Stornoway Diamond Corporation (TSX:SWY)
(the “Corporation” or “Stornoway”) is pleased to
report that at its first sale of 2018 that closed on Friday Jan
26th, 138,687 carats were sold for gross proceeds1 of US$14.4
million at an average price of US$104 per carat. This is the
highest price achieved to date, and reflects a strengthening
diamond market at the beginning of the year and appreciable
improvements in breakage levels, size distribution and quality mix.
The parcel represented run of mine diamonds
recovered during a four week period from mid-October to
mid-November. Within the mix sold, 97,317 carats of +7 sieve size
diamonds were sold at an average price of US$140/ct compared to
FY2018 guidance of US$125 to US$165 per carat. 41,370 carats of -7
sieve size diamonds were sold at an average price of US$21 per
carat compared to FY2018 guidance of US$15 to US$19 per carat. 24
special stones (larger than 10.8 carats) were sold for an average
price of US$3,210 per carat.
The tender sale, held at the Antwerp offices of
Stornoway’s sales agent Bonas-Couzyn, saw 190 attendees, 132
bidding attendees and 18.5 bids per parcel, all records.
About the Renard Diamond
Mine
The Renard Diamond Mine is Quebec’s first
producing diamond mine and Canada’s sixth. It 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. Construction on the project commenced on July
10, 2014, and commercial production was declared on January 1,
2017. Average annual diamond production is forecast at 1.8 million
carats per annum over the first 10 years of mining. Readers are
referred to the technical report dated January 11, 2016, in respect
of the September 2015 Mineral Resource estimate, and the technical
report dated March 30, 2016, in respect of the March 2016 Updated
Mine Plan and Mineral Reserve Estimate for further details and
assumptions relating to the project.
About Stornoway Diamond
Corporation
Stornoway is a leading Canadian diamond
exploration and production company listed on the Toronto Stock
Exchange under the symbol SWY and headquartered in Montreal. A
growth oriented company, Stornoway owns a 100% interest in the
world-class Renard Mine, Québec’s first diamond mine.
On behalf of the BoardSTORNOWAY DIAMOND
CORPORATION/s/ “Matt Manson”Matt MansonPresident and Chief
Executive Officer
-------------------------------------------------1 Before stream
and royalty.
For more information, please contact Matt Manson
(President and CEO) at 416-304-1026 x2101or Orin Baranowsky (CFO)
at 416-304-1026 x2103 or Jodi Hackett (Manager, Communications) at
416-304-1026 x2104 or toll free at 1-877-331-2232
Pour plus d’information, veuillez contacter M.
Ghislain Poirier, Vice-président Affaires publiques de
Stornoway au 418-254-6550, gpoirier@stornowaydiamonds.com
** Website: www.stornowaydiamonds.com Email:
info@stornowaydiamonds.com **
Forward-Looking Statements
This document contains forward-looking
information (as defined in National Instrument 51 102 – Continuous
Disclosure Obligations) and forward-looking statements within the
meaning of Canadian securities legislation and the United States
Private Securities Litigation Reform Act of 1995 (collectively
referred to herein as “forward-looking information” or
“forward-looking statements”). These forward-looking statements are
made as of the date of this document and, the Corporation does not
intend, and does not assume any obligation, to update these
forward-looking statements, except as required by law. Capitalized
terms under this section not otherwise defined in this document
have the meaning attributed thereto in the most recently filed
Annual Information Form of the Corporation.
These forward-looking statements relate to
future events or future performance and include, among others,
statements with respect to Stornoway’s objectives for the ensuing
year, our medium and long-term goals, and strategies to achieve
those objectives and goals, as well as statements with respect to
our management’s beliefs, plans, objectives, expectations,
estimates, intentions and future outlook and anticipated events or
results. Although management considers these
assumptions to be reasonable based on information currently
available to it, they may prove to be incorrect.
