Stellar Diamonds plc has said that it would focus on developing its Tongo project in Sierra Leone even as it pursued the acquisition of the adjacent Tonguma mining licence so as to achieve “long-term and sustainable production and revenues”. The Company reported that its pre-tax losses had increased to US $ 7.05 mn, up from US$ 3.01 mn a year ago, but clarified that this was largely on account of an impairment charge of US$ 4.3 mn booked on its Kono diamond project which has been under dispute for the last few years.
A preliminary economic assessment delivered for the proposed combined Tongo-Tonguma project shows robust returns with pre-tax NPV of US$172 million and IRR of 49%, Stellar said. While Tongo is a Tongo 1.45 million carat project, the neighbouring Tonguma licence is estimated as a 3.45 mn ct project.
The Company described Tonguma as a ”transformational acquisition” and said it remains the focus of Stellar, but added that there is no guarantee that it will be completed.
In the current fiscal, the Company has recently entered into an agreement with Citigate to fully fund its Baoulé project in Guinea and its two exploration licences in Liberia. It’s existing teams on the ground will manage the projects for the first phase of work and will also receive a management fee for doing so.
During the last year, at the Baoulé Project, Guinea, trial mining yielded a total of 11,564 carats to date with diamond sale revenues of US$1.1 million. The largest stone was of 55cts (low quality) with high value gems up to 12cts in size. The target resource remains 3.3Mcts based on historical drilling and current grades.
Stellar said that it had raised US$3.6 mn cash in the financial year through a combination of equity and debt funding to complete the Baoulé trial mining exercise and advance the Tongo project and proposed Tonguma acquisition.
Karl Smithson, Chief Executive, commented, “In the event of completion of the acquisition of Tonguma, the combined mine would have an initial inferred +1.18mm diamond resource of 4.5 million carats, with diamond values ranging from US$209/ct to US$310/ct, from just three (of eight) kimberlite dykes in the licence areas, all of high grade and high diamond values. The PEA demonstrates a life of mine of 20 years with production estimated to be over 200,000 carats per year for the most part.”
