TSX: DIAM
SASKATOON, May 2, 2019 /CNW/ - Star Diamond
Corporation (the "Company") reports that the unaudited
results of its operations for the quarter ended March 31, 2019 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 a technical update on proposed sampling program by
Rio Tinto Exploration Canada ("RTEC") on the Company's 100% held
Star and Orion South Kimberlites (the "Star - Orion South Diamond
Project", or "Project");
- Announced results of a study into the abundance of Type IIa
diamonds in the diamond parcels recovered from the Star and Orion
South Kimberlites;
- Working capital of $2.2 million
at March 31, 2019;
- Issued and outstanding shares of 393.3 million at March 31, 2019
Overview
Star Diamond Corporation is a Canadian
natural resource company focused on exploring and developing
Saskatchewan's diamond
resources. As a result of the 2017 mineral property
consolidation and earn-in agreement with Rio Tinto Exploration
Canada Inc. ("RTEC"), a wholly-owned subsidiary of Rio Tinto (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").
During 2018, the Company announced the positive results of an
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). In addition, during
2018, the Saskatchewan Ministry of Environment ("Ministry")
approved the Project (See News Release dated October 25, 2018). The Ministry conducted a
thorough environmental assessment for the Project, including a
detailed environmental impact statement, and carried out in-depth
consultation prior to the decision to approve the Project. This
included fulfilling the Province's duty to consult with local First
Nations and Métis communities. The Canadian Environmental
Assessment Agency previously announced a positive Environmental
Assessment Decision for the proposed Project by the federal
Environment Minister (See News Release dated December 3, 2014).
Activities relating to the Star - Orion South Diamond
Project
The Company recently announced that RTEC has
completed the sonic and core drilling on the Star and Orion South
Kimberlites (see News Releases dated April
15, 2019 and December 11,
2017). The sonic drilling provides a detailed log of the
overburden stratigraphy above the kimberlite, while the core holes
are being drilled to generate detailed logs of the kimberlite
geology at each locality in preparation for RTEC's bulk sampling
with the Trench Cutter Sampling Rig. RTEC aims to use a Bauer BC 50
Cutter mounted on a Bauer MC 128 Duty-cycle Crane ("Trench Cutter
Sampling Rig") to drill and sample to depths of up to 250 metres
below surface (See News Release dated April
12, 2018). 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.
The Company recently announced the results of a study into the
abundance of Type IIa diamonds in the diamond parcels recovered
from the Star and Orion South Kimberlites (see News Release dated
March 4, 2019). This study confirmed
that unusually high proportions of Type IIa diamonds are present in
both the Star (26.5 percent) and the Orion South (12.5 percent)
kimberlites. The diamonds analysed in this study represent a
spectrum of diamond sizes from +11 DTC (+0.32 carats) through all
of the large stones, up to diamonds of nearly 50 carats. Type IIa
diamonds are very rare and account for approximately less than two
percent of all natural rough diamonds mined from kimberlites. Type
IIa diamonds usually have anhedral crystal shape and exhibit a
range of elongated, distorted or irregular morphologies. Most
importantly, many high-value, top colour, large specials (greater
than 10.8 carats) are Type IIa diamonds, which include all ten of
the largest known rough diamonds recovered worldwide, from the 726
carat Jonker to the 3,106 carat Cullinan.
Results
For the quarter ended March 31, 2019, the Company recorded net loss of
$0.9 million or $0.00 per share (basic and fully diluted)
compared to a net loss of $0.7
million or $0.00 per share for
the same period in 2018. 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,
2019
|
As
at
December
31,
2018
|
Current
assets
|
$
|
2.4 M
|
$
|
2.9 M
|
Exploration and
evaluation, capital and other assets
|
67.7 M
|
67.5 M
|
Current
liabilities
|
0.2 M
|
0.3 M
|
Non-current
liabilities
|
1.6 M
|
1.3 M
|
Shareholders'
equity
|
68.3 M
|
68.8 M
|
|
|
|
|
|
|
Consolidated
Statements of Income (Loss)
|
Quarter
Ended
March 31,
2019
|
Quarter Ended
March 31,
2018
|
Interest and other
income
|
$
|
0.0 M
|
$
|
0.0 M
|
Expenses
|
0.9 M
|
0.8 M
|
Flow-through premium
recognized in income
|
0.0 M
|
0.1 M
|
Net loss for the
period
|
(0.9)
M
|
(0.7)
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,
2019
|
Quarter Ended
March 31,
2018
|
Cash flows from
operating activities
|
$
|
(0.8) M
|
$
|
(1.0) M
|
Cash flows from
investing activities
|
0.0
M
|
0.0
M
|
Cash flows from
financing activities
|
0.2
M
|
0.0
M
|
Net decrease in
cash
|
(0.6) M
|
(1.0) M
|
Cash – beginning of
period
|
2.8
M
|
4.0
M
|
Cash – end of
period
|
2.2
M
|
3.0
M
|
Outlook
The provincial environmental approval of the
Star - Orion South Diamond Project received in 2018, alongside
the previous positive federal decision, marked a major milestone
for the Project. In addition, the positive results of the 2018 PEA
shows that the Project can be economically developed and operated
while providing direct employment for hundreds of people throughout
the construction phase and hundreds of people continuously over its
estimated 38 year mine life.
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 defined the start of 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
and Fort à la Corne kimberlites. While RTEC's work continues to
focus on the bulk sampling of the Star and Orion South kimberlites,
Brownfields exploration programs by RTEC also aim to investigate
and prioritise the Company's other kimberlite bodies in the Fort
à la Corne diamond district. There are some 60 other
kimberlites within the Fort à la Corne diamond district, on
mineral dispositions held 100 percent by the Company. The Company
is also very pleased to continue to have Newmont Goldcorp
Corporation as a significant shareholder.
As of May 2, 2019, the Company had
approximately $1.9 million in cash
and cash equivalents (excluding $0.6
million in restricted cash). A portion of the Company's cash
and cash equivalents will be used for 2019 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 as defined
by certain securities laws, including the "safe harbour" provisions
of Canadian securities legislation and the United States Private
Securities Litigation Reform Act of 1995. Forward-looking
information is often, but not always, identified by the use of
words such as "anticipate", "believe", "expect", "plan", "intend",
"forecast", "target", "project", "guidance", "may", "will",
"should", "could", "estimate", "predict" or similar words
suggesting future outcomes or language suggesting an outlook.
In particular, statements regarding the Company's future
operations, future exploration and development activities or other
development plans constitute forward-looking statements. By their
nature, statements referring to mineral reserves, mineral
resources, PEA or TFFE constitute forward-looking statements.
Forward-looking statements contained or implied 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, after-tax payback
period, tonnes of kimberlite to be mined, carats per tonne to be
recovered (grade), diamond prices, project life, life of mine,
capital costs, and 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; statements
with respect to environmental permitting and approvals; the
Company's intention to seek additional financing in the ensuing
years; statements with respect to metallurgical investigations,
assessments and test work; the potential proportion of Type IIa
diamonds in the Star and Orion South kimberlites and the potential
for the recovery of large high quality diamonds; RTEC's and the
Company's objectives for the ensuing year, including the timing for
revision or replacement of the desanding plant, timing for
construction of the bulk sample processing plant and timing for
recommencement of the bulk sampling program; as well as the
Brownfields programs.
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 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 is made herein.
SOURCE Star Diamond Corporation