Stornoway Announces Renard Feasibility Program


Stornoway Diamond Corporation (TSX-SWY) and Société générale de financement du Québec ("SGF") are pleased to announce the formal commencement of a Feasibility Study and associated work programs at the Renard Diamond Project, located in North Central Québec. The Renard Diamond Project is a 50:50 joint venture between Stornoway Diamond Corporation and SOQUEM, a wholly-owned subsidiary of SGF, the Québec government's main industrial and financial holding company.

In March 2010, Stornoway released the results of an updated Preliminary Assessment at Renard which outlined a base case estimate of pre-tax Net Present Value of C$885 million (at an 8% discount rate) and an Internal Rate of Return of 24.8%. The feasibility program announced today is designed to build upon this earlier work, and has been conceived with the aim of making a production decision at the project by the end of 2011. It will include the following elements:

  • A mine Feasibility Study incorporating both open pit and underground mining scenarios, with examination of an increased processing capacity from 5,000 up to 7,000 tonnes per day;
  • An Environmental and Social Impact Assessment;
  • Mine permitting, community consultation, and the negotiation of an Impact and Benefits Agreement;
  • Establishment of a Québec-based owner's team for mine development; and 
  • A separate Feasibility Study and Environmental Assessment for a power line to connect the project to the Hydro-Québec James Bay hydroelectric network.

Matt Manson, President and CEO, commented: "The commencement of a Feasibility Study at Renard is a significant milestone on the path towards Québec's first diamond mine. Our objective at Renard is to define a robust, low-risk project with high margins and a substantial mine life, which is readily financeable. An important element of the work program will be a distinct Feasibility Study and Environmental Assessment for a power line to the project, to be conducted under the auspices of Hydro-Québec but financed by the joint venture partners. This power line has the potential to greatly reduce the project's operating costs, reduce its overall environmental footprint, and to insulate the project from future fuel cost escalation. Its addition to the conceptual mine plan, not contemplated in previous studies, follows the recent determination of a cost-efficient mechanism for its construction. The feasibility program will also entail the immediate creation of an expanded Québec-based mining team under the leadership of Stornoway's newly appointed Chief Operating Officer, Patrick Godin."

For his part, Pierre Shedleur, President and General Manager of SGF commented: "The expansion of the Québec-based management team and our investment in the Feasibility Study and Environmental Assessment for a power line are clear signs of our belief in the economic potential of the Renard Project, what could become the first ever diamond mine in Québec."

Budget and Schedule

The total cost of the feasibility program, covering a two year period from January 2010 to December 2011, is estimated at $28.3 million on a 100% basis, including all studies, associated exploration work, program support, operator management fees and contingencies. Approximately 13% of this total has already been expended since the beginning of 2010. The feasibility program schedule is designed to prepare the project for potential mine construction starting in 2012 and consequent production by the end of 2013. This schedule is aggressive, but consistent with current guidance on the progression of the "Route 167 Extension", the road development project linking Renard to the Québec provincial highway system, which is currently undergoing feasibility assessment and permitting under the auspices of the Québec Ministry of Transportation. It is expected that any delays to the project timeline produced by road construction delays can be mitigated through the construction of a seasonal access road, if deemed necessary.

Feasibility Study

The updated Renard Preliminary Assessment released by Stornoway in March 2010 suggested a potential mine life of at least 25 years based on a processing capacity of 5,000 tonnes per day and utilizing both Indicated and Inferred Mineral Resources of 23 million carats and 13.3 million carats respectively. Although defined as a Preliminary Assessment, many elements of this study, such as cost estimation and resource definition, were completed to a high enough level to warrant proceeding directly to a full Feasibility Study.

The Feasibility Study will develop a mine plan based on combined open pit and underground mining, utilizing a shaft and large tonnage, low cost mining methods. The study is expected to result in a Mineral Reserve statement based on the existing Indicated Mineral Resources in the Renard 2, 3 and 4 kimberlite pipes. The mine plan will also be designed to allow for the future development of the large amount of Inferred Mineral Resources indentified at the project, and the currently estimated "potential mineral deposit" of between 12 and 26 million carats, the latter being the subject of a concurrent exploration program (described below). Each kimberlite at Renard remains open at depth, and maintaining flexibility in the mine plan so as to take advantage of future potential resources, including those in the Renard 9 and 65 kimberlite pipes, will be an important element of the study. The reader is cautioned that the potential quantity and grade of any potential mineral deposit is conceptual in nature, and it is uncertain if further exploration will result in the target being delineated as a mineral resource.

