LOM 5.00% 21.0¢ lucapa diamond company limited

LOM out of cash?

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    March quarter cash outflows forecast of $2.5M against cash of $1.5M which gets you into late February before funds run dry. Current funding proposal of $15M gives no parameters. Is the funding deal with all of the the owners of project (can get security over plant and mine) or ONLY with LOM (no security other than 40% holding in JV)?

    Sounds like it is a bridge funding deal with LOM only (as they are contractually bound?? to fund entire project for their 40% interest). IMHO sounds like this will be a mix of equity and debt and require a charge over the 40% interest held by LOM in the JV. IF this is the case then terms will be more expensive than a direct charge over mine plant and mine.

    This explains the recent drop in the share price as it started after the funding announcement was made, and upcoming floor in the share price will be indicative of deal making terms. IMHO may also come in several steps involving equity placement (at a significant discount) and plant and mine funding in several stages.

    LOM has a current MC of $47M for its 40% so $15M funding will form a significant chunk of valuation going (1/4 - 1/3????) forward, and based on free cash flow rates from production.

    Interesting project with very significant upside if funding gets into place. IF funding terms get drawn out then immediate equity raise at a discount becomes necessary within next four weeks. Looking for an entry point. Good luck to all longs
 
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