JOHANNESBURG (miningweekly.com) – Aim-listed Stellar Diamonds has started an application process for a mining licence at its 100%-owned, 1.45-million-carat Tongo Dyke-1 kimberlite project, in eastern Sierra Leone.
The company would need to invest $20-million in capital expenditure (capex) to bring the mine into production and to reach its target of producing over one-million carats over the mine’s estimated 16-year life.
"Moving Tongo to the mining licence application stage is a major milestone. Having recently defined a faster route to production cash flow [through] the assessment of surface mining studies and based on the extensive resource and financial modelling completed to date, Tongo has clear economic potential,” Stellar CE Karl Smithson said in a statement on Wednesday.
He added that the application for a mining licence would be accompanied by updated mining and financial reports under a preliminary economic assessment (PEA), instead of a previously planned definitive feasibility study, to cut costs and in an attempt to fast-track Tongo to production.
“Simultaneous to this, we intend to establish a suitable financing structure to access debt funding for the majority of capex,” Smithson noted.
MINE LEASE APPLICATION
Given the nature and consistency of the Tongo orebody, the board has decided to engage Paradigm Project Management (PPM) to consolidate and update all previous technical reporting into a single PEA.
This decision was designed to save shareholder funds and reduce the time taken to get the mine to production. The PEA would include an updated mine plan for both surface and underground mining, rebudgeting of all previous operating and capex figures, and the generation of an up-to-date financial model to support a mining licence application with the Sierra Leone government, as well as proposals for project debt finance.
Smithson recently met with various stakeholders in Freetown, including the Ministry of Mines, and received a favourable response to the decision to accelerate Tongo toward mine development.
A group would shortly be appointed to undertake the environmental- and social-impact assessment in Sierra Leone. The mining licence approval process was expected to be completed within six months.