JOHANNESBURG (miningweekly.com) – TSX-listed diamond junior Stornoway Diamond Corp on Wednesday said it had allocated a predevelopment budget of $28.4-million to develop Quebec’s first diamond mine, the Renard project.
Predevelopment construction had started, including detailed engineering and design, site preparation activities and the ordering of long-lead items. As a component of this work programme, Stornoway expects to shortly enter into an engineering, procurement and construction management (EPCM) contract for the project's process plant, water treatment plant, accommodation and maintenance facilities, and site utilities.
Stornoway's mining team, based in Longueuil, would be expanded during the course of the year and start the design of the openpit and underground mine, design of the processed kimberlite containment facility, and security operations. Predevelopment engineering on the project's shaft and hoisting facilities will be started under a separate EPCM contract in the second half of the year.
Vehicle access to the Renard project would be by way of the Route 167 extension, a $332-million road development project under the auspices of the Quebec Ministere des transports (MTQ). The MTQ have now awarded contracts for two of four construction segments and tree clearing along the route started in January.
Meanwhile, Stornoway is looking to a combination of project debt and equity to finance the $802-million price tag for the mine. In April 2011 Stornoway entered into a $100-million credit support agreement with its largest shareholder, Diaquem, a subsidiary of the province’s investment vehicle Investissement Quebec, to acquire Diaquem's half of the project.
At that time, Diaquem was also granted a right to subscribe to 25% of any new equity issued.
Stornoway undertook financings early this month and during April on the basis of 50% debt and 50% equity, with Diaquem exercising its right to acquire equity.
On the basis of this strong support from its largest shareholder, Stornoway is actively exploring a broad range of financing options available for the project within the commercial bank debt, bond and equity markets, in addition to financing options tied to future diamond supply.
The Renard project has a National Instrument 43-101-compliant probable mineral reserve of 18-million carats, a further 17.5-million carats in the inferred category and 23.5-million to 48.5-million carats classified as nonresource-exploration upside, owing to all kimberlites remaining open at depth.
The project, located in north-central Quebec, is expected to have a mine life of about 11 years.
Stornoway said it remained on track to start mine construction during 2013 and first ore production is expected by July 2015.