Stornoway Diamond Corporation · OTC:SWYDF
Stornoway Diamond — Investor Presentation (December 2013)
55 slides from Stornoway Diamond's investor presentation, Dec 3, 2013
Slide 1: Building Québec's First Diamond Mine
BUILDING QUÉBEC’S FIRST DIAMOND MINE Update December 3rd, 2013 Matt Manson Orin Baranowsky President, CEO & Director Director of Investor Relations
Slide 2: Forward-Looking Information
2 Forward-Looking Information This presentation 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 statement
Slide 3: Stornoway Diamond Corporation TSX:SWY
3 Stornoway Diamond Corporation TSX:SWY 100% Ownership in Renard, Québec’s First Diamond Mine One of the World’s Few New Diamond Projects Under Development Strong Base Case Economics; World Class Upside All-Season Access Road Opened Ahead of Schedule and Under Budget Mining Lease and Certificates of
Slide 4: Stornoway's Board and Management Team
4 Stornoway’s Board and Management Team Executive Officers Head Office: Longueuil, Québec Exploration Office: North Vancouver, BC Matt Manson Pat Godin Zara Boldt Community Offices: Mistissini & Chibougamau Québec President, CEO COO & Director CFO and VP & Director Finance Non-Executive Directors Eb
Slide 5: Stornoway's Platform for Project Development and Financing
5 Stornoway’s Platform for Project Development and Financing BALANCE SHEET* Market Capitalization: Update C$ 139 million 12 MONTH ANALYST TARGETS (based on voting and non-voting shares) BMO Total Shares Outstanding: Ed Sterck Market Perform na 163 million (Basic and Non-voting convertible shares) No
Slide 6: Towards Québec's First Diamond Mine
6 Towards Québec’s First Diamond Mine
Slide 7: Renard Kimberlite Bodies
7 Renard Kimberlite Bodies 0 1 2 Kilometers N 60 0 60 120 Kilometers Laforge 2 Laforge 1 R10 Brisay LG4 LG2 R7 LG3 Foxtrot Property Hibou R1 Eleonore Wemindji Renard R65 Western Troy Eastmain Mine R4 Strateco R8 R9 R3 Troilus Mine R2 Temiscamie Lynx Mistissini Matagami Chibougamau Kimberlite Bodies
Slide 8: Key Project Parameters
8 Key Project Parameters Reserve Based Mine Plan Renard 65 (Feasibility Study Nov. 2011, Optimization Jan. 2013) 29/24cpht Renard 3 0m 103/112cpht Mine Life 11 years 100m Mineral Reserve 17.9 mcarats Initial Cap-ex $752m 200m Operating Cost $58/t ($76/carat) 300m Operating Margin 67% Operating Cash
Slide 9: What has Changed Since the January 2013 Optimization Study?
9 What has Changed Since the January 2013 Optimization Study? 14% Increase in Indicated Resources Renard 65 Renard 3 0m 29/24cpht 103/112cpht An additional 2.3Mcarats at Renard 65 (7.87 Mtonnes at 29cpht) amenable to open pit mining to 100m 150m depth (July 2013). 200m Updated Diamond Price Estimate
Slide 10: Renard's Resource Upside
10 Renard’s Resource Upside A Project with a Long Resource Tail and Very Long Mine Life Potential Renard 65 Millions 29/24cpht Renard 3 of Tonnes 0m Exploration Target High Range 103/112cpht 140 Exploration Target Low Range 100m Inferred Resource 200m 120 Probable Reserve 300m 100 400m The Vision: D
Slide 11: Mineral Resource Continuing to Grow
11 Mineral Resource Continuing to Grow July 2013: 14% Increase in Indicated Mineral Resources Renard 65 Stornoway recently completed a successful 5,000 Renard 3 tonne bulk sample at Renard 65 in July 2012. The Renard 65 bulk sample returned the highest value diamonds to date at the Renard Project. D
Slide 12: Resource Expansion
12 Resource Expansion Targets for Resource Expansion in 2013 and Beyond Renard 2 Renard 3 Renard 4 Renard 65 Renard 9 490 m 0 m asl 1 2 3 -275 m 790 m asl 1. Conversion of Renard 65 Inferred Resources to Indicated to 150m Legend depth (July 2013: Completed) Indicated Resource Inferred Resource 2. Ad
Slide 13: Mine Plan
13 Mine Plan A Combined Open Pit and Underground Mine Open Pit Mining Renard 65 (years 1-2). Underground Mining (years 3-11). Underground method: Blast Hole Shrinkage, Panel Retreat with waste backfill from pits. Ramp access 610 meter level. Renard 3 Renard 4 6,000 tpd plant capacity (2.2Mtonnes/yea
Slide 14: General Project Arrangement
