Stornoway Diamond Corporation (TSX:SWY)
(the “Corporation” or “Stornoway”) is pleased to
announce the completion of the first sale of Renard diamonds held
between the 14th and 23rd of November in Antwerp Belgium.
In total, 38,913 carats were sold at an average
price of US$195 per carat, for proceeds of US$7.6 million (C$10.2
million1).
1 Assuming C$: US$ conversion rate of
$1.34
Matt Manson, President and CEO of Stornoway,
commented “The diamonds sold in this first sale represent a portion
of our production recovered during the initial commissioning and
ramp-up of the Renard project during August and September. We saw
strong interest in our product assortment, with 153 diamantaires
attending the tender. Pricing met or was close to our expectations
on most items. Recent events in India surrounding demonetization
has impacted pricing and demand for certain smaller and lower
quality items and, as a result, a quantity of these were withdrawn
from the sale. These will be sold at a later date. Because of this,
and because of a higher than expected proportion of small diamonds
recovered during the ramp-up period, the result of this first sale
cannot be taken as representative of the longer term pricing
profile of the project. This was the first introduction of Québec
diamonds to the market and a price discovery exercise. We
look forward to growing our sales profile over the next few months.
The project’s production ramp-up continues to exceed our
expectations, and three tender sales have been scheduled for the
first quarter of 2017.”
Production Update
As of November 15th, 2016 244,623 tonnes of ore
had been processed for an attributable carat production of 261,353
carats, representing an average grade of 107 carats per hundred
tonnes (cpht). Stornoway’s guidance for FY2016, based on the March
2016 mine plan, is 220,000 carats produced, at an average grade of
97 cpht. The higher grade achieved is attributable to a better than
expected mix of ore available within the open pit for processing.
The focus of the ramp-up remains the management and de-watering of
processed kimberlite. Ore processing rates in October achieved an
average daily rate of 3,114 tonnes per day, with a peak of 4,711
tonnes per day. This increased to an average rate of 3,804 tonnes
per day and a peak of 6,357 tonnes per day in the first half of
November. Commercial production at Renard is defined as 60% of
plant capacity, or 3,600 tonnes per day, over a 30 day period. This
is expected to be achieved, on schedule, on or around December 31,
2016.
About the Renard Diamond
Mine
The Renard Diamond Mine 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. On
July 8, 2014, Stornoway announced the completion of a $946 million
project financing transaction to fully fund the project to
production, and construction commenced on July 10, 2014. Processing
of ore commenced on July 15, 2016.
In March 2016, Stornoway released the results of
an Updated Mine Plan and Mineral Reserve Estimate in March 2016.
The study highlighted the potential of the project to become a
significant producer of high value rough diamonds over an initial
14 year mine life. Probable Mineral Reserves, as defined in
National Instrument 43-101 – Standards of Disclosure for Mineral
Projects (“NI 43-101”), stand at 22.3 million carats. In accordance
with the Corporation’s September 2015 Mineral Resource estimate,
total Indicated Mineral Resources, inclusive of the Mineral
Reserve, stand at 30.2 million carats, with a further 13.35 million
carats classified as Inferred Mineral Resources, and 33.0 to 71.1
million carats classified as non-resource exploration upside.
Average annual diamond production is forecast at 1.8 million carats
per annum over the first 10 years of mining, at an average
valuation of US$155/carat based on March 2016 terms.
Readers are cautioned that the potential quality
and grade of any target for further exploration 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. All kimberlites
remain open at depth. Readers are referred to the technical report
dated January 11, 2016, in respect of the September 2015 Mineral
Resource estimate, and the technical report dated March 30, 2016,
in respect of the March 2016 Updated Mine Plan and Mineral Reserve
Estimate for further details and assumptions relating to the
project.
About Stornoway Diamond
Corporation
Stornoway is a leading Canadian diamond
exploration and development company listed on the Toronto Stock
Exchange under the symbol SWY and headquartered in Montreal. Our
flagship asset is the 100% owned Renard Diamond Project, Québec’s
first diamond mine. Stornoway is a growth oriented company with a
world-class asset, in one of the world’s best mining jurisdictions,
in one of the world’s great mining businesses.
On behalf of the BoardSTORNOWAY DIAMOND
CORPORATION/s/ “Matt Manson”Matt MansonPresident and Chief
Executive
For more information, please contact Matt Manson
(President and CEO) at 416-304-1026 x2101or Orin Baranowsky (Vice
President, Investor Relations and Corporate Development) at
416-304-1026 x2103 or toll free at 1-877-331-2232
Pour plus d’information, veuillez contacter M.
Ghislain Poirier, Vice-président Affaires publiques de
Stornoway au 418-254-6550, gpoirier@stornowaydiamonds.com
** Website: www.stornowaydiamonds.com Email:
info@stornowaydiamonds.com **
This press release contains "forward-looking
information" within the meaning of Canadian securities legislation.
This information and these statements, referred to herein as
“forward-looking statements”, are made as of the date of this press
release and the Corporation does not intend, and does not assume
any obligation, to update these forward-looking statements, except
as required by law.
