Stornoway Diamond Corporation
(TSX:SWY)
(the “Corporation” or “Stornoway”)
is pleased to announce the results of an updated Mine Plan and
Mineral Reserve estimate for the Renard Diamond Project.
Highlights
(All quoted figures in CAD$ unless stated
otherwise)
- A 25% increase in the Probable Mineral Reserves from 17.9 to
22.3 million carats (representing 33.4 million tonnes at an average
grade of 67 carats per hundred tonnes, or “cpht”);
- An increase in the Mineral Reserve based mine life from 11
years to 14 years;
- First ore processing forecast by the end of September 2016 and
commercial production by December 31, 2016, a five month
improvement on the starting project execution schedule;
- Average diamond production in years 1 to 10 of 1.8 million
carats per year compared to 1.6 million carats per year previously,
with schedules of 1.9 million carats produced and 1.4 million
carats sold to the end of 2017, increases of 24% and 57%
respectively compared to the previous plan;
- A scheduled increase in processing rate from 2.2 million tonnes
per annum (6,000 tonnes per day) to 2.5 million tonnes per annum
(7,000 tonnes per day) starting in 2018;
- Initial capital cost estimate of $775 million within a life of
mine capital cost estimate of $1,045 million;
- Life of mine average operating costs of $56.20/tonne, or
$84.37/carat;
- Net revenue of $4,555 million yielding a real terms cash
operating margin of $2,677 million or 59%, or $120 per carat, after
allowance for royalties, taxes and the Renard diamond streaming
agreement; and
- Unlevered, stream affected, after tax NPV (7%) of $974 million
as of January 1st 2016 calculated in real terms. NPV is
calculated on Probable Mineral Reserves only, excluding any
resource upside, utilizing “mark-to-market” diamond price estimates
and before consideration for potential large diamond recovery.
Matt
Manson, President and CEO, commented “With six months remaining
before the scheduled commencement of first diamond production at
Renard, we are updating the project’s mine plan to incorporate
updates to the Mineral Resources completed in 2013 and 2015, and to
capture opportunities that have developed in schedule, operating
profile and processing capacity. The new plan shows incremental
improvements in the project’s cost to complete, average carat
production, mine life and Mineral Reserves. All-important early
carat production to the end of 2017 shows a substantial increase
compared to the previous estimate. A reduction in the average grade
of the new Mineral Reserves reflects the addition of new lower
grade material within the open pit and underground mining envelopes
rather than any material reduction in the grades of the ore units
comprising the previous reserve statement. The project continues to
demonstrate a robust valuation and a cash operating margin of 59%
after all taxes, royalties and the Renard diamond stream, despite
the substantial recent reduction in rough diamond prices. We look
forward to building on our track record to date of solid project
execution as we bring Renard into production later this year.”
Support materials that illustrate the updated
Updated Renard Mine Plan and Mineral Reserve Estimate can be found
on Stornoway’s website at www.stornowaydiamonds.com. A
Technical Report under National Instrument (“NI”) 43-101 –
Standards for Disclosure for Mineral Projects (“NI 43-101”)
entitled “Updated Renard Mine Plan and Mineral Reserve Estimate”
has been filed on SEDAR concurrently with this press release.
March 2016 Mineral Reserve
Estimate
Probable Mineral Reserves, as defined in
National Instrument 43-101 – Standards of Disclosure for Mineral
Projects (“NI 43-101”), are estimated at 22.3 million carats (33.4
million tonnes at an average grade of 67 cpht) compared to 17.9
million carats previously (23.8 million tonnes at an average grade
of 75 cpht). The Mineral Reserves are derived from 30.2 million
carats of Indicated Mineral Resources (42.6 million tonnes at 71
cpht) as defined in the September 2015 Mineral Resource estimate.
The new Mineral Reserves are based on a mine call factor of 1 with
respect to the processing of the Mineral Resources, and incorporate
revised estimates of ore recovery, mining dilution and internal
dilution from the updated mine plan.
