Stellar Diamonds’ (LON:STEL) bulk sampling results boost the value of the Droujba kimberlite project in Guinea, says broker Daniel Stewart.
DS reckons the company is undervalued, especially given his recent revised valuation, calculating a 33 per cent increase in Droujba’s net present value (NPV) to US$45 million and a 15 per cent increase in Tongo’s NPV to US$87 million.
“We believe that the average diamond value will increase and therefore move the value of Stellar’s Droujba kimberlite upwards,” DS said in a note to clients.
DS has a ‘buy’ rating and bullish 27 pence target price on the stock, which implies huge upside with the market price currently just over 3 pence a share.
Fairfax analyst John Meyer was also optimistic, but added that the positive results are being overshadowed by the Kono licence dispute with Sierra Leone’s Ministry of Mines.
Yesterday the company revealed it had processed 2,023 dry tonnes of ore in its phase-two programme, returning grades of 70 carats per hundred tonnes from the first sample and 109 cpht from the second.
The largest gem quality diamond was 6.9 carats, with other stones of 9.55, 7.6, 5.55, 4.25 and 4 carats.