Stornoway Diamond Corporation Corporate Update Presentation
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BUILDING QUÉBEC’S FIRST DIAMOND MINEUpdate December 3rd, 2013
Matt MansonPresident, CEO & Director
Orin BaranowskyDirector of Investor Relations
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 statements, referred to herein as “forward-looking statements”, are made as of the date of this presentation and the Company 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 Optimization Study; (v) assumptions relating to gross revenues, operating cash flow and other revenue metrics set out in the Feasibility Study or 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; and (x) sources of and anticipated financing requirements. 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” 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 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 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. Certain important factors that could cause actual results, performances or achievements to differ materially from those in the 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 Project’s value; and (vii) future exploration plans and objectives. Additional risks are described in Stornoway's most recently filed Annual Information Form, annual and interim MD&As, and other disclosure documents available under the Company’s profile at: www.sedar.com.
When relying on our forward-looking statements to make decisions with respect to Stornoway, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Stornoway does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by Stornoway or on our behalf, except as required by law.
Readers are referred to the technical report dated December 29th, 2011 in respect of the November 2011 Feasibility Study for the Renard Diamond Project, the technical report dated February 28th, 2013 in respect of the January 2013 Optimization Study, and the press release dated July 23rd 2013 in respect of the July 2013 Mineral Resource estimate for further details and assumptions relating to the project. These technical reports and this press release list the names of the Qualified Persons in respect of these studies.
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Stornoway Diamond Corporation TSX:SWY
Strong Base Case Economics; World Class Upside
All-Season Access Road Opened Ahead of Schedule and Under Budget
Mining Lease and Certificates of Authorization Issued
Strong Public Support in Québec; IBA in Place
Excellent Diamond Supply & Demand Fundamentals
100% Ownership in Renard, Québec’s First Diamond Mine
One of the World’s Few New Diamond Projects Under Development
Focused on the Timely Completion of Final Project Financing
4
Hume KyleIndependent
Zara BoldtCFO and VP
Finance
Pat GodinCOO & Director
Matt Manson President, CEO
& Director
Michel BlouinIndependent/ IQ Designate
Yves Harvey Independent
John LeBoutillierIndependent/ IQ Designate
Monique MercierIndependent/ IQ Designate
Peter NixonIndependent
Ebe ScherkusIndependent/
Board Chairman
Executive Officers
Non-Executive Directors
Key Managers
Head Office: Longueuil, Québec
Exploration Office: North Vancouver, BC
Community Offices: Mistissini & Chibougamau
Québec
Stornoway’s Board and Management Team
Serge VézinaIndependent
Orin Baranowsky
Director, IR
Jean-Charles Dumont
Corporate Controller
Yves PerronVP Engineering & Construction
Ghislain Poirier
VP Public Affairs
Brian Glover VP Asset Protection
Martin BoucherVP Sustainable Development
Guy BourqueChief Mining
Engineer
Helene RobitailleDirector, HR
Robin Hopkins
VP ExplorationMario Courchesne
Construct. ManagerFreddie Mianscum
IBA Implem. Officer
5
MAJOR SHAREHOLDINGS*
12 MONTH ANALYST TARGETSMarket Capitalization: Update(based on voting and non-voting shares)
C$ 139 million
Total Shares Outstanding: (Basic and Non-voting convertible shares)
163 million
Total Options & Warrants Outstanding:(9m Options $0.40-$2.40; 25m warrants $1.20)
34 million
Consolidated Cash: (as of July 31, 2013)
C$ 25 million
Consolidated Debt: ($100m Standby Facility with IQ undrawn)
C$ 39 million
IQ**(common shares)(non-voting convertible shares)
25.0% 35.4%
Agnico-Eagle 10.5% 9.0%
Caisse de dépôt et placement du Québec
8.1% (est)
7.0% (est)
Float 56.4% 48.6%
Fully Diluted
Basic
BMO Ed SterckNovember 13th 2013
Market Perform na
Laurentian Eric LemieuxNovember 13th 2013
Buy $2.10
RBC Des Kilalea,November 13th 2013
Outperform-Speculative Risk $1.20
Desjardins John HughesOctober 21st 2013
Speculative Buy $1.70
Paradigm David DavidsonJune 26th 2013
Buy $2.00
National BankPaolo LostrittoDecember 11th 2012
Outperform-Speculative Risk $2.00
BALANCE SHEET*
Notes: Debt Facility: In December 2010, Stornoway announced a $100 million Credit Support Agreement with a subsidiary of Société générale de financement du Québec, now Investissment Québec, with respect to future project debt financing. The Credit Support Agreement has an annual commitment fee of 175 bps undrawn, and will take the form of a direct project loan ranking pari passu with concurrent senior lenders or, as appropriate, on a stand alone basis on terms no less favourable than prevailing commercially reasonable market terms.
*Based on market close of $0.85 on November 15th 2013 and not including the issue of flow through shares announced on November 13 th 2013.
