Stornoway Diamond Corporation · OTC:SWYDF
Stornoway Diamond — Corporate Update (November 2012)
46 slides from Stornoway Diamond's corporate update, Nov 19, 2012
Slide 1: Building Québec's First Diamond Mine
BUILDING QUÉBEC’S FIRST DIAMOND MINE Update November 19th 2012 Matt Manson President , CEO & Director
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: Renard, World's Most Advanced New Diamond Mine
3 Stornoway Diamond Corporation TSX:SWY 100% Ownership in Renard: The World’s Most Advanced New Diamond Mine Under Development On Track for Construction Start-up in 2013 Renard Strong Base Case Economics World Class Resource Upside All-Season Access Road Under Construction Permitting Nearing Complet
Slide 4: The Route 167 Extension
4 The Route 167 Extension November 15th 2012: Stornoway Assumes Management of Road Completion On November 15th 2012 Stornoway announced an agreement by which the Government of Quebec will provide $77m of financing to Stornoway to complete Renard segments “C” and “D” of the Route 167 Extension as a S
Slide 5: Stornoway's Board and Management Team
5 Stornoway’s Board and Management Team Executive Officers Head Office: Longueuil Québec, Exploration Office: North Vancouver, BC Matt Manson Pat Godin Zara Boldt Community Office: Mistissini, Québec President, CEO COO & Director CFO and VP & Director Finance Non-Executive Directors Ebe Scherkus Mic
Slide 6: Stornoway's Platform for Project Development and Financing
6 Stornoway’s Platform for Project Development and Financing BALANCE SHEET* Market Capitalization: C$ 81 million 12 MONTH ANALYST TARGETS (based on voting and non-voting shares) RBC Total Shares Outstanding: Outperform- 161 million Des Kilalea, $2.05 (Basic and Non-voting convertible shares) Specula
Slide 7: 12 Months of Milestones Achieved
7 12 Months of Milestones Achieved Moving Forward with Québec’s First Diamond Mine 2011 2012 Nov 2011: Feasibility Study Completed Dec 2011: ESIA Filed Feb 2012: Road Construction Commences Mar 2012: IBA (Mecheshoo Agreement) Signed Mar to May 2012: $40m Debt/Equity Raised May 2012: $28.4m Pre-Devel
Slide 8: The Renard Diamond Project
stornoway DIAMOND CORPORATION
Slide 9: Renard Kimberlite Bodies
9 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 10: Key Project Parameters
10 Key Project Parameters Renard 65 November 2011 Feasibility Study* 29cpht Renard 3 106/118cpht Mine Life 11 years Mineral Reserve 18 mcarats Initial Cap-ex $802m Operating Cost $55/t ($70/carat) Operating Margin 68% Operating Cash Flow $2.7B Diamond Valuation $180/carat Peak Diamond Production 2.1
Slide 11: Renard's Resource Upside
Renard’s Resource Upside 11 A Project with a Long Resource Tail and Very Long Mine Life Potential Renard 65 Millions 29cpht Renard 3 of Tonnes Exploration Target High Range 106/118cpht 140 Exploration Target Low Range Inferred Resource 120 Probable Reserve 100 The Vision: Deposit still 80 Open 60 Pe
Slide 12: Mine Plan
12 Mine Plan A Combined Open Pit and Underground Mine Open Pit Mining at Renard 2 & 3 Renard 65 (years 1-2) Underground Mining Renard 2, 3 & 4 (years 3-11) Underground method: Blast Hole Shrinkage with waste backfill from pits. 6,000 tpd plant capacity, (2.2mtonnes/annum). Renard 3 Pit at Renard 65
Slide 13: General Project Arrangement
13 General Project Arrangement Small Project Footprint of 3.1km2, Modest Environmental Impact Processed Kimberlite Containment (PKC) R65 Waste Rock R2-R3 Overburden Stockpile Plant Ore Stockpile Camp Route 167 Extension
Slide 14: Renard's Diamonds
Renard’s Diamonds 14 Valuation Conducted by WWW International Diamond Consultants Ltd. May 8th-13th, 2011 Renard kimberlite pipes have a diamond population with a coarse size distribution and high proportion of large white gems. Lynx and Hibou kimberlite dykes have a finer distribution of browner st
Slide 15: Feasibility Mine Plan Production Schedule and Cash Flow
15 Feasibility Mine Plan Production Schedule and Cash Flow Open Pit & Underground Mining Schedule (Ktonnes of Ore) 2,500 2,000 R4 UG 1,500 R3 UG 1,000 R2 UG 500 R3 Pit R2 Pit - 2020 2013 2014 2015 2016 2017 2018 2019 2021 2022 2023 2024 2025 2026 Carat Production (Kcarats) Gross Revenue (C$M, Real)
Slide 16: Renard will Make Stornoway a Significant Diamond Producer
16 Renard will Make Stornoway a Significant Diamond Producer 1 De Beers (Anglo/Botswana) $6,420m 2 Alrosa (Russia) $4,660m 2011 World Diamond 3 BHPB (ASE: BHP) $940m Production Data with 4 Rio Tinto (ASE: RIO) $910m Renard Included at 5 Peak Stornoway (TSX: SWY) $380m Peak Production (2.1mcarats/yr
