Stornoway Provides Renard Project Update
Feasibility Study and ESIA Nearing Completion
September 20, 2011
Stornoway Diamond Corporation (TSX-SWY) 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. This program is now nearing completion, and Stornoway can provide the following guidance:
Schedule of Feasibility Study and Mine Permitting
Feasibility Study operating and cost estimates are nearing completion, and a mine plan and production schedule finalized. Over the next several weeks, Stornoway expects to complete final due diligence and review, prior to approval by the Stornoway Board of Directors for release. The accompanying Environmental and Social Impact Assessment (“ESIA”) is also nearing completion, and will be submitted to the relevant permitting authorities upon finalization of the Feasibility Study. 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”) and the Canadian Environmental Assessment Agency, it is currently expected that public hearings will be held in the first half of 2012 and, upon the satisfaction of all regulatory requirements, the project will be eligible for the receipt of both Quebec and Federal Certificates of Authorization by the end of the second 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.
Mine Plan Development
The Renard Feasibility Study will outline a mine life based on 24 mtonnes of National Instrument (“NI”) 43-101 compliant Indicated Mineral Resources in the Renard 2, 3 and 4 kimberlites, which represents the Mineral Resources available for potential conversion to Mineral Reserves. This will be mined by way of open pits on Renard 2 and 3, and an underground mine utilizing a 5.5 meter diameter shaft to 740m depth. Nameplate ore processing capacity will be 6,000 tonnes per day (2.2 mtonnes/annum) with a maximum carat production expected to be in excess of 2 mcarats/annum. To minimize impact on fish habitats in Lake Lagopede, a water retention dyke and open pit at Renard 4 are not being considered at this time. Underground mining of Renard 2 and 3 to a maximum of 600 meters depth will be by blast-hole shrink stoppage with waste backfill from surface. Renard 4 will be mined by blast-hole stoping with waste backfill under a crown pillar. Processed kimberlite management will be by way of a “dry-stack” disposal facility which will be progressively reclaimed. Successful metals leach tests indicate no liner will be required, and no fish habitat will be impacted by tailings disposal.
Separate from the Renard Feasibility Study, Stornoway is developing a Long Term Business Plan (“LTBP”) based on all Indicated and 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. The Renard 65 pit will be included within the Feasibility Study and permitting plan as a borrow pit for backfill waste and for water management. Ore recovered from Renard 65, currently classified as Inferred Mineral Resource, will not appear in the Feasibility Study production schedule. In support of the LTBP, Stornoway expects to complete a large tonnage bulk sample of Renard 65 in order to allow the conversion of a portion of these resources to an Indicated Mineral Resource and, if warranted, to a Mineral Reserve, prior to construction start-up.
In addition to the NI 43-101 compliant Mineral Resources at Renard, Stornoway has delineated additional, non-resource upside in the form of a potential mineral deposit (“PMD”) of 55.1 to 75.5 mtonnes containing an estimated 23.5 to 48.5 mcarats to a maximum depth of 775 meters in the Renard 2, 3, 4, 65 and 9 kimberlite pipes, and in the Lynx and Hibou klimberlite dykes. No PMD will be included in the production schedules of the Feasibility Study. Beyond the base of the currently estimated PMD, all ore bodies remain open at depth.
The reader is cautioned that mineral resources that are not mineral reserves do not have demonstrated economic viability. In addition, the potential quantity and grade of any potential mineral deposit is conceptual in nature, there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource. 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.
Road Access and Mine Development Schedule
Year round access to the Renard Diamond Project will be by way of the Route 167 Extension, a $332 million road development project sponsored by the Quebec Ministry of Transportation under the auspices of the “Plan Nord”. Permitting for the road is nearing completion. Successful public hearings were held by the COMEX on August 30th and 31st in the communities of Mistissini and Chibougamau and, subject to the satisfaction of all regulatory requirements, the Ministry of Transportation expects to commence road construction in the 4th Quarter of this year. Based on this schedule, Stornoway anticipates first vehicle access to the Renard site for mine construction mobilization by mid-2013 and first diamond production in 2015 based on an approximately 2 year mine development schedule. This development timeline is highly dependent upon the successful development of the road on schedule. On August 1st, 2011, Stornoway announced the signing of two financing agreements with the Government of Quebec by which Stornoway will contribute to the construction and maintenance costs of the new road. Stornoway has agreed to contribute $44 million to its development, to be paid annually over a ten year period, starting in July 2015. Stornoway’s contribution will be financed by Québec at 6.3% and will be conditional upon, amongst other things, the completion of the road on schedule, the receipt of all regulatory approvals for the construction of the Renard Diamond Project and the successful completion of Renard Diamond Project financing.
