TORONTO (miningweekly.com) – The proponent of Quebec’s only diamond mine, Stornoway Diamond Corp, has conceded that it was in advanced negotiations with a number of parties regarding a comprehensive financing plan for its Renard diamond project, located in north-central Quebec, sending its shares up by as much as C$0.16 apiece on Thursday.
Despite the company affirming that it did not generally respond to rumours or media speculation, Stornoway said that management was encouraged with progress made in discussions to date.
It did, however, note that the outcome of such discussions was uncertain and subject to further negotiation and executing binding term sheets and definitive agreements, and receiving all applicable regulatory, shareholder and other approvals.
“There is no assurance that any transaction will result from these discussions, or as to the timing, structure or terms of any transaction (which may include any combination of debt, equity, forward sale of diamonds and other forms of financing) and no further comment will be forthcoming unless the situation so warrants,” Stornoway said in a statement.
The company cautioned investors that any statements or speculation made by parties other than Stornoway might be unsubstantiated, false or premature and Stornoway could not be responsible for any investment losses attributable to relying on such statements or speculation.
The Renard diamond project is located about 250 km north of the Cree community of Mistissini and 350 km north of Chibougamau, in the James Bay region of north-central Quebec.
The project hosts probable mineral reserves, as defined under National Instrument 43-101, at 17.9-million carats. Total indicated mineral resources, inclusive of the mineral reserve, are at 27.1-million carats, with a further 16.9-million carats classified as inferred mineral resources, and 25.7-million carats to 47.8-million carats classified as no-resource exploration upside. All kimberlites remain open at depth.
The November 2011 feasibility study included ramp and shaft access to the Renard underground mine. According to the optimisation study released in January 2013, shaft sinking will now be deferred until later in the mine life and access to the underground mine will be through a ramp only.
The shaft will be developed to a depth of 610 m, sufficient to extract all mineral reserves and the inferred mineral resources. It will also be enlarged to accommodate the planned production rate of 6 000 t/d of ore. Ore will be hauled to surface by 60 t trucks, with ramp ventilation capacity and surface maintenance facilities expanded to accommodate the increased fleet. Plant capacity remains at 6 000 t/d, expandable to 7 000 t/d. Power requirements are expected to total 12.2 MW during operations and to be provided through on-site diesel power generation.
According to the optimisation study, diamond production in years one and two will be derived predominantly from the Renard 2/3 openpit. Diamond production from the underground mine will start during year two. As indicated in the feasibility study, underground ore will be mined, with blast-hole shrinkage on the 250 m, 430 m and 610 m development levels, with waste backfill from surface. The optimisation study contains a refined draw-point design and a mining sequence incorporating a panel-retreat method to better ensure geomechanical stability and mitigate the unexpected onset of natural caving.
As a result of design changes to the project, preproduction capital costs are estimated at C$752-million, a reduction of C$50-million from the previous estimate.
As a result of agreements between Stornoway and the Québec Ministère des Transports, the Ministère des Ressources Naturelles and the Ministère des Finances et de l’Économie (MFE) regarding the completion of the Route 167 extension and the Renard mine road, as well as a revised financing agreement between Stornoway and the MFE, the new project development schedule assumes first road access to the project site by the fourth quarter of 2013, rather than July 2013, as stated previously.
Plant commissioning is now scheduled to begin in December 2015, with commercial production set for June 2016, instead of July 2015 and January 2016, as stated previously.
Stornoway has received a positive environmental assessment decision for the Renard project from the Canadian Environmental Assessment Agency. The project has received all of the major Quebec and federal government authorisations required to start construction.
The company’s TSX-listed stock on Thursday gained C$0.06 to close at C$0.98 apiece.