Table 1: Renard NI 43-101 Probable
Mineral Reserves
(Changes from January 2013 Probable Mineral
Reserve estimate shown in italics)
Probable Mineral Reserves(1,2,4) |
|
|
Carats(millions) |
Tonnes (millions) |
Grade (cpht)(3) |
MiningDilution(5) |
InternalDilution(6) |
MiningRecovery |
Open Pit |
Renard 2, All
Units |
|
1.85 |
|
49 |
% |
3.54 |
|
170 |
% |
|
52.2 |
|
-45 |
% |
|
|
2.9 |
% |
|
0.0 |
% |
|
98 |
% |
Renard 2 |
|
1.38 |
|
11 |
% |
1.49 |
|
14 |
% |
|
92.7 |
|
-2 |
% |
|
|
1.7 |
% |
|
0.0 |
% |
|
98 |
% |
CRB-2A |
|
0.15 |
n/a |
0.47 |
n/a |
|
31.4 |
n/a |
|
|
1.8 |
% |
|
0.0 |
% |
|
98 |
% |
CRB |
|
0.32 |
n/a |
1.58 |
n/a |
|
20.2 |
n/a |
|
|
4.3 |
% |
|
0.0 |
% |
|
98 |
% |
Renard
3 |
|
0.73 |
|
9 |
% |
0.79 |
|
10 |
% |
|
92.3 |
|
-1 |
% |
|
|
11.4 |
% |
|
0.0 |
% |
|
98 |
% |
Renard
4 |
|
-- |
n/a |
-- |
n/a |
|
-- |
n/a |
|
|
|
-- |
|
|
-- |
|
|
-- |
Renard
65 |
|
1.38 |
n/a |
4.58 |
n/a |
|
30.1 |
n/a |
|
|
3.5 |
% |
|
0.0 |
% |
|
98 |
% |
OP ProbableMineral Reserves |
|
3.96 |
|
107 |
% |
8.91 |
|
339 |
% |
|
44.4 |
|
-53 |
% |
|
|
3.9 |
% |
|
0.0 |
% |
|
98 |
% |
Underground |
Renard
2 |
|
15.65 |
|
15 |
% |
19.68 |
|
16 |
% |
|
79.6 |
|
-1 |
% |
|
|
20.2 |
% |
|
6.4 |
% |
|
82 |
% |
Renard
3 |
|
0.86 |
|
2 |
% |
1.22 |
|
22 |
% |
|
70.2 |
|
-16 |
% |
|
|
14.0 |
% |
|
29.8 |
% |
|
85 |
% |
Renard
4 |
|
1.67 |
|
6 |
% |
3.46 |
|
-7 |
% |
|
48.3 |
|
15 |
% |
|
|
14.0 |
% |
|
2.2 |
% |
|
78 |
% |
Renard
65 |
|
-- |
n/a |
-- |
n/a |
|
-- |
n/a |
|
|
|
-- |
|
|
-- |
|
|
-- |
UG ProbableMineral Reserves |
|
18.18 |
|
13.4 |
% |
24.36 |
|
12.0 |
% |
|
74.6 |
|
1 |
% |
|
|
18.9 |
% |
|
6.7 |
% |
|
82 |
% |
Stockpile(7) |
Stockpile |
|
0.11 |
n/a |
0.15 |
n/a |
|
73.9 |
n/a |
|
|
|
-- |
|
|
-- |
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ProbableMineral Reserves |
|
22.26 |
|
24.0 |
% |
33.42 |
|
40.5 |
% |
|
66.6 |
|
-11.3 |
% |
|
|
14.8 |
% |
|
4.9 |
% |
|
86 |
% |
Notes1 Reserve categories
follow the CIM Standards for Mineral Resources and Mineral
Reserves.2 Totals may not add due to rounding.3 Carats per hundred
tonnes. Estimated at a +1 DTC sieve size cut-off.4 Diamond
valuation data utilized for the test of prospects of reasonable
economic extraction are derived from a diamond valuation exercise
undertaken in March 2014 (see Stornoway Annual Information Form
dated March 2016).5Represents the proportion of waste rock expected
to be extracted during mining. Mining dilution is assumed to have
zero grade.6Represents planned dilution of waste rock through stope
design in the underground mine. 7Represents mine and stockpiled ore
as of December 31, 2015.
Open pit Mineral Reserves have increased 339% in
tonnage terms (to 8.91 million tonnes) and 107% in carat terms (to
3.96 million carats), with a commensurate 53% reduction in average
grade to 44 cpht. This is principally attributable to the addition
of 4.58 million tonnes of Renard 65 ore at 30 cpht and over 2
million tonnes of Renard 2 “CRB” and “CRB-2a” ore at 20 and 31
cpht. Higher grade Renard 2 and Renard 3 ore has also increased in
tonnage terms by 14% and 10% respectively (to 1.49 and 0.79 million
tonnes) at 92.7 and 92.3 cpht respectively, reflecting the
deepening of the Renard 2-Renard 3 open pit.
