Name of the Project
Tongo-Tonguma diamond project.

Location
The project is located in eastern Sierra Leone.

Client
Stellar Diamonds and Octea Mining. In September this year, Stellar agreed with diamond miner Octea Mining to extend the longstop dates of their agreements to October 31.

Project Description
In September 2016, Stellar Diamonds and junior diamond developer Octea Mining proposed to combine their adjacent Tongo and Tonguma diamondiferous kimberlite dyke properties.

The results of an independent preliminary economic assessment (PEA) for the combined mining project has demonstrated a financially robust and high-margin project, with a 21-year life-of-mine (LoM). Only three of 11 kimberlite dykes on the properties have been categorised as resources to date – Tongo Dyke-1, Kundu and Lando – for 2.2-million tonnes and 4.5-million carats at a +1.18 mm cutoff.

The PEA was prepared on the basis of an underground mining-only scenario.
The current underground mine plan is configured as a series of declines from surface at Kundu, Lando and Tongo.

The declines will be 4 m × 4 m in cross section and will be developed at an angle of 8°. Mining levels will be interspaced at depths of 35 m, with the first levels being developed at 40 m below surface.

Based on the current resource models, Tongo will have 11 levels, Lando 10 and Kundu 5 during the 21-year LoM.

The orebodies will be accessed through 2 m × 2 m drives and crosscuts into stopes mined using traditional overhand shrinkage stoping mining methods. The ore will be drawn from access points and transported on underground locomotives and tipped into bins on an ore pass system. These bins will feed haulage trucks that will transport the ore to surface and the processing plant.

The existing 50 t/h processing plant at Octea’s Koidu mine will be relocated to Tonguma and further upgraded to serve as the processing plant for the new mine. This will save considerable time getting the project to production.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has a pretax net present value, at a 10% discount rate, of $172-million, and an internal rate of return of 49%.

Value
The project has an expected capital expenditure of $31.8-million.

Duration
First production is expected within 12 months.

Latest Developments
Stellar Diamonds has, over the past six months, continued to focus on sourcing the necessary funding to bring its Tongo-Tonguma project into production.

"Capital markets in the UK have proven extremely difficult to raise funds for junior mining companies in recent years. Further, the market capitalisation of Stellar during the past six months hovered around the $2-million level, which provided additional challenges of raising capital to develop the mine," CEO Karl Smithson has said.

However, he has noted that ASX-listed Newfield Resources' (NWF's) proposed share offer to acquire Stellar would raise the required project development capital for Tongo-Tonguma.

Under the terms of the proposed acquisition offer, Stellar's shareholders and the holders of rights over Stellar ordinary shares will receive in aggregate 95.5-million shares in NWF, which will equate to about 16.4% of the enlarged share capital of NWF.

NWF has advanced Stellar an unsecured $3-million loan with which to primarily start the front-end engineering design programme at the project, mine plan drilling and, as a result of the recent completion of the tribute mining agreement, payment of Tonguma mining licence fees of $1.25-million.

The loan will also be used to pay legal and corporate financial adviser costs, including those related to the possible offer for the company. Working capital will, therefore, remain constrained as Stellar continues discussions with NWF regarding the possible offer.

Key Contracts and Suppliers
Paradigm Project Management and SRK Consulting (FEED).

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.