Diversified miner Rio Tinto is selling its 75% interest in the Fort à la Corne diamond project, in central Saskatchewan, to joint venture (JV) partner Star Diamond Corp, for shares in the Canadian junior.

Star Diamond will issue Rio Tinto Exploration Canada (RTEC) shares that will result in the company owning a 19.9% stake in the exploration and development company.

Rio Tinto head of exploration Dave Andrews said that the majority of the group’s exploration programme was now firmly focused on metals and minerals to support the energy transition.

“Although we will no longer have direct involvement in the project, we are pleased to be able to maintain our interest in the project by gaining a 19.9% ownership interest in Star Diamond.  After more than five years, we continue to see potential in the project and believe it can be a significant contributor to both the local communities around the Fort à la Corne property and the broader Saskatchewan economy."

RTEC will transfer to Star Diamond ownership of the trench cutter drill rig, used by RTEC to complete its prior bulk sampling programme at Fort à la Corne, and the bulk sample plant, including the Tomra XRT diamond sorting machine that is on site.

"Acquiring 100% ownership of the project will be a major accomplishment for Star Diamond and its shareholders,” commented Star Diamond president and CEO Ewan Mason.

“We are grateful to Rio Tinto for the significant monetary investment and expertise it has contributed to the project over the past more than five years, which has meaningfully advanced what Star Diamond believes is one of the most promising diamond projects in the world," he said.

Upon completion of the transactions that are the subject of the agreement, Star Diamond will have full control and responsibility for the project, the existing JV agreement between RTEC and Star Diamond will terminate, and Star Diamond will release and indemnify RTEC for liabilities arising from or relating to the project, all in exchange for a $4-million payment from RTEC to Star Diamond. 

RTEC has agreed that it will provide on Star Diamond's behalf, for up to five years following closing, letters of credit in the aggregate amount of no more than C$9.9-million to secure certain environmental remediation and reclamation obligations related to the project. Star Diamond will be obliged to repay any amounts drawn on these letters of credit and such repayment obligations will be secured against the project and its assets.