DIAM.TO · 2022-12-31 12:00:00

EWS RELEASE Mar ch 29, 2023

Corporate Updates

TSX: DIAM Saskatoon, Saskatchewan

STAR DIAMOND CORPORATION ANNOUNCES 2022 YEAR END RESULTS

tar Diamond Corporation (“Star Diamond” or the “Company”) reports that the audited results of its

operations for the year ended December 31, 2022, will be filed today on SEDAR and may be viewed at

www.sedar.com once posted.

verview

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 Exploration Canada Inc. (“Rio Tinto Canada”), a wholly -owned subsidiary of Rio Tinto plc, a 25%

interest in certain mineral properties (which includes the Star – Orion South Diamond Project, or the

“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.

he Company also holds a 50% interest in the exploration and evaluation properties and assets of the

Buffalo Hills -JV located in north -central Alberta, Canada. Canterra Minerals Corporation (“Canterra”)

holds the remaining 50% interest. Canterra is the operator of the Buffalo Hills-JV.

ort à la Corne mineral properties

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 Project on care and maintenance through December 31,

2022. Rio Tinto Canada also advised that, subject to fulfilling its existing obligations, it did not intend to

commit additional capital to the Fort à la Corne properties during 2022 beyond what was necessary for

care and maintenance. Rio Tinto Canada also advised Star Diamond that it intend ed to conduct a near -

term review of its alternatives regarding the Fort à la Corne properties, which included its potential exit.

On October 21, 2022, Star Diamond announced that Rio Tinto Canada had stated that it intended to fully

de-mobilize the leased on-site camp in early 2023.

While Star Diamond continues to seek to work with Rio Tinto Canada to assess alternatives regarding the

Project, there is no certainty that any agreement will be reached between Star Diamond and Rio Tinto

Canada regarding any such potential arrangements.

Activities relating to the Star - Orion South Diamond Project and Fort à la Corne mineral properties

During the year ended December 31, 2022, 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 (see news release dated May 31, 2022). 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

confirmed that high proportions of Type IIa diamonds are present in the Star Kimberlite. Of note is the

high proportion of Type IIa diamonds in the larger size fractions of the EJF of which 53% (or 8 of the 15)

of the largest stones, 4 carats and above are Type IIa. This study also confirm ed and augments earlier

studies conducted by Star Diamond of Type IIa diamonds at Star (26.5%, +11 DTC (0.32 carats) and above)

(see news releases dated June 09, 2010, March 4, 2019 and May 2, 2022). Type IIa diamonds are rare and

account for less than 2% 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.

Rio Tinto Canada geologists of the Project’s ‘Orbit’ exploration team have, over the past few years, used

a spectrum of evaluation techniques to review and prioritize Fort à la Corne kimberlites outside of the

Star and Orion South Kimberlites (see n ews release dated April 13, 2022). This program highlighted the

kimberlites of Orion North (K120, K147, K148) as having significant potential to add to the Project. Orion

Centre (K145), Taurus (K150, K118, K122) and K119 stand out in the field as having a number of the

attributes sought but require further work to completely evaluate. The evaluation techniques used by the

Orbit exploration team to prioritize these Orion North, Orion Centre and Taurus Kimberlites have

included: componentry method of core logging; diamond inclusion studies; garnet colour studies; trace

element geochemistry; thermobarometry; and microdiamond sampling. These studies highlighted the

kimberlites of Orion North (K120, K147, K148) as satisfying Rio Tinto Canada’s Ore Grade Width Intercept

(“OGWI”) requirements and that these kimberlites would require additional evaluation work. Orion

Centre (K145), Taurus (K150, K118, K122) and K119 indicated the potential to deliver OGWIs.

During 2022 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 (see news r elease dated May 2, 2022) . These diamonds were recovered by Star

Diamond between 2006 and 2008 from 48-inch large diameter drilling 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.

ctivities relating to the Buffalo Hills mineral properties

In February 2023, the Company announced the completion of the diamond valuation from the K6, K14,

K91 and K252 kimberlites of the Buffalo Hills-JV.

