JOHANNESBURG (miningweekly.com) – Aim-listed Stellar Diamonds has conditionally raised some £1.85-million through the issue of around 148-million new ordinary shares of 1p each at a price of 1.25p apiece to new and existing private and institutional investors.

The proceeds of the fundraising would be used predominantly to advance the West Africa-focused company's Baoulé kimberlite project, in Guinea, towards trial mining, as well as to continue the bulk sampling programme at its Tongo play, in Sierra Leone.

The cost of the 2014 work programme was estimated at £1-million for Baoulé and £300 000 for Tongo, and the remaining £55 000 would be used to settle outstanding fees and for general working capital.

Investment group Foradex Invest, the company's largest shareholder, was subscribing for 47.6-million new ordinary shares and, following admission, would hold 161-million ordinary shares, representing 23.18% of the company's issued share capital.  

“Given the tough market conditions for small mineral resources companies, the directors believe that the acceleration of Baoulé to trial mining is the correct strategy to deliver shareholder value, as the project has the potential to generate cash flow for the company in the second half of the year,” the miner said in a statement.

Stellar's right to earn into the Baoulé project at the diamondiferous Baoulé kimberlite pipe, which is located in the prolific diamond region of Aredor, in sout-heast Guinea, was granted under a joint venture agreement in December last year. 

Using an extensive historical database as reference, Stellar had modelled a target resource of over 22-million tonnes to a depth of 300 m. 

In addition, bulk sampling by previous owners had yielded diamond grades of between 13 ct per hundred tonnes (cpht) and 40 cpht.

“Taking the lower grade of 13 cpht, Stellar is targeting a diamond resource of three-million carats. In 2000, a 500 ct parcel [from Baoulé ] sold for $157/ct, which [we] estimate would yield over $200/ct in the current diamond market,” the diamond explorer said on Thursday.

Stellar intended to allocate funds to accelerate Baoulé to trial mining and was already in the process of relocating its assets from the Droujba and Mandala licences, in south-east Guinea, to Baoulé.

Among the most critical of these assets was a MB 100 dense media separation plant, which was capable of processing large tonnages and recovering large, high-value diamonds for which the Aredor area, in which Baoulé was located, was renowned. 

The company had scheduled commissioning of the plant for August, with trial mine processing starting in September this year.

“Stellar intends to acquire its 75% interest in the Baoulé project, as per the joint venture agreement, through a combination of past and future expenditure and vending in of various plant and machinery assets before the start of the trial mining,” the miner noted.

ONGOING SAMPLING

Meanwhile, at the Tongo project, ongoing bulk sampling of the 1.1-million carat Dyke-1 resource continued to yield high diamond grades with “exceptional” quality diamonds. 

Stellar recently reported recovery of 551 ct at an average bulk sample grade of 126 cpht, which was in excess of the modelled resource grade of 120 cpht. 

The company said it would continue with the bulk sampling programme into July to achieve at least a 1 000 ct diamond parcel for the valuation and diamond-value modelling that was required for the definitive feasibility study.

“The work at Tongo will continue through the bulk sampling exercise, although completion of the full definitive feasibility study will now be targeted for the first half of 2015,” said Stellar.