Forward-looking statements made in this document
include, but are not limited to, statements with respect to: (i)
the amount of Mineral Reserves, Mineral Resources and exploration
targets; (ii) the estimated amount of future production over any
period; (iii) net present value and internal rates of return of the
mining operation; (iv) expectations and targets relating to
recovered grade, size distribution and quality of diamonds, average
ore recovery, internal dilution, mining dilution and other mining
parameters set out in the 2016 Technical Report as well as levels
of diamond breakage; (v) expectations, targets and forecasts
relating to gross revenues, operating cash flows and other revenue
metrics set out in the 2016 Technical Report, growth in diamond
sales, cost of sales, cash cost of production, gross margins
estimates, planned and projected diamond sales, mix of diamonds
sold and capital expenditures, liquidity and working capital
requirements; (vi) mine and resource expansion potential, expected
mine life, and estimated incremental ore recovery, revenue and
other mining parameters from potential additional mine life
extension; (vii) expected time frames for completion of permitting
and regulatory approvals related to ongoing construction
activities at the Renard Diamond Mine; (viii) the expected
time frames for the completion of the open pit and underground mine
at the Renard Diamond Mine; (ix) the expected financial
obligations or costs incurred by Stornoway in connection with the
ongoing development of the Renard Diamond Mine; (x) mining,
development, production, processing and exploration rates, progress
and plans, as compared to schedule and budget, and planned
optimization, expansion opportunities, timing thereof and
anticipated benefits therefrom; (xi) future exploration plans and
potential upside from targets identified for further exploration;
(xii) expectations concerning outlook and trends in the diamond
industry, rough diamond production, rough diamond market demand and
supply, and future market prices for rough diamonds and the
potential impact of the foregoing on various Renard financial
metrics and diamond production; (xiii) the economic benefits of
using liquefied natural gas rather than diesel for power
generation; (xiv) sources of and anticipated financing
requirements; (xv) the ability to meet Subject Diamonds Interest
delivery obligations under the Purchase and Sale Agreement; (xvi)
the foreign exchange rate between the US dollar and the Canadian
dollar; and (xvii) the anticipated benefits from recently approved
plant modification measures and the anticipated timeframe and
expected capital cost thereof. 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”, “schedule” 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 prospects and strategies and the environment in
which Stornoway will operate in the future, including the recovered
grade, size distribution and quality of diamonds, average ore
recovery, internal dilution, and levels of diamond breakage, the
price of diamonds, anticipated costs and Stornoway’s ability to
achieve its goals, anticipated financial performance, regulatory
developments, development plans, exploration, development and
mining activities and commitments, and the foreign exchange rate
between the US and Canadian dollars. Although management considers
its assumptions on such matters to be reasonable based on
information currently available to it, they may prove to be
incorrect. Certain important assumptions by Stornoway or its
consultants in making forward-looking statements include, but are
not limited to: (i) the accuracy of our estimates regarding capital
and workforce requirements; (ii) estimates of net present value and
internal rates of return; (iii) recovered grade, size distribution
and quality of diamonds, average ore recovery, internal dilution,
mining dilution and other mining parameters set out in the 2016
Technical Report as well as levels of diamond breakage; (iv) the
expected mix of diamonds sold, and successful mitigation of ongoing
issues of diamond breakage in the Renard Diamond Mine process plant
and realization of the anticipated benefits from plant modification
measures within the anticipated timeframe and expected capital
cost; (v) the stabilization of the Indian currency market and full
recovery of prices; (vi) receipt of regulatory approvals on
acceptable terms within commonly experienced time frames and
absence of adverse regulatory developments; (vii) anticipated
timelines for the development of an open pit and underground mine
at the Renard Diamond Mine; (viii) anticipated geological
formations; (ix) continued market acceptance of the Renard diamond
production, conservative forecasting of future market prices for
rough diamonds and impact of the foregoing on various Renard
financial metrics and diamond production; (x) the timeline,
progress and costs of future exploration, development, production
and mining activities, plans, commitments and objectives; (xi) the
availability of existing credit facilities and any required future
financing on favorable terms and the satisfaction of all covenants
and conditions precedent relating to future funding commitments;
(xii) the ability to meet Subject Diamonds Interest delivery
obligations under the Purchase and Sale Agreement; (xiii)
Stornoway’s interpretation of the geological drill data collected
and its potential impact on stated Mineral Resources and mine life;
(xiv) positive impact of reclassification of underground expenses
under the Corporation’s revised accounting policy, including
improvement in margins; (xv) the continued strength of the US
dollar against the Canadian dollar and absence of significant
variability in interest rates; (xvi) improvement of long-term
diamond industry fundamentals and absence of material deterioration
in general business and economic conditions (xvii) increasing carat
recoveries with progressively increasing grade in LOM plan; (xviii)
estimated incremental ore recovery, revenue and other mining
parameters from potential additional mine life extension with
minimal capital expenditures; (xix) availability of skilled
employees and maintenance of key relationships with financing
partners, local communities and other stakeholders; (xx) long-term
positive demand trends and rough diamond demand meaningfully
exceeding supply; (xxi) high depletion rates from existing diamond
mines; (xxii) global rough diamond production remaining stable;
(xxiii) modest capital requirements post-2018 with significant
resource expansion available at marginal cost; (xxiv) substantial
resource upside within scope of mine plan; (xxv) opportunities for
high grade ore acceleration and processing expansion and
realization of anticipated benefits therefrom; (xxvi) significant
potential upside from targets identified for further exploration;
and (xxvii) limited cash taxes payable over the medium term.