It is expected that the Feasibility Study will be completed within 12 months. Work elements will include mine and plant design, process security design, metallurgical testing, site infrastructure studies, processed kimberlite/waste rock management design, geotechnical and hydro-geological studies, and site condemnation drilling. Certain seasonally dependent aspects of the Feasibility Study, such as geotechnical drilling, have already been completed.

Power Line Study

Stornoway and SOQUEM will undertake to finance an independent feasibility study and environmental assessment for a power line, to be undertaken by Hydro-Québec and to be completed separately from, but concurrently to, the Renard mine Feasibility Study undertaken by the joint venture. Following the threefold increase in the size of the Renard mineral resource as outlined in the March, 2010 Renard Preliminary Assessment, and given the very low rates available for hydroelectric power within Québec, such a power line has the potential to reduce mine operating costs significantly, extend the mine life by reducing the effective resource cut-off grade, insulate the project from future fuel cost escalation, and reduce the project's environmental impact with lower carbon emissions and fewer loads of fuel trucked to site.

Environmental and Social Impact Assessment, Permitting and Community Consultation

An Environmental and Social Impact Assessment ("ESIA"), building upon previous environmental baseline data collection and community dialogue, will commence shortly. Work elements will include wildlife habitat assessment, hydrology studies, traditional ecological knowledge and archeological studies, a Social and Economic Impact Study, and field data collection. The ESIA will be undertaken concurrently with mine permitting activities and community consultations.

Mine permitting for the Renard Diamond Project was initiated on February 11th, 2010 with the filing of a "Notice of Intent" with the provincial administrator of the James Bay and Northern Québec Agreement (the "JBNQA"), representing the environmental protection regime under which the project falls. In addition to the JBQNA, the project falls under the purview of the Canadian Environmental Assessment Act, requiring an equivalent federal assessment to be completed. Once the provincial and federal administrators have issued authorizations for project development, final mine permits will be sought from the Québec Ministère du Développement durable, de l'Environnement et des Parcs, ("MDDEP"), the Ministère des Ressources Naturelles et de la Faune ("MRNF"), and all relevant federal authorities. Permitting for the Renard Diamond Project is expected to take between 18 and 24 months from date of initiation.

Consultation with communities, including public open houses and individual stakeholder meetings, will be undertaken in conjunction with the ESIA and mine permitting processes. Since 2002, regular project presentations have been made to the Band Council of the Cree Nation of Mistissini (the "CNM") and employment opportunities to community members have been provided. In preparation for construction of a full scale mining project, the first public information sessions were held successfully in March of this year in the communities of Mistissini and Chibougamau, and more formal public hearings on the proposed project will be scheduled for the second half of 2011. In addition, Stornoway and SOQUEM are currently in negotiations with the CNM and the Grand Council of the Crees (Eeyou Istchee) with the aim of concluding an Impact and Benefits Agreement, which is expected to provide mine related employment and contracting opportunities, and foster environmental protection. To this end, a project business development office will be opened in Mistissini and Cree involvement in the ongoing environmental assessment studies will be facilitated.


As a component of the feasibility program, exploration drilling will be conducted at the project with the aim of determining the potential grade and tonnage upside of several kimberlite pipes in the project area. During the recent winter drill program, Renard kimberlites 3, 4 and 65 were tested with deep drill holes and all were determined to be larger in dimension at depth than previously modeled (Stornoway Diamond Press Release dated April 14, 2010). Additional drilling on these three kimberlites is scheduled for the summer program. Micro-diamond analysis on drill-core will be used to generate grade models so as to integrate the newly drilled portions of each kimberlite into the existing grade and geology models established for the recent National Instrument ("NI") 43-101 compliant resource estimate (Stornoway Diamond Press release dated December 8, 2009). More comprehensive drilling and diamond sampling for the purposes of expanding and updating the existing NI 43-101 Mineral Resources at Renard will be considered on a case by case basis, results dependent. 

About Stornoway Diamond Corporation

Stornoway Diamond Corporation is one of Canada's leading diamond exploration and development companies, involved in the discovery of over 200 kimberlites in seven Canadian diamond districts. The Company benefits from a diversified diamond property portfolio, a strong financial platform and management and technical teams with experience in each segment of the diamond "pipeline" from exploration to marketing. The Qualified Person for the Renard Diamond Project is Mr. Dave Skelton, P. Geol. (AB/QC), Vice President, Project Development. Mr. Skelton has reviewed the contents of this press release.

