LOM - Lucapa Diamond Company

[Miner]

Agree, Miner
That seemed like a good idea at the time, and I did the same.
At current levels, however, I see support. Over the coming days, we shall see whether that is correct and today's news of the XRT plant commissioning helps with that.

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I'm back on the buy side.

Yes Pixel
Due to bloody flue I was not following the market . Saw XRT news and price went upto 51 cents.
I will watch for re- entry if not too late.

 

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Yes Pixel
Due to bloody flue I was not following the market . Saw XRT news and price went upto 51 cents.
I will watch for re- entry if not too late.

Closed back at 48c, so you may get lucky tomorrow and pick some up at a still reasonable price.

 

[P87]

Contagion and Regime Change required.

Selling lots of diamonds, must have huge running costs, because nothing is flowing back to Aus entity - or someone has sticky hands.

Doing business in an economic environment akin to a house of cards is not the smartest strategy.

http://allafrica.com/stories/201611080335.html

When the United States warns of the risks of handing control of Angola's banks to politically exposed people (i.e. President José Eduardo dos Santos, his family members, and the Generals who back him), this is not an idle warning.

It's because the USA know the President is planning to transfer control over the BFA (Banco de Fomento Angola) to his daughter, Isabel, and that once he does so, the Presidential group's control over almost the entire Angolan banking system will be in place. How so?

According to African Business Magazine's list of Africa's Top 100 Banks in 2015, the five largest banks in Angola were: Banco Económico (BE - Economic Bank), Banco Angolano de Investimentos (BAI - Angolan Investment Bank), Banco de Poupança e Crédito (The Savings and Credit Bank), Banco de Fomento de Angola (BFA - Development Bank of Angola) and Banco BIC (BIC - The International Credit Bank). Between them they control nearly five billion dollars of capital.

Nearly half (40 percent) of the stock of Banco Económico is owned by Sonangol (now run by the President's daughter, Isabel dos Santos). General Leopoldino Fragoso do Nascimento, one of the President's closest advisers and the frontman his businesses, and Isabel dos Santos are also connected to Grupo GENI, which owns a further 19.9 percent of BE stock.

Public records further show that in addition to Isabel and Leopoldino, António Van-Duném (former Secretary of the Council of Ministers) and Manuel Augusto Fonseca (former member of the Sonangol legal team) are also part of Grupo GENI. Additionally linked to the group is the notorious arms trade dealer Pierre Falcone.

With more than half BE's voting stock in the hands of the President's daughter and her associates, it is safe to say that the former Portuguese Banco de Espírito Santo (BES) is now controlled by Politically Exposed Persons.

Another of Angola's top five banks is the Angolan Investment Bank, the BAI. Once again, Isabel dos Santos's Sonangol appears as a shareholder with 8.5 percent of the stock. Other Politically Exposed Persons hold a further 41.5 percent of the BAI stock - they include Vice-President Manuel Vicente (the former Chair of the Sonangol Board), the president of the National Assembly Fernando da Piedade dos Santos 'Nandó', the current Defence Minister João Lourenço, and the former MPLA Vice-President Roberto de Almeida.

Meanwhile the BPC is a state-owned bank, which allows Isabel's father, the President, to exert direct control.

A takeover move for 51.9 percent of the BFA by UNITEL (principal shareholders Isabel dos Santos with 25 percent and Sonangol with 25 percent) was agreed on October 7, 2016, which puts the President's daughter in majority control of yet another bank. Grupo GENI is also involved.

That brings us to the BIC. And Isabel dos Santos is also in control of this bank with 42.5 percent of the shares (at least).

Summing up: of the five largest banks in Angola in 2015, one is state-owned, three are directly or indirectly controlled by Isabel dos Santos and Sonangol and the fifth, the BFA, will join them imminently.

This is the 'risky' situation that has so concerned the United States. It demands close scrutiny. Allowing politically exposed persons, in particular the President's daughter, to take control of what amount to the most significant banks in the country's banking system, is equivalent to handing her the keys to the nation's entire savings.

It gives Isabel dos Santos the ability to call on all the national savings deposits in these banks. This is not to suggest that she can empty the coffers and simply leg it to Dubai. But it means, for example, that their capital (the savings of their fellow Angolans) can be diverted into bailing out the companies with which Isabel is associated.

Imagine the potential domino effect: as people deposit their monies into banks controlled by Isabel dos Santos, so the banks lend that money to companies controlled by Isabel dos Santos. Then if those companies miss their interest payments or simply fail to repay, the banks could go bust and ordinary Angolans could lose all their savings. Hence the red flags.