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, size
distribution and quality of diamonds, kimberlite lithologies and
country rock content within the material identified as Mineral
Resources from that predicted; (ii) variations in rates of recovery
and levels of diamond breakage; (iii) the uncertainty as to whether
further exploration of exploration targets will result in the
targets being delineated as Mineral Resources; (iv) risks
associated with our dependence on the Renard Diamond Mine and the
limited operating history thereof; (v) unfavorable developments in
general economic conditions and world diamond markets; (vi)
variations in diamond valuations and fluctuations in diamond prices
from those assumed; (vii) insufficient demand and market acceptance
of our diamonds; (viii) risks associated with the production and
increased consumer demand for synthetic gem-quality diamonds; (ix)
risks relating to fluctuations in the Canadian dollar and other
currencies relative to the US dollar and variability in interest
rates; (x) inaccuracy of our estimates regarding future financing
and capital requirements and expenditures, significant additional
future capital needs and unavailability of additional financing and
capital, on reasonable terms, or at all; (xi) uncertainties related
to forecasts, costs and timing of the Corporation’s future
development plans, exploration, processing, production and mining
activities; (xii) increases in the costs of proposed capital,
operating and sustainable capital expenditures; (xiii) increases in
financing costs or adverse changes to the terms of available
financing, if any; (xiv) tax rates or royalties being greater than
assumed; (xv) uncertainty of mine life extension potential and
results of exploration in areas of potential expansion of
resources; (xvi) changes in development or mining plans due to
changes in other factors or exploration results; (xvii) risks
relating to the receipt of regulatory approvals or the
implementation of the existing Impact and Benefits Agreement with
aboriginal communities; (xviii) the failure to secure and maintain
skilled employees and maintain key relationships with financing
partners, local communities and other stakeholders; (xix) risks
associated with ongoing issues of diamond breakage in the Renard
Diamond Mine process plant and the failure to realize the
anticipated benefits from plant modification measures within the
anticipated timeframe and expected capital cost, or at all; (xx)
the negative market effects of recent Indian demonetization and
continued impact on pricing and demand; (xxi) the effects of
competition in the markets in which Stornoway operates; (xxii)
operational and infrastructure risks; (xxiii) execution risk
relating to the development of an operating mine at the Renard
Diamond Mine; (xiv) the Corporation being unable to meet its
Subject Diamonds Interest delivery obligations under the Purchase
and Sale Agreement; (xxv) future sales or issuances of common
shares lowering the share price and diluting the interest of
existing shareholders; (xxvi) the risk of failure of information
systems; (xxvii) the risk that our insurance does not cover all
potential risks; (xxviii) the risks associated with our substantial
indebtedness and the failure to meet our debt service obligations;
and (xxix) additional risk factors described in Stornoway’s annual
and interim MD&A filed with the securities regulatory
authorities in Canada, available on SEDAR at www.sedar.com and on
the Corporation’s Website under the “Investors” section, its other
disclosure documents 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
and new, unforeseeable risks may arise from time to time.