3rd Oct 2014 12:29
LONDON (Alliance News) - Stellar Diamonds has a "positive sentiment" toward the diamond market, with demand set to outstrip new supply in the next few years, and the company is focused on tapping that demand by fast-tracking its existing projects whilst also looking for new opportunities.
Due to a diamond deficit, "diamonds have the best outlook in the commodities market, with prices expected to continue to rise," Chief Executive Karl Smithson told Alliance News in an interview.
Diamond supply is set to grow 2.5% annually until 2018 due to a lack of new diamond mines, with global demand expecting to rise 6% annually, partially driven by the US, the world's largest consumer of diamonds, coming out of recession and increasing its GDP, he added.
Its Baoule project in Guinea has been built from the ground up, with infrastructure fully completed in August. The company was due to make a presentation of the kimberlite ore at the end of September, which will be followed by "gentle trial mining" until October, when a continous mining period of 9-12 months will begin, said Chief Operating Officer Rowan Carr.
Stellar has a 75% interest in the Baoule project with Société Tassiliman owning the other 25%. Stellar has the option to purchase the additional 25%, but has held off due to the "good partnership and support" being recieved through the joint venture.
The Baoule project needs between USD50-75 million in capital expenditure, with financing for the project needed but not yet considered. "The asset is good enough to source it when needed," said Smithson.
Trial mining at Baoule is due in October in an attempt to bring in early stage cash flow, with sales to be reported late October, early November. "Producing from Baoule will get the revenue in, which is key," added Smithson.
"We are looking for one or two 'bonanza stones', which would make a big difference to the company, shareholders and new investors," Smithson said.
Its "more advanced" but smaller Tongo operation in Sierra Leone will initially focus on surface mining to bring in revenue, with an independent report stating the surface mine could last two years before underground mining would be neccessary. Stellar plans to conduct surface mining to increase its resource whilst sending shafts underground, said Smithson. An update on the grading at Tongo is due for mid-October.
Smithson also said that the company will continue to look for further acquisitions in Siberia, Sierra Leone and Guinea. "We will be part of a small group of diamond producers," he said.
Stellar Diamond shares were up 2.4% to 1.46 pence per share Wednesday afternoon.
By Joshua Warner; [email protected]; @JoshAlliance
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