Stornoway Diamond Corporation (TSX:SWY)
the "Corporation" or "Stornoway") is pleased to
announce that it has successfully completed the drawdown of the
second US$80m tranche of diamond stream funding from Orion Mine
Finance ("Orion"), the Caisse de dépôt et placement du Québec
("CDPQ") and Blackstone Tactical Opportunities ("Blackstone").
Under Stornoway's C$946 million1 project financing transaction,
which closed on July 8th, 2014, a total of US$250 million in
upfront stream payments were committed by Orion and the CDPQ to
fund in three tranches, scheduled for March 2015, September 2015
and March 2016. On April 28th, 2015, Blackstone announced that it
had acquired a minority position in the Renard Diamond Stream from
Orion by way of a secondary market transaction. Drawdown of each
tranche is conditional upon the satisfaction of certain terms and
conditions, including the independent certification of construction
progress at the Renard Diamond Project and its cost to complete
being within plan. With these conditions having been met, the
second stream tranche has been funded on schedule.
As of July 31st, 2015, Stornoway's cash, cash equivalents and
short-term investments stood at C$270 million2. The US$80 million
of funds received from the second tranche of stream payments were
converted to Canadian dollars upon deposit at an exchange rate of
$1.336, representing a cash gain to the Corporation of C$18.9
million compared to the July 2014 funding plan, which assumed a
C$:US$ exchange rate of $1.10.
Stornoway's current cash resources are sufficient to cover all
planned mine development expenses, financing and corporate costs
into calendar 2016. Following funding of the third and final
tranche of stream payments in March 2016, Stornoway expects to draw
on a C$100 million senior secured loan in late 2016 to complete
mine development at Renard. As of August 30th, 2015, overall
construction progress at the project stood at 41.0% compared to a
plan of 37.1%, with a forecast cost to complete within the capital
budget of C$811 million (including contingencies and escalation
allowances).
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. On July 8th 2014
Stornoway announced the completion of a $946 million1 project
financing transaction to fully fund the project to production, and
construction commenced on July 10th, 2014. First ore is scheduled
to be delivered to the plant in the second half of 2016 with
commercial production scheduled for the 2nd quarter of 2017.
In January 2013, Stornoway released the results of an Optimized
Feasibility Study at Renard which highlighted the potential of the
project to become a significant producer of high value rough
diamonds over a long mine life. Probable Mineral Reserves, as
defined in National Instrument 43-101 – Standards of Disclosure for
Mineral Projects ("NI 43-101"), stand at 17.9 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 27.8
to 59.7 million carats classified as non-resource exploration
upside. Average annual diamond production is forecast at
1.6mcarats/year over the first 11 years of mining, at an average
valuation of US$190/carat based on a March 2014 assessment by WWW
International Diamond Consultants Ltd.
Readers are cautioned that the potential quality and grade of
any target for further exploration is conceptual in nature, there
has been insufficient exploration to define a Mineral Resource and
it is uncertain if further exploration will result in the target
being delineated as a Mineral Resource. All kimberlites remain open
at depth. Readers are referred to the technical report dated
February 28th, 2013 in respect of the January 2013 Optimization
Study, and the press release dated September 24, 2015 in respect of
the September 2015 Mineral Resource estimate, for further details
and assumptions relating to the project. Disclosure of a scientific
or technical nature in this press release was prepared under the
supervision of Patrick Godin, P.Eng. (Québec), Chief Operating
Officer and Robin Hopkins, P.Geol. (NT/NU), Vice President,
Exploration, both "qualified persons" under NI 43-101.
__________
1 For illustrative purposes. Assumes a C$: US$ conversion rate
of $1.10. Actual proceeds of each financing tranche are measured at
the C$: US$ exchange rate in effect the date the funds are
received.
2 Assuming a C$: US$ conversion rate of $1.3047.
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, on track to becoming 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 Board |
STORNOWAY DIAMOND CORPORATION |
/s/ "Matt Manson" |
Matt Manson |
President and Chief Executive |
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 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,
average ore recovery, internal dilution, mining dilution and other
mining parameters set out in the 2011 Feasibility Study or the
Optimization Study; (v) assumptions relating to gross
revenues, operating cash flow and other revenue metrics set out in
the 2011 Feasibility Study or the Optimization Study;
(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, start of mining and commercial production 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 Stream, the Senior Secured Loan, the COFand the
Equipment Facility and the use of proceeds therefrom; (xv) the
Corporation's expectations regarding receipt of the remaining
deposits under the Stream and its ability to meet its delivery
obligations thereunder; (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,
commencement of mine production and development of an open pit and
underground mine at the Renard Diamond Project, which heavily
depend, among other things, on adequate availability and
performance of skilled labour, engineering and construction
personnel, performance of mining and construction equipment and
timely delivery of components; (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 Stream,
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 receipt of
the remaining deposits under the Stream and the Corporation's
ability to meet its delivery obligations thereunder; 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, 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 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) 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) changes
in project parameters as plans continue to be refined;
(xiii) risks relating to the receipt of regulatory approvals
or the implementation of the existing Impact and Benefits Agreement
with aboriginal communities; (xiv) the effects of competition
in the markets in which Stornoway operates; (xv) operational
and infrastructure risks; (xvi) execution risk relating to the
development of an operating mine at the Renard Diamond Project;
(xvii) failure to satisfy the conditions to the effectiveness,
funding or availability, as the case may require, of each of the
Stream, the Senior Secured Loan, the COF and the Equipment
Facility; (xviii) changes in the terms of the Stream, the
Senior Secured Loan, the COF or the Equipment Facility;
(xix) the funds of the Stream, the Senior Secured Loan, the
COF or the Equipment Facility not being available to the
Corporation; (xx) the Corporation being unable to meet its
delivery obligations under the Stream; (xxi) future sales or
issuances of Common Shares lowering the Common Share price and
diluting the interest of existing shareholders; and (xxi) 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, and new, unforeseeable
risks may arise from time to time.
CONTACT: For more information, please contact
Matt Manson (President and CEO) at 416-304-1026 x2101
or Orin Baranowsky (Director, Investor Relations) at 416-304-1026 x2103
or toll free at 1-877-331-2232
Pour plus d'information, veuillez contacter
M. Ghislain Poirier, Vice-president Affaires publiques de Stornoway au
418-254-6550, gpoirier@stornowaydiamonds.com
** Website: www.stornowaydiamonds.com Email: info@stornowaydiamonds.com **