DIAMOND STUDY: Positive feasibility study for Stornoway’s Renard project

QUEBEC - The results of the feasibility study for the Renard diamond project in the north central part of the province are positive, according to owner Stornoway Diamond Corp. of Vancouver. The probable reserve is 18 million ct in 23 million tonnes at an average grade of 78 cpht.

The base case puts the net present value at C$672 million at a 7% discount rate and the internal rate of return at 18.7% before taxes and mining duties, or C$376 million and 14.9% after taxes and mining duties.

A combined open pit and underground operation with an estimated 11-year life and a diamond recovery plant is to be built. Diamond production will peak at 2.1 million ct/y, averaging 1.7 million ct/y over the life of the mine. The pre-production capital cost is C$802 million.

In real terms the gross revenue will be C$4.1 billion and the operating cash flow C$2.7 billion. With an average diamond valuation is US$180/ct, the estimated operating cost will average C$54.71/t or C$70.27/ct. That will yield an operating margin of 68%.

Stornoway hopes that construction mobilization can begin by July 2013 and production start two years later, in July 2015.

Additional details from the feasibility study are posted at www.StornowayDiamonds.com.