Slide 17: Renard is Continuing to Grow
17 Renard is Continuing to Grow Renard 65 Bulk Sample: Expansion in the Project Reserve Renard 65 Stornoway commenced a 5,000 tonne bulk sample at Renard 3 Renard 65 in July 2012. The objective is the recovery of a 1,000 carat parcel of diamonds for valuation, to allow conversion of Inferred Resourc
Slide 18: Moving Forward
stornoway DIAMOND CORPORATION
Slide 19: Permitting and Development Schedule
19 Permitting and Development Schedule 2011 2012 2013 2014 2015 2H 1H 2H 1H 2H 1H 2H 1H 2H BFS (Complete) Following Stornoway’s November ESIA (Complete) 14th Agreement with Quebec, first road access is expected to Renard by Community Hearings Q4 2013 compared to July 2013 in the November 2011 Feasib
Slide 20: The Route 167 Extension
20 The Route 167 Extension Construction Images September 2012
Slide 21: Permitting
21 Permitting On-Track for Completion in 2012 Renard falls under the environmental protection regime of the James Bay and Northern Québec Agreement (JBNQA) and the Canadian Environmental Assessment Act. Permitting Milestones: • December 2011: Filing of the Renard Environmental and Social Impact Asse
Slide 22: The "Mecheshoo" Agreement (IBA)
The “Mecheshoo” Agreement (IBA) 22 Renard’s Social Licence The Renard Diamond Project is situated close to the Cree Nation of Mistissini (CNM). In March 2012 Stornoway concluded an Impacts and Benefits Agreement, the “Mecheshoo Agreement”, with the CNM and the Grand Council of the Crees (EI). The Me
Slide 23: What to Expect
23 What to Expect Significant Development and Financing Milestones in the next 12 months Completion of Project Permitting • Certificate of Authorization in Q4 2012 Capital Cost Optimization • Shaft/Ramp Tradeoff Study Q4 2012 Reserve Growth through R65 • Results Q4 2012. Valuation Q1 2013 Completion
Slide 24: Why Invest in Stornoway?
24 Why Invest in Stornoway? The Lassonde Curve: Value Creation through Project Financing and Development Aber Diamond Corporation Stockprice Index Sept. 95 to Sept. 07 600% Post Financing, Production 500% De-Risking Phase Pre-Feas/ Discovery/ Feas Post-Feas Resource 400% Growth Pre-Financing Low Poi
Slide 25: Appendix 1: The Diamond Market
25 Appendix 1: The Diamond Market
Slide 26: Diamond Jewelry Demand is Forecast to Grow Dramatically
26 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 27: Major Diamond Mines and Development Projects Worldwide
27 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 28: Future Rough Diamond Production is Forecast to be Static
28 Future Rough Diamond Production is Forecast to be Static Almost all rough diamond production forecasts show flat or declining production long term. Rough production may not reach 2008 levels in carat terms again. Only 15% Supply Growth No large scale diamond mine has been discovered since the 201
Slide 29: Diamond Prices are Growing
29 Diamond Prices are Growing Rough and Polished Diamonds Against a Basket of Indicators, 2003-April 2012 Commodity Index Data 700 8% CAGR in16000 Rough Prices 14000 S&P TSX Composite Index Weekly Closing 600 2003-2012 12000 500 Index October 2003 = 100 10000 400 8000 300 Rough6000 Diamonds 200 4000
Slide 30: Appendix 2: Feasibility Study Sensitivities
30 Appendix 2: Feasibility Study Sensitivities
Slide 31: Feasibility Study Contributors
31 Feasibility Study Contributors Capital and Operating Cost Estimates, Onsite Infrastructure Design, Construction Strategy, Risk Assessment Process Plant, Underground Mine Design and Underground Reserve Open Pit Design, Open Pit Reserve and Financial Analysis Geotechnical, Processed Kimberlite Cont
Slide 32: Financial Analysis: Project Assumptions, Valuation and Pay-Back
32 Financial Analysis Project Assumptions, Valuation and Pay-Back Key Assumptions in the Financial Model Reserve Carats (m) 18.0 Tonnes Processed (m) 23.0 Recovered Grade (cpht) 78 Mining Average Ore Recovery (%) 83.5% Parameters Average Mining Dilution (%) 14% Dilution Grade (cpht) 0 Processing Rat
Slide 33: Financial Analysis: Capital Costs
33 Financial Analysis Capital Costs Capital Costs (C$m) Direct Costs (C$531m) Site Preparation & General $22.9 Onsite Plant utilities Mining $236.9 and infra. 32% Mineral processing plant $168.4 19% Onsite utilities and infrastructures $102.4 Owner’s Cost $86.2 Spares, fills, tools $10.2 Site Prep.
