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Stellar Diamonds starts bulk-sampling program on high-grade Tongo kimberlite dyke

Stellar Diamonds (LON:STEL) has begun a bulk-sampling program on the high-grade diamond bearing Tongo kimberlite dyke in eastern Sierra Leone.  The company aims to collect a 1,000 to 2,000 carat bulk sample for diamond grade and value estimations prior to shaft sinking and underground trial mining.

According to Stellar, the renowned Tongo diamond field is host to a number of very high-grade kimberlites which have never been commercially exploited, four of which are hosted on the company’s wholly-owned license. The bulk sampling follows a smaller sampling program on Dykes 1 and 4, which returned results of 90 and 100cpht (carats per hundred tonnes) respectively. 

The company highlighted that independent grade modelling suggests higher diamond grades of 150cpht for both dykes.  Furthermore, the decision to progress with bulk-sampling is further justified by the recent re-valuation of 122 carats obtained from Dyke 1, which were valued at US$144 per carat.

Stellar also highlighted that sampling on a continuation of the same kimberlites, on Koidu Holdings license adjacent to Stellar’s, returned grades between 200 and 300cpht.

"Stellar has been preparing for the commencement of this bulk sampling programme for the past two months.  We are prioritising the 2.5km long Dyke 1 kimberlite that previously returned a grade of 90cpht and a re-valued diamond price of $144 per carat”,  Stellar chief executive Karl Smithson commented.

“The objective is to collect a larger, more representative sample of between 1,000 and 2,000 carats from this high-grade kimberlite prior to making a decision on underground trial mining, similar to what Stellar has achieved at its Kono project, located only 60km to the north of Tongo.”

Smithson also noted that a 5 ton per hour DMS (Dense Media Separation) plant is being imported from Stellar’s former Weasua project in Liberia, to process the bulk sample. Once collected, the diamond parcel will be valued in Antwerp.

"The company is also generating cash flow in Guinea and the strategy remains to build on its production profile with the development of its portfolio of high-grade kimberlites in Guinea and Sierra Leone. In the meantime, I look forward to updating shareholders on our progress in the coming months," Smithson added.

The bulk-sampling program is expected to be completed in 4 months.

Astaire Securities featured the group in its Morning Report, saying that Tongo is one of the most exciting assets in the Stellar portfolio and it is no surprise that management have decided to focus on its development.

"The Tongo Field, also explored by Koidu Holdings, is known for its high grade and high value stones and Stellar has justified high expectations for the results of this bulk sampling programme," it added.

Last week, in its interim results, Stellar was upbeat on its progress after a transformational six-months in which it joined the AIM market through the reverse takeover of West African Diamonds. The ramping-up production profile and improved project economics were key features of the results for the 6-months ended 31st March 2010. Furthermore planned improvements are expected to up production further to 16,000 carats per month.

The West African Diamonds reverse takeover was completed in February, alongside a successful £5m fund raising. The merger consolidated two producing diamond mines in Guinea, Bomboko and Mandala, with a combined resource base of over 1.5 million carats, three joint ventures in Sierra Leone, as well as 100% interests in two high grade kimberlite projects: Droujba in Guinea and Tongo in Sierra Leone.