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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.
Stellar Diamonds - Tongo valuation exceeds upbeat expectations - Northland
Stellar Diamonds PLC (LON:STEL) revealed today that the first parcel of diamonds exported from its Tongo kimberlite Project in Sierra Leone consisting of 639 carats, was valued at an average price of US$191 per carat.
Analyst at broker Northland Capital Partners Andrew McGeary said the result had exceeded its upbeat expectations.
In a note, the analyst said: "On our recent site visit we saw first-hand the fine quality Tongo diamonds which made up some of this parcel and had expected a good result from this valuation.
"However, results have exceeded our upbeat expectations."
He added that with "few stand out stones (in terms of size) in this package compared to the last which contained a 5ct diamond, this is actually a better result than it looks and there is every hope grade and valuation can improve with wider sampling".
The firm also told investors today how the average grade of the kimberlite from the bulk sampling to date is over 109 carats per hundred tonnes which suggests a potential in-situ value of the kimberlite ore body of US$209 per tonne at the project.
This would make Tongo one of the highest value kimberlites globally on a per tonne of rock basis, it said.
Stellar is a diamond mining and exploration company focused on West Africa, which owns a 100 percent interest in four high-grade kimberlite projects.
Its chief executive Karl Smithson had said today: "The valuation of the first parcel of diamonds exported from Tongo is excellent at US$191 per carat. Considering that there were no large stones in this parcel this bodes well for any future run of mine diamond values."
The phase-1 surface bulk sampling programme is more than 80 percent completed, and next month, Stellar will begin a 6,000 metres drilling programme with the objective of defining an initial inferred resource on Dyke 1 to a depth of at least 200 metres.
On Tongo, analyst McGeary added: "The performance of grades looks more or less in line with our hopes and suggests significant potential headroom for project economics at this stage.
"For example, an in-situ value of over $200/t compares to a rough estimate for opex of $50/t. Factoring in some dilution, which should be far less than the 30-40 percent here with more refined stope mining, economics should be extremely robust."
In Guinea, the company is continuing resource definition drilling on the diamondiferous Droujba kimberlite pipe and bulk sampling is underway on the high grade Bouro kimberlite dyke which is adjacent to the company's Mandala alluvial diamond mine.
In Sierra Leone at Tongo a bulk sampling programme is ongoing on the high grade Dyke 1 and bulk sampling is planned on the Lion 5 dyke at the Kono kimberlite project.
Northland's McGeary concluded: "We continue to view Stellar as a strong value opportunity with potential for significant re-rating as it progresses its two key projects, Tongo and Droujba towards resource status."