Meanwhile Sonangol's financial woes are in the public domain and the oil giant's problems could also prove contagious to those banks in which it is a majority shareholder. On the one hand Sonangol could try to lever itself out of trouble by forcing the banks it controls to shore it up, causing a drought of money to loan elsewhere in the financial markets. This is what economists call "concentration risk", when loans are not evenly distributed. On the other hand, if Sonangol fails, so would the banks.

Another example: let's suppose that revenues from the sale of Angolan oil are no longer sufficient to cover the expenses of the Angolan State Budget. Under normal circumstances, the solution would be to issue government debt bonds in the hope that these would be snapped up by investors, thus generating funds to meet the shortfall in the state finances.

However, data published by the Angolan government indicates that the State issues debt bonds in Kwanzas, with an annual interest rate of close to 20 percent. This means that for every 100 Kwanzas invested, it has to pay back 120 Kwanzas. Does that seem like good business sense? In practice, no, not at all.

Because those same government statistics indicate inflation is running at approximately 40 percent. This means that what you could acquire a year ago for 100 kwanzas will cost you 140 kwanzas today. Thus, anyone who invests 100 Kwanzas in Angolan debt, is not earning a straightforward profit of 20 percent - in fact, once inflation is factored in, they are making a 20 percent loss. Most big investors would look away. So that throws up the question of who would be willing to buy up government debt, knowing they would be making a loss.

Isn't it likely that banks controlled by Isabel dos Santos would be summoned to bail out the government? They could buy up the debt, hand over the money to the state, then lose out when it's payback time and yet the balance sheets would not reveal the true picture. Their reports would show a 20 percent profit whereas, as we now know, they would actually be making a loss on the transaction.

There is a further, political, risk. With Isabel dos Santos controlling the banking system, there can be no real transparency, good governance or accountability in the system. Any bank decision - whether it's who gets a loan, whose loan is refinanced or called in - will be questionable.

And the whole edifice is then balanced, quaveringly, on one pivot. Any major stumble by Isabel dos Santos, Sonangol or Angola's state finances could bring down all five of the major banks. It goes without saying that the dangers of that situation are incalculable.

Finally, leaving aside the big five banks mentioned above, it is worth mentioning the case of the Banco Millennium Atlântico (BMA - Atlantic Millennium Bank) which is the result of the recent merger between the Banco Millennium de Angola (Millennium Bank of Angola) and the Banco Privado Atlântico (Atlantic Private Bank). According to the published figures, the merger propels the BMA into the position of Angola's second biggest bank in terms of loans granted. Without doubt, this adds it to the list of the country's top banks. So who owns it?

Interlagos Equity Partners SA has a 31.65 percent stake and BCP Africa SGPS has 22.52 percent (and Sonangol has a 29.9 percent stake in that). Sonangol also held a stake of 8.82 percent in the BPA. With its tentacles sunk deep into both sides of the merger, industry insiders estimate it must presently hold at least a 10 percent stake in this new bank.

And the presidential cabal's influence doesn't stop there. There are two other banks, Banco Sol (Sunshine Bank) and Standard Bank which may be of lesser importance in the overall Angolan banking system but are not to be ignored. Rafael Marques is unequivocal that this too falls under the control of Politically Exposed Persons. As he wrote at the time:

"The MPLA state conglomerate GEFI is the majority shareholder in Banco Sol, holding 55 percent of its stock through a subsidiary, Sansul. GEFI owns 99 percent of the capital in Sansul with trusted MPLA members holding the nominal remainder between them. These include the President's wife, Ana Paula dos Santos, the Vice-President of the National Assembly and Political Bureau member, João Lourenço [in 2016 currently the Defence Minister and MPLA Vice-President] and the former Finance Minister and current member of parliament, Júlio Bessa."

As for the South African Standard Bank in Angola, 49 percent is in the hands of the notoriously financially-incompetent José Filomeno dos Santos 'Zenú', the President's son. (On a side note it should be added that Standard bank openly advertises its offshore services in Jersey and the Isle of Man as well Mauritius.)

All of this is pointing to an even worse scenario: Angola could find itself in the grave position of having its entire banking system under the control of the politically exposed presidential cabal. It is quite likely that it's this doomsday scenario that led the United States to issue its warning that Angola should take action to remove politically exposed persons from the banks.

