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Stellar Diamonds (LON:STEL) has lodged its application for a mining licence at the Tongo Dyke-1 kimberlite project in eastern Sierra Leone as part of its new fast-track plan.
All of the data compiled so far on the 1.45mln carat deposit will also be pulled together for a preliminary economic assessment. This will be instead of a previously planned definitive feasibility study and will cut costs.
Tongo has a net present value (NPV) on current estimates on US$75mln assuming an average 120cpht [carats per hundred tons] and US$270/ct [per carat] price.
Stellar expects to increase that NPV value by targeting higher grade stones at an average 165cpht, with an initial target of 120,000 carats production through surface mining during the first three years.
It will cost US$20mln to bring the mine into production, to be funded by debt, with a target over the total life of mine of one million carats over 16 years.
Karl Smithson, chief executive, said: "Moving Tongo to the mining licence application stage is a major milestone for the project.
“Simultaneous to this we intend to establish a suitable financing structure to access debt funding for the majority of the US$20mln of capital expenditure, which is estimated to be required to bring the project into production.
"We are delighted at the positive response received from various stakeholders within Sierra Leone.
“There is a clear will to support our efforts to build the next diamond mine in Sierra Leone, which can offer a significant and positive contribution to the post-Ebola social and economic reconstruction."
Sanlam keeps its 'speculative buy' unchanged on the shares, targeting 1.86p.
"We believe that the Tongo and Baoule projects merit development (Baoule dependent on stone value) but are concerned about recommending a stock that needs equity in the current soft funding environment (for junior miners)," said analyst Charlie Long.
He added that Stellar's debt approach would minimse the dilution if successful, so long as the cost is not too high.
"Presumably a project level investor is also a possibility," added the analyst.
Stellar shares were unchanged at 0.85p.