**IQ: Investissement Québec, the Québec government's industrial and financial holding company whose mission is to foster the growth of investment in Québec, thereby contributing to economic development and job creation in every region
Stornoway’s Platform for Project Development and Financing
66
Towards Québec’s First Diamond Mine
7
Lynx
R10
N
R7
R1Hibou
R4
R9R2
R3
R65
R8
Kimberlite Bodies with Probable Reserves
Hibou
Lynx
R4
R9R2
R3
R65
Kimberlite Bodies with Resource Potential
R1Hibou
Lynx
Legend
Stornoway Properties
Hydro-Québec Facility
Renard Kimberlites
Kimberlitic Dyke
Regional Kimberlites
Hydro-Québec Powerlines
Route 167 Extension/ Renard Mine Road
Road
Exploration/ Mining Projects
LEGEND:
0 1 2
Kilometers
60 0 60 120
Kilometers
Renard
LG3LG2LG4
Laforge 1
Laforge 2
Brisay
Foxtrot Property
Strateco
Eastmain MineWestern Troy
Troilus Mine
Eleonore
Temiscamie
Mistissini
ChibougamauMatagami
Wemindji
Renard Kimberlite Bodies
Kimberlite Bodies with Inferred Resources
8
Key Project Parameters
27 mcarat Indicated Mineral Resource
17 mcarat Inferred Mineral Resource
26-48 mcarat Exploration Upside
Reserve Based Mine Plan(Feasibility Study Nov. 2011, Optimization Jan. 2013)
Mine Life 11 years
Mineral Reserve 17.9 mcarats
Initial Cap-ex $752m
Operating Cost $58/t ($76/carat)
Operating Margin 67%
Operating Cash Flow $2.7B
Average Diamond Price $180/carat
Average Diamond Production 1.6 mcarats/yr
After Tax NPV (7%; Jan 1 2013) $391m
After Tax IRR 16.3%
Production Startup December 2015
Long Term Plan (Basis of Mine Permitting)
Includes the mining of the 17mcarat Inferred Resources within the scope of the Feasibility Study mine infrastructure: Extended mine life, increased annual production, increased project valuation
*Key Assumptions: C$1=US$1, Oil US$95/barrel, 2.5% real terms diamond price growth Q311-Q425, 82.9% ore recovery, 23.8% mining and internal dilution, 0cpht dilution grade, January 1 2013 effective date for NPV and IRR calculation.
Notes: Grades illustrated are for Indicated and Inferred Mineral Resources respectively at a +1DTC sieve size cut-off. Reserve and Resource categories are compliant with the "CIM Definition Standards on Mineral Resources and Reserves". Mineral resources that are not mineral reserves do not have demonstrated economic viability. The potential quantity and grade of any Exploration Target (previously referred to as a “Potential Mineral Deposit”) is conceptual in nature, and it is uncertain if further exploration will result in the target being delineated as a mineral resource.
Renard 460/50cpht Renard 9
53cpht
Renard 6529/24cpht
Renard 2104/119cpht
Renard 3103/112cpht
0m
100m
200m
400m
600m
700m
500m
300m
9
What has Changed Since the January 2013 Optimization Study?
27 mcarat Indicated Mineral Resource
17 mcarat Inferred Mineral Resource
26-48 mcarat Exploration Upside
Renard 460/50cpht Renard 9
53cpht
Renard 6529/24cpht
Renard 2104/119cpht
Renard 3103/112cpht
0m
100m
200m
400m
600m
700m
500m
300m
14% Increase in Indicated Resources
An additional 2.3Mcarats at Renard 65 (7.87 Mtonnes at 29cpht) amenable to open pit mining to 150m depth (July 2013).
Updated Diamond Price Estimates
Revised estimates based on individual diamond price models: US$190/ct for Renard 2; US$180/ct for Renard 65 (March 2013).
Op-ex Reduced 7% with LNG Option
Incremental cap-ex increase of $2.6 million for annual op-ex reduction of $8 to $10m using LNG for power generation (October 2013).
New Québec Tax Regime Absorbed
New Québec system of mining taxation and royalties: graduated approach based on project profitability (May 2013).
Removal of uncertainty on tax environment for project development.
10
The Feasibility: 11 years of mining
Permitting and Long Term Business Plan
The Vision: Deposit still Open
40
60
80
100
120
140
Millions of Tonnes
20
0
Exploration Target High Range
Inferred Resource
Exploration Target Low Range
Probable Reserve
Notes: Reserve and Resource categories are compliant with the "CIM Definition Standards on Mineral Resources and Reserves". Mineral resources that are not mineral reserves do not have demonstrated economic viability. The potential quantity and grade of any Exploration Target is conceptual in nature, and it is uncertain if further exploration will result in the target being delineated as a mineral resource.
Renard’s Resource UpsideA Project with a Long Resource Tail and Very Long Mine Life Potential
The resource upside at depth at Renard is world class.
Although highly accretive, the project’s Inferred Mineral Resources are not included in the Feasibility Study economic analysis in accordance with NI 43-101.
0m
100m
200m
400m
600m
700m
500m
300m
Renard 6529/24cpht Renard 3
103/112cpht
Renard 2104/119cpht
Renard 953cpht
Renard 460/50cpht
11
Stornoway recently completed a successful 5,000 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. Diamond recovery of 963 carats with a March 2013 valuation of US$250/ct, giving a base model of US$180/ct (sensitivities of $203 & $169).
