Stellar Diamonds PLC (LON:STEL) said the first three holes drilled at its 100 percent owned Droujba kimberlite in Guinea in have proven the continuity of the kimberlite pipe to a depth of at least 120 metres.
The three completed holes have so far drilled 607m at Droujba, and drilling is continuing with a further 17 holes planned to complete the initial 3,000m programme.
Chief executive Karl Smithson said: "Initial observations of the drill core suggest that the pipe is comprised of two main geological units and we have consigned separate samples of these to Canada for microdiamond analysis. This initial 3,000m drilling programme for Droujba will continue uninterrupted through the New Year period and will be extended to include adjacent geophysical targets which could represent additional kimberlites."
The pipe was previously mined in early 1960's by the Russian Aid Mission to a depth of approximately 20m with grades as high as 200 carats per hundred tonnes reported. It was previously postulated that the ore body was not considered to extend significantly deeper than the mined depth due to a shallow angled fault, however drilling has now yet disproven this, Stellar said.
In addition to the samples sent to Canada, a number of samples have been dispatched to South Africa for petrographic interpretation in order to correctly define the kimberlite units and assist in assessing the relative diamond potential of the ore body. The results of the analytical work are expected in Q1 2011.
The primary objective of the drilling programme is to model the ore body to a depth of 150m by drilling angled holes through the kimberlite and to collect representative samples for microdiamond analysis. A number of narrower kimberlite dykes have been intersected close to the margin of the main pipe. Further diamond drilling is planned on the geophysical anomalies which are in the immediate vicinity of the Droujba kimberlite pipe.
Northland Capital Partners featured steller in its 'Morning Report', saying while it is early in the programme, it is positive that the company has already established continuity of the kimberlite.
"Past exploration suggests that the pipe could be of significant grade. Thus Droujba has the potential to become an important find for Stellar, If microdiamond analysis in Q1 is able to reproduce the attractive diamond grades of past exploration. Our NPV/share remains unchanged at 18.9p," the broker added.
This Droujba kimberlite pipe is located approximately 50 kilometres to the south east of Stellar's Mandala mine.
The company has a portfolio of projects in West Africa. Two projects in Guinea, Mandala and Bomboko, are undergoing mining and trial mining respectively, which provide cash flow to the company.
Stellar also owns full rights over four high-grade kimberlites that are to be the focus of future development. In Sierra Leone at the Tongo project, a bulk sampling programme is currently underway on one key kimberlite to assess the diamond grade and value, where previous results yielded grades of 100 carats per hundred tonnes with diamond values of US$144 per carat.
At the Kono underground trial mine, previous bulk sampling has produced 4,200 carats as part of an economic evaluation exercise. In Guinea drilling has commenced on the Droujba kimberlite pipe and at Bouro, bulk sampling of a high grade kimberlite dyke adjacent to the Mandala mine is also planned.