“Subject to BDG Capital satisfactorily completing its due diligence, this binding terms sheet should see Stellar Diamonds realise some US$2 million in cash for its non-core projects in Guinea, representing approximately two thirds of our current market capitalisation,” explains Stellar Diamonds CEO, Karl Smithson.
“The proceeds will be used to advance the development of our flagship Tongo – Tonguma kimberlite project in
Cape Lambert Resources commences legal action in Sierra Leone; a project that has an estimated post-tax of $104 million attributable to Stellar Diamonds.
[quote]“The proposed Tongo – Tonguma mine has a low capex requirement of $32 million and the potential to be the second largest kimberlite diamond mine in West Africa – with forecast production levels of 200 000 carats pa, generating revenues of over $45 million pa over a minimum life of mine of 21 years, he continues.
“The proposed disposal of our Guinea assets allows management to focus on the Tongo – Tonguma mine development in Sierra Leone. It also allows for BDG to take the projects forward which is in the interests of Guinea and local stakeholders.
“We look forward to unlocking the significant value that we believe is inherent in the Tongo – Tonguma development as we advance the company towards sustained commercial production.”
The terms sheet with BDG Capital, which is binding subject to BDG completing its due diligence satisfactorily, allows for a two month due diligence period during which time it is anticipated (although there can be no guarantee) the necessary share purchase agreements transferring Stellar’s shares in its Guinea Projects to BDG will be completed.
The final consideration price has been agreed at $2000 000 of which $250 000 has been advanced to Stellar Diamonds to ensure exclusivity for BDG to complete its due diligence.
Should Stellar Diamonds withdraw from the proposed agreement and if the agreed terms are materially the same, then the exclusivity fee will be reimbursed to BDG in either cash or Stellar Diamonds’ shares at a price to be determined.
However, if BDG proposes to materially amend the terms following due diligence and Stellar Diamonds as a consequence withdraws then the exclusivity fee shall not be reimbursed.
In the event that BDG decides not to continue with the transaction, the exclusivity fee of $250 000 is not refundable to BDG.
Feature image credit: Stellar Diamonds