Stornoway Raises Renard Diamond Reserve Estimate 25%, Finalizes Financing

Mining and Exploration
31/03/2016 15:42

Stornoway Diamond Co. (Canada) has announced the results of an updated mine plan and mineral reserve estimate for the Renard Diamond Project, reporting a 25% increase in the probable mineral reserves from 17.9 to 22.3 million carats (representing 33.4 million tons at an average grade of 67 carats per hundred tons). This also increases the Mineral Reserve based mine life from 11 years to 14 years, with average diamond production in years 1 to 10 of 1.8 million carats per year compared to 1.6 million carats per year previously and schedules of 1.9 million carats produced and 1.4 million carats sold to the end of 2017, increases of 24% and 57% respectively compared to the previous plan. First ore processing is still forecast by the end of September 2016 and commercial production by December 31, 2016, a five month improvement on the original schedule. Matt Manson, President and CEO, commented, “With six months remaining before the scheduled commencement of first diamond production at Renard ... The new plan shows incremental improvements in the project’s cost to complete, average carat production, mine life and Mineral Reserves. All-important early carat production to the end of 2017 shows a substantial increase compared to the previous estimate."

Stornoway also announced that it has successfully completed the drawdown of the third and final US$90m tranche of diamond stream funding from Orion Mine Finance (“Orion”), the Caisse de dépôt et placement du Québec (“CDPQ”) and Blackstone Tactical Opportunities (“Blackstone”). The US$90 million of funds received from the third tranche of stream payments were converted to Canadian dollars upon deposit at an exchange rate of $1.2951, representing a cash gain to the Corporation of C$17.6 million compared to the July 2014 funding plan, which assumed a C$:US$ exchange rate of $1.10. Following utilization of 75% of the proceeds from the third stream tranche and the satisfaction of certain other terms and conditions, Stornoway will be entitled to draw upon its $100 million senior secured loan from DIAQUEM Inc. to complete mine development. Stornoway’s current cash resources and committed funds are sufficient to cover planned mine development expenses, financing and corporate costs during calendar 2016.