The Renard Project includes additional Inferred
Mineral Resources of 13.4 million carats (24.5 million tonnes at 54
cpht), and 33.0 to 71.1 million carats of non-resource exploration
upside (76.2 to 113.2 million tonnes at grades ranging from 25 to
168 cpht). All kimberlites remain open at depth. Readers are
cautioned that the potential quantity and grade of any such
exploration target 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.
March 2016 Updated Mine
Plan
Compared to the January 2013 Renard Optimization
Study, the March 2016 Updated Mine Plan incorporates changes to
Renard Mineral Resource Estimate completed in 2013 and 2015, as
well as a re-baselined cost and schedule to complete the project, a
modified mine design for the Renard 2-Renard 3 open pit, a
deepening of the Renard 2 underground mine, expanded processing
starting in 2018, and updates to diamond price assumptions,
exchange rates and consumables pricing.
Results and Key Assumptions
Table 2: Results and Key
Assumptions |
January 2013OptimizationStudy,
beforeStream1 |
March 2016Mine PlanUpdate,
afterStream1,2 |
|
|
MiningParameters |
Reserve Carats (M) |
|
17.9 |
|
|
22.3 |
|
|
Tonnes Processed (M) |
|
23.8 |
|
|
33.4 |
|
|
Recovered Grade (cpht) |
|
75 |
|
|
67 |
|
|
Average Ore Recovery (%) |
|
83 |
% |
|
86 |
% |
|
Average Mining Dilution (%) |
|
18 |
% |
|
15 |
% |
|
Processing Rate (Mtonnes/annum) |
|
2.2 |
|
2.2 to 2.5 |
|
Mine Life (years) |
|
11 |
|
|
14 |
|
|
CostParameters |
Initial Cap-ex (C$M)3 |
$793 ($811)7 |
$ |
775 |
|
|
LOM Cap-ex (C$M)3 |
$ |
1,013 |
|
$ |
1,045 |
|
|
Diesel Price (C$/litre) |
$ |
1.14 |
|
$ |
1.00 |
|
|
LOM Op-ex (C$/tonne)4 |
$ |
57.63 |
|
$ |
56.20 |
|
|
LOM Op-ex (C$/carat)4 |
$ |
76.63 |
|
$ |
84.37 |
|
|
RevenueParameters4 |
Gross Revenue (C$M) |
$ |
4,268 |
|
$ |
5,565 |
|
|
Net Revenue (C$M) |
$ |
4,069 |
|
$ |
4,555 |
|
|
Marketing Costs |
|
2.70 |
% |
|
1.80 |
% |
|
DIAQUEM Royalty |
|
2.00 |
% |
|
2.00 |
% |
|
Cash Operating Margin (C$M) |
$ |
2,693 |
|
$ |
2,677 |
|
|
% Operating Margin |
|
67 |
% |
|
59 |
% |
|
Cash Operating Margin (C$/carat) |
$ |
151 |
|
$ |
120 |
|
|
Income Tax and Mining Duties (C$M) |
$ |
625 |
|
$ |
698 |
|
|
After Tax Net Cash Flow (C$M) |
$ |
1,084 |
|
$ |
1,105 |
|
|
DiamondPriceParameters |
Average Price of Mineral Reserve (US$/carat)5 |
$ |
180 |
|
$ |
155 |
|
|
Diamond Price Escalation |
|
2.50 |
% |
|
2.50 |
% |
|
Exchange rate |
1C$=1US$ |
1.35C$=1US$ |
|
ScheduleParameters |
Effective Date for NPV Calculation |
Jan. 1 2013 |
Jan. 1 2016 |
|
Plant Commissioning Commences |
Dec. 1 2015 |
Oct. 1 2016 |
|
Commercial Production Declared |
June 1 2016 |
Dec. 31 2016 |
|
ValuationParameters6 |
Pre-Tax NPV7% (C$M) |
$ |
683 |
|
$ |
1,349 |
|
|
After-Tax NPV7% (C$M) |
$ |
391 |
|
$ |
974 |
|
|
Notes1 January 2013
Optimization expressed in October 2012 terms. March 2016 Updated
Mine Plan expressed in December 2015 terms.2 March 2016 study shown
net of the July 2014 Renard Streaming Agreement, Diaquem royalty
and marketing costs in terms of net revenue, cash operating margin
and NPV. For further information on the Renard Streaming Agreement
see the Stornoway Annual Information Form dated March 30, 2016.3
Expressed in nominal terms, and excluding Renard Mine Road capital
of $69.4 million.4 Expressed in real terms. 5 Represents the
average price per carat of the Mineral Reserve before escalation,
comprising Renards 2,3 & 4 expressed in May 2011 terms in the
case of the January 2013 Optimization Study, and Renards 2, 3, 4
& 65 expressed in March 2016 terms in the case of the March
2016 Mine Plan Update.6 Net-present valuations are presented net of
all royalties, costs incurred under the Mecheshoo Agreement and, in
the case of the March 2016 Updated Mine Plan, the effective revenue
impairment associated with the Renard diamond streaming agreement,
and on an un-levered basis.7 Initial Capital Cost in the January
2013 Optimization Study was estimated at $793 million based on $752
million of cost and contingency plus $41 million escalation
allowance. In April 2014, prior to the commencement of
construction, Initial Capital was estimated at $811 million based
on $754 million of cost and contingency plus $57 million of
escalation. The estimate of $775 million of Initial Capital in the
March 2016 Updated Mine Plan includes all costs, contingencies and
escalation allowances and represents a reduction of $36 million on
the April 2014 estimate.
