Scoping studies have started at West Africa-focused Stellar Diamonds' (LON:STEL) Tongo and Droujba projects, the firm said today.
The results will help determine whether to move into the pre-feasibility stage later this year and the work is expected to take six months.
The conceptual economic scoping work will include such factors as mine design, mine planning, capital budgeting and financial analysis.
Tongo and Droujba have a combined inferred diamond resource of 4 million carats, which could be increased through further drilling, but the firm reckons they now have a "critical mass".
Chief executive Karl Smithson said: "Moving them (the projects) through the conceptual study stages is in line with the plans we announced at the time of our recent placing.
"The results of the studies will enable us to decide whether to move into the pre-feasibility stage later this year."
Earlier this month, the company announced it had raised around £1.1 million to advance its Droujba and Tongo projects.
Analyst Dr Ryan Long, at broker Northland, said he could see potential upside from the results of the scoping studies for the Tongo project, he remains cautious on the Droujba project.
Current low diamond values at the Droujba project have led the broker to remove it from its base case valuation for the company, which stands at 4.3 pence.
In his upside case of 5.5p, Long assigns a value of 1.2 pence a share for the Droujba project that assumes an increase in diamond prices to reflect improving underlying fundamentals.
"Despite our concerns on the Droujba project, at its current level, Stellar Diamond’s share price leaves the Tongo project looking undervalued. We maintain our BUY rating and price target range of 4.3p to 5.5p," he said today.
Stellar Diamond shares were unchanged today at 2.75p.