Slide 34: Financial Analysis: Operating Costs
34 Financial Analysis Operating Costs Operating Unit Costs (Real Terms; C$) $/tonne Open Pit Mine $19.99 Underground Mine $24.11 Plant $14.82 G&A $14.69 Total $54.71 ($70.27/ct) Notes: Pit costs incurred before January 1st, 2016 are capitalized Operating Costs LOM Operating Costs (C$1,260m) 70 G&A,
Slide 35: Financial Analysis: Valuation Sensitivities
35 Financial Analysis Valuation Sensitivities 30.0% PRE-TAX IRR 1,200,000 PRE-TAX NPV7% 25.0% 1,000,000 20.0% 800,000 15.0% 600,000 10.0% 400,000 5.0% 200,000 0.0% - 80% 90% 100% 110% 120% 80% 90% 100% 110% 120% Operarting Cost 20.7% 19.7% 18.7% 17.7% 16.7% Operating Cost 808,813 740,372 671,932 603
Slide 36: Renard Diamond Valuation
36 Financial Analysis Renard Diamond Valuation. Conducted by WWW May 9th to 13th 2011 Conducted by WWW International Diamond Consultants Ltd. May 9th-13th 2011 Achieved Prices for the Valuation Samples WWW Price Modeling Valuation Kimberlite Average of Minimum of Maximum of WWW Sample Number of WWW
Slide 37: Renard Diamond Valuation Sensitivities
37 Financial Analysis Renard Diamond Valuation Sensitivities WWW determine High and Minimum sensitivities on their Base Case diamond price model. WWW state that it is unlikely that an actual diamond price achieved for each kimberlite body upon production would fall below the “Minimum” sensitivity, b
Slide 38: Renard Diamond Valuation Sensitivities
38 Financial Analysis Renard Diamond Valuation Sensitivities This “Alternative” diamond price model is highly accretive to the project’s valuation given the dominance of Renard 2 in the mine plan. The interpretation of similarity in the diamond populations is the more conservative approach. Pre-Tax
Slide 39: Appendix 3: Project Comparables
39 Appendix 3: Project Comparables
Slide 40: Diamond Industry Cost Curve
40 Project Comparables Diamond Industry Cost Curve (Anglo American November 2011 after De Beers 2010) COST/REVENUE 2.0 Gahcho Kue (development project) 10.5 Cost/revenue (x) Renard with Powerline Namedeo operations Snap lake 1.0 Damtshaa Renard Orapa Venetia Jwaneng 0.5 0.0 0 2,000 4,000 6,000 8,000
Slide 41: Recent Canadian Diamond Mines Compared
41 Project Comparables Recent Canadian Diamond Mines Compared as of the Date of each BFS Ekati (1998) Diavik (1999) Victor (2008) Renard FS BHPB, As Built Rio-Tinto, As De Beers, As (2011) Estimates Built Estimates Built Estimates Resource Parameters Resource (m carats) 161 133 No data 41 Resource (
Slide 42: Recent Canadian Diamond Development Projects Compared
42 Project Comparables Recent Canadian Diamond Development Projects Compared as of the Date of each BFS Gahcho Kué FS (2010) Star-Orion FS (2011) Renard FS (2011) Mountain Province Shore Gold Resource Parameters Resource (m carats) 61 43 41 Resource (US$) $5.1B $11B $7.2B Resource Grade (cpht) 168 1
Slide 43: Appendix 4: Management Biographies
43 Appendix 4: Management Biographies
Slide 44: Management Biographies: Matt Manson
44 Appendix: Management Biographies Matt Manson, PhD. Matt Manson was appointed President of Stornoway Diamond Corporation in March 2007 following the acquisition of Ashton Mining of Canada and Contact Diamond Corporation, and subsequently President & CEO in January 2009. As President & CEO, Mr. Man
Slide 45: Management Biographies: Patrick Godin
45 Appendix: Management Biographies Patrick Godin, Eng., Asc. Pat Godin joined Stornoway as Chief Operating Officer in May 2010 and was appointed to the Board of Directors in October 2011. He is responsible for the development of the Renard Diamond Project in north- central Québec, on track to becom
Slide 46: Management Biographies: Zara Boldt
46 Appendix: Management Biographies Zara Boldt, B.A., CGA Zara Boldt was appointed Vice President, Finance with Stornoway in May 2007, after serving as Stornoway’s Controller between 2004 and 2007, and Chief Financial Officer in March 2010. As Vice President Finance and CFO, Ms. Boldt is responsible