Name of the Project
Tongo-Tonguma diamond project.

Location
The project is located in eastern Sierra Leone.

Client
Stellar Diamonds and Octea Mining. In September this year, Stellar agreed with diamond Octea Mining to extend the longstop dates of their agreements to October 31.

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 and Kundu 5 during the 21-year LoM.

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

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

Potential Job Creation
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 announced in December 2017 that it had narrowed its full-year loss while continuing to make progress on developing its Tongo diamond project, in Sierra Leone.

For the financial year ended June 30, the company reported a pretax loss of $2.3-million, compared with $7.1-million a year earlier.

The miner did not recognise revenue during the year, nil compared with $499 725 in revenue reported from the sale of diamonds the year before.

"Stellar continues to carefully manage its day to day working capital and alongside our loan note holders, who remain fully supportive, we are working on, and remain optimistic of securing, the required project funding to develop the Tongo-Tonguma project," Stellar CEO Karl Smithson said.

Smithson noted that during the past year the proposed acquisition of the Tonguma diamond project had been restructured to a tribute mining and revenue share agreement.

"The terms of the transaction require Stellar to fund the capital development of the combined Tongo-Tonguma mining operation in return for a de-facto 90% revenue share of future project revenues, once Stellar has fully recouped its capital outlay. Stellar and Octea continue to work together to extend the longstop dates to the completion of the tribute mining and revenue share agreements as required, to allow Stellar the necessary time to complete the required project development funding," Smithson said.

Stellar has extended the longstop to the end of January. The new longstop will cover project costs which are estimated to be about $80 000/m.

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.