Publish Date : 04-May-2017
Stellar Diamonds plc, the London quoted diamond exploration and development company focused on West Africa, announces that, further to the Companys announcement on 28 April 2017 that it entered into a Tribute Mining Agreement with Octea Mining Limited (Octea) in relation to the Tongo-Tonguma kimberlite dyke diamond project in Sierra Leone (the Project), the Company has now entered into a contract for the Front End Engineering and Design study (FEED) to be conducted for the underground mine development of the Project.
FEED Highlights:
First key milestone in the mine development of a high-grade diamond project ; Paradigm Project Management Pty Ltd (PPM) appointed to prepare the FEED study; Study will refine estimated operating and capital costs and mine construction parameters; Robust attributable potential post-tax Project NPV(8) and IRR of US$104 million and 31% respectively1;
Long 21-year mine life, producing over 4 million carats with revenues over US$1.5 billion1; Project is one of the highest dollar per tonne value kimberlites in Africa and has the potential to be the second largest diamond mine in West Africa; 1 Company estimates based on the Preliminary Economic Assessment (PEA).
Chief Executive Karl Smithson commented:
Having announced the signing of the Tribute Mining Agreement on the Tongo-Tonguma project last week, we are pleased to already be announcing the signing of the FEED contract today. The FEED is a very important first step in the mine development process. PPM are highly experienced in the delivery of diamond mine projects and together with SRK Consulting they will refine all elements of the mine plan as determined in the PEA to higher levels of confidence in order to reduce the project delivery risk. With over 66,000m of drilling completed at the Project to date, we will undertake mine plan related drilling to a depth of 75m concurrent with the FEED study.
Once work commences on the FEED, it is expected to take approximately four months to deliver (including drilling) and will mark the onset of the mine development programme. I look forward to updating shareholders on our progress as we work to transform Stellar into a long term, high value diamond producer.
FEED Objectives
The main objectives and approximate cost of the FEED study, the commencement of which remains subject to funding, are as outlined in the PEA which was announced on 5 October 2016. The FEED results will better define the technical requirements of the Project in order to ensure that the correct underground mine design is implemented and that the treatment plant design and layout is properly designed and the unit processes are clearly identified.
Although the combined Tongo-Tonguma projects have seen some 66,000m of drilling, approximately 5,000m of additional core drilling will be undertaken at 50m intervals to better define the near-surface geology of the kimberlites in Resource with particular reference to siting of the decline portals, the declines and the development drives for the first two levels of mining to a depth of 75m below surface. Furthermore, the drilling will provide the necessary geotechnical and hydrogeological information for the initial years of mining.
The FEED will also define the final capital expenditure definitive estimate and the operating cost budgets. In addition, the Project execution plan will also be developed. A refined financial model will also be developed for the mine which currently shows a Project post-tax NPV(8) of US$167 million and IRR of 33%, of which Stellars attributable NPV(8) is US$104 million.
Key FEED Elements and Deliverables
The following list highlights the key FEED work streams and deliverables by PPM/SRK Consulting and Stellar:
Mining ; Underground geotechnical ; Hydrology ; Underground infrastructure ; Hydrogeology ; Surface geotechnical ; Surface infrastructure ; Bulk services (power and water supply)
; Treatment plant ; Security and product protection ; Operational readiness (including manpower plan, preliminary project procurement ) ; Procurement and logistics ; Project execution plan ; Risk and opportunity management ; Project Management and services ; Infill drilling ; Environmental management in line with approved EIAs ; Social and community liaison ; Legal and permitting
.
Review by Competent Person
This announcement has been reviewed by Karl Smithson, Chief Executive of Stellar, a qualified geologist and Fellow of the Institute of Materials, Metals, Mining, with 28 years experience. This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identi ed by their use of terms and phrases such as believe, expect, could, should envisage, estimate, intend, may, plan, potentially, will or the negative of those, variations or comparable expressions, including references to assumptions. These forward looking statements are not based on historical facts but rather on the Directors current expectations and assumptions regarding the Companys future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements re ect the Directors current beliefs and assumptions and are based on information currently available to the Directors.
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