AIM-listed diamond junior, Stellar Diamonds may not have operational mines yet, but the amount of time and level of investment it is injecting into its two core diamond projects will ensure it delivers new world-class mines, CEO Karl Smithson tells Laura Cornish.
Global diamond jewellery consumption is expected to achieve an annual growth rate of 5.6%, reaching US$128 billion (R1.04 trillion) by 2020. This, in turn, will help rough diamond demand to grow an average of 10.4% every year to reach US$40.8 billion in the same timeframe.
Coupled with such a promising outlook for the diamond sector is Stellar Diamond’s unfaltering commitment to its diamond project prospects.
“We have over 12 years of experience in West Africa’s Sierra Leone and Guinea, and an experienced core team on the ground comprising no expatriate geologists,” says Smithson.
And despite the fact that both its core projects are building up towards pre-feasibility stages, it already employs and has trained 300 personnel.
“The combination of the increasing diamond price and our investment and commitment to our projects will ensure we develop successful, profitable diamond-producing mines,” Smithson continues.
“And while our timeframe seems longer than most average mine development timeframes, we believe it is essential to be thorough and sure at all stages.”
Importantly, all of Stellar’s projects already include small-scale process plants and despite their remote African locations, have sound and accessible infrastructure, and sufficient water.
“Electricity may be our only challenge, but we have generators on site and acknowledge that power will make up at least 60% of our operational costs.”
Tongo project – the most advanced
“At present, we are working towards doubling the project’s inferred resource to above 1.2 million carats towards the beginning of this year’s fourth quarter. We will achieve this by drilling Dyke 1 to a 300 m depth and verifying the eastern extension of the kimberlite,” Smithson explains.
Once this resource has been independently verified, the plan is to double the resource again to a depth of 600 m. At the same time, underground trial mining will be initiated with the aim of mining a 10 000 t bulk sample, which should take approximately 18 months to complete. Thereafter, a fully fledged operational mine should take between 12 and 24 months to establish.
“Our aim is to ultimately produce about 100 000 carats, of high quality, every year from Tongo,” Smithson notes.
Perhaps the project’s close proximity to Koidu Holdings’ 180 000 tph kimberlite project, located some 60 km to the north of Tongo, might indicate an ‘additional vote of confidence’ in Stellar’s project. Koidu’s diamond grades place it among the top three of highest revenue per tonne kimberlite operations in the world. So much so that a leading diamond retailer, Tiffany & Co, has entered into an exclusive off-take agreement with the project.
Stellar Diamonds’ second Sierra Leone-based project, Kono, is temporarily on hold following a licence dispute announcement in April this year.
“We are in a dispute with the Ministry of Mines over our Kono project permits; the ministry claims our licences are invalid. We are currently investigating political and legal avenues to resolve this situation,” Smithson explains.
“Our next step at Kono will be to embark on a programme to drill out a 2 Mt resource, which we should be under way with already. Stellar Diamonds has done everything according to the law in terms of complying with the mining code and believes this issue will be resolved.” The company has spent some US$19 million on the Kono project to date, which includes underground trial mining.
Despite the delays, the company has suffered no problems with the renewal of its nearby Tongo licence.
In March this year, Stellar Diamonds released an inferred resource statement for its Droujba kimberlite pipe project declaring 2.5 million carats to a depth of 360 m.
“Ultimately, our intention at Droujba is to define a resource of over 4 million carats, with a contained value of over US$240 million,” Smithson notes.
The current resource statement includes 1.3 million carats as part of an open pit plan (to 160 m depth) and an additional 1.2 million carats comprising an underground mining portion (from 190 to 360 m depths).
An additional 400 000 carats has not been included in the resource, which constitutes the area from where the open pit portion ends and the underground portion starts.
The next step, which started in June this year, includes the collection and treatment of a 2 000 t bulk sample from the pipe, which should contain about 1 500 carats.
The first two of eight Phase-2 samples have yielded grades of 69.98 cpht and 109.59 cpht from a total of 383 t of processed material to date.
Thirty stones of +1 carat have been recovered and include a 6.9 carat gem-quality stone.
Smithson believes this project is two or three years away from reaching production status. He anticipates production will be about 400 000 carats per annum from the open pit portion of the project, which should have a life of mine of between five and six years. The cash generated from the opencast mine will fund the project’s underground development needs.
Tongo Droujba Total
resource carats 660 000 carats 2.474 million carats 3.134 million carats
in situ value US$163.4 million US$148.4 million US$311.8 million
12 month target
additional carats 500 000 carats 1.5 million carats 2 million carats
12 month implied
addition in situ value US$125 million US$90 million US$215 million
Total target carats 1.160 million carats 4 million carats 5.160 million carats
Total target in situ
value US$290 million US$249 million US$530 million