14 General Project Arrangement Small Project Footprint of 3.1km2, Modest Environmental Impact Processed Kimberlite Containment (PKC) R65 Waste Rock R2-R3 Overburden Stockpile Plant Ore Stockpile Camp Road from Chibougamau
Slide 15: Mine Plan Production Schedule and Cash Flow
15 Mine Plan Production Schedule and Cash Flow (Mineral Reserves Only) Open Pit & Underground Mining 2,500,000 2,000,000 Ore Tonnage (t) 1,500,000 1,000,000 500,000 - 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 R2 Pit R3 Pit R2 UG R3 UG R4 UG Diamond Production Gross R
Slide 16: Stornoway will be a Significant Diamond Producer
16 Stornoway will be a Significant Diamond Producer Current and Future Diamond Producers 2012 World Diamond Production Data/ Forecast Future Production 1 De Beers (Anglo/Botswana) $6,074m 2 Alrosa (Russia) $4,497m Alrosa 28% 3 BHPB/Dominion Diamond (TSX: DDC) $894m BHPB/ Dominion 4 Rio Tinto (ASE: R
Slide 17: Renard's Diamonds
17 Renard’s Diamonds Recent Valuation Conducted by WWW International Diamond Consultants Ltd. March 2013 The Renard kimberlite pipes have similar, but marginally different diamond populations exhibiting coarse size distributions and with high proportions of large white gems. 99% by weight gem/near-g
Slide 18: Permitting and Social Acceptability
18 Permitting and Social Acceptability Strong Regulatory and Public Support for Québec’s First Diamond Mine Social Licence March 2012: Impact and Benefits Agreement (“IBA” or the “Mecheshoo Agreement”) with the Cree Nation of Mistissini and the Grand Council of the Crees (EI). July 2012: Partnership
Slide 19: Project Schedule
19 Project Schedule January 2013 Optimization Study 2011 2012 2013 2014 2015 2016 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H BFS (Complete) ESIA (Complete) Community Hearings (Complete) Reg. Authorizations (Complete) Specific Operating Permits (50) Detailed Engineering Project Financing Road Construction Firs
Slide 20: The Route 167 Extension and the Renard Mine Road
20 The Route 167 Extension and the Renard Mine Road A Canadian Diamond Project with Road Access Opened Ahead of Schedule Construction of an all-season access road connecting Renard to the Québec Highway network began in Renard February 2012. Lac Naococane Km240 Segments A & B of this road (143 km) c
Slide 21: Stages of Road Construction
21 Stages of Road Construction “Slashing” or Tree Clearing Preparation of Road Grading Foundation Bridges or Culverts on Construction of Permanent Connection of the Renard Stream Crossings Bridges Mine Road September 2013
Slide 22: Views of the Road
22 Views of the Road KM 210 KM 237 KM 155
Slide 23: Renard Aerodrome
23 Renard Aerodrome Renard Project Site The Renard Aerodrome will be located 8 km south of the project site. The airstrip will be certified by Transport Canada to receive Dash 8-300 turboprop and Hercules aircraft. Design criteria (3C-NP): • Gravel surface • 30m wide by 1,494m long • Taxiway and 100
Slide 24: Aerodrome Progress
24 Aerodrome Progress October 2013 First Landing: November 5th Tree Cutting Area Runway Centerline
Slide 25: Site Progress
25 Site Progress October 2013 Renard Mine Road Bulk Sample DMS Plant Tree Clearing R9 R2 R4 Construction Camp R65 R65 Borrow Pit
Slide 26: Liquefied Natural Gas Power Plant
26 Liquefied Natural Gas Power Plant Feasibility Study Released October 2013 With a view to project optimization, Stornoway has been investigating more cost efficient alternatives for on-site power supply than traditional diesel fuelled gen- sets. A Hydro-Québec powerline has been ruled out in the s
Slide 27: Liquefied Natural Gas Power Plant
27 Liquefied Natural Gas Power Plant Feasibility Study Released October 2013 An LNG fuelled powerplant for Renard offers many advantages over diesel: • Greatly reduced annual operating costs of $8m to $10m per year, for a small incremental capital cost of $2.6m. • Up to 43% less greenhouse gas emiss
Slide 28: Québec's First Diamond Mine – Ready to Build
