DIAMONDS PROJECT PROGRESSES Moving Tongo to the mining license application stage is a major milestone for the project
West Africa-focused diamond development company Stellar Diamonds has started the application process to obtain a mining licence for its 100%-owned 1.45-million carat Tongo Dyke-1 kimberlite project in eastern Sierra Leone.
The application process was started as a result of Stellar’s decision to fast-track the Tongo project towards production following recent positive resource definition work, mining studies and financial modelling undertaken by project management and engineering company Paradigm Project Management.
“Moving Tongo to the mining licence application stage is a major milestone for the project. Having recently defined a faster route to production cash flow by the assessment of surface mining studies and based on the extensive resource and financial modelling completed to date, Tongo has clear economic potential,” says Stellar Diamonds CE Karl Smithson.
The company notes that the project’s mining licence application will be accompanied by updated mining and financial reports as part of the mine’s preliminary economic assessment that will be conducted instead of a previously planned definitive feasibility study to cut costs and fast-track Tongo to production.
The mining licence approval process is expected to be completed within six months, although this timeframe may vary, the company notes.
Simultaneously, Stellar Diamonds intends to establish a suitable financing structure to access debt funding for the majority of the $20-million of capital expenditure which is estimated to be required to bring the project into production.
The company’s board will target debt structures for the majority of the funding requirement to minimise dilution to existing shareholders and thereby seek to optimise their exposure to any future cash flows.
The process of sourcing and structuring the applicable debt facilities will be ongoing during the mine lease application process. Any funding that is secured will be contingent on the mine lease being granted.
“We are delighted at the positive response received from various stakeholders within Sierra Leone. There is a clear will to support our efforts to build the next diamond mine in Sierra Leone, which can offer a significant and positive contribution to the post-Ebola social and economic reconstruction. We look forward to the full support of the Sierra Leonean government in assisting our efforts,” says Smithson.
Meanwhile, the company notes that, although Ebola still persists in certain areas in the west of Sierra Leone the level of infection is on a downward trend. The area of the Tongo mine has been Ebola free for many months, however, strict operating protocols are still in place on the project, in order to ensure the continued health and safety of all employees and surrounding communities.