Name of the Project
Tongo-Tonguma diamond project.

Location
The project is located in eastern Sierra Leone.

Client
Stellar Diamonds and Octea Mining.

Project Description
In September 2016, Stellar Diamonds and junior diamond developer Octea Mining proposed to combine their adjacent Tongo and Tonguma diamondiferous kimberlite dyke properties.

The results of an independent preliminary economic assessment (PEA) for the combined mining project has demonstrated a financially robust and high-margin project, with a 21-year life-of-mine (LoM). Only three of 11 kimberlite dykes on the properties have been categorised as resources to date – Tongo Dyke-1, Kundu and Lando – for a total of 2.2-million tonnes and 4.5-million carats at a +1.18 mm cutoff.

The PEA was prepared on the basis of an underground mining-only scenario.

The current underground mine plan is configured as a series of declines from surface at Kundu, Lando and Tongo.

The declines will be 4 m × 4 m in cross section and will be developed at an angle of 8°. Mining levels will be interspaced at depths of 35 m, with the first levels being developed at 40 m below surface.

Based on the current resource models, Tongo will have 11 levels, Lando 10 levels and Kundu 5 levels during the 21-year LoM.

The orebodies will be accessed by 2 m × 2 m drives and crosscuts into stopes mined by traditional overhand shrinkage stoping mining methods, with the ore being drawn from access points and transported on underground locos and tipped into bins on an ore pass system. These ore bins will feed haulage trucks that will transport the ore to surface and to the processing plant.

The existing 50 t/h processing plant at Octea’s Koidu mine will be relocated to Tonguma and be further upgraded to serve as the processing plant for the new mine.

This will save considerable time getting the project to production.

Jobs to be Created
Not stated.

Net Present Value/Internal Rate of Return
The project has a pretax net present value, at a 10% discount rate, of $172-million, and an internal rate of return of 49%.

Value
The project has an expected capital expenditure of $31.8-million.

Duration
First production is expected within 12 months.

Latest Developments
Stellar Diamonds has signed a legally binding conditional tribute mining agreement and revenue share agreement with Octea Mining in respect of the combined Tongo-Tonguma kimberlite diamond project, in eastern Sierra Leone.

“These agreements with Octea . . . will allow Stellar to build a single mine for the simultaneous commercial production from the contiguous Tongo and Tonguma kimberlite deposits,” Stellar CEO Karl Smithson has said.

The first elements of mine development are planned to start within three months of the mining agreement being concluded.
 
Octea will continue to hold the Tonguma mining licence through its subsidiary company Tonguma, and Stellar will continue to own its adjacent Tongo licence and subsidiary company Sierra Diamonds.

Stellar will also own certain infrastructure and capital items procured for and used at the mine development on both licences.
Further to this, Stellar has entered into a contract for the front-end engineering design (FEED) study to be conducted for the underground mine development of the project.

The FEED is expected to take about four months to complete and will mark the onset of the mine development programme.

The results of the FEED will better define the technical requirements of the project to ensure that the correct underground mine design is implemented and the treatment plant design and layout is properly designed, as well as that of the unit processes.

The FEED will also define the final capital expenditure estimate and the operating-cost budgets. The project execution plan and a refined financial model will also be developed for the mine.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Stellar Diamonds, tel +44 20 7010 7686 or fax +44 20 7010 7699.