Lucapa Diamond Co Ltd experienced a significant decline in its stock price on the ASX. As of June 25, 2024, at 07:10 BST, the share price dropped by 6.15%, losing 0.004 AUD to settle at 0.061 AUD. This downturn reflects investor reaction to recent announcements, including the divestment of its 70% stake in Mothae Diamonds (Pty) Ltd to Lephema Executive Transport (Pty) Ltd, a Lesotho-based company.
Market data by: FT
The transaction, valued nominally at A$10,000 (approximately LSL120,000) with additional payments of approximately A$1 million for outstanding technical services, is part of Lucapa’s strategic shift to focus on its assets in Angola and Australia.
Market data by: FT
The market’s reaction suggests investor concerns about the future earnings potential and operational stability of Lucapa following this divestment, especially given the relatively low sale price and the assumption of liabilities by the purchasing company. The decline in stock value is consistent with the broader trend observed in Lucapa’s performance over the past year.
Analysis:
- Lephema Executive Transport (Pty) Ltd: ASX announcement however doesn’t mention that the proprietor of Lephema Executive Transport, Lebona Lephema is a senior minister in the government of Lesotho (Minister of Local Government, Police and Home Affairs).
- Lucapa Diamond Co Ltd: The significant drop in share price following the announcement of the sale of its stake in Mothae Diamonds indicates investor uncertainty about the company’s strategic direction and financial health. The low sale price and assumption of liabilities may have raised concerns about the company’s valuation and future prospects.
