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Star Diamond Corp.

TSX: diam

Corporate

Corporate
Presentation

Corporate History

The Company was incorporated on April 29, 1985 under the Canada Business Corporations Act ("the Act") as 143818 Canada Ltd. The articles of the Company were amended on July 16, 1986 to reflect a name change to Shore Gold Fund Inc. and to increase the maximum number of directors to twelve. On August 12, 1994, the articles were amended to change the Company’s name to Shore Gold Inc.

The common shares of the Company were listed for trading on the Alberta Stock Exchange under the symbol "SGF" on February 10, 1987. On November 26, 1999, the Company began trading on the Canadian Venture Exchange (now known as the TSX Venture Exchange ("TSX-V")), also under the symbol "SGF". On November 26, 2004, the Company began trading on the Toronto Stock Exchange ("TSX") under the same symbol and concurrently ceased trading on the TSX-V. The articles of the Company were amended on February 6, 2018 to reflect a name change to Star Diamond Corporation. Effective February 12, 2018, the Company’s trading symbol on the TSX was changed to "DIAM".

General History

Prior to 1993, the Company was engaged primarily in gold exploration and development and was a former gold producer through its interest in the Jasper Mine, which ceased production in December 1991. In 1993, management changed with the appointment of Mr. Kenneth E. MacNeill to the Board of Directors and his appointment as Chief Executive Officer. Between 1993 and 1995, the Company was still primarily engaged in gold exploration. In December 1995, the exploration emphasis of the Company switched to diamonds with the acquisition of mineral claims in the Fort à la Corne area of Saskatchewan. Although the Company has also acquired and worked on base and precious metal properties since 1995, the majority of the exploration effort since then has been devoted to diamonds.

Various exploration techniques on the Company's Star Kimberlite Property resulted in the decision to move forward with an aggressive 25,000 tonne bulk sample program to recover 3,000 carats of diamonds. This decision led to a number of equity financings during 2001, 2002 and 2003 intended to raise sufficient capital to proceed with this program. The 25,000 tonne bulk sample program began in 2003 and included the sinking of a 250 metre shaft, constructing a headframe and hoist, and the construction of a 10 tonne per hour on-site processing facility.

The processing plant, constructed in 2003 at the Star Kimberlite Property, was commissioned in February 2004, and by April 2004, the Company had completed the sinking of the shaft on the Star Kimberlite Property down to a 250 meter depth. Lateral drifting commenced in May 2004 and was completed by November 2004 when approximately 25,000 tonnes of kimberlite had been extracted. Two additional phases of bulk sampling were also performed, with all bulk sampling on the Star Kimberlite Property completed during 2007.

During 2004, the Company transferred its gold properties into its wholly-owned subsidiary, Wescan Goldfields Inc. ("Wescan") (previously Shore Resources Inc.). Wescan then completed an initial public offering concurrent with distribution by The Company of a portion of its Wescan shares as a dividend-in-kind, and listed its shares on the TSX-V. Complete details with respect to this transaction are available for viewing at in Wescan's Long Form Prospectus dated August 30, 2004.

On August 15, 2005, the Company and Kensington Resources Ltd. ("Kensington") (which at the time held a 42.245 percent working interest in the adjacent Fort à la Corne Joint Venture, or FalC-JV) announced their intentions to merge. On October 28, 2005 the merger was finalized and Kensington became a wholly-owned subsidiary of the Company. Subsequent to the merger, on October 31, 2005 the Company entered into a voting arrangement with Cameco Corporation ("Cameco") and UEM Inc. ("UEM") with respect to the FalC-JV Property whereby Cameco (which at the time held a 5.51% interest) and UEM (which at the time held a 10 percent interest) agreed to vote with the Company on all operating decisions (excluding production decisions) to be made by the participants in the FalC-JV over a term up to seven years in duration. De Beers Canada Inc. ("De Beers") was the FalC-JV operator, which at the time held a 42.245 percent interest.

Significant capital resources were required to keep pace with the growth and expansion requirements and in 2005 two major equity financings took place for total gross proceeds of $236.7 million (see News Releases dated March 22, 2005 and November 9, 2005). Newmont participated in both financings.

