JOHANNESBURG (miningweekly.com) - Aim-listed Stellar Diamonds has, over the past six months, continued to focus on sourcing the necessary funding to bring its Tongo-Tonguma project, in eastern Sierra Leone, into production.
"The capital markets in the UK have proven extremely difficult to raise funds for junior mining companies in recent years. Further, the market capitalisation of Stellar during the last six months hovered around the $2-million level, which provided additional challenges of raising capital to develop the mine," said CEO Karl Smithson.
However, he noted that ASX-listed Newfield Resources' (NWF's) proposed share offer to acquire Stellar would raise the required project development capital for Tongo-Tonguma.
Under the terms of the proposed acquisition offer, Stellar's shareholders and the holders of rights over Stellar ordinary shares will receive in aggregate 95.5-million shares in NWF, which will equate to about 16.4% of the enlarged share capital of NWF.
NWF has advanced to Stellar an unsecured $3-million loan with which to primarily commence the front end engineering design programme at Tongo-Tonguma, mine plan drilling and, as a result of the recent completion of the tribute mining agreement, payment of Tonguma mining licence fees of $1.25-million.
The loan will also be used to pay legal and corporate financial adviser costs including those related to the possible offer for the company. Working capital will, therefore, remain constrained as Stellar continues discussions with NWF regarding the possible offer.
The combined resource of Tongo-Tonguma is established at 4.5-million carats, of which four-million carats is estimated to be recovered during the initial 21-year life-of-mine.