Tribute Mining Agreement

“The structure of the agreement would allow Stellar to be the operator and distributor of diamonds produced, with a simplified revenue participation agreement to be paid in exchange for octea.” 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 that the after-tax capital value from the Tongo Tonguma mine could amount to approximately $US 104 million. In addition, beyond the 4.5 million carat resource (in Tongo and Tonguma), there is considerable upward potential by introducing additional large-scale kimberlites into the resource and future mining plan in the two conssession areas. Instead, diamond development companies Stellar Diamonds and Octea Mining intend to enter into a tribute mining agreement that would allow Stellar Diamonds to dismantle the Tonguma license area in eastern Sierra Leone, in addition to Stellar`s own Tongo project, and process and sell all diamonds mined from these concessions, while part of the proceeds of the sale will be paid to Octea Mining. “While Stellar Diamonds no longer intends to acquire the Tonguma license, Stellar and Octea continue to work towards an agreement that will bring together their combined diamond concession areas covering all high-quality Tongo diamond fields for commercial production,” said Karl Smithson, Executive Chef of Stellar Diamonds. The tribute agreement would be a sub-contract agreement between Octea Mining and Stellar Diamonds, which would normally be concluded and would allow Stellar Diamonds to simultaneously dismantle its 100% Tongo project and the adjacent Tonguma project, with Stellar Diamonds being the operator of the combined mine. While the proposals remain subject to a legally binding agreement, Stellar Diamonds and Octea Mining have agreed to exclusive terms under which the main terms of the proposed tribute agreement have been agreed. “We hope to complete the formal agreement and due diligence process in the near future and will continue to work with potential strategic investors. We will keep shareholders informed when we work towards this agreement. Karl Smithson, Chief Executive, said: “We are pleased to have signed these agreements with Octea, which will allow Stellar to build a unique mine for simultaneous commercial production from the adjacent Kimberlit sites in Tongo (Stellar) and Tonguma (Octea). The combined project has an initial resource of 4.5 Mct, considered one of the most high-end kimberlite bodies in Africa based on dollars per tonne, due to its high grade (100 to 260 ct/100 t to +1.18 mm) and high-quality diamonds ($209/ct to $310/ct).

Follow me!