Stornoway Diamond Corporation (SWY.TO) First Vehicle Arrives at Renard Project Site via New Permanent Road
Renard Mine Road opens ahead of Schedule
Stornoway Diamond Corporation (TSX-SWY) is pleased to announce the opening of the Renard Mine Road to all-season vehicle traffic for the first time. All four road construction segments “A” to “D” of the Renard Mine Road and the Route 167 Extension that are currently under construction by Stornoway and the Québec Ministère des Transports (“MTQ”) have now been connected, allowing the full transit of construction vehicles from Temiscamie, at the end of the existing public highway, to the Renard project site 240 km to the north.
Matt Manson, President and CEO commented: “With today’s news, it is now possible to drive directly to the Renard Project by permanent road. The connection of each construction segment has been achieved two months earlier than expected, and well ahead of the 4th Quarter, 2013 schedule established when construction of Stornoway’s portion of the road began in April. We are also forecasting final completion of the Renard Mine Road within budget. These achievements have been made possible by the strong performance of our construction contractors, all of whom are Cree or locally operated businesses, and the professionalism of Stornoway’s construction management team based in Longueuil, Québec.”
Matt Manson continued: “The Renard Project is now permitted, connected by road, and ready to build. The project’s large Mineral Resource, and its extensive exploration upside, offers a project producing up to 2 million carats of diamonds per year and projected annual revenues of up to C$450m per year within its initial 11 year mine life. Renard is an outstanding, and unique, new diamond development project. Project financing discussions with lenders and prospective investors are ongoing and progressing well, with a view to first construction mobilization prior to the end of 2013.”
Construction of the road that will provide all-season vehicle access to the Renard Project began in February 2012 as the “Route 167 Extension”. Under the terms of the November 2012 Framework Agreement between Stornoway and the Government of Québec, Québec is to complete the first 143km of road (segments “A” and “B”) as a 70km/hr two-lane gravel highway and Stornoway is undertaking the construction of a 50km/hr single lane mining road over the remaining 97km (segments “C” and “D”) as the “Renard Mine Road”. The cost of the Renard Mine Road was initially estimated at $77 million, including a 15% contingency. Under the terms of the December 2012 Financing Agreement between Stornoway and Québec, this cost is being funded through a credit facility provided to Stornoway bearing interest at the rate of 3.35% and amortized over a period of 15 years. In order to provide additional contingency, Stornoway is entitled to draw an additional $7.7 million bearing interest at the rate of 6.3%, for a total facility of up to $84.7 million. The schedule of repayment of these loans will be based on the financing and construction schedule of the Renard Diamond Project. To-date, Stornoway has drawn $61.4 million from the credit facility, and is forecasting a final cost to complete well within the base budget.
The Renard Mine Road has opened initially for construction traffic only, and is not yet open for public use. Overall completion stands at 50%. To date, all temporary bridges have been completed, 9 of 16 permanent bridges have been installed, more than 80% of all culverts have been installed, and approximately 1.6 million tonnes of gravel has been extracted from 7 borrow pits.
Throughout the road construction process, Stornoway has prioritized the granting of contracts to businesses located in the James Bay Region of Québec, in particular those associated with the Crees of Eeyou Istchee. Contractor productivity throughout has been excellent, and the greatest factor in Stornoway’s ability to advance the road so efficiently. Stornoway’s contractors include:
•The Eskan Company, the Development Corporation of the Cree Nation of Mistissini, and Swallow-Fournier inc. for road construction;
•Nordic Structures Bois, a wholly-owned subsidiary of Chantiers Chibougamau Ltée, for bridge construction;
•Jos Ste-Croix & Fils Ltée of Chibougamau for construction management;
•The Eenatuk Forestry Corporation for tree clearing;
•The Kiskinchiish Corporation for camp services and catering; and
•Petronor, a wholly owned Cree enterprise, for fuel supply.
About the Renard Diamond Project
The Renard Diamond Project is located approximately 250 km north of the Cree community of Mistissini and 350 km north of Chibougamau in the James Bay region of north-central Québec. In November 2011, Stornoway released the results of a Feasibility Study at Renard, followed by an Optimization Study in January 2013, which highlighted the potential of the project to become a significant producer of high value rough diamonds over a long mine life. Probable Mineral Reserves as defined under National Instrument (“NI”) 43-101 stand at 17.9 million carats. Total Indicated Mineral Resources, inclusive of the Mineral Reserve, stand at 27.1 million carats, with a further 16.9 million carats classified as Inferred Mineral Resources, and 25.7 to 47.8million carats classified as non-resource exploration upside. All kimberlites remain open at depth. Pre-production capital cost stands at an estimated C$752 million, with a life of mine operating cost of C$57.63/tonne giving a 67% operating margin over an initial 11 year mine life. Readers are referred to the technical report dated December 29th, 2011 in respect of the November 2011 Feasibility Study for the Renard Diamond Project, and the technical report dated February 28th, 2013 in respect of the January 2013 Optimization Study, for further details and assumptions relating to the project.
About Stornoway Diamond Corporation
Stornoway is a leading Canadian diamond exploration and development company listed on the Toronto Stock Exchange under the symbol SWY and headquartered in Montreal. Our flagship asset is the 100% owned Renard Diamond Project, on track to becoming Québec’s first diamond mine. Stornoway is a growth oriented company with a world class asset, in one of the world’s best mining jurisdictions, in one of the world’s great mining businesses.
On behalf of the Board
STORNOWAY DIAMOND CORPORATION
/s/ “Matt Manson”
President and Chief Executive Officer