Stornoway Diamond Corporation (TSX:SWY)
(the “Corporation” or “Stornoway”) would like to
remind holders of its common share purchase warrants, issued on
July 8, 2014 and exercisable at C$0.90 per share (the “Warrants”)
(TSX:SWY.WT.A), of their expiry at 5:00 pm (Eastern time) on July
8, 2016.
Pursuant to the terms of the July 8, 2014
financing transactions with Orion Mine Finance, Diaquem Inc. and
Ressources Québec (wholly-owned subsidiaries of Investissement
Québec), and the Caisse de dépôt et placement du Québec, Stornoway
intends to use any proceeds from the exercise of the Warrants to
complete the construction of the Renard Diamond Project ahead of
drawing down funds from its committed C$100 million Senior Loan
Facility with Diaquem Inc. The Diaquem Senior Loan facility bears
an initial interest rate of prime plus 4.75% with a ten year
term.
Matt Manson, President and CEO of Stornoway
commented, “The Renard Project continues ahead of schedule and
within budget. Formal commissioning of the process plant has
commenced and first diamond production is expected shortly. Prior
to the exercise of the Warrants, we have been forecasting excess
financing capacity available to complete the project, comprising
surplus cash and available cost-overrun facilities, of C$116
million. This calculation assumes the full drawdown of the Diaquem
Senior Loan. Any and all proceeds from warrant exercise will serve
to increase this financing capacity further, and will allow us to
reduce our senior indebtedness proportionately, greatly increasing
our financial flexibility as cash flow begins.”
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy, nor shall there be any sale of any
securities referred to in this press release in any jurisdiction in
which such an offer, solicitation or sale would be unlawful prior
to the registration or qualification under the securities laws of
any such jurisdiction. The securities being offered have not been
approved or disapproved by any regulatory authority, nor has any
such authority passed upon the accuracy or adequacy of the final
short form prospectus. The securities referred to in this press
release have not been, nor will they be registered under the U.S.
Securities Act of 1933, as amended, or applicable U.S. state
securities laws.
About the Renard Diamond ProjectThe 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 (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, 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.