Far East Capital Newsletter
Lucapa demonstrates strong fundamental value
23 Aug 2020

In This Issue


Lucapa demonstrates strong fundamental value

Stepping back from general market comment this week, we have released a detailed research note on Lucapa (LOM). We have frequently commented on Lucapa in previous Weeklies but this time we have sought to come to grips with the fundamental value based on projected earnings from its two diamond mines. We have extracted some of the more salient points from the research. The full report is also attached.

Selling at 68% discount to projected Net Profit stream
We have estimated that the projects will generate A$140m in net profits for Lucapa over the next 10 years. With the market capitalisation at $45m, this is a 68% discount to estimated earnings.

Selling at 79% discount to projected Cash Receipts
We have estimated that the projects will return cash of A$217m to Lucapa over the next 10 years. Again, the market capitalisation is selling at a very large discount, being 79%.
Thus, at current levels, the shares are fundamentally very cheap with nothing in the share price for blue sky appeal from kimberlite exploration or mine life extensions.

We have also updated our comments on Titan Minerals

 

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