Stornoway (CSWY.TO) to Commence Early Construction of Renard Mine Airport
Made Possible by the Expected Completion of the Renard Mine Road Ahead of Schedule and Below Budget
Made Possible by the Expected Completion of the Renard Mine Road Ahead of Schedule and Below Budget
MONTREAL, QUEBEC--(Marketwired - Oct. 10, 2013) - Stornoway Diamond Corporation (TSX:SWY) is pleased to announce that owing to the expected completion of the Renard Mine Road significantly below budget, an agreement has been reached with the Government of Québec to allow the residual amount of the financing facility established for the construction of the road to be utilized for the immediate construction of the Renard Mine Airport. The early construction of permanent airstrip facilities close to the Renard Diamond Project will better assist Stornoway in mitigating construction risk at the Renard Diamond Project during 2014 and 2015, and will create a new regional aerodrome enhancing air transport in the Monts Otish region of Québec.
Construction of the permanent road leading to the Renard Project began in February 2012 as the "Route 167 Extension". Under the terms of a November 2012 Framework Agreement between Stornoway and the Government of Québec, Québec is completing 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"; the "Renard Mine Road"). On September 3rd, 2013 Stornoway announced that all four segments had been successively connected, allowing the first full transit of vehicles to the project site well ahead of schedule.
The cost for the Renard Mine Road was originally estimated at $77 million, including a 15% contingency. Under the terms of a 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. The schedule of repayment of this loan is based on the financing and construction schedule of the Renard Diamond Project.
Stornoway is now forecasting the cost to complete the Renard Mine Road at $70 million, approximately 10% below budget. Stornoway and Québec have agreed that the balance of funds within the base credit facility of $77 million may be drawn for the construction of the Renard Mine Airport. The airport's capital cost estimate contained within the January 2013 Renard Optimization Study was $15.5 million, including all site infrastructure and operating facilities. Given the competitive cost environment currently existing in Québec for major capital projects, and the on-site presence of Stornoway's contractors, fuel and equipment already mobilized for road construction, Stornoway has estimated that sufficient funds will be available within the road credit facility for the completion of all major civil works at the airport, well within budget and schedule. Work will commence immediately
