Northland Capital this morning repeated its buy advice and 10.2 pence a share price target on Stellar Diamonds (LON:STEL) after an upbeat presentation from the group.
Analyst Ryan Long pointed out that an exploration programme that was slated to take a year has been completed in just six months and is expected to deliver a significant resource uplift.
The results to date have been encouraging and point to a potential one million carats to be added to the company’s two key projects – Droujba in Guinea and Tongo in Sierra Leone.
There is scope for “additional resource” potential, said Long.
However he pointed out that Stellar is keen to move to the next stage of development, which means monetising the projects.
“This could include establishing a feasibility study for Droujba and potentially commencing trial mining for Tongo,” the Northland analyst said.
“This may involve strategic partnerships or other methods to secure the necessary upfront capex of probably around $20 million or less in the case of Droujba, whilst Tongo capex will be offset by trial mining revenues.
“The company can also potentially leverage its own in-house equipment for assets, the mothballed Mandala plant for Droujba and the Kono plant for Tongo (if that licence dispute is not satisfactorily resolved).
“This successful six months of exploration for Stellar Diamonds has delivered everything management has set out to achieve and left it confident of achieving a material uplift in JORC defined carats to potentially over three million Droujba and around one million at Tongo.”
At midday the stock was trading almost unchanged at 3.1 pence, valuing the group at £6.7 million.