Fareast capital
Look at special situations while markets
remain unconvincing
http://www.fareastcapital.com.au/newsletter.asp?id=154
Lucapa’s $15m placement will be the turning point
At the risk of being the boy who cried wolf one too many
times, I see the $15m placement at 23¢ by Lucapa as the
last piece of the jigsaw puzzle. Expanding businesses need
greater amounts of working capital and the diamond
business is no different. The market has been aware of the
tightness of cash flow projections in 2018, and the need to
raise more money, so there was the overhang in the
market. That issue has now been resolved.
As good as the Angolan alluvial diamond mine is, and the
prospectivity for the source kimberlite, LOM has been
struggling to find sustainable support in the market.
However, the dynamics around this company could change
dramatically with the start of work on the Brooking
lamproite pipe in the coming dry season, in the Kimberley
region of WA. Remember that in a hole drilled last year the
Company recovered 119 diamonds. This is an exceptional
result, but if it is indicative of the diamond population in this
pipe we could be seeing something really big.
The placement mostly went to three high net worth
investors, but the lift from the originally sought $13m
suggests other players have come in. Provided all of these
guys are serious investors, as opposed to short term
punters, we have most likely seen the bottom of the
downtrend. That means it is all upside from here
