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Additional Information
Market: AIM
Sector: General Mining - Diamonds & Gemstones
EPIC: STEL
Latest Price: 2.88p  (0,00%)
52-week High: 8.00p
52-week Low: 2.50p
Market Cap: 8.17M
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Stellar Diamonds
www.stellar-diamonds.com/s/Home.asp

Stellar Diamonds plc is a London listed (AIM:STEL) diamond exploration and development company that is focused on the West African countries of Sierra Leone and Guinea.  Stellar has an advanced portfolio of high grade kimberlites that are currently subject to resource definition thorugh drilling, bulk sampling and trial mining.  Initial resource statements are expected in early 2011 from Tongo and Droujba.  In addition, Stellar has also mined and sold over 125,000 carats of diamonds from two alluvial operations in Guinea. 

Full Stellar Diamonds profile here
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Stellar Diamonds given 15 pence price target by Daniel Stewart & Co

17th Jun 2011, 9:20 am by Sergei Balashov

Daniel Stewart & Company (DS&C) has initiated coverage of Stellar Diamonds (LON:STEL) with a “buy” rating and a 15 pence target price, calling its projects “robustly profitable”.

Today’s research note followed a visit to the Africa focused diamond production and development company’s projects in Guinea and Sierra Leone.

The target price is 2.5 times greater than the stock’s current market value of 6 pence. However, the broker called its approach “cautious” as none of the projects has a resource estimate or a scoping study yet with the first estimates not due until well into 2012.

The unrisked value of Stellar’s assets was estimated at £74.7 million, which is equivalent to 34.5 pence per share. DS&C based its calculations on four of Stellar’s projects, Tongo, Kono, Droujba and Bourno, assigning no value to the Mandala alluvial mine.

Analyst Martin Potts arrived at the 15 price target after applying risk discounts.

“We see little downside, given that rough diamond prices are still rising and that all four exploration projects appear to have robust economics,” said Potts. He also noted that the country risk may not be as high as thought despite the fact that both Guinea and Sierra Leone have a recent history of violence.

“This is in the past and both are now peaceful with major foreign investment underpinning stability,” added Potts.

“On current information, all four projects should be robustly profitable, though resources have yet to be quantified and the capital and operating costs used (in the valuation) are mere first pass estimates.”

DS&C said that the Kono project in Sierra Leone, in particular, could generate substantial value in the near term, being cheap and quick to restart production.

The research note highlighted the recent fundraising of £5.9 million, assuming that most of which is currently unspent and the company should have about £5 million in the bank. These funds have removed a substantial risk to the business, enabling it to accelerate its work programmes, said Potts.

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