TSX: DIAM
SASKATOON,
July 31, 2019 /CNW/ - Star Diamond Corporation
(the "Company") reports that the unaudited results of its
operations for the quarter ended June 30,
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 period is as follows:
Highlights
- Announced updates on bulk 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 Project;
- Working capital of $4.0 million
at June 30, 2019;
- Issued and outstanding shares of 407.7 million at June 30, 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.
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
During the quarter ended June 30,
2019, the Company announced that RTEC completed the Cutter
Soil Mixing ("CSM") panels at the ten proposed trench cutter bulk
sample positions on the Star Kimberlite (See News Release dated
May 23, 2019). Utilizing a Bauer
Maschinen GmbH ("Bauer") BG 30 rig with a cutter soil mixing
attachment, cement is mixed with the top 20 metres of near-surface
sands in order to stabilize the unconsolidated sand overburden at
the planned bulk sample locations.
The Trench Cutter Sampling Rig being utilized by RTEC consists
of a Bauer BC 50 Cutter mounted on a Bauer MC 128 Duty-cycle Crane.
Cutter rigs by Bauer are used around the world for complex
engineering projects. Bauer has indicated that this is the first
time in the world that this technology is being used in an active
project to sample kimberlite at depths of up to 250 meters. The
Trench Cutter Sampling Rig is designed to sample large volumes of
kimberlite by excavating a rectangular hole of 3.2 by 1.5 metres.
Each ten metres of advance down hole, within the kimberlite, will
yield some 100 tonnes of sample. The Trench Cutter Sampling Rig's
cutter head has been designed to excavate kimberlite fragments up
to 80 millimetres in diameter, which are pumped in a slurry to the
surface. The Kimberlite Separation Unit ("KSU") has been designed
to recover kimberlite fragments between 80 and 0.85 millimetres
from the Trench Cutter Sampling Rig slurry. The Trench Cutter
Sampling Rig and associated KSU have been designed by RTEC to
minimize diamond breakage during sample excavation, washing and
bagging. This well washed kimberlite material will help ensure
optimal performance of RTEC's on- site Bulk Sample Plant ("BSP").
The on-site BSP uses a modern flow-sheet and the latest X-ray
transmission ("XRT") sorting technology to ensure any large
diamonds present (up to 25 millimetres) are recovered with minimal
breakage. Final diamond recovery from the concentrate produced by
the on-site BSP is to be conducted by RTEC at a secure off-site
facility. Assembly of the on-site BSP is currently underway.
During the quarter, RTEC recommenced bulk sampling on the
Corporation's Star Kimberlite using the Trench Cutter Sampling Rig.
The Company recently announced that the Trench Cutter Sampling Rig
completed the first hole, to a total depth of 228.4 metres, and
intercepted a total of 117.4 metres of kimberlite (See News Release
dated June 18, 2019). This hole
produced 704 bulk bags of kimberlite over 15 sample intervals.
Bauer has indicated that this depth has never been reached before
by a trench cutter in any commercial application worldwide.
Kimberlite collected will be stored
in a secure storage area, until
the on-site BSP has been assembled and
commissioned.
During the quarter ended June 30,
2019, the Company also announced that RTEC 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.
During 2019, the Company 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.
Quarterly results
For the quarter ended June 30, 2019,
the Company recorded net loss of $1.5
million or $0.00 per share
(basic and fully diluted) compared to a net loss of $1.8 million or $0.00 per share for the same period in 2018. The
loss during the quarters ended June
30, were due to operating costs and exploration and
evaluation expenditures incurred by the Company.
Year to date results
For the six months ended June 30,
2019, the Company recorded a net loss of $2.4 million or $0.01 per share compared to a net loss of
$2.5 million or $0.01 per share for the same period in 2018. The
loss during the six month periods ended June
30, 2019 and 218 were primarily due to ongoing operating
costs and exploration and evaluation expenditures incurred by the
Company exceeding interest and other income earned. Exploration and
evaluation expenditures incurred during the six months ended
June 30, 2019 primarily related to
geological and metallurgical investigations and test work for the
Project as well as other costs associated with the Project.
Selected
financial highlights include:
|
|
|
Condensed Consolidated Statements of
Financial Position
|
As at
June 30,
2018
|
As at
December 31,
2018
|
Current assets
|
$
|
4.2 M
|
$
|
2.9 M
|
Exploration and evaluation, capital and other assets
|
67.8 M
|
67.5 M
|
Current liabilities
|
0.2 M
|
0.3 M
|
Non-current liabilities
|
1.6 M
|
1.3 M
|
Shareholders' equity
|
70.2 M
|
68.8 M
|
|
|
|
|
|
Consolidated Statements of
Income (Loss)
|
Three Months
Ended June 30,
2019
|
Three Months
Ended June 30,
2018
|
Six Months
Ended June 30,
2019
|
Six Months
Ended June 30,
2018
|
Interest and other income
|
$
|
0.0 M
|
$
|
0.1 M
|
$
|
0.0 M
|
$
|
0.1 M
|
Expenses
|
1.5 M
|
2.0 M
|
2.4 M
|
2.8 M
|
Flow-through
premium recognized in income
|
0.0 M
|
0.1 M
|
0.0 M
|
0.1 M
|
Investment in Wescan Goldfields Inc
|
0.0 M
|
0.0 M
|
0.0 M
|
0.1 M
|
Net loss for the period
|
(1.5) M
|
(1.8) M
|
(2.4) M
|
(2.5) M
|
Net loss per share for the period
(basic and diluted)
|
0.00
|
0.00
|
0.01
|
0.01
|
|
|
|
Condensed Consolidated Statements of
Cash Flows
|
Six Months
Ended June 30,
2019
|
Six Months
Ended June 30,
2018
|
Cash flows from operating activities
|
$
|
(1.5) M
|
$
|
(1.9) M
|
Cash flows from investing activities
|
0.0 M
|
(0.1) M
|
Cash flows from financing activities
|
2.7 M
|
0.1 M
|
Net increase (decrease) in cash
|
1.2 M
|
(1.9) M
|
Cash – beginning of period
|
2.8 M
|
4.0 M
|
Cash – end of period
|
4.0 M
|
2.1 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 July 30, 2019, the Company
had approximately $3.9 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 geological and 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 construction of the bulk sample processing plant and
timing for 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