Stornoway – Building a Canadian Diamond Resource Base
OverviewStornoway Diamond Corporation is a leading Canadian diamond exploration and development company. In addition to maintaining a large portfolio of grassroots exploration and four advanced stage properties in Canada, Stornoway has a 50% interest in the Renard Project which received a positive preliminary economic assessment in October 2008, and has the potential to become the first diamond mine in Quebec, Canada. The experienced management and technical team of Stornoway have a strong track record of discovery and a history of wealth creation for shareholders. What We Like about Stornoway!
Core PropertiesRenardThe Renard Project, located within the Foxtrot Property, is a 50:50 JV with SOQUEM INC. (“SOQUEM”). Formed in 1996 to conduct regional reconnaissance scale diamond exploration in north-central Québec, the joint venture currently holds approximately 128,000 hectares of mineral permits in the Otish Mountains region. Exploration on the property has resulted in the discovery of a new field of kimberlitic intrusions, the Renard Cluster, three of which, Renards 2, 3 and 4 form an economically attractive, high value, core resource that, on December 15, 2008, received a positive Preliminary Assessment (“PA”). Overall, including 2009 drilling developments, Renard represents a potential diamond resource of between 20 and 40 million carats in four kimberlite pipes and two kimberlite dikes.
The PA comprises a National Instrument (“NI”) 43-101 compliant resource estimate and a diamond processing plant design prepared by AMEC Americas Limited (“AMEC”), and a mine plan, capital and operating cost estimate, and financial model prepared by Agnico-Eagle Mines Limited (“Agnico”), Stornoway’s largest shareholder. AMEC’s plant design, and elements of Agnico’s mining study such as the cost estimation, have been completed to a pre-feasibility standard. The NI 43-101 compliant mineral resource estimate released in December 2008 comprised 7.0 million carats of Indicated Resource and 4.5 million carats of Inferred Resource. A further 9-21 million carats was classified on a more conceptual basis as potential mineral deposit (“PMD”) and combined portions of Renard 2, 3, 4, 9, as well as the Lynx and Hibou dikes. Using a base case diamond resource of 5.9 million carats the model yields a pre-tax IRR of 14.2% and an NPV of C$56 million (calculated before tax at an 8% discount rate) in a conceptual mine plan combining open pit and underground mining over a 7 year mine life. Pre-tax IRR increases to 17.5% with an NPV of C$93 million when an alternate and supportable higher average diamond price is applied ($123 US/ carat; same as Renard 2 and 3) to Renard 4 and 9 (calculated before tax at an 8% discount rate). Stornoway considers the Renard PA to be an excellent first step in developing Québec’s first diamond mine. Winter drilling in 2009 has focussed on the Renard 2 ‘bulge’ as outlined in the PMD. What was discovered at depth was a substantial amount of new kimberlite which has had a dramatic impact on the estimate of the overall size of the pipe. In the PA, Renard 2 contributed the bulk of the mineral resource contained within the conceptual mine plan. The discovery of such a large amount of new kimberlite, much of it within the scope of the existing underground mine design, is expected to have a very positive impact on project economics. Stornoway is currently planning the additional work programs required to convert this new material to a mineral resource to be part of an updated NI 43-101 Resource Estimate scheduled for completion late in 2009. Stornoway has played a strong advocacy role for the ongoing development of regional infrastructure in the James Bay region of Québec through an active engagement with government and communities. The proposed road development project is designed to connect the communities of Chibougamau and Mistissini to the Renard Diamond Project by way of several other prospective mining projects and the proposed Albanel-Témiscamie-Otish Park. On March 18, 2009 the Québec Government announced major capital funding (~$260 million) towards the construction of the Routes Monts Otish road. Stornoway believes this deposit has the potential to become Québec’s first diamond mine. It is a substantial and rare resource with considerable upside potential, providing the opportunity for significant value growth in Québec’s emerging diamond story. AviatThe 476,000 acre Aviat Project is a joint venture with the Hunter Exploration Group (10%) under which Stornoway holds a 90% interest in the property, is the operator, and holds 100% of the diamond marketing rights. A total of twelve distinct, but likely related, kimberlite bodies have been identified on the Aviat Property since 2002 (AV1, AV1 West, AV267, AV2 Upper, AV3, AV4, AV5, AV8 Upper, AV8 Middle, AV8 Lower, AV9, and one currently un-named body discovered in 2008). The bodies range from small pipe-like intrusions at AV1, AV4, and AV9 to layered sheet or dyke like intrusions which characterize bodies AV1 West, and AV2 through AV8, including AV267, and reach widths of up to 16 m in the southwest. These shallowly dipping (8 to 20 degrees), macrocrystic, hypabyssal kimberlite sheets with associated zones of kimberlite breccia are thought to be part of a sequence of layered, horizontally stacked sheets separated by vertical distances of 10 to 30m. Exploration work in 2007 and 2008 has led to a revised geological model and naming system for the Eastern Sheet Complex (”ESC”). Drilling has confirmed the AV267 body to be linked to the AV3 and AV8 Upper sheets, creating a single, 260 ha body averaging 1.7 m (reaching thickness of up to 16 m in the southwest), renamed the ES 1 kimberlite sheet. ES 2 sits in the ES1 hanging wall and ES 3 and 4 sit in the footwall (see satellite image map and cross section of bodies). Stornoway engaged SRK Consulting (Canada) Inc. (”SRK”), an independent consultant, to provide a conceptual resource study on the Eastern Sheet Complex. The results of which were announced on October 7, 2008, and outlined the potential for 24.1 to 40.3 million carats of diamonds in 12.4 to 16.0 million tonnes of kimberlite using a diamond content of 235 cpht +/- 30 cpht based on existing diamond data. A mini-bulk sample of 202 wet tonnes was extracted from the ES 1 in 2008 for DMS processing for the purpose of providing additional insight into the grade, diamond value and overall economic potential of this large scale, and growing, diamond camp. Management
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Search for Stornoway Diamond NewsAnalyst ReportsGMP Securities- Jacques Wortman (analyst)
Telephone # 416-367-8600 Canaccord Adams- Eric Zaunscherb (analyst) not rated
Telephone # 604-643-7300 Media CovreageThe Canadian Mining Journal: April 2009 Issue, Mining Matters Column on Route des Monts Otish (Route 167 Extension). The Globe and Mail – Report on Business Magazine March 2009 Off the Clock (Column) – Pipe Dreams: by Carol Toller (Article on Stornoway CEO and President, Matt Manson) Share InformationShare Structure
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