Canadian Mining Journal

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DIAMOND STUDY: Renard PEA boosts pre-tax NPV to $885 million

QUEBEC - Stornoway Diamond Corp. of Vancouver says the updated preliminary assessment for the Renard diamond p...



QUEBEC – Stornoway Diamond Corp. of Vancouver says the updated preliminary assessment for the Renard diamond project in the Otish Mountains shows a huge improvement to the pre-tax net present value (NPV), putting it at C$885 million. The base case NPV estimate is a whopping 14 times larger than it was in the estimate made just a year ago.

The latest study puts the NPV at C$885 million (at an 8% discount rate) and the internal rate of return (IRR) at 24.8% using the September 2009 diamond valuation of US$117/ct and a Canadian:US dollar exchange rate of 1.11:1. Using current market assumptions for rough diamond pricing and the current US dollar exchange rate the numbers would rise to an NPV of C$1.173 billion and an IRR of 29.7%.

Stornoway reported that pre-production capital requirements will be C$450 including contingencies. The capital cost rises to C$511 million when sustaining capital and closure costs are included. A mine life of 25 years using both open pit and underground methods would have a total output of 30 million ct.

Stornoway president and CEO Matt Manson said, “The updated preliminary assessment at Renard shows a dramatic increase in NPV compared to a year ago due to the recent threefold expansion in the project’s resource base. The larger mine that this resource can now support has also allowed us to reduce our estimate of overall operating costs at the expense of a modestly higher capital cost.”

Executive chairman Eira Thomas stated, “This study has firmly established Renard as one of the best undeveloped diamond deposits in the world, well on track to becoming Quebec’s first diamond mine.”

The Renard project is a 50:50 joint venture of Stornoway (the operator) and SOQUEM. Details are available at www.StornowayDiamonds.com.