Freetown: Stellar Diamonds has entered a subcontracting arrangement to operate the Tonguma mine in Sierra Leone, after opting out of a deal to acquire the deposit.
Under the arrangement, Stellar will run the mine and sell the resulting diamonds, paying a percentage of revenues to the project’s owner, Octea Mining.
Stellar, which already owns the adjacent Tongo mine, had initially been in talks to acquire Tonguma from Octea – a move that would have enabled combined annual production of 250,000 carats.
Instead, the new agreement will see Stellar paying Octea 10 percent of proceeds from sales after deduction of government royalties, but only after Stellar has recouped an amount equal to its investment, and after Octea has received an initial revenue-share payment of $5 million.
The deal is pending legal and government approval, with Stellar retaining exclusivity to it until April 30.
