MONTREAL, QUEBEC--(Marketwire - Mar 27, 2013) - Stornoway Diamond Corporation (SWY.TO) is pleased to provide an update on progress made in the construction of the Renard Mine Road that will provide year-round vehicle access to the Renard Diamond Project by way of the communities of Mistissini and Chibougamau. Due to favourable weather conditions, construction of the Renard Mine Road has commenced earlier than anticipated, with overall progress already standing at 12% of expected work. First all-season vehicle access to Renard is currently scheduled for the fourth quarter of this year, as previously anticipated.
Under the terms of an agreement executed on November 15th, 2012 by Stornoway, the Québec Ministère des Transports ("MTQ"), the Ministère des Ressources Naturelles, and the Ministère des Finances et de l'Économie ("MFE"), a 240km long all-season road linking Renard to the Québec highway network is currently being constructed in four segments, A to D. Progress is well established on segments A and B, which are being completed by the MTQ as a 70km/hr two-lane gravel highway. Stornoway will complete the remaining 97km covered by segments C and D as a 50km/hr single lane mining road under the terms of a Financing Agreement executed on December 6th, 2012 between Stornoway and the MFE.
As previously reported, first vehicle access to the Renard project site was achieved on February 15th by way of a winter road constructed by the MTQ. The winter road, which opened early and remains in use currently, has been used to ship construction equipment and fuel to the project site and has allowed construction of the all-season Renard Mine Road to commence well ahead of the planned schedule. Consequently, Stornoway can report the following construction milestones achieved:
- Construction camps for the accommodation of 100 people have been completed;
- Building materials for 9 of 16 permanent bridges have been delivered to watercourse sites and the abutments of 3 bridges have been completed; and
- Dry-fill foundations have been completed and culverts delivered on 85% of all wetland sites;
Several road construction contracts have been entered into by Stornoway with businesses located in the James Bay Region of Québec or associated with the Crees of Eeyou Itschee. These include:
- A consortium of the Eskan Company, the Development Corporation of the Cree Nation of Mistissini, and Swallow-Fournier inc., for road construction;
- Nordic Structures Bois, a wholly-owned subsidiary of Chantiers Chibougamau Ltée, for bridge construction;
- Jos Ste-Croix & Fils Ltée of Chibougamau for construction management;
- The Eenatuk Forestry Corporation for tree clearing; and
- The Kiskinchiish Corporation for camp services and catering;
- Petronor, a wholly owned Cree enterprise, for fuel supply.
On December 17th, 2012, Stornoway announced that it had received the transfer of the Certificate of Authorization for the construction of the Renard Mine Road from the Québec Ministère du Développement durable, de l'Environnement, de la Faune et des Parcs ("MDDEFP"). Consistent with this transfer, and the reduced scope of the Renard Mine Road compared to the two-lane public highway that was previously contemplated, Stornoway filed an amendment to the road project's Environmental and Social Impact Assessment on February 15th, 2013 with the Evaluation Committee ("COMEX") of the James Bay and Northern Québec Agreement, the environmental protection regime for the James Bay Region of Québec.
About the Renard Mine Road
Construction of the road that will provide all-season vehicle access to the Renard Project began in February 2012 as the "Route 167 Extension". Under the terms of the November 2012 Framework Agreement between Stornoway and the Government of Québec, Québec will complete the first 143km of road as a 70km/hr two-lane gravel highway and Stornoway will undertake the construction of a 50km/hr single lane mining road over the remaining 97km as the "Renard Mine Road". The cost of the Renard Mine Road is estimated at $77 million, including a 15% contingency. Under the terms of the December 2012 Financing Agreement between Stornoway and Québec, this cost will be funded through a credit facility provided to Stornoway bearing interest at the rate of 3.35% and amortized over a period of 15 years. In order to provide additional contingency, Stornoway will be entitled to draw an additional $7.7 million bearing interest at the rate of 6.3%, for a total facility of up to $84.7 million . The schedule of repayment of these loans will be based on the financing and construction schedule of the Renard Diamond Project. To-date, Stornoway has drawn $26.2 million from the credit facility.
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 National Instrument ("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 29th, 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.