Stellar Diamonds plc has entered into “a conditional binding Term Sheet” with BDG Capital Limited (BDG) for the proposed sale of Stellar’s assets in the Republic of Guinea.

Under the agreement, the Company is to receive a cash consideration price for the Guinea assets amounting to US$ 2 million. Of this, an amount of US$ 250,000 cash has been received as an “exclusivity fee”; the exclusivity period has been fixed for two months during which the due diligence and documentation process is expected to be completed.

The sale will include some equipment as well as the shares in subsidiary companies Ressources Tassiliman Baoulé (75% interest in the Baoulé project), Ressources Mandala Guinee (100% interest in the Mandala project) and West African Diamonds (100% interest in the Droujba project).

In the meanwhile, the Joint Venture Agreement over Baoulé and Liberia with Citigate has been terminated.

Chief Executive Karl Smithson commented: “Subject to BDG satisfactorily completing its due diligence, this binding terms sheet should see Stellar realise some US$ 2 million in cash for its non-core projects in Guinea, representing approximately two thirds of our current market capitalisation.”

He added: “The proceeds will be used to advance the development of our flagship Tongo-Tonguma kimberlite project in Sierra Leone; a project that has an estimated post-tax NPV(8) of US$ 104 million attributable to Stellar. The proposed Tongo-Tonguma mine has a low capex requirement of US$32 million and the potential to be the second largest kimberlite diamond mine in West Africa – with forecast production levels of 200,000 carats per annum, generating revenues of over US$ 45 million per annum over a minimum life of mine of 21 years.”