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West Africa-focused Stellar Diamonds plc (LSE:STEL), has accomplished its target of expanding its resource from its Tongo project in Sierra Leone to at least a million carats, following the conclusion of expansion drilling, the company said Wednesday.
In a statement, Stellar announced a 63% in a JORC-compliant inferred resource from Dyke-1 of its Tongo licence to approximately 1.074 million carats, up from 660,000 carats the company reported back in March 2012.
“Tongo Dyke-1 therefore has the potential to be a high value, high quality growth asset for the Company,” said Karl Smithson, Chief Executive of Stellar.
According to Mr. Smithson, the modeled in-situ resource value of the Tongo diamond deposits is as much as US$266 million.
The value and the grade of diamonds in the revised resource estimate are still the same as those pegged in the first maiden estimate released last March 2012, but total tonnage was increased to 895,000 tonnes to produce the said million carats.
Shares of the AIM-listed explorer Stellar gained 8.7% to 3.125 pence a share on the London Stock Exchange at 9:40 AM GMT, following the news.
What’s Next?
“Stellar is currently planning the next phase of development work at the Tongo project, which is likely to include conceptual economic scoping studies followed by a pre-feasibility study during 2013,” the company said.
The company, however, will be in need of funds to support the next phase of development as it only has US$1.5 million of cash as at 30th June 2012, though carrying no debt.
An equity financing in April 2012 has already raised US$3 million to fund the resource expansion of Tongo as well as the Droujba project in Guinea.
Lord Daresbury, Stellar’s Non-Executive Chairman, had already noted during the company’s 2011-2012 annual report the difficult market condition the company was in with the reduced investment from banks in purchasing diamonds, pushing values of both polished and rough diamonds down.
But Lord Daresbury said Stellar strongly intends to be a diamond producer despite the odds as the company pins its confidence on Tongo, which the Chairman referred as having one of the highest value kimberlites on a dollar per tonne basis.
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