1 A New Force in the Canadian Diamond Industry RBC Diamond Conference London, May 15, 2008.
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Transcript of 1 A New Force in the Canadian Diamond Industry RBC Diamond Conference London, May 15, 2008.
1
A New Force in the Canadian Diamond Industry
RBC Diamond Conference
London, May 15, 2008
2
Forward Looking Information
This presentation may contain forward looking statements, being statements which are not historical facts, and discussions of future plans and objectives. There can be no assurance that such statements will prove accurate. Such statements are necessarily based upon a number of estimates and assumptions that are subject to numerous risks and uncertainties that could cause actual results and future events to differ materially from those anticipated or projected. Important factors that could cause actual results to differ materially from the Stornoway's expectations are in Stornoway documents filed
Stornoway disclaims any intention or obligation to revise or update such statements.
from time to time with the Toronto Stock Exchange and provincial securities regulators, most of which are available at www.sedar.com.
from time to time with the Toronto Stock Exchange and provincial securities regulators, most of which are available at www.sedar.com.
Our Vision
To create a successful growth oriented diamond company that succeeds in the practical business of mining and selling rough diamonds, and which pursues an aggressive exploration strategy to seek and develop world-class diamond mining opportunities in a market that has become increasingly under-supplied.
4
Quality Diamond Assets in Canada
Ownership in Renard, one of Canada’s largest undeveloped diamond resources with potential for near term cash flow and leveraged against strong, predicted price growth
Four advanced diamond projects capable of adding reserves
One of Canada’s leading, diversified exploration portfolios with “blue-sky” potential
5
Stornoway as an Investment Opportunity
Lowest Risk Canadian Portfolio With Large Exploration Upside For Investors
6
Capital Market Profile
$0
$250
$500
$750
$1,000
$1,250
Hudson
Resou
rces
Indic
ator M
iner
als
Peregr
ine
Met
alex
Shear
Mine
rals
GGL
Diamond
s Nor
th
Diamond
ex
Diano
r
Sanat
ana D
iamon
ds
Storn
oway
Vaaldi
am
Mou
ntain P
rovin
ce
Mwan
aPet
ra
Shore
Gold
Harry W
insto
nGem
Mar
ket C
ap (
mill
ions
)
$1.74 billion
*as of April 30th, 2008
$1.93 billion
7
Financial Platform
As of April 30, 2008
Market Capitalization:(based on average close for last 2 months)
$ 70 million
Total Shares Outstanding: 200 million
Cash Balance: $ 11 million
Fully Diluted Working Capital: $ 22 million
Convertible Debentures:(12% per annum interest; matures March 16, 2009)
$ 20 million
8
Why Canada?
9Canada’s Place in Global Diamond Exploration World Diamond Exploration Expenditures 2006
Canada
Russia
Australia
South Africa
Botswana
Democratic Republic of Congo
Namibia
Angola
Namibia $8.70
Sierra Leone $18.10
Australia $19.40
Democratic Republic of Congo $24.90
Botswana $30.10
Russia $35.80
South Africa $70.60
Angola $78.20
Canada $305.80
Sierra Leone Expenditures in Millions (Cdn)
Expenditure Information from Metals Economics Group, CorporateExploration Strategies 2006 and Courtesy of the Ontario Ministry of Northern Development and Mines
10
Canadian Project Pipeline
Development-Track
Renard, Quebec
Advanced Exploration
Aviat, Nunavut
Churchill, Nunavut
Qilalugaq, Nunavut
Timiskaming, Quebec & Ontario
Early-Stage Exploration
Over 12 million acres of prospective ground in Canada over 150 kimberlites discovered to date.
