Latest on 2 Diamond Stocks: LOM & MED

Diamond – A Precious Stone

Diamond, the most famous of all the gemstones, are made up of pure carbon in a crystallised form. Its sparkle generates everybody’s interest, making it one of the most precious gems among all. Initially, diamond might have been used as a talisman or charm during the ancient period. Majority of the diamonds are found to be without any hue or are slightly tinted. Further, ‘fancies’ are classified as a coloured diamond that could be exceptionally precious depending upon the need of the consumer. It caters both towards industrial and jewellery purpose.

Industrial diamonds are utilised as the materials for cutting wheels, drilling, glass cutting, polishing powders and so forth. US, India, China and Canada are the best regions, considered for the presence of diamond.

During the middle of the nineteenth century, in the Australian region, diamonds were discovered in 1-2 of the Australian goldfields. Though, the presence of the precious gemstone has not been detected in a significant number, in Australia, often the size of the them are small. Besides, a diamond’s hardness is measured by Mohs scale ranging between 1 – 10. In Australia, the diamonds are mostly found in New South Wales, followed by Victoria and Queensland.

Benefits of Investing in Diamond Stocks 
  • Diamonds are a safe investment which maintains the value even when the economy is uncertain.
  • Diamonds are highly valued which means that they are easily stored and transported.
  • The durability of the diamond is also an advantage, it is considered as the hardest material on planet earth.
  • Diamonds are also considered inflation proof like gold and silver.
Lucapa Diamond Company Limited 

Lucapa Diamond Company Limited (ASX: LOM) headquartered in Australia, is a producer of the high-value diamonds from the mines like Mothae (Lesotho) and Lulo (Angola). The company’s vision is to become the leading producer of diamond from kimberlite and alluvial sources.

Recent Updates 

On 4 September 2019, the company released Africa Down Under Conference presentation, wherein, it provided an update on LOM’s background, exploration report and resource estimates on the Lulo Diamond Mine, Angola and Mothae Diamond Mine.

Some of the highlights are as mentioned below:

  • On Lulo diamond mine, Angola – LOM mentioned that it is the best alluvial diamond mine. It is one of the world’s most prolific diamond field worldwide, with a decade of alluvial mining licence to be renewed in 2025. It has been generating exceptional diamonds, where 13+100 carat diamonds have been recovered. The mine’s production rate continues to grow and generate good returns.
  • On Mothae diamond mine, Lesotho – it is Africa’s newest kimberlite diamond mine. It contains huge high-value diamonds and has mining licence for a decade to be renewed in 2027. The mine has proved its worth with solid operational performance. Its 2019 sales till date stands at USD 9 million (AUD 12.9 million).

On 3 September 2019, LOM notified on the record diamond production from Lulo and Mothae mines. Some of the few updates are as below:

The company recorded monthly diamond production from Lulo and Mothae diamond mines in August 2019.

  • The lulo Alluvial mines, Angola produced 3180 carats in August which is considered to be its highest since commencement.
  • Lulo mines have a major contribution with monthly grade of 13 carats per 100 cubic metres.
  • Mothae kimberlite mine in Lesotho produced two records during August this year.
  • A processing record standing at 120,736 tonnes was attained for one month.

Financial Summary for HY 2019 

On 3 September the company announced the results for the period ending 30 June 2019. The company delivered NPAT of US$1.1 million compared to the loss of US$4.3 million in the previous corresponding year.

A few financial updates from Lesotho and Angola resources are as mentioned below:

  • Mothae kimberlite mine, Lesotho

The diamond carat productio recorded 36 percent ahead of planned target in the first six months of commercial operations. The planned cash operating costs were 14% lower of US$12.56 / tonne contributed to US$0.7 million EBITDA. The company gained support from most of the shareholders for the refinancing of Mothae development debt.

  • Lulo alluvial mine & Kimberlite project, Angola

It is the first international tender of Lulo diamonds, that contributed to the sales of US$22.1 million at US$3.668 per carat and made a recovery of 216 +4.8 carat diamond including two more +100 carat stones. The company’s cash operating costs of US$576/million contribute to USD11.3 million EBITDA. There was a 90 percent rise for in-situ carats in the JORC alluvial diamond.

Stock Performance

On 5 September 2019, by the closure of the trading session, LOM’s stock was at A$0.160, up by 3.226 percent from the previous close. It has a market capitalisation of A$76.86 million and approximately 495.9 million outstanding shares. The 52 weeks high and low were A$0.265 & A$0.145, respectively.

 

Merlin Diamonds limited

Merlin Diamonds limited (ASX: MED) is a diamond exploration company. The Merlin diamond mine in the Northern Territory is owned by the company. The Merlin Diamond Project contains Merlin Diamond Mine operations and adjacent exploration area of ~2,154 km2. The Merlin Diamond Mine took a pilot production in July 2013 and MED is also following several high priority exploration targets. 

Few Facts About the Company

  • The super white gems of high quality have been found at Merlin Diamond Mine.
  • Existing processing plant and mine infrastructure acts as a catalyst for the immediate restart of the operations.
  • Feasibility study for the operations’ re-commencement was completed in September 2014.
  • The company has approximately 4.35 million carats reserve in JORC compliant Mineral Resource.
  • The significant exploration has started with +80 targets, six targets have already been drilled.
  • The largest ever diamond in Australia of 104 carats were produced by Merlin.

Recent Updates 

On 31 July 2019, the company had released a cash flow report for the quarter ending 30 June 2019, below are the snapshot of the report.

  • Net cash used in operating activities stood at A$259,000.
  • Net cash for investing activities stood at a loss of A$240,000 for the period.
  • Cash and cash equivalent, by the end of the quarter were at A$5,000.
  • The company has estimated the total cash outflow of A$580,000 for next quarter.

On 19 February 2019, the company has released an update on its continuation of Suspension from Official Quotation. MED released a copy of a letter addressed to ASX with the date of 18 December 2018 and an ASX query letter to MED with a date of 4 January this year. The release further mentioned that the shares of the company would continue to be suspended, in line with listing rule 17.3 until further notification on it. 

Stock Performance

MED’s stock last traded on 28 September 2018, at a price of A$ 0.006.


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