TSX: DIAM
SASKATOON, SK, March 29,
2023 /CNW/ - Star Diamond
Corporation ("Star Diamond" or the "Company") reports that
the audited results of its operations for the year ended
December 31, 2022, will be filed
today on SEDAR and may be viewed at www.sedar.com once
posted.
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 Exploration Canada Inc. ("Rio Tinto Canada"), a wholly-owned
subsidiary of Rio Tinto plc, a 25% interest in certain mineral
properties (which includes the Star – Orion South Diamond Project,
or the "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.
The Company also holds a 50% interest in the exploration and
evaluation properties and assets of the Buffalo Hills-JV located in
north-central Alberta, Canada.
Canterra Minerals Corporation ("Canterra") holds the remaining 50%
interest. Canterra is the operator of the Buffalo Hills-JV.
Fort à la Corne mineral properties
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 Project on care and maintenance
through December 31, 2022. Rio Tinto
Canada also advised that, subject to fulfilling its existing
obligations, it did not intend to commit additional capital to the
Fort à la Corne properties during 2022 beyond what was
necessary for care and maintenance. Rio Tinto Canada also advised
Star Diamond that it intended to conduct a near-term review of its
alternatives regarding the Fort à la Corne properties, which
included its potential exit. On October 21, 2022, Star Diamond announced that Rio
Tinto Canada had stated that it intended to fully de-mobilize the
leased on-site camp in early 2023.
While Star Diamond continues to seek to work with Rio Tinto
Canada to assess alternatives regarding the Project, there is no
certainty that any agreement will be reached between Star Diamond
and Rio Tinto Canada regarding any such potential arrangements.
Activities relating to the Star - Orion South Diamond Project
and Fort à la Corne mineral properties
During the year ended
December 31, 2022, 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 (see
news release dated May 31, 2022).
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 confirmed that high proportions of
Type IIa diamonds are present in the Star Kimberlite. Of note is
the high proportion of Type IIa diamonds in the larger size
fractions of the EJF of which 53% (or 8 of the 15) of the largest
stones, 4 carats and above are Type IIa. This study also confirmed
and augments earlier studies conducted by Star Diamond of Type IIa
diamonds at Star (26.5%, +11 DTC (0.32 carats) and above) (see news
releases dated June 09, 2010,
March 4, 2019 and May 2, 2022). Type IIa diamonds are rare and
account for less than 2% 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.
Rio Tinto Canada geologists of the Project's 'Orbit' exploration
team have, over the past few years, used a spectrum of evaluation
techniques to review and prioritize Fort à la
Corne kimberlites outside of the Star and Orion South
Kimberlites (see news release dated April
13, 2022). This program highlighted the kimberlites of Orion
North (K120, K147, K148) as having significant potential to add to
the Project. Orion Centre (K145), Taurus (K150, K118, K122) and
K119 stand out in the field as having a number of the attributes
sought but require further work to completely evaluate. The
evaluation techniques used by the Orbit exploration team to
prioritize these Orion North, Orion Centre and Taurus Kimberlites
have included: componentry method of core logging; diamond
inclusion studies; garnet colour studies; trace element
geochemistry; thermobarometry; and microdiamond sampling. These
studies highlighted the kimberlites of Orion North (K120, K147,
K148) as satisfying Rio Tinto Canada's Ore Grade Width Intercept
("OGWI") requirements and that these kimberlites would require
additional evaluation work. Orion Centre (K145), Taurus (K150,
K118, K122) and K119 indicated the potential to deliver OGWIs.
During 2022 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 (see news release dated
May 2, 2022). These diamonds were
recovered by Star Diamond between 2006 and 2008 from 48-inch large
diameter drilling 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 the Buffalo Hills mineral
properties
In February 2023,
the Company announced the completion of the diamond valuation from
the K6, K14, K91 and K252 kimberlites of the Buffalo Hills-JV.
Diamond valuations and characterizations as shown in the table
below were completed by Mr. Nelson
Karun, Diamond Specialist, Saskatchewan Research Council
Diamond Services, on behalf of Star Diamond.