As a component of the Renard feasibility work program, Hydro-Quebec is undertaking a separate Feasibility Study on behalf of Stornoway for a potential 161kV powerline connecting Renard to the LaForge 1 hydro-electric powerstation 165 kilometers to the north. This powerline will add capital cost to the project but offers substantial operating cost savings over a long mine life. While Stornoway awaits the completion of the powerline study by Hydro-Quebec, the Renard Feasibility Study will be formulated on a base case scenario of on-site diesel power generation, with an assessment of the expected benefits to the project upon transference to grid power.
In collaboration with the Crees of the James Bay region, Stornoway undertakes regular consultations with communities, including public open houses and individual stakeholder meetings. Since the beginning of this year the Renard Environmental Exchange Group has met in the Cree community of Mistissini five times, giving a forum for the exchange of environmental and traditional knowledge in the area of the proposed development. Stornoway also is currently in negotiations with 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 highlighted the potential of the project to become a significant producer of high value rough diamonds over a long mine life. Current NI 43-101 compliant Indicated and Inferred Mineral Resources 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. 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
/s/ “Matt Manson”
President and Chief Executive Officer
For more information, please contact Matt Manson (President and CEO) at 416-304-1026
or Nick Thomas (Manager Investor Relations) at 604-983-7754, toll free at 1-877-331-2232
Pour plus d’information, veuillez contacter M. Ghislain Poirier, Vice-président Affaires publiques de Stornoway au 418-780-3938, firstname.lastname@example.org
This press release 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 press release 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) capital costs and operating costs; (iv) mine expansion potential and expected mine life; (v) expected time frames for completion of permitting and regulatory approvals, completion of a Feasibility Study and making a production decision; (vi) future exploration plans; (vii) future market prices for rough diamonds; 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.
Forward-looking statements are made based upon certain assumptions and other important factors that, if untrue, could cause the actual results, performances or achievements of Stornoway to be materially different from future results, performances or achievements expressed or implied by such statements. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which Stornoway will operate in the future, including the price of diamonds, anticipated costs and ability to achieve goals. Certain important factors that could cause actual results, performances or achievements to differ materially from those in the forward-looking statements include, but are not limited to: (i) estimated completion date for the Feasibility Study and the Environmental and Social Impact Assessment; (ii) required capital investment and estimated workforce requirements; (iii) receipt of regulatory approvals on acceptable terms within commonly experienced time frames; (iv) the assumption that a production decision will be made, and that decision will be positive; (v) anticipated timelines for the commencement of mine production; (vi) anticipated timelines related to the Route 167 extension and the impact on the development schedule at Renard; (vii) anticipated timelines for community consultations and the conclusion of an Impact and Benefits Agreement; (viii) market prices for rough diamonds and the potential impact on the Renard Project’s value; and (ix) future exploration plans and objectives.
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 risk 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, (i) risks relating to variations in the grade, kimberlite lithologies and country rock content within the material identified as mineral resources from that predicted; (ii) variations in rates of recovery and breakage; (iii) the greater uncertainty of potential mineral deposits; (iv) developments in world diamond markets; (v) slower increases in diamond valuations than assumed; (vi) risks relating to fluctuations in the Canadian dollar and other currencies relative to the US dollar; (vii) increases in the costs of proposed capital and operating expenditures; (viii) increases in financing costs or adverse changes to the terms of available financing if any; (ix) tax rates or royalties being greater than assumed; (x) results of exploration in areas of potential expansion of resources; (xi) changes in development or mining plans due to changes in other factors or exploration results of Stornoway; (xii) changes in project parameters as plans continue to be refined; (xiii) risks relating to receipt of regulatory approvals or the conclusion of an Impact and Benefits Agreement with aboriginal communities; (xiv) the effects of competition in the markets in which Stornoway operates; (xv) operational and infrastructure risks; and (xvi) the additional risks described in Stornoway's most recently filed Annual Information Form, annual and interim MD&A, 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.