July 2013: Conversion of Inferred Mineral Resources to a depth of 150m to an Indicated Mineral Resource of 2.30 Mcarats (comprising 7.87 Mtonnes at 29cpht)
Upon conversion to a Mineral Reserve, this material may be incorporated into the mine plan in two ways:
1. add 1 year to the LOM and increase the production rate to 2.5Mt/a or
2. add 3 years to the LOM as a reserve tail at a production rate of 2.1Mt/a
The cost of developing a 75m deep pit at Renard 65 is already contained within the Feasibility Study.
Renard 2
Renard 3
Renard 9Renard 4
Renard 65
Three Renard 65 diamonds: 9.78 ct and 6.41 ct diamonds recovered from the 2012 bulk
sample and a 4 carat stone discovered in drillcore in 2003
Mineral Resource Continuing to GrowJuly 2013: 14% Increase in Indicated Mineral Resources
Notes: Reserve and Resource categories are compliant with the "CIM Definition Standards on Mineral Resources and Reserves". Mineral resources that are not mineral reserves do not have demonstrated economic viability. The potential quantity and grade of any Exploration Target is conceptual in nature, and it is uncertain if further exploration will result in the target being delineated as a mineral resource.
12
490 m asl
-275 m asl
0 m
790 m
Indicated Resource
Legend
Inferred Resource
Inferred Resource of R2 CRB
Low TFFE
High TFFE
Resource ExpansionTargets for Resource Expansion in 2013 and Beyond
Renard 2 Renard 3 Renard 4 Renard 65 Renard 9
1. Conversion of Renard 65 Inferred Resources to Indicated to 150m depth (July 2013: Completed)
2. Addition of Renard 2 Country Rock Breccia to both Indicated and Inferred Resources (July 2013: Completed)
3. 6.2 Mcarats in 5.23 Mtonnes (at 119 cpht) in Renard 2 Inferred Resources between 610m and 700m depth: 4.2 to 7.3 Mcarats TFFE between 700m and 770m depth. Open below 770m. (Target for 2014 Drilling)
12
3
13Mine PlanA Combined Open Pit and Underground Mine
Renard 4
Renard 2
Renard 3
Renard 65
View looking Northeast
Renard 2 Renard 3
Open Pit Mining (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.
6,000 tpd plant capacity (2.2Mtonnes/year) expandable to 7,000 tpd (2.5Mtonnes/year).
Pit at Renard 65 (initially) as a borrow-pit and waste water sump, pending resource conversion.
14
Waste Rock
Processed Kimberlite Containment (PKC)
Overburden Stockpile
R2-R3
Ore Stockpile
R65
Camp
Plant
Road from Chibougamau
General Project ArrangementSmall Project Footprint of 3.1km2, Modest Environmental Impact
15Mine Plan Production Schedule and Cash Flow(Mineral Reserves Only)
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000 Open Pit & Underground Mining
R2 Pit R3 Pit R2 UG R3 UG R4 UG
Ore
To
nn
age
(t)
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000 Diamond Production
R2 R3 R4
Dia
mo
nd
s (c
arat
s)
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
-
100,000
200,000
300,000
400,000
500,000
600,000 Gross Revenue (Real Terms)
R2 R3 R4
Rev
enu
e (k
C$)
16Stornoway will be a Significant Diamond ProducerCurrent and Future Diamond Producers
Source: Kimberly process and Company Reports
1 De Beers (Anglo/Botswana) $6,074m
2 Alrosa (Russia) $4,497m
3 BHPB/Dominion Diamond (TSX: DDC) $894m
4 Rio Tinto (ASE: RIO) $741m
5 Petra (note 1; L: PDL) $403m
6 Stornoway (note 2; TSX: SWY) $306m
7 Mountain Province (note 3; TSX: MPV) $273m
8 Gem (L: GEMD) $202m
9 Lucara (note 4; TSX: LUC) $118m
10 Others $2,200m
Total $15,708m
DeBeers39%
Alrosa29% BHPB/
Domin-ion6%
RioT-into5%
Petra3%
SWY2%
MPV2%
GEM1%
LUC1%
Others14%
2012 World Diamond Production Data/ Forecast Future Production
Notes:
1. Petra 12 month results for period ending June 30, 2013
2. Renard estimated at FS average annual diamond production of 1.7 million carats, and WWW April 2011 weighted diamond price of $180/ct, un-escalated
3. Gahcho Kue estimated at 50% of FS average annual production of 4.5 million carats, and WWW April 2011 weighted diamond price of $121/ct, un-escalated
4. Karowe estimated as per Lucara FY2013 Operating Guidance.
17Renard’s DiamondsRecent 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-gem quality. 1% industrial quality boart.
