Stellar Diamonds has announced the results of an independent preliminary economic assessment for the proposed Tongo-Tonguma mining project with Octea Mining.
Stellar announced on 22 August s proposed transaction with Octea Mining to combine their adjacent Tongo and Tonguma diamondiferous kimberlite dyke properties in eastern Sierra Leone,
Stellar says the PEA demonstrates a financially robust and high margin 21 year life of mine over an initial resource of 4.5 million carats.
The PEA also recognises considerable upside exists from additional high-grade kimberlite dykes on the properties which are not yet categorized into resource. Highlights:
- Estimated pre-tax Project NPV(10) and IRR of $172 million and 49% respectively
- Projected life of mine Project revenues of $1,518m with operating costs of $847 million
- Estimated operating margin of 50% over the life of mine
- First production expected within 12 months, ramping up to over 200,000 carats p.a. in 4th year
- Expected Capex of $31.8 million in first two years (including 15% contingency)
- Estimated 3.96 million carats recoverable from the initial 4.5 million carats resource at a +1.18mm cut-off
- Recoverable diamond grades and values for first three kimberlites to be mined of:
* Kundu: 260cpht and $209 per carat ($543 per tonne)
* Lando: 220cpht and $209 per carat ($440 per tonne)
* Tongo: 100cpht and $310 per carat ($310 per tonne)
- Exploration target of up to 8 million carats in addition to existing resource
Chief executive Karl Smithson said: "The PEA of the combined Tongo-Tonguma mine demonstrates robust financial returns for a modest capital requirement and supports the Board's decision to pursue this strategic acquisition. Three kimberlite dykes, Kundu, Lando and Tongo are contained within the mine plan and have compellingly high diamond grades and values and together support a long life of mine.
"We are further encouraged by the potential which exists to significantly increase the resource base by bringing a number of additional high grade kimberlites that have been discovered to date on both licences into the long term resource base.
"We continue to make good progress with the legal and other due diligence processes that are required to complete the Transaction and will provide further updates in due course."