Kimberlite
|
Carats
|
Stones
|
%
Gem
Quality
|
%
White
Colour
|
Faint to
no
Fluorescence
|
Average US$/Ct
Parcel
|
Model
Price
(US$/ct)
|
K6
|
16.73
|
86
|
29.5
|
70.5
|
82.9
|
103.54
|
185*
|
K14
|
69.32
|
1,362
|
17.9
|
73.8
|
92.6
|
54.32
|
160
|
K91
|
4.17
|
103
|
17.9
|
54.6
|
89.7
|
53.61
|
N/A
|
K252
|
12.41
|
328
|
22.0
|
82.1
|
92.1
|
72.79
|
140*
|
*Very speculative due to the small sample size
|
As observed by Mr. Karun, diamonds from these kimberlite bodies
exhibit good quality, colour and very
low to no fluorescence. All the parcels
of diamonds appear
to be statistically very similar
in terms of their graded characteristics. There is
an inadequate sample size for K91 to model the average diamond
price. Extremely speculative model prices are given for samples K6
and K252, due to the small parcel size. K14 is a larger parcel
size, and a price can be modeled, but should still be used with
caution.
The diamond valuation exercise has shown that
kimberlites K14 and K6 have elevated modelled
diamond prices, US$ 160 per carat and
US$ 180 per carat, respectively. The
K6 parcel includes three fancy
yellow stones, the K14 four fancy yellow
and the K252 a fancy orange stone. The two
highest value stones, which
are both from the K6, are 1.06 carats
(US$ 532) and 1.07 carats (US$ 506).
These four kimberlites have diamond parcels with sufficient
diamonds to conduct preliminary diamond typing studies. The number
and the percentage of Type IIa diamonds for the Buffalo Hills
kimberlites studied are documented in the table below and show
these kimberlites have an anomalously high percentage of Type IIA
diamonds.
Diamonds +3 DTC (0.026
carats) to 5 Grainer (1.2 carats)
|
|
Number
of
Diamonds
Typed
|
Number of Type IIa
Diamonds
|
Percentage Type IIa
Diamonds
|
K6 +3 (0.026
ct) & above
|
78
|
4
|
5.1
|
K14 +7 (0.12 ct) &
above
|
126
|
3
|
2.4
|
K91 +3 (0.026 ct) &
above
|
47
|
3
|
6.4
|
K252 +3 (0.026
ct) & above
|
153
|
7
|
4.6
|
The diamond typing exercise has shown presence of Type IIa
diamonds, in elevated proportions, in all four of these Buffalo
Hills kimberlites. The diamonds analysed represent a spectrum of
diamond sizes from +3 DTC (+0.026 carats) to 5 grainer (1.2
carats).
Type IIa diamonds are very rare and generally account for less
than 2 percent of all natural rough diamonds mined world-wide from
kimberlite deposits. Only a small number of active diamond mines
regularly produce Type IIa diamonds with the most important of
these mines being Cullinan Diamond
Mine in South Africa,
Letseng Diamond Mine in the Kingdom of Lesotho and, more recently, Karowe Diamond
Mine in Botswana.
Year to Date Results
For the year ended December 31, 2022, the Company recorded a net
loss of $68.8 million, or
$0.15 per share (basic and fully
diluted), compared to a net loss of $7.7
million, or $0.02 per share,
in 2021. The increase in net loss during the current year was due
to an impairment charge of $66.3
million offset by the elimination of the $0.9 million contingent consideration combined
with the year over year decrease in operating costs and exploration
and evaluation expenditures.
The recent actions by Rio Tinto Canada, which are outside the
control of the Company, have resulted in a high degree of
uncertainty over the future of the Project. As a result,
during the fourth quarter, the Company: i) recognized a non-cash
after-tax impairment of $66.3 million
on its 25% share of the Fort à la Corne asset leaving it fully
impaired at December 31, 2022; and
ii) determined that there was a remote probability for a contingent
payment and reduced the fair value of the contingent consideration
to $nil (December 31, 2021 -
$0.9 million).
At December 31, 2022 the Company
had $2.6 million (2021 – $1.3 million) in cash and cash equivalents and
working capital of $2.0 million (2021
- $(1.6) million). The increase
in working capital was a result of proceeds received from the
April 2022 private placement,
combined with the $0.6 million
received from the Ministry of Environment upon release of the
Company's environmental rehabilitation commitments, offset by
administrative and exploration and evaluation expenditures. The
Company believes it has sufficient liquidity to fund general and
administrative costs and certain exploration expenditures through
to the end of 2023.