Value Upside in Large Gems• 17 stones recovered to date larger than 5 carats with average price of $3,100/ct. Model prices
assumes $1,920 to $2,240 per carat for 5-10ct stones. Potential c.15% revenue upside.• Diamonds larger than 10.8ct (“Specials”) estimated at three to six 50-100ct stones and one to two
+100ct stones every 100,000 carats (two weeks). Not accounted for in the revenue model
Kimberlite Body
Size ofValuation Sample(carats)
WWW March 2013 Sample
Price(US$/carat)1
WWW March 2013 Base Case Price
Model(US$/carat)1
Sensitivities(Minimum to High)
Renard 2 1,580 $180 $190 $171 to $214
Renard 3 2,753 $173 $151 $141 to $185
Renard 4 2,674 $100 $104 ($150)2 $98 to $168
Renard 65 997 $250 $180 $169 to $203
Notes
1. All prices in US$/carat. Samples utilizing a +1 DTC sieve size cut-off.
2. Should the Renard 4 diamond population prove to have a diamond population with a size distribution equal to the average of Renard 2 and 3, WWW have estimated that a base case diamond price model of
$150 per carat based on March 2013 pricing.
Renard 3 Bulk Sample Stones larger than 2 carats. “Run of
Mine”
18Permitting and Social AcceptabilityStrong Regulatory and Public Support for Québec’s First Diamond Mine
Social Licence
Permitting
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 Agreements Signed with Chibougamau and Chapais.
May 2013: Settlement of future Québec mining tax regime
Oct. 2012: Québec Mining license issued.
Dec. 2012: Québec Certificate of Authorization issued.
July 2013: Positive Federal Environmental Assessment decision issued.
All Community Agreements and Regulatory Authorizations Required to Proceed to
Construction are in Place.
19Project ScheduleJanuary 2013 Optimization Study
BFS (Complete)
ESIA (Complete)
Community Hearings (Complete)
Reg. Authorizations (Complete)
Specific Operating Permits (50)
Detailed Engineering
Project Financing
Road Construction
Site Construction
Commissioning and Ramp-up
Commercial Production
2011
2H 2H 2H 2H2H 1H 1H 1H1H
2012 2013 2014 2015
2H1H
2016
First Vehicle Access
With first vehicle access achieved on the Renard Mine Road, the timely completion of mine project financing is the now principal driver on project schedule
20The Route 167 Extension and the Renard Mine Road A Canadian Diamond Project with Road Access Opened Ahead of Schedule
50 km
Renard Project
Explor./Mining Projects
Stornoway Properties
Albanel-Témiscamie-Otish Par
Segment A: 0-82kmSegment B: 82-143kmSegment C: 143-195kmSegment D: 195-240km
Legend
Renard
WesternTroy
EastmainAbitex
Strateco
Mistissini
Lac Mistassini
Lac Naococane
Lac Hecla
Lac Albanel
Km 0
Km82
Km240
Km195
Km143
Rou
te 1
67
Construction of an all-season access road connecting Renard to the Québec Highway network began in February 2012.
Segments A & B of this road (143 km) constructed by Québec as a 2-lane highway. Segments C & D (97 km) constructed by Stornoway as the single lane “Renard Mine Road”.
To complete this work, Québec provided Stornoway up to $85m of debt financing, repayable upon commercial production at Renard.
All 4 segments have been connected. The road is open to construction traffic 2 months ahead of schedule and approximately 10% below budget.
Segments C & DStornoway
97km of Mine Road (50km/hr)
Segments A & BMin. of Transport
143km of Regional Highway (70km/hr)
Eastmain Bridge, March 2013
Transportation of Pre-Fabricated Temporary Bridge
Spans March 2013
21
Stages of Road Construction
“Slashing” or Tree Clearing Preparation of Road Foundation
Bridges or Culverts on Stream Crossings
Construction of Permanent Bridges
Connection of the Renard Mine Road September 2013
Grading
22
Views of the Road
Renard Project
Explor./Mining ProjectsStornoway Properties
Albanel-Témiscamie-Otish Par
Segment A: 0-82kmSegment B: 82-143kmSegment C: 143-195kmSegment D: 195-240km
Legend
Renard
WesternTroy
EastmainAbitex
Strateco
Mistissini
Lac Mistassini
Lac Naococane
Lac Hecla
Lac Albanel
Km 0
Km82
Km240
Km195
Km143
Rou
te 1
67
KM 210 KM 237
KM 155
23
Renard Aerodrome
ApronRunway Taxi wayShoulder
Renard Project SiteThe 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 100mx100m apron• Equipped with assisted landing capability
Traffic will be 3 to 5 flights per week for 48 workers per flight.
The Renard Mine Aerodrome will be available for public use, enhancing air transport in the Monts Otish region of Québec.
On October 10th Stornoway announced an agreement with Québec to commence
construction of the Renard Mine Aerodrome immediately, utilizing the residual amount of financing available within the Renard Mine
Road credit facility.
24Aerodrome ProgressOctober 2013
Tree Cutting Area
RunwayCenterline
First Landing: November 5th
25Site ProgressOctober 2013
R65 Borrow Pit
Tree Clearing
Bulk Sample DMS Plant
Construction Camp
Renard Mine Road
R65
R2R9
R4
26Liquefied 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 short term due to high cap-ex cost.
On October 21st Stornoway announced it will proceed with an LNG fuelled gen-set option, made possible by the ability to receive regular cryogenic LNG shipments on the Renard Mine Road.
The Renard LNG plant will comprise seven 2.1MW rated gas gen-sets, providing sufficient power generation capacity for the project’s normal operating specification of 9.5MW.
