STAR Diamond Corporation Announces Year End Results
NEWS RELEASE March 29, 2018
TSX: DIAM Saskatoon, Saskatchewan
STAR DIAMOND CORPORATION ANNOUNCES YEAR END RESULTS
Star Diamond Corporation (the “Company”) reports that the audited results of its operations for the year ended
December 31, 2017 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 consolidation of the Fort à la Corne mineral properties (including the Star - Orion South
Diamond Project), resulting in the Company holding a 100% interest and Newmont Canada FN Holdings
ULC (“Newmont”) increasing its equity interest in the Company;
- Announced the concurrent Option to Joint Venture Agreement with Rio Tinto Exploration Canada Inc.
(“RTEC”) for the Fort à la Corne mineral properties (including the Star - Orion South Diamond Project);
- Announced the rela ted closing of a subscription by RTEC for 5.6 million Common Shares and 5.6 million
Common Share purchase warrants for aggregate gross proceeds of $1.0 million;
- Announced core and sonic drilling programs and geotechnical investigations on the Star Kimberlite
- Working capital of $3.9 million at December 31, 2017;
- Issued and outstanding shares of 378.3 million at December 31, 2017
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 complete d 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.
As a result of the 2017 mineral property consolidation and earn -in agreement (as discussed below), the
Company is now in an enhanced position to advance its 100% held Star - Orion South Diamond Project
(“Project”), which is situated in the Fort à la Corne kimberlite field in central Saskatchewan. Indicated Mineral
Resources for the Star - Orion South Diamond Project are 55.4 million carats (see News Release dated
November 9, 2015 and Technical Report filed December 2 1, 2015). In addition to the Indicated Mineral
Resource Estimate, the Star and Orion South Kimberlites include Inferred Resources containing 11.5 million
carats.
Consolidation of the Fort à la Corne mineral properties and Option to Joint Venture
In June 2 017, the Company announced that it had acquired (the "Newmont Acquisition") from Newmont
Canada FN Holdings ULC ("Newmont") all of Newmont's participating interest in the Fort à la Corne joint
venture (the "FalC JV"), resulting in the Company owning 100% of the of the Fort à la Corne mineral properties
(including the Project), and has concurrently entered into an Option to Joint Venture Agreement (the "Option
Agreement") with Rio Tinto Exploration Canada Inc. ("RTEC") pursuant to which the Company has grant ed RTEC
an option to earn up to a 60% interest in the Fort à la Corne mineral properties (including the Project) on the
terms and conditions contained in the Option Agreement (see N ews Release dated June 23, 2017). Immediately
after the closing of the Newm ont Acquisition and issuance of common shares, Newmont held approximately
19.9% of the Company’s common shares issued and outstanding on a non-diluted basis.
Activities relating to the Star - Orion South Diamond Project
During the fourth quarter of 2017, t he Company and RTEC announced the completion of an HQ core drilling
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 diamo nd drill program, geotechnical
investigations on the overburden were also conducted (See News Release dated January 8, 2018) . The core
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 were in close proximity to the core holes, which will act as pilot holes for the proposed
sampling program.
During 2017, the Company also performed geotechnical investigations, assessments and test work on the
Project kimberlites. The work completed during this period included X -ray Tr ansmission (“XRT”) recovery of
diamonds from Star pyroclastic kimberlite, ore processing data review, diamond parcel characterization,
kimberlite particle size analysis and overburden removal investigations (See News Release dated March 6,
2017). These pro grams also investigate the use of new technology for the efficient excavation of the open pit
and improvements to the flow -sheet of the diamond processing plant, while simultaneously reducing pre -
production capital costs and the time to initial diamond production.
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 J anuary 26, 2017). The Ministry has indicated to the Company
that significant progress on meeting its duty 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. The 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).
Year to Date Results
For the year ended December 31, 201 7, the Company recorded net income of $40.8 million or $0.12 per share
(basic and fully diluted) compared to a net loss of $ 5.4 million or $0.0 2 per share in 201 6. Net income during
2017 was due to the partia l reversal of previously recorded impairments relating to the Company’s Fort à la
Corne mineral properties ($44.5 million). As a result of the Newmont Acquisition, the Company performed an
assessment of the estimated recoverable amount of exploration and e valuation assets. Based on this
assessment, the recoverable amount of exploration and evaluation assets (which includes the Fort à la Corne
mineral properties) was determined to be $66.3 million, resulting in a partial reversal of previously recorded
impairments. Exploration and evaluation expenditures incurred during the year ended December 31, 2017
primarily related to work relating to geotechnical investigations and test work for the Project. The loss during
the year ended September 30, 2016 was primaril y due to ongoing operating costs and exploration and
evaluation expenditures incurred by the Company exceeding interest income earned on cash and cash
equivalents and short-term investments.
In connection with the Option Agreement, RTEC subscribed for 5.6 million units, for a gross subscription amount
of $1.0 million, with each unit consisting of one common share and one common share purchase warrant. In
addition, options and broker warrants were also exercised during the quarter ended June 30, 2017 for total cash
proceeds of $0.4 million. In connection to the Newmont Acquisition, 53.8 million common shares and 1.1 million
common share purchase warrants were issued to Newmont. The Company also agreed that Newmont will
receive a contingent payment in the ag gregate amount of $3.2 million upon a positive decision being made to
develop a mine on the Project. The Company, in its sole discretion (subject to regulatory approvals), may satisfy
the contingent payment due to Newmont through a cash payment or the issuance of common shares. The
estimated discounted present value of this contingent consideration at December 31, 2017 was determined to
be $0.7 million.
Selected financial highlights include:
Condensed Consolidated Statements of Financial Position
As at
December 31,
2017
As at
December 31,
2016
Current assets $ 4.2 M $ 3.2 M
Exploration and evaluation, capital and other assets 67.7 M 1.5 M
Current liabilities 0.4 M 0.3 M
Premium on flow-through shares 0.2 M 0.2 M
Non-current liabilities 1.3 M 0.6 M
Shareholders’ equity 70.0 M 3.6 M
Consolidated Statements of Income (Loss)
Year Ended
December 31,
2017
Year Ended
December 31,
2016
Interest and other income $ 0.1 M $ 0.0 M
Expenses 4.0 M (5.9) M
Flow-through premium recognized in income 0.2 M 0.5 M
Reversal of prior impairments to exploration and evaluation assets 44.5 M 0.0 M
Net and income (loss) for the period 40.8 M (5.4) M
Net income (loss) per share for the period (basic and diluted) 0.12 (0.02)
Condensed Consolidated Statements of Cash Flows
Year Ended
December 31,
2017
Year Ended
December 31,
2016
Cash flows from operating activities $ (3.6) M $ (4.5) M
Cash flows from investing activities 0.6 M 0.1 M
Cash flows from financing activities 4.2 M 3.3 M
Net increase (decrease) in cash 1.2 M (1.1) M
Cash – beginning of period 2.8 M 3.9 M
Cash – end of period 4.0 M 2.8 M
Outlook
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 March 29, 2018, the Company had approximately $3.1 million in cash and cash equivalents and short-term
investments (excluding $0. 6 million in restricted cash). A portion of the Co mpany’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 L itigation Reform Act of 1995. The words "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 activities or other development plans contain forward- looking
statements. Forward-looking statements in this news release include, but are not l imited to, statements relating 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 as sociated 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 Company's objectives for the ensuing year, including t he 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 the markets in which the Company operates, the impact of changes in the laws and regulations regula ting
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 relea ses and
technical reports. The Company 's anticipation of and success in managing the foregoing risks could cause a ctual 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 may be made.
For further information: [email protected] or (306) 664-2202
www.stardiamondcorp.com
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