LONDON, June 5 (Reuters) - Stellar Diamonds has agreed to sell its Guinean assets to BDG Capital Limited for $2 million to allow it to focus on a bigger mine in Sierra Leone that could begin producing diamonds next year, its CEO said on Monday.
Small-cap Stellar Diamonds said its Tongo-Tonguma project in Sierra Leone has the potential to generate earnings of $45 million a year and focusing on its development was the best way to boost shareholder returns after a period of underperformance.
Banque de Developpement de Guinee, a subsidiary of the BDG Capital group of companies, was not immediately available for comment.
Stellar Diamonds CEO Karl Smithson said the development of diamonds was "a nice fit" for BDG Capital following a previous decision to invest in Guinean gold production.
He told Reuters that Stellar Diamonds planned to go to the market in the "not-too-distant future" to raise further funds for the development of Tongu-Tonguma, which would cost $32 million.
Smithson declined to be more specific other than to say he meant this year, adding that the mine could produce diamonds within a year of the financing being completed.
The company's shares have fallen 17.5 percent so far this year, leaving it with a market capitalisation of 2.5 million pounds ($3.2 million).
It is estimated the mine in Sierra Leone could produce 200,000 carats per year, generating more than $45 million annually, over a minimum mine life of 21 years.
($1 = 0.7741 pounds)
(Reporting by Barbara Lewis; editing by David Clarke)
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