27Liquefied Natural Gas Power PlantFeasibility 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 $2.6m.• Up to 43% less greenhouse gas emissions.• Long term, stable supply market utilizing existing commercial distribution network within Quebec.• Elimination of on-site propane, as LNG will be used for building and underground mine heating.
Diesel will continue to be used for the mobile mining fleet and construction activities
Cost Improvements with LNGJan 2013
Optimization Study with Diesel
Jan 2013 Optimization Study
with LNG
Unit Power Cost (C$/kWh) 1 $0.299 $0.188 (-37%)
Unit Operating Cost (C$/tonne) 1,2 $57.63 $53.84 (-7%)
Initial Capital Cost (C$m) 1 $752.1 $754.0 (+0.3%)
Life of Mine Capital Cost (C$m) 1,3 $1,013 $1,010 (-0.3%)
Annual Diesel Consumption (million litres) 27.5 5.9 (-79%)
Annual LNG Consumption (thousand m3/annum) n/a 41.7
Annual Propane Consumption (thousand m3/annum) 3.5 n/a
Notes
1. January 2013 Optimization Study costs expressed in October 2012 terms.
2. Excludes capitalized preproduction costs.
3. Includes all initial, sustaining and deferred capital, contingencies and escalation
Key Assumptions
Based on the 11 year reserve-based mine life (17.9 mcarats) contained within the January 2013 Optimization Study, with a normal operating load of 9.49MW, C$1=US$1, Oil US$95/barrel
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
Favourable Cost Environment for Project Construction
Project Debt Facility Well Advanced (Syndicate announced on September 6th 2012 for a senior facility of up to $475m BMO, Scotia, NedBank, SocGen, EDC, Caterpillar, IQ)
Stornoway is Focused on Completing Project Financing for Construction in 2014
and 2015, with first Production in 2016
2929
Appendix 1: NI 43-101 Mineral Reserves and Mineral Resources
30
Probable Mineral ReserveMining Recovery Factors Utilized in the Reserve
Calculation
Kimberlite Grade(cpht)
Tonnes(millions)
Contained Carats(Millions)
Internal Dilution
Mining Recovery
MiningDilution
Renard 2 OP 95 1.31 1.24 0.0% 96.0% 7.1%Renard 2 UG 80 17.03 13.62 7.0% 82.4% 20.2%Renard 3 OP 93 0.72 0.67 0.0% 96.0% 10.5%Renard 3 UG 84 1.00 0.84 21.1% 85.0% 14.0%Renard 4 UG 42 3.72 1.58 1.4% 78.2% 14.0%
Total 75 23.79 17.95 5.9% 82.9% 17.9%
Notes: Reserve categories are compliant with the "CIM Definition Standards on Mineral Resources and Reserves". Totals may not add due to rounding. Grades are estimated at a +1DTC sieve size cut-off.
R2 ; 83%
R3, 8%R4, 9%
Revenue
R2 ; 77%
R3; 7%
R4; 16%Tonnage
R2 ; 83%
R3; 8%R4; 9%
Carats
NI 43-101 Probable Mineral ReservesUpdated January 28th 2013
31
Notes: Resource categories are compliant with the "CIM Definition Standards on Mineral Resources and Reserves". Mineral resources that are not mineral reserves do not have demonstrated economic viability. Indicated Mineral resources are Inclusive of the Mineral Reserve. Totals may not add due to rounding. Grades are estimated at a +1DTC sieve size cut-off.
Renard NI 43-101 Mineral ResourcesPublished July 23rd 2013. Changes to January 2011 Mineral Resource in Italics
Kimberlite Grade(cpht)
Tonnes(millions)
Contained Carats(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 32 (n/a) 0.87 (n/a) 0.28 (n/a)
Renard 3 103 (-2.2%) 1.76 (+0.5%) 1.82 (-1.7%)
Renard 4 60 (+13.1%) 7.25 -- 4.31 (+13.0%)
Renard 65 29 (n/a) 7.87 (na) 2.30 (n/a)
Total Indicated 76.4 (-14.3%) 35.45 (33.1%) 27.09 (+14.0%)
Renard 2 – Total 64 (n/a) 10.46 (n/a) 7.47 (n/a)
Renard 2 119 (+1.2%) 5.23 (+0.4%) 6.23 (+1.6%)
Renard 2 CRB 19 (n/a) 5.23 (n/a) 1.24 (n/a)
Renard 3 112 (-4.5%) 0.54 (+0.2%) 0.61 (-4.2%)
Renard 4 50 (+13.7%) 4.75 (-0.1%) 2.37 (+13.7%)
Renard 9 53 (+13.2%) 5.70 (+0.1%) 2.69 (+13.2%)
Renard 65 24 (-16.8%) 4.93 (-61.9%) 1.18 (-68.3%)
Lynx Dyke 107 -- 1.80 -- 1.92 --
Hibou Dyke 144 -- 0.18 -- 0.26 --
Total Inferred 58.2 (+3.7%) 28.36 (-8.9%) 16.50 (-5.4%)
32
Notes: The potential quantity and grade of any exploration target (previously referred to as “potential mineral deposit”) is conceptual in nature, and it is uncertain if further exploration will result in the target being delineated as a mineral resource. The exploration upside for the Renard kimberlite pipes has been determined by projecting reasonable kimberlite
volumes from the base of the inferred Resource to a depth of 700m below surface. In the case of the Lynx and Hibou dykes, the exploration upside was established on the basis of known drill intersections of kimberlite for which insufficient diamond sampling exists to adequately estimate a diamond resource grade.
