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TSX: DIAM
Star Diamond Corporation ("Star Diamond" or the "Company") today reported its financial results for the quarter ended June 30, 2022 .
Highlights
- Reported on technical and joint venture meetings with Rio Tinto Exploration Canada Inc. ("Rio Tinto Canada") concerning the Fort à la Corne mineral properties and Rio Tinto Canada's advice that, subject to fulfilling its existing obligations, it does not intend to commit additional capital to the Fort à la Corne properties during 2022 beyond what is necessary for care and maintenance. In addition, Rio Tinto Canada also advised that it intends to conduct a near-term review of its alternatives regarding the Fort à la Corne properties, including its potential exit
- Announced study results identifying the abundance of Type IIa diamonds in diamond parcels recovered from the Early Joli Fou ("EJF") Geological Units of the Star, Orion North and Taurus Kimberlites
- Acquired an additional interest of approximately 17% in the Buffalo Hills joint venture project, increasing its interest in the project to 50%
- Completed a $5.0 million non-brokered private placement of units
Overview
Star Diamond Corporation is a Canadian natural resource company focused on exploring and developing Saskatchewan's diamond resources. Star Diamond holds, through a joint venture arrangement with Rio Tinto Canada, a wholly-owned subsidiary of Rio Tinto plc or "Rio Tinto", a 25% interest in certain mineral properties (which includes the Star – Orion South Diamond Project, or "Project") within the Fort à la Corne diamond district of central Saskatchewan, Canada . These properties are in close proximity to established infrastructure, including paved highways and the electrical power grid, which provide significant advantages for future mine development. Rio Tinto Canada refers to their Fort à la Corne mineral properties as "Project FalCon".
On June 28, 2022 , Rio Tinto Canada exercised its voting power at a meeting of the Fort à la Corne joint venture management committee to place the Fort à la Corne properties on care and maintenance through December 31, 2022 . Rio Tinto Canada also advised that, subject to fulfilling its existing obligations, it does not intend to commit additional capital to the Fort à la Corne properties during 2022 beyond what is necessary for care and maintenance. Rio Tinto Canada also advised the Company that it intends to conduct a near-term review of its alternatives regarding the Fort à la Corne properties, including its potential exit. During the meeting, Rio Tinto Canada stated that it remains pleased with the results of the comprehensive studies and bulk sampling program that have been completed to date at the Project.
Activities relating to the Star - Orion South Diamond Project and Fort à la Corne mineral properties
During the quarter, the Company announced the completion of an independent study into the abundance of Type IIa diamonds in the Trench Cutter diamond parcels recovered from the Early Joli Fou ("EJF") geological units at the Star Kimberlite, as defined by the Star Diamond geological model. The Star Kimberlite is located within the Star - Orion South Diamond Project. During 2019, Rio Tinto Canada completed the drilling of ten bulk sample holes (trenches) on the Star Kimberlite using a Trench Cutter Sampling Rig. This study confirms that high proportions of Type IIa diamonds are present in the Star Kimberlite. Of particular note is the high proportion of Type IIa diamonds in the larger size fractions of the EJF of which 53 percent (8 of the 15) of the largest stones, 4 carats and above are Type IIa. This study also confirms and augments earlier studies conducted by Star Diamond of Type IIa diamonds at Star (26.5 percent, +11 DTC (0.32 carats) and above). Type IIa diamonds are rare and account for less than 2 percent of all natural rough diamonds mined from kimberlites. Many high-value, top colour, large specials (greater than 10.8 carats) are Type IIa diamonds, which include all ten of the largest known rough diamonds recovered worldwide.
During the quarter, the Company also announced the completion of an independent study into the abundance of Type IIa diamonds in the diamond parcels recovered from the EJF Geological Units at the Orion North and Taurus Kimberlites. These diamonds were recovered by Star Diamond between 2006 and 2008 from 48-inch large diameter drilling ("LDD") programs. This study confirms that unusually high proportions of Type IIa diamonds are present in both the Orion North and Taurus Kimberlites. Of particular note is the high proportion of Type IIa diamonds in the Orion North 147/148 EJF (52%) of which 66% of the 24 stones, 3 grainer (0.66 carats) and above, are Type IIa.
Activities relating to other mineral properties
During the quarter, the Company announced that pursuant to a Quitclaim, Surrender and Assignment of Interest Agreement dated May 11, 2022 , the Company acquired an additional joint venture interest of approximately 17% in the Buffalo Hills project for nominal consideration. As a result of the transaction, Star Diamond and Canterra Minerals Corporation each hold a 50% interest in the Buffalo Hills project. Located approximately 400 kilometres northwest of Edmonton, Alberta, Canada , the Buffalo Hills project is a significant and accessible field of diamond-bearing kimberlites, with similarities to the Fort á la Corne kimberlites in Saskatchewan, Canada .
Quarterly results
For the quarter ended June 30, 2022 , the Company recorded a net loss of $0.7 million or $0.00 per share (basic and fully diluted) compared to a net loss of $2.0 million or $0.00 per share for the same period in 2021. The losses during these quarters were due to operating costs and exploration and evaluation expenditures incurred by the Company exceeding interest income earned on cash and cash equivalents.
