Mr. Ewan Mason reports

STAR DIAMOND CORPORATION 2024 YEAR-END UPDATE

Star Diamond Corp. has brought its shareholders up to date on a number of management initiatives.

Prefeasibility study financing

Following the completion of the company's revised mineral resource update (Revised Mineral Resources Estimate Exhibits Significant Increase Total Indicated: 72 Million Carats, Total Inferred: 15 Million Carats, July 24, 2024), Star Diamond has been looking for $3-million to $5-million in project financing in order to undertake a prefeasibility study on the company's Star-Orion South diamond project. To date the company has been unsuccessful in this endeavour. A brief summary of these continuing efforts is noted below.

Royalty companies

The company reached out to over 20 royalty or streaming companies globally and responses fell under two main categories:

• "Diamonds are not within our current mandate;"
• "We do not have the resources to look at this project at the present time."

Resource project bridge debt providers

Star Diamond had discussions with over 70 institutions engaged in providing prebuild resource financing and received several market proposals. These proposals required the provision of senior ranking security over the company's assets in order to advance funding. However, security over all the company's assets is held by its previous joint venture partner as collateral for their provision of the reclamation bond to the province of Saskatchewan on the company's behalf. The secured party was not willing to provide a security carve-out to allow the company to avail ourselves of these proposals.

Offtake agreements

The company engaged several consultants to approach large diamond wholesalers/retailers across the globe in search of financing through a commitment to provide exclusive access to rough diamonds upon commencement of diamond production at the project. There was interest from this segment of the diamond industry, but it was felt that an offtake agreement was premature given the time horizon for diamond production.

Management continues to pursue these avenues in addition to reaching out to wealthy individuals/groups in search of financing for the prefeasibility study. While these efforts continue, management has undertaken several initiatives to lower the company's expense profile and seek alternative financing solutions as below.

Asset sales

• Star has entered into discussions with a heavy equipment auctioneer to sell the Bauer trench cutter; they believe the sale could realize some $4-million to $6-million in gross proceeds, of which 50 per cent is payable to Rio Tinto under the terms of the exit agreement.
• Management has also been in discussions with a number of critical minerals companies about the sale of the bulk sample plant and the Tomra X-ray sorter.

Cost reduction

• The company has moved its head office to a smaller footprint in the same building resulting in 70-per-cent drop in the company's office lease payments.
• All marketing and consulting contracts have been paused.
• The board and the chief executive officer have agreed to forgo compensation until such time as the company is on better financial footing.
• Certain management functions will be reduced or eliminated.

The way forward

Although management of the company continues to talk to possible investors, it has determined that the project should be placed on a care and maintenance basis until such time as the diamond market recovers from its current state of malaise and the company can raise the funds to complete the prefeasibility study. Early in the new year Star Diamond will need to raise funds to cover care and maintenance costs until the above-noted asset sales can be completed that will finance the prefeasibility study.

Early in 2024, the company's chief financial officer (CFO), Rick Johnson, indicated he would be leaving Star Diamond to focus on his other executive position. To ensure the smoothest possible transition, Mr. Johnson has advised the company that he will be available to the company on a consultant basis. Accordingly, effective Jan. 1, 2025, the company has outsourced the CFO (chief financial officer) role to Carmello Marrelli from Marrelli Support Services Inc. (MSSI) to fulfill the CFO role as a part-time position. The company looks forward to working with MSSI in the new year.

Ewan Mason, president and chief executive officer of the company, said: "While 2024 was a great year for us in getting back our former joint-venture partner's 75-per-cent share of the project, along with a myriad of other assets, and increasing the project resource by nearly 30 per cent, the diamond industry as a whole has not fared so well. There does however appear to be the beginning of a turnaround in the larger stone end of the market and that should bode well for us going forward."

Mr. Mason also noted, "The company is grateful for the work done by Mr. Johnson over the past two years as Star Diamond navigated through unchartered waters and thanks him for his service on behalf of the board and all shareholders."

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's most significant asset is its 100-per-cent interest in the Fort a la Corne project in central Saskatchewan. These kimberlites are located in close proximity to established infrastructure, including paved highways and the electrical power grid, which provides significant advantages for future mine development.

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