Target for Further ExplorationPublished July 23rd 2013. Changes to January 2011 Estimates in Italics
Kimberlite Grade(cpht)
Tonnes(millions)
Contained Carats(Millions)
Renard 2 104 to 158 4.0 to 4.6 4.2 to 7.3Renard 3 105 to 168 0.8 to 1.7 0.8 to 2.8Renard 4 50 to 77 11.1 to 15.4 5.6 to 11.8Renard 9 52 to 68 3.9 to 6.3 2.0 to 4.3Renard 65 25 to 33 29.0 to 40.9 7.3 to 13.5Lynx Dyke 96 to 120 3.1 to 3.2 3.0 to 3.8Hibou Dyke 104 to 151 2.7 to 2.9 2.9 to 4.3Total Exploration Upside
54.6 (-0.8%)
to74.9
(-0.8%)25.7
(+9.1%)to
47.8(-1.4%)
33Renard Resource UpsideInferred Resources and TFFE Not in Reserve Case Mine Plan
0m
100m
200m
400m
600m
700m
500m
300m
Inferred Resource
Exploration Target
Indicated Resource
0.8 to 2.8 mcarats
0.6 mcarats
6.2 mcarats
4.2 to 7.3 mcarats
1.2 mcarats
2.7 mcarats
7.3 to 13.5mcarats
5.6 to 11.8 mcarats
2.0 to 4.3 mcarats
Notes: Reserve and Resource categories are compliant with the "CIM Definition Standards on Mineral Resources and Reserves". Mineral resources that are not mineral reserves do not have demonstrated economic viability. The potential quantity and grade of any Exploration Target (previously referred to as a “Potential Mineral Deposit”) is conceptual in nature, and it is uncertain if further exploration will result in the target being delineated as a mineral resource.
Renard’s Inferred Resources and TFFE represent a potential increase over the current Indicated Resource of 156% to 237%.
Each kimberlite remains open at 770m depth
2.4 mcarats 1.2
mcarats
3434
Appendix 2: Feasibility Study and Feasibility Optimization
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 with an extended mine plan incorporating the project`s 17.5 million carats of Inferred Mineral Resources.
Basis of overall mine design and project permitting. Not part of the project`s public disclosure, consistent with Canadian reporting standards
Optimization Study
Released on January 28th, 2013. NI 43-101 Technical Report filed March 2013.
Refined of Feasibility mine design, including shaft deferral and a modified underground mining sequence.
11 Year Mine Plan based on 17.9 million carat Mineral Reserve.
Resource Update
Released July 2013. NI 43-101 Resource update with 14% increase in Indicated Resource contained carats
LNG Feasibility Study
Released October 2013. Modified project Cap-ex and Op-ex for LNG powered gensets
36Optimization Study Financial Analysis Project Assumptions, Valuation and Pay-Back
Key Assumptions in the Financial Model1
Mining Parameters
Reserve Carats (M) 17.9Tonnes Processed (M) 23.8Recovered Grade (cpht) 75Average Ore Recovery (%) 82.9%Average Mining Dilution (%) 17.9%Dilution Grade (cpht) 0Processing Rate (Mtonnes/annum) 2.2Mine Life (years) 11
Cost Parameters
Initial Cap-ex (C$M)2 $752LOM Cap-ex (C$M)4 $1,013Oil Price (US$/barrel)2 $95LOM Op-ex (C$/tonne)2 $57.63LOM Op-ex (C$/carat)2 $76.63
Revenue Parameters
Gross Revenue (C$M)2 $4,268Marketing Costs 2.7%DIAQUEM Royalty 2.0%Cash Operating Margin (C$M)2 $2,693% Operating Margin 67%Income Tax, Mining Duties and IBA Payments (C$M)1 $625
After Tax Net Cash Flow (C$M) $1,084
Diamond Price
Parameters3
Renard 2 and Renard 3 (US$/carat) $182Renard 4 (US$/carat) $164Diamond Price Escalation 2.5%Exchange rate 1C$=1US$
Schedule Parameters
Effective Date for NPV Calculation Jan. 1 2013Construction Mobilization/Early Works Aug. 1 2013Plant Commissioning Commences Dec. 1 2015Commercial Production Declared Jun. 1 2016
Valuation Results5 (C$m)
