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Star Diamond Corporation Announces Third Quarter Results

TSX: DIAM                                                                                                           

SASKATOON , Nov. 7, 2019 /CNW/ - Star Diamond Corporation (the "Company") reports that the unaudited results of its operations for the quarter ended September 30, 2019 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 period is as follows:

Star Diamond Corporation (CNW Group/Star Diamond Corporation)

Highlights

  • Announced updates on bulk sampling program by Rio Tinto Exploration Canada ("RTEC") on the Company's 100% held Star and Orion South Kimberlites (the "Star - Orion South Diamond Project", or "Project");
  • Announced completion of ten bulk sampling holes (trenches) by RTEC on the Company's Star Kimberlite;
  • Working capital of $3.4 million at September 30, 2019 ;
  • Issued and outstanding shares of 409.1 million at September 30, 2019


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 earn-in agreement with Rio Tinto Exploration Canada Inc. ("RTEC"), a wholly-owned subsidiary of Rio Tinto (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 announced the positive results of an 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 ). In addition, during 2018, the Saskatchewan Ministry of Environment ("Ministry") approved the Project (See News Release dated October 25, 2018 ). The Ministry conducted a thorough environmental assessment for the Project, including a detailed environmental impact statement, and carried out in-depth consultation prior to the decision to approve the Project. This included fulfilling the Province's duty to consult with local First Nations and Métis communities. 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 ).

Activities relating to the Star - Orion South Diamond Project
The Company recently announced that RTEC have completed the drilling of ten bulk sample holes (trenches) to conclude their program 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 surface and recovered using a Kimberlite Separation Unit ("KSU"), with samples loaded and stored in cubic metre bulk bags, which total 6,848 in number (estimated by RTEC to be approximately 8,271 wet tonnes).

The Trench Cutter Sampling Rig being utilized by RTEC consists of a Bauer BC 50 Cutter mounted on a Bauer MC 128 Duty-cycle Crane. Cutter rigs by Bauer are used around the world for complex engineering projects. Bauer has indicated that this is the first time in the world that this technology is being used in an active project to sample kimberlite at depths of up to 250 meters. The Trench Cutter Sampling Rig is designed to sample large volumes of kimberlite by excavating a rectangular hole of 3.2 by 1.5 metres. The Trench Cutter Sampling Rig's cutter head has been designed to excavate kimberlite fragments of up to 80 millimetres in diameter, which are then pumped in a slurry to the surface to a KSU. The KSU has been designed to recover kimberlite fragments between 80 and 0.85 millimetres from the Trench Cutter Sampling Rig slurry. The Trench Cutter Sampling Rig and associated KSU have been designed by RTEC to minimize diamond breakage during sample excavation, washing and bagging. This well washed kimberlite material will help ensure optimal performance of RTEC's on-site Bulk Sample Plant ("BSP"), which is now at an advanced stage of construction. This on-site BSP uses 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 minimal breakage. Final diamond recovery from the concentrate produced by the on-site BSP is to be conducted by RTEC at a secure off-site facility.

Quarterly results
For the quarter ended September 30, 2019 , the Company recorded a net loss of $0.8 million or $0.00 per share (basic and fully diluted) compared to a net loss of $1.0 million or $0.00 per share for the same period in 2018. The losses during the quarters ended September 30, 2019 and 2018 were due to operating costs and exploration and evaluation expenditures incurred by the Company.

Year to date results
For the nine months ended September 30, 2019 , the Company recorded a net loss of $3.2 million or $0.01 per share compared to a net loss of $3.5 million or $0.01 per share for the same period in 2018. The losses during the nine month periods ended September 30, 2019 and 2018 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 nine months ended September 30, 2019 primarily related to geological and metallurgical investigations and test work for the Project as well as other costs associated with the Project.  

Selected financial highlights include:

Condensed Consolidated Statements of Financial Position

As at

September 30,

2018

As at

December  31,

2018

Current assets

$  3.5  M

$ 2.9  M

Exploration and evaluation, capital and other assets

67.7  M

67.5  M

Current liabilities

0.1  M

0.3  M

Non-current liabilities

1.6  M

1.3  M

Shareholders' equity

69.5  M

68.8  M

 

Condensed Consolidated Statements of Loss

Three Months
Ended
September 30,

 2019

Three Months
Ended
September 30,

 2018

 Nine Months
Ended
September 30,

 2019

Nine Months
Ended
September 30,

 2018

Interest and other income

$ 0.0  M

$ 0.0  M

$ 0.0  M

$ 0.1  M

Expenses

0.8  M

1.0  M

3.2  M

3.7  M

Flow-through premium recognized in income

0.0  M

0.1  M

0.0  M

0.2  M

Investment in Wescan Goldfields Inc.

0.0  M

(0.1) M

0.0  M

(0.1) M

Net loss for the period

0.8  M 

 1.0  M 

 3.2  M 

3.5  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

Nine Months
Ended
September 30,

 2019

Nine Months
Ended
September 30,

 2018

Cash flows from operating activities

$ (2.2) M

$ (2.4) M

Cash flows from investing activities

0.0  M

(0.1) M

Cash flows from financing activities

2.7  M

0.1  M

Net increase (decrease) in cash

0.5  M

(2.4) M

Cash – beginning of period

2.8  M

4.0  M

Cash – end of period

3.3  M

1.6  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 2018 PEA shows 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 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 defined the start of 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 and Fort à la Corne kimberlites. While RTEC's work continues to focus on the bulk sampling of the Star and Orion South kimberlites, Brownfields exploration programs by RTEC also aim 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. The Company is also very pleased to continue to have Newmont Goldcorp Corporation as a significant shareholder.

As of November 7, 2019 , the Company had approximately $3.2 million in cash and cash equivalents (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 or other development plans constitute forward-looking statements. By 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 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, 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 additional financing in the ensuing years; statements with respect to geological and metallurgical investigations, assessments and test work; the potential proportion of Type IIa diamonds in the Star and Orion South kimberlites and the potential for the recovery of large high quality diamonds; RTEC's and the Company's objectives for the ensuing year, including the timing for construction of the bulk sample processing plant and timing for the bulk sampling program; as well as the Brownfields programs.

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 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 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.

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.

SOURCE Star Diamond Corporation


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