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 on 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
Work on the transaction between Stellar and Octea is continuing, with ongoing legal and due diligence work.

The competent person’s report on the project will be announced in due course and marketing to new investors and existing shareholders will then start.

As the transaction is classified as a reverse takeover under AIM rules for companies, trading in the company’s shares on AIM will remain suspended until either an admission document is published or the company announces its or Octea’s withdrawal from the transaction.

The transaction, if completed, will result in Stellar having a 75% economic interest in the project following, among others, preferential repayment of the initial investment made by Stellar and payment of certain revenue royalty payments as outlined in the transaction announcement.

The transaction remains subject to a number of conditions, including, among others, publication of an admission document and shareholder approval.

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.