Selected financial highlights include:
Condensed
Consolidated Statements of Financial Position
|
As at
December
31,
2022
|
As at
December
31,
2021
|
Current
assets
|
$ 2.7
M
|
$ 1.5
M
|
Exploration and
evaluation, investments and other assets
|
0.4 M
|
67.9 M
|
Current
liabilities
|
0.7 M
|
3.1 M
|
Non-current
liabilities
|
0.0 M
|
1.1 M
|
Shareholders'
equity
|
2.4 M
|
65.2 M
|
Consolidated
Statements of Loss
|
Year
Ended
December
31,
2022
|
Year
Ended
December
31,
2021
|
Interest and other
income
|
$ 0.0
M
|
$ 0.0
M
|
Expenses
|
3.0 M
|
8.0 M
|
Loss before undernoted
items
|
(3.0) M
|
(8.0) M
|
Investment in Wescan
Goldfields Inc.
|
(0.4) M
|
0.3 M
|
Contingent
consideration
|
0.9 M
|
0.0 M
|
Impairment
charge
|
(66.3) M
|
0.0 M
|
Net loss for the
year
|
(68.8)
M
|
(7.7)
M
|
Net loss per share for
the year (basic and diluted)
|
(0.15)
|
(0.02)
|
Condensed
Consolidated Statements of Cash Flows
|
Year
Ended
December
31,
2022
|
Year
Ended
December
31,
2021
|
Cash flows used in
operating activities
|
$
(5.0) M
|
$
(5.4) M
|
Cash flows from
investing activities
|
0.6 M
|
0.0 M
|
Cash flows from
financing activities
|
5.7 M
|
1.9 M
|
Net increase (decrease)
in cash
|
1.3 M
|
(3.5) M
|
Cash – beginning of
year
|
1.3 M
|
4.8 M
|
Cash – end of
year
|
2.6 M
|
1.3 M
|
Outlook
Fort à la Corne mineral properties
Star Diamond
continues to work with Rio Tinto Canada in assessing alternatives
regarding the Project. These discussions remain ongoing and there
is no certainty that any agreement will be reached between Star
Diamond and Rio Tinto Canada regarding any such potential
arrangements. Management believes that the negotiated return
of the Project on reasonable terms is critical to its long-term
success.
Buffalo Hills mineral properties
Management continues
to review the recent results from the diamond valuation and typing
analysis. Discussions are ongoing with Canterra to determine
possible future work programs. More detailed updates on activities
at the Buffalo Hills-JV will be provided as they become
available.
About Star Diamond Corporation
Star Diamond
Corporation is a Canadian based corporation engaged in the
acquisition, exploration and development of mineral properties.
Shares of Star Diamond trade on the Toronto Stock Exchange under
the trading symbol "DIAM". Star Diamond holds, through a
joint venture arrangement with Rio Tinto Canada, a 25% interest in
certain Fort à la Corne kimberlites (including the Star – Orion
South Diamond Project). These properties 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. The Company also holds a 50% interest in
the exploration and evaluation properties and assets of the Buffalo
Hills-JV located in north-central Alberta, Canada. Canterra Minerals Corporation
("Canterra") holds the remaining 50% interest. Canterra is the
operator of the Buffalo Hills-JV.
Stay Connected with Us:
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https://twitter.com/StarDiamondCorp
LinkedIn: https://www.linkedin.com/company/star-diamond-corp
Facebook:
https://www.facebook.com/people/Star-Diamond-Corp/100058096376664/
Instagram: https://www.instagram.com/stardiamondcorp/
Caution Regarding Forward-looking Statements
This press release contains "forward-looking statements" and/or
"forward-looking information" (collectively, "forward-looking
statements") within the meaning of applicable securities
legislation. All statements, other than statements of historical
fact, are forward-looking statements. Forward-looking statements in
this press release include, but are not limited to, Star Diamond's
assessment of its cost and management structure going
forward.
These forward-looking statements are based on Star Diamond's
current beliefs as well as assumptions made by and information
currently available to Star Diamond 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, statements regarding Rio
Tinto Canada's future plans and intentions including with respect
to the Fort à la Corne mineral properties; the Company's management
structure, developments in world diamond markets, changes in
diamond prices, risks relating to fluctuations in the Canadian
dollar and other currencies relative to the US dollar, the impact
of changes in the laws and regulations regulating mining
exploration, development, closure, judicial or regulatory judgments
and legal proceedings, operational and infrastructure risks and the
additional risks described in Star Diamond's most recently filed
Annual Information Form, and annual and interim MDA.
SOURCE Star Diamond Corporation