🕐04.05.10 - 10:14 Uhr
Acquisition Of Kono Diamond Project, Sierra Leone
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Re: News Releases - Tuesday, May 04, 2010
Acquisition Of Kono Diamond Project, Sierra Leone
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NOT FOR DISTRIBUTION IN THE UNITED STATES OR FOR DISSEMINATION TO US
NEWS WIRE SERVICES.
ACQUISITION OF KONO DIAMOND PROJECT, SIERRA LEONE
Stellar, the London listed (AIM:STEL) diamond mining and exploration
company focused on West Africa, is pleased to announce that it has
reached agreement with Petra Diamonds Limited ("Petra") to acquire
Petras interest in the Kono kimberlite project ("Kono Project") in
Sierra Leone, the remaining interest in which is held by Stellars
wholly owned subsidiary, Stellar Diamonds Limited.
Highlights
.
Acquisition of Petras interest in Kono for an all share
consideration of 900,000
.
Consideration to be settled by the issue to Petra of 4,500,000
Stellar ordinary shares
.
Petra to become a 4.45% shareholder in Stellar
.
Stellar and Petra to enter into a cooperation agreement
.
Kono trial mining produced over 4,200 carats in 2008/9
.
Kono Project presently on care and maintenance
.
Kono Project economics improving in line with rough diamond prices
Karl Smithson, Chief Executive of Stellar, comments:
"This deal is excellent for Stellar shareholders as we gain full
control of the Kono asset, which we consider has the potential to
become a long-term mine for the Company.
This is in line with our
growth strategy focused on the development of our kimberlite projects
in West Africa.
"The Kono Project is among the most advanced in our portfolio with over
US$17 million spent to date on the establishment of underground shaft
and tunnel infrastructure, a 75 tonne per hour processing plant, earth
moving machinery and on general exploration.
The project has been on
care and maintenance since May 2009, after the global fall in diamond
prices.
However, with the strong recovery in rough diamond prices, the
Kono Project is an exceptionally well positioned development asset for
Stellar to hold in its portfolio, offering growth to our future
production pipeline.
"We also welcome Petra as a significant shareholder in Stellar and are
pleased to reinforce our existing excellent relationship.
The
cooperation agreement that Stellar and Petra have agreed offers
optionality to both parties, and we look forward to discussing
partnerships on other Stellar projects in West Africa with Petra as and
when appropriate opportunities arise."
Terms of Acquisition
Stellar will issue Petra with 4,500,000 new ordinary Stellar shares (at
a price of 0.20 per share) for a total consideration of 900,000, in
return for Petras interest in the Kono Project, held via joint venture
company Basama Diamonds Limited.
Following the acquisition of Petras
interest, the Stellar group will increase its ownership in the Kono
project to 100%.
The completion of the transaction is subject, inter alia, to the
execution of a share purchase agreement and issue of the Stellar shares
to Petra.
On completion, Stellars issued share capital will be
101,193,932 shares and Petra will become a 4.45% shareholder in
Stellar.
Petra has agreed (subject to certain exceptions) not to
dispose of any of the Stellar shares for 12 months from the date of the
signature of the share purchase agreement, which is expected to be
before 14 May 2010.
Cooperation Agreement between Stellar and Petra
As part of the transaction both Stellar and Petra have agreed a
cooperation agreement whereby Stellar will in good faith discuss with
Petra the first option to joint venture any project in the Stellar
portfolio which Stellar seeks to develop with a partner.
About the Kono Kimberlite Dyke Project
The Kono project is an underground trial mining operation targeting
diamond bearing kimberlite dykes within two Exclusive Prospecting
Licences covering an area of 206km2 in the heart of the Kono diamond
district of eastern Sierra Leone.
The Kono district has historically produced a reported 9 million carats
of high value gem diamonds, mostly by artisanal means, including the
970 carat Star of Sierra Leone.
The Kono licence areas are directly
adjacent to the Koidu Mine owned by Koidu Holdings, which hosts the
largest established hard-rock diamond resource in Sierra Leone, with 2
million carats in the indicated and inferred category.
The most recent
public data on production by Koidu Holdings shows that Pipe 1 grades at
45 carats per hundred tonnes ("cpht") with a diamond value of US$231
per carat, whereas Pipe 2 grades at 26cpht with a diamond value of
US$187 per carat.
During the successful joint venture, Petra and Stellar mapped some 17km
of kimberlite dykes in the project area.
A number of shafts were sunk
to evaluate some of these kimberlites, with underground development
focusing on two kimberlite dykes, designated Pol-K and Bardu.
Over
4,200 carats of diamonds were produced by the joint venture during this
phase of development work.
The project was put on care and maintenance
in 2009 after the global fall in diamond prices.
At Pol-K, the shaft is currently at a depth of 85m and trial stope
mining has been conducted at a depth of between 35m and 65m.
In-situ
grades of around 65cpht have been consistently generated, with an
average diluted "run of mine" grade of 38cpht.
The three largest
diamonds produced from Pol-K weigh 11.95, 11.45 and 10.55 carats.
At Bardu the shaft is currently at 45m depth and lateral development
drives in the kimberlite have generated average in-situ grades of
66cpht, However the grade increased to 140cpht in the western most end
of the development drive, which could be indicative of the commencement
of a higher grade kimberlite zone.
No trial stope mining has been
conducted on Bardu to date.
Three diamond sales have been completed from the Kono project, with
greatly varying prices realised before and during the economic crisis.
* Goods sold together so average value per carat has been calculated
based on the pre-sale valuation.
Considering the continued improvement in the rough diamond market from
mid-2009 to present, it is likely that the Kono goods would attract
higher prices than the last sale conducted in June 2009.
For further information please contact the following or visit the
Companys 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 a London (AIM: STEL) quoted diamond mining and
exploration company that has a portfolio of projects in West Africa.
Two projects in Guinea are in production, Mandala and Bomboko, which
provide cash flow to the Company.
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.
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.
End
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Message sent on Tue May 4, 2010 at 1:08:33 AM Pacific Time
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