About SGF

Société générale de financement du Québec (, an industrial and financial holding company, has a mission to carry out economic development projects, particularly in the industrial sector, in cooperation with partners and in compliance with accepted profitability requirements and with the economic development policy of the Québec government. As part of its new mandate, SGF is authorized by the Québec government to go beyond its traditional role as an equity investor by offering complementary solutions, such as loans, debentures or preferred shares.

SOQUEM, a wholly-owned subsidiary of Société générale de financement du Québec, is to undertake exploration, development and mining activities throughout the province of Québec.

On behalf of the Board
/s/ "Matt Manson"
Matt Manson
President and Chief Executive Officer

For more information, please contact Matt Manson (President and CEO) at 416-304-1026
or Nick Thomas (Manager Investor Relations) at 604-983-7754, toll free at 1-877-331-2232

Pour plus d'information, veuillez contacter M. Ghislain Poirier, Vice-président Affaires publiques de Stornoway au 418-780-3938,  ou
Sophie Alarie, Directrice Marketing et Relations publiques à la SGF au numéro 514-876-9368, ou Pierre Bertrand, Directeur général de SOQUEM 819-874-3773 ;
**  Website:  Email: **

This document contains "forward-looking information" within the meaning of Canadian securities legislation and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. This information and these statements, referred to herein as "forward-looking statements" are made as of the date of this document and the Company does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by law.

Forward-looking statements relate to future events or future performance and reflect current expectations or beliefs regarding future events and include, but are not limited to, statements with respect to: (i) the amount of mineral resources and potential mineral deposits; (ii) the amount of future production over any period; (iii) net present value and internal rates of return of the proposed mining operation; (iv) capital costs, including plant costs, and operating costs; (v) diamond values and increases in diamond values; (vi) strip ratios, rates of extraction of kimberlite and mining rates; (vii) mine expansion potential and expected mine life; (viii) exploration potential at the Project; (ix) road construction, power generation and operation costs; and (x) expected time frames for completion of permitting and regulatory approvals, completion of a Feasibility Study and making a production decision. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects", "anticipates", "plans", "projects", "estimates", "assumes", "intends", "strategy", "goals", "objectives" or variations thereof or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements

All forward-looking statements are based on Stornoway's or its consultants' current beliefs as well as various assumptions made by and information currently available to them. Many of these assumptions are set forth in the news release and include: (i) the presence of and continuity of diamonds in its host rocks at the Project at modeled grades; (ii) diamond values and diamond price escalation factors; (iii) discount rates; (iv) financing structure and costs; (v) reasonable contingency requirements; (vi) anticipated financial performance, (vii) receipt of regulatory approvals on acceptable terms within commonly experienced time frames; (viii) the settlement of an Impact and Benefits Agreement on acceptable terms within a reasonable time frame; (ix) the construction of an access road on a timely basis. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.  Many forward-looking statements are made assuming the correctness of other forward looking statements, such as statements of net present value and internal rate of return, which are based on most of the other forward-looking statements and assumptions herein. The cost information is also prepared using current values, but the time for incurring the costs will be in the future and it is assumed costs will remain stable over the relevant period.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. We caution readers not to place undue reliance on these forward-looking statements as a number of important factors could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates assumptions and intentions expressed in such forward-looking statements. These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur, including the assumption in many forward-looking statements that other forward-looking statements will be correct, but specifically include, without limitation, risks relating to variations in the grade, kimberlite lithologies and country rock content within the material identified as mineral resources from that predicted, variations in rates of recovery and breakage; the greater uncertainty of potential mineral deposits, developments in world diamond markets, slower increases in diamond valuations than assumed, risks relating to fluctuations in the Canadian dollar and other currencies relative to the US dollar, increases in the costs of proposed capital and operating expenditures, increases in financing costs or adverse changes to the terms of available financing, if any, tax rates or royalties being greater than assumed, results of exploration in areas of potential expansion of resources, changes in development or mining plans due to changes in other factors or exploration results of Stornoway or its joint venture partners, changes in project parameters as plans continue to be refined, risks relating to receipt of regulatory approvals or settlement of an Impact and Benefits Agreement, the effects of competition in the markets in which Stornoway operates, operational and infrastructure risks and the additional risks described in Stornoway's most recently filed Annual Information Form, annual and interim MD&As, and Stornoway's anticipation of and success in managing the foregoing risks. Stornoway cautions that the foregoing list of factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to Stornoway, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Stornoway does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by Stornoway or on our behalf, except as required by law.