Star Diamond Corp. Provides Market Update

0:08 Hello everyone and welcome to Star Diamond's live event. Today we're joined with their CEO, Ewan Mason. If you have any questions, Please feel free to submit them in the chat. And as always, this event is being recorded so you can watch the replay in the coming days if you wish. Now, yesterday, Star Diamond provided a big update after hours. Euan, you said you're planning on closing this acquisition by Q1 and you did just that, but I won't steer you thunder. Why don't you provide us a quick summary of yesterday's news before I ask you a couple of questions. The floor is yours. All right, Cal, thanks.

0:39 There's a first for everything and I have been saying for some time we were going to close this transaction and I'm happy and excited to say we have done just that. We will now own 100% of this asset, which Star Diamond and its predecessors have never owned before. It truly is a step up. We're going to get the whole property back, which is worth, in our PEA, over a couple of billion dollars. In addition to that, we're gonna get some cash to help us pay our fees throughout this whole process, as well as reclamation bonding provided by Rio Tinto for a five-year period to allow us to continue with the project. In addition to that, of course, all the on-site buildings for the sample plant, as well as the core sheds and of course the trench cutter. So this is a hell of a good deal for our shareholders and it was very generous of Rio to allow us to do this and they, according to them, remain very supportive.

1:35 Excellent. Now Rio is obviously a big name in the industry. Would, if anything is lost by Rio, no longer being part of the project?

1:47 Well, I mean, it would have been nice if Rio had decided to build a mine, but they did not and it's not in our purview to have made that decision for them. So I think there's only good things coming out of this. First of all, the last deal we cut with them back in 20, I believe it was 2021, gave us only 25% of the project and basically ensured our dilution quite significantly with respect to catching up on all the funding. So we were gonna have to chunk out some real money and our goal had been to push things out a little bit, give us a five-year breather so we could stay in the project. And that's what happened. And so, you know, I think now, you know, given what we've got here,

2:35 I think it's Rio's loss and our gain, but we appreciate the effort they made to get this to us. So are you happy with the terms of Rio's departure? Look, this is a killer deal. As a former investment banker, I couldn't even conceive of this type of deal ever being agreed to. And it just goes to show you, you know, in my mind, the capacity that Rio has will help us to move this forward. We sat through a March 2022 joint venture meeting with Rio Tinto, in which they presented 240 pages of their plan to go forward. And this plan included things like an 84-year mine life. It included their analysis that type 2a, you know, percentages in these samples were not 26, they're 33%.

3:28 They also compared it to the biggest and best mines in the world and said this was right up there with them and perhaps even better. And they verified all the work we've done over the years. We got a lot of people that poo-pooed our work on this, including some engineer firms with respect to pit slope and stuff like that. But Rio certified it all and said absolutely, that'll work and perhaps even better. And to be quite honest with you, I was shocked at how positive they were on it. Unfortunately, diamonds are not a big part of Rio Tinto's business. I was explained to me that it's 1% of their net income. And so this project would be less than 1% of their net income. So it's not something they were willing to go forward on. And they've had their own press release on that too. So again, this is a win for us in no uncertain terms.

4:13 And this is a barnblazer of a deal for us and our shareholders and the province of Saskatchewan and all the peoples associated with it.

4:21 Certainly and I see questions are trickling in so I might as well start addressing some in the chat here. If you did just come in we are doing a Q&A so feel free to ask questions but the first one is will you receive all of the info and data from Rio? We already have all of it. And the only thing we don't get are any interim corporate documents, board documents to be presented to their own board. But all the project data we already have now. Excellent, thank you. And what are you gonna be doing with the trench cutter rig? Can you rent it out and make some monthly rent to help pay the bills?

4:57 Well, great question. In fact, we've had a couple of inbounds already about it. And suffice to say, you rent that out for 6 months because you wouldn't rent it for any less because there's a lot of transport and logistics involved with it. That'll probably pay for a whole year's exploration work on another property. So yeah, definitely good looking at it and are talking to a couple of parties about it. Now Bruce is asking a question here. Are we hindered in obtaining financing outside of Rio?

5:25 Do we consider flow-through shares? Is that an option? Well, we did finance even when Rio owned a portion of it, now they do not. So I would have to expect that subject to the diamond market being okay, we will be able to raise money and of course flow through is a big part of it. It'll be a big part of our feasibility work going forward. But again, the work we're doing right now is designed to eliminate a massive cost for a pre-feasibility study. And we're talking about orders of magnitude less and expenditures than we had originally thought. So it's all good.

