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Stellar Diamonds expands production capacity at Mandala and Bomboko in Guinea

Stellar Diamonds (LON:STEL) told investors that it has now increased its production capacity at the Mandala and Bomboko properties in Guinea. Earth moving equipment has been introduced at both sites over the last three-months - including 4 30-ton dump trucks, 2 excavators and 2 front end loaders – to enable increased production at both mines in the second half of the year.

"After boosting our mining capacity at Mandala and Bomboko, Stellar is well positioned to significantly increase its production and revenues as well as reduce its unit costs per carat produced,”  Stellar chief executive Karl Smithson said.“This should place the company in a strong financial position enabling us to progress with our core strategy of developing our key kimberlite assets in Sierra Leone and Guinea.”

The company reported its interim results for H1-2010m, for period ended 31st March 2010, late in June.

To date, at the Guinea mining operations, total production has reached 83,000 carats at Mandala (78,491 carats at the end of H1) and 4,500 carats (4,157 carats at the end of H1). In the year to date, diamond sales – from Mandala’s production - have been carried out in Dubai and Antwerp, realising US$1.27m.  Overall, since the mines have been in operation, diamond sales have realised US$2.9m in revenues (including a period under West African Diamonds' (LON:WAD) ownership).

Stellar’s medium term strategy is to use the producing assets to fund the development of its high-grade kimberlite projects and key growth projects at Kono and Tongo in Sierra Leone and the Bouro and Droujba projects in Guinea.

“Exploration has already commenced at our high-grade Tongo kimberlite dyke in Sierra Leone, with a bulk sampling programme underway.  We look forward to updating shareholders on our progress in the coming months," Smithson added.

The company recently gained full control of the Kono project through a share-based deal with JV partner Petra Diamonds. The Kono project is currently on care and maintenance and Stellar intends to resume trial mining once the expected increased revenues from Mandala and Bomboko are realised.

The company has previously highlighted that trial mining in the past has produced over 4,200 carats to date, at average in-situ grades of around 65cpht for the Pol-K kimberlite, and up to 140cpht from the Bardu kimberlite. 

During the remainder of the second half, Stellar intends to bulk sample the Tongo and Bouro kimberlites, in order to determine the diamond grade and value with more confidence. Additionally, a 5 tonne per hour DMS plant has been purchased and it will be re-located to the Tongo project.

Bulk-sampling began at Tongo on 30 June, 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.

Elsewhere, at the Droujba kimberlite pipe an aggressive drill programme is planned for the end of 2010, the program will enable a geological resource model to be defined, in advance of surface bulk sampling in 2011.

Stellar Diamonds joined the AIM market through the reverse takeover of West African Diamonds, in February 2010, alongside a successful £5m fund raising.