Rio Tinto (ASX, LON, NYSE: RIO) and Canadian junior Star Diamond (TSX: DIAM) have reached an agreement to end a drawn out dispute over the development of a joint diamond project in the province of Saskatchewan.
The legal row stemmed from a 2017 earn-in deal under which Rio Tinto’s subsidiary committed to spend $75 million in phases to acquire 60% of the Star-Orion South diamond project.
The main change to the terms of their original joint venture agreement is that Rio’s subsidiary, Rio Tinto Exploration Canada (RTEC) will eventually own 75% of the project, with Star Diamond holding the remaining 25% interest.
As part of the intended changes, the parties agreed that all expenses on the project prior to Dec. 31, 2021 will be the sole responsibility of RTEC.
Investments done next year before the announcement of a decision on whether or not to build a diamond operation, to be made after completing a feasibility study, will initially be advanced by RTEC.
Star Diamond will not be required to begin reimbursing RTEC for the Canadian junior share of the costs unless and until commercial production has been achieved, the parties said.
Once the decision to develop a mine on the Fort à la Corne property in Saskatchewan has been made and announced, Star Diamond will have six months to begin contributing to the joint venture.
A 2018 preliminary economic assessment estimated 66 million carats could be recovered from the project over a 38-year period, generating $3.3 billion (US$2.6 billion) in revenue.
The asset, located 60 km east of Prince Albert, is known to host larger stones, including high-value Type IIa diamonds.
This article first appeared on www.Mining.com