TSX: DIAM
SASKATOON, SK, March 29, 2022 /CNW/ - Star Diamond
Corporation ("DIAM", "Star Diamond" or the "Company")
reports that the audited results of its operations for the year
ended December 31, 2021 will be filed
today on SEDAR and may be viewed at www.sedar.com once posted.
A summary of key financial and operating results is as follows:
Highlights
- Announced binding
agreements and revised arrangements with Rio Tinto Exploration
Canada Inc. ("Rio Tinto Canada") that comprehensively resolve all
disputes
Overview
Star Diamond Corporation is a Canadian
natural resource company focused on exploring and developing
Saskatchewan's diamond resources.
As a result of the December 2021
agreements (as discussed below), the Company is now in an enhanced
position for the advancement of the Star - Orion South Diamond
Project ("Project") and other kimberlite bodies in the Fort à la
Corne diamond district.
Fort à la Corne mineral properties (including the Project)
Agreements with Rio Tinto Canada
In
December 2021, the Company entered
into binding agreements with Rio Tinto Canada that comprehensively
resolved all disputes between them (see News Release and related
filings dated December 9, 2021). As
part of these agreements, Star
Diamond and Rio Tinto Canada agreed to revised arrangements.
Under these new arrangements:
- All expenditures on the
Fort à la Corne properties prior to
December 31, 2021 are the sole
responsibility of Rio Tinto Canada;
- All expenditures incurred between January 1, 2022 and the public announcement of a
decision to develop a diamond mining operation, based upon the
completion of a positive feasibility study, will initially be
advanced by Rio Tinto Canada. Star
Diamond is not required to begin reimbursing Rio Tinto
Canada for Star Diamond's share of
these expenditures unless and until commercial production has been
achieved. As a result, Star
Diamond is under no obligation to contribute additional
investment to the project until a decision to develop the mine is
made and publicly announced;
- Once the decision to develop the mine has been announced,
Star Diamond will have six months to
begin contributing Star Diamond's
share of the capital costs and expenditures required to build the
mine; and
- In exchange for these amendments, the participating interests
of Rio Tinto Canada and Star Diamond
in the joint venture agreement were adjusted to 75% for Rio Tinto
Canada and 25% for Star Diamond
(from 60% and 40%, respectively, as per the previous Option
Agreement).
These arrangements are intended to ensure that key project
milestones, and the certainty associated with them, will have been
achieved before Star Diamond has to
contribute any additional capital.
Activities relating to the Star - Orion South Diamond Project
and Fort à la Corne mineral properties
During 2019, the Company announced that Rio Tinto Canada
completed the drilling of ten bulk sample holes (trenches) on the
Company's Star Kimberlite using the Trench Cutter Sampling Rig.
These ten trench cutter holes 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. During the second quarter of 2020, the
Company announced that Rio Tinto Canada had commenced the
processing of bulk samples from Rio Tinto Canada's trench cutter
program on the Star Kimberlite (see News Release dated April 23, 2020). The mineral concentrates
produced by the on-site bulk sample plant were shipped by Rio Tinto
Canada to an off-site facility for diamond recovery and reporting
of such recovery to Star Diamond and
Rio Tinto Canada. The results reported from the ten trench cutter
holes were reported by Star Diamond
in 2020 and 2021. The results reported from these ten reported
trenches continue to validate the grades outlined in the
independent Preliminary Economic Assessment (the "PEA") which was
based upon Star Diamond's own prior
underground bulk sampling and large diameter drilling programs. The
recovery of larger diamonds from Rio Tinto Canada's bulk sample
program, including larger Type IIa diamonds, also continues to
strengthen the expectation for recovery of large, high value
diamonds in a future producing diamond mine.
During February 2021, Rio Tinto
Canada provided written notice to Star
Diamond that Rio Tinto Canada had successfully completed its
ten-trench cutter hole bulk sample program (see News Release dated
February 22, 2021). Rio Tinto Canada
also confirmed to Star Diamond that
this bulk sample program had met Rio Tinto Canada's objective of
improving confidence in the diamond grade of the Project.
