Stellar Diamonds plc, recently signed “ a legally binding conditional Tribute Mining Agreement and Revenue Share Agreement” with Octea Mining Limited with reference to the Tongo-Tonguma kimberlite diamond project in eastern Sierra Leone.
As a result, potential for “substantial near and long term cash flows” has been created for the Company, Stellar said. The Agreements also allows for combined mining of the contiguous Tongo and Tonguma concessions. Under the Agreement, Stellar will make a one-off payment of US$ 5.5 million to Octea five years after Project mine development commences, the Company stated.
“We are delighted to have signed these agreements with Octea which, subject to completion, will allow Stellar to build a single mine for the simultaneous commercial production from the contiguous Tongo (Stellar) and Tonguma (Octea) kimberlite deposits,” Chief Executive Karl Smithson commented. “The combined project has an initial 4.5 million carat resource which, due to the high grade (100cpht to 260cpht at +1.18mm) and high quality diamonds (US$209/ct to US$310/ct), is considered to be one of the highest value kimberlite ore bodies in Africa on a dollar per tonne basis. The 21 year mine plan with a consistent output of over 200,000 carats per year at full production would quantify this development as the second largest kimberlite diamond mine in West Africa. The project also has a very modest two year capital requirement of just under US$ 32 million to get into full scale commercial production.”
Stellar noted that the project at full production is estimated to generate US$ 45 million gross revenue per annum.
Under the Agreements, a 10% share of gross revenues (after deduction of Government royalty) is payable to Octea on diamond and other minerals recovered and sold, “once Stellar has recouped an amount equal to its CAPEX investment and Octea has received an initial revenue share payment of US$ 5 million”.
To date, Stellar revealed, it has invested US$ 7.2 million to establish resources at Tongo, which amount is equivalent to approx. £0.14 per Stellar share.
News Source: gjepc.org
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