Monday, February 19, 2018
Karl Smithson

Karl Smithson

Stellar Diamonds

KARL Smithson has unashamedly put his eggs in one basket by selling the firm’s Guinea diamond assets and focusing on the $45m Tongo-Tonguma diamond prospect in Sierra Leone. If a mine is built it will be the first large mining development in the West African country since the 2015 Ebola contagion. But it must be built first, which means capital needs to be raised. Stellar is not in great fettle financially: as a junior it’s tough, while its willingness to take $1.25m for its Guinea assets – when it first said it would get $2m – suggests Smithson and Stellar don’t have immense amounts of time if they are to get Tongo-Tonguma financed. If they do, it could transform Stellar into a mid-cap diamond producer from its current small-cap explorer status. Tongo-Tonguma will yield 200,000 carats a year for 21 years. The prospect is currently owned by Octea Mining, a company aligned to Beny Steinmetz through BSG Resources. Smithson attempted a reverse takeover of Octea, but eventually elected for a revenue-share model in which Stellar is to raise the project capital and pay Octea a 9.5% royalty once the capital costs have been repaid. Smithson is heartened by a track record of large diamond finds in Sierra Leone. The firm announced an improved full-year loss of $2.3m compared to a $7m loss previously.

LIFE OF KARL

Smithson is one of the many former De Beers people going about finding diamonds on their own. He listed Stellar Diamonds through the reverse takeover of West African Diamonds, raising over $15m while at the firm. A geology graduate of Kingston University in the UK, he is credited with finding high-quality diamonds in Botswana, Zimbabwe, Sierra Leone and Liberia. He was awarded the Old Mutual Gold Medal for services.