Far East Capital Newsletter
Lucapa's Mothae Kimberlite Acquisition Ticks All the Boxes
5 Feb 2017

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Lucapa's Mothae Kimberlite Acquisition Ticks All the Boxes

LOM has been delivering on the diamond production front with sales of US$51m from the Lulo mine in 2016. It is the most impressive alluvial diamond mine in the world today. Yet there are still many investors that baulk at buying Lucapa shares because of the location in Angola. Investors don't seem to trust the government. The geology speaks for itself but it is an alluvial diamond mine, not hard rock, so it is more difficult to establish JORC resources. LOM has a minority interest in the mine, holding only 40% equity. Even though it is proving very profitable and a great cash generator, investors seem to want more.

Conscious of the negatives expressed above, LOM has been on the lookout for a good project which addresses these concerns, outside of Angola. Many projects have been considered and rejected as being unsuitable or too low quality when compared to the Lulo productions. At the end of the day any new acquisition had to complement the high value production and be of institutional quality or it wouldn;'t be worth doing. The Mothae kimberlite project seems to tick all the boxes. 

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