The likelihood of the current Angolan regime acting on the US advice is nil. It would take a nuclear bomb to separate these politicians from the financial system. Only regime-change can break them apart.

 

[P87]

http://allafrica.com/stories/201611151072.html

Any wonder the sale of diamonds is not translating into real returns for Lucapa holders?

By Rafael Marques De Morais
A much-lauded cartoon by Angola's premier pictorial satirist Sérgio Piçarra recently depicted the state of the country's economy, thanks to José Eduardo dos Santos, the country's President for the past 37 years. In his depiction, Angola has a 'Real Economy', and a 'Virtual Economy', but there is an even third one, the 'Fictitious Economy'.

It's a reflection of a truth: every year the Angolan state budget (Orçamento Geral de Estado) is a mixture of the actual (real), anticipated (virtual) and the 'only on paper' (fictitious) spending for the year ahead.

Now insiders say the 2017 Budget strays even further from reality than usual.

One example: Angola expects to spend more than 1.7 billion kwanzas (US $6.5 million) on maintenance of the memorial to Agostinho Neto, the country's first post-independence president.

The Soviet Union undertook the initial construction of the memorial. However, with the collapse of the USSR, the construction remained incomplete for nearly 30 years. The structure, whose architecture is reminiscent of a rocket, was finally completed in 2012, comprising a mausoleum that contains the remains of President Neto, as well as a small museum displaying some of his effects.

How can the annual maintenance bill for a mausoleum, completed only four years ago, be so high?

Compare the allocation for what locals dub the 'Rocket' ("Foguetão" in Portuguese) with the 2017 Budget's allocation of 826.75 million kwanzas (less than US $5 million) to build four badly-needed and long overdue municipal hospitals for the provinces of Moxico, Cunene, Bie and Kuando Kubango.

How are Angolans meant to interpret the budget priorities? Is one dead Angolan (who happened to be the first post-colonial President and, ironically, was a medical doctor) more important that the health of hundreds of thousands of living Angolans?

When it comes to budgetary matters, Angola is perhaps the only country in the world that has a body called the Commission for the Real Economy. Yes. This actually exists. And answers directly to the President. Wits say this is to remind the president from time to time that there is something other than the virtual and fictional worlds in which he operates.

You see, it is important for the executive branch to be seen to be planning the building of more hospitals, but many of these plans do not get off the drawing board or turnout to be just shoddy health posts. Some may be 'real' and construction may indeed get started. Some are 'virtual' - the money is allocated but the projects are not yet ready. Others are 'fictitious' from the get-go and the money is really intended for other things. A similar situation applies to Education.

The José Eduardo dos Santos University (serving Region V, for 12,000 students from the central highlands and eastern provinces of Huambo, Bié and Moxico) gets an allocation of nearly two billion kwanzas (US $11.9 million), while the universities serving other regions (particularly those of the North and East) are under-funded. Kimpa Vita (Region VII, for 9,000 students from Uige and Kwanza Norte) is only worth some 900 million kwanzas (US $5.4 million) and Lueji A'Nkonde (Region IV, for 10,000 students from Lunda Norte, Lunda Sul and Malanje) gets even less: about 700 million kwanzas (US $4 million.)

From which we can conclude the following: it is worth more to preserve the memory of a former President than to educate Angolan youth - unless they happen to be youth studying at a university named after the current President.

Public sector post-secondary education in Angola can also be classified under the 'Real', 'Fictitious' and 'Virtual' headings. On the one hand you have the 'real' education given to the children of the MPLA élite who almost all are funded to study abroad.

Their qualifications are deemed superior to any awarded in Angola (the 'fictitious' kind, given the poor standard of teaching and low marks required to gain a degree). That was certainly the official justification given for the nepotistic appointment of the President's daughter Isabel dos Santos to run the state oil company, Sonangol: that her engineering degree from the University of London somehow made her more qualified.

Then there is the 'virtual' kind, whereby some dunce who could only scrape a diploma transforms it into a job that requires degree-level education on the basis of having a 'sponsor' within the ruling party machine.

Delivering an authentically high-quality post-secondary education is inimical to the fortunes of the ruling elite, who resent the questioning of their motives (or the origins of their fabulous fortunes) by enquiring minds. Some say the regime can barely scrape together enough brain cells to keep up appearances (the fiction) that they are working on behalf of the Angolan people (virtual reality) rather than to line their own pockets (the real picture).

There is a further possible interpretation: that no-one could be bothered to do the sums to come up with a rational state budget and the whole thing was cobbled together randomly - "à toa" as they say in Angola.