During the first quarter of 2021, the Company announced that Rio
Tinto Canada had commenced an eight-hole geotechnical drilling
program on and in proximity to the Orion North Kimberlite (see News
Release dated January 19, 2021). The
drill rigs utilized were capable of sonic drilling to obtain
representative samples of the glacial overburden and core drilling
for the underlying kimberlite or host rock sediments. Star Diamond was advised that the aim of this
drilling was to investigate the geotechnical properties of the
overburden, kimberlite and host rock sediments, with this
information to be used for open pit design. Parts of the Orion
North Kimberlite have shallower overburden than the Star and Orion
South Kimberlites.
Rio Tinto Canada has indicated to the Company that a number of
desktop studies have been undertaken to evaluate the mineability
and economic viability of the Project (see News Release dated
February 17, 2022). Star Diamond recently received presentations
from both Rio Tinto Canada and Rio Tinto personnel concerning data
analysis and exploration activities that have been underway by Rio
Tinto Canada over the last two years (see News Release dated
March 9, 2022). Topics of interest
covered during these technical meetings included: 1) Star
Kimberlite trench cutter bulk sampling program results, 2) Diamond
size and quality analysis, 3) 'Orbit' project update, 4)
Mineability study, 5) Geological model and resource update, 6)
Community and stakeholder engagement, 7) Environmental and
permitting and, 8) Green energy and carbon mineralization.
Rio Tinto Canada has informed Star
Diamond that it intends to submit an additional program and
budget to the "FalCon Project Joint Venture Management Committee"
of the Fort à la Corne project (the "JVMC") for the period
commencing May 31, 2022. Star Diamond will be reviewing materials
relating to these topic areas with Rio Tinto Canada as the Company
collaborates on 2022 programs and the budget to be approved by the
JVMC.
Star Diamond, in concert with a
number of external consultants, is also in the process of
completing a diamond breakage study.
Year to Date Results
For the year ended December 31, 2021, the Company recorded a net
loss of $7.7 million or $0.02 per share (basic and fully diluted)
compared to a net loss of $6.1
million or $0.01 per share in
2020. The losses during 2021 and 2020 were primarily due to ongoing
operating costs and exploration and evaluation expenditures
incurred by the Company exceeding interest and other income
earned.
Selected financial highlights include:
Condensed
Consolidated Statements of Financial Position
|
As
at
December
31,
2021
|
As
at
December
31,
2020
|
Current
assets
|
$
1.5 M
|
$
5.0 M
|
Exploration and
evaluation, capital and other assets
|
67.9
M
|
67.6
M
|
Current
liabilities
|
3.1
M
|
1.0
M
|
Non-current
liabilities
|
1.1
M
|
1.2
M
|
Shareholders'
equity
|
65.2
M
|
70.4
M
|
Consolidated
Statements of Income (Loss)
|
Year
Ended
December 31,
2021
|
Year Ended
December 31,
2020
|
Interest and other
income
|
$
0.0 M
|
$
0.1 M
|
Expenses
|
8.0
M
|
6.1
M
|
Loss before
undernoted items
|
8.0
M
|
6.0
M
|
Investment in Wescan
Goldfields Inc.
