Study shows economic benefit of concurrent openpit mining, underground development at Tongo

3rd December 2014

By: Leandi Kolver

Creamer Media Deputy Editor


Font size: - +

JOHANNESBURG ( – An independent study undertaken at Aim-listed diamond development company Stellar Diamonds’ 100%-owned Tongo kimberlite Dyke-1 project, in Sierra Leone, has shown attractive economics for concurrent surface openpit mining and underground mine development, the company announced on Wednesday.

Stellar CE Karl Smithson said the possibility of generating early cash flow from surface mining at Tongo Dyke-1 in conjunction with underground mine development was a “very attractive financial option”.

“Using a grade of 120 carats per hundred tonnes (cpht) and [a] diamond value of $270/ct in the financial model, generates a net present value (NPV) of $75-million for Dyke-1,” he said.

This represented a 42% increase on the project’s previous NPV of $53-million, translating into a pretax internal rate of return of 55%.

Further, Smithson noted that if the project’s recently increased diamond grade of 165 cpht was applied in the financial model, while maintaining the $270/ct modelled value, the project’s NPV estimate was almost doubled to $146-million.

“The directors believe the NPV compared to the company's current market capitalisation provides significant potential value upside,” Smithson said.

The study further found potential for 120 000 ct to be mined from the project’s openpit during the first three years of mine life, with more than one-million carats expected from the total 16-year life-of-mine.

The capital expenditure to develop the mine was estimated at $16-million.

"Having recently started trial mining at our Baoulé project, in Guinea, to generate cash flow before the end of 2014, we are delighted that we believe we have also found a route to early cash flow for Tongo and believe we are demonstrating our ability to deliver optimum value from our projects,” he concluded.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online




FlameBlock is a proudly South African company that engineers, manufactures and supplies fire intumescent and retardant products to the fire...

Yale Lifting Solutions
Yale Lifting Solutions

Yale Lifting Solutions is a leading supplier of lifting and material handling equipment in Southern Africa. Yale offers a wide range of quality...


Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?







sq:0.223 0.257s - 90pq - 2rq
1: United States
Subscribe Now
2: United States