Stellar Diamonds (LON:STEL) this morning revealed it is raising £6.2 million from investors which will be used to develop the company’s kimberlite portfolio and for general working capital.
A total of 77.5 million shares, the equivalent of 38.5 per cent of the company’s enlarged equity base, is being placed at a price of 8 pence a share.
Chief executive Karl Smithson said: “We are delighted at the very strong demand for this placing, which has attracted significant new institutional investors to our share register.
“The level of support from both existing shareholders and new investors provides Stellar with the financial capacity to aggressively accelerate the exploration and development of our kimberlite portfolio, which we believe has the potential to unlock significant value for all shareholders.
“The diamond market and the outlook for the diamond sector as a whole continue to improve and our strategy remains for Stellar to become a leading diamond producer in Africa."
Around £2 million of the proceeds will be used for resource definition drilling and bulk sampling at the Droujba kimberlite pipe in Guinea. This will include assessing the wider licence area for additional kimberlite ore bodies.
Analysis of the Droujba drill samples returned highly encouraging micro diamond results, Stellar revealed.
“The company therefore plans a phase two drilling programme with the objective of increasing the known depth extent of the pipe, while also increasing the confidence in the shape and size of the ore body,” it said it a statement.
“A bulk sample will also be collected from the surface of the kimberlite, once the standing water has been pumped out, and processed in order to determine the diamond grade and value of the pipe.”
At the same time Stellar will spend £1.5 million evaluating the high grade Dyke 1 kimberlite at Tongo Dykes in Sierra Leone.
The current 2,000 tonne bulk sample will be completed and will be followed by a larger scale underground bulk sampling programme to include 3,000m surface drilling to delineate the lateral and depth extent of Dyke 1.
At the Bouro and Kono kimberlite dyke projects in Guinea and Sierra Leone respectively, the exploration and evaluation programmes will continue.
This will include continued bulk sampling at Bouro, which is located only one kilometre north of the company's Mandala alluvial project.
Bouro is thought to be one of the likely hard rock sources for the 115,000 carats of diamonds produced so far at Mandala.
Separately, the company plans to recommence exploration and trial mining activities at the Kono project, with £500,000 set aside for this.