|
0.3
M
|
0.1
M
|
Contingent
consideration
|
0.0
M
|
(0.2) M
|
Net loss for the
period
|
7.7
M
|
6.1
M
|
Net loss per share
for the period (basic and diluted)
|
0.02
|
0.01
|
Condensed
Consolidated Statements of Cash Flows
|
Year Ended
December 31,
2021
|
Year Ended
December 31,
2020
|
Cash flows from
operating activities
|
$
(5.4) M
|
$
(4.7) M
|
Cash flows from
investing activities
|
(0.0) M
|
(0.0) M
|
Cash flows from
financing activities
|
1.9
M
|
1.6
M
|
Net increase
(decrease) in cash
|
(3.5) M
|
(3.1) M
|
Cash – beginning of
period
|
4.8
M
|
7.9
M
|
Cash – end of
period
|
1.3
M
|
4.8
M
|
Outlook
The provincial environmental approval of the
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 independent PEA 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 Fort
à la Corne mineral properties (including the Project) and the
amended Fort à la Corne joint venture agreement that was announced
in December 2021 defines a new phase
for the Company. Under the amended Fort à la Corne joint
venture agreement , expenditures incurred at the Fort à la Corne
properties ("carried interest costs") from and after January 1, 2022 are to be 100% advanced by Rio
Tinto Canada in the first instance until, among other things: (a)
the completion of a feasibility study demonstrating that extraction
of diamonds is reasonably justified (economically mineable) and
that contemplates the construction and operation of a diamond
mining operation having certain minimum requirements; (b) a
positive decision has been made to develop such mine; (c) a
development program and budget for the construction of such mine
has been approved; and (d) public disclosure has been made of the
decision to develop such mine. Star Diamond will have no obligation
to fund or contribute to carried interest costs until the
commencement of commercial production, which will not occur until
after the completion of construction of the diamond mine with it
generally operating at certain specified thresholds for 90 days.
Once a decision to develop the mine has been made and publicly
announced, Star Diamond will have six months before it is required
to begin contributing to its share of capital costs and
expenditures incurred for construction of the mine. As part of the
December 2021 amendments, the respective participating interests of
Rio Tinto Canada and Star Diamond were adjusted to 75% for Rio
Tinto Canada and 25% for Star Diamond.
As of March 29, 2022, the Company
had approximately $1.3 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.
The Company recently announced that it intends to raise up to
$5 million by way of a non-brokered
private placement of units of the Company (collectively, the
"Units") at a price of $0.30 per Unit
(the "Offering") (see News Release dated March 16, 2022). Each Unit will consist of one
common share in the capital of the Company (each, a "Common Share")
and one Common Share purchase warrant (each, a "Warrant"). Each
Warrant will entitle the holder thereof to purchase one Common
Share at a price of $0.40 for a
period of 24 months from the date of issuance.
About Star Diamond Corporation
Star Diamond
Corporation is a Canadian based corporation engaged in the
acquisition, exploration and development of mineral properties.
Shares of Star Diamond trade on the
Toronto Stock Exchange under the trading symbol "DIAM".
Star Diamond holds, through a joint
venture arrangement with Rio Tinto Canada (a wholly-owned
subsidiary of Rio Tinto), a 25% interest in certain Fort à la Corne
kimberlites (including the Star – Orion South Diamond Project).
These properties 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. Rio Tinto refers to their Fort à la Corne
mineral properties as "Project FalCon". During 2018, Star Diamond announced the positive results of
an independent Preliminary Economic Assessment on the Project. The
PEA (on a 100% basis) estimated 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).
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 the
PEA constitute forward-looking statements. Forward-looking
statements contained or implied in this news release include, but
are not limited to, statements relating to the Company's ability to
continue as a going concern; statements regarding programs
previously performed by Rio Tinto Canada; statements regarding
future programs by Rio Tinto Canada; statements related to diamond
breakage and other reporting; 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 need for
and intention to seek additional financing; statements with respect
to metallurgical and diamond investigations, assessments and test
work including diamond breakage studies; 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
Rio Tinto Canada or the Company, the nature and outcome of studies,
analyses, criteria or conditions that Rio Tinto Canada may consider
relevant to its assessment of whether to seek to further invest in
the Project or seek to develop the Project into an operating mine,
the effects of competition in the markets in which the Company
operates, the impact of the COVID-19 pandemic, risks related to
diamond breakage from extraction and diamond recovery, risks
related to the Company's need for additional financing and the
Company's ability to raise that financing, 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 the Company 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 laws, the Company does not undertake to
update any forward-looking statement that is made herein.
www.stardiamondcorp.com
SOURCE Star Diamond Corporation