28 Québec’s First Diamond Mine – Ready to Build Project Green-lighted: Authorizations Issued Community Agreements in Place Stornoway Operating Team in Place Access Road Opened 2 Months Ahead of Schedule and Under Budget LNG Power Plant Results in Meaningful Cost Savings Resource Continuing to Grow F
Slide 29: Appendix 1: NI 43-101 Mineral Reserves and Mineral Resources
29 Appendix 1: NI 43-101 Mineral Reserves and Mineral Resources
Slide 30: NI 43-101 Probable Mineral Reserves
30 NI 43-101 Probable Mineral Reserves Updated January 28th 2013 Mining Recovery Factors Utilized in the Reserve Probable Mineral Reserve Calculation Contained Grade Tonnes Internal Mining Mining Kimberlite Carats (cpht) (millions) Dilution Recovery Dilution (Millions) Renard 2 OP 95 1.31 1.24 0.0%
Slide 31: Renard NI 43-101 Mineral Resources
31 Renard NI 43-101 Mineral Resources Published July 23rd 2013. Changes to January 2011 Mineral Resource in Italics Grade Tonnes Contained Carats Kimberlite (cpht) (millions) (Millions) Renard 2 – Total 100 (n/a) 18.58 (n/a 18.66 (n/a) Renard 2 104 (+1.2%) 17.71 (-0.4%) 18.38 (+1.6%) Renard 2 CRB-2a
Slide 32: Target for Further Exploration
32 Target for Further Exploration Published July 23rd 2013. Changes to January 2011 Estimates in Italics Grade Tonnes Contained Carats Kimberlite (cpht) (millions) (Millions) Renard 2 104 to 158 4.0 to 4.6 4.2 to 7.3 Renard 3 105 to 168 0.8 to 1.7 0.8 to 2.8 Renard 4 50 to 77 11.1 to 15.4 5.6 to 11.
Slide 33: Renard Resource Upside
33 Renard Resource Upside Inferred Resources and TFFE Not in Reserve Case Mine Plan 0m Renard’s Inferred Resources and TFFE represent a potential increase 100m over the current Indicated Resource 2.7 mcarats 1.2 of 156% to 237%. mcarats 200m Each kimberlite remains open at 770m depth 300m 2.4 mcarat
Slide 34: Appendix 2: Feasibility Study and Feasibility Optimization
34 Appendix 2: Feasibility Study and Feasibility Optimization
Slide 35: Chronology of Renard Studies
35 Chronology of Renard Studies Feasibility Study Released on November 16th 2011. NI 43-101 Technical Report filed December 29 2011. 11 Year Mine Plan based on 18 Mcarat Mineral Reserve derived from January 2011 NI 43-101 Resource. Long Term Business Plan Companion study to the Feasibility Study wit
Slide 36: Optimization Study Financial Analysis
36 Optimization Study Financial Analysis Project Assumptions, Valuation and Pay-Back Key Assumptions in the Financial Model1 Reserve Carats (M) 17.9 Tonnes Processed (M) 23.8 Recovered Grade (cpht) 75 Valuation Results5 (C$m) Mining Average Ore Recovery (%) 82.9% Parameters Average Mining Dilution (
Slide 37: Optimization Study Financial Analysis: Capital Costs
37 Optimization Study Financial Analysis Capital Costs Capital Costs1 (C$m) Direct Costs (C$474m) Site Preparation & General $32.7 Onsite Mining $151.2 utilities Plant and Mineral processing plant $175.4 37% infrastruc. Onsite utilities and infrastructures $114.8 24% Owner’s Cost $94.7 Spares, fills
Slide 38: Optimization Study Financial Analysis: Operating Costs
38 Optimization Study Financial Analysis Operating Costs Open Pit Unit Costs1 $/tonne Open Pit 21.22 Processing 15.29 G&A2 and Infrastructure 18.27 Total Open Pit3 54.78 Operating Cost (C$1,352m) G&A, $429m, Open Pit, 1 Underground Unit Costs $/tonne 32% $10m, 1% Underground 23.64 Processing 15.29 G
Slide 39: Optimization Study Financial Analysis: Carat Production and Revenue
39 Optimization Study Financial Analysis Carat Production and Revenue Production Parameters1 (Mcarats) Diamond Production by Mining Method Renard 2 Open Pit 1.24 11% Renard 3 Open Pit 0.67 Total Open Pit 1.91 Renard 2 Underground 13.62 Renard 3 Underground 0.84 Renard 4 Underground 1.58 Total Underg
Slide 40: Optimization Study Financial Analysis: Project Valuation Sensitivities
40 Optimization Study Financial Analysis Project Valuation Sensitivities 30.0% Pre-Tax 1,200 Pre-Tax IRR 25.0% NPV 1,000 20.0% 800 15.0% 600 10.0% 400 5.0% 200 0.0% 0 80% 90% 100% 110% 120% 80% 90% 100% 110% 120% Operating Cost 24.3% 22.3% 20.3% 18.3% 16.1% Operating Cost 891,143 789,142 683,499 574
