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.

Dyke-1 has a Joint Ore Reserves Committee-compliant resource of 1.45-million carats.

The PEA has 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. There was also opportunity to expand the mine life and project economics through the addition of any of the other three dykes in the licence area.

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.

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 at 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 possibly having a higher actual recovered diamond grade than 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 one to four is estimated at $24.8-million, which will enable surface and underground mine infrastructure to be developed.

Duration
Not stated.

Latest Developments
Stellar Diamonds is progressing to receiving the required mining and environmental licences to develop and exploit the 1.45-million-carat diamond resource at its Tongo Dyke-1.

The company has secured a meeting with the Sierra Leone Environmental Protection Agency (EPA) to discuss and agree on the fee for issuing the environmental licence for its Dyke-1 project.

In February, Stellar received approval for its environmental-, social- and health-impact assessment (ESHIA) from the EPA, a key step to obtain these licences, Stellar Diamonds CEO Karl Smithson has said, adding that Dyke-1 is one of four kimberlite dykes at the Tongo project.

The Mines and Minerals Act of Sierra Leone requires an environmental-impact assessment (EIA) for a mining licence application, but does not require an EIA to be undertaken for an exploration licence to be issued. However, it does require an assessment before a mining licence can be issued. There is, however, a general governance requirement to conduct exploration and evaluation in an environmentally sensitive manner, explains Stellar in its PEA.

Environmentally sensitive operations are those that provide, among others, compensation for landowners for damage to crops during exploration, backfilling and improvement of safety in terms of boreholes or excavations, as well as remove any camps, temporary buildings or machinery erected and installed during exploration.

Exploration activities on the Tongo project are considered to have had minimal impact on the environment, notes Stellar, with baseline studies having been initiated during the roll-out of the ESHIA in November.

Stellar has indicated that it wants to keep its footprint as small as possible, with processing being done using dense-media separation, which is completely water based.

The studies included monitoring soil and land use, and air and water quality to assess and document the state of the environment encompassing the project, the project’s environmental footprint and any potential impacts it might have as it progresses along the mine life cycle.

The data will be used to assess potential environmental risks and how they can be mitigated and will, therefore, constitute the project’s environmental management plan (EMP).

The plan also entails developing, implementing, maintaining and updating site-specific systems and focuses on issues such as the disposal of sewage, solid waste, ore and mine waste, as well as water management and rehabilitation.

Under the terms of the ESHIA, the EMP will be used to manage all environmental aspects through a system of ongoing planning, implementation, checking, corrective action and management review.

The feedback process generated will promote continuous improvement of environmental impacts to achieve Stellar’s objectives and targets.
  
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.