15 Mar 2010 07:00
NOT FOR DISTRIBUTION IN THE UNITED STATES OR FOR DISSEMINATION TO US NEWS WIRE SERVICES.
15 March 2010
AIM: STEL
Stellar Diamonds plc
("Stellar" or the "Company")
PROGRESS UPDATE
Stellar, the London listed (AIM:STEL) diamond mining and exploration company focused on West Africa, is pleased to provide a progress update on its operations following the successful Reverse Takeover of West African Diamonds plc.
Highlights
·; Operational and corporate synergies being harnessed after Reverse Takeover
·; Production at Mandala has exceeded 64,000 carats since mid 2009
·; A 37 carat fancy yellow stone has been recently mined from Mandala
·; Diamond sales from Mandala exceed US$1.7m to date
·; Expansion programmes at both Mandala and Bomboko mines underway
Mandala Diamond Mine (Guinea)
Mining at the 100% owned Mandala diamond mine in southeast Guinea has produced 64,800 carats at a grade of over 42 carats per hundred tonnes ("cpht") since mining commenced in mid-2009. The project currently has a measured and indicated diamond resource of 676,000 carats, with a further 114,000 carats in the inferred category. Production for January and February 2010 reached 16,400 carats at an average grade of 38.5cpht.
During February a special 37 carat 'fancy' yellow stone was recovered, the largest diamond produced to date by Stellar at the Mandala mine. The diamond has been exported to Antwerp for valuation and sale.
Between May 2009 and Feb 2010 some 60,800 carats have been sold from the Mandala mine, generating revenues in excess of US$1.7million for the Company, at an average price of US$29 per carat. The latest sale of 6,000 carats in early March recorded an average price of US$42 per carat (excluding the 37 carat fancy yellow diamond), indicative of an improving rough diamond market.
Bomboko Diamond mine (Guinea)
Since the Placing and Readmission, the Company has allocated resources to further develop the 100% owned Bomboko diamond mine, located some 60km from the Mandala mine in southeast Guinea, with the objectives of increasing production levels and improving diamond recoveries.
The Bomboko project has produced 2,562 carats since trial mining commenced in Q4-2009 at an average grade of over 4cpht. Recent production, however, has seen a significant increase in grade of 7cpht to 9cpht, subsequent to the implementation of improved mining and grade control measures. The largest diamond recovered to date is a 16 carat gem quality stone.
Three diamond sales totaling 1,816 carats have been completed from Bomboko since July 2009, with prices progressively increasing from US$114 per carat to US$126 per carat, reflecting the improving diamond market. An export of over 1,000 carats is expected in late March. The Bomboko run of mine goods are comprised of a high percentage (typically above 55%) of gem stones with a high average diamond size (typically above 0.5/ct), which impacts positively on the diamond price.
Diamond production to increase
Stellar is in the process of acquiring additional mining equipment in order to boost production at both the Mandala and Bomboko diamond mines, including the addition of a 16-foot pan plant and a Flow Sort X-Ray machine at Bomboko, which is expected to be installed during Q2-2010. It is expected that these initiatives will lead to increased production and processing capacities, as well as enhancing security in the diamond recovery process. This should enable the Company to meet its near term forecasts of 2,000 carats and 12,500 carats per month from the Bomboko and Mandala mines respectively.
Kimberlite Diamond Projects
Stellar is assessing the next exploration and development phases at its Tongo (Sierra Leone) and Droujba (Guinea) kimberlite diamond projects. These may include surface bulk sampling and drilling in order to define geological models and establish early-stage diamond grades and values. Previous mini-bulk sampling of Tongo yielded grades of approximately 100cpht with high value diamonds ($189 per carat; November 2008 Government of Sierra Leone valuation) and there are reported grades of up to 200cpht for the Droujba kimberlite pipe.
Karl Smithson, Chief Executive of Stellar, comments;
"Since the Reverse Takeover of West African Diamonds was completed in late February 2010 the Company has moved quickly to restructure its operations and fast track production. We are in the process of boosting the capital at Mandala and Bomboko which will positively impact on our revenue generating capabilities in the near term.
"The continued high grade being recovered at the Mandala mine, as well as the improving grades at Bomboko, is in line with our forecast and we are particularly pleased with the recent recovery of the 37 carat fancy yellow diamond from Mandala. The rough diamond market has recovered strongly since we commenced production in 2009 and we expect this to continue. This is recognised in our recent sales prices achieved.
"We are very pleased with the Company's accelerated progress as a newly quoted diamond producing company and I look forward to updating shareholders of our further progress in the near future."
For further information please contact the following or visit the company's website at www.stellar-diamonds.com
In accordance with the AIM Rules, the information in this announcement has been reviewed by Karl Smithson, CEO of Stellar, a qualified geologist with 22 years' experience.
Stellar Diamonds plc
Karl Smithson, Chief Executive Tel: +44 (0) 7783 707971
RBC Capital Markets
Martin Eales / Daniel Conti Tel:+44 (0) 20 7653 4000
Astaire Securities
Jerry Keen / Charles Vaughan Tel:+44 (0) 20 7448 4400
Pelham Bell Pottinger
Charles Vivian / James MacFarlane Tel:+44 (0) 20 7337 1500
About Stellar Diamonds plc
Stellar Diamonds plc is London (AIM: STEL) quoted diamond mining and exploration company that was formed from the merger of Stellar Diamonds Limited and West African Diamonds plc. Stellar has a portfolio of projects in West Africa. Two projects in Guinea are in production, Mandala and Bomboko, which provide robust cash flow.
Stellar also owns rights over four high-grade kimberlites that are the focus of further development. In Sierra Leone the Tongo and Kono projects comprise a series of kimberlite dykes, with the Kono project having produced 4,200 carats of diamonds through underground trial mining with Joint Venture partner Petra Diamonds. In Guinea the Droujba kimberlite pipe and the Bouro kimberlite dykes are located in proximity to the Mandala mine and demonstrate grades of up to 200cpht and 500cpht respectively.
Forward-looking Statements
This press release includes certain forward-looking statements. All statements, other than statements of historical fact, included herein, including without limitation, statements regarding the future plans and objectives of Stellar, are forward-looking statements that involve various known and unknown risks and uncertainties as well as other factors. Such forward-looking statements are subject to a number of risks and uncertainties that may cause actual results or events to differ materially from current expectations, including delays in obtaining or failure to obtain required regulatory approvals. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Any forward-looking statements speak only as of the date hereof and, except as may be required by applicable law, Stellar disclaim any obligation to update or modify such forward-looking statements, either as a result of new information, future events or for any other reason.