Diamond exploration in Angola isabout as risky as it gets, but LucapaDiamond Co (Sydney: LOM) is worthkeeping an eye on. The company hasa 3,000 sq km concession in northeast Angola, a vast green landscapeof rivers and swamps. It has beenexploring in the country for more thanseven years, but in the last 18 monthsappears to have zoned in on themotherlode.
Lucapa is currently sifting throughgravel beds on the banks of the Cacuiloriver (this is known as alluvial mining),pumping gravel into a processing plantand pulling out diamonds. In February,Lucapa recovered a 404-caratdiamond, the largest ever found inAngola, which it promptly sold for$16m.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Lucapa doubled its mining rates lastyear and plans to double them again,but the chief executive, StephenWetherall, is looking for a much biggerprize: the source of the diamonds itself,known as a kimberlite pipe. Most of thediamonds Lucapa has found have beenrecovered from one area, "MiningBlock 8".
The diamonds have jaggededges and they have also been largeon average, suggesting they have nottravelled far from the original source.Lucapa has done gravity surveys,pointing to a large geological bodydirectly under Block 8. It has shippeda drill rig to Angola and plans to begindrilling immediately.
If the body is a kimberlite pipe, theupside could be enormous. Lucapa'sconcession is in the same postcode asCatoca, one of the biggest diamonddeposits ever found. But the risksare also hefty. Angola is a "highrisk"jurisdiction, says broker ParetoSecurities, after a civil war that endedin 2002.
Under Angolan law, Lucapaonly owns 40% of its mining licence,with renewals due at the end of May.Drilling, meanwhile, is always a lottery but Lucapa is hoping to win big.
-
Norfolk or Norway? Holidays you can afford with different-sized pension potsMany people look forward to taking more holidays when they retire. But what sort of trips could your pension buy you? We look at the holidays to match different retirement incomes
-
Q&A: Issac Thong – new lead manager of Aberdeen Asian Income Fund
-
These 2 stocks are set to soarTips The returns from these two aluminium and tin stocks could be spectacular when the commodity cycle turns says David J Stevenson.
-
The best ways to buy strategic metalsTips Weaker prices for strategic metals in the alternative-energy sector are an investment opportunity, says David Stevenson. Here, he picks some of the best ways to buy in.
-
A lesson for investors from a ill-fated silver mineAnalysis Mining methods may have changed since the industry’s early days, but the business hasn’t – digging ore from the ground and selling it at a profit. The trouble is, says Dominic Frisby, the scams haven't changed either.
-
The natural resources industry is in a tight spot – which is bad news for the rest of usOpinion The natural resources industry is in a bind. We need it to produce more energy and metals, but it has been starved of investment, plagued by supply chain issues, and hobbled by red tape. That’s bad news for everyone, says Dominic Frisby.
-
How to invest in the copper boomTips The price of copper has slipped recently. But that’s temporary – the long-term outlook is very bullish, says Dominic Frisby. Here, he explains the best ways to invest in copper.
-
Why investors should consider adding Glencore to their portfoliosTips Commodities giant Glencore is well placed to capitalise on rising commodity prices and supply chain disruption, says Rupert Hargreaves. Here’s why you should consider buying Glencore shares.
-
How to invest in the multi-decade boom in industrial metalsTips The price of key industrial metals has already begun to rise. The renewable energy transition will take them higher, says David Stevenson. Here's how to profit.
-
Avoid China’s stockmarket – here’s what to invest in insteadOpinion China’s stockmarket is not a good place for investors to be. But you can't just ignore the world's second-largest economy, says Dominic Frisby. Here, he picks an alternative China play.