Pre-Tax After Tax
NPV5% $894 $537
NPV7% (Base Case) $683 $391 NPV9% $514 $274
IRR 20.4% 16.3%
Pay-Back (years) 4.69 4.82
Notes
1. Optimization Study, released January 28th 2013.
2. Expressed in October 2012 terms.
3. Expressed in May 2011 terms.
4. Expressed in nominal terms.
5. Expressed in Dde-escalated nominal terms.
37Optimization Study Financial Analysis Capital Costs
Capital Costs1 (C$m)
Site Preparation & General $32.7
Mining $151.2
Mineral processing plant $175.4
Onsite utilities and infrastructures $114.8
Owner’s Cost $94.7
Spares, fills, tools $7.1
EPCM services $47.9
Field indirect costs, vendor representatives $33.9
Construction camp & Catering $24.5
Freight and duties $5.5
Contingency $64.7
Total Initial Capital $752.1
Escalation Allowance on Initial Capital $45.1
Pre-Production Revenue $(25.0)
Deferred & Sustaining Capital2 $175.9
Deferred Capital (Route 167 Extension) $0.0
Renard Mine Road2 $78.0
Salvage Value2 $(13.3)
Total LOM Capital $1,012.9
Site Prep. & General
7%Mining32%
Plant37% Onsite utilities
and infras-truc.24%
Direct Costs (C$474m)
Owner’s Cost34%
Spares3%
EPCM17%
Field, Vendor reps12%
Camp9%
Freight2%
Contin.23%
Indirect Costs (C$278m)
Notes1. Optimization Study, released January 28th 2013. 2. After Escalation
38Optimization Study Financial Analysis Operating Costs
Notes: 1. Optimization Study, released January 28th 2013. Costs are
expressed in October 2012 terms. Totals may not add due to rounding.
2. Unit cost per processed tonnes.
Open Pit Unit Costs1 $/tonne
Open Pit 21.22
Processing 15.29
G&A2 and Infrastructure 18.27
Total Open Pit3 54.78
Underground Unit Costs1 $/tonne
Underground 23.64
Processing 15.29
G&A2 and Infrastructure 18.27
Total Underground3 57.20
Life of Mine Operating Costs1,4 (Real Terms)
Total Operating Cost (C$M) 1,352
Diamond Prod. (Mcarats) 17.6
Production Cost357.63 C$/ t
76.63 C$/ ct
3. G&A unit costs do not include closure cost4. “Life of Mine Operating Costs” exclude diamond production prior to Commercial
Production and exclude pre-production operating costs, which are capitalized.
Open Pit, $10m, 1%
UG Mine, $555m, 41%
Plant,$359m, 26%
G&A, $429m, 32%
Operating Cost (C$1,352m)
39Optimization Study Financial AnalysisCarat Production and Revenue
Revenue Parameters1 (Real Terms)
Total Gross Revenue (C$m) $4,268
Marketing Costs (%) 2.7%
DIAQUEM Royalty (%) 2.0%
Cash Operating Margin (C$m) $2,693
% Operating Margin 67%
Taxes and Mining Duties and IBA Payments (C$m) $625
Cumulative After Tax Cash Flow (C$m) $1,084
Production Parameters1 (Mcarats)
Renard 2 Open Pit 1.24
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 Underground 16.03
Total 17.95
11%
89%
Diamond Production by Mining Method
Open PitUnderground
83%
8%9%
Diamond Production by Kimberlite Pipe
Renard 2Renard 3Renard 4Notes:
1. Optimization Study, released January 28th 2013.
40Optimization Study Financial AnalysisProject Valuation Sensitivities
80% 90% 100% 110% 120%
Operating Cost
0.196230817501467
0.179972091321546
0.163250266570968
0.146048134926164
0.128352213587736
Capital Cost
0.211848685510625
0.185686524308791
0.163250266570968
0.143515586162991
0.126422937843627
Revenue
0.0954733598295952
0.130922538916418
0.163250266570968
0.193237406873603
0.221132045336473
2.5%
7.5%
12.5%
17.5%
22.5%
27.5%After Tax IRR
80% 90% 100% 110% 120%
Operating Cost
0.242509245832617
0.223133018667018
0.203203454136104
0.182598617148955
0.161222312218575
Capital Cost
0.260321997028043
0.229478257678887
0.203203454136104
0.180038611510592
0.159688707251324
Revenue
0.120925606372013
0.164238448528949
0.203203454136104
0.23896505379885
0.272313998809559
2.5%
7.5%
12.5%
17.5%
22.5%
27.5%
80% 90% 100% 110% 120%
Operating Cost
526138.560097787
460173.864766308
391479.681320721
320039.469487909
245910.93197427
Capital Cost
506816.515672916
449805.653795551
391479.681320721
331667.85325678
272019.81394411
Revenue
99134.8611828234
246431.438184723
391479.681320721
535409.221431181
677695.47684244
50,000
150,000
250,000
350,000
450,000
550,000
650,000
80% 90% 100% 110% 120%
Operating Cost
891142.544040477
789142.294089817
683498.672419844
574143.39011149
461111.206256864
Capital Cost
845695.085738505
764629.149834535
683498.672419844
601268.751237633
519031.263288076
Revenue
231317.818191946
457407.565789829
683498.672419844
909511.097962548
1135601.64804841
100,000
300,000
500,000
700,000
900,000
1,100,000Pre-Tax IRR
After Tax NPV
Pre-Tax NPV
41Rough Diamond Price MovementsThe Diamond Market, January 2010 to September 2013
A tracking of the diamond market since the publication of the November 2011 FS indicates rough diamond prices have generally remained within the bounds of sensitivities contained within the FS financial model (May 2011 spot prices and a 2.5% real terms annual price escalator).
