22:50:03 EDT Fri 30 Sep 2022
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Star Diamond Corp
Symbol DIAM
Shares Issued 473,891,620
Close 2022-08-12 C$ 0.125
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Star Diamond spends $700,000 on Q2 ops, exploration

2022-08-12 17:24 ET - News Release

An anonymous director reports

STAR DIAMOND CORPORATION ANNOUNCES SECOND QUARTER 2022 RESULTS

Star Diamond Corp. has released 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 a 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 a 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 a 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 per cent in the Buffalo Hills joint venture project, increasing its interest in the project to 50 per cent;
  • Completed a $5.0-million non-brokered private placement of units.

Overview

Star Diamond is a Canadian natural resource company focused on exploring and developing diamond resources in Saskatchewan. Star Diamond holds, through a joint venture arrangement with Rio Tinto Canada, a wholly owned subsidiary of Rio Tinto PLC, a 25-per-cent interest in certain mineral properties (including the Star-Orion South diamond project or the project) within the Fort a 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 its Fort a la Corne mineral properties as project FalCon.

On June 28, 2022, Rio Tinto Canada exercised its voting power at a meeting of the Fort a la Corne joint venture management committee to place the Fort a la Corne properties on care and maintenance through Dec. 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 a 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 a 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 a 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 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 10 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 per cent (eight of 15) of the largest stones, four 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 per cent, over 11 DTC (0.32 carat) and above). Type IIa diamonds are rare and account for less than 2 per cent 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 10 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 per cent), of which 66 per cent of the 24 stones, three grainer (0.66 carat) 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 per cent in the Buffalo Hills project for nominal consideration. As a result of the transaction, Star Diamond and Canterra Minerals Corp. each hold a 50-per-cent interest in the Buffalo Hills project. Located approximately 400 kilometres northwest of Edmonton, Alta., Canada, the Buffalo Hills project is a significant and accessible field of diamond-bearing kimberlites, with similarities to the Fort a la Corne kimberlites in Saskatchewan, Canada.

Quarterly results

For the quarter ended June 30, 2022, the company recorded a net loss of $700,000 or nil per share (basic and fully diluted), compared with a net loss of $2.0-million or nil 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 nil per share (basic and fully diluted), compared with a net loss of $3.1-million or one cent per share for the same period in 2021. The losses during the six-month periods ended June 30, 2022, and June 30, 2021, were primarily due to continuing operating costs and exploration and evaluation expenditures incurred by the company exceeding interest and other income earned.

Selected financial highlights are provided in the attached tables.

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 a 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 a la Corne properties on care and maintenance through Dec. 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 a la Corne properties.

As of Aug. 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 $600,000 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 Corp.

Star Diamond is a Canadian-based corporation engaged in the acquisition, exploration and development of mineral properties. Shares of the company trade on the Toronto Stock Exchange under the trading symbol DIAM. The Fort a 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 per cent) of $2.0-billion after tax, an internal rate of return (IRR) of 19 per cent 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.

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