An anonymous director reports

STAR DIAMOND CORPORATION ANNOUNCES FIRST QUARTER 2023 RESULTS

Star Diamond Corp. has released its unaudited financial results for the quarter ended March 31, 2023. The results will be filed on SEDAR today and may be viewed there once posted.

Overview

Star Diamond 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., a wholly owned subsidiary of Rio Tinto PLC, a 25-per-cent interest in certain mineral properties (which includes the Star-Orion South diamond 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.

The company also holds a 50-per-cent interest in the exploration and evaluation properties and assets of the Buffalo Hills joint venture located in north-central Alberta, Canada. Canterra Minerals Corp. holds the remaining 50-per-cent interest. Canterra is the operator of the Buffalo Hills JV.

Fort a la Corne mineral properties

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 project on care and maintenance through Dec. 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 a 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 a la Corne properties, which included its potential exit. On Oct. 21, 2022, Star Diamond announced that Rio Tinto Canada had stated that it intended to fully demobilize the leased on-site camp. During the quarter, the site was fully demobilized and the project was placed on care and maintenance.

Recent activities relating to the Star-Orion South diamond project and Fort a la Corne mineral properties

During the quarter ended March 31, 2023, the company continued negotiations with Rio Tinto Canada to assess alternatives regarding the project.

Recent 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 attached table were completed by Nelson Karun, diamond specialist, Saskatchewan Research Council Diamond Services, on behalf of Star Diamond.

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 modelled, but should still be used with caution.

The diamond valuation exercise has shown that kimberlites K14 and K6 have elevated modelled diamond prices, $160 (U.S.) per carat and $180 (U.S.) 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 ($532 (U.S.)) and 1.07 carats ($506 (U.S.)).

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 attached table and show these kimberlites have an anomalously high percentage of Type IIA diamonds.

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 plus three DTC (plus 0.026 carat) to five grainer (1.2 carats).

Type IIa diamonds are very rare and generally account for less than 2 per cent of all natural rough diamonds mined worldwide 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 quarter ended March 31, 2023, the company recorded a net loss of $300,000, or zero cents per share (basic and fully diluted), compared with a net loss of $900,000, or zero cents per share, for the comparative period in 2022. The decrease in net loss was due primarily to reduced expenditures, period over period, combined with a $300,000 non-cash gain on the fair value measurement of the company's marketable securities.

At March 31, 2023, the company had $1.5-million (Dec. 31, 2022 -- $2.6-million) in cash and cash equivalents and working capital of $1.3-million (Dec. 31, 2022 -- $2.0-million). The decrease in working capital was a result of general and administrative and exploration and evaluation expenditures incurred during the quarter. The company believes it has sufficient liquidity to finance general and administrative costs and certain exploration expenditures through to the end of 2023.

Outlook

Fort a la Corne mineral properties

Star Diamond continues to work with Rio Tinto Canada in assessing alternatives regarding the project. These discussions remain continuing 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 continuing with Canterra to determine possible future work programs and a potential strategic path forward for the property. A more detailed update on activities at the Buffalo Hills JV will be provided as it becomes available.

About Star Diamond Corp.

Star Diamond 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-per-cent interest in certain Fort a 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-per-cent interest in the exploration and evaluation properties and assets of the Buffalo Hills JV located in north-central Alberta, Canada. Canterra Minerals holds the remaining 50-per-cent interest. Canterra is the operator of the Buffalo Hills JV.

Technical information

All technical information in this press release has been prepared under the supervision of George Read, senior technical adviser, professional geoscientist in the provinces of Saskatchewan and British Columbia, and Mark Shimell, project manager, professional geoscientist in the province of Saskatchewan and Alberta, who are the company's qualified persons under the definition of National Instrument 43-101.

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