May 2011 Valuation utilized in the FS based
on the average of 5 diamantaires c.10%
below the WWW rough index price
4242
Appendix 3: Project Comparables
43Diamond Industry Cost Curve Source: Published FY2012 Results, FS Life of Reserve Data and Company Estimates
World Diamond Project ComparablesCost/Revenue
44Project ComparablesRecent Canadian Diamond Mines Compared as of the Date of each FS
Source: Company Reports and Stornoway Estimates. Excludes resource and diamond price upside from both projects. Excludes diamond price escalators. Assumes similar diamond recovery and mining dilution parameters.
Ekati (1998)BHPB, As Built
Estimates
Diavik (1999)Rio-Tinto, As
Built Estimates
Victor (2008)De Beers, As
Built Estimates
Renard FS Optimization Study (2013)
Resource ParametersResource (m carats) 161 133 No data 41
Resource (US$) $10B $6.7B No data $7.2BResource Grade (cpht) 110 360 No data 72Average Resource Diamond Price $60 $50 No data $175Resource Mine Life 25 25 No data n/a
Reserve ParametersReserve (carats) 72 102 6 17.9
Reserve (dollars) $6B $5.5B $2.4B (est) $3.2BReserve Grade (cpht) 109 400 20 75Average Reserve Diamond Price $84 $55 $400 $180 Average Reserve Ore Value (US$) $92 $220 $80 $136Reserve Mine Life 17 19 12 11
Production ParametersAnnual Production (mCarats) Up to 3.6 Up to 7 0.5 1.7Annual Revenue (US$m) $302 $385 $215 $306LOM Op-ex (Cdn$/tonne) $100 to $60 $100 No data $58LOM Op-ex (Cdn$/carat) $92 to $55 $25 No data $76Canadian-US Dollar c.$0.75 $0.67 c.$1.00 $1.00
Pre-Production Cap-ex (Cdn$) $900m $1.3B $982m $752m
45Project ComparablesRecent Canadian Diamond Development Projects Compared as of the Date of each FS
Gahcho Kué FS (2010) De Beers/Moun. Prov.
Star-Orion FS (2011) Shore Gold
Renard FS Optimization Study (2013)
Resource ParametersResource (m carats) 61 43 41Resource (US$) $5.1B $11B $7.2BResource Grade (cpht) 168 12 72
Average Resource Diamond Price $85 (WWW Apr 10)$65 (DTC Apr 10) $256 (WWW Feb 11) $175 (WWW May 11)
Resource Mine Life n/a n/a n/a
Reserve ParametersReserve (carats) 49 34 17.9Reserve (dollars) $3.7B $8.2B $3.2BReserve Grade (cpht) 157 12 75Average Reserve Diamond Price $75 $242 $180 Average Reserve Ore Value (US$) $118 $30 $136Reserve Mine Life 11 20 11
Production ParametersAnnual Production (mCarats) 4.5 1.7 1.7Annual Revenue (US$m) $338 $411 $306LOM Op-ex (Cdn$/tonne) $49 $14 $58LOM Op-ex (Cdn$/carat) $31 $114 $76Canadian-US Dollar 0.96 0.945 1.00
Pre-Production Cap-ex (Cdn$) $550m ($800m De Beers Dec 11) $1.9B $752m
Source: Company Reports. Excludes resource and diamond price upside from both projects. Excludes diamond price escalators. Assumes similar diamond recovery and mining dilution parameters.
4646
Appendix 4: The Diamond Market
47Major Diamond Mines and Development Projects WorldwideFew Enough Mines to Fit on One Map
South Africa • Venetia (De Beers)
• Finsch, Premier (Petra Diamonds)
• Lace (DiamondCorp)
Tanzania• Williamson (Petra Diamonds)
Russia • Arkhangelsk District (Alrosa)
• Yakutia District (Alrosa)
• Grib (LUKOIL)
India• Bundar (Rio Tinto)
Australia• Argyle (Rio Tinto)
• Ellendale (Gem Diamonds)
Canada• Ekati (BHPB)
• Diavik (Rio Tinto/Harry Winston)
• Victor, Snap Lake, Gahcho Kue (De Beers)
• Renard (Stornoway)
• Star (Shore Gold/Newmont)
Botswana• Jwaneng, Orapa (De Beers)
• Gope (Gem Diamonds)
• AK6 (Lucara Diamonds)
Angola• Catoca (Alrosa)
Democratic Republic of Congo• Mbuyi-Mayi
Sierra Leone• Koidu, (Steinmetz Group)
Lesotho• Letseng (Gem Diamonds)
• Kao (Namakwa Diamonds)
• Liqhobong (Firestone)
• Mothai (Lucara)
48The Rough Diamond Business in Context1/8th the Size of the Copper Business
Source: USGS, LME, Kimberly Process
49The Diamond PipelineAn Industry with Many Intermediaries
Source: Tacy D.I.B.April 2013
Production Cost
Production Value
Mine Sales to Industry
Rough Sales to Cutting Centers
Value of Polished Produced
Value of Diamonds in
Retail Jewelery
Sales
Retail Sales of Diamond
Jewelery
Estimated Average Margins
after Costs (%)
Polishing: -10 to 15%
Jewelery Manufac: -10
to 10%
Jewelery Retail: 20 to
50%
Mine Production Rough Trading and Diamond Polishing Diamond Jewelery
Value in US$B terms of