Mining and Processing
Mining operations in the Renard 2-Renard 3 open
pit, which commenced in 2015, are expected to provide the bulk of
ore production until 2018 when production from the underground mine
is expected to commence. The Renard 2-Renard 3 pit will be
developed with a stripping ratio of 2.54 to a depth of 130 meters,
a 17 meter deepening compared to the previous pit design.
Underground ore will be sourced from the Renard
2 kimberlite exclusively between 2018 and 2027, and Renard 3 and
Renard 4 between 2027 and 2029. A blast-hole shrink stoppage method
will be used with panel retreat, based on production levels at 290,
470, 590 and 710 meters depth. Long hole stoping will be utilized
at Renard 3 with one production level at 250 meters depth based on
the current limit of Indicated Mineral Resources. Blasthole
stoppage beneath a crown pillar will be employed at Renard 4.
Ore processing is scheduled to begin before the
end of September 2016, with commercial production (defined as 60%
of nameplate capacity) scheduled to be achieved by December
31, 2016. Nameplate capacity is defined as 6,000 tonnes per
day or 2.16 million tonnes per annum based on 78% plant
utilization. 100% of nameplate capacity is scheduled to be achieved
by June 2017. An expansion to 7,000 tonnes per day, or 2.52 million
tonnes per annum, is scheduled for 2018 based on achieving an 83.5%
utilization and an additional 2% throughput increase. The
additional ore feed will be derived from the Renard 65 kimberlite,
where open pit mining operations for sourcing construction
aggregate have been underway since 2014. Renard 65 will provide
supplementary ore feed from 2018 to 2029 from an open pit developed
to a depth of 155 meters with a stripping ratio of 2.11. No
underground mining is currently contemplated at Renard 65.
Processing of low grade stockpiles derived from the mining of CRB
and CRB2a in the Renard 2-Renard 3 open pit will be available to
extend the mine life to 2030, which would be expected to be
deferred upon the addition of further Mineral Resources to the mine
plan.
Capital and Operating Costs
The re-baselined cost to complete estimate is
$775 million, including $36.6 million of uncommitted contingencies
and escalation allowance as of December 31, 2015, at which time
total incurred costs and commitments stood at $548.5 million and
construction progress stood at 63.3%. Total life of mine capital,
including initial capital, deferred and sustaining capital, is
$1,045 million. This estimate includes the cost of underground mine
development in 2017 and 2018, and the cost of major overhauls in
the power plant and mobile mining fleet in 2024 and 2025 to allow
mine life extension past 2029.
Life of mine operating cost is estimated at
$56.20/tonne, or $84.37/carat, in real terms. This is forecast to
yield an after-tax, after-stream cash operating margin of 59%, or
$120 per carat, given the project’s diamond revenue assumptions,
marketing costs and tax schedule.
Diamond Pricing and Foreign Exchange
Assumptions
Revenue forecasts in the March 2016 Updated Mine
Plan utilize “spot” diamond valuation estimates for each ore body
arrived at by applying a uniform market price adjustment to base
case diamond price models determined by WWW International Diamond
Consultants (“WWW”) for the Renard Project in March 2014. A 19%
decrease in world average rough diamond prices between March 2014
and March 2016 is indicated by roughprices.com, an independent
agency, based on a market assortments maintained by WWW. This
results in an average diamond price estimate for the March 2016
Probable Mineral Reserves of US$155/carat in March 2016 terms,
compared to US$190/carat in March 2014 terms. For comparison, the
average diamond price of the January 2013 Probable Mineral Reserves
in the January 2013 Optimization Study was US$180/carat in May 2011
terms.