Year to Date Results
For the six months ended June 30, 2022 , the Company recorded a net loss of $1.5 million or $0.00 per share (basic and fully diluted) compared to a net loss of $3.1 million or $0.01 per share for the same period in 2021. The losses during the six month periods ended June 30, 2022 and 2021 were primarily due to ongoing operating costs and exploration and evaluation expenditures incurred by the Company exceeding interest and other income earned.
Selected financial highlights include:
Condensed Consolidated Statements of Financial Position | As at June 30, 2022 | As at December 31, 2021 |
Current assets | $ 3.2 M | $ 1.5 M |
Exploration and evaluation, capital and other assets | 67.7 M | 67.9 M |
Current liabilities | 0.4 M | 3.1 M |
Non-current liabilities | 1.0 M | 1.1 M |
Shareholders' equity | 69.5 M | 65.2 M |
Condensed Consolidated Statements of Loss | Three Months | Three Months 2021 | Six Months 2022 | Six Months 2021 |
Interest and other income | $ 0.0 M | $ 0.0 M | $ 0.0 M | $ 0.0 M |
Expenses | 0.7 M | 1.8 M | 1.4 M | 3.2 M |
Investment in Wescan Goldfields Inc. and other items | 0.0 M | (0.2) M | (0.1) M | 0.1 M |
Net loss for the period | 0.7 M | 2.0 M | 1.5 M | 3.1 M |
Net loss per share for the period (basic and diluted) | 0.00 | 0.00 | 0.00 | 0.01 |
Condensed Consolidated Statements of Cash Flows | Quarter Ended 2021 | Quarter Ended 2020 |
Cash flows from operating activities | $ (4.0) M | $ (2.9) M |
Cash flows from investing activities | 0.0 M | 0.0 M |
Cash flows from financing activities | 5.7 M | 1.9 M |
Net decrease in cash | 1.7 M | (1.0) M |
Cash – beginning of period | 1.3 M | 4.8 M |
Cash – end of period | 3.0 M | 3.8 M |
Outlook
The provincial environmental approval of the 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 independent Preliminary Economic Assessment (the "PEA") show 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.
Following the successful completion of the 2017 consolidation of the Fort à la Corne mineral properties, the arrangements announced in December 2021 were intended to ensure that key project milestones, and the certainty associated with them, will have been achieved before Star Diamond has to contribute any additional capital. Due to the June 2022 decision by Rio Tinto Canada to exercise its voting power to place the Fort à la Corne properties on care and maintenance through December 31, 2022 no additional exploration programs will occur on site in 2022. During the June 2022 meeting, Rio Tinto Canada also stated that it remains pleased with the results of the comprehensive studies and bulk sampling program that have been completed to date at the Project. Though the board of directors of Star Diamond is disappointed by these decisions, Star Diamond intends to work with Rio Tinto Canada in assessing alternatives regarding the Fort à la Corne properties.
As of August 12, 2022 , the Company had approximately $3.4 million in cash and cash equivalents and $0.0 million in restricted cash (due to the recent release of $0.6 million of irrevocable standby letters of credit). A portion of the Company's cash and cash equivalents will be used for programs (including remaining flow-through commitments) to further assess, evaluate and advance certain aspects of the Company's mineral properties, as well as for general corporate matters.
About Star Diamond Corporation
Star Diamond is a Canadian based corporation engaged in the acquisition, exploration and development of mineral properties. Shares of the Company trade on the TSX under the trading symbol "DIAM". The Fort à la Corne kimberlites (including the Project) are located in central Saskatchewan in close proximity to established infrastructure, including paved highways and the electrical power grid, which provide significant advantages for future mine development.
During 2018, the Company announced the positive results of the independent 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.
During 2018, the Saskatchewan Ministry of Environment approved the Project. The Canadian Environmental Assessment Agency previously announced a positive Environmental Assessment Decision for the Project by the federal Environment Minister.
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 or the PEA constitute forward-looking statements. Forward-looking statements contained or implied in this news release include, but are not limited to, statements relating to the Company's ability to continue as a going concern; statements regarding Rio Tinto Canada's advice that it will not commit additional capital to the Fort à la Corne properties during 2022 beyond care and maintenance; statements regarding future capital commitments, programs and plans by Rio Tinto Canada, including its review of alternatives regarding the Fort à la Corne properties and potential exit (and Star Diamond's intention to work with Rio Tinto Canada in assessing such alternatives); 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 anticipated use of the Company's cash and cash equivalents; the Company's need for and intention to seek additional financing; statements with respect to metallurgical and diamond investigations, assessments and test work including diamond breakage studies; the potential proportion of Type IIa diamonds in the Star, Orion South , Orion North and Taurus kimberlites and the potential for the recovery of large, high-quality diamonds.
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 Rio Tinto Canada or the Company, the nature and outcome of studies, analyses, criteria or conditions that Rio Tinto Canada may consider relevant to its assessment of whether to seek to further invest in the Project or seek to develop the Project into an operating mine, the effects of competition in the markets in which the Company operates, the impact of the COVID-19 pandemic, risks related to diamond breakage from extraction and diamond recovery, risks related to the Company's need for additional financing and the Company's ability to raise that financing, 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 the Company 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 laws, the Company does not undertake to update any forward-looking statement that is made herein.
SOURCE Star Diamond Corporation
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