TSX: DIAM
SASKATOON, SK, Aug. 12,
2022 /CNW/ - Star Diamond
Corporation ("Star Diamond" or the "Company") today
reported its financial results for the quarter ended June 30, 2022.
Highlights
- Reported on technical and joint venture meetings with Rio Tinto
Exploration Canada Inc. ("Rio Tinto Canada") concerning the Fort à
la Corne mineral properties and Rio Tinto Canada's advice that,
subject to fulfilling its existing obligations, it does not intend
to commit additional capital to the Fort à la Corne properties
during 2022 beyond what is necessary for care and maintenance. In
addition, Rio Tinto Canada also advised that it intends to conduct
a near-term review of its alternatives regarding the Fort à la
Corne properties, including its potential exit
- Announced study results identifying the abundance of Type IIa
diamonds in diamond parcels recovered from the Early Joli Fou
("EJF") Geological Units of the Star, Orion North and Taurus
Kimberlites
- Acquired an additional interest of approximately 17% in the
Buffalo Hills joint venture project, increasing its interest in the
project to 50%
- Completed a $5.0 million
non-brokered private placement of units
Overview
Star Diamond Corporation is a Canadian natural resource
company focused on exploring and developing
Saskatchewan's diamond resources. Star
Diamond holds, through a joint venture arrangement with Rio Tinto
Canada, a wholly-owned subsidiary of Rio Tinto plc or "Rio Tinto",
a 25% interest in certain mineral properties (which includes the
Star – Orion South Diamond Project, or "Project") within the Fort
à la Corne diamond district of central Saskatchewan, Canada. These properties are in
close proximity to established infrastructure, including paved
highways and the electrical power grid, which provide significant
advantages for future mine development. Rio Tinto Canada refers to
their Fort à la Corne mineral properties as "Project FalCon".
On June 28, 2022, Rio Tinto Canada
exercised its voting power at a meeting of the Fort à la Corne
joint venture management committee to place the Fort à la
Corne properties on care and maintenance through December 31, 2022. Rio Tinto Canada also advised
that, subject to fulfilling its existing obligations, it does not
intend to commit additional capital to the Fort à la Corne
properties during 2022 beyond what is necessary for care and
maintenance. Rio Tinto Canada also advised the Company that it
intends to conduct a near-term review of its alternatives regarding
the Fort à la Corne properties, including its potential exit.
During the meeting, Rio Tinto Canada stated that it remains pleased
with the results of the comprehensive studies and bulk sampling
program that have been completed to date at the Project.
Activities relating to the Star - Orion South Diamond Project
and Fort à la Corne mineral properties
During the quarter, the Company announced the completion of an
independent study into the abundance of Type IIa diamonds in the
Trench Cutter diamond parcels recovered from the Early Joli Fou
("EJF") geological units at the Star Kimberlite, as defined by the
Star Diamond geological model. The Star Kimberlite is located
within the Star - Orion South Diamond Project. During 2019, Rio
Tinto Canada completed the drilling of ten bulk sample holes
(trenches) on the Star Kimberlite using a Trench Cutter Sampling
Rig. This study confirms that high proportions of Type IIa diamonds
are present in the Star Kimberlite. Of particular note is the high
proportion of Type IIa diamonds in the larger size fractions of the
EJF of which 53 percent (8 of the 15) of the largest stones, 4
carats and above are Type IIa. This study also confirms and
augments earlier studies conducted by Star Diamond of Type IIa
diamonds at Star (26.5 percent, +11 DTC (0.32 carats) and above).
Type IIa diamonds are rare and account for less than 2 percent of
all natural rough diamonds mined from kimberlites. 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.
During the quarter, the Company also announced the
completion of an independent study into the abundance of Type IIa
diamonds in the diamond parcels recovered from the EJF Geological
Units at the Orion North and Taurus Kimberlites. These diamonds
were recovered by Star Diamond between 2006 and 2008 from 48-inch
large diameter drilling ("LDD") programs. This study confirms that
unusually high proportions of Type IIa diamonds are present in both
the Orion North and Taurus Kimberlites. Of particular note is the
high proportion of Type IIa diamonds in the Orion North 147/148 EJF
(52%) of which 66% of the 24 stones, 3 grainer (0.66 carats) and
above, are Type IIa.
