London listed diamond mining and exploration company Stellar Diamonds has reached an agreement with Petra Diamonds Limited to acquire Petra's interest in the Kono kimberlite project in Sierra Leone, the remaining interest in which is held by Stellar's wholly owned subsidiary, Stellar Diamonds Limited.

Stellar will acquire Petra's interest in Kono for an all share consideration of £900,000 (US$1.4 million), and Petra will become a 4.45% shareholder in Stellar.

As part of the transaction both Stellar and Petra have agreed a cooperation agreement whereby Stellar will in good faith discuss with Petra the first option to joint venture any project in the Stellar portfolio which Stellar seeks to develop with a partner.

The Kono project, presently on care and maintenance, is an underground trial mining operation targeting diamond bearing kimberlite dykes within two Exclusive Prospecting Licences covering an area of 206 square kilometers in the heart of the Kono diamond district of eastern Sierra Leone.

The Kono district has historically produced a reported 9 million carats of high value gem diamonds, mostly by artisanal means, including the 970 carat Star of Sierra Leone.

The most recent public data on production by Koidu Holdings shows that Pipe 1 grades at 45 carats per hundred tons (cpht) with a diamond value of US$231 per carat, whereas Pipe 2 grades at 26cpht with a diamond value of US$187 per carat.

Karl Smithson, Chief Executive of Stellar, comments, “With the strong recovery in rough diamond prices, the Kono project is an exceptionally well positioned development asset for Stellar to hold in its portfolio, offering growth to our future production pipeline.”