TSX: DIAM
SASKATOON, SK, July 30, 2020 /CNW/ - Star Diamond
Corporation (the "Company" or "Star Diamond") reports that
the unaudited results of its operations for the three and six
months ended June 30, 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
quarter ended June 30, 2020 is as
follows:
Highlights
- Announced that Rio Tinto Exploration Canada Inc. ("RTEC") had
commenced the processing of bulk samples from RTEC's trench cutter
program conducted in 2019 on the Company's 100% held Star and Orion
South Kimberlites (the "Star - Orion South Diamond Project", or the
"Project")
- Announced microdiamond results from RTEC's drilling on the
Orion North kimberlite cluster, which contained two macrodiamonds,
the largest being a 0.552 carat fragment
- Working capital of $5.3 million
at June 30, 2020
- Issued and outstanding shares of 429.3 million at June 30, 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
an Option to Joint Venture Agreement dated June 22, 2017 (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).
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. As the on-site bulk sample
plant (the "BSP") was not constructed or commissioned by RTEC prior
to the completion of the ten Star kimberlite trench cutter holes,
RTEC established a storage area where 6,848 bulk sample bags were
stored on-site until the BSP was fully constructed and
commissioned.
During the quarter ended June 30,
2020, the Company announced that RTEC had commenced the
processing of bulk samples from RTEC's Star Kimberlite trench
cutter program (see News Release dated April
23, 2020). The mineral concentrates produced by the BSP are
being shipped by RTEC 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 sample bags collected during 2019
will be processed by RTEC during calendar 2020, provided that there
are not any unexpected material delays in this process including
issues arising from COVID-19.
During the quarter ended June 30,
2020, the Company also announced that RTEC provided the
Company with microdiamond results from the PQ3 (83 millimetre) core
hole 120FB001, which RTEC drilled in November of 2019 (see News
Release dated May 11, 2020). This
hole was drilled on the Company's K120 Kimberlite, which forms part
of the Orion North kimberlite cluster. The Company noted that the
microdiamond results provided to the Company contained two
macrodiamonds, the largest weighing 0.552 carats. This 0.552 carat
diamond fragment has been broken from a larger stone. The
occurrence of a 0.552 carat diamond in a microdiamond sample is
anomalous and speaks to the potential for a coarse diamond size
frequency distribution and also supports previous evaluation work
conducted by the Company on the Orion North Kimberlites. The
results from RTEC's drill program also highlights the evaluation
potential of the extensive volumes of kimberlite that are outside
of the Project.
Litigation Update
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). An injunction application
brought by the Company against RTEC as part of these legal
proceedings was heard by the Court of Queen's Bench for
Saskatchewan on June 29 and 30, 2020 (see News Release dated
June 2, 2020). The Company is
awaiting the Court's decision on the injunction application.
The injunction application seeks, among other things, to
restrain RTEC, pending the satisfaction of certain conditions, from
calling any meeting of the management committee under the joint
venture agreement between Star
Diamond and RTEC that would have come into effect if RTEC
had validly exercised its four options in November 2019. RTEC
has agreed that, until the Court has rendered a decision on the
injunction application, RTEC will not seek to call any meeting of
such management committee.
Quarterly results
For the quarter
ended June 30, 2020, the Company recorded a
net loss of $1.5 million or $0.00 per share (basic
and fully diluted) compared to a net loss
of $1.5 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 and other income earned
on cash and cash equivalents.
Year to date results
For the six months ended June 30,
2020, the Company recorded a net loss of $2.5 million or $0.01 per share compared to a net loss of
$2.4 million or $0.01 per share for the same period in 2019. The
loss during the six month periods ended June
30, 2020 and 2019 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, 2020 and 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,
2020
|
As
at
December
31,
2019
|
Current
assets
|
$
|
5.9
M
|
$
|
8.0
M
|
Exploration and
evaluation, capital and other assets
|
|
67.7
M
|
|
67.7
M
|
Current
liabilities
|
|
0.6
M
|
|
0.3
M
|
Non-current
liabilities
|
|
1.5
M
|
|
1.6
M
|
Shareholders'
equity
|
|
71.5
M
|
|
73.8
M
|
|
Condensed
Consolidated Statements of Loss
|
Three Months
Ended June 30,
2020
|
Three Months
Ended June 30,
2019
|
Six
Months
Ended June 30,
2020
|
Six Months
Ended June 30,
2019
|
Interest and other
income
|
$
|
0.0
M
|
$
|
0.0
M
|
$
|
0.0
M
|
$
|
0.0
M
|
Expenses
|
|
1.5
M
|
|
1.5
M
|
|
2.6
M
|
|
2.4
M
|
Investment in Wescan
Goldfields Inc.
|
|
0.0
M
|
|
0.0
M
|
|
0.1
M
|
|
0.0
M
|
Net loss for the
period
|
|
1.5
M
|
|
1.5
M
|
|
2.5
M
|
|
2.4
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, 2020
|
Six
Months
Ended June 30, 2019
|
Cash flows from
operating activities
|
$
|
(2.3) M
|
$
|
(1.5) M
|
Cash flows from
investing activities
|
|
0.0
M
|
|
0.0
M
|
Cash flows from
financing activities
|
|
0.1
M
|
|
2.7
M
|
Net increase
(decrease) in cash
|
|
(2.2) M
|
|
1.2
M
|
Cash – beginning of
period
|
|
7.9
M
|
|
2.8
M
|
Cash – end of
period
|
|
5.7
M
|
|
4.0
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 independent Preliminary Economic
Assessment (the "PEA") 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 July 30, 2020, the Company
had approximately $5.5 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 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
or PEA 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, including the determination
of the injunction application by the Court; 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, including the determination
of the injunction application by the Court, 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