8th May 2014 10:27
LONDON (Alliance News) - Stellar Diamonds PLC Thursday said it has raised about GBP1.85 million before expenses through a share placing, money it will use to accelerate its plans to advance its Baoulé kimberlite project in Guinea towards trial mining and for continuing bulk sampling at Tongo Dyke-1 in Sierra Leone.
In a statement, the company said it had issued 148.2 million new shares at 1.25 pence each to new and existing private and institutional investors.
It said the work programme at Baoule is set to cost GBP1.0 million, and the rest of the bulk sampling at the Sierra Leone site GBP0.3 million. The remaining GBP0.55 million will be used for corporate and general working capital, it added.
"The company intends to allocate funds to accelerate Baoulé to trial mining and is already in the process of relocating its assets from Droujba and Mandala to Baoulé, particularly its MB 100 dense media separation plant which is capable of processing large tonnages and recovering large, high value diamonds for which the Aredor area is renowned," it said in a statement.
It is scheduling the commissioning of the plant for August, and hopes to start trial mining in September.
Stellar Diamonds said in December that it had signed a joint venture deal with local Guinean company, Société Tassiliman, to develop the five hectare "Baoulé pipe" prospect in the country's most famous diamond mining district, a deal that will allow it to take full ownership of the site if it proves economically viable.
Stellar will be able to earn up to 100% of the interest in the site. It will earn a 75% interest by spending USD5 million at the site, and has taken an option to buy the remaining 25%.
"Stellar intends to acquire its 75% interest in the Baoulé project, as per the joint venture agreement, through a combination of past and future expenditure and vending in of various plant and machinery assets before the commencement of the trial mining," it said in its statement Thursday.
The move marks an acceleration of its plans for the project, which the company said was prudent given the tough market for small mining companies. So-called junior resources companies are finding it much tougher to raise new funds and find partners for projects after some metals prices fell sharply last year.
"Given the tough market conditions for small mineral resources companies, the directors believe that the acceleration of Baoulé to trial mining is the correct strategy to deliver shareholder value as Baoulé has the potential to generate cash flow for the company during the second half of 2014," it said.
Stellar said the continuing bulk sampling of the 1.1 million carat Dyke-1 resource at the Tongo project in Sierra Leone continues to yield "very high" diamond grades with "exceptional quality" diamonds.
"Stellar recently reported recovery of 551 carats at an average bulk sample grade of 126 carats per hundred tons which is in excess of the modelled resource grade of 120cpht," it said in its statement. "Stellar will continue with the bulk sampling programme into July 2014, in order to achieve at least a 1,000 carat diamond parcel for the valuation and diamond value modelling that is required for the definitive feasibility study."
The company said Daniel Stewart & Company PLC is handling the placing.
Stellar Diamonds shares were down 28.4% at 1.20 pence Thursday morning, the third-biggest decline on AIM, as the placing set a new benchmark price.
By Steve McGrath; [email protected]; @stevemcgrath1
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