Name and Location
Tongo Dyke-1 kimberlite diamond project, Sierra Leone.

Client
Stellar Diamonds.

Project Description
A preliminary economic assessment (PEA) on the Tongo project has delivered robust economics that support the development of an openpit and subsequent underground mine.

The PEA focused on the base-case grade and resource model of 120 carats per hundred tonnes and 1.1-million carats to a depth of between 300 m and 400 m from surface over an initial 18-year life-of-mine.

A detailed mine plan has been established that will allow for surface bench stope mining from years one to four.

During the surface mining phase, the first underground shaft and infrastructure will be established so that underground ore production can start in Year 3 and, therefore, allow for a seamless - transition from surface to underground operations.

Production from the first three years of surface mining is forecast to yield an estimated 117 800 ct, with revenues estimated at $28.5-million, while production from underground mining from years 4 to 18 is expected to yield 838 124 ct and revenues of $358.2-million.

The current life-of-mine plan is based solely on the Tongo Dyke-1 resource to a depth of between 300 m and 400 m.

Opportunities exist to extend the life-of-mine and enhance revenues and project economics by:
• deeper mining of Dyke-1 to levels similar to fissure mines in South Africa, which have operated to more than 700 m in depth;
• drilling and resource definition of Dykes 2, 3 and 4 on the Tongo licence, all of which have indicated grades similar to or higher than Dyke-1; and
• Dyke-1 may have a higher actual recovered diamond grade to that used in the PEA.

Net Present Value/Internal Rate of Return
The project has a net present value, at a 10% discount rate, of $53.2-million and an internal rate of return of 31%.

Value
The capital requirement to establish production in years 1 to 4 is estimated at $24.8-million, which will enable surface and underground mine infrastructure to be developed.

Duration
Not stated.

Latest Developments
Following completion of the Tongo PEA, the directors have decided to pursue the development of the Tongo project and continue with the mining-licence application process.

As part of this process, an environmental- and social-impact study (ESIA) must be completed and submitted to the Environmental Protection Agency to be awarded an environmental licence.

This process is well advanced, with independent group TerraNova-EcoSys compiling the ESIA.

The mining licence application will then be submitted for consideration through the National Minerals Agency and Minerals Advisory Board, which will make the final recommendation to the Minister of Mines for its approval.

Subject to the mining licence being approved, which is allowed for in the Mines Act (2009), a negotiation process will follow between the company, its advisers and a specialised governmental body, during which the fiscal terms of the future mine will be agreed upon.

Key Contracts and Suppliers
Paradigm Project Management (PEA) and TerraNova-EcoSys (ESIA).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Stellar Diamonds, tel +44 20 7010 7686 or fax +44 20 7010 7699.