Diamond prices are assumed to increase by 2.5%
per annum in real terms from March 2016 until the end of 2028. A
CAD/USD exchange rate of $1.35 has been applied to US dollar
denominated diamond sales and consumable purchases. The
depreciation of the Canadian dollar since 2014 has served to offset
the decline in rough diamond prices over this period for revenue
forecasting in Canadian dollar terms.
Table 3: Diamond Pricing Assumptions
January 2013 to March 2016
Body |
March 2014 Diamond
PriceModel1
(US$/carat) |
Estimated Market PriceAdjustment March 2014to March
2016 |
|
Adjusted March 2016:“Spot” Price
Models2(US$/carat) |
Renard 2 |
$197(High $222, Min $178) |
-19 |
% |
$160(High $181, Min $145) |
Renard 3 |
$157(High $192, Min $146) |
-19 |
% |
$128(High $156, Min $119) |
Renard 4 |
$106
($155)3(High $174, Min
$100) |
-19 |
% |
$86
($126)3(High $141, Min
$81) |
Renard 65 |
$187(High $190, Min $160) |
-19 |
% |
$152(High $155, Min $130) |
Notes1 As determined WWW
International Diamond Consultants Ltd. at a +1 DTC sieve size cut
off.2As determined by Stornoway by applying the world average rough
price index of roughprices.com to the March 2014 WWW price models,
at a +1 DTC sieve size cut-off. 3Should the Renard 4 diamond
population prove to have a size distribution equal to the average
of Renard 2 and 3, WWW have estimated that a base case diamond
price model of US$155 per carat would apply based on March 2014
pricing, equivalent to US$126 per carat on a market price adjusted
basis to March 2016.
Production Schedule and FY2016 to FY2017
Guidance
Commercial diamond production between 2017 and
2026 is expected to average 1.8 million carats per annum compared
to 1.6 million carats per annum in the previous
plan.
Diamond production is forecast at 0.22 million
carats in FY2016 (comprising 0.23 million tonnes at 97 cpht from
Renard 2) and 1.71 million carats in FY2017 (comprising 1.57
million tonnes at 86 cpht in Renard 2 and 0.43 million tonnes at 84
cpht from Renard 3). This is a 39% increase in the forecast
of carats produced to the end of December 2017 compared to the
previous plan. Based on a 15 week schedule from production to
sales, Stornoway currently forecasts 1.36 million carats of diamond
sales in FY2017, a 57% increase compared to the previous plan.
Qualified Persons for the March 2016 Updated Renard Mine
Plan and Mineral Reserve Estimate
M. Patrick Godin, P.Eng. (Québec), COO of Stornoway Diamond
Corporation, is the Qualified Person responsible for mine and
infrastructure design, the operating and capital cost estimate,
financial analysis and risk management.
Mr. Robin Hopkins, P.Geol. (NT/NU), VP Exploration of Stornoway
Diamond Corporation, is the Qualified Person responsible for the
2015 Mineral Resource estimate and the diamond pricing
assumptions.
Mr. Paul Bedell, P.Eng. of Golder Associates Ltd. is the
independent Qualified Person responsible for geotechnical, water
management and processed kimberlite containment facility
design.
All of these Qualified Persons have reviewed and approved the
contents of this press release for which they are responsible.
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 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. First ore is scheduled to be delivered to the plant at
the end of September 2016, with commercial production scheduled for
December 31, 2016.
In January 2013, Stornoway released the results
of an Optimized Feasibility Study at Renard, with an Updated Mine
Plan and Mineral Reserve Estimate in March 2016. These studies
highlight 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 February 28, 2013, in respect of the January 2013
Optimization Study, 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, 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 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
(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-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, average ore
recovery, internal dilution, mining dilution and other mining
parameters set out in the Updated Renard Diamond Project Mine Plan
and Mineral Reserve Estimate, Québec, Canada, NI 43-101 Technical
Report (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 approval
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 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; and (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 approval 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
depends, 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 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 delivery obligations under the Steaming 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,
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 approval 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
issuance 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 unforeseeable, new
risks may arise from time to time.