In twin statements released today, Stellar Diamonds plc made two announcements: In one, the Company announced the completion of the trial mining evaluation at the Baoulé kimberlite in Guinea, West Africa; In the other it said that it had entered into an “unsecured loan facility agreement” with existing shareholders Altus Strategies Limited (Altus) and Deutsche Balaton AG (Deutsche Balaton).

In its operational update on the 75% owned, five hectare Baoulé kimberlite pipe in Guinea, Stellar reported that evaluation of a 100,000 tonne bulk sample taken from the eastern and western  lobes of Baoulé has been completed as part of a trial mining exercise.

From this, a total of 11,808 carats of diamonds were recovered at an average grade of 11.4cpht at a +1.25mm cut off. The Company indicated that the grade of the eastern lobe is higher than that of the western lobe at 13.3 cpht vs. 9.8 cpht respectively.

“A total of 929 stones greater than 1 carat have been yielded including numerous high value gem and fancy coloured (yellow) diamonds,”said Karl Smithson, Stellar’s Chief Executive Officer. “Additionally, as announced on 15 March 2016, one 55 carat stone has been recovered, which confirms the Company’s belief that the Baoulé pipe is a source of large diamonds that are renowned in the Aredor area of Guinea.”

In three separate sales it conducted, Stellar has sold over 8,400 carats totally to date, earning over US$1 million in revenues. “Diamond values have varied widely from US$ 91 to US$ 156 per carat depending on the market sentiment at the time of the sale and the diamond mix of the parcels sold,” the Company stated. “However, it is notable that a number of gem and fancy coloured diamonds commanded premiums and values of up to US$ 6,800 per carat, confirming the presence of high value stones in the Baoulé pipe.”

Later this month, the Company plans to sell another 3,188 carats. The sale will be conducted via online auction using the DDA Trading platform. “Viewings of the goods will take place from 20 to 27 June 2016 in Antwerp with the auction closing on 28 June 2016,” the Company said. “Results of the auction will be announced soon after the auction is closed and sales proceeds received.”

Smithson concluded: “We will then complete the necessary diamond grade and value modelling as part of the resource estimation exercise, with our resource target remaining approximately 3 million carats contained within the Baoulé pipe. This will then allow us to formulate the next development steps for the project.”

Under the Shareholder Loan Facility Agreement, Altus and Deutsche Balaton will provide a total of £465,000 funding to the Company; of which £325,000 is to be provided by the former and £140,000 by the latter. “The proceeds of the Loan will be used for working capital purposes as the Company advances its mining licence application for its Tongo kimberlite project in Sierra Leone and establishes a maiden resource at its Baoulé kimberlite project in Guinea,” the Company announced.

Further, the Company declared, the loan is repayable six months following the date of the Agreement, or as otherwise agreed from time to time. The loan attracts an interest rate of 20% per annum, which is payable in arrears. Stellar also has the option of prepaying all or part of the loan at any time, subject to a minimum prepayment amount. 

Pic Cap: Mining at the eastern lobe of the Baoulé kimberlite