MONTREAL, QUEBEC--(Marketwire - Mar 14, 2013) - Stornoway Diamond Corporation (SWY.TO) is pleased to report that it has entered into option agreements with 0954506 B.C. Ltd. (the "Optionee"), a private company controlled by Ms. Eira Thomas, formerly a director of Stornoway, relating to Stornoway''s interest in each of the Qilalugaq, Pikoo and Timiskaming exploration projects. Under the terms of the option agreements, the Optionee will acquire an 80% interest in each of the Qilalugaq, Pikoo and Timiskaming exploration projects upon completion of a defined exploration program (the "option work program") specific to each project. The option work programs will be funded and operated by the Optionee. Stornoway retains a one-time back-in right to re-acquire a 20% interest in each project, thereby increasing its interest to 40%, by paying the Optionee an amount equal to three times the cost incurred by the Optionee in connection with the project-specific option work program. Stornoway has a 100% interest in each of these projects; the Qilalugaq project is subject to a 3% net smelter returns royalty on metals produced and a 3% gross-overriding royalty on the sale of industrial minerals, including diamonds.
The Optionee has notified Stornoway of its intent to assign its interest and obligations in the option agreements to North Arrow Minerals Inc. (TSX VENTURE:NAR) ("North Arrow"), as permitted under the terms of the option agreements. Upon closing of the assignment, North Arrow, as optionee, will assume the rights and obligations of 0954506 B.C. Ltd. under these agreements.
The option work program for the Qilalugaq, Nunavut project is designed to evaluate the potential of the Q1-4 kimberlite by the surface collection and subsequent processing of a 1,000 tonne bulk sample. The option work programs for the Pikoo, Saskatchewan and Timiskaming, Ontario projects are designed to evaluate the potential for bedrock kimberlite occurrences at each project. The Pikoo option work program will consist of a minimum of 2,000 meters of diamond drilling within the project, with a minimum of two drill holes for each of the North and South Target areas. The Timiskaming option work program will consist of single core drill holes testing three separate geophysical targets. The Timiskaming option agreement excludes the previously identified 95-2 kimberlite. Stornoway expects that exploration on these projects will commence in 2013, subject to receipt of all required permits and authorizations.
Matt Manson, Stornoway''s President and CEO commented: "This option agreement allows us to move these promising exploration projects forward while allowing our management team to focus on the development of the Renard Diamond Project, our core asset. The bulk sample program at Qilalugaq, for which an Inferred Mineral Resource of 26 million carats was declared by Stornoway in June 2012, is designed to recover a large enough parcel of diamonds for a preliminary valuation and economic assessment. The Pikoo and Timiskaming work programs are designed to test for the presence of kimberlite with economic potential. At the end of each program Stornoway and the Optionee will be well placed to make a determination on whether to advance each project further within a joint venture, if results warrant."
About the Qilalugaq, Pikoo, Timiskaming Exploration Projects
The Qilalugaq Diamond Project, located on the Rae Isthmus of Nunavut close to the hamlet of Repulse Bay, includes the Qilalugaq kimberlite pipes and the Naujaat system of kimberlite dykes. The project was originally optioned by Stornoway and subsequently acquired from BHP Billiton Diamonds Inc. in July 2006 and July 2010, respectively. The project includes the 12.5 hectare Q1-4 kimberlite, the largest kimberlite pipe in the eastern Canadian Arctic. In June 2012 Stornoway announced an Inferred Mineral Resource at Q1-4 of 26.1 million carats from 48.8 million tonnes of kimberlite with an average +1 DTC total diamond content of 53.6 carats per hundred tonnes (cpht) extending from surface to a depth of 205m. Additional resource upside in the form of a target for further exploration was estimated at between 7.9 to 9.3 million carats from 14.1 to 16.6 million tonnes of kimberlite with an average +1 DTC total diamond content of 56.1 cpht, extending from 205m depth to 305m depth.
The Pikoo Project comprises 33,374 hectares of contiguous claims located in central Saskatchewan, approximately 140 km east of La Ronge Saskatchewan and 100 km west of Flin Flon Manitoba and close to the community of Deschambault Lake. Previous geochemical and geophysical work by Stornoway has outlined the potential for several kimberlites with diamond potential on the property. In 2012 kimberlite float was discovered that returned a single microdiamond from 73.8 kilograms of material submitted for caustic dissolution.
The Timiskaming Project comprises 3,865 hectares of claims located close to the community of New Liskeard, Ontario. Stornoway and its predecessor companies have discovered a total of 9 kimberlites out of over 50 kimberlites that are believed to have been discovered in the region. Stornoway''s 95-2 kimberlite, the best delineated and most promising Timiskaming kimberlite discovered to date, contains an Inferred Mineral Resource of 2.3 million carats from 20.2 million tonnes of kimberlite with an average +1 DTC total diamond content of 11.3 cpht extending from surface to a depth of 300m. The 95-2 kimberlite is excluded from the Timiskaming option agreement.
