STAR Diamond Corporation Announces Year End Results
NEWS RELEASE March 28, 2019
TSX: DIAM Saskatoon, Saskatchewan
STAR DIAMOND CORPORATION ANNOUNCES YEAR END RESULTS
Star Diamond Corporation (“DIAM”, “Star Diamond” or the “Company”) reports that the audited results of its
operations for the year ended December 31, 201 8 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:
o 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;
o Case 1 scenario (High Model diamond price): NPV (7%) of $5.4 billion for an IRR of 32% before taxes
and royalties
- Announced environmental approval of the Project by the provincial Ministry of Environment;
- Announced study results that indicate a high proportion of Type I Ia diamonds present in both the Star
(26.5 percent) and the Orion South (12.5 percent) kimberlites;
- Announced technical updates on bulk sampling program of the Star and Orion South kimberlites by Rio
Tinto Exploration Canada (”RTEC”);
- Announced Brownfields exploration programs by RTEC on the Company’s 100% held Fort à la Corne
kimberlites outside of the Star and Orion South kimberlites;
- Working capital of $2.6 million at December 31, 2018;
- Issued and outstanding shares of 392.1 million at December 31, 2018
Overview
Star Diamond Corporation is a Canadian natural resource company focused on exploring and developing
Saskatchewan's diamond resources. 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.
During 2018, the Company announce d 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 years after the commencement of
diamond production (see News Release dated April 16, 2018).
During the quarter ended December 31, 2018, the Saskatchewan Ministry of Environment (“Ministry”) approved
the Company’s Star - Orion South Diamond Project ( See News Release dated October 25, 2018) . The Ministry
indicated that they have conducted a thorough environmental assessment for the P roject, including a detailed
environmental impact statement, and carried out in -depth consultation prior to the decision to approve the
Project. This include d fulfilling the Province’s duty to consult with local First Nations and Métis communities.
The Can adian Environmental Assessment Agency previously announced a positive Environmental Assessment
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Decision for th e proposed Project by the federal Environment Minister (See News Release dated December 3,
2014).
Activities relating to the Star - Orion South Diamond Project and Fort à la Corne mineral properties
During 2018, RTEC , Bauer Maschinen GmbH (“Bauer”) and Nuna Logistics Limited finalized contractual
arrangements for the manufacture, supply and operation of equipment to be used for bulk sampling of the Star
and Orion South Kimberlite s. RTEC aim to use a Bauer BC 50 Cutter mounted on a Bauer MC 128 Duty -cycle
Crane (“Trench Cutter Sampling Rig”) to drill and sample to depths of up to 250 metres below surface (See News
Release dated April 12, 2018) . 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 this 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.
During 2018, RTEC and Consulmet (Pty) Ltd finalized contractual arrangements for the manufacture and supply
of a 30 tonne per hour on-site bulk sample plant (See News Release dated May 15, 2018). The bulk sample plant
has been specifically designed to maximize liberation and recovery of diamonds throughout the -25+0.85
millimetre size range, and minimize diamond breakage, particularly among potential specials (plus 10.8 carat
diamonds) that may b e recovered from both the Star and Orion South Kimberlites. The bulk sample plant will
use a modern flow -sheet and the latest X -ray transmission (“XRT”) sorting technology to ensure any large
diamonds present (up to 25 millimetres) are recovered with minim al breakage. A secondary crushing circuit,
using a high pressure rolls crusher (“HPRC”), will maximize the liberation of smaller diamonds from the
kimberlite.
During 2018, RTEC successfully completed panels at five of the proposed ten bulk sample locations on the Star
Kimberlite, using the Cutter Soil Mixing (“CSM”) drilling rig (See News Release dated October 1 , 2018). The CSM
drilling program mixes cement grout with the top 20 metres of near- surface sands in order to stabilize the
unconsolidated sand overburden at each of RTEC’s planned bulk sampling locations.
Prior to the commencement of winter shut down of the Trench Cutter Sampling Rig, RTEC commenced drilling
of the first bulk sample hole on the Star Kimberlite using the Trench Cutter Sampling Rig. The Trench Cutter bulk
sample drilling was successfully initiated to a depth of 37.1 metres below surface (See News Release dated
November 1, 2018). The Trench Cutter Sampling Rig successfully excavated the sand and till overburden and
returned a substantial proportion of large (up to 80 millimetre) fragments from the till. The encouraging
performance of the Trench Cutter Sampling Rig was unfortunately constrained by the commissioning of the
desanding plant, which did not operate at design capacity. The design and construction of the desanding plant
are being evaluated by RTEC with the intent that the desanding plant will be revised or replaced by the time
that the Trench Cutter Sampling Rig program resumes on the first bulk sample hole and RTEC's on -site bulk
sample processing plant is commissioned in 2019.
The Company recently announced that RTEC commenced the sonic and core drilling of up to 25 pilot holes each,
on the Orion South Kimberlite (see News Release dated January 24, 2019). The sonic drilling is to provide a
detailed log of the overburden stratigraphy above the kimberlite, while the core holes are being drilled to
generate detailed logs of the kimberlite geology at each locality in preparation for RTEC’s proposed bulk
sampling of the Orion South kimberlite with the Trench Cutter Sampling Rig.
