Opinions
Rick Rule
Lucara Diamond Corp
LUC-T
COMMENT
Nov 12, 2015
Stock price when the opinion was issued
You might be interested:
A diamond miner, and it seems like the pipe they are mining right now continues to produce giant diamonds. Thinks they will continue to execute. Has a steady cash flow from mining normal diamonds, and then, every once in a while, they find a monster diamond, which is going to do great things for their cash flow. You can probably expect special dividends occasionally. A little volatile, so you can trade around it.
The diamond business is really, really tough. It is hard to find a mine, and costs billions to develop it. For the sector, this is probably the best company you could buy. It has a nice dividend and a nice cash position. They paid a special dividend last year. There is the potential to find giant diamonds, which they already have. They’ve changed their production profile so that they can find giant diamonds. It is worth owning for the dividend and the special dividends along the way. Dividend yield of 2.1%.
Operated by the Lundine family. This has been a truly outstanding Canadian success story. It mines and markets some of the highest quality diamonds globally. Earnings on a quarterly basis are lumpy, but over the course of a year they earn and distribute a lot of money. Return on cost employed in this mine is spectacular, and it looks like the mine life is pretty good. If you are willing to own, what is in effect a luxury goods market in the face of an economy that you see for the next 2 years, this is a good name to own.