TSX:
DIAM
SASKATOON, May 3, 2018 /CNW/ - Star Diamond
Corporation (the "Company") reports that the unaudited results
of its operations for the quarter ended March 31, 2018 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 independent Preliminary Economic Assessment
("PEA") on the Company's 100% held Star and Orion South Kimberlites
(the "Star - Orion South Diamond Project", or "Project"): 66
million carats of diamonds could be recovered in a surface mine
over a 38-year Project life:
-
- Base Case scenario (Model diamond price): Net Present
Value ("NPV") (7%) of $3.3 billion
and an Internal Rate of Return ("IRR") of 22% before taxes and
royalties, and an after-taxes and royalties NPV (7%) of
$2.0 billion with an IRR of 19% and
payback period of 3.4 years after the commencement of diamond
production;
- Case 1 scenario (High Model diamond price): NPV (7%) of
$5.4 billion for an IRR of 32% before
taxes and royalties
- Announced a technical update on proposed sampling program by
Rio Tinto Exploration Canada ("RTEC");
- Announced core and sonic drilling programs and geotechnical
investigations on the Star Kimberlite;
- Working capital of $3.2 million
at March 31, 2018;
- Issued and outstanding shares of 379.9 million at March 31, 2018
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.
The Company recently announced the positive results of the
independent Preliminary Economic Assessment ("PEA") on the Project.
The PEA estimates that 66 million carats of diamonds could be
recovered in a surface mine over a 38-year Project life, with a Net
Present Value ("NPV") (7%) of $2.0
billion after tax, an Internal Rate of Return ("IRR") of 19%
and an after-tax payback period of 3.4 years after the commencement
of diamond production (see News Release dated April 16, 2018). As a result of the 2017 mineral
property consolidation and concurrent earn-in agreement with RTEC
(see News Release dated June 23,
2017), the Company is now in an enhanced position to advance
its 100% held Star - Orion South Diamond Project ("Project").
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.
RTEC, Bauer Maschinen GmbH ("Bauer") and Nuna Logistics Limited
recently finalized contractural arrangements for the manufacture,
supply and operation of equipment to be used for the next phase of
large diameter, bulk sample drilling on the Star Kimberlite (See
News Release dated April 12, 2018).
RTEC aim to use a Bauer BC 50 Cutter mounted on a Bauer MC 128
Duty-cycle Crane to drill and sample to depths of up to 250 metres
below surface. Each ten metres of advance down hole aims to
excavate some 100 tonnes of kimberlite. Bauer cutter rigs are used
around the world for complex engineering projects. Bauer has
indicated that this will be the first time in the world that this
technology will be used in an active project to reach a depth of
250 meters. Bauer has committed to build and deliver the equipment
to RTEC by mid-2018 with drilling of RTEC's program to commence
this year.
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).
Results
For the quarter ended March 31, 2018,
the Company recorded net loss of $0.7
million or $0.00 per share
(basic and fully diluted) compared to a net loss of $0.9 million or $0.00 per share for the same period in 2017. The
losses during these quarters were due to operating costs and
exploration and evaluation expenditures incurred by the Company
exceeding interest income earned on cash and cash equivalents and
short-term investments.
Selected financial highlights include:
Condensed
Consolidated Statements of Financial Position
|
As
at
March
31,
2018
|
As
at
December
31,
2017
|
Current
assets
|
$ 3.4 M
|
$ 4.2 M
|
Exploration and
evaluation, capital and other assets
|
67.7
M
|
67.7
M
|
Current
liabilities
|
0.2
M
|
0.4
M
|
Premium on
flow-through shares
|
0.2
M
|
0.2
M
|
Non-current
liabilities
|
1.3
M
|
1.3
M
|
Shareholders'
equity
|
69.4
M
|
70.0
M
|
Consolidated
Statements of Income (Loss)
|
Quarter
Ended March
31,
2018
|
Quarter
Ended March
31,
2017
|
Interest and other
income
|
$ 0.0 M
|
$ 0.0 M
|
Expenses
|
0.8
M
|
0.9
M
|
Flow-through premium
recognized in income
|
0.1
M
|
0.0
M
|
Net loss for the
period
|
(0.7) M
|
(0.9) M
|
Net loss per share
for the period (basic and diluted)
|
0.00
|
0.00
|
Condensed
Consolidated Statements of Cash Flows
|
Quarter
Ended March
31,
2018
|
Quarter
Ended
March
31,
2017
|
Cash flows from
operating activities
|
$
(1.0) M
|
$ (0.9) M
|
Cash flows from
investing activities
|
0.0
M
|
0.0
M
|
Cash flows from
financing activities
|
0.0
M
|
0.0
M
|
Net decrease in
cash
|
(1.0) M
|
(0.9) M
|
Cash – beginning of
period
|
4.0
M
|
2.8
M
|
Cash – end of
period
|
3.0
M
|
1.9
M
|
Outlook
The positive results of the PEA show that the Star and Orion South
Kimberlites have the potential to be economically developed as a
world class diamond mine. On the shoulders of more detailed
drilling and the Revised Resource Estimate of 2015, the Company has
taken a fresh look at the Project and has refined the mining and
processing plans with exciting and positive results.
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 May 3, 2018, the Company had
approximately $2.7 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, disclosure regarding the
economics and project parameters presented in the PEA, including,
without limitation, IRR, NPV and other costs and economic
information, carats of diamonds to be recovered, pre-tax payback
period, tonnes of kimberlite to be mined, carats per tonne to be
recovered (grade), diamond prices, life of mine, capital costs,
length of pre-production period; statements related 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
proposed sampling program; 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