Stellar Diamonds

Stellar Diamonds targets $1m (£660,000) monthly revenue late this year from Bomboko and Mandala in Guinea, but sees bigger rewards later from elsewhere.

Headed by ex-De Beers luminary Karl Smithson, the West Africa-focused company says bulk sampling at its high-grade kimberlite project at Tongo in Sierra Leone gives an average value of $140 per carat and expects potential output of 200,000 carats a year from there.

According to Smithson, Kono, another kimberlite project in Sierra Leone, could start to yield 60,000 carats a year in 18 months. In neighbouring Guinea, he suggests the Droujba kimberlite project, where Soviet mining in the 1960s showed grades of up to 200 carats per hundred tonnes of rock, could begin to deliver up to 300,000 carats annually by 2013, which is the year when industry analysts suggest a developing world shortage of rough diamonds could begin to make itself felt — while another Guinea kimberlite prospect, Bouro, has shown particularly encouraging grades of 500 carats per hundred tonnes.

Spun out of former AIM mining hopeful Mano River (now African Aura Mining), Stellar came into being in its present form through the reverse takeover of Irish wheeler-dealer John Teeling's West African Diamonds and a £5m placing at 20p. African Aura has 30% of the shares, which have retreated to 10.75p, and Smithson is clear its promising kimberlite projects will eventually need hefty City funding.

However, if the projects live up to expectations and the diamond market moves in the hoped-for direction, stimulated by growing chinese interest, funding might not be a problem. Investors prepared to take the risk might consider a medium term flutter.