In 2006, the Company was able to acquire a controlling interest in the FalC-JV Property. On September 25, 2006, the Company announced that Kensington had entered into agreements to acquire De Beers’ participating interest in the FalC-JV for $180 million and to acquire Cameco Corporation’s and UEM Inc.’s interests for a combined cash price of $66.1 million (see News Release September 25, 2006). Concurrent with these acquisitions, Kensington on-sold a 40 percent interest in the FalC-JV to Newmont for $170.4 million on the same terms and conditions as those associated with the De Beers, Cameco and UEM acquisitions. These transactions resulted in Kensington acquiring a net additional 17.755 percent interest for a net cash outlay of $75.7 million, resulting in Kensington holding a 60 percent interest in the FalC-JV and the Company maintaining a sufficient cash position to fund further exploration programs on the Star and the FalC-JV Properties. Kensington also became operator of the FalC-JV which allowed for more synergistic use of resources in moving the two projects forward.

Extensive exploration programs were carried out on both the Star and FalC-JV properties, including core drilling, additional bulk sampling and large diameter drill sampling, in order to establish reserves and resources.

In early 2007, the Company selected diamonds weighing some 200 carats, from the Star bulk sample parcel for a cutting and polishing ("C&P") exercise. The stones selected for the exercise included a spectrum of colour from top white to yellow, brown and grey, and generally more challenging shapes. No sawables were included in the C&P parcel. The C&P for the lower quality goods was completed at two manufacturing centres in Antwerp, Belgium and the higher quality goods were processed in Perth, Australia. The C&P exercise was a great success and proved that a high quality polished product can be produced from Saskatchewan diamonds.

Cut and polished diamonds from the Star Diamond Project

Cut and polished diamonds from the Star Diamond Project

In November of 2008, the Company announced that a Project Proposal for a Star - Orion South Diamond Project (the "Project") had been submitted to the Environmental Assessment Branch of the Saskatchewan Ministry of Environment and federal authorities to commence the Environmental Impact Assessment ("EIA") process and initiate discussion with regulators and the public about the implications of the Project.

The original evaluation of the Orion South Kimberlite, using underground bulk sampling and LDD mini-bulk sampling, was curtailed by the world financial crisis of late 2008. By early 2009, most capital intensive exploration activity had ceased on the Star and FalC-JV properties. Newmont has elected not to participate in the FalC-JV budgets since 2009 and, as a result, its interest had decreased since that time by approximately 9 percent, to 31 percent. From 2009 to 2014, the Company focused primarily on desk-top engineering studies and data analysis. The following is a list of the technical reports completed based on these studies:

During the completion of the pre-feasibility and feasibility studies, the Company undertook various other activities to support the economic models contained within these reports. In 2010, the Company exercised its right to purchase an outstanding three percent net profit interest ("NPI") held by a third party in August 2010 (see News Release August 9, 2010 and Material Change Report dated August 17, 2010). Fifteen claims, three of which are directly associated with the Star Kimberlite, were originally staked by a third party in 1995. These were subsequently transferred to the Company in 1997 for a consideration of the grant of a three percent NPI, payable should a positive production decision be made and the property achieve commercial mineral production. The Company had the option to purchase the NPI any time prior to 90 days after a positive production decision on any of the claims, for $1.0 million.

During 2007, the Company purchased an interest in the Buffalo Hills Property ("Buffalo Hills") located in northern Alberta (see News Release July 24, 2007). In December of 2009, the Company and Canterra Minerals Corporation ("Canterra", formerly Diamondex Resources Ltd.) together purchased an additional twelve percent interest in Buffalo Hills from Burnstone Ventures Inc. ("Burnstone", formerly Pure Diamonds Exploration Inc.) in exchange for $75,000 each and a 1 percent royalty interest (see News Release December 10, 2009). The Company’s interest in Buffalo Hills increased during 2010 due to the Company and Canterra funding certain exploration expenditures up to April 30, 2010. The Company’s interest in Buffalo Hills increased again during 2022 due to a Quitclaim, Surrender and Assignment of Interest Agreement reached. As a result, as of May 2022, Star Diamond Corporation and Canterra each held a 50 percent interest in the Buffalo Hills project. Canterra is the Operator of Buffalo Hills. In August 2024 the company completed the acquisition of Canterra Minerals Corporation’s (“Canterra”) interest in the Buffalo Hills Diamond Project (the “Project”). Star Diamond now owns 100% of the Project.

