Stornoway Diamond Corporation
TSX : SWY

Stornoway Diamond Corporation

November 17, 2014 08:50 ET

Stornoway Completes Field Portion of 2014 Renard Drill Program

Renard 2 Intersected over Substantial Widths and to 1,000m depth

MONTRÉAL, QUÉBEC--(Marketwired - Nov. 17, 2014) - Stornoway Diamond Corporation (TSX:SWY)(the "Corporation" or "Stornoway") is pleased to provide an update on the 2014 resource expansion drill program at the Renard Diamond Project in Québec. The field portion of the program has now been concluded, and highlights to date are as follows:

  • 12,010 meters of deep directional drilling has been completed at the Renard 2 kimberlite in 33 branches from 3 pilot holes;
  • The deepest kimberlite intersection returned was at 1,012 vertical metres below surface, at which point Renard 2 is interpreted to have a cross sectional area of greater than 1 hectare, and to be open at depth;
  • The overall dimensions of the Renard 2 body at depths below 600 meters are comparable to the dimensions in the upper portion of the pipe in the area of the current Mineral Reserve, with a preliminary geological model suggesting a tonnage range of 9 to 12 mTonnes between 600m and 1,000m depth;
  • The four primary kimberlite rock types identified in the upper pipe are present and remain consistent in the deep drilling; and
  • Sample processing of drill core for diamond content has begun with the recovery of a 1.01 carat diamond from a caustic fusion sample and a 0.97 carat diamond from a dense media separation sample, the presence of such large diamonds in small samples being a characteristic of the Renard Project.

Matt Manson, President and CEO commented: "the 2014 resource expansion drill program has met our expectations on the tonnage potential of the Renard 2 kimberlite below the level of the current Mineral Reserve. Whilst the kimberlite clearly shows areas of gentle pinching and swelling with depth, at 1,000 meters below surface it is still of a size and geological composition comparable to what we see closer to the surface. This is a remarkable ore body, and the 2014 drill program, which has been technically challenging to complete, has succeeded in delineating many years of potential mining beyond the current 11 year reserve based mine plan. We now move into the detailed geological modeling and sample processing work, with a revised Mineral Resource estimate expected at the end of Q2 2015."

The Renard 2 deep drilling commenced in early April with three drill rigs establishing a single pilot hole each from which a series of tightly constrained branches were cut using directional drilling equipment. Two drills were situated within the outline of Renard 2 and drilled subvertically within the kimberlite, while a third drill was positioned outside the body and focused on inclined holes. A total of 33 branches were cut from the three pilot holes, ranging in length from 5.3m to 724.8m. Two separate shorter holes were also drilled from surface within the Renard 2 body. Total meterage drilled during the program was 12,010m and comprised a mixture of BQ, NQ and HQ diameter core. The longest continuous drill hole trace ran 1,086m from surface to the end of the hole. The deepest vertical depth tested from surface was 1,056m, and the deepest vertical depth of kimberlite intersected was 1,012m.

This drilling has resulted in sufficient internal kimberlite intersections and external pierce points on the margins of the body to allow it to be outlined between 600m (at the base of the current Indicated Mineral Resource and Mineral Reserve) and 1000m depth. Each of the four characteristic geological units that comprise the Renard 2 kimberlite have been intersected, including Kimb2a ("Blue" kimberlite), Kimb2b ("Brown" kimberlite), Kimb2c (Hypabyssal Kimberlite) and CRB/CRB-2a ("Country Rock Breccia").

Initial geological modeling from the drill results suggests that Renard 2 maintains a substantial cross-sectional area to 1,000m depth (see table below). Irregularities in the pipe shape previously noted in the upper 600m of the pipe continue to 1000m depth, and there is no indication at this stage that the proportion of the diatreme units Kimb2a and Kimb2b within the kimberlite diminishes markedly with depth. This means that the "root zone", which can be expected to be comprised of narrow zones of primarily hypabyssal kimberlite, has not yet been reached, and Renard 2 can be considered open below 1,000m.

Renard 2 Initial Geological Model Shape
Depth Below Surface Preliminary Interpreted Size of Kimberlite Pipe
Maximum Horizontal Dimensions Approximate Cross-Sectional Area1
50m 110m by 215m 1.86 ha
100m 110m by 215m 1.66 ha
200m 100m by 230m 1.71 ha
300m 110m by 200m 1.07 ha
400m 125m by 190m 1.05 ha
500m 180m by 210m 1.57 ha
600m 175m by 210m 1.51 ha
700m 175m by 170m 1.23 ha
800m 170m by 160m 1.20 ha
900m 170m by 160m 1.16 ha
1,000m 170m by 160m 1.14 ha
Note 1: The interpreted cross-sectional area of the kimberlite includes each of the highly diamondiferous Kimb2a, Kimb2b and Kimb2c units, which comprise the pipe's Indicated Mineral Resource, as well as the "CRB" Country Rock Breccia unit, which comprises a lower grade Inferred Mineral Resource and which is volumetrically significant at the top of the kimberlite between surface and 200m depth. The definition of "kimberlite" does not include the outlying "CCR" Cracked Country Rock unit which is known to contain intermittent zones of hypabyssal kimberlite but which is not in the Mineral Resource.

