While the proposals remain subject to a legally binding agreement, Stellar Diamonds and Octea Mining have reached exclusive conditions under which the main terms of the proposed tribute agreement have been agreed. “While Stellar Diamonds no longer intends to acquire the Tonguma license, Stellar and Octea continue to work towards the completion of an agreement that brings together their combined diamond properties covering all high-quality Tongo diamond fields for commercial production,” said Karl Smithson, Chief Executive of Stellar Diamonds. The final tribute agreement is expected to contain a timetable in which the implementation of the mining plan will be implemented, but this timetable has yet to be negotiated. Instead, diamond development company Stellar Diamonds and Octea Mining intend to enter into a mining agreement that would allow Stellar Diamonds to promote the Tonguma Licensing Area in eastern Sierra Leone, along with Stellar`s Tongo project and process, and to sell all diamonds extracted from these concessions while paying a portion of the proceeds from the sale to Octea Mining. “We hope to complete the formal process of agreement and due diligence in the near future and we will continue to cooperate with potential strategic investors. We will keep shareholders informed on the way to this agreement. The tribute agreement would be a sub-contract between Octea Mining and Stellar Diamonds, concluded as part of its normal operations, and would allow stellar Diamonds to promote both its 100% Tongo project and the adjacent Tonguma project, stellar Diamonds being the operator of the combined mine. “The structure of the agreement would allow stellar to be the operator and distributor of diamond products, with a simplified participation agreement with Octea in return.” The directors believe that the profitability of the proposed tribute agreement is very attractive to Stellar. Subject to the terms of the tribute agreement that remains in effect for the life of the mine, Stellar estimates its after-tax operation resulting from the Tongo Tonguma mine at approximately $104 million. In addition, there remains considerable potential beyond the 4.5 million carats of resources (tongo and tonguma) thanks to the provision of resources and the future plan of additional high quality kimberlite mines on both properties. While the completion of the Tribute Agreement is not considered a reverse acquisition under AIM rules, Stellar Diamonds` trading in AIM is currently suspended until a fundraiser is completed. To date, Stellar Diamonds has invested more than $7.2 million at Tongo, or about 18 pence per existing common share.
Technical information on the proposed Tongo-tonguma mining plan, which has previously been reported, remains unchanged.