JOHANNESBURG (miningweekly.com) – West Africa-focused Stellar Diamonds has entered into a conditional binding term sheet with financial corporation BDG Capital for the proposed sale of its assets in the Republic of Guinea.
This includes certain plant and equipment, as well as the shares in subsidiary companies Ressources Tassiliman Baoulé, which holds 75% interest in the Baoulé project; Ressources Mandala Guinee; and West African Diamonds.
Stellar CEO Karl Smithson noted that, subject to BDG satisfactorily completing its due diligence, this binding terms sheet should see Stellar realise some $2-million in cash for its noncore projects in Guinea, representing two-thirds of its current market capitalisation.
Stellar already received $250 000 cash as an exclusivity fee, which covers two months for due diligence and completion of documentation.
"The proceeds will be used to advance the development of our flagship Tongo-Tonguma kimberlite project, in Sierra Leone; a project that has an estimated post-tax net present value of $104-million,” he explained.
Smithson further highlighted that the proposed Tongo-Tonguma mine has a low capital expenditure requirement of $32-million and the potential to be the second-largest kimberlite diamond mine in West Africa – with forecast production levels of 200 000 ct/y, generating revenues of over $45-million a year over a minimum mine life of 21 years.
Meanwhile, Stellar has also reported that it has exited its joint venture (JV) agreement with Citigate Commodities Trading. Signed in November 2016, various warranties were made by Citigate to Stellar, including that Citigate had the necessary funding and authorisations to enter into the JV agreement.
This included a contractual payment to Stellar of $150 000 as a management fee as a condition precedent to completion of the JV agreement. To date, neither the project funding nor the management fee have been received from Citigate.
Stellar has accepted such material breach as repudiatory and terminated the JV agreement.