Far East Capital Newsletter
Lucapa Diamond Co - showing us the money!
18 Dec 2021

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Lucapa Diamond Co - showing us the money!

We continue to see funds easing out of mining situations with share prices of many companies being down 50% over the last six months. Price get marked back when Wall Street falls, only partially recovering when Wall Street bounces. There are many downtrends. I can't see why it will get better in the short term.

Many traditional metals stocks seem to be on the wane (with some outstanding exceptions e.g. MetalEx) but even the battery and alternative energy stocks have lost momentum. There are so many stories out there. We have little ability to understand which ones are going to be winners as the bull market in this sector has been based on rhetoric and promotion rather than hard numbers (not unusual). Punters have taken the bait hook line and sinker. If this bull market is like others in the past, there will be a reckoning, perhaps sooner rather than later. But, who really knows?

However, not every stock falls at the same time. As money looks around for better stocks to be in, we can see very strong performance in special situations e.g. stocks that have been a dog for a long time that have eventually started to come good. The best example of this in recent days has been Lucapa Diamond Company. That is a company that had too many placements and issues in succession, causing a gross underperformance in the share price going back a couple of years, but things are different now. Good financial and exploration results have been inspiring aggressive buying. Everything seems to be going well for the company.
 

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