Star - Orion South Diamond Project Technical Presentation. George Read, P.Geo Senior Vice President Exploration & Development

Transcription

1 Star - Orion South Diamond Project Technical Presentation George Read, P.Geo Senior Vice President Exploration & Development October 4, 2018

2 Safe Harbour Statement This presentation contains "forward-looking statements" and/or "forward-looking information" within the meaning of applicable securities laws (collectively referred to as "forward-looking statements"). Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "believe", "expect", "plan", "intend", "forecast", "target", "project", "guidance", "may", "will", "should", "could", "estimate", "predict" or similar words suggesting future outcomes or language suggesting an outlook. In particular, statements regarding Star Diamond Corporation's (the Company ) future operations, future exploration and development activities or other development plans constitute forward-looking statements. Forwardlooking statements included or implied in this presentation include, but are not limited to, disclosure regarding the economics and project parameters presented in the PEA, including, without limitation, IRR, NPV and other costs and economic information, carats of diamonds to be recovered, pre-tax payback period, tonnes of kimberlite to be mined, carats per tonne to be recovered (grade), diamond prices, life of mine, capital costs, length of pre-production period; the timing and costs of future development and exploration activities on the Corporation's projects; success of development and exploration activities; permitting time lines and requirements; time lines for further studies; planned exploration and development of properties and the results thereof; and planned expenditures and budgets and the execution thereof as well as the Corporation and Rio Tinto Exploration Canada Inc s ( RTEC ) objectives for the ensuing year, including the proposed sampling program. These forward-looking statements are based on the Corporation's current beliefs as well as assumptions made by and information currently available to it and involve inherent risks and uncertainties, both general and specific. Although management considers the assumptions contained in forward-looking statements to be reasonable based on information currently available to it, those assumptions may prove to be incorrect and actual results may not be consistent with these forward-looking statements. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether such results will be achieved. Risks exist that forwardlooking statements will not be achieved due to a number of factors including, but not limited to, developments in world diamond markets, changes in diamond prices, risks relating to fluctuations in the Canadian dollar and other currencies relative to the US dollar, changes in exploration, development or mining plans due to exploration results and changing budget priorities of the Company or its partners, the effects of competition in the markets in which the Company operates, the impact of changes in the laws and regulations regulating mining exploration, development, closure, judicial or regulatory judgments and legal proceedings, operational and infrastructure risks and the additional risks described in the Company's most recently filed Annual Information Form, annual and interim MD&A. The Company's anticipation of and success in managing the foregoing risks could cause actual results to differ materially from what is anticipated in such forward-looking statements. When making decisions with respect to the Company, investors and others should not place undue reliance on these statements and should carefully consider the foregoing factors and other uncertainties and potential events. The forwardlooking statements in this presentation are expressly qualified by this cautionary statement. Unless required by applicable securities law, the Company does not undertake to update any forward-looking statement that is made herein. 2

3 Presentation Summary Project location High value diamonds Large stones Type IIa diamonds Coarse size frequency distribution Preliminary Economic Assessment ( PEA ) Comparison with diamond mines Property consolidation, Rio Tinto agreement Future work: Bulk sampling 3

4 Star Orion South Project Location H Q

5 Star Orion South Project Location H Q

6 Mineral Dispositions & Kimberlites H Q

7 Star Project Site (Sept 2006) 7

8 Diamonds: High Value Stones Orion South carat Fancy Yellow $8,000/ct US$84,240 Star 5.39 carat IF $2,466/ct US$13,300 Star 4.77 carat IF $4,535/ct US$21,600 Star carat Type IIa $11,333/ct US$135,543 Orion South carat Makeable $2,977/ct US$47,300 8

9 Diamonds: Large Stones Star 22.6 carat Star 49.5 carat Kimberlite Ten largest diamonds recovered during evaluation Star 49.5, 24.9, 22.6, 19.7, 19.7, 19.6, 19.2, 17.7, 16.6, 15.8 Orion South 45.9, 33.0, 15.9, 15.9, 10.5, 10.2, 9.4, 8.3, 7.2, 7.2 9