6:05 Excellent, thank you. Brett's just wondering about your working capital, your burn rate and how do you plan on raising funds to get this to the finish line? Well, basically our top executives are all part-time and no one's been paid for a while, so we need to catch up on that. We did get the $4 million from Rio. A large portion of that will go to paying outstanding bills like legals, which we haven't paid. We are looking at different ways of raising money to get this across the finish line towards a mine decision. And, you know, I can't really say too much about that, but there will be a requirement to raise some money, just how we do that and where and when is the question. I have a unique question here by 604 Paul. He's just looking to confirm, can you speak freely about the project without Rio's consent today moving forward?

7:03 I don't know if there was any restrictions prior or not, but are you freed up to talk more other than regulatory restrictions? Absolutely, 100%. We have all the information we can now say what we like. Obviously we have fiduciary duty and stuff like that so we can't talk garbage and I would never do that. But we are gonna start telling the real story here and moving this forward. And there are so many pieces to this puzzle now that we've been working on for the last year and a half that are gonna come out, including the carbon capture study we put out, including things like indigenous involvement, not just the employees, but partnerships, government involvement, as you've seen previously, we've been marketing this in the Middle East. I'm in West Palm Beach today meeting with potential new investors.

7:52 This is a juggernaut and it's not going to stop anytime soon. Jarrett seems rather excited that you now have all the data from Fort D'Alacorn. Is there anything that Rio might have discovered?

8:06 He also comments how big is the deposit, but was there anything that you gained from gaining access to all this information? Well, in addition to Rio verifying our work, most particularly the pit slopes and the ability of certain layers of sediment rock to withhold water and stuff like that, What we really got out of this, in my mind, was the Northern Orion concept. I mean, they looked at that, and they, you know, greater than 50% Type IIa diamonds, they wanted to go and start trench cutting that tomorrow. And they think that'll be the real, if you will, big-ass pipe. And not that there's anything wrong with Star and Orion South.

8:55 These are also great pipes. But to have 3 times the Type 2a, I mean, Their concept was the possibility of monster, and I mean monster, diamonds in Orion North.

9:07 Truly incredible. So we'll be keeping an eye on that, and if the market turns and we get a lot more interest in the story, we're going to go punch some holes in that too, Because I'd like nothing better than a thousand carat diamonds sitting on our table in the office Maybe continue on with this thought because there is a comment about the quality and size of Orion North So people that might not be familiar with Orion North Maybe provide an overview of of what gets you so excited about this prospective target? One word, geochemistry. The geochem shows the propensity for the right type of olivine crystallization and garnets that produce these big type 2a diamonds. The only problem with Orion North is there hasn't been enough sampling done on it yet to unearth one of these. So naturally we'd be very much in favor of punching some holes down there, but it's a 2 year permitting process to get going on that, and it's probably not cheap, it's probably going to be a $10 million project to do that.

10:04 But based on the studies we've reviewed from

10:07 Rio, those diamonds are there, period. Okay, so I'm going to try and compile a few questions together. So you are now the 100% owner of Fort Alicorn. Is there any possibility, and I think this is all these questions all derived to like how to avoid dilution in the future. Is there any possibility of spinning off a standalone pipe? And the second question that an individual in the audience was asked is, if there's any interest of parties, I know you just acquired 100%, but any other interest as parties in purchasing the assets? Well, given that this is our first day having owned the whole thing, I can honestly say that no 1 called me up this morning and offered to buy the whole company.

10:55 But I have had approaches in the past from hedge fund types with ideas about how to put the story in play, that's not what we're up for. We want to increase the value of this project to the benefit of all of our shareholders.

11:10 And spinning off a pipe is probably not a good idea because we've got all 3 of them now and the market at large largely doesn't seem to care. So spinning 1 off, I don't see how that would work. But we're interested in limiting dilution. There is absolutely no way we're doing a rollback or anything like that. Look at Burgundy Diamond, a billion shares outstanding. So we're going to do this in the best interest of shareholders and stakeholders. And where I come from, that's the hard charge mode. Thank you. You answered another individual's question there.

11:46 Alex and Mark stating a fact here, Wistar went from 25% to 100% owner of the property. And that was where Rio went from 75 to 19%. Why hasn't the share price not moved today? Well, to be blunt, I didn't expect the share price would do much. You know, this is this is not the the end. This is the beginning. There are hard yards to cover now and we need to get going with it and we're going to do just that. But there's no magic wand here. There's no panacea. It's called hard work and investment and results.