These forward-looking statements include, among
others, statements with respect to Stornoway’s objectives for the
ensuing year, Stornoway’s medium and long-term goals, and
strategies to achieve those objectives and goals, as well as
statements with respect to Stornoway’s beliefs, plans, objectives,
expectations, anticipations, estimates and intentions. Although
management considers these assumptions to be reasonable based on
information currently available to it, they may prove to be
incorrect.
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
Reserves, Mineral Resources and exploration targets; (ii) the
amount of future production over any period; (iii) net present
value and internal rates of return of the mining operation;
(iv) assumptions relating to recovered grade, size
distribution and quality of diamonds, average ore recovery,
internal dilution, mining dilution and other mining parameters set
out in the 2016 Technical Report; (v) assumptions relating to
gross revenues, operating cash flow and other revenue metrics set
out in the 2016 Technical Report; (vi) mine expansion
potential and expected mine life; (vii) expected time frames
for completion of permitting and regulatory approvals related
to construction activities at the Renard Diamond Project;
(viii) the expected time frames for the completion of the
open pit and underground mine at the Renard Diamond Project; (ix)
the expected time frames for the completion of construction,
ramp-up, achievement of commercial production and achievement of
plant nameplate capacity at the Renard Diamond Project and the
financial obligations or costs incurred by Stornoway in connection
with such mine development; (x) future exploration plans;
(xi) future market prices for rough diamonds; (xii) the
economic benefits of using liquefied natural gas rather than diesel
for power generation; (xiii) sources of and anticipated
financing requirements; (xiv) the effectiveness, funding or
availability, as the case may require, of the Senior Secured Loan,
the COF and the Equipment Facility and the use of proceeds
therefrom; (xv) the Corporation’s ability to meet its Subject
Diamonds Interest delivery obligations under the Purchase and Sale
Agreement; (xvi) the impact of the Financing Transactions on
the Corporation’s operations, infrastructure, opportunities,
financial condition, access to capital and overall strategy; (xvii)
the foreign exchange rate between the US dollar and the Canadian
dollar; and (xviii) the availability of excess funding for the
construction and operation of the Renard Diamond Project. 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”, “schedule” 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 by Stornoway or its consultants 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 prospects and strategies and the environment in
which Stornoway will operate in the future, including the price of
diamonds, anticipated costs and Stornoway’s ability to achieve its
goals, anticipated financial performance, regulatory developments,
development plans, exploration, development and mining activities
and commitments, and the foreign exchange rate between the US and
Canadian dollars. Although management considers its assumptions on
such matters to be reasonable based on information currently
available to it, they may prove to be incorrect. Certain important
assumptions by Stornoway or its consultants in making
forward-looking statements include, but are not limited to:
(i) required capital investment and estimated workforce
requirements; (ii) estimates of net present value and internal
rates of return; (iii) receipt of regulatory approvals on
acceptable terms within commonly experienced time frames;
(iv) anticipated timelines for completion of construction,
ramp-up, achievement of commercial production and achievement of
plant nameplate capacity at the Renard Diamond Project, as well as
continuous development of an open pit and underground mine at the
Renard Diamond Project (v) anticipated geological formations;
(vi) market prices for rough diamonds and the potential impact
on the Renard Diamond Project; (vii) the satisfaction or waiver of
all conditions under each of the Senior Secured Loan, the COF and
the Equipment Facility to allow the Corporation to draw on the
funding available under those financing elements for the completion
of the development and construction of the Renard Diamond Project;
(viii) Stornoway’s interpretation of the geological drill data
collected and its potential impact on stated Mineral Resources and
mine life; (ix) future exploration plans and objectives;
(x) the Corporation’s ability to meet its Subject Diamonds
Interest delivery obligations under the Purchase and Sale
Agreement; and (xi) the continued strength of the US dollar against
the Canadian dollar. Additional risks are described in Stornoway’s
most recently filed Annual Information Form, annual and interim
MD&A, and other disclosure documents available under the
Corporation’s profile at:
www.sedar.com
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,
size distribution and quality of diamonds, 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 uncertainty as to whether
further exploration of exploration targets will result in the
targets being delineated as Mineral Resources;
(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, operating and sustaining capital
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) uncertainty
of 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; (xii) risks
relating to the receipt of regulatory approvals or the
implementation of the existing Impact and Benefits Agreement with
aboriginal communities; (xiii) the effects of competition in
the markets in which Stornoway operates; (xiv) operational and
infrastructure risks; (xv) execution risk relating to the
development of an operating mine at the Renard Diamond Project;
(xvi) failure to satisfy the conditions to the funding or
availability, as the case may require, of the Senior Secured Loan,
the COF and the Equipment Facility; (xvii) changes in the
terms of the Forward Sale of Diamonds, the Senior Secured Loan, the
COF or the Equipment Facility; (xviii) the funds of the Senior
Secured Loan, the COF or the Equipment Facility not being available
to the Corporation; (xix) the Corporation being unable to meet
its Subject Diamonds Interest delivery obligations under the
Purchase and Sale Agreement; (xx) future sales or issuances of
Common Shares lowering the Common Share price and diluting the
interest of existing shareholders; and (xxi) the additional
risk factors described herein and in Stornoway’s annual and interim
MD&A’s, most recently filed AIF, its other disclosure documents
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 and new,
unforeseeable risks may arise from time to time.