Diamond valuations and characterizations as shown in the table below were completed by Mr. Nelson

Karun, Diamond Specialist, Saskatchewan Research Council Diamond Services, on behalf of Star Diamond.

Kimberlite Carats Stones % Gem

Quality

% White

Colour

Faint to no

Fluorescence

Average US$/Ct

Parcel

Model Price

(US$/ct)

K6 16.73 86 29.5 70.5 82.9 103.54 185*

K14 69.32 1,362 17.9 73.8 92.6 54.32 160

K91 4.17 103 17.9 54.6 89.7 53.61 N/A

K252 12.41 328 22.0 82.1 92.1 72.79 140*

*Very speculative due to the small sample size

As observed by Mr. Karun, diamonds from these kimberlite bodies exhibit good quality, colour and very

low to no fluorescence. All the parcels of diamonds appear to be statistically very similar in terms of their

graded characteristics. There is an inadequate sample size for K91 to model the average diamond price.

Extremely speculative model prices are given for samples K6 and K252, due to the small parcel size. K14

is a larger parcel size, and a price can be modeled, but should still be used with caution.

The diamond valuation exercise has shown that kimberlites K14 and K6 have elevated modelled diamond

prices, US$ 160 per carat and US$ 180 per carat, respectively. The K6 parcel includes three fancy yellow

stones, the K14 four fancy yellow and the K252 a fancy orange stone. The two highest value stones, which

are both from the K6, are 1.06 carats (US$ 532) and 1.07 carats (US$ 506).

hese four kimberlites have diamond parcels with sufficient diamonds to conduct preliminary diamond

typing studies. The number and the percentage of Type IIa diamonds for the Buffalo Hills kimberlites

studied are documented in the table below and show these kimberlites have an anomalously high

percentage of Type IIA diamonds.

Diamonds +3 DTC (0.026 carats) to 5 Grainer (1.2 carats)

Number of

Diamonds Typed

Number of Type IIa

Diamonds

Percentage Type IIa

Diamonds

K6 +3 (0.026 ct) & above 78 4 5.1

K14 +7 (0.12 ct) & above 126 3 2.4

K91 +3 (0.026 ct) & above 47 3 6.4

K252 +3 (0.026 ct) & above 153 7 4.6

he diamond typing exercise has shown presence of Type IIa diamonds, in elevated proportions, in all four

of these Buffalo Hills kimberlites. The diamonds analysed represent a spectrum of diamond sizes from +3

DTC (+0.026 carats) to 5 grainer (1.2 carats).

ype IIa diamonds are very rare and generally account for less than 2 percent of all natural rough

diamonds mined world -wide from kimberlite deposits. Only a small number of active diamo nd mines

regularly produce Type IIa diamonds with the most important of these mines being Cullinan Diamond

Mine in South Africa, Letseng Diamond Mine in the Kingdom of Lesotho and, more recently, Karowe

Diamond Mine in Botswana.

ear to Date Results

For the year ended December 31, 2022 , the Company recorded a net loss of $ 68.8 million, or $0.15 per

share (basic and fully diluted) , compared to a net loss of $ 7.7 million, or $0.02 per share, in 2021. The

increase in net loss during the current year was due to an impairment charge of $66.3 million offset by

the elimination of the $0.9 million contingent consideration combined with the year over year decrease

in operating costs and exploration and evaluation expenditures.

e recent actions by Rio Tinto Canada, which are outside the control of the Company, have resulted in a

high degree of uncertainty over the future of the Project. As a result, during the fourth quarter, the

Company: i) recognized a non-cash after-tax impairment of $66.3 million on its 25% share of the Fort à la

Corne asset leaving it fully impaired at December 31, 2022; and ii) determined that there was a remote

probability for a contingent payment and reduced the fair value of the contingent consideratio n to $nil

(December 31, 2021 - $0.9 million).