DecliningRisk
Profile
11
Stornoway’s Principal Properties (encompassing 155 kimberlites)
11
Aviat (11)
Renard (14)
Qilalugaq (16)
Churchill (79)
Timiskaming (9)
Pikoo
Blackstone
Slave Craton (6)
Mackenzie
Coronation Gulf (10)
Wales Island (10)
Legend
Development Track Project
Advanced Stage Projects
Grass Roots Projects
Areas of Exploration Focus
Calling Lake
N. Alberta
12
The Renard Kimberlites, Otish Mountains, Québec
Development Track Projects
The Foxtrot Project and Renard Kimberlites-
Renard” 1-10 kimberlite pipes and “Lynx-Hibou” kimberlite dyke system within “Foxtrot” property
50/50 Joint Venture between Ashton (a subsidiary of Stornoway) and SOQUEM
Discovered 2001-2003
Québec is routinely assessed as one of the top mining jurisdictions in the world
Agnico-Eagle Mines Ltd. is Stornoway’s largest shareholder and a leading mine developer in Québec .
MontrealCalgary Winnipeg
Toronto
Aviat
Renard
Qilalugaq
Churchill
Timiskaming
Pikoo
Blackstone
Slave Craton
Mackenzie
Coronation Gulf
Wales Island
Legend
Development Track Project
Advanced Stage Projects
Grass Roots Projects
Areas of Exploration Focus
Calling Lake
N. Alberta
14
Renard Kimberlite Bodies
Renard
LG3LG2LG4
Laforge 1
Laforge 2
Brisay
Foxtrot Property
Strateco
Eastmain MineWestern Troy
Troilus Mine
Eleonore
Temiscamie
Mistissini
ChibougamauMatagami
Wemindji
Legend
Stornoway/Soquem JV Properties
HydroQuebec Facility
Renard Kimberlites
Kimberlitic Dyke
Kimberlitic Pebbles & Boulders
Diamond in Till
Anomaly Outline
HydroQuebec Powerlines
Winter Road
Road
N
Ice
Direct
ion
R7R1
Southea
st A
nomal
y
North
Ano
mal
y
South A
nomal
y
2 km
Renard Core Area
North Dyke Discovery
SE Dyke Discovery
R10
R7
R1Hibou
Lynx
The Renard Kimberlites are Complicated and have Variable Grades(Renard 2 Geological Model, February 2008)
Plan View Plan View
Halo
Oblique View (no Halo) Oblique View (no Halo)
Brown(kimb2b)
Blue (kimb2a)
HK
CRB
West View
The Renard Kimberlites are Complicated and have Variable Grades(Renard 3 Geological Model, February 2008)
Looking North Looking North Looking North (No Halo) Looking North (No Halo)
Blue (kimb3b)
Brown (kimb3f)
Green(kimb3i)
CRB+HK
Grey(kimb3g)
?
Plan View Plan View
Halo
Renard Bulk Sample Program (2006-2007)
Extraction and processing of 10,000 tonne bulk sample from Renard kimberlites 2, 3 and 4.
Combination of underground decline and surface trenching
On-site treatment by DMS of 6,000 tonnes.
Valuation of 6,500 carat sample October 2007, revised March 2008.
Underground SamplingSurface Sample Renard 4Underground Sample Renard 2 & 3
18
Renard 2 Renard 3 Renard 4 (Northern Complex
Zone)
Lynx Hibou
Tonnes Treated 2,448 1,929 2,099 494 31
Carats Recovered 1,602 2,681 2,723 529 40
Largest Diamond Recovered (carats)
15.46 10.15 5.92 21.53 1.01
Diamond Recovery Range (cpht)1
26 to144 78 to 223 80 to184 n/a n/a
Average Diamond Recovery (cpht)1
65 139 130 108 126
Valuation, with sensitivities: WWW March 08
US$121 ($108 to $136)
US$121 ($108 to $136)
US$79 ($71 to
$87)
US$66 ($56 to $97)
US$66
Bulk Sample Rock Value ($/tonne)
$79 $168 $103 $71 $83
2007 Bulk Sample Results
1The estimated diamond content, expressed as carats per hundred tonnes, may not be representative of the overall diamond content of the body due to a number of factors, including location and size of the samples
19
Agnico-Eagle will author the main pre-feasibility report with support and contributions from AMEC Americas Ltd.
