Stornoway Diamond Corporation (TSX:SWY) is a leading Canadian diamond development and exploration company. The Company’s flagship property is the 100%-owned, Renard Diamond Project, located in north-central Quebec. Currently in the development stage having received the Certificate of Authorization from the Québec Government in December of 2012, as well as an updated and optimized mine plan and cost estimates in January of 2013, the project is on track to becoming Quebec’s first diamond mine and Canada`s next by January of 2016.
The Company also maintains a pipeline of earlier-stage projects for long-term Company growth. Two of which, Pikoo and Aeon, are early-stage projects both with exciting coincident geophysical and geochemical anomaly supported targets approaching the drill-testing stage. Three other projects (Aviat, Qilalugaq, and Timiskaming) are in the advanced stage of assessment and have the potential to become the pipeline projects to Renard.
- Management and technical team with unparalleled experience in the Canadian diamond industry through experience from the discovery and development of the Diavik Mine in the 90′s with Aber Diamonds, now Harry Winston and soon to be Dominion Diamonds.
- 100% ownership of one of the best emerging, diamond development stories worldwide; a bankable feasibility study with an 18 million carat reserve with very large growth potential (17 million carat indicated resource and a potential exploration upside of 24-49 million carats) strong mining margins, road and hydro power potential, modest capex and opex numbers, located in a supportive mining jurisdiction: Quebec.
- Supportive large shareholders in Quebec: 33.7% owned by the Quebec Government, 9% by Agnico Eagle (both on a fully diluted basis).
- An Eleven year mine life at Renard (based on current reserves) with the potential for 20 or more years of production including the inferred resources*.
* mineral resources that are not mineral reserves do not have demonstrated economic viability.
- Production at Renard is scheduled to commence at a time when world diamond reserves are predicted to start decreasing (2016). The current market for diamonds is growing rapidly in emerging markets like China and India and is predicted to continue for the foreseeable future.
- Renard stones are high quality Canadian diamonds with June 2011 modeled average value of $182 US per carat (above world average of ~110 US per carat).
- Company is undervalued compared to current project valuations on Renard alone. Analyst coverage by six different firms available.
- High potential for new discovery through grassroots projects and value growth potential in future development of Advanced Stage portfolio (Aviat, Qilalugaq, Timiskaming): excellent project pipeline.
Renard Diamond Project
The 100% owned Renard Diamond Project, Stornoway’s flagship asset, is located near the Otish Mountains in north-central Quebec and is well on track to becoming Quebec’s first diamond mine. The project benefits from a large and growing resource, good mining conditions, strong social acceptance, a modest environmental footprint, and the development of direct-to-mine infrastructure under the auspices of Quebec’s “Plan Nord”.
The Renard kimberlite pipes, and the nearby “Lynx Hibou” system of kimberlite dykes, were discovered starting in 2001 following five years of grass roots exploration over an area of more than 400,000 square kilometres of the eastern Archean Superior craton in northern Quebec. Initial exploration was conducted under a joint venture between Ashton Mining of Canada Inc. and SOQUEM inc. Stornoway acquired Ashton in January 2007 and in April 2011 acquired the remaining 50% in the project held by DIAQUEM Inc. a subsidiary of SOQUEM.
The current project development schedule (as of the January 28, 2013 Optimization Study) assumes first road access to the project site by the fourth quarter of 2013 followed by a 24 month construction period. Plant commissioning is scheduled to begin in December 2015 with commercial production achieved by June 2016.
The January 28, 2012, an Optimization Study incorporates certain design refinements undertaken since the release of the project’s Feasibility Study in November 2011, including the deferral of shaft access for the underground mine and a modified underground mining sequence and draw point design. The Optimization Study also contains an updated financial model incorporating, amongst other things, the terms of the March 2012 Mecheshoo Agreement with the Cree Nation of Mistissini, the Grand Council of the Crees (Eeyou Istchee), and the Cree Regional Authority, and the November 2012 Renard Mine Road financing agreement with the Government of Québec.
The study outlines a (base case) Net Present Value (“NPV”) of C$683 million at a 7% discount rate and Internal Rate of Return (“IRR”) of 20.3% before taxes and mining duties, and C$391 million and 16.3% after taxes and mining duties. It calculates a revised initial capital cost of C$752 million and a revised operating cost averaging C$57.63/tonne (C$76.63/carat), and an 11 years reserve-based mine life with diamond production averaging 1.6 million carats/annum life of mine, real terms net revenue of C$4,046 million, and a cash operating margin of C$2,693 million (67% compared to 68% in the previous estimate).
The global Certificate of Authorization for the Renard Diamond Project was received onDecember 6, 2012 from the Québec Ministère du Développement Durable, de l’Environnement,de la Faune et des Parcs (“MDDEFP”). The Certificate of Authorization represents the principal regulatory approval required to commence mine construction, and was issued by the Québec regulators following more than 2 years of formal environmental study, community engagement and public consultation under the terms of the James Bay and Northern Québec Agreement (the “JBNQA”).
Québec’s Ministère des Ressources naturelles issued the Mining Lease for Renard on September 17, 2012. The Mining Lease represents the formal transference of mineral title from Québec to Stornoway, and is valid for a period of 20 years.
Separate from the Renard Optimization Study, Stornoway is developing a Long Term Business Plan (“LTBP”) based on the addition of 31 mtonnes (17 mcarats) of NI 43-101 compliant Inferred Mineral Resources within the scope of the mine infrastructure contained within the Feasibility Study. The LTBP is expected to outline an increased production rate and extended mine life, with underground mine development at Renard 2, 3, 4 and 9 to a maximum 700 meters depth, and an open pit at Renard 65. A significant quantity of non-resource, potential mineral deposit has been identified in addition to the NI 43-101 compliant resources, and all pipes remain open at depth.
The reader is cautioned that mineral resources that are not mineral reserves do not have demonstrated economic viability. Readers are referred to the NI 43-101 compliant technical report dated February 3rd, 2011 with respect to the disclosure of Mineral Resources for the Renard Diamond Project.
Analysis of the Renard diamond population has shown a coarse size distribution and a high proportion of large white gems. Based on percentage by weight, 99% of the stones are gem/near-gem quality with just 1% industrial quality boart. This combination of attributes gives a high potential for significant “Specials” to be recovered once the mine is fully operational. This is not accounted for in the current resource work or valuation estimates.
An important aspect of the project’s advancement is the “Route 167 Extension” which will allow all-season access to Renard by way of the communities of Chibougamau and Mistissini. Construction began in February of this year, and is being undertaken in four segments, “A” to “D”. The Ministry of Transport Québec has mostly completed the first 143km of the road over segments A and B as a 70km/hr two-lane gravel highway . Starting in April 2013, Stornoway will commence construction of a 50km/hr single lane mining road over the remaining 97km covered by segments C and D bringing access to the site in the last quarter of 2012 (see press release dated November 15, 2012).
A first for diamond mining in Canada, year round road access will allow Renard to be developed and operated with significantly reduced costs and operating risk.
In an era of steadily growing diamond demand and decreasing supply, Renard is one of the best undeveloped diamond deposits in the world today.
Renard Diamond Project Digital Fly-Through Video
Matt Manson – President, Chief Executive Officer, and Director
Matt Manson has over 14 years of experience in diamond exploration, development and production. He was appointed President of Stornoway in March 2007 following the acquisition of Ashton Mining of Canada and Contact Diamond Corporation, and subsequently President & CEO in January 2009. Between 1999 and 2005 he was employed by Aber Diamond Corporation (now Harry Winston Diamond Corporation) as VP Marketing and subsequently VP Technical Services & Control, during which time he participated in the US$230m project financing for the Diavik Diamond Project and oversaw Aber’s technical and marketing operations. Matt is a director of Karmin Exploration Inc., and a graduate of the University of Edinburgh (BSc Geophysics, 1987) and the University of Toronto (PhD Geology, 1996).
Patrick Godin – Chief Operating Officer and Director
Mr. Godin is a professional mining engineer with more than 20 years of experience in all aspects of mine development, construction and operation. Prior to joining Stornoway, Mr. Godin held the position of Vice President, Project Development, for G Mining Services Inc. of Montreal, with responsibility for the successful development of the Essakane Project in Burkina Faso under contract to IAMGOLD Corporation. Between 2007 and 2008 he oversaw the development of the Nunavik Nickel Project as Vice President Operations for Canadian Royalties Inc. Between 1991 and 2007 he held successively senior positions with Cambior Inc. and its affiliate companies, with experience in the development and management of several mining operations in the Abitibi-Témiscamingue region of Québec, and culminating in the role of President and General Manager of CBJ-CAIMAN S.A.S., the Cambior, and subsequently IAMGOLD, subsidiary in French Guiana.
Mr. Godin is a member of the Ordre des Ingénieurs du Québec, a director of Orbit Garant Drilling Inc. (TSX-OGD), and a member of the Technical Advisory Committee of the Canada Centre for Mineral and Energy Technology (“CANMET”).
Zara Boldt – Vice-President of Finance and Chief Financial Officer
Zara Boldt has held progressive positions with several mineral exploration companies, in addition to working for a national brokerage firm for several years. Her most recent resource industry roles include CFO for Sherwood Copper Corporation from May 2006 to May 2007 and Controller for the Northair Group of Companies between May 2004 and April 2007. Ms. Boldt is a Certified General Accountant and a graduate of the University of Puget Sound in Tacoma, Washington. Beyond her role at Stornoway, Ms. Boldt currently serves as a Corporate Secretary for Strongbow Exploration Inc. and North Arrow Minerals Inc. and is a Director of Troon Ventures Ltd.
Robin Hopkins – Vice-President of Exploration
Robin Hopkins, P.Geol. (NT/NU), has held this position since January 2006 and was Chief Technical Officer for the predecessor company, Stornoway Ventures Ltd., since 2003. Mr. Hopkins was Vice-President, Exploration, for Navigator Exploration Corporation between 2000 and 2004, and prior to that a key member of the Aber Resources Ltd. exploration team that discovered the Diavik Diamond Project pipes in the Northwest Territories in 1994.
With more than 20 years exploration experience throughout Canada, Greenland and southern Africa since graduating from the University of Waterloo (HBASc, Earth Sciences), Mr. Hopkins is a Qualified Person under NI 43-101, and the Company’s diamond exploration programs are conducted under his direction.
Dave Skelton – Vice-President of Project Development
Mr. Skelton brings more than 21 years of experience as a geologist including 15 years in diamond exploration and advanced evaluation. For the last 6 years, Mr. Skelton has managed the Renard Diamond Project, recently the subject of a positive Preliminary Assessment study released on October 28, 2008. Renard is Stornoway’s most advanced project and remains on track to be developed as Quebec’s first diamond mine.
Ghislain Poirier – Vice-President of Public Affairs
Ghislain Poirier is a geological engineer with more than 20 years of experience in the mining exploration industry. He is a graduate of Université Laval in 1984 and he obtained a masters degree in economic geology from Université du Québec à Montréal (UQAM) in 1987. From 1988 to 1991, he acted as a consultant for several junior companies and from 1991 to 2005 he was employed by SOQUEM, a Quebec mineral exploration crown corporation. During this period he was involved in the discovery of the Renard diamond deposit as the joint venture partner of Ashton Mining of Canada inc. Before joining Stornoway he acted as Manager Environment and Public Affairs for Ashton. He occupied the same position for Stornoway from 2007 to 2010. In March 2011 he was promoted to Vice-president Public Affairs for Stornoway. He is member of the Ordre des Ingénieurs du Québec (OIQ) and he has been a board member of the Association de l’Exploration Minière du Québec (AEMQ) for 10 years. In January 2009, he was appointed president of the AEMQ for a 2 year mandate which was subsequently renewed for an additional year. Mr. Poirier also sits on the Board of Minalliance.
Board of Directors
Ebe Scherkus – Chairman of the Board
Michel Blouin – Director, Nominee of Investissement Quebec
Patrick Godin – Director
Yves Harvey – Director
John LeBoutillier – Director, Nominee of Investissement Quebec
Matt Manson – Director
Monique Mercier – Director, Nominee of Investissement Quebec
Peter Nixon – Director
Serge Vézina – Director