Activities relating to other mineral properties
During the quarter, the Company announced that pursuant to a
Quitclaim, Surrender and Assignment of Interest Agreement dated
May 11, 2022, the Company acquired an
additional joint venture interest of approximately 17% in the
Buffalo Hills project for nominal consideration. As a result of the
transaction, Star Diamond and Canterra Minerals Corporation each
hold a 50% interest in the Buffalo Hills project. Located
approximately 400 kilometres northwest of Edmonton, Alberta, Canada, the Buffalo Hills
project is a significant and accessible field of diamond-bearing
kimberlites, with similarities to the Fort á la Corne kimberlites
in Saskatchewan, Canada.
Quarterly results
For the quarter ended June 30,
2022, the Company recorded a net loss of $0.7 million or $0.00 per share (basic and fully diluted)
compared to a net loss of $2.0
million or $0.00 per share for
the same period in 2021. 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.
Year to Date Results
For the six months ended June 30,
2022, 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 $3.1
million or $0.01 per share for
the same period in 2021. The losses during the six month periods
ended June 30, 2022 and 2021 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
June
30,
2022
|
As at
December
31,
2021
|
Current
assets
|
$
3.2 M
|
$
1.5 M
|
Exploration and
evaluation, capital and other assets
|
67.7 M
|
67.9 M
|
Current
liabilities
|
0.4 M
|
3.1 M
|
Non-current
liabilities
|
1.0 M
|
1.1 M
|
Shareholders'
equity
|
69.5 M
|
65.2 M
|
Condensed
Consolidated Statements of Loss
|
Three Months
Ended June 30,
2022
|
Three Months
Ended June 30,
2021
|
Six Months
Ended June 30,
2022
|
Six Months
Ended June 30,
2021
|
Interest and other
income
|
$
0.0 M
|
$
0.0 M
|
$
0.0 M
|
$
0.0 M
|
Expenses
|
0.7 M
|
1.8 M
|
1.4 M
|
3.2 M
|
Investment in Wescan
Goldfields Inc. and other items
|
0.0 M
|
(0.2) M
|
(0.1) M
|
0.1 M
|
Net loss for the
period
|
0.7
M
|
2.0
M
|
1.5
M
|
3.1
M
|
Net loss per share for
the period (basic and diluted)
|
0.00
|
0.00
|
0.00
|
0.01
|
Condensed
Consolidated Statements of Cash Flows
|
Quarter Ended
June 30,
2021
|
Quarter Ended
June 30,
2020
|
Cash flows from
operating activities
|
$
(4.0) M
|
$
(2.9) M
|
Cash flows from
investing activities
|
0.0 M
|
0.0 M
|
Cash flows from
financing activities
|
5.7 M
|
1.9 M
|
Net decrease in
cash
|
1.7 M
|
(1.0) M
|
Cash – beginning of
period
|
1.3 M
|
4.8 M
|
Cash – end of
period
|
3.0 M
|
3.8 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 Preliminary Economic Assessment (the "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.
Following the successful completion of the 2017 consolidation of
the Fort à la Corne mineral properties, the arrangements announced
in December 2021 were 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. Due to the June 2022 decision by Rio Tinto Canada to
exercise its voting power to place the Fort à la Corne properties
on care and maintenance through December 31,
2022 no additional exploration programs will occur on site
in 2022. During the June 2022
meeting, Rio Tinto Canada also stated that it remains pleased with
the results of the comprehensive studies and bulk sampling program
that have been completed to date at the Project. Though the board
of directors of Star Diamond is disappointed by these decisions,
Star Diamond intends to work with Rio Tinto Canada in assessing
alternatives regarding the Fort à la Corne properties.
As of August 12, 2022, the Company
had approximately $3.4 million in
cash and cash equivalents and $0.0
million in restricted cash (due to the recent release of
$0.6 million of irrevocable standby
letters of credit). 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
Star Diamond is a Canadian based corporation engaged in the
acquisition, exploration and development of mineral properties.
Shares of the Company trade on the TSX under the trading symbol
"DIAM". The Fort à la Corne kimberlites (including the 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
independent 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.
During 2018, the Saskatchewan Ministry of Environment approved
the Project. The Canadian Environmental Assessment Agency
previously announced a positive Environmental Assessment Decision
for the Project by the federal Environment Minister.
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 Rio Tinto
Canada's advice that it will not commit additional capital to the
Fort à la Corne properties during 2022 beyond care and
maintenance; statements regarding future capital commitments,
programs and plans by Rio Tinto Canada, including its review of
alternatives regarding the Fort à la Corne properties and potential
exit (and Star Diamond's intention to work with Rio Tinto Canada in
assessing such alternatives); 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 anticipated use of
the Company's cash and cash equivalents; 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, Orion South, Orion North and Taurus 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