STAR Diamond Corporation Announces First Quarter Results
NEWS RELEASE May 3, 2018
TSX: DIAM Saskatoon, Saskatchewan
STAR DIAMOND CORPORATION ANNOUNCES FIRST QUARTER RESULTS
Star Diamond Corporation (the “Company”) reports that the unaudited results of its operations for the quarter
ended March 31, 2018 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 year is as follows:
Highlights
- Announced the independent Preliminary Economic Assessment (“PEA”) on the Company’s 100% held Star
and Orion South Kimberlites (the “Star - Orion South Diamond Project”, or “Project”): 66 million carats of
diamonds could be recovered in a surface mine over a 38-year Project life:
Base Case scenario (Model diamond price): Net Present Value (“NPV”) (7%) of $3.3 billion and an
Internal Rate of Return (“IRR”) of 22% before taxes and royalties, and an after-taxes and royalties NPV
(7%) of $2.0 billion with an IRR of 19% and payback period of 3.4 years after the commencement of
diamond production;
Case 1 scenario (High Model diamond price): NPV (7%) of $5.4 billion for an IRR of 32% before taxes
and royalties
- Announced a technical update on proposed sampling program by Rio Tinto Exploration Canada (”RTEC”);
- Announced core and sonic drilling programs and geotechnical investigations on the Star Kimberlite;
- Working capital of $3.2 million at March 31, 2018;
- Issued and outstanding shares of 379.9 million at March 31, 2018
Overview
Star Diamond Corporation is a Canadian natural resource company focused on exploring and developing
Saskatchewan's diamond resources. In February, 2018, the Company announce d that it had changed its name
from Shore Gold Inc. to Star Diamond Corporation and its trading symbol on the Toronto Stock Exchange to
“DIAM” (see News Release dated Februa ry 12, 2018). Th is new corporate name is in honour of the Star
Kimberlite, located in the Fort à la Corne forest of Saskatchewan, Canada. It was the exploration and evaluation
work completed on the Star Kimberlite, which demonstrated the significant quality, size and value of the
contained diamond populations. These high value diamonds facilitated the consolidation and advancement of
the Company’s Fort à la Corne area kimberlites, including the Star - Orion South Diamond Project.
The Company recently announced the positive results of the independent Preliminary Economic Assessment
(“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 yea rs after the commencement of diamond
production (see News Release dated April 16, 2018). As a result of the 2017 mineral property consolidation and
concurrent earn-in agreement with RTEC (see News Release dated June 23, 2017), the Company is now in an
enhanced position to advance its 100% held Star - Orion South Diamond Project (“Project”).
Activities relating to the Star - Orion South Diamond Project
During the fourth quarter of 2017, the Company and RTEC announced the completion of an HQ core drillin g
program, consisting of ten holes and some 2, 409 metres of drilling, on the Star Kimberlite (See News Releases
dated October 12, 2017 and December 11, 2017 ). In conjunction with this diamond drill program, geotechnical
investigations on the overburden wer e also conducted (See News Release dated January 8, 2018) . The core
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drilling was required to accurately document the internal stratigraphy of the Star Kimberlite prior to a proposed
sampling program by RTEC , which is expected to commence in 2018. The Sonic drilling investigation of the
overburden above the kimberlite was also an important precursor to a proposed sampl ing program. The Sonic
drill hole locations we re in close proximity to the core holes, which will act as pilot holes for the proposed
sampling program.
RTEC, Bauer Maschinen GmbH (“Bauer”) and Nuna Logistics Limited recently finalized contractural
arrangements for the manufacture, supply and operation of equipment to be used for the next phase of large
diameter, bulk sample drilling on the Star Kimberlite (See News Release dated April 12, 2018). RTEC aim to use a
Bauer BC 50 Cutter mounted on a Bauer MC 128 Duty -cycle Crane to drill and sample to depths of up to 250
metres below surface. Each ten metres of advance down hole aims to excavate some 100 tonnes of kimberlite.
Bauer cutter rigs are used around the world for complex engineering projects. Bauer has indicated that t his will
be the first time in the world that this technology will be used in an active project to reach a depth of 250
meters. Bauer has committed to build and de liver the equipment to RTEC by mid -2018 with drilling of RTEC’s
program to commence this year.
