It looks like Lucapa has found the source pipe of its fabulous alluvial diamond deposits

It looks like Lucapa has found the source pipe of its fabulous alluvial diamond deposits

Lucapa back in the spotlight

After more than five years of searching for the source kimberlite pipe for the fabulous alluvial deposits that it has been mining at Lulo in Angola, it seems that Lucapa (LOM) may have achieved its primary exploration objective. The announcement last Monday, of the initial kimberlite bulk sample results, qualifies as a “discovery” in the true meaning of the word. Thirteen diamonds with a combined weight of 4.15 carats were recovered with eight of them being of the rare Type IIa category, from a 2,192 m3 sample. It was an understated release without any euphoria, but it was nonetheless very significant.

When a kimberlite is being assessed you start with the first step of determining whether or not the pipe is diamondiferous. The vast majority of pipes are not, so recovering macrodiamonds, as opposed to even micro diamonds, is enormously encouraging. So far only 1% of the surface area has been sampled but we should not expect a homogeneous distribution of diamonds - it could be better or worse elsewhere in the pipe. The company is
moving a crushing plant to the location to better assess what is coming from the pipe. We would expect to get even better recoveries once this is operating.

This pipe has a surface area of 8 hectares (20.8 acres), so it is big enough to host a meaningful-sized mine. It is typical for pipes like these to appear in clusters so there is a strong possibility that there will be more than one pipe that will yield diamonds. The targets have been identified but they are yet to be tested.

Assessment of kimberlite pipes involves progressively larger samples being taken to assess the discovery. Once 5,000 carats have been recovered they can be sent off for third party valuation and then you can start your estimates of what the discovery is worth. The speculation to this point will be both the frequency or grade of the diamonds, and their value per carat.

Pipes typically have a number of eruptive pulses that bring diamonds to the surface and each of these can host different concentrations of diamonds. Information on this front will be gathered for mine planning purposes. In addition, wide diameter drilling will be needed to test the pipe at various depth levels, being also necessary for mining planning purposes.

There is no point in being too modest about this sort of discovery because results like these are rare. Though, it is obvious that the Company is being a little cautious at the point, perhaps because of one or two premature bouts of optimism previously.

Lucapa now presents itself as a solid earning story given the guidance released a couple of weeks ago. Add to this the enormous blue sky potential you get when a diamondiferous pipe is discovered and you have the makings of a very valuable company.

WeeklyComm 13 November 2021 (fareastcapital.com.au)