TSX: DIAM
SASKATOON, March 29, 2018 /CNW/ - Star Diamond
Corporation (the "Company") reports that the audited results of
its operations for the year ended December
31, 2017 will be filed today on SEDAR and may be viewed at
www.sedar.com once posted. A summary of key financial and
operating results for the year is as follows:
Highlights
- Announced the consolidation of the Fort à la Corne mineral
properties (including the Star - Orion South Diamond Project),
resulting in the Company holding a 100% interest and Newmont Canada
FN Holdings ULC ("Newmont") increasing its equity interest in the
Company;
- Announced the concurrent Option to Joint Venture Agreement with
Rio Tinto Exploration Canada Inc. ("RTEC") for the Fort à la Corne
mineral properties (including the Star - Orion South Diamond
Project);
- Announced the related closing of a subscription by RTEC for 5.6
million Common Shares and 5.6 million Common Share purchase
warrants for aggregate gross proceeds of $1.0 million;
- Announced core and sonic drilling programs and geotechnical
investigations on the Star Kimberlite
- Working capital of $3.9 million
at December 31, 2017;
- Issued and outstanding shares of 378.3 million at December 31, 2017
Overview
Star Diamond Corporation is a Canadian
natural resource company focused on exploring and developing
Saskatchewan's diamond
resources. In February, 2018, the Company announced that
it had changed its name from Shore Gold Inc. to Star Diamond
Corporation and its trading symbol on the Toronto Stock Exchange to
"DIAM" (see News Release dated February 12,
2018). This new corporate name is in honour of the Star
Kimberlite, located in the Fort à la Corne forest of Saskatchewan, Canada. It was the exploration
and evaluation work completed on the Star Kimberlite, which
demonstrated the significant quality, size and value of the
contained diamond populations. These high value diamonds
facilitated the consolidation and advancement of the Company's Fort
à la Corne area kimberlites, including the Star - Orion South
Diamond Project.
As a result of the 2017 mineral property consolidation and
earn-in agreement (as discussed below), the Company is now in an
enhanced position to advance its 100% held Star - Orion South
Diamond Project ("Project"), which is situated in the Fort à la
Corne kimberlite field in central Saskatchewan. Indicated Mineral Resources for
the Star - Orion South Diamond Project are 55.4 million carats (see
News Release dated November 9, 2015
and Technical Report filed December 21,
2015). In addition to the Indicated Mineral Resource
Estimate, the Star and Orion South Kimberlites include Inferred
Resources containing 11.5 million carats.
Consolidation of the Fort à la Corne mineral properties and
Option to Joint Venture
In June
2017, the Company announced that it had acquired (the
"Newmont Acquisition") from Newmont Canada FN Holdings ULC
("Newmont") all of Newmont's participating interest in the Fort à
la Corne joint venture (the "FalC JV"), resulting in the Company
owning 100% of the of the Fort à la Corne mineral properties
(including the Project), and has concurrently entered into an
Option to Joint Venture Agreement (the "Option Agreement") with Rio
Tinto Exploration Canada Inc. ("RTEC") pursuant to which the
Company has granted RTEC an option to earn up to a 60% interest in
the Fort à la Corne mineral properties (including the Project) on
the terms and conditions contained in the Option Agreement (see
News Release dated June 23, 2017).
Immediately after the closing of the Newmont Acquisition and
issuance of common shares, Newmont held approximately 19.9% of the
Company's common shares issued and outstanding on a non-diluted
basis.
Activities relating to the Star - Orion South Diamond
Project
During the fourth quarter of 2017, the Company and
RTEC announced the completion of an HQ core drilling program,
consisting of ten holes and some 2,409 metres of drilling, on the
Star Kimberlite (See News Releases dated October 12, 2017 and December 11, 2017). In conjunction with this
diamond drill program, geotechnical investigations on the
overburden were also conducted (See News Release dated January 8, 2018). The core drilling was required
to accurately document the internal stratigraphy of the Star
Kimberlite prior to a proposed sampling program by RTEC, which is
expected to commence in 2018. The Sonic drilling investigation of
the overburden above the kimberlite was also an important precursor
to a proposed sampling program. The Sonic drill hole locations were
in close proximity to the core holes, which will act as pilot holes
for the proposed sampling program.
