Africa-focused Stellar Diamonds (LON:STEL) said Wednesday it had finalized its tribute agreement and revenue share with junior Octea Mining for the Tongo-Tonguma diamond project in eastern Sierra Leone.
The deal, which allows for mining the combined and contiguous Tongo and Tonguma concessions, is expected to create one of the largest diamond mines in West Africa.
“The closure of the agreements with Octea mark a major milestone for Stellar as it secures the Tongo-Tonguma project for the planned long-term development programme,” chief executive Karl Smithson said in the statement.
He noted the company had already begun the front end engineering design program and signed a contract for 9,000 metres of mine development drilling that will enhance the geological control for the first two levels of mining.
In terms of funding the project, Stellar Diamonds said it was in talks with Australia-listed Newfield Resources (ASX: NWF) regarding a possible offer.
If an agreement is reached and supported by the two companies’ respective shareholders, it will result in sufficient funding being made available to bring the Tongo-Tonguma project into production according to a refined mine plan to be worked out, Stellar said.