13th Jun 2016 10:29
LONDON (Alliance News) - Stellar Diamonds PLC on Monday said its trial mining exercise at the Baoule site in Guinea has been completed ahead of schedule, and it has entered into an unsecured loan facility agreement with two of its existing shareholders for GBP465,000 of funding.
The diamond development company said, in its recently completed trial mining exercise, it processed more than 100,000 tonnes of kimberlite from eastern and western lobes of the five hectare pipe, and recovered 11,808 carats at an average grade of 11.4 carats per hundred tonnes.
Stellar said the results from its exercise show the larger eastern lobe is of a higher grade and quality than the western lobe, and it intends to sell a further 3,188 carats later in June from the western lobe. This will add to the USD1.0 million generated to-date from diamonds sold, Stellar said.
"We will then complete the necessary diamond grade and value modelling as part of the resource estimation exercise, with our resource target remaining approximately 3.0 million carats contained within the Baoule pipe. This will then allow us to formulate the next development steps for the project," said Chief Executive Karl Smithson.
In a separate statement, Stellar Diamonds said it has entered into an unsecured loan facility agreement with existing shareholders Altus Strategies Ltd and Deutsche Balaton AG to provide GBP465,000 of funding. Of this, GBP325,000 is to be provided by Altus and GBP140,000 by Deutsche Balaton.
The proceeds of the loan will be used as the company advances its mining licence application for its Tongo kimberlite project in Sierra Leone and establishes a maiden resource at its Baoule kimberlite project in Guinea, Stellar said.
Stellar noted that the loan is repayable six months following the date of the agreement and bears interest at a rate of 20% per annum, payable in arrears. Stellar may prepay all or part of the loan at any time, subject to a minimum prepayment amount, the company added.
As Deutsche Balaton owns 26.77% of Stellar, and Stellar Non-Executive Director Stephen Poulton is the chief executive of Altus, the loan is a related-party transaction under AIM market listing rules.
However, the directors who are independent of the loan consider the terms of the loan are fair and reasonable in so far as the company's shareholders are concerned, Stellar said.
Shares in Stellar were up 6.2% at 6.90 pence on Monday.
By Hannah Boland; [email protected]; @Hannaheboland
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