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Stellar Diamonds (LON:STEL) was in focus this morning as bulk sampling of the company’s Tongo kimberlite in Sierra Leone returned some very encouraging results.
Stellar said it has processed 566 tonnes of rock at a grade of 109 carats per tonne at Dyke 1. The diamond quality is said to be excellent with 90 per cent of the stones of gem quality.
The Tongo processing plant, meanwhile, is now running at close to optimal capacity.
The objective of the bulk sampling programme is to unearth 1,000 to 2,000 carats for grade and valuation purposes.
So far it has extracted 371.45 from the material, which is 60 per cent kimberlite and 40 per cent granite.
Once the surface bulk sampling is completed, a 3,000m resource definition drilling programme will be undertaken.
Subject to the results, Stellar will sink a shaft to begin underground bulk sampling at a depth of 45 metres.
"The objective of this aggressive programme is to identify an initial inferred resource statement for Tongo,” chief executive Karl Smithson said today.
“Based on the high grade and excellent diamond quality so far observed, we believe that Tongo has the potential to deliver substantial value for shareholders".
He added: "The latest results from bulk sampling of Dyke 1 at Tongo continue to prove highly encouraging.
“The in-situ grade of the kimberlite remains high at 109 cpht and the diamond quality is excellent.
“The processing plant is now running at close to optimal capacity and we are now approximately 30% through the sampling programme with 566 tonnes of the planned 2,000 tonnes having been processed.”
After a strong opening, the shares drifted back a little to stand just 0.06 pence higher at 7.81 pence.
“(These are) encouraging results,” said Andrew McGeary, from broker Northland.
“Whilst diluted grade of 65 carats per tonne is lower than previous samples this is largely owing to safety issues.
“The undiluted grade is robust at over 100 carats and while also a bit lower than previous samples.
“The company expects grades to improve with re-crushing of ore as the plant is optimised.
"The 3,000m resource definition drilling programme planned to commence in June, could provide an inferred resource.
"The underground bulk sampling could provide the economic basis for full production as well as a substantial diamond parcel of its own.
"The bulk sampling programme is a third of the way through and there are several more milestones to go before the project is de-risked.
"However, at this stage, likely high diamond value, established high gem quality and robust grades, provide encouragement that Tongo can progress towards a sizeable economic resource.”
City broker Fairfax, while reassured by today’s announcement, is more interested in the progress from the Droujba in Guinea, which is a potential company-maker.
"Following refinancing in March of £6.2m the company can crack on with exploration work at its various projects which are yielding positive results,” it added.