Ann: Lulo Diamond Project - Update, page-65

Cosmick,

To further explain my opinion and it is only my opinion as I make no claim to any "inside" knowledge so feel free to shoot it down (as all the rampers here will try anyway).
But as you stated I have been correct so far.

It goes like this,
When you apply for bridging finance the first thing the lender will give you is their terms for repayment including interest (term sheet) that you can either accept or reject.
This forms the basis of the first announcement.

http://www.asx.com.au/asxpdf/20150121/pdf/42w31p01dm2hrd.pdf

This is not an offer for the money but simply the terms that if it was offered would have to be observed.
IMO it was a bit misleading to build up hopes for this type of finance before it was certain, they could have just said that they were exploring different finance options.

Next step in the process is Due Diligence.
Now this is just a step to show that the company is legal, has some form of tenure and such like.
It is NOT a guarantee (especially on a non-JORCed speculative venture) that it will ever turn a profit.

What the lender would be more concerned about is the final step, provision of Security.

I am quite prepared to believe LOMs claims that the first two steps have been addressed but from the following statements it appears that they have not been able to provide the required Security.

"allow completion of legal formalities and provision of security, being conditions precedent to provision of funds"

"to complete the gazetting and incorporation formalities which are required to provide the necessary in-country security for the investment group."

from
http://www.asx.com.au/asxpdf/20150227/pdf/42wy0t7hqnvgts.pdf

Now why is the Security provision falling short?

If I was going to lend $15m US to a company that was only worth $40m Aud I would ask for some sort of lien or hold over the entire operation, lock stock and barrel, wouldn't you?
By this I mean the lease, any infrastructure and all equipment.

Now look at the last financial report from LOM.
http://www.asx.com.au/asxpdf/20140910/pdf/42s4c7v34973gx.pdf

What does it list as assets???
Not very much, 11 k in plant and equipment !!!
And the major item of "deferred exploration costs" which they hope and pray that they will someday get back.

So in my opinion the lease, the two DMS's, the non-leased Tonkas, the camp, any plant and any diamond in the safe belong to the JV of which LOM is a junior partner.

Now do you think that the Angolans are going to allow any part of what they own the majority off to be put up for Surety?????

If you think that they will, I have this slightly used bridge for sale.

IMO, bridging finance will never eventuate and I firmly think there will be another CR in the next 2 or so months.

Both P and myself said the same before Xmas and were abused and ridiculed but what came to pass?

But thats only my opinion, DYOR and make up your own mind and best of luck.