Freetown: Stellar Diamonds has partnered with Octea Mining in a deal that will enable the two companies to combine their diamond mining operations in Sierra Leone.
The agreement — which the companies signed last week - “will allow Stellar to build a single mine for the simultaneous commercial production” from its Tongo asset and Octea’s adjacent Tonguma kimberlite deposit, explained Stellar Diamonds CEO Karl Smithson.
In February, Stellar agreed to operate the Tonguma mine on a subcontracting basis, having changed its initial plans to acquire the asset from Octea. With the mines combined, the project is expected to yield more than 4.5 million carats, valued at approximately $1.5 billion, over its 21-year estimated life span.
Stellar expects to incur a capital expense of $32 million in the first two years of development, and projections show the mine reaching full-capacity annual production of 200,000 carats at an estimated $229 per carat a year later.
Once Stellar has recouped its initial capital investment, Octea will receive an initial revenue payment of $5.5 million and 10% of gross revenues from diamonds and other minerals sold thereafter.
