Stellar Diamonds plc, a diamond developer focused on West Africa, has signed joint venture agreements with Citigate Commodities Trading, a Dubai-based commodities group, over the company’s Baoulé kimberlite project in Guinea and two earlier stage exploration licenses in western Liberia which were awarded to Stellar in February 2016.
The company currently has a 75% interest in the Baoulé Project and a 100% interest in the Liberia Project.
Under the agreement, there is a staged earn-in by Citigate’s subsidiary company SAFA Afrique Ltd. of up to 75% of Baoulé; ◦Phase-1 expenditure of $1.5 million for a 25% shareholding; Phase-2 expenditure of $2 million for a further 25% shareholding; Phase-3 fund a pre-feasibility study for a further 25% shareholding; Stellar to be paid a Phase-1 management fee of $150,000; Stellar to receive 56% of gross revenues from Phase-1 trial mining; and Citigate awarded off-take rights on goods exported during the Citigate earn-in process.
Stellar Chief Executive Karl Smithson commented: “Stellar is focused on the proposed Tongo-Tonguma transaction in Sierra Leone, as previously announced. As such we are delighted to finalize 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 party's shareholding during each particular Phase. Stellar’s experienced local teams will manage the programs for at least the first Phase of work, for which the company will receive a management fee. We expect the first phase of work to commence on each project towards the end of November.
“Importantly, these joint ventures will allow the key management of Stellar to focus on the proposed Tongo-Tonguma transaction in Sierra Leone, which we believe offers significant value potential. The combined Tongo-Tonguma project demonstrated robust economics in a Preliminary Economic Assessment, with an estimated pre-tax project NPV(10) of US$172 million, an IRR of 49%, and projected life of mine project revenues of US$1.5 billion. We therefore look forward to focusing our efforts on the advancement of Tongo-Tonguma, whilst retaining exposure to Baoulé and the Liberian projects.”