During 2010 and 2011, agreements were reached with several Aboriginal parties, to gather information on traditional Aboriginal land use and traditional knowledge in the Fort à la Corne forest (see News Releases April 1, May 12, August 18, 2010 and April 21, 2011). The information gathered as a result of these agreements was used in preparation of the EIS. The Company also announced Memoranda of Understandings ("MOUs") with several Aboriginal groups (see News Releases dated May 17 and June 17, 2010, January 19, 2011 as well as May 5, 2014). The terms of the MOUs provide that the parties will engage in discussions concerning potential education and training, job, business and participation opportunities for the Aboriginal groups. These discussions aim to establish mutually agreeable terms for a participation agreement in anticipation of the proposed Project.

In December of 2010 the Company announced that the Environmental Impact Statement ("EIS") for the Star – Orion South Diamond Project was submitted to the Saskatchewan Ministry of Environment ("Ministry") and federal authorities (see News Release dated December 22, 2010 and Material Change Report dated December 23, 2010). The Ministry is the lead agency on behalf of the province and the Canadian Environmental Assessment Agency ("CEAA"), which are jointly conducting the environmental impact assessment of the Project.

The CEAA completed their technical review of the proposed Project and during the second quarter of 2014 released the final Comprehensive Study Report ("CSR") for a thirty day public comment period. The preparation of the CSR and the public comment period were steps in the Federal Comprehensive Study type environmental assessment process for the Project. The CSR contains CEAA’s conclusions about the potential environmental effects of the Project, based on information presented in the Company’s Revised EIS and supplemental information submitted to the Agency in September 2012, April, June, August, December 2013, and April and May 2014. Within the CSR, CEAA concluded that the Project is not likely to cause significant adverse environmental effects when the implementation of proposed mitigation measures is taken into account (See News Release dated June 25, 2014).

In December 2014, the CEAA announced an Environmental Assessment Decision for the proposed Project (See News Release dated December 3, 2014). The Federal Environment Minister announced that the Project "is not likely to cause significant adverse environmental effects when the mitigation measures described in the Comprehensive Study Report are taken into account".

During 2014 the Company filed the final EIS for the Project to the Ministry and the CEAA. The EIS was prepared at the request of the Ministry and includes all updates, revisions, information requests and the Company’s responses. The Final EIS was released for public comment by the Ministry in January 2015. The public was invited to comment on the EIS and the Ministry’s technical review comments. The Ministry is continuing to work on fulfilling the province’s duty to consult responsibilities with First Nation and Métis communities potentially impacted by the proposed Project (See News Release dated January 26, 2017).

In June 2015 the Company announced that core and LDD drilling programs on the Orion South Kimberlite was successfully completed (see News Release dated June 15, 2015). The LDD program included twelve 24 inch holes totaling 2,560.5 metres that sampled a total of 1,028.53 metres of kimberlite units within the Orion South Kimberlite (see News Release dated September 2, 2015). The core drilling was required to accurately document the internal stratigraphy of the Orion South Kimberlite prior to the commencement of the LDD program. The LDD program aimed to provide diamond grade information at new grid locations and this additional diamond grade information was used in the Revised Mineral Resource estimate. The original evaluation of the Orion South Kimberlite, using underground bulk sampling and LDD mini-bulk sampling, was curtailed by the world financial crisis of late 2008.

In October of 2015 the Company also announced an updated valuation of the diamond parcels from the Project (see News Release dated October 21, 2015). This updated diamond valuation was required for the Revised Mineral Resource estimates for the Star and Orion South Kimberlites. The Parcel Prices show increases between 31 and 125 percent above the March 2008 prices. Model Prices ranging between $161 and $333 per carat have been determined for the diamond populations of the major kimberlite units that make up the Star and Orion South Kimberlites.

On November 9, 2015, the Company announced a Revised Mineral Resource estimate for the Star – Orion South Diamond Project (see News Release dated November 9, 2015). The Revised Mineral Resource estimate includes the 100 percent owned Star Diamond Project, as well as Star West and the Orion South Kimberlite, which fall within the adjacent FalC-JV (see Material Change Report dated November 9, 2015 and accompanying December 21, 2015 Technical Report as filed on www.sedar.com).

