Lucapa receives A$5m dividend from Angolan subsidiary

31st August 2022 By: Marleny Arnoldi - Deputy Editor Online

ASX-listed Lucapa has reported a healthy performance from by its 40%-owned subsidiary Sociedade Mineira Do Lulo (SML), which operates the Lulo alluvial mine, in Angola, with Lucapa receiving a A$5-million net dividend payment for the six months ended June 30.

The company posted multiple records from both the Lulo mine and the Mothae mine it owns in Lesotho.

For the Lulo operation, SML held a record tender of seven high-value diamonds generating $21.4-million in revenue in the period under review.

The Lulo mine recovered 5 207 ct attributable to Lucapa.

The Mothae mine achieved a record for tonnes processed of 637 000 t in the first half of this year – a year-on-year increase of 27%. As a result, a record 17 486 ct were recovered in the six months under review.

The mine recovered 12 240 ct attributable to Lucapa.

Meanwhile, Lucapa is developing the Merlin diamond mine, in Australia, which, once commissioned, will be the largest commercial diamond mine in Australia. The company is progressing a feasibility study on the project, which should be completed before the end of the year.

The company is also advancing prospective primary source exploration and evaluation activities on several projects in Africa and Australia, the most advanced of which is the Lulo kimberlite exploration venture.

So far, the exploration has delivered 14 new kimberlite targets and added kimberlites to the priority bulk sampling programme. Lucapa is in discussions with its Angolan partners to secure a majority stake in the Lulo joint venture, which pertains to a 3 000 km2 kimberlite exploration licence.

Lucapa comments that diamond prices reached a peak in February before retreating and stabilising by June 30; however, despite the stable pricing, the global inflationary environment and supply chain constraints are leading to substantially higher mining costs.

For example, the company posted a noncash impairment charge of A$14.5-million in respect of Mothae, owing to its high input costs and, therefore, lower carrying value.

Lucapa’s earnings before interest, taxes, depreciation and amortisation came to A$1-million in the period under review, and it managed to repay A$13-million of debt, reducing its total debt to A$14.3-million.

The group’s net assets as of June 30, after taking into account the Mothae impairment, amounted to A$120-million.