About the Renard Diamond Project
The Renard Diamond Project is located approximately 250 km north of the Cree community of Mistissini and 350 km north of Chibougamau in the James Bay region of north-central Québec. In November 2011, Stornoway released the results of a Feasibility Study at Renard, followed by an Optimization Study in January 2013, which highlighted the potential of the project to become a significant producer of high value rough diamonds over a long mine life. Probable Mineral Reserves as defined under NI 43-101 stand at 17.9 million carats, with a further 17.5 million carats classified as Inferred Mineral Resources, and 23.5 to 48.5 million carats classified as non-resource exploration upside. All kimberlites remain open at depth. Pre-production capital cost stands at an estimated C$752 million, with a life of mine operating cost of C$57.63/tonne giving a 67% operating margin over an initial 11 year mine life. Readers are referred to the technical report dated December 29, 2011 in respect of the November 2011 Feasibility Study for the Renard Diamond Project, and the press release dated January 28, 2013 in respect of the January 2013 Optimization Study, for further details and assumptions relating to the project.
About Stornoway Diamond Corporation
Stornoway is a leading Canadian diamond exploration and development company listed on the Toronto Stock Exchange under the symbol SWY and headquartered in Montreal. Our flagship asset is the 100% owned Renard Diamond Project, on track to becoming Québec''s first diamond mine. Stornoway is a growth oriented company with a world class asset, in one of the world''s best mining jurisdictions, in one of the world''s great mining businesses.
On behalf of the Board
STORNOWAY DIAMOND CORPORATION
Matt Manson, President and Chief Executive Officer
This press release contains "forward-looking information" within the meaning of Canadian securities legislation and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. This information and these statements, referred to herein as "forward-looking statements", are made as of the date of this press release and the Company does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by law.
Forward-looking statements relate to future events or future performance and reflect current expectations or beliefs regarding future events and include, but are not limited to, statements with respect to: (i) the amount of mineral resources and exploration targets; (ii) the amount of future production over any period; (iii) net present value and internal rates of return of the mining operation; (iv) assumptions relating to recovered grade, average ore recovery, internal dilution, mining dilution and other mining parameters set out in the Feasibility Study or the Optimization Study; (v) assumptions relating to gross revenues, operating cash flow and other revenue metrics set out in the Feasibility Study or the Optimization Study; (vi) mine expansion potential and expected mine life; (vii) expected time frames for completion of permitting and regulatory approvals and making a production decision; (viii) the expected time frames for the construction of a mining grade road by Stornoway and completion generally of the Route 167 extension and the financial obligations or costs incurred by Stornoway in connection with such road extension; (ix) future exploration plans; (x) future market prices for rough diamonds; and (xi) sources of and anticipated financing requirements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects", "anticipates", "plans", "projects", "estimates", "assumes", "intends", "strategy", "goals", "objectives" or variations thereof or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.
Forward-looking statements are made based upon certain assumptions by Stornoway or its consultants and other important factors that, if untrue, could cause the actual results, performances or achievements of Stornoway to be materially different from future results, performances or achievements expressed or implied by such statements. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which Stornoway will operate in the future, including the price of diamonds, anticipated costs and Stornoway''s ability to achieve its goals. Certain important factors that could cause actual results, performances or achievements to differ materially from those in the forward-looking statements include, but are not limited to: (i) estimated approval date of the Environmental and Social Impact Assessment; (ii) required capital investment and estimated workforce requirements; (iii) estimates of net present value and internal rates of return; (iv) receipt of regulatory approvals on acceptable terms within commonly experienced time frames; (v) the assumption that a production decision will be made, and that decision will be positive; (vi) anticipated timelines for the commencement of mine production; (vii) anticipated timelines related to the construction of a mining grade road by Stornoway and completion generally of the Route 167 extension and the impact on the development schedule at Renard; (viii) anticipated timelines for community consultations and the impact of those consultations on the regulatory approval process; (ix) market prices for rough diamonds and the potential impact on the Renard Project''s value; and (x) future exploration plans and objectives.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. We caution readers not to place undue reliance on these forward-looking statements as a number of important risk factors could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates, assumptions and intentions expressed in such forward-looking statements. These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur, including the assumption in many forward-looking statements that other forward-looking statements will be correct, but specifically include, without limitation, (i) risks relating to variations in the grade, kimberlite lithologies and country rock content within the material identified as mineral resources from that predicted; (ii) variations in rates of recovery and breakage; (iii) the greater uncertainty of exploration targets; (iv) developments in world diamond markets; (v) slower increases in diamond valuations than assumed; (vi) risks relating to fluctuations in the Canadian dollar and other currencies relative to the US dollar; (vii) increases in the costs of proposed capital and operating expenditures; (viii) increases in financing costs or adverse changes to the terms of available financing if any; (ix) tax rates or royalties being greater than assumed; (x) results of exploration in areas of potential expansion of resources; (xi) changes in development or mining plans due to changes in other factors or exploration results of Stornoway; (xii) changes in project parameters as plans continue to be refined; (xiii) risks relating to receipt of regulatory approvals or the implementation of the existing Impact and Benefits Agreement with aboriginal communities; (xiv) the effects of competition in the markets in which Stornoway operates; (xv) operational and infrastructure risks; (xvi) technical, environmental, permitting and execution risk relating to the construction by Stornoway of a mining grade road forming part of the Route 167 extension, (xvii) the additional risks described in Stornoway''s most recently filed Annual Information Form, annual and interim MD&A, and Stornoway''s anticipation of and success in managing the foregoing risks. Stornoway cautions that the foregoing list of factors that may affect future results is not exhaustive.
When relying on our forward-looking statements to make decisions with respect to Stornoway, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Stornoway does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by Stornoway or on our behalf, except as required by law.