In January 2017, the Company was informed by the Saskatchewan Minister of Environment that additional
consultation is required for the government to meet its legal obligation with respect to duty to consult and
accommodate process (See News Release dated January 26, 2017). The Ministry has indicated to the Company
that significant progress on meeting its d uty to consult obligations has been made and that once consultations
with potentially impacted First Nation and Métis communities are completed, all pertinent information will be
reviewed before a decision is made under The Environmental Assessment Act. Th e Canadian Environmental
Assessment Agency previously announced an Environmental Assessment Decision for the proposed Project in
which the federal Environment Minister indicated that the Project “is not likely to cause significant adverse
environmental effects when the mitigation measures described in the Comprehensive Study Report are taken
into account” (See News Release dated December 3, 2014).
Results
For the quarter ended March 31, 2018, the Company recorded net loss of $0.7 million or $0.00 per share (basic
and fully diluted) compared to a net loss of $ 0.9 million or $0.0 0 per share for the same period in 2017 . 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 and short-term investments.
Selected financial highlights include:
Condensed Consolidated Statements of Financial Position
As at
March 31,
2018
As at
December 31,
2017
Current assets $ 3.4 M $ 4.2 M
Exploration and evaluation, capital and other assets 67.7 M 67.7 M
Current liabilities 0.2 M 0.4 M
Premium on flow-through shares 0.2 M 0.2 M
Non-current liabilities 1.3 M 1.3 M
Shareholders’ equity 69.4 M 70.0 M
Consolidated Statements of Income (Loss)
Quarter Ended
March 31,
2018
Quarter Ended
March 31,
2017
Interest and other income $ 0.0 M $ 0.0 M
Expenses 0.8 M 0.9 M
Flow-through premium recognized in income 0.1 M 0.0 M
Net loss for the period (0.7) M (0.9) M
Net loss per share for the period (basic and diluted) 0.00 0.00
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Condensed Consolidated Statements of Cash Flows
Quarter Ended
March 31,
2018
Quarter Ended
March 31,
2017
Cash flows from operating activities $ (1.0) M $ (0.9) M
Cash flows from investing activities 0.0 M 0.0 M
Cash flows from financing activities 0.0 M 0.0 M
Net decrease in cash (1.0) M (0.9) M
Cash – beginning of period 4.0 M 2.8 M
Cash – end of period 3.0 M 1.9 M
Outlook
The positive results of the PEA show that the Star and Orion South Kimberlites have the potential to be
economically developed as a world class diamond mine. On the shoulders of more detailed drilling and the
Revised Resource Estimate of 2015, t he Co mpany has taken a fresh look at the Project and has refined the
mining and processing plans with exciting and positive results.
The successful completion of the 2017 consolidation of the Company’s Fort à la Corne mineral properties
(including the Star - Orion South Diamond Project) and the concurrent earn -in arrangement with RTEC sets the
stage for a new phase for the Company. It is the Company’s view that Rio Tinto is one of the few companies in
the world with the resources and expertise to move forward with a project of the magnitude of the Star - Orion
South Diamond Project. The Company is also very pleased to have acquired the remaining portion of the Project
from Newmont while continuing to have Newmont as a significant shareholder.
As of May 3, 2018 , the Company had a pproximately $2.7 million in cash and cash equivalents and short -term
investments (excluding $0. 6 million in restricted cash). A portion of the Company’s cash and cash equivalents
and short-term investments will be used for 2018 programs (including flow -through commitments) to further
assess, evaluate and advance certain aspects of the Project, as well as for general corporate matters.
Caution Regarding Forward-looking Statements
This news release contains forward -looking statements within the meaning of certain securities laws, including the "safe harbour"
provisions of Canadian securities legislation and the United States Private Securities Litigation Reform Act of 1995. The wor ds "may,"
"could," "should," "would," "suspect," "outlook," "believe," "plan," "anticipate," "estimate," "expect," "intend," and words and
expressions of similar import are intended to identify forward -looking statements, and, in particular, statements regarding the
Company's future operations, future exploration and development ac tivities or other development plans contain forward -looking
statements. Forward -looking statements in this news release include, but are not limited to, 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, pre-tax payback period, tonnes of kimberlite to be mined, carats per tonne to be recovered (grade), diamond
prices, life of mine, capital costs, 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 a nd associated timelines; the environmental assessment and permitting process; the Company's
intention to seek additional financing in the ensuing years; statements with respect to geotechnical investigations, assessments and test
work; the proposed sampling program; Company and RTEC's objectives for the ensuing year.
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 the Company or its contractual partners, the
effects of competition in t he markets in which the Company operates, 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.
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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 incor rect. 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 may be made.
For further information: [email protected] or (306) 664-2202
www.stardiamondcorp.com
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