10 Diamonds: Type IIa Stones Type IIa diamonds contain no nitrogen or boron impurities Type IIa are usually top white or brown and can also be pink Type IIa diamonds are rare and account for less than 1.3 % of annual world production Star carat Type IIa $12,500/ct US$149,500 Star Kimberlite Diamonds greater than 2.7 carats Kimberlite Number of Diamonds Percentage Unit Type Ia Type IIa Total Type IIa Cantuar Pense EJF TOTALS

11 Diamond Size Frequency Distribution Diamonds are log-normally distributed in size frequency: exponentially more small stones than big stones Letseng Kimberlite in Lesotho has coarsest SFD and has produced many large stones: Lesotho Promise 603 ct sold for US$12.37 million in 2006 Karowe Kimberlite in Botswana in Nov 2015 produced: 1,109 ct, 813 ct and 374 ct stones 11

12 PEA Summary April 16, 2018 Total potential plant feed of 470 million tonnes at a weighted average grade of 14 carats per hundred tonnes ( cpht ), containing 66 million carats over the 34 year Life of Mine ( LOM ); The Base Case scenario (Model diamond price) has an NPV (7%) of $3.3 billion and an IRR of 22% before taxes and royalties, and an after-taxes and royalties NPV (7%) of $2.0 billion with an IRR of 19%; The Case 1 scenario (High Model diamond price) has an NPV (7%) of $5.4 billion for an IRR of 32% before taxes and royalties; Pre-production capital cost of $1.41 billion with a total capital cost of $1.87 billion (including direct, indirect costs and contingency) over the LOM and an initial capital cost payback period of 3.4 years. 12

13 PEA Financials Pre Tax & Royalty NPV IRR Base Case, Model Price +2% $3,317M 22% Case 1 High Price +2% (Pre Tax & Royalty) $5,430M 32% Model Price, No Escalation (Pre Tax & Royalty) $1,742M 18% Post Tax & Royalty NPV IRR Base Case, Model Price +2% $2,024M 19% Case 1 High Price +2% $3,370M 26% Model Price, No Escalation $1,023M 15% Taxes and Royalties Total Corporate Income Tax LOM $4,598M Mining Royalties LOM $1,987M Surface Mining Leases LOM $69M Municipal Taxes LOM $164M Personnel Income Taxes LOM $454M Total Estimated Payroll LOM $1,487M 13

14 PEA Mining Statistics Mining Unit Star Orion South Total Resource Tonnes 247.6M 280.2M Total Waste Tonnes 1,547.5M 900.9M OS Strip Ratio W:O Clearing / Stripping Tonnes 124.1M 159.2M Bucket wheel Tonnes 1,183.3M 608.6M Waste Below O/B Tonnes 240.1M 133.1M Star Total Tonnes Total Cost Cost per Tonne Clearing / Stripping Costs 124.1M $104M $0.84 Bucket Wheel Costs 1,183.3M $462M $0.39 Material Below O/B 487.6M $672M $1.38 Orion South Clearing / Stripping Costs 159.2M $183M $1.15 Bucket Wheel Costs 608.6M $247M $0.41 Material Below O/B 413.2M $734M $

15 PEA Site Plan 15

16 PEA Carat Production 16

17 PEA Cash Flow (after Tax & Royalties) 17

18 PEA/Resource/Reserve Comparison Project Tonnes * (Mt) Grade (cpht) Carats (Mct) Price (US$/ct) Star Orion South - Canada $190 Ekati - Canada $81 Diavik - Canada $128 Gahcho Kue - Canada $78 Renard - Canada $104 Karowe - Botswana $687 Letseng - Lesotho $2,100 *Tonnes: 1=PEA; 2=Indicated Resources; 3=Proven & Probable Reserves Weighted average diamond price Valuation of diamond deposits dependent on tonnes, grade and diamond price Diamond price is unique for each kimberlite Disclaimer: Values presented are the best estimates in the public domain at the time of preparation 18