In June 2017, the Company announced that it had acquired (the "Newmont Acquisition") from Newmont Canada FN Holdings ULC ("Newmont") all of Newmont's participating interest in the Fort à la Corne joint venture (the "FalC JV"), resulting in the Company owning 100% of the of the Fort à la Corne mineral properties (including the Project), and has concurrently entered into an Option to Joint Venture Agreement (the "Option Agreement") with Rio Tinto Exploration Canada Inc. ("RTEC") pursuant to which the Company has granted RTEC an option to earn up to a 60% interest in the Fort à la Corne mineral properties (including the Project) on the terms and conditions contained in the Option Agreement (see News Release dated June 23, 2017). Immediately after the closing of the Newmont Acquisition and issuance of common shares, Newmont held approximately 19.9% of the Company’s common shares issued and outstanding on a non-diluted basis.

In April 2018, the Company announced the positive results of the independent Preliminary Economic Assessment (“PEA”) on the Project. The PEA estimates that 66 million carats of diamonds could be recovered in a surface mine over a 38-year Project life, with a Net Present Value (“NPV”) (7%) of $2.0 billion after tax, an Internal Rate of Return (“IRR”) of 19% and an after-tax payback period of 3.4 years after the commencement of diamond production (see News Release dated April 16, 2018 and Technical Report dated May 30, 2018). The PEA was led by independent mining, processing and design consultants, with support from the Company’s technical team. The PEA cash flow model is based on developing two open pits, initially on the Orion South Kimberlite and subsequently on the Star Kimberlite.

In November 2019, Star Diamond received notice from RTEC advising that RTEC was purporting to exercise all four of its options under the Option Agreement. In February 2020, the Company notified RTEC that its purported exercise of its four options under the Option Agreement did not comply with the terms of the Option Agreement. In March 2020, the Company announced that it had commenced legal proceedings against RTEC in relation to RTEC’s purported exercise of its options under the Option Agreement (see News Release dated March 5, 2020).

In December 2021, the Company and Rio Tinto announced that the Company entered into binding agreements with RTEC that comprehensively resolve all disputes between them (See News Release dated December 9, 2021). As part of these agreements, Star Diamond and Rio Tinto agreed to revised joint venture arrangements that best position the joint venture to advance the development of a diamond mining operation on the Fort à la Corne property in Saskatchewan, Canada. Under these new arrangements:

On March 26, 2024, Star Diamond and RTEC completed the previously announced transaction (the “Transaction”) whereby RTEC has transferred to Star Diamond its 75% interest in the Project. As consideration for the Transaction the Company issued RTEC 108,204,112 common shares with a deemed fair value of $9.2 million. In exchange for the common shares and RTEC’s 75% interest in the Project, RTEC also transferred certain pieces of property, plant and equipment and $4.0 million.

After the close of the Transaction:

  1. NOTE: During the fourth quarter of 2015, the Company announced Revised Mineral Resource estimates for the Star and Orion South Kimberlites (see News Release dated November 9, 2015 and Technical Report filed December 21, 2015). Accordingly, the mineral resources and economic assessment previously disclosed by the Company for the Project should no longer be relied upon.

Revised Mineral Resources Estimate 2024

On, July 24, 2024 – Star Diamond Corporation announced a significant increase in the estimated Mineral Resources for the Star - Orion South Diamond Project (the “Project”).

Highlights

Revised Mineral Resources Estimate

Table 1. Revised Mineral Resources Estimates for the Star and Orion South Kimberlites

Scroll to the right to see the table data.

Table Notes Apply to Table 1

  1. Canadian Institute of Mining and Metallurgy (“CIM”) definitions were followed for classification of mineral resources.
  2. Star Kimberlite Units: Cantuar, Pense, Early Joli Fou (“EJF”), & Mid Joli Fou (“MJF”).
  3. Orion South Kimberlite Units: P3, Pense & EJF. 
  4. Mineral Resources are constrained within a Whittle optimized pit shell.
  5. Mineral Resources, which are not Mineral Reserves do not have demonstrated economic viability. The estimation of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant issues.
  6. There is no guarantee that all or any part of the Mineral Resources will be converted into a Mineral Reserves.
  7. Grade values are rounded to the first decimal.
  8. The effective date of the Revised Mineral Resources estimate is July 24, 2024.
  9. The EJF Inner and Outer kimberlite units for both deposits are based on detailed kimberlite geology recorded from   the core logging of the pattern drilling program. The EJF Inner represents coarser grained EJF kimberlite that occurs within the volcanic crater and the EJF Outer includes finer grained EJF kimberlite that lies on and outside the crater rim. This Revised Mineral Resources estimate acknowledges that the transition from Inner to Outer is geologically gradational.