Four Study Modules Module 1: Resource (AMEC) Module 2: Mine (AEM) Module 3: Plant (AMEC) Module 4: Cap-ex, Op-ex and
Financial Model (AEM)
Pre-Feasibility Study
June 2007 : Pre-feasibility Phase 1 Commences
November 2007: Pre-feasibility Phase 2 Commences. First results beginning Q2 2008.
10.15 carat10.15 carat
20
A Renard Diamond Resource
Renard 3 Bulk Sample
Diamonds
Renard 3 Bulk Sample
Diamonds
10.15ct
4.94ct4.26ct
6.36ct
4.89ct
Lynx Mini-Bulk 5.7ct
Renard 3 Mini-Bulk 4.3ct
The Renard Kimberlites are Small
Grades are Variable, but Good by World Standards
The Renard Diamonds are High Quality with:
Good crystal shapes
Colours of White to Brown
No “Boart” or Industrial Grade diamonds
A potential for large “Special” diamonds
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
+5ct
2.5-4ct
8gr
3-6gr
+7-3gr
Gem
Near-Gem
Bottom
40% 50% 60% 70% 80% 90% 100%
+5ct
2.5-4ct
8gr
3-6gr
+7-3gr
Gem
Near-Gem
Bottom
By weight...
By value…
Renard Diamonds: Value Upside with Large Gems21
At Renard, Quality Improves with Size!
SWY Internal Analysis of 6,500 carat sample
Conceptual Site Layout(Working Draft)
Lynx
1 000 m
Winter road
Processed Kimberlite and Strip Rock
Overburden Storage
Open PitR2 & R3
Water Treatment
Open Pit R4 & R9
Hibou
Permanent Road
Plant and Accommodation
Conceptual Mine Plan: Combined Open Pit and Underground Mining(Working Draft)
23
Renard 2Renard 2
Renard 3Renard 3
Renard 9Renard 9Renard 4Renard 4
Portal
Level 540Drilling
Level
Level 530Mucking
Level
130 m
100 m
Level 525 (Drilling Level)
Level 515 (Mucking Level)
Level 504 (Drilling Level)
Level 494 (Mucking Level)
Elev 500
Elev 0
Plant and Production Rate
Investigating 3,500 and 5,000 tonnes per day options
1.3m to 1.8m tonnes/year or 1m to 1.5m carats/year
Recovery of large diamonds a priority for flow sheet design
Proven technology on diamond recovery
Investigating onsite Genset against powerline and cheap hydro: Cap-ex/Op-Ex trade off
24
Renard Development: An Optimistic Schedule25
20002000 20012001 20022002 20032003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011 20122012 2013201319991999
20002000 20012001 20022002 20032003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011 20122012 2013201319991999
Grassroots ExplorationGrassroots Exploration
DiscoveryDiscovery
Staged Mini-Bulk SamplingStaged Mini-Bulk Sampling
Bulk Sampling
Bulk Sampling
Pre-FeasPre-Feas
Feas./ Permitting
Feas./ Permitting
ConstructionConstruction
Prod.Prod.
The Timing and Nature of Infrastructure Development is Key
?
?
26
Road and power access are critical determinants for the economic viability of the Renard Project.
Stornoway has conducted scoping-level studies for a 4-season forestry grade road from both the north (154km) and the south (238km).
Stornoway lends full support to a Provincial and Federal Government, Community and Industry partnership created to facilitate a permanent “Route Monts Otish”.
Infrastructure: Access Routes and Powerlines
Stornoway/Soquem JV Properties
HydroQuebec Facility
Kimberlitic Pebbles & Boulders
HydroQuebec Powerlines
Road
Renard
LG3LG2LG4
Laforge 1
Laforge 2
Brisay
StratecoStratecoEastmainEastmainWestern TroyWestern Troy
Troilus Mine
Eleonore
Temiscamie
Mistissini
ChibougamauMatagami
Wemindji
Potential Powerlines
Potential Road
Canadian Diamond Project Resources and Cap-Ex
0
20
40
60
80
100
120
140
160
180
200
Diavik Ekati Jericho Victor Snap Lake Ghacho Kue Star (FalC) Renard
cara
ts (
mill
ions
)
0
200
400
600
800
1000
1200
1400
1600
US
$ (m
illio
ns)
Capex (US$M) Resource
Mines Development Projects Development-Track Projects
Source: 2005 Mine Estimates and 2006 Project Forecasts
Renard: Opportunities and Challenges
The Opportunities
Renard has the potential to become Quebec’s first diamond mine.