19 Agreements June 2017 Consolidation of the FALC Mineral Properties Announced the consolidation of the Fort à la Corne mineral properties (including the Star - Orion South Diamond Project), resulting in Star Diamond Corporation holding a 100 percent interest with Newmont Canada FN Holdings ULC ( Newmont ) increasing its interest to a 19.9% shareholder of Star Diamond Corporation immediately following the completion of the transactions Option to Joint Venture Announced the concurrent Option to Joint Venture Agreement with Rio Tinto Exploration Canada Inc. ( RTEC ) for the Fort à la Corne mineral properties (including the Star - Orion South Diamond Project). RTEC has the option to earn up to a 60 percent interest in the Fort à la Corne mineral properties Announced the related closing of a subscription by RTEC for 5.6 million Common Shares and 5.6 million Common Share purchase warrants for aggregate gross proceeds of $1.0 million 19

20 Future Work by Rio Tinto Bulk Sampling of Star kimberlite in close proximity to underground development and previous LDD holes Processing samples in on-site bulk sample plant File photo FALC bulk sample processing plant (2005) 20 20

21 Cutter Soil Mixing Installation of CSM boxes for Trench Cutter Stabilization of top 20 metres of unconsolidated overburden 21

22 Cutter Soil Mixing 22

23 Cutter Soil Mixing 23

24 Trench Cutter Bulk Sampling Rig 24

25 Trench Cutter Bulk Sampling Rig Height: 26 metres Weight: 310 tonnes Sample to 250 metres Cutter Head 70 tonnes Steering plates Cutter frame Mud pump Suction box Cutter wheels 25

26 Cutter Rig Cutter Wheels 26

27 BE 550 Desanding & Bagging Equipment 27

28 Bulk Sampling Plant Drill -80mm De-Sand +0.85mm Sample from Megabags 30tph Make-Up H 2 O Scrubber Process Water to Plant Screening mm mm -12+6mm mm -0.85mm Surge Bin Surge Bin Surge Bin Overflow Recycle H20 Jaw Crusher XRT DMS (10tph) Thickener Underflow to Slimes Disposal HPRC -25+6mm Rejects Accepts DMS Sinks DMS Floats mm Store Surge Bin -25+6mm XRT Concentrate mm DMS Concentrate Audit 28

29 Environment & EIS Positive Federal decision on the EIS December 2014 Awaiting decision from the Ministry of Environment of Saskatchewan 29

30 Project Future & Upside Large contiguous diamond bearing kimberlites Attractive diamond parcel: High price, coarse size frequency, Type IIa Accessible Project site close to infrastructure, particularly electrical power Saskatchewan: #2 rated Mining Investment Jurisdiction (Fraser Institute) PEA strong NPV and IRR Consolidated FALC mineral properties, Rio Tinto Option Agreement Rio Tinto: additional bulk sampling commences

31 Management & Technical Team Kenneth E. MacNeill President, CEO, Director Extensive background over 34 years experience in all aspects of natural resource exploration and development MARKET AND FINANCIAL INFORMATION As of July 31, 2018 Exchange: Symbol TSX: DIAM Shares outstanding million Shares fully diluted million Greg P. Shyluk Chief Financial Officer Chartered accountant with 18 years experience with mining and natural resource companies George H. Read Senior Vice President of Exploration and Development Mark Shimell Project Manager Geologist with 21 years experience Brian DesGagnes Senior Project Geologist Geologist with 12 years experience Diamond exploration geologist with 34 years of international experience 31

32 Head Office: 600, 224-4th Avenue South Saskatoon, Saskatchewan Canada S7K 5M5 Tel: (306) Fax: (306) Website: