Stornoway Announces $28.4M Renard Pre-Development Capital Program
VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 23, 2012) -Stornoway Diamond Corporation (TSX:SWY) is pleased to announce a significant pre-development capital program for 2012 at the 100% owned Renard Diamond Project ("Renard") located in north-central Québec. In November 2011 Stornoway released the results of the Renard Feasibility study, which demonstrated an economically viable project with an initial 11 year reserve based mine life, strong operating margins and extensive resource upside. Since this time, Stornoway has filed the project's Environmental and Social Impact Assessment ("ESIA"; December, 2011), announced the start of construction on the Route 167 highway extension project by the Québec Ministère des transports ("MTQ"; February, 2012), announced the signing of an Impacts and Benefits Agreement with the Crees of the James Bay Region (the "Mecheshoo Agreement"; March 2012), and announced the raising of gross proceeds of $40 million in a combination of unsecured debt and new equity (March, April and May, 2012).
Matt Manson, President and CEO, commented: "The pre-development capital program announced today for Renard will maintain our development schedule as we complete final permitting and project financing in 2012. Despite the currently challenging market conditions, we have succeeded in raising the significant capital required to perform this work and we are highly encouraged by the response we have received to date on our larger scale project financing activities. Our objective is to continue hitting our project milestones, this being the most effective way of delivering long term shareholder value."
Patrick Godin, COO, added: "An important part of the 2012 program will be to expand our mine development team based in Longueuil, Mistissini and Chibougamau, Québec. This team has already added considerable mining depth to the company alongside our existing diamond technical team based at our North Vancouver office and plant facility. Our strategy is to build upon our already strong operating credentials, recognizing that strong in-house expertise is an essential element for the successful growth of any diamond mining business."
2012 Engineering Program
Subsequent to the recent financings, Stornoway's board has approved a $28.4 million budget for pre-development work at Renard including detailed engineering and design, site preparation activities and the ordering of long lead items. As a component of this program of work, Stornoway expects to shortly enter into an EPCM contract covering project engineering, procurement and construction management for the project's process plant, water treatment plant, accommodation and maintenance facilities, and site utilities. Stornoway's mining team based in Longueuil Québec will be expanded during the course of the year and will assume responsibility for design of the open pit and underground mine, design of the processed kimberlite containment facility, and security operations. Pre-development engineering on the project's shaft and hoisting facilities will be initiated under separate EPCM contract in the second half of the year.
Permitting Progress Report
The Renard Diamond Project falls under the environmental protection regimes of the James Bay and Northern Québec Agreement (the "JBNQA") and the Canadian Environmental Assessment Act. Stornoway filed the Renard ESIA on December 28th, 2011 with both the Québec Ministère du Développement durable, de l'Environnement et des Parcs (the "MDDEP") and the Canadian Environmental Assessment Agency (the "CEAA"). Two highly successful information sessions on the ESIA were hosted by Stornoway in Chibougamau and Mistissini on March 14th and March 21st respectively, and initial feedback from local communities and the federal and Québec regulators has been positive. Both the Review Committee of the JBNQA ("COMEX") and the CEAA will now hold formal public hearings on the Renard Project, the first of which have been scheduled by the CEAA for June 5th and 6th in Chibougamau and Mistissini. It is currently expected that the COMEX hearings will be scheduled for later in the summer, making the project eligible to receive its Certificates of Authorization thereafter.
Route 167 Construction Progress Report
Vehicle access to the Renard Diamond project will be by way of the Route 167 Extension, a $332 million road development project under the auspices of the MTQ. The MTQ have now awarded contracts for two of four construction segments and tree clearing along the route was initiated in January 2012 on the southernmost segment. Work is progressing well, with only minor delays to the schedule. The MTQ is investigating the development of a full winter road access next year to expedite the all-season road project and maintain the construction schedule. On this basis, Stornoway is maintaining its guidance of construction start-up during 2013 and first ore production by July 2015, as defined within the Renard Feasibility Study.
Project Financing Progress Report
Stornoway is currently pursuing a financing strategy for the Renard project based on a combination of project debt and equity. In April 2011 Stornoway entered into a $100 million credit support agreement with its largest shareholder, DIAQUEM Inc., a subsidiary of Investissement Québec, in connection with the acquisition of DIAQUEM's 50% interest in the Renard Project. At this time, DIAQUEM was also granted a pre-emptive right to subscribe to 25% of any new equity issued. Stornoway's recent financings were undertaken on the basis of 50% debt and 50% equity, with DIAQUEM exercising its pre-emptive right. 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.