RTEC is also performing Brownfields exploration program s to investigate and prioritise the Company’s Fort à la
Corne kimberlites outside of the Star and Orion South kimberlites (see News Releases October 25, 2018 and
November 9, 2018). While the Star and Orion South kimberlites are the focus of the planned bulk sampling by
RTEC, respectively, there are so me 60 other kimberlites within the Fort à la Corne diamond district, on mineral
dispositions held 100 percent by Star Diamond. Star Diamond and other companies have previously completed
extensive exploration on these Fort à la Corne kimberlites, including geophysical surveys, pattern core drilling,
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large diameter drilling and micro - and macrodiamond analyses, which resulted in the documentation of
geological models for a number of these bodies.
The Company recently announced the results of a study into th e abundance of Type IIa diamonds in the
diamond parcels recovered from the Star and Orion South Kimberlites (see News Release dated March 4, 2019).
This study confirmed that unusually high proportions of Type IIa diamonds are present in both the Star (26.5
percent) and the Orion South (12.5 percent) kimberlites. M any high-value, top colour, large specials (greater
than 10.8 carats) are Type IIa diamonds, includ ing all ten of the largest known rough diamonds recovered
worldwide.
Year to Date Results
For the year ended December 31, 201 8, the Company recorded a net loss of $4.6 million or $0. 01 per share
(basic and fully diluted) compared to net income of $40.8 million or $0 .12 per share in 201 7. The loss during
2018 was primarily due to ongoing operating costs and exploration and evaluation expenditures incurred by the
Company exceeding interest and other income earned. Net income during 2017 was due to the partial reversal
of previously recorded impairments relating to the Company’s Fort à la Corne mineral properties ($44.5 million).
Selected financial highlights include:
Condensed Consolidated Statements of Financial Position
As at
December 31,
2018
As at
December 31,
2017
Current assets $ 2.9 M $ 4.2 M
Exploration and evaluation, capital and other assets 67.5 M 67.7 M
Current liabilities 0.3 M 0.4 M
Premium on flow-through shares 0.0 M 0.2 M
Non-current liabilities 1.3 M 1.3 M
Shareholders’ equity 68.8 M 70.0 M
Consolidated Statements of Income (Loss)
Year Ended
December 31,
2018
Year Ended
December 31,
2017
Interest and other income $ 0.1 M $ 0.1 M
Expenses 4.8 M 4.0 M
Flow-through premium recognized in income 0.2 M 0.2 M
Investment in Wescan Goldfields Inc. (0.1) M 0.0 M
Reversal of prior impairments to exploration and evaluation assets 0.0 M 44.5 M
Net income (loss) for the period (4.6) M 40.8 M
Net income (loss) per share for the period (basic and diluted) (0.01) 0.12
Condensed Consolidated Statements of Cash Flows
Year Ended
December 31,
2018
Year Ended
December 31,
2017
Cash flows from operating activities $ (3.0) M $ (3.6) M
Cash flows from investing activities (0.1) M 0.6 M
Cash flows from financing activities 1.9 M 4.2 M
Net increase (decrease) in cash (1.2) M 1.2 M
Cash – beginning of period 4.0 M 2.8 M
Cash – end of period 2.8 M 4.0 M
Outlook
The positive results of the 2018 PEA show that the Star and Orion South Kimberlites have the potential to be
economically developed as a diamond mine. T he recent provincial environmental approval, alongside the
previous positive f ederal decision, marks a major milestone for the Project. As illustrated by the PEA, the
Company has shown 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 38 year mine life.
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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 mov e 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. RTEC’s work focuses on the bulk
sampling of the Star and Orion South kimberlites. In addition, Brownfields exploration programs by RTEC aims to
investigate and prioritise the Company’s other kimberlite bodies in the Fort à la Corne diamond district . There
are some 60 other kimberlites within the Fort à la Corne diamond district , on mineral dispositions held 100
percent by the Company.
As of March 28, 2019, the Company had approximately $2.3 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
will be used for 2019 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 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 o r other development plans constitute forward-
looking statements. B y their nature, statements referring to mineral reserves, mineral resources, PEA or TFFE constitute forward -looking
statements. Forward-looking statements contained or implied in this news r elease 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, 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; t he Company's intention to seek additional financing in the ensuing years; statements with respect to metallurgical investigat ions,
assessments and test work; the potential proportion of Type IIa diamonds in the Star and Orion South kimberlites and the pote ntial for the
recovery of large high quality diamonds ; RTEC’s an d the Company’s objectives for the ensuing year, including the timing for revision or
replacement of the desanding plant, timing for delivery and construction of the bulk sample processing plant and timing for recommencement of
the bulk sampling program; as well as the Brownfields programs.
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 the Company or its partners, the effects of competition in the markets in which the
Company operates, the impact of changes in the laws and regulations regulating mining exploration and development, judicial o r regulato ry
judgments and legal proceedings, operational and infrastructure risks and the additional risks described in the Company's mos t recently filed
Annual Information Form, annual and interim MD&A, news releases and technical reports. The Company's anticipat ion 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 rea sonable 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 t he 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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