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Application for Mining Licence at Tongo Kimberlite Project, Sierra Leone
Stellar Diamonds, a London listed (LSE:STEL) diamond development company focused on West Africa, announces that it has commenced the application process for a mining licence at its 100% owned 1.45 million carat Tongo Dyke-1 kimberlite project in eastern Sierra Leone.
This is as a result of the Company’s decision to fast-track Tongo to production following recent positive resource definition work, mining studies and financial modelling undertaken by Paradigm Project Management.
Highlights:
· Acceleration of the Tongo project, saving shareholder funds and reducing the time to production
· PPM to consolidate and update all previous technical reporting into a single Preliminary Economic Assessment
· Attractive economics for surface mining concurrent with underground mine development
· Estimated pre-tax NPV(10) and IRR of US$75 million and 55% respectively (120cpht and US$270/ct)
· Significant potential NPV and IRR upside using higher resource grade of 165cpht and US$270/ct
· Target of 120,000 carats production via surface mining in first 3 years
· Target of over 1 million carats mined in estimated 16 year mine life
· Low capital expenditure estimated at US$20 million to bring mine into production
· Funding primarily by debt structures being targeted
· Favourable response received from Sierra Leone stakeholders for decision to accelerate Tongo towards mine development
Chief Executive Karl Smithson commented:
“Moving Tongo to the mining licence application stage is a major milestone for the project. Having recently defined a faster route to production cash flow by the assessment of surface mining studies and based on the extensive resource and financial modelling completed to date, Tongo has clear economic potential. The application for a mining licence will be accompanied by updated mining and financial reports under a Preliminary Economic Assessment instead of a previously planned Definitive Feasibility Study in order to cut costs and seek to fast-track Tongo to production. Simultaneous to this we intend to establish a suitable financing structure to access debt funding for the majority of the US$20 million of capital expenditure which is estimated to be required to bring the project into production.
“We are delighted at the positive response received from various stakeholders within Sierra Leone. There is a clear will to support our efforts to build the next diamond mine in Sierra Leone, which can offer a significant and positive contribution to the post-Ebola social and economic reconstruction. We look forward to the full support of the Sierra Leonean Government in assisting our efforts.”