t December 31, 2022 the Company had $2.6 million (2021 – $1.3 million) in cash and cash equivalents

and working capital of $2.0 million (2021 - $(1.6) million). The increase in working capital was a result of

proceeds received from the April 2022 private placement, combined with the $0.6 million received from

the Ministry of Environment upon release of the Company’s environmental rehabilitation commitments,

offset by administrative and exploration and evalu ation expenditures. The Company believes it has

sufficient liquidity to fund general and administrative costs and certain exploration expenditures through

to the end of 2023.

elected financial highlights include:

Condensed Consolidated Statements of Financial Position

As at

December 31,

2022

As at

December 31,

2021

Current assets $ 2.7 M $ 1.5 M

Exploration and evaluation, investments and other assets 0.4 M 67.9 M

Current liabilities 0.7 M 3.1 M

Non-current liabilities 0.0 M 1.1 M

Shareholders’ equity 2.4 M 65.2 M

Consolidated Statements of Loss

Year Ended

December 31,

2022

Year Ended

December 31,

2021

Interest and other income $ 0.0 M $ 0.0 M

Expenses 3.0 M 8.0 M

Loss before undernoted items (3.0) M (8.0) M

Investment in Wescan Goldfields Inc. (0.4) M 0.3 M

Contingent consideration 0.9 M 0.0 M

Impairment charge (66.3) M 0.0 M

Net loss for the year (68.8) M (7.7) M

Net loss per share for the year (basic and diluted) (0.15) (0.02)

Condensed Consolidated Statements of Cash Flows

Year Ended

December 31,

2022

Year Ended

December 31,

2021

Cash flows used in operating activities $ (5.0) M $ (5.4) M

Cash flows from investing activities 0.6 M 0.0 M

Cash flows from financing activities 5.7 M 1.9 M

Net increase (decrease) in cash 1.3 M (3.5) M

Cash – beginning of year 1.3 M 4.8 M

Cash – end of year 2.6 M 1.3 M

Outlook

Fort à la Corne mineral properties

Star Diamond continues to work with Rio Tinto Canada in assessing alternatives regarding the Project.

These discussions remain ongoing and there is no certainty that any agreement will be reached between

Star Diamond and Rio Tinto Canada regarding any such potential arrangements. Management believes

that the negotiated return of the Project on reasonable terms is critical to its long-term success.

Buffalo Hills mineral properties

Management continues to review the recent results from the diamond valuation and typing analysis.

Discussions are ongoing with Canterra to determine possible future work programs. More detailed

updates on activities at the Buffalo Hills-JV will be provided as they become available.

bout 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 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. The Company also holds a 50% interest in the exploration and

evaluation properties and assets of the Buffalo Hills-JV located in north-central Alberta, Canada. Canterra

Minerals Corporation (“Canterra”) holds the remaining 50% interest. Canterra is the operator of the

Buffalo Hills-JV.

or further information, please contact:

Phone: (306) 664-2202

Email: [email protected]

Website www.stardiamondcorp.com

tay Connected with Us:

Twitter: https://twitter.com/StarDiamondCorp

LinkedIn: https://www.linkedin.com/company/star-diamond-corp

Facebook: https://www.facebook.com/people/Star-Diamond-Corp/100058096376664/

Instagram: https://www.instagram.com/stardiamondcorp/

Cau

tion Regarding Forward-looking Statements

This press release contains "forward -looking statements" and/or "forward -looking information" (collectively, "forward -looking

statements") within the meaning of applicable securities legislation. All statements, other than statements of historical fact, are

forward-looking statements. Forward -looking statements in this press release include, but are not limited to, Star Diamond’s

assessment of its cost and management structure going forward.

These forward-looking statements are based on Star Diamond's current beliefs as well as assumptions made by and information

currently available to Star Diamond 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, statements regarding

Rio Tinto Canada’s future plans and intentions including with respect to the Fort à la Corne mineral properties; the Company' s

management structure, 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, 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 Star Diamond's most recently filed Annual Information Form, and annual and interim MDA.

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