TSX: DIAM
SASKATOON, May 7, 2020 /CNW/ - Star Diamond
Corporation (the "Company") reports that the unaudited
results of its operations for the quarter ended March 31, 2020 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 three months ended
March 31, 2020 is as follows:
Highlights
- Announced an update on the bulk sampling program being
conducted by Rio Tinto Exploration Canada ("RTEC") on the Company's
100% held Star and Orion South Kimberlites (the "Star - Orion South
Diamond Project", or the "Project")
- Announced that the Company had notified RTEC that its purported
exercise in November 2019 of its four
options under the Option to Joint Venture Agreement dated
June 22, 2017 (the "Option
Agreement") did not comply with the terms of the Option Agreement,
and that the Company had commenced legal proceedings against RTEC
in relation to such purported option exercise
- Working capital of $6.7 million
at March 31, 2020
- Issued and outstanding shares of 429.1 million at March 31, 2020
Overview
Star Diamond Corporation is a Canadian
natural resource company focused on exploring and developing
Saskatchewan's diamond
resources. In June 2017, the
Company announced that it had acquired from Newmont Corporation all
of its participating interest in the Fort à la Corne joint venture
(the "FalC JV"), resulting in the Company owning 100% of the Fort à
la Corne mineral properties (including the Project), and
concurrently entered into the Option Agreement with RTEC, a
wholly-owned subsidiary of Rio Tinto, pursuant to which the Company
granted to RTEC an option to earn up to a 60% interest in the
Company's 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).
In November 2019, Star Diamond received notice from RTEC advising
that RTEC was purporting to exercise all four of its options under
the Option Agreement (see News Release dated November 15, 2019). In February 2020, the Company notified RTEC that its
purported exercise of its four options under the Option Agreement
did not comply with the terms of the Option Agreement (see News
Release dated February 18, 2020). In
March 2020, the Company announced
that it had commenced legal proceedings in the Court of Queen's
Bench for Saskatchewan against
RTEC in relation to RTEC's purported exercise of its options under
the Option Agreement (see News Release dated March 5, 2020).
Activities relating to the Star - Orion South Diamond
Project
During 2019, the Company announced that RTEC
completed the drilling of ten bulk sample holes (trenches) on the
Company's Star Kimberlite using the Trench Cutter Sampling Rig (See
News Release dated October 8, 2019).
The ten holes completed on the Star Kimberlite included a total of
2,351 metres of trench cutter drilling and intersected a total of
1,215.5 metres of kimberlite. Kimberlite was pumped to the surface
and recovered using a Kimberlite Separation Unit, with
samples loaded and stored in cubic metre bulk bags, which total
6,848 in number (estimated by RTEC to be approximately 8,271 wet
tonnes). As the on-site Bulk Sample Plant (the "BSP") was not
constructed or commissioned prior to the completion of the ten Star
kimberlite trench cutter holes, the resulting 6,848 sample bags
were stored by RTEC until the on-site BSP was fully constructed and
commissioned.
The Company recently announced that RTEC had commenced the
processing of bulk samples from RTEC's trench cutter program (See
News Release dated April 23, 2020).
The Company also announced that it had been advised by RTEC that it
had completed commissioning of the BSP. As well, the Company
announced that the mineral concentrates produced by the BSP were
expected to be shipped, on an ongoing basis, to an off-site
facility for final diamond recovery and reporting of such recovery
to Star Diamond and
RTEC.
Star Diamond currently expects
that all or substantially all of the bulk samples collected during
2019 will be processed through to final diamond recovery and
reported over the balance of calendar 2020, provided that there are
not any unexpected material delays in this process including issues
arising from COVID-19.
Results
For the quarter ended March 31, 2020, the Company recorded a net loss
of $1.0 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 2019. 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, 2020
|
As
at December
31, 2019
|
Current
assets
|
$
7.2 M
|
$
8.0 M
|
Exploration and
evaluation, capital and other assets
|
67.8
M
|
67.7
M
|
Current
liabilities
|
0.4
M
|
0.3
M
|
Non-current
liabilities
|
1.6
M
|
1.6
M
|
Shareholders'
equity
|
73.0
M
|
73.8
M
|
Consolidated
Statements of Income (Loss)
|
Quarter Ended
March 31, 2020
|
Quarter Ended
March 31,
2019
|
Interest and other
income
|
$
0.0 M
|
$
0.0 M
|
Expenses
|
1.1
M
|
0.9
M
|
Investment in Wescan
Goldfields Inc.
|
0.1
M
|
0.0
M
|
Net loss for the
period
|
1.0
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,
2020
|
Quarter Ended
March 31, 2019
|
Cash flows from
operating activities
|
$
(1.1) M
|
$
(0.8) M
|
Cash flows from
investing activities
|
0.0
M
|
0.0
M
|
Cash flows from
financing activities
|
0.1
M
|
0.2
M
|
Net decrease in
cash
|
(1.0) M
|
(0.6) M
|
Cash – beginning of
period
|
8.0
M
|
2.8
M
|
Cash – end of
period
|
7.0
M
|
2.2
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 independent Preliminary Economic
Assessment (the "PEA") on the Project announced in 2018
show 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. There
are some 60 other kimberlites within the Company's 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 Corporation as a significant shareholder.
As of May 7, 2020, the Company had
approximately $6.6 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 2020 programs (including
remaining flow-through commitments) to further assess, evaluate and
advance certain aspects of the Company's mineral properties, as
well as for general corporate matters.
About Star Diamond Corporation
Shares of the Company
trade on the TSX Exchange under the trading symbol "DIAM". The Fort
à la Corne kimberlites (including the Star - Orion South Diamond
Project) are located in central Saskatchewan in close proximity to established
infrastructure, including paved highways and the electrical power
grid, which provide significant advantages for future mine
development.
During 2018, the Company announced the positive results of the
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 (7%) of $2.0 billion after tax, an Internal Rate of
Return 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).
During 2018, the Saskatchewan Ministry of Environment approved
the Company's Star - Orion South Diamond Project (See News Release
dated October 25, 2018). 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).
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, changes in exploration, development or mining
plans due to exploration results and changing budget priorities of
RTEC or the Company; risks related to the legal proceedings
commenced by the Company against RTEC; the effects of competition
in the markets in which the Company operates; the impact of the
COVID-19 pandemic; risks related to the operation of the BSP and
the processing methods being used by RTEC and the effectiveness
thereof; disclosure regarding the economics and project parameters
presented in the PEA, including, without limitation, Internal Rate
of Return, Net Present Value 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; 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.
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
RTEC or the Company, the effects of competition in the markets in
which the Company operates, risks related to the legal proceedings
commenced by the Company against RTEC, the impact of the COVID-19
pandemic, risks related to the operation of the BSP and the
processing methods being used by RTEC and the effectiveness
thereof, 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