24th Aug 2015 07:13
LONDON (Alliance News) - Stellar Diamonds PLC shares rose on Monday after it said it has secured the preliminary economic assessment for the Tongo kimberlite project in Sierra Leone which shows the project can produce almost 1.0 million carats over the next 18 years.
Stellar shares were up 11% to 0.470 pence per share on Monday morning.
Stellar will now submit a mining licence application for the project using the assessment "in the near future".
Paradigm Project Management conducted the assessment over the project, which includes the 1.45 million carat inferred resource from the Tongo Dyke-1 kimberlite dyke, one of four kimberlite dykes at the project.
"The objective was to define updated project economics for both surface and underground mining of the diamond resource in support of the mining licence application," it said.
"The Tongo pre-economic assessment has delivered robust economics which support the development of an open pit and subsequent underground mine," said Chief Executive Karl Smithson.
The Tongo project has been assessed to have an 18 year mine life from both surface and underground mining, yielding a total of 955,930 carats. In the first four years, Stellar plans to produce 117,806 carats to provide early cashflow.
"Early cash flow is expected to be generated from the initial surface mining but the mine also represents a long-term and sustainable operation which has the potential to generate solid cash flows from the sale of its very high quality, high grade diamonds over many years," said Smithson.
Stellar said there was also "significant potential" to increase the mine life beyond the initial 18 years.
"Stellar considers that the Tongo mine can be further improved and extended with the development of additional diamond resources from nearby high-grade kimberlites that we have previously identified and tested," said Smithson.
The project has a resource grade of 120 carats per hundred tonnes and a diamond value of USD270 per carat, which will generate USD386.7 million in gross revenues, it said.
The project will be built for around USD24.2 million to establish the initial surface and underground mining operation.
Tongo has a pretax net present value of USD53.2 million and an internal rate of return of 31%.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Stellar Diamonds