Modern Mining March 2015

DIAMONDS

coming year if the necessary funding can be raised. “This is a smaller deposit than Baoulé but it is a high-grade, high-value resource – by which I mean 165 cpht and US$145 to 270 per carat – which can be mined from surface for three years, with the operation transitioning gradually into an underground mine starting from year two,” he states. “The life of mine is 16 years and over this period we would expect to produce nearly a million carats with the peak production – starting in year 8 – being about 90 000 carats a year generating approximately US$40 million a year. The capex is very low at around US$16 million for the first three years of operation, and we hope to secure the majority of this through debt funding.” Smithson describes Tongo Dyke-1 as being somewhat similar – geologically – to Petra’s Helam fissure mine near Swartruggens in South Africa. “Helam is now mining at about 700 m below surface whereas we’ll be starting with a surface operation, which will be relatively low- cost in nature and should deliver 120 000 carats over three years,” he adds. Stellar has completed an economic scop- ing study for the project and is currently well advanced with a feasibility study which it is undertaking in conjunction with Paradigm Project Management (PPM) of Johannesburg. PPM has also been responsible for a surface mining study. Explaining the reason for this, Smithson says it was originally envisaged that Tongo Dyke-1 would be developed entirely as an underground operation, with the 300 m shaft and associated infrastructure required taking up to two years to develop before first produc- tion and first cash flow. “We decided to look at options to accelerate production and bring cash flow forward, hence the appointment of PPM, which has huge experience in the diamond mining field.” Based on the results of the study, bench stope mining from surface to 40 m depth has been selected as the most appropriate and attrac- tive mining method. The plan is to have three pits of 500 m length spread across the 2 000 m strike length. Each pit has two stope faces being mined in different directions, with the stope width being 1,5 m, the face height 2,5 m and the face length 5 m. Ore will be extracted by a winch and rail-mounted mechanical 1-ton kibble. Comments Smithson: “This is an inno- vative approach which will allow multiple working faces with all that this implies in terms of providing us with maximum flexibility in maintaining production levels.” Smithson points out that the Tongo Dyke-1 project has plenty of upside given that Dyke 1 is

just one of four diamondiferous orebodies (the others, not surprisingly, are labelled Dykes 2 to 4). “Our current JORC-compliant resource of 1,45 million carats is entirely based on Dyke 1 so clearly there is potential for it to grow as our exploration of the other orebodies continues,” he says. “In addition, at Dyke 1 the orebody has only been defined to a depth of 300 m and resources beyond this point could extend the life of mine.” On the subject of Ebola, Smithson says that it has impacted the Tongo project more than Baoulé. “Guinea has been less affected by the Ebola outbreak than its neighbours and we have had no hold ups at Baoulé,” he observes. “Tongo, by contrast, is located in an area of Sierra Leone which was badly affected by the epidemic and our site has been on lockdown at times. But the worst of the crisis has now passed and we don’t see Ebola as an obstacle to our operations as we move forward.” Finally, and discussing Sierra Leone and Guinea (which share a common border) as a mining destination, Smithson says his own experience of the region goes back 15 years and that it has never been more politically stable than at present. “When we started working in this region, it was highly volatile. But Sierra Leone has now enjoyed around 12 or 13 years of peace and has become a surprisingly robust democracy – it’s had three successive elections which were generally regarded as free and fair. The story in Guinea is perhaps more mixed with the political scene being quite turbulent at times but certainly the country is in better shape than it was during the days of mili- tary dictatorship. Overall, we believe that the future looks pretty good for Sierra Leone and Guinea and that conditions are now ripe for the region’s mineral wealth to be effectively and sustainably developed.” 

Loading ore into the Tongo plant as part of bulk sampling operations.

“... the worst of the crisis has now passed and we don’t see Ebola as an obstacle to our operations as we move forward.” Karl Smithson, CEO, Stellar Diamonds

March 2015  MODERN MINING  29