JOHANNESBURG (miningweekly.com) – Aim-listed exploration company Stellar Diamonds is turning its attention to finding potential and appropriate sources of funding for its Tongo project, in Sierra Leone.
An estimated $25-million would be required to bring the surface and underground mining operations into production, the company said in an interim results statement on Tuesday.
Stellar noted that it had, during the six months to December 31, continued to make progress at the Tongo project, as well as at its Baoulé project, in Guinea.
The application for a mining licence for Tongo had been submitted in November 2015.
The first stages of the approval process at the 1.45-million-carat Dyke-1 resource was completed and the company was awaiting the recommendation of the Minerals Advisory Board (MAB) to the Minister of Mines and Mineral Resources.
“Our environmental impact assessment study was approved by the Environmental Protection Agency (EPA) in February. We will now engage with the EPA to determine an appropriate licence fee to receive our environmental licence, which will enable the mining licence to be granted, subject to the MAB and Ministerial approval,” said Stellar CEO Karl Smithson.
The resource at Tongo was high grade and of high diamond value, which offered an attractive in situ value of over $300/t of rock.
There was further resource potential at Tongo from three as yet undrilled, high-grade kimberlites next to Dyke-1. Subject to available finance, the company would aim to drill Dyke-4 and bring it into resource with a target of 500 000 ct that could contribute to the 1.45-million-carat resource at Dyke-1.
The company was aiming to evolve from an explorer to a funded diamond mining company this year, with Tongo moving into the development phase once the mining licence was granted and the necessary funding had been secured.
This would be the key focus of the executive team over the coming months and was going to be challenging with the current tough resource market conditions.
Meanwhile, trial mining continued at the 5 ha Baoulé pipe where the company was 73% of the way through its stated 100 000 t bulk sample.
The diamond grade remained at the expected 13 carats per hundred tonnes (cpht) at a +1.25 mm cutoff and diamonds of up to 55 ct in size had been yielded, which confirmed that the pipe was a source of large diamonds.
“We sold two diamond parcels in the first half of 2015, realising over $700 000 in revenues, and a third sale was recently completed post reporting period which generated a further $300 000 in revenues, bringing total revenues to $1- million,” he said.
From the sales conducted, Stellar realised high values for single stones of up to $6 800/ct, which demonstrated the high quality of some of the diamonds in the deposit.
The company expected the trial mining component of the process to be completed before July and thereafter would establish a maiden resource statement for the Baoulé pipe.
In-house modelling of previous drilling over the pipe suggested a target of over 22-million tonnes to a depth of 300 m. At an average target grade of 12.7 cpht, this would suggest a diamond resource in the region of three-million carats.
Although the rough diamond market experienced average price declines of 15% in 2015, prices had recovered strongly in the first two months of this year, with both De Beers and Alrosa managing supply to the market to meet the actual demand.
Stellar expected ongoing uncertainty in pricing in the shorter term, noting that prices were likely to remain vulnerable owing to excess supply to the market.