Adds broker comments......
West Africa focused Stellar Diamonds PLC (LON:STEL) said the work programme at the Tongo kimberlite project in Sierra Leone continues to deliver very strong results, and the initial resource estimate remains on track to be completed in the first quarter of 2012.
The current drill programme has confirmed the lateral and depth continuity of the high-grade Dyke 1. The kimberlite has been intersected at a vertical depth of 200 metres along a strike length of 1 kilometre and remains open at depth and along strike.
Further, bulk sampling results from Dyke-1 have continued to deliver grades comfortably in excess of 100 carat per hundred tonnes (cpht).
Drilling with two core rigs has been focused on the 2.5 klometres long Dyke-1 with 14 holes for 1,833 metres being completed to date. In the next two months, once drilling on Dyke 1 has been completed, Stellar will test Dyke-4, located 1 kilometre northwest of and parallel to Dyke-1, and undertake further surface bulk sampling. A further 36 holes are planned for 5,000 metres.
A second diamond parcel from the Tongo project, comprising 310 carats, was recently exported to Antwerp and independently valued at US$176 per carat. The first parcel of 639 carats exported in June 2011 was valued at US$191 per carat, giving an average value to date for both parcels of US$185 per carat and a potential in-situ value of Dyke-1 of approximately US$205 per tonne.
Chief Executive Karl Smithson said: "The work programme at Tongo continues to deliver very strong results and we remain confident in the potential Tongo offers as we continue to focus our portfolio on the development of our high grade kimberlite projects.
“Our objective remains to establish a maiden resource estimate for Tongo in the first quarter of 2012 and we will continue to provide updates on our progress as the programme continues."
Stellar is focused on West Africa where programmes aimed at generating maiden resource estimates at Droujba in Guinea and Tongo in Sierra Leone are ongoing. Bulk sampling of the Lion-5 dyke at Kono in Sierra Leone is due to commence shortly and at Bouro in Guinea a previous bulk sample realized a grade of 243 carat per hundred tonnes. Mining at Mandala in Guinea is currently on a seasonal break.
Broker Fairfax said: "The results reinforce our view that the very rich dyke at Tongo has potential to repay development capital back quickly and there is scope for upside in the shares on verification of the value of the Tongo Dyke in Sierra Leone.
"These are exceptional grades and we await some form of tonnage estimation for Dyke-1 and an indication of potential mining costs for this type of potential mining operation."
Meanwhile, Daniel Stewart maintained its 'buy' recommendation and targeted a price of 15 pence.