In general, the Angolan Budget has always been a mixture of fact and fiction, a reflection of the contempt shown by the Dos Santos Administration for the Angolan people when it comes to rendering financial accounts.

Even if the figures it contained were properly calculated, even if the capital projects were accurately estimated and certain to be put into effect, the Budget is nothing more than a virtual document, intended to convey high-minded plans while covering up embezzlement on a grand scale by the political elite.

It's not just a scandal, it's an insult to the intelligence of the Angolan people - but then that's just one more virtual insult in 37 years of a government that in reality acts as a kleptocracy while maintaining the fiction of being a functioning democracy.

 

[Porper]

Still distribution up around $0.50. That area needs to be overcome...then could fly as it's a long drawn-out trading range.

 

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Throughout October, 47c has been support, until the Quarterlies failed to show revenue from several reported Auctions, which the Market would have been reasonably expecting. Subsequent news about the new processing plant and geographical diversification seem to have halted the decline and reversed it, so we're now dealing with 47c as resistance.




I do, however, expect a return into the 50's and possibly beyond. All it would take is news of one oversized stone recovered from coarse gravel by the new plant.
I can wait.

 

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This morning's announcement should lift the sp. Or is it "unsatisfactory" in the minds of those that led the prolonged sell-off in recent weeks?
I am still waiting for that one big rock from the coarse gravel...

(As the ASX website is still dead, I'll attach the pdf of the announcement)

 

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LOM is about to become very "ordinary"
To be inducted into the All Ordinaries Index.
Here is hoping that might provide some much-needed demand.

 

[peter2]

Looks like that new equipment to find the large diamonds from the thrown away rubbish hasn't found any "thumpers" yet. All Ords inclusion wont save this one, only "big beauties".

Sorry, I wasn't aware of this:
"For commercial reasons in the industry,
the sale prices of large diamonds, unless iconic, are not individually disclosed. "

 

[Wyatt]

LOM is about to become very "ordinary"
To be inducted into the All Ordinaries Index.
Here is hoping that might provide some much-needed demand.

A lot of the other 43 new inductee's charts look pretty average as well. There were much better prospects this time last year. The fact that $XSO has only had 3 green days in the last 17, may have something to do with it.

 

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I'm accumulating.
Assuming the sp continues to move between Fib levels the way it has in the past, 41c should come into play next. Stop at Close below 36.5c.

 

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If anybody is interested: A youtube video (about a quarter hour) explains how diamonds are recovered, using the Tomra plant. I believe Lucapa are operating one of those too.

 

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Two better-quality videos:

 

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As the Angolan wet season draws to a close, mining and screening should become easier and more productive again. The chart suggests buyers may share that view as prices consolidate and accumulation becomes evident. Check out the Bullish Divergence in MACD over the two matching Lows 20/04 and 5/05.

Note: A price increase by 30% of the mother stock will cause the 20c options LOMOA to double in value. I have therefore loaded up on oppies, too.

 

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Chart showing some improvement at last.
Bullish MACD Divergence and increasing volume. Pity about the gap though.

 

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http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01894098
some really nice rocks from Block 8

 

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I found it rather strange that LOM gets sold down in the lead-up to LOMOA expiry.
But then I remembered the recent financing deal for the Mothae mine in Lesotho:

The funding package includes the underwriting of LOMOA options, a bridging loan and the issue of new options. When combined with the cash repatriated from the Lulo diamond mine in Angola (See ASX announcement 25 May 2017), the funding package leaves Lucapa on track to commence commissioning Mothae in the first quarter of 2018 under a staged, low-risk development plan.

The financier has the right to buy stock at 20c, the number depending on how many options remain unexercised on the 30th of September.
Money for jam: Keep a lid on the sp by judiciously selling at 27-28c. That would discourage a lot of retail investors, who will either sell the options among each other, or let them lapse. The underwriter will then stock up again at 20c. Instant profit of 35 - 40%.

 

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We shall see on Tuesday what impact, if any, the cash influx (and dilution) has on the company's valuation. At this time, it looks rather positive with resistance 28.5 coming under pressure. I hold.

 

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Coming up for auction in a few weeks, in time for Christmas, for that "special someone".
Does anybody here intend to join the bidding?

 

[peter2]

Wow after 11 months work, only a 163c gem from a 404c stone.
I assume that many of the off cuts were used in the left side of the necklace.
It's an ugly necklace, though perfect for a dual personality.