Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

Baoulé project could transform Stellar Diamonds, reckons Sanlam

Baoulé project could transform Stellar Diamonds, reckons Sanlam

Stellar Diamonds (LON:STEL) is fast tracking trial mining at its Baoulé kimberlite project in Guinea, which could transform the firm's fortunes, said broker Sanlam.

The aim is to generate early cash flow and plant commissioning is earmarked for the end of August this year.

Chief executive Karl Smithson said: "The diamondiferous Baoulé pipe is located in the heart of the Aredor diamond district of Guinea which has historically yielded very large, high value diamonds from alluvial mining. 

"With an internal resource estimate of at least 3 million carats at the lower end of the grade scale of between 13- 40cpht we are excited to further unlock the value in this high tonnage project."

He added: "We have already made progress establishing the local infrastructure for the project and we are in the process of relocating our significant earth moving and kimberlite processing plant, already located in Guinea, to the Baoulé pipe."

Stellar noted that in 2000, a parcel of 509 carats, which did not contain any large stones, was sold for US$157 per carat but it believes the same parcel could achieve prices in excess of US$200 per carat in the current market.

Broker Sanlam, which rates the stock a 'hold', said the project could be potentially transformational for the company.

"The diamond value is believed to be $200/ct or above which seems reasonable given the historical prices achieved there," it highlighted.

"At 13cpht and $200/ct the Baoule rock would be worth in the region of $26/t against costs of production in the region of $20/t."

At 40cpht (carats per hundred tonnes) the rock is worth closer to $80/t which would deliver high margins and make Baoule an excellent project,"  it added.

"A grade of 30cpht or more should transform the fortunes of Stellar and its shareholders. Baolue has the potential to transform Stellar and make it a very interesting company indeed. We currently value Baoule at a nominal $5m which would clearly increase many times should trial mining be successful."

Stellar shares edged 1.85% higher to 1.375p.

View full STEL profile View Profile

Stellar Diamonds PLC Timeline

Related Articles

Bag of diamonds
July 06 2018
In a production update, the AIM-listed diamond miner said production in the first half of the year was up 81% year-on-year at 73,028 tonnes
April 03 2018
The strategic review aims to assess how the company can best leverage its position as the owner of one of the world's largest sapphire mines.

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use