Although detailed logging is continuing, the overall emplacement model indicated by the drilling suggests a possible tonnage estimate of 9 to 12 mTonnes between 600m and 1,000m depth. In comparison, the current Renard 2 Mineral Resource Estimate comprises 18.6 mTonnes of Indicated Mineral Resource to 600m depth (containing 18.7mcarats at 100 carats per hundred tonnes, or "cpht"), 5.2mTonnes of Inferred Mineral Resources between 600m and 700m depth (containing 6.2 mcarats at 119 cpht) and a non-resource "Target for Further Exploration" of between 4.0 and 4.6mTonnes below 700m (containing 4.2 to 7.3 mcarats at between 104 and 158 cpht).

The Renard 2 diamonds were most recently valued at US$197/carat in March 2014, this being a base case diamond price model established in the conventional manner by WWW International Diamond Consultants Ltd. with a "high" sensitivity of US$222/carat and a "minimum" sensitivity of US$178/carat.

The reader is cautioned that mineral resources that are not mineral reserves do not have demonstrated economic viability. In addition, the potential quantity and grade of any exploration target is conceptual in nature, and it is uncertain if further exploration will result in it being delineated as a mineral resource.

Next Steps

Detailed core logging, three dimensional geological modelling, sampling and other data collection is ongoing to determine the internal architecture of Renard 2 below 600m and the relative proportion of each geological unit. Sampling is focused on investigating the pipe in a series of 50m horizontal depth slices. It is estimated that a total of 50 tonnes of drill core will be submitted for macrodiamond recovery by dense media separation and approximately 3.5 tonnes of core for microdiamond extraction by caustic dissolution, with additional sampling for indicator mineral work, geochemical analyses, petrography and density determinations. Testwork to determine diamond content is ongoing at Microlithics Laboratories Inc. in Thunder Bay, Ontario, but at present there is no petrographic evidence to suggest any variation from the previously determined grade characteristics of the Renard 2 body. Diamond recoveries from samples already processed include a 0.97 carat stone from a dense media separation sample of the kimb2c unit in Renard 2 from 450 to 500m below surface, described as a brown distorted tetrahexahedroid aggregate.

In addition to the Renard 2 work, studies are also underway to better understand the grade and petrographic characteristics on certain other kimberlites which contain Inferred Mineral Resources outside of the current Mineral Reserve, such as Renard 3, Renard 4, Renard 9, Lynx and Hibou, and on bodies outside of the current Mineral Resource, such as Renard 1, Renard 7, Renard 8, Renard 10 and certain of the other dyke systems. In the course of this work, a 1.01 carat stone has been recovered from a caustic fusion sample of the Kimb4c (Hypabyssal kimberlite) unit in Renard 4 which was taken from archived core. This stone is described as a colourless distorted partially resorbed octahedra. The regular recovery of such large diamonds from relatively small samples is a characteristic feature of the Renard Project.

The 2014 Renard drill program is fully funded from the proceeds of a $10m private placement of flow-through shares undertaken by Stornoway in late 2013 and is expected to be completed within budget.

About the Renard Diamond Project

The Renard Diamond Project is located approximately 250 km north of the Cree community of Mistissini and 350 km north of Chibougamau in the James Bay region of north-central Québec. On July 8th 2014 Stornoway announced the completion of a $946 million project financing transaction to fully fund the project to production, and construction commenced on July 10th, 2014. First ore is scheduled to be delivered to the plant in the second half of 2016 with commercial production scheduled for the 2nd quarter of 2017.

In January 2013, Stornoway released the results of an Optimized Feasibility Study at Renard which highlighted the potential of the project to become a significant producer of high value rough diamonds over a long mine life. Probable Mineral Reserves, as defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"), stand at 17.9 million carats. Total Indicated Mineral Resources, inclusive of the Mineral Reserve, stand at 27.1 million carats, with a further 16.85 million carats classified as Inferred Mineral Resources, and 25.7 to 47.8 million carats classified as non-resource exploration upside. Average annual diamond production is forecast at 1.6mcarats/year over the first 11 years of mining, at an average valuation of US$190/carat based on a March 2014 assessment by WWW International Diamond Consultants Ltd.

Readers are cautioned that the potential quality and grade of any target for further exploration is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the target being delineated as a Mineral Resource. All kimberlites remain open at depth. Readers are referred to the technical report dated February 28th, 2013 in respect of the January 2013 Optimization Study, and the press release dated July 23, 2013 in respect of the July 2013 Mineral Resource estimate, for further details and assumptions relating to the project. Disclosure of a scientific or technical nature in this press release was prepared under the supervision of Robin Hopkins, P.Geol. (NT/NU), Vice President, Exploration, a "qualified person" under NI 43-101.

