Stellar Diamonds signs JVs for Guinea and Liberia projects

AIM-listed Stellar Diamonds has agreed to joint ventures with Dubai-based Citigate Commodities Trading, over the miner’s kimberlite project in Guinea and two exploration licences in Liberia.

The joint ventures will allow the company to focus on the proposed Tongo-Tonguma transaction in Sierra Leone, which offers significant value potential.

Stellar's local teams will manage the programmes for at least the first phase of work on each project, which the company will receive a management fee.

Chief executive Karl Smithson said: "Stellar is focussed on the proposed Tongo-Tonguma transaction in Sierra Leone, as previously announced. As such we are delighted to finalise these joint ventures on terms which are highly attractive to Stellar and our shareholders, who will retain an ongoing interest in the projects, including a proportion of any revenues commensurate with each parties' shareholding during each particular phase.

In a preliminary economic assessment the Tongo-Tonguma project was found to have an estimated pre-tax project net present value of $172m, an internal rate of return of 49%, and projected life of mine project revenues of $1.5bn.

The company currently has a 75% interest in the Baoulé kimberlite project and a 100% interest in the two western Liberia early stage exploration licences, which it was awarded in February.

For the Baoulé project there is a staged earn-in by Citigate's subsidiary, SAFA Afrique, of up to 75%, with a phase one expenditure of $1.5m for a 25% stake and $2m for a phase two and a further 25%.

Phase three of the project involves a pre-feasibility study for a further 25% stake.

The company will be paid a phase one management fee of $150,000 to receive 56% of gross revenues from a trial mining.

Citigate was awarded off-take rights on goods exported during the earn-in process.

For the Liberia joint venture, there will be a staged earn-in by SAFA Afrique of up to 85% of the project, with a phase one expenditure of $250,000 for a 25% stake and $2m for a phase two and a further 25%.

Phase three of the project will cost $4m for a further 35% stake.

The company will be paid a phase one management fee of $25,000 and will receive pro-rata revenues from any diamond sales.

Citigate was awarded off-take rights on goods exported during the earn-in process.

For each of the joint ventures, phase one is expected to take place over a 12 months starting in November, and phase two is expected to take place over two years, with phase three expected over three years.

AFA Afrique will be awarded a 25% stake in each project when the company receives funds due.