AR DIAMOND CORPORATION ANNOUNCES SECOND QUARTER 2020 RESULTS S tar Diamond Corporation (the “C ompany” or “Star Diamond” ) reports that the un audited results of its operations for the three and six months ended
NEWS RELEASE July 30, 2020
TSX: DIAM Saskatoon, Saskatchewan
ST
AR DIAMOND CORPORATION ANNOUNCES SECOND QUARTER 2020 RESULTS
S
tar Diamond Corporation (the “C ompany” or “Star Diamond” ) reports that the un audited 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
O
verview
Star Diamond Corp oration 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 Ju ne 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 d ated April 23, 2020). The
mineral concentrates produced by the BSP a re 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.
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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 exercis e 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) . T he 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.
Y
ear 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 mont hs 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.
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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 comp letion of the 2017 conso lidation of the C ompany’s Fo rt à la Corne miner al proper ties
(including th e Star - Orion Sou th D iamond Proje ct) and the concu rrent e arn-in arrangement with RTEC
defined the start of a new phase for the Company. Th ere are some 60 oth er 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 h ad approximately $5.5 million in cash and cash equivalents (excluding $0.6
million in restric ted cash). A portio n of the Company ’s cash and cash e quivalents will be used for prog rams
(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
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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).
C
aution 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 a dditional financing; statements
with respect to metallurgical investigations, assessments and test work; the pot ential proportion of Type IIa diamonds in the S tar 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 diamo nd
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 th ereof, the impact of changes in the laws and regulations
regulating mining exploration and development, judicial or regulatory judgments and legal proceedings, operational and infras tructure
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.
For further information: [email protected] or (306) 664-2202
www.stardiamondcorp.com
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