A producer of large, high value gems
200-300 jobs during construction, 150-200 jobs during operation
Potentially 1m to 1.5m carats/year for more than 10 years
Local purchasing, employment, and capacity development
The Challenges
The Project is modest in scope and requires careful, cost-conscious management.
Government and community support for infrastructure development is key.
29
Exploration
Advanced Stage Projects
30
Stornoway’s Property Portfolio
(as at July 02, 2007) 12.88 million acres total (in 34 active projects)
0.40 million acres ‘development’ stage (Renard)
5.04 million in ‘advanced’ stage projects (Aviat, Churchill, Qilalugaq and Timiskaming)
7.44 million acres in ‘early stage’ projects (Pikoo, Botswana, Blackstone, Itza, etc.)
3131
Aviat (11)
Legend
Development Track Project
Advanced Stage Projects
Grass Roots Projects
Areas of Exploration Focus
Churchill (79)
Qilalugaq (16)
Timiskaming (9)
Stornoway’s Advanced Stage Exploration Properties (encompassing 155 kimberlites)
3232
Aviat (11)
Aviat (90%)Budget for 2008 is $3.1 million
Legend
Development Track Project
Advanced Stage Projects
Grass Roots Projects
Areas of Exploration Focus
33
Aviat – Ongoing Exploration
11 kimberlites to date (8 dyke-like)
good grades from those tested to date (average 75-100 cpht in early stage sampling; 162 cpht from 20.6 tonne sample of AV267)
diamonds derived from similar source
best 2007 intersection: 7.0 m (dykes), 87.0 m (AV9 pipe)
AV9 came back significantly diamondiferous; 2008 focus
Press Releases of January 21st and 29th 2008
162 cpht and 3.64
Carat Diamond
Recovered from
AV267 Kimberlite
6.2 t80 cpht
20.6 t162 cpht
2.1 t
48.9 t89 cpht
Sch
emat
ic C
ross
Sec
tion
Aviat 2007 Exploration SummaryAviat 2007 Exploration Summary
20.6 t162 cpht
6.2 t80 cpht
AV9
AV267
AV2 Upper
150 m
?
? ?? ?
?
?
S N
Aviat’s Eastern Sheet Complex: area of focus
preliminary resource model currently being formulated for AV267 body; larger sample planned for 2008
AV9 body, discovered late in 2007, will be focus of spring drilling program commencing in April, 2008
dimensions not currently known of AV9; larger sample required to understand diamond carrying capacity.
36Advanced Exploration Projects2007 Budget ~ $7.0 million
Project % Interest KimberlitesGrades
cphtTonnagePotential
Bulk Sampling
Diamond Quality
Aviat 74.10% 11 75-142 High 85 tonnes pending
Qilalugaq 50-60% 16 30 High 42 tonnes pending
Churchill 41.86% 70+ 40-200 Medium 400 tonnes pending
Timiskaming 100% 9 15 Medium 600 tonnes High
Evaluation Work Completed to Date
37
Exploration
Grass Roots Projects
38Grass Roots Exploration Budget 2007 = $3.0 million
Blackstone
Slave Craton
Mackenzie
Legend
Areas of Grass Roots
Exploration Focus
Foxtrot
Timiskaming
Itza
Calling Lake
N. Alberta
8 drill ready projects8 drill ready projects
39
Conclusion
Stornoway Offers:
A new and unique diamond investment opportunity at the right time
Strong, experienced management
One of Canada’s leading technical teams with a track record of discovery
Diversified project pipeline including grass roots and development track assets
Future cash flow potential
A company well positioned for growth
40
A New Force in the Canadian Diamond Industry
www.stornowaydiamonds.com