The Nasdaq listing of the Dermot Desmond-backed Canadian diamond miner, Mountain Province Diamonds, is under threat after its share price plunged by two-thirds in a little over a year.
Nasdaq has written to MPD, in which Mr Desmond owns a near 30 per cent stake, to warn that its share price has fallen so low that it no longer meets listing requirements. The American exchange has given the company 180 days to meet the rules, following which it could delist the stock.
Under its listing rules, Nasdaq companies must maintain a bid share price – the price at which brokers will sell – of at least $1 per share to stay on the New York exchange. If a company falls below the $1 mark for 30 consecutive days, it gets a written warning.
MPD’s Nasdaq share price has fallen from $2.85 early last summer to about $0.95, and it has bobbed around this level in recent weeks, prompting the warning missive from Nasdaq.
Cooled
Investors have cooled on the stock because of competition in the industry from cheaper lab-grown synthetic diamonds, and also because of a disappointing bounty so far from Gahcho Kue, a diamond mine deep in the Canadian Arctic tundra in which MPD holds a 49 per cent stake.
MPD has told its investors that it has until next February to come back into compliance with the listing rules, or it “may face delisting from the exchange”. It also said there is a chance it nay be given more ttime to comply.
In the absence of an improvement in sentiment from investors, the options open to MPD to help bump up its share price include implementing a reverse share split, in which shares are effectively merged to reduce their number and hike the unit price, or a company-funded share buyback scheme.
MPD is also listed on the Toronto stock exchange, but potentially losing its Nasdaq listing would be a blow as it would reduce the liquidity of the stock and potentially crimp its access to new equity funding, if it were required.
The company is chaired by Jonathan Comerford, an employee of Mr Desmond's International Investment and Underwriting vehicle. Mr Desmond's son, Brett Desmond, also sits on the board.
Last week, it reported disappointing half-year financial results. Total revenues were 156 million Canadian dollars, down by 5.5 per cent, while half-year earnings were down by a fifth to 58.8 million Canadian dollars.