Slide 41: Rough Diamond Price Movements
41 Rough Diamond Price Movements The Diamond Market, January 2010 to September 2013 May 2011 Valuation utilized in the FS based on the average of 5 diamantaires c.10% below the WWW rough index price A tracking of the diamond market since the publication of the November 2011 FS indicates rough diamon
Slide 42: Appendix 3: Project Comparables
42 Appendix 3: Project Comparables
Slide 43: Diamond Industry Cost Curve
43 Diamond Industry Cost Curve Source: Published FY2012 Results, FS Life of Reserve Data and Company Estimates World Diamond Project Comparables Cost/Revenue
Slide 44: Project Comparables
44 Project Comparables Recent Canadian Diamond Mines Compared as of the Date of each FS Ekati (1998) Diavik (1999) Victor (2008) Renard FS BHPB, As Built Rio-Tinto, As De Beers, As Optimization Estimates Built Estimates Built Estimates Study (2013) Resource Parameters Resource (m carats) 161 133 No
Slide 45: Project Comparables
45 Project Comparables Recent Canadian Diamond Development Projects Compared as of the Date of each FS Gahcho Kué FS (2010) Star-Orion FS (2011) Renard FS Optimization De Beers/Moun. Prov. Shore Gold Study (2013) Resource Parameters Resource (m carats) 61 43 41 Resource (US$) $5.1B $11B $7.2B Resour
Slide 46: Appendix 4: The Diamond Market
46 Appendix 4: The Diamond Market
Slide 47: Major Diamond Mines and Development Projects Worldwide
47 Major Diamond Mines and Development Projects Worldwide Few Enough Mines to Fit on One Map Canada • Ekati (BHPB) • Diavik (Rio Tinto/Harry Winston) Russia • Victor, Snap Lake, Gahcho Kue (De Beers) • Arkhangelsk District (Alrosa) • Renard (Stornoway) • Yakutia District (Alrosa) • Star (Shore Gold/
Slide 48: The Rough Diamond Business in Context
48 The Rough Diamond Business in Context 1/8th the Size of the Copper Business Source: USGS, LME, Kimberly Process
Slide 49: The Diamond Pipeline
49 The Diamond Pipeline An Industry with Many Intermediaries Mine Production Rough Trading and Diamond Polishing Diamond Jewelery Source: Tacy Value of D.I.B.April 2013 Rough Sales Value of Diamonds in Retail Sales Production Production Mine Sales to to Cutting Polished Retail of Diamond Cost Value
Slide 50: Future Rough Diamond Supply
50 Future Rough Diamond Supply Almost all rough diamond production forecasts show flat or declining production long term. De Beers see production peaking in 2017, and broad reserve depletion thereafter. Rough production is not expected to reach 2008 levels in carat terms again. No large scale diamon
Slide 51: Diamond Jewelry Demand is Forecast to Grow Dramatically
51 Diamond Jewelry Demand is Forecast to Grow Dramatically Share of World Diamond Jewelry Market, 2005 to 2020 2020F: $128B China (and Asia-Pacific) Rough Diamond 32% US 27% CAGR of 10%1 2010-2020 2010: $74B China (and Asia-Pacific) 15% India (and US Asia-Arabia) 42% 25% 2005: $62B India (and China
Slide 52: Rough Diamond Supply and Demand Forecasts
52 Rough Diamond Supply and Demand Forecasts An Example: Bain September 2013 Since 2012, Bain & Co in partnership with the Rough Diamond Demand Antwerp World Diamonds Center have published an annual review of the diamonds sector. The September 2013 edition forecasts a rough diamond supply CAGR of 2%
Slide 53: Rough Diamond Pricing Since 2003
53 Rough Diamond Pricing Since 2003 Rough and Polished Diamonds Against a Basket of Indicators, 2003- October 2013 Commodity Index Data 700 1 8% CAGR in S&P TSX Composite Index Weekly Closing 0.9 600 Rough Prices 2003-2012 0.8 500 Index October 2003 = 100 0.7 0.6 400 0.5 300 0.4 200 $182 $190 0.3 $1
Slide 54: Stornoway Diamond Corporation
stornoway DIAMOND CORPORATION
Slide 55: Stornoway Diamond Corporation
55 Stornoway Diamond Corporation TSX:SWY Head Office: 1111 Rue St. Charles Ouest, Longueuil, Québec J4K 4G4 Tel: +1 (450) 616-5555 IR Contact: Orin Baranowsky, CFA, Director IR obaranowsky@stornowaydiamonds.com Tel: +1 (416) 304-1026 x103 www.stornowaydiamonds.com Info@stornowaydiamonds.com
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