UK miner protests Sierra Leone licence cancellation By KEMO CHAM in Freetown | Friday, April 13  2012 at  12:56

Sierra Leone's government could find itself embroiled in a legal tussle after it suddenly revoked the licences of UK diamond mining and exploration company Stellar Diamond Plc.

The miner has disputed the decision to cancel two if its permits and said that it was seeking clarification from the mining ministry after the Wednesday decision.

A Mines ministry letter said it should not have renewed the firm's licences in 2012 as provided for by mining legislation and as a result it had withdrawn the rights accorded by the permits.

"The government says that the rights they gave us in the first place were not actually quite correct, so therefore we don't have any rights, which is an absurd position for the government to be coming from, so we can’t accept that," Stella Diamond chief executive officer Karl Smithson said.

Investor uncertainty

Stella Diamond, a West African focused diamond miner, is presently engaged in Sierra Leone and neighbouring Guinea, where it has six projects.

The company has two alluvial projects in production in Guinea`s Mandala and Bomboko, and full rights over four high-grade kimberlite projects in the two countries said to be at various stages of development from drilling through bulk sampling to trial mining.

In Sierra Leone`s diamond-rich district of Kono, the company has two licenses which were initially granted in 2005. It has spent over $19m there.

News of the revocations of those licenses has caused uncertainty among shareholders over the exact status of its other licenses in the town of Tongo, also in east, but which the company said is of greater significance.

The Tongo liceses was renewed in November last year.

Reports monitored elsewhere indicated that Stella Diamond`s shares responded negatively to development.

Allay fears

But the company`s CEO sought to allay fears by playing down the significance of the Kono concession.

The market, he said, had overreacted to the announcement.

Mr Smithson added that over the last 12 months the firm's focus had been on Droujba in Guinea and Tongo in Sierra Leone.

"Kono has played a very minor part in the portfolio up until this point," he was quoted saying.

The Sierra Leone government, under pressure from civil society activists, towards the end of last year announced that it had started reviewing all its mining agreements.

Stella Diamond however said it had operated over the licences since its initial issuance in January 2005 in accordance with prevailing laws in the country.

It added that it had also submitted applications to the Ministry for 2012’s licence renewals in November as per the Mines and Minerals Act of 2009.

''Whilst this uncertainty is frustrating and unfortunate, we strongly believe that our legal tenure over the Kono licenses is intact and will be engaging with the Ministry of Mines to clarify and then satisfactorily resolve this issue,” said Smithson.