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AIM: STEL
Stellar Diamonds plc
("Stellar" or the "Company")
The Board of Stellar is pleased to announce its Interim results (unaudited) for the six months ended 31 March 2010 which have also been published today on the Company's website www.stellar-diamonds.com.
Highlights
- Reverse takeover of West African Diamonds plc completed in February 2010 to create the second largest diamond producing company, in carat terms, on AIM
- £5 million of new funds raised in February 2010 to implement significant increases in diamond production
- Balance sheet cash position at 31 March 2010 of US$2.5 million, net current assets of US$3.4 million and loans of US$0.4 million
- In May 2010 Stellar acquired Petra Diamonds' 51% share in the Kono kimberlite project in Sierra Leone by issuing 4.5 million Stellar shares at 20 pence per share.
Karl Smithson, Chief Executive Officer, comments:
"The past six months have seen Stellar evolve from a privately held, primarily exploration focussed company, to a quoted diamond production and development company with a focus on the prolific diamond region of West Africa. Through the reverse takeover of West African Diamonds plc and subsequent financing we have created an enlarged company that is financially robust and is in the process of increasing its current production profile and revenues in the short-term, which will enable the Company to develop our key high-grade kimberlites in the medium-term.
"I look forward to updating shareholders on our production and development progress in the near future."
For further information please contact the following or visit the Company's website at www.stellar-diamonds.com.
Stellar Diamonds plc
Karl Smithson, Chief Executive Tel: +44 (0) 7783 707971
RBC Capital Markets
Martin Eales / Daniel Conti Tel: +44 (0) 20 7653 4000
Astaire Securities
Jerry Keen / Charles Vaughan Tel: +44 (0) 20 7448 4400
Pelham Bell Pottinger
Charles Vivian / James MacFarlane Tel: +44 (0) 20 7337 1500
About Stellar Diamonds plc
Stellar Diamonds plc is a London (AIM: STEL) quoted diamond mining and exploration company that has a portfolio of projects in West Africa. Two projects in Guinea are in production, Mandala and Bomboko, which provide cash flow to the Company.
Stellar also owns full rights over four high-grade kimberlites that are the focus of further development. In Sierra Leone the Tongo and Kono projects comprise a series of diamondiferous kimberlite dykes, with the Kono project having produced 4,200 carats of diamonds through underground trial mining. In Guinea the Droujba kimberlite pipe and the Bouro kimberlite dykes are located in proximity to the Company's Mandala mine and demonstrate grades of up to 200cpht and 500cpht respectively.
CHAIRMAN'S STATEMENT
Stellar Diamonds plc (the "Company" or "Stellar")) is required to provide these interim consolidated financial statements under the AIM rules for the six month period following the date of the last audited information in its Admission Document. The Company's financial year end is 30 June and the next set of audited results will be prepared to this date.
In the six months to 31 March 2010 under review Stellar has made considerable progress towards its goal of becoming the leading West African diamond producer. The reverse takeover of West African Diamonds was completed and the enlarged company, Stellar Diamonds plc, was admitted to trading on the Alternative Investment Market ("AIM") on 22 February 2010. This was accompanied by a successful fund raising of £5 million which was co-brokered between RBC Capital Markets (Stellar's nominated adviser and broker) and Astaire Securities.
The funds raised enabled Stellar to pursue its strategy of expansion of the Bomboko and Mandala mines in south east Guinea to increase exposure to strengthening diamond prices. Additional equipment has been purchased to enable mining and production rates to increase and this process has almost been completed.
Production at the 100% owned Mandala mine for the six months ended 31 March 2010 was 34,409 carats at a grade of 36 carats per hundred tonnes ("cpht"). Total production at Mandala since mining commenced in late April 2009 has reached 78,491 carats at a grade of 39cpht, which is well in excess of the expected (modeled) grade of 25cpht. The largest diamond recovered to date is a 37 carat fancy yellow stone that was selected for polishing.
Diamond sales, of both gem and industrial quality for the six months ended 31 March 2010 realised $1.19 million at an average of over $24 per carat. Total sales to date from Mandala have reached 74,793 carats at an average of $30.71 per carat, for total revenue of $2.3 million. The average sales prices in 2010 are significantly higher than those achieved in 2009 as the rough diamond market continues to improve. The most recent sales have realised prices ranging from $38 to $42 per carat, excluding the 37 carat yellow stone.
At Bomboko trial mining continued with production reaching over 2,411 carats at an average grade of around 4cpht for this interim period. Total production from Bomboko has yielded 4,157 carats at a grade of 5cpht. This lower grade relative to Mandala is compensated for by the higher average diamond value at Bomboko. Sales of Bomboko diamonds have realised $417,000 at average prices of $120 per carat.
The introduction of additional earth moving machinery at Mandala and a second plant at Bomboko should enable production at both these projects to be significantly increased from the end of the second quarter of 2010. At Mandala monthly carat production is expected to be over 12,000 carats, whereas at Bomboko, once the second plant is installed and operational, the mine will then have the capacity to produce up to 4,000 carats per month. This resulting increase in revenue will provide Stellar with the necessary funds to implement its kimberlite exploration and development programme going forward.
Stellar's medium term strategy and a key driver for growth is the development of its high-grade kimberlite projects at Kono and Tongo (Sierra Leone) and Bouro and Droujba (Guinea). These projects offer significant opportunities to strengthen Steller's production pipeline in the mid-term and as such fast tracking their development through to production is a core priority for the Company. As part of this strategy Stellar entered negotiations with joint venture partner Petra Diamonds Limited ("Petra") with respect to acquiring Petra's interest in the Kono project. This acquisition was successfully completed in May 2010 through Stellar issuing Petra 4.5 million shares at a price of 20 pence per share, making Petra a 4.4% shareholder in Stellar.
The Kono project remained on care and maintenance during the interim review period. Trial mining has to date produced over 4,200 carats at average in-situ grades of around 65cpht for the Pol-K kimberlite, but grades of up to 140cpht from the Bardu kimberlite. Stellar intends to resume trial mining once the expected increased revenues from Mandala and Bomboko are realised.
Stellar intends to bulk sample the Tongo and Bouro kimberlites during 2010 in order to determine the diamond grade and value with more confidence. A 5 tonne per hour DMS plant has been purchased and will be re-located to the Tongo project in June to process a 1,000 to 2,000 tonne sample. The Bouro kimberlite is located a mere 1km from the Mandala processing plant so the bulk sampling of this kimberlite will utilize the existing mine infrastructure.
At the Droujba kimberlite pipe an aggressive drill programme is planned to commence towards the end of 2010. This will enable a geological resource model to be defined in advance of surface bulk sampling in 2011.
The Board of Stellar continues to assess new projects and acquisition opportunities as the Company seeks to achieve growth by both organic and non-organic means. However, the immediate focus of the management team is to increase production and revenue from its two existing mines to provide a strong financial platform to deliver growth through development of core kimberlite projects.
I would like to take this opportunity to thank my Board, management teams and staff for their hard work under challenging circumstances this past six months. Furthermore, I am thankful to existing and new shareholders for their continued support as Stellar made the successful transition from a private, mainly exploration focussed company to a publicly listed, production and development focussed company.
With an improving diamond sector I feel that the future outlook for Stellar is good as we ramp up production and position the company to become one of the largest diamond producers in West Africa and on AIM.
Lord Daresbury
Non-Executive Chairman
24 June 2010
To see this News Release in full, including the Interim Consolidated Financial Statements (Unaudited) for the six months ended 31 March 2010, please follow the link below or visit www.stellar-diamonds.com.
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