSX and ...may not continue to trade on any other trading platform."

Stornoway has been impacted by the challenging environment in the low-quality end of the market and their diamonds have achieved much lower prices than planned due to an unforeseen oversupply of rough, given the glut of polished goods on the market. Back in June, Stornoway arranged bridge financing to keep the Renard mine operating while the company undertook a strategic review with the aim of restructuring its finances, but their most recent financial results from Q2 (three months to June 30) were again disappointing.

The miner reported a net loss of over C$396 million (US$298 million) "due primarily to a non-cash impairment charge of $442.7 million", which effectively nullified a 230% year-over-year revenue increase to US$142 million (C$189 million). This prompted them to note that their forecasted cash flows “will not be sufficient to meet the corporation’s obligations, commitments and budgeted expenditures through June 30, 2020 based upon current market diamond prices.” However, the Bridge financing lenders amended the terms of the sale and investment solicitation process: the original deadline for a submission by third parties of a qualified non-binding indication of interest was July 15, 2019, which was extended to September 16, 2019, though they are not optimistic about finding an investor/buyer before that date - in which case, the company will have defaulted on CAD 11.7 million ($8.8 million) bridge loan. Stornoway’s stock fell 25% on Friday following the announcement and will open Monday at 0.015 cents.

Mountain Province

Mountain Province Diamonds (TSX and NASDAQ: MPVD) announced on August 13 that it received notification from Nasdaq Stock Market that it is not in compliance with the minimum bid price requirement for continued listing on the Nasdaq Stock Exchange and was given six months to raise its share price or it would no longer be eligible to list on Nasdaq. The minimum bid price required for maintaining a spot on the exchange $1 per share. It received the warning because its price had fallen below that level for more than 30 consecutive business days, no longer meeting the minimum bid price requirement. Since that announcement, Mountain Province's share price has fallen further, currently sitting at $0.835.

Mountain Province has been provided 180 calendar days, or to February 10, 2020, to regain compliance with Nasdaq Listing Rule 5450(a).  In order to regain compliance, the company's common shares must have a closing bid price of at least US$1.00 for a minimum of 10 consecutive trading days.  In the event that they do not regain compliance during the first notice period of 180 calendar days, or February 10, 2020, MP may be eligible for additional time to regain compliance or may face delisting from the exchange. The Nasdaq notice does not affect the company’s listing on the Toronto Stock Exchange.