12:23 And that's what we're aiming for. You know, the stock's up a little bit today. There's a little more volume, but by and large, you know, I think there's a lot of people just sitting there waiting to see what happens. If we had interest in the diamond market at large, if there was some sort of return to normal diamond pricing and purchasing levels in the near term, I think that's where you're going to see it because that is the one factor that we do not control. Certainly. Greg's wondering, maybe provide a little clarity. So we know you received all the data from Rio. Is that including the greenfield drilling outside but near the fault properties?

13:01 It included all the information that was done on claims which were part of the joint venture. Any claims that they have that were not part of the joint venture were not part of the transaction. Okay, Thank you for that. And we've done that to death, by the way. We, when they said that we're gonna draw that, we're like, yeah, whatever, thanks, we've done it. Sure, right. Brett's wondering about any additional board members. Do you plan on adding any? Or where are you looking at getting them from?

13:34 Yeah, absolutely. And in the near term, we will be adding representatives from our indigenous communities and making some announcements about that as we go forward. These talks have been well underway for a year now. But as one of my former clients told me, it takes 50 cups of tea to establish trust with the indigenous community. And after all the years of how poorly they've been treated. So yeah, it's taken a while, but we're just about to announce that involvement. Hang tight. Thank you. Brent is wondering, have you thought of talking to Mountain Province? Maybe provide information on what or who is Mountain Province because I'm unfamiliar with this.

14:23 Well look, Mountain Province owns 49% of a mine they share with De Beers. You know, the only difference between us and them is their mines operating. They do not have the same quality of diamonds we have.

14:39 And you know, they've been under quite a bit of pressure too. You take a look at their share price, you'd be horrified to see what's happened and the amount of money that's gone down the drain over there, but it's a mine that makes a profit, and we're here to talk to anybody. It would not make any sense, I don't think, for us to inbound them. We don't want somebody else's penny stock. Honestly, we don't. We need to move this project forward, buttress it, provide some real value for interested parties, and then see what happens. Thank you. You've been a good sport. There's question after question, we've been firing them off at you. Really, the only one, unless there's more questions that come in from the audience, is that now that Star Diamond is the sole owner of the project, what does the path look like now moving forward?

15:27 Well, you know, in the main channel There is the resource upgrade which is expected around the end of June. Don't hold me to that because it might take an extra couple of weeks. Assuming that's all tickety-boo, then it's right into the pre-feasibility, into the feasibility. We'll be furthering our carbon capture studies. We'll be furthering our discussions with the indigenous communities. We're also going to announce a couple of things that are interesting in the coming weeks with respect to how we identify our diamonds. And when you take a look at our diamonds, they will be conflict-free out of Canada, and that is priceless, I think, in the diamond market, particularly what's going to happen in the fall with a complete sanctioning of all Russian diamonds it's just going to be it's going to be horrific for the for the wholesalers and the diamond cutters.

16:18 And I think that's going to engender a lot more interest in our store because we are in Saskatchewan. Our Kuwait and diamonds are conflict-free and Canadian. Well, Muin, I think we got all the questions addressed. If anyone has questions at all, feel free to contact Star Diamond directly. You can find their information on their website. And if you did come in a little late, do not worry, this is being recorded, so the replay will be available. There was a comment here that they really appreciate your forthright and transparency. Whenever there's big news, I was telling you this before we went live is that you're always ready to have a webinar to address any comments, concerns, queries of the like. So any closing remarks before we close things off, Yon?

17:08 Look, it's been a long, tough 4 years in this. And prior to that, 3 years of us kind of looking around and going, what's going on? But all I can say to really you know to verify the situation is Rio Tinto spent an awful lot of money on this had an awful lot of people all over the globe working on this and came out all thumbs up on this you know the fact that they're walking away has nothing to do with the project whatsoever. They'll tell you that. In fact, they're more shocked than us. A whole legion of real employees were planning on living in Saskatoon and retiring there with this 84 year mind life. So what I would say to you is We perhaps have caught a bit of a breath here. We're not going to get the death spiral of dilution, but it's up to us now to move this forward. And we're going to do just that. We're going to do things that people haven't even thought of before, we're going to do this a different way. And I'm looking forward to it. And I hope you'll all stay with us and away we go.

18:03 Excellent. Ewan, thank you for the update, much appreciated. And you enjoy the rest of your day. All right, Kyle, thank you. ♪