RE:Here's the link to the Swedebank write upHere it is translated.... Nice to see what the upper targets/valuations are.. Large diamonds investor's best friend Published on Thursday, January 22, 2015 Since production began in the second quarter of 2012, Lucara Diamond Corporation results exceeded all expectations, and after only two years, the company has a bulging coffers. As early as next quarter is expected to invest in improved ore processing increase the chances that the company will find more exceptionally large and valuable raw diamonds. Swedbank initiates coverage of the recommendation Strong Buy and target price of 18 crowns. Profile image in the right column to the article Ola Södermark, equity analysts Lucara Diamond Corp. (LUC) Buy Sell Demand for diamonds is expected to exceed supply by a wide margin over the coming years. A Diamond is Forever is a slogan that almost everyone recognizes. It was coined by former diamond monopolist De Beers in 1948 and has been used in any advertisement made by the company since then, and still do. The intention then as now was to create and sustain a market for diamonds to especially engagement rings. The larger and more expensive the better. It worked. De Beers created a market for diamond jewelery is estimated to be worth 72 billion dollars a year and is growing in pace with the new countries embracing the diamond dream and millions more people can afford to implement it. The next few years are expected demand in the US, China and India rise. - Demand for diamonds is expected to exceed supply by a wide margin over the coming years, and even if new discoveries are made, it will take a long time to complete the break. We do not expect that someone completely new establishment may be in operation until at least mid-2020s, says Ola Södermark, equity analysts. A company that greatly benefit from this development is Lucara Diamonds Corporation, whose acquisition of Karowegruvan in Botswana in 2009 proved to be a success. - Since production began during the second quarter of 2012, the company's results exceeded all expectations. The reason is primarily to Lucara found significantly more large and exceptionally fine diamonds than expected. The availability of such is extremely limited at very high prices. Approximately 80 percent of all diamonds found are industrial diamonds. The remaining 20 percent have higher quality and become investment and jewelry diamonds. These account for over 80 percent of the value of all diamonds found. 2013 and 2014 broke Lucara an estimated 439,000 or 430,000 carats of diamonds. 2014, the average price per carat Lucara received $ 660. Exceptional diamonds accounted for 40 percent of Lucaras sales in 2013 and an estimated 50 percent in 2014. Debt-free and with bulging cash thanks to the unexpectedly lucrative bargains managed to Lucara The trick to pay off their debts two years after its inception, and the company is the only one in the Lundin Group, which pays dividends to its shareholders. Checkout swells in addition. - Our assessment is that net cash will grow by 40-80 million dollars a year and is expected to reach $ 150 million in 2015 and $ 230 million in 2016. The outlook for higher dividends are thus good. Great location to walk into shares first quarter of 2015 is currently under way an upgrade of the ore processing plant at Karowegruvan at a cost of $ 55 million. It is expected to be completed during the second quarter, enable the extraction of larger stones and treatment of harder rock. When the upgrade is complete, mining focus on the southern part of the mine, where most exceptional diamonds found so far and from July the company should be able begin to announce new sales of large rough diamonds. - In 2014 yielded these sales averaged $ 46 million. We expect two or three such sales opportunities in the second half of 2015. These sales may be a lot of attention and has increased the interest in shares. Attractive valuation in Swedbank's baseline scenario is calculated Lucaras net asset value (NAV) of SEK 21 per share. The calculation is based partly on an annual extraction of 437,000 carats of diamonds and an average price of $ 629 per carat. Target price of SEK 18, based on 15 percent discount to net asset value and an EV / EBIT of 5.5 for 2015. Currently valued Lucara to very low EV / EBIT 3.5 in 2014 expected operating results. In Swedbank most positive scenario increases the value of the sales of exceptional diamonds, leading to an average price per carat of $ 800. In this scenario, 32 crowns a reasonable share price. In the most negative scenario screws Swedbank instead reduce the share of exceptional diamonds and the average price per carat to $ 470. In this case judged shares to be worth 14 crowns. Two new exploration licenses Current reserves in Lucaragruvan give it a life expectancy 2026. In September 2014 received Lucara two new exploration licenses in the same area as Karowegruvan, just 30 kilometers away. - We put no value on exploration rights at present. However, in that they are so close Karowe mine and there are proven discoveries of the diamond-bearing rock Kimberlite is very attractive. From a cost point of view, the comparatively minimal costs to investigate deposits because there are already ways and Karowegruvans reprocessing plant can be used to examine samples and also for possible future production, says Ola Södermark. Given the high quality of the diamonds extracted from Karowegruvan and the two exploration licenses assesses Swedbank nedsidesrisken in shares to the current course is limited. Facts Botswana is one of Africa's most stable and prosperous countries is a middle-income country with a per capita GDP of 16,400 US dollars (2013) As a country number 31 in the global corruption index, Corruption Perception Index), Botswana has the highest ranking in terms of corruption of all African countries, a placement level with Portugal and Cyprus, and better than, say, Poland and Spain. 2013 was 18 percent of the world's production of rough diamonds from Botswana, but 28 percent of the value of global rough diamond production. The diamond industry accounts for about 35 percent of GDP and about one-third of government revenue. The capital Gaborone is a growing diamond trading center. Swedbank's vision of Lucara Diamonds Corporation . Great location to walk into shares during the first half of 2015 Attractive valuation Operations are conducted in Africa's most stable country Crucial to share development is that the company continues to find large and very valuable diamonds. Given the quality of Karowegruvan and exploitation potential of the neighboring licenses judged nedsidesrisken of shares to be low. If the rough diamond market is weakened, it is negative for the stock. Recommendation: Strong Buy Price Target: 18 SEK