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Stellar Diamonds: PEA on Sierra Leone diamond projects pegs NPV at US$172M

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Stellar Diamonds: PEA on Sierra Leone diamond projects pegs NPV at US$172M

Stellar Diamonds Plc said Oct. 5 that an independent preliminary economic assessment for the combined Tongo and Tonguma diamond properties in Sierra Leone defined a pretax net present value of US$172 million, using a 10% discount rate, with a 49% internal rate of return.

The project is estimated to generate US$1.52 billion in revenue over its 21-year mine life, with operating costs of US$847 million.

Under the proposed mine plan, the company will develop a series of declines at Kundu, Lando and Tongo to access ore 40 meters below surface. An existing 50-tonnes-per-hour processing plant at OCTEA Mining Ltd.'s Koidu mine will be relocated to Tonguma and upgraded.

The project will require CapEx of US$31.8 million in the first two years to bring the mine into production within a year and ramp up to 200,000 carats per year in the fourth year of operations.

Using a +1.18-millimeter cutoff, the company expects to recover an estimated 3.96 million carats from the initial 4.5 million-carat inferred resource.

Meanwhile, Stellar is continuing legal and due diligence work on the proposed transaction with OCTEA Mining, completed in August, to combine the two kimberlite properties and bring both assets into production under the same production infrastructure.

If the deal is completed, Stellar will having a 75% economic stake in the project following repayment of its initial investment, as well as the payment of certain revenue royalties, among other things.