Sierra Leone grants preliminary OK to Stellar Diamonds Tongo mine

Shares in West Africa-focused Stellar Diamonds (LON:STEL) soared more than 20% to 7.85p Tuesday after the company said the Sierra Leone Minerals Advisory Board had “verbally” approved a mining license for its 100% owned Tongo project.

According to a preliminary economic assessment, Tongo has the capacity of producing almost one million carats of diamonds over 18 years.

Stellar, which applied for large-scale mining in the country earlier this year, noted it still requires written notification of the approval from the National Minerals Agency, which is the licensing body of the Sierra Leone Ministry of Mines.

Once this has taken place, the fiscal terms of the mining licence will be negotiated between Stellar Diamonds and the government of Sierra Leone, the miner said. The resulting mining concession agreement will then require ratification through parliament.

The firm is also waiting to receive documentation regarding its environmental licence for the mine, which secured in February this year.

According to a preliminary economic assessment, Tongo has the capacity of producing almost one million carats of diamonds over 18 years, generating $387 million in revenues.

Initial investment during the first four years is estimated to be $24.8 million, which will enable the establishment of surface and underground mining.