Stellar Diamonds (LON:STEL) has generated almost US$200,000 in revenue from diamond sales from the Bomboko trial mine in south east Guinea in the third quarter.
As it anticipated, Stellar temporarily closed the mine for the rainy season in August. In the three months ended 30 September, Bomboko produced 576 carats.
Bomboko is the smaller of Stellar’s two production stage assets.
The company’s sales pipeline continued strongly despite the shut-down with 1,664 carats sold in two ‘parcels’ , with average prices at US$115 per carat. Stellar highlighted that the second parcel was sold at a notably higher price of at $132 per carat, which it said reflects a general improvement in the global diamond market.
"We are very encouraged by the increase in diamond prices received for parcels sold from the Bomboko trial diamond mine,” chief executive Karl Smithson said.
Stellar emphasised that it used the shut-down to boost future production, as it provided an opportunity to carry out plant upgrades.
“The interruption of operations by heavy seasonal rains has provided the company with the opportunity to install improved equipment and undertake modification to the mining process which are anticipated to improve diamond recoveries,” Smithson said.
“With the plant upgrade complete, our focus will be to expand the resource at Bomboko in order to deliver sustainable production over a number of years."
Stellar believes that Bomboko’s 41,000 carat inferred resource can be expanded significantly, as such it is conducting geological mapping to identify additional resource areas.
Later this month it is planning trial mining activities across the potential new resource areas.
Astaire Securities analyst Andrew McGeary said he was encouraged by the installation of new equipment, and the strong improvement in average sales price bodes well.
The analyst also highlighted the project’s upside potential.
“The commencement of trail mining specifically targeting resource definition later this month provides a further possible milestone for Bomboko with the potential for a significant upgrade in resource,” McGeary said.
Since it began trial mining a year ago, Stellar has now produced just over 5,000 carats from Bomboko. The project is Stellar’s second revenue generating operation. Last week the company reported a 31% increase in production from the larger Mandala mine, over the same 3 month period.
At Mandala, Stellar produced 18,291 carats in the third quarter, it sold 18,549 carats at an average price of US$33 per carat to generate US$609,000 in revenue.
The company’s medium term strategy is to use the producing assets to fund the development of its high-grade kimberlite projects and key growth projects at Kono and Tongo in Sierra Leone and the Bouro and Droujba projects in Guinea.