Stock Symbol: TSX: DIAM
SASKATOON, SK, Aug. 11, 2020 /CNW/ - Star Diamond Corporation
("Star Diamond" or the "Corporation") today provided an update in
connection with its ongoing legal proceedings (the "Legal
Proceedings") against Rio Tinto Exploration Canada Inc. ("RTEC")
related to RTEC's purported exercise in November 2019 of its four options under the
Option to Joint Venture Agreement dated June
22, 2017 (the "Option Agreement"). Yesterday, the Court of
Queen's Bench for Saskatchewan
(Judicial Centre of Saskatoon)
released its decision (the "Decision") on the interim injunction
application that had been brought by Star Diamond as one step in
the Legal Proceedings.
In the Decision, the Court found that Star Diamond had
successfully met its onus of establishing a serious issue to be
tried in the Legal Proceedings with respect to each of the
following key claims advanced by Star Diamond:
- that RTEC did not validly exercise the second, third or fourth
option in accordance with the Option Agreement;
- that RTEC engaged in misrepresentation about both the costs
associated with RTEC's work under the Option Agreement and about
RTEC not exercising its options until results were available from
the bulk sample cutter holes excavated by RTEC in 2019; and
- that RTEC breached its duties of good faith and honest dealing
in that RTEC exercised its discretionary powers to deliberately
undermine Star Diamond's contractual interests and dilute Star
Diamond's interest in the joint venture, and that RTEC misled Star
Diamond as to when it would exercise the options so as to form the
joint venture.
While each of these claims will ultimately need to be assessed
and determined by the Court at the hearing on the merits in the
Legal Proceedings, Star Diamond is pleased that the Court
recognized, at this preliminary stage, that these claims represent
serious issues to be tried at the merits hearing. Star
Diamond cautions that there can be no assurance that the Court will
find in the Company's favour on these issues at the hearing on the
merits. Star Diamond also cautions that, at this preliminary
stage in the Legal Proceedings, none of these claims had yet
reached the stage of constituting a strong prima facie case,
as the Court noted in the Decision.
As the Court stated in the Decision, after the interim
injunction application was brought by Star Diamond, RTEC agreed, as
part of its response to the injunction application, that RTEC would
not call and/or conduct any meeting of the management committee
under the RTEC/Star Diamond joint venture agreement (the "JV
Agreement") for a period of 120 days following RTEC completing the
processing, diamond recovery and reporting of all diamond results
on the samples previously taken from the 10 cutter holes completed
on the Star Kimberlite by RTEC during 2019. Relying on RTEC's
commitment during the hearing of the injunction application that
this represented an undertaking of RTEC to the Court, the Court
ultimately determined, after taking account of the balance of
convenience between Star Diamond and RTEC, that an interim
injunction would not be granted, which would have extended the
prohibition on RTEC calling and/or conducting a meeting of the
management committee until a further five cutter holes on the Orion
South Kimberlite were drilled and fully reported on, as had been
requested by Star Diamond.
In the result, RTEC will be prohibited from calling and/or
conducting any meeting of the management committee under the JV
Agreement for a period of 120 days following RTEC completing the
processing, diamond recovery and reporting of all diamond results
on the samples previously taken from the 10 cutter holes completed
during 2019.
As previously disclosed, Star Diamond currently expects that all
or substantially all of the bulk samples from the ten cutter holes
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 COVID19. However,
even if the processing by RTEC of these samples is completed during
calendar 2020, the timing for the completion of diamond recovery
and reporting of all diamond results from these samples remains
uncertain and may take longer.
The Court has not yet established a timetable for the hearing on
the merits in the Legal Proceedings or the various pre-trial steps
that will precede it. Star Diamond will provide further
updates on the Legal Proceedings as developments
warrant.
About Star Diamond Corporation
Star Diamond Corporation is a Canadian based corporation engaged
in the acquisition, exploration and development of mineral
properties. Shares of the Corporation trade on the Toronto
Stock Exchange under the trading symbol "DIAM". The
Corporation's 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.
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 Corporation'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 press release include, but
are not limited to, the Corporation's expectations regarding the
processing and analysis of, and reporting of results from, the bulk
samples previously collected by RTEC and the timeline for doing
so.
These forward-looking statements are based on the Corporation'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 prices,
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 Corporation, risks related to the
legal proceedings commenced by the Corporation against RTEC, the
effects of competition in the markets in which Star Diamond
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, the impact of changes in the
laws and regulations regulating mining exploration, development,
closure, judicial or regulatory judgments and legal proceedings,
operational and infrastructure risks and the additional risks
described in the Corporation's most recently filed Annual
Information Form, annual and interim MD&A, news releases and
technical reports. The Corporation'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 Corporation,
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 Corporation does not undertake to
update any forward-looking statement that is made herein.
SOURCE Star Diamond Corporation