The company is dealing with a major credibility problem - and potentially a cash problem, but the HY report is probably a bit misleading because SML had the (USD) $12.4m tender result in late July, and there was also $1m owing to Lucapa from Mothae related to technical services payments, which you would assume has now been received given the sale transaction has been finalised.
What is needed, as you rightly pointed out recently, is for Lucapa to communicate it's strategy and vision going forward. Investors understandably expect that Lucapa will pursue a dilutive equity raising to develop Merlin. The result - SP going backwards and shareholders exiting in droves.
IMO, it is clear that Lucapa needs to develop a strategy for Merlin that does not involve dilutive equity raising (debt finance - unlikely, spin off, or project deferral until the natural diamond market 'normalises' and they can raise cash at a more respectable level).
If they can do that - and communicate their strategy coherently to the market, then investors may see some appreciation in investment values that have been absolutely decimated. Until then, I expect more of the same - barring some potential news on the MIC or kimberlite exploration results at Lulo.
LOM Price at posting:
4.8¢ Sentiment: None Disclosure: Held