About Stornoway Diamond Corporation

Stornoway is a leading Canadian diamond exploration and development company listed on the Toronto Stock Exchange under the symbol SWY and headquartered in Montreal. Our flagship asset is the 100% owned Renard Diamond Project, on track to becoming Québec's first diamond mine. Stornoway is a growth oriented company with a world class asset, in one of the world's best mining jurisdictions, in one of the world's great mining businesses.

On behalf of the Board

STORNOWAY DIAMOND CORPORATION

/s/ "Matt Manson"

Matt Manson

President and Chief Executive

This press release contains "forward-looking information" within the meaning of Canadian securities legislation. This information and these statements, referred to herein as "forward-looking statements", are made as of the date of this press release and the Corporation 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 exploration targets; (ii) the amount of future production over any period; (iii) net present value and internal rates of return of the mining operation; (iv) assumptions relating to recovered grade, average ore recovery, internal dilution, mining dilution and other mining parameters set out in the Feasibility Study or the Optimization Study; (v) assumptions relating to gross revenues, operating cash flow and other revenue metrics set out in the Feasibility Study or the Optimization Study; (vi) mine expansion potential and expected mine life; (vii) expected time frames for completion of permitting and regulatory approvals and making a production decision; (viii) future exploration plans; (ix) future market prices for rough diamonds; (xii) the economic benefits of using liquefied natural gas rather than diesel for power generation; (xiii) sources of and anticipated financing requirements; (xiv) the completion, effectiveness or availability, as the case may require, of the other elements of the Financing Transactions and the use of proceeds therefrom; and (xv) the impact of the Financing Transactions on the Corporation's operations, infrastructure, opportunities, financial condition, access to capital and overall strategy.. 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", "schedule" 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.

Forward-looking statements are made based upon certain assumptions by Stornoway or its consultants and other important factors that, if untrue, could cause the actual results, performances or achievements of Stornoway to be materially different from future results, performances or achievements expressed or implied by such statements. Such statements and information are based on numerous assumptions regarding present and future business prospects and strategies and the environment in which Stornoway will operate in the future, including the price of diamonds, anticipated costs and Stornoway's ability to achieve its goals, anticipated financial performance, regulatory developments, development plans, exploration, development and mining activities and commitments. Although management considers its assumptions on such matters to be reasonable based on information currently available to it, they may prove to be incorrect. Certain important assumptions by Stornoway in making forward-looking statements include, but are not limited to: (i) required capital investment and estimated workforce requirements; (ii) estimates of net present value and internal rates of return; (iii) receipt of regulatory approvals on acceptable terms within commonly experienced time frames; (iv) the assumption that a production decision will be made, and that decision will be positive; (v) anticipated timelines for the commencement of mine production; (vi) market prices for rough diamonds and the potential impact on the Renard Diamond Project; (vii) Stornoway's ability to consummate the Financing Transactions to enable it finance the development and construction of the Renard Diamond Project; (viii) Stornoway's interpretation of the geological drill data collected and its potential impact on stated Mineral Resources and mine life, and (ix) future exploration plans and objectives. Additional risks are described in Stornoway's most recently filed Annual Information Form, annual and interim MD&A, and other disclosure documents available under the Corporation's profile at: www.sedar.com.

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 risk 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, (i) risks relating to variations in the grade, kimberlite lithologies and country rock content within the material identified as mineral resources from that predicted; (ii) variations in rates of recovery and breakage; (iii) the uncertainty as to whether further exploration of exploration targets will result in the targets being delineated as mineral resources; (iv) developments in world diamond markets; (v) slower increases in diamond valuations than assumed; (vi) risks relating to fluctuations in the Canadian dollar and other currencies relative to the US dollar; (vii) increases in the costs of proposed capital and operating expenditures; (viii) increases in financing costs or adverse changes to the terms of available financing if any; (ix) tax rates or royalties being greater than assumed; (x) uncertainty of results of exploration in areas of potential expansion of resources; (xi) changes in development or mining plans due to changes in other factors or exploration results; (xii) changes in project parameters as plans continue to be refined; (xiii) risks relating to the receipt of regulatory approvals or the implementation of the existing Impact and Benefits Agreement with aboriginal communities; (xiv) the effects of competition in the markets in which Stornoway operates; (xv) operational and infrastructure risks; (xvi) timeframe and potential benefits relating to the issuance of an updated Mineral Resource Estimate in 2015 ; (xvii) failure to receive regulatory approvals (including stock exchange), or other approvals or otherwise satisfy the conditions to the completion, effectiveness or availability, as the case may require, of each of the elements of the Financing Transactions; (xviii) the funds of some of the elements of the Agreement not being available to the Corporation; (xix) future sales or issuances of Common Shares lowering the Common Share price and diluting the interest of existing shareholders; (xx) Stornoway being unable to meet its diamond delivery obligations under the Streaming Agreement, and (xxi) the additional risks described in Stornoway's most recently filed Annual Information Form, annual and interim MD&A 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, and new, unforeseeable risks may arise from time to time.

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