Company Report: Lucara diamond corp.

Lucara Diamond Corp.

Lucara Diamond Corp

Listed in TSX exhange, Nasdaq OMX Stockholm  and Botswana stock exhange.

Ticker: LUC 

Lucara diamond Corp. is a new diamond exploration and mining company, operating in Southern Africa Botswana and Lesotho. Lucara is a member of the Lundin group.Its key assets are Karowe mine in Botswana and Mothae project in Lesotho.

Karowe Mine

Karowe is 100% Lucara owned mine. Its located Orapa/Lethakare kimberlite district in Botswana. It has been in production since mid 2012. Mine is open pit, hard rock mine. Its estimated to be open pit to about year 2026 and after that potentially underground. Its products are large high value diamonds. Operating cost is $31-$33 per tonne and production is 400000 - 420000 in 2014.

Resources and reserves

From surface to depth of 324m: 32,2mt reserve containing 6,6 million carats.
Indicated resource from surface to a depth of 400m: 51mt containing 8,2 million carats.
Inteferred resource from 400m  to 750m: 21mt containing 4 million carats.

Mothae project, Lesotho

Lucara has 75% ownership  and government of lesotho has 25%. Its also hard rock and open pit mine site. The project has completed the trial mining stage and at the moment it is put care and maintanence stage while company investigates futher develpment options.

Highlights of 2014 third quarter

Revenue $91,3 million and total revenue to September was $195 million.
EBITDA $125,8 million at end of September
Cash $133,1 million
EPS $0,11 for the quarter

Dividend

Company pays annual CA$ 0,02 dividend per share. Special dividend is also paid December CA$0,004.

   My opinion

Botswana is very stable African country where has been decades of uninterrupted civilian government and it it middle income country, GDP of 13500 per capita. So, the country risk are quite low. Karowe mine's operation cost are low and diamonds are high value. If the diamond prices doesn't collapse company cash flow would be strong. Further Information Lucara diamond site

Walde
Kuva:http://www.freeimages.com

Company Report: Nordic Mining

NORDIC MINING

Nordic Mining.com

Stock symbol: NOM

Stock exhange: Oslo Axess

Nordic Mining is a mining company which owns mining right for several deposits in Norway and Finland and develops them.

Company's current projects are:

Nordic Rutile AS

-Engebo rutile project

-High grade rutile

Nordic Qvartz AS

-Secured rights for quartz deposit in Kvinnherads in Norway in 2011

-High purity quartz 99.998% SiO2

Keliber Oy (26% ownership)

-Lithium deposit

 

Reinfjörd 

-Platinum, Palladium,  Nickel, copper deposit

 Engebo rutile project

At the moment company is focused to develop Nordic Rutile AS's Engebo rutile project. Nordic Mining acquired mining rights in 2006 from Dupont. Engebo has potential to be Europas's largest producer of natural rutile. Rutile is used in pigment production and titanium metal production.

Company has gone throw extensive permit process and it is now in final stage. In the past year company has done water circulation measurements, modelling of tailings and biological investigations. Now, they are waiting government decisions regarding the industrial area and waste disposal permit.

At the moment, big question is tailing disposal. Company wants to fall the tailings bottom of fjord. There is lot of discussion about waste material environmental effects of fjord's sealife. Decission about permits are coming soon. Production would start somewhere 2017-2019.

In a Scoping study 2009, 

Indicated resources (JORC) 31.7 million tonnes at grade 3.77% (TiO2)

Inferred resources (JORC) 122.6 million tonnes at grade 3.75%

Production estimate is 50 years, if JORC compliant estimates are correct. Open pit for 10-15 years and underground 35 years. Planned production 100 000 rutile concentrate and 100 000 garnet annually. 

Preliminary project financials:

CAPEX: 300M USD

Rutile recovery rate: 55%

IRR: 20.7%

NPV 8% WACC: USD 466 (after tax)

Payback time 4,5 years at rutile price USD 1000/t and garnet USD 300/t

Brake even price for rutile USD 370/t

Other projects

Other project are still early stages. Company is also developing process for environmentally friendly extraction of alumina from anorthosite.

Stock performance 

The Company has financed its operations with new share offerings. They have now 308,504,805 shares out. 2014 Q3 report the Q3 loss was 5.8 million NOK. Stock's 52 week range has been 0.53-1.66 NOK. Current share price is 0.80 NOK.

My opinion

Nordic Mining has a lot of potential. It is high risk, high reward stock. Their most important ore deposits are high grade rutile and high purity qartz which should enable good profits when they are developed fully working mines. They are also part of lithium project in Finland. I believe that lithium demand grows in the future. 

In the near future, Engebo rutile project permits approval or disapproval set the stock price. I currently own over 50 000 shares

More information about company and projects you can find their web page Nordig Mining

Walde

Kuva:http://www.freeimages.com