---ADDS CEO AND BROKER COMMENT---
Stellar Diamonds (LON:STEL) shares rose 11% after it said trial mining of its Baoulé kimberlite pipe in Guinea had exceeded hopes with a number of large stones uncovered.
The first ore processed yielded 196 carats in total, or 17 carats per hundred tonnes – which was well ahead of the minimum expected grade of 13 carats per hundred tonnes.
Within that Stellar unearthed octahedrons of 5.5 carats and 5.1 carats alongside stones of 3.1, 1.9, 1.3 and 1.2 carats. Overall, half of the diamonds found were of gem quality.
The first export of stones is expected to take place next month, and eventually the project is expected to pay for itself. “As we build up production so the project becomes self-sustaining,” chief executive Karl Smithson told Proactive Investors.
“We are probably going to be look at two, three exports in before the project is doing that.”
The objective is to mine 100,000 tonnes to establish a diamond grade and a benchmark value for the stones. The group is currently expects to receive around US$200 a carat.
Smithson said there was some fine tuning to be done with the plant used to process the diamond-bearing kimberlite ore, but overall he is happy with progress.
“We have now ramped up to 50 tonnes per hour,” he said.
“The capacity is 100 tonnes. But if we can get up to 60, 70 tonnes we will be very, very happy. It is about fine tuning and everyone doing their job.”
The shares, up 42% in the year to date, rose 11% to 1.41p. Broker Daniel Stewart reckons the stock has much further to go, setting a price target of 5p.
“With an estimated diamond value of around US$200 a carat, Baoulé has the potential to become a significant cash flow generator for Stellar,” the broker said in a note to clients.
Separately, Stellar said it had implemented restrictions on staff travel and a total ban on visits to the epicentres of the Ebola virus in Guinea.
“The company continues to monitor the situation very closely to ensure the continued well-being of all employees and that of the local communities,” it added.