Newfield Resources Limited (ASX: NWF) - Sierra Leone - Diamonds

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SET FOR DEVELOPMENT
Having recently completed a positive Front End Engineering and Design (“FEED”) Study and
declared initial Probable Reserves of just over one million carats of diamonds at 100 cpht,
Newfield Resources (“Newfield” or “the Company”) is set to commence development of
the Tongo Kimberlite Project (“Tongo” or “the Project”) in eastern Sierra Leone, with an FID
expected in Q3, CY19.
The Project, which is held under two granted large scale Mining Licences (“ML”), is fully
permitted and thus ready to go. One ML, Tonguma, is held by Octea Limited (“Octea”), with
Newfield’s subsidiary Sierra Diamonds operating under Tribute Mining and Revenue Sharing
Agreements with Octea.
The FEED Study presents an eight year base case starter operation based on Probable Reserves
only in two of the eleven recognised kimberlite dykes, producing up to 257,844 ctpa from up to
230,901 tpa of ore, and with a total production of just over one million carats - first production
is expected within twelve months of commencement of development.
There is significant upside to this base case however - the Project has total Resources of
7.369 mcts at a grade of 250 cpht, and with a diamond value of US$191/ct. This includes
5.786 mcts at 300 cpht and with a value of US$194/ct at the Kundu and Lando dykes, which
are the dykes to be mined in the initial operations.
The Company has also published a significant Exploration Target with a range contained
diamonds of 3.7 mcts to 20.8 mcts, and thus the Company’s strategy is to progressively
add to and upgrade Resources through drilling in parallel with operations. The Resource base
and Exploration Target underpin the potential for the Project to be developed into a long term
mine, with, given the nature of kimberlite dyke mineralisation, the possibility of a significant
proportion of the Exploration Target being converted to Resources. In addition the Resources
and Exploration Targets are from only seven of the identified diamondiferous kimberlite dykes,
with four more requiring initial assessment.
Strengths of the Project include relatively high grade and high value diamonds and thus
relatively high values per tonne of kimberlite - a vital factor when considering this style of
narrow dyke mineralisation.
The Company also holds alluvial exploration tenements along the Sewa River, which are
currently under care and maintenance, and early stage exploration ground in neighbouring
Liberia.
KEY POINTS
�� Ready for development: With completion of the FEED Study, the Project is now ready
for development - some site operations have already commenced, including excavation of
the portal box cut.
�� Relatively low capex: The estimated up front capital of US$29.4 million is relatively low,
and should be relatively easy to finance - one of the reasons for the low figure is that
Newfield will refurbish (at an estimated cost of U$5.1 million) a 50 tph processing plant
that has been provided at a nominal cost under the agreements with Octea - this has the
potential to treat up to 300,000 tpa of ore.
�� Low opex: Similarly, estimated opex figures are quite low, with estimated longer term
operating costs of under US$100/tonne - although operations on kimberlite dykes are
labour intensive, the cost of labour in Sierra Leone is relatively low.
�� Experienced team: Newfield’s operations personnel have extensive experience in
diamonds as well as in West Africa and Africa in general.
�� Supportive major shareholders, tightly held: The Top 20 hold close to 85% of the
Company, and have been sticky and provided consistent support in major capital raisings
to date.
�� Steady news flow: With development imminent (the FID is targeted for Q3, CY19), and
with diamond production planned from 2020 onwards, we would expect steady news