During 2017, the Company also performed geotechnical
investigations, assessments and test work on the Project
kimberlites. The work completed during this period included X-ray
Transmission ("XRT") recovery of diamonds from Star pyroclastic
kimberlite, ore processing data review, diamond parcel
characterization, kimberlite particle size analysis and overburden
removal investigations (See News Release dated March 6, 2017). These programs also investigate
the use of new technology for the efficient excavation of the open
pit and improvements to the flow-sheet of the diamond processing
plant, while simultaneously reducing pre-production capital costs
and the time to initial diamond production.
In January 2017, the Company was
informed by the Saskatchewan
Minister of Environment that additional consultation is required
for the government to meet its legal obligation with respect to
duty to consult and accommodate process (See News Release dated
January 26, 2017). The Ministry has
indicated to the Company that significant progress on meeting its
duty to consult obligations has been made and that once
consultations with potentially impacted First Nation and Métis
communities are completed, all pertinent information will be
reviewed before a decision is made under The Environmental
Assessment Act. The Canadian Environmental Assessment Agency
previously announced an Environmental Assessment Decision for the
proposed Project in which the federal Environment Minister
indicated that the Project "is not likely to cause significant
adverse environmental effects when the mitigation measures
described in the Comprehensive Study Report are taken into account"
(See News Release dated December 3,
2014).
Year to Date Results
For the year ended December 31, 2017, the Company recorded net
income of $40.8 million or
$0.12 per share (basic and fully
diluted) compared to a net loss of $5.4
million or $0.02 per share in
2016. Net income during 2017 was due to the partial reversal of
previously recorded impairments relating to the Company's Fort à la
Corne mineral properties ($44.5
million). As a result of the Newmont Acquisition, the
Company performed an assessment of the estimated recoverable amount
of exploration and evaluation assets. Based on this assessment, the
recoverable amount of exploration and evaluation assets (which
includes the Fort à la Corne mineral properties) was determined to
be $66.3 million, resulting in a
partial reversal of previously recorded impairments. Exploration
and evaluation expenditures incurred during the year ended
December 31, 2017 primarily related
to work relating to geotechnical investigations and test work for
the Project. The loss during the year ended September 30, 2016 was primarily due to ongoing
operating costs and exploration and evaluation expenditures
incurred by the Company exceeding interest income earned on cash
and cash equivalents and short-term investments.
In connection with the Option Agreement, RTEC subscribed for 5.6
million units, for a gross subscription amount of $1.0 million, with each unit consisting of one
common share and one common share purchase warrant. In addition,
options and broker warrants were also exercised during the quarter
ended June 30, 2017 for total cash
proceeds of $0.4 million. In
connection to the Newmont Acquisition, 53.8 million common shares
and 1.1 million common share purchase warrants were issued to
Newmont. The Company also agreed that Newmont will receive a
contingent payment in the aggregate amount of $3.2 million upon a positive decision being made
to develop a mine on the Project. The Company, in its sole
discretion (subject to regulatory approvals), may satisfy the
contingent payment due to Newmont through a cash payment or the
issuance of common shares. The estimated discounted present value
of this contingent consideration at December
31, 2017 was determined to be $0.7
million.
Selected financial highlights include:
Condensed
Consolidated Statements of Financial Position
|
As
at
December
31,
2017
|
As
at
December
31,
2016
|
Current
assets
|
$
4.2 M
|
$
3.2 M
|
Exploration and
evaluation, capital and other assets
|
67.7
M
|
1.5
M
|
Current
liabilities
|
0.4
M
|
0.3
M
|
Premium on
flow-through shares
|
0.2
M
|
0.2
M
|
Non-current
liabilities
|
1.3
M
|
0.6
M
|
Shareholders'
equity
|
70.0
M
|
3.6
M
|
Consolidated
Statements of Income (Loss)
|
Year
Ended
December 31,
2017
|
Year Ended
December 31,
2016
|
Interest and other
income
|
$
0.1 M
|
$
0.0 M
|
Expenses
|
4.0
M
|
(5.9) M
|
Flow-through premium
recognized in income
|
0.2
M
|
0.5
M
|
Reversal of prior
impairments to exploration and evaluation assets
|
44.5
M
|
0.0
M
|
Net and income (loss)
for the period
|
40.8
M
|
(5.4)
M
|
Net income (loss) per
share for the period (basic and diluted)
|
0.12
|
(0.02)
|
Condensed
Consolidated Statements of Cash Flows
|
Year Ended
December 31,
2017
|
Year Ended
December 31,
2016
|
Cash flows from
operating activities
|
$ (3.6)
M
|
$ (4.5)
M
|
Cash flows from
investing activities
|
0.6
M
|
0.1
M
|
Cash flows from
financing activities
|
4.2
M
|
3.3
M
|
Net increase
(decrease) in cash
|
1.2
M
|
(1.1) M
|
Cash – beginning of
period
|
2.8
M
|
3.9
M
|
Cash – end of
period
|
4.0
M
|
2.8
M
|
Outlook
The successful completion of the 2017
consolidation of the Company's Fort à la Corne mineral properties
(including the Star - Orion South Diamond Project) and the
concurrent earn-in arrangement with RTEC sets the stage for a new
phase for the Company. It is the Company's view that Rio Tinto is
one of the few companies in the world with the resources and
expertise to move forward with a project of the magnitude of the
Star - Orion South Diamond Project. The Company is also very
pleased to have acquired the remaining portion of the Project from
Newmont while continuing to have Newmont as a significant
shareholder.
As of March 29, 2018, the Company
had approximately $3.1 million in
cash and cash equivalents and short-term investments (excluding
$0.6 million in restricted cash). A
portion of the Company's cash and cash equivalents and short-term
investments will be used for 2018 programs (including flow-through
commitments) to further assess, evaluate and advance certain
aspects of the Project, as well as for general corporate
matters.
Caution Regarding Forward-looking Statements
This news release contains forward-looking statements within the
meaning of certain securities laws, including the "safe harbour"
provisions of Canadian securities legislation and the United States
Private Securities Litigation Reform Act of 1995. The words "may,"
"could," "should," "would," "suspect," "outlook," "believe,"
"plan," "anticipate," "estimate," "expect," "intend," and words and
expressions of similar import are intended to identify
forward-looking statements, and, in particular, statements
regarding the Company's future operations, future exploration and
development activities or other development plans contain
forward-looking statements. Forward-looking statements in this news
release include, but are not limited to, statements relating to
mineral resources and/or reserves; statements related to the
approval of the development of the Star - Orion South Diamond
Project; statements relating to future development of the Star -
Orion South Diamond Project and associated timelines; the
environmental assessment and permitting process; the Company's
intention to seek additional financing in the ensuing years;
statements with respect to geotechnical investigations, assessments
and test work; the Company's objectives for the ensuing year,
including the Company and RTEC's objectives for the ensuing
year.
These forward-looking statements are based on the Company's
current beliefs as well as assumptions made by and information
currently available to it and involve inherent risks and
uncertainties, both general and specific. Risks exist that
forward-looking statements will not be achieved due to a number of
factors including, but not limited to, developments in world
diamond markets, changes in diamond valuations, risks relating to
fluctuations in the Canadian dollar and other currencies relative
to the US dollar, changes in exploration, development or mining
plans due to exploration results and changing budget priorities of
the Company or its contractual partners, the effects of competition
in the markets in which the Company operates, the impact of changes
in the laws and regulations regulating mining exploration and
development, judicial or regulatory judgments and legal
proceedings, operational and infrastructure risks and the
additional risks described in the Company 's most recently filed
Annual Information Form, annual and interim MD&A, news releases
and technical reports. The Company's anticipation of and
success in managing the foregoing risks could cause actual results
to differ materially from what is anticipated in such
forward-looking statements.
Although management considers the assumptions contained in
forward-looking statements to be reasonable based on information
currently available to it, those assumptions may prove to be
incorrect. When making decisions with respect to the Company,
investors and others should not place undue reliance on these
statements and should carefully consider the foregoing factors and
other uncertainties and potential events. Unless required by
applicable securities law, the Company does not undertake to update
any forward-looking statement that may be made.
SOURCE Star Diamond Corporation