Shanghai Shibang
Machinery Co., ltd.
Africa-focused diamond- miner Stellar Diamonds is considering several consolidation opportunities, one of which, if it materialises, may lead to a stock exchange listing.
Although it is majority-owned by Aim- and TSX Venture Exchange-listed Mano River Resources, the company is privately owned.
Despite the global economic slowdown, the company is generating “good cash flows and production” from its Guinea operations, says CEO Karl Smithson.
“As financial markets improve, the company is expecting these margins to improve further, favourably positioning Stellar for additional growth. With a stronger diamond market, a tactical merger could only add to the company’s offering and production.”
The Guinea government has confirmed that Stellar is currently the largest diamond producer in the country.
The company recently brought its Mandala alluvial mine, in Guinea, into production. Stellar started building the plant in January, commissioning it towards the end of April. To date, the mine has produced more than 20 000 ct, including four diamonds of over 10 ct, the largest being 31,33 ct in size.
“Our monthly production was forecast to increase to 10 000 ct in June; however, the company has exceeded this target and is happy to report that it exported around 10 100 ct for June 2009.
“The company is also confident that its target of 14 000 ct a month will be achieved.
“The Mandala mine has an indicated resource of 536 000 ct, though we now believe this is likely to be higher as our recovered grades consistently exceed the modelled grades used for the independently assessed resource statement,” says Smithson.
The mine is 85%-owned by Stellar, with 15% net profit interest payable to local partners once past capital and operating costs have been recouped.
Since January, the 55-km access road from Macenta to Mandala has been rehabilitated and upgraded, and the plant transported to site, where it was erected and commissioned within eight weeks.
The plant has a nameplate head feed of 100 t/h and a dense-media separation capacity of 30 t/h. Diamond recovery is by flow-sort X-ray with a grease table backup, all performed under strict security conditions.
“We are very pleased with the progress made at the Mandala project. The grades achieved at Mandala are high for an alluvial diamond project and, with the confirmed presence of some larger diamonds, this bodes well for the future eco- nomics of the project.
“Nonetheless, the diamond market continues to be chal- lenging, as exhibited by the low average price realised for the company’s jointly owned Kono project’s diamond sales.”
Stellar entered a joint venture with Petra Diamonds in 2005, in the Kono district, which is a well-known diamond area in Sierra Leone. The company owns 49% of the Kono mine.
Smithson says that the proceeds of the most recent sale were over 60% lower than those of the sale in September 2008, demonstrating the diamond market still has a long way to go in terms of its recovery.
“Although the diamond grades from Kono remain encouraging, we realise that it is not sustain- able to continue to trial-mine at such prices. Therefore, with our partners, Petra Diamonds, we have reluctantly decided to enter a temporary care-and- maintenance of the Kono project.
“This situation will be con- tinually monitored as the diamond market changes. We take a long-term view on the Kono project and, in an improved diamond market, trial mining will be resumed with the objective of determining the econo- mics of the project. Stellar believes that the project will definitely go forward in the near future.”
Stellar is also aiming to start up a new project, just south of the Kono project. Smithson says that the project is very similar to the Kono mine, but indicators show that the grades could be even higher than those achieved at the Kono project. He adds that Stellar wholly owns this project and that the company is looking forward to getting the project going.
“Stellar’s expectations for the remainder of the year are to continue its positive produc- tion and cash flows in Guinea.
“The company believes that the diamond market will improve and, when it does, Stellar is looking forward to entering and starting its new project in Sierra Leone and reopening the Kono project,” Smithson concludes.