Ann: Lucapa completes divestment of Mothae Mine stake, page-32

I can just repeat my statement. We have no money for dividend, also not just with the Lulo alluvials. My major mistake when initially entering into Lucapa was, that r<I thought that evenues from alluvial can be taken to fund the search for the jackpot. I initially thought: "Great, the alluvial mining is enough to fund the search for the source and so I just have to lay back and wait". This was my initial idea in 2015. I was aware, that it can take 1 year, 5 years, 10 years or 20 years but in case that the source is really on our concession (where I see a 60-70% probability if I look on the rivers on the map) we will finally find it and then Lucapa will become a ten-bagger at minimum.

Unfortunately it was never like this, the revenues from the alluvials were not sufficient to fund the costs, some years they were (e.g. when we found the 404 ct) but in average there was a constant need for CRs, even before the acquisition of Mothae. This is important to understand and I have the impression people do not understand this and think we have tons of money just because we have a conbstant revenue from the alluvials, but revenue does not mean profit. There are various reasons, why revenues do not cover costs in average:
- our share of the alluvials is only 40%
- we have to sell most of the diamonds via Endiama, which pay not the highest prices. This is what I see as country risk (or corruption). E.g.: I am not sure but if I remember correctly the necklace made out the 404ct diamond was ending on the neck of the daughter of former president, also owning Rosas & Petalas who owned a part of Lulo. Now after change of president she is gone but I do not see that corruption lowered. Well on the one hand it is their land and their ressources, on the other hand corruption or we can also call it an informal extra tax not based on revenues not on profit will result in the fact that we will probably get only 30-35% of the 'real' alluvial revenues. And from this we have to fund 100% of the company Lucapa.
- Besides of this there are the other known issues. The risk is fully on our side, all money that is needed for exploration and mining comes from Lucapa if it is not covered by the Lulo revenues. Money transfer out of Angola costs time. These two topics do not harm in terms of average profitability of Lucapa but may caused short term cash problems.

But the mayor issue is that Lucapa in average is not profitable but an exploration company that spends money to find (one of) the biggest diamond mine(s) in the world. And spending some money on other topics (like Mothae or Merlin or dividens to shareholders) just lowers the value of the company. As I said, I am curious about the next yearly end closure, I expect a loss of 50 M$ for this year due to Mothae write off.

As we have no money, no reserves, a bombed share price, only 2 million in the cash box, and an imminent CR on the horizon, the only chance for the company to survive that I see is to balance cost and income and not spend money for any kind of adventures, neither Merlin, nor dividend nor anything else.