VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 28, 2011) - Stornoway Diamond Corporation (News - Market indicators) is pleased to provide a progress update on feasibility level work at the Renard Diamond Project, Stornoway's flagship project located in North Central Québec.
In July 2010, Stornoway announced the commencement of a full program of mine design, environmental assessment, permitting and community engagement designed to lead to a production decision at Québec's first diamond mine. Since this time, Stornoway has acquired a 100% interest in Renard through the acquisition of the 50% interest previously owned by DIAQUEM Inc. (Stornoway press release dated April 1, 2011), increased the size of the Renard National Instrument 43-101 compliant Mineral Resource (Stornoway press release dated January 24, 2011), and welcomed the Québec Government announcement of final funding for the Route 167 Extension road development project (Stornoway press release dated March 18, 2011). Work on the project itself is well advanced, and is summarized as follows.
Schedule of Feasibility Study and Permitting
The Renard Feasibility Study and its accompanying Environmental and Social Impact Assessment ("ESIA") are on track for completion in the third quarter of this year. A separate Feasibility Study and Environmental Assessment for a power line to connect the project to the James Bay hydro-electric network are also underway under the auspices of Hydro-Québec. The Renard Diamond Project falls under the environmental protection regimes of the James Bay and Northern Québec Agreement (the "JBNQA") and the Canadian Environmental Assessment Act. Subject to a schedule to be established by the Review Committee of the JBNQA ("COMEX"), it is currently expected that community hearings will be held in the fourth quarter of 2011 and, subject to the satisfaction of all regulatory requirements, the project will be eligible for the receipt of Certificates of Authorization by the end of the first quarter of 2012. Once the provincial and federal administrators have issued authorizations for project development, final mine permits will be sought from the Québec Ministère du Développement durable, de l'Environnement et des Parcs, the Ministère des Ressources Naturelles et de la Faune, and all relevant federal authorities. In support of this schedule, an expenditure of $14.3m has been budgeted for the completion of all project feasibility work programs, permitting and associated pre-development activities to the end of March 2012, to be funded from existing cash resources.
Mine Plan Development
The Renard mine plan currently under development within the Feasibility Study contemplates a combined open pit and underground operation focused initially on the high grade Renard 2 and Renard 3 kimberlite pipes mined at a rate of 6,000 tonnes per day (2.1 million tonnes per year). The potential for production expansion beyond 6,000 tonnes per day is also being investigated through the addition of supplementary, open pittable ore from the nearby Renard 65 kimberlite. To this end, Stornoway expects to complete a 5,000 tonne bulk sample of Renard 65 so as to recover a large parcel of diamonds for valuation purposes. This work will be undertaken in 2012, in time to allow the conversion of Renard 65 from an Inferred to an Indicated Mineral Resource and, if warranted, to a Mineral Reserve, prior to construction start-up.
Diamond Valuation
Prior to the finalization of the Feasibility Study, Stornoway will conduct a full, open market diamond valuation exercise in Antwerp, Belgium on the approximately 8,300 carats of diamonds recovered from the Renard 2, Renard 3 and Renard 4 kimberlite pipes and the Lynx and Hibou kimberlite dykes. These diamond parcels were last valued in September 2009, at which time WWW recommended a modeled "Base Case" diamond price estimate for both the Renard 2 and Renard 3 valuation samples of US$117 per carat (estimated at a +1 DTC sieve size cut-off), with a "High" modeled price estimate of US$131 per carat and a "Low" modeled price estimate of US$103 per carat. Since this time, market prices for rough diamonds have increased significantly. The revised modeled price estimate obtained from the new WWW valuation exercise will be utilized in the financial model within the Feasibility Study and for future mine planning.
Road Access and Development Schedule
On March 17, 2011 it was announced that the Québec Government will commit to the development of the Route 167 Extension under the auspices of the "Plan Nord", the strategic initiative to develop the north of Québec. The Route 167 Extension (also known as the "Route des Monts Otish") will provide year round highway access to the Renard Diamond Project by way of the communities of Mistissini and Chibougamau. Road construction is expected to commence this year, and Stornoway anticipates first vehicle access to the Renard site for construction mobilization by the first quarter of 2013 through the utilization of an upgraded seasonal road and construction easements. The Renard Feasibility Study will establish the optimum schedule for mine construction and production start-up based on this road access time-line.
Stakeholder Relations
Consultation with communities, including public open houses and individual stakeholder meetings, have been undertaken in conjunction with the ESIA and mine permitting processes. With the collaboration of the Crees of the James Bay region, Stornoway has established an Environmental Exchange Group designed to provide a forum for the exchange of environmental and traditional knowledge in the area of the proposed development. Stornoway also is currently in negotiations with the Cree Nation of Mistissini and the Grand Council of the Crees (Eeyou Istchee) with the aim of concluding an Impact and Benefits Agreement. This agreement is expected to provide mine related employment and contracting opportunities, as well as foster environmental and social protection. This negotiation process follows upon the successful execution of a Pre-Development Agreement between the parties in July 2010, and the establishment of a project business development office in the community of Mistissini in January of this year.
About Stornoway Diamond Corporation
Stornoway Diamond Corporation is one of Canada's leading diamond exploration and development companies, involved in the discovery of over 200 kimberlites in seven Canadian diamond districts. The Company benefits from a diversified diamond property portfolio, a strong financial platform and management and technical teams with experience in each segment of the diamond "pipeline" from exploration to marketing.
About the Renard Diamond Project
The Renard Diamond Project is located approximately 250 km north of the Cree community of Mistissini and 350 km north of Chibougamau in the James Bay region of North-Central Québec. In May 2010, Stornoway filed a National Instrument 43-101 compliant technical report for the Preliminary Assessment at Renard that estimated the project to have the potential to produce approximately 30 million carats of diamonds over a 25 year mine life, with a pre-tax Net Present Value of C$885 million (at an 8% discount rate) and an Internal Rate of Return of 24.8%. National Instrument 43-101 compliant Indicated and Inferred Mineral Resources currently stand at 23.8 and 17.5 million carats respectively, with a further 23.5 to 48.5 million carats classified as a non-resource, "potential mineral deposit". All kimberlites remain open at depth. Total capital investment is currently estimated to be $511 million, with an average operating expenditure of approximately $67 million per year and a workforce of 300 people. Readers are referred to the technical report in respect of the Renard Diamond Project for further details and assumptions relating to the project.
On behalf of the Board
STORNOWAY DIAMOND CORPORATION
Matt Manson, President and Chief Executive Officer
This document contains "forward-looking information" within the meaning of Canadian securities legislation and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. This information and these statements, referred to herein as "forward-looking statements" are made as of the date of this document and the Company does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by law.
Forward-looking statements relate to future events or future performance and reflect current expectations or beliefs regarding future events and include, but are not limited to, statements with respect to: (i) the amount of mineral resources and potential mineral deposits; (ii) the amount of future production over any period; (iii) net present value and internal rates of return of the proposed mining operation; (iv) capital costs and operating costs; (v) mine expansion potential and expected mine life; (vi) expected time frames for completion of permitting and regulatory approvals, completion of a Feasibility Study and making a production decision; (vii) future exploration plans; and (viii) sources of and anticipated financing requirements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects", "anticipates", "plans", "projects", "estimates", "assumes", "intends", "strategy", "goals", "objectives" or variations thereof or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.
All forward-looking statements are based on Stornoway's or its consultants' current beliefs as well as various assumptions made by and information currently available to them. Many of these assumptions are set forth in the news release and include: (i) estimates of net present value and internal rates of return; (ii) estimates of potential production and duration of mine life; (iii) estimated completion date for the Feasibility Study and related Environmental and Social Impact Assessment; (iv) required capital investment and estimated workforce requirements; (v) receipt of regulatory approvals on acceptable terms within commonly experienced time frames; (vi) the assumption that a production decision will be made, and that decision will be positive; (vii) anticipated timelines for the commencement of mine production; (viii) anticipated timelines related to the Route 167 extension and the impact on the development schedule at Renard; (ix) anticipated timelines for community consultations and the conclusion of an Impact and Benefits Agreement; (x) market prices for rough diamonds and the potential impact on the Renard Project's value; (xi) future exploration plans and objectives. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Many forward-looking statements are made assuming the correctness of other forward looking statements, such as statements of net present value and internal rate of return, which are based on most of the other forward-looking statements and assumptions herein. The cost information is also prepared using current values, but the time for incurring the costs will be in the future and it is assumed costs will remain stable over the relevant period.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. We caution readers not to place undue reliance on these forward-looking statements as a number of important factors could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates assumptions and intentions expressed in such forward-looking statements. These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur, including the assumption in many forward-looking statements that other forward-looking statements will be correct, but specifically include, without limitation, risks relating to variations in the grade, kimberlite lithologies and country rock content within the material identified as mineral resources from that predicted, variations in rates of recovery and breakage; the greater uncertainty of potential mineral deposits, developments in world diamond markets, slower increases in diamond valuations than assumed, risks relating to fluctuations in the Canadian dollar and other currencies relative to the US dollar, increases in the costs of proposed capital and operating expenditures, increases in financing costs or adverse changes to the terms of available financing, if any, tax rates or royalties being greater than assumed, results of exploration in areas of potential expansion of resources, changes in development or mining plans due to changes in other factors or exploration results of Stornoway or its joint venture partners, changes in project parameters as plans continue to be refined, risks relating to receipt of regulatory approvals or settlement of an Impact and Benefits Agreement, the effects of competition in the markets in which Stornoway operates, operational and infrastructure risks and the additional risks described in Stornoway's most recently filed Annual Information Form, annual and interim MD&As, and Stornoway's anticipation of and success in managing the foregoing risks. Stornoway cautions that the foregoing list of factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to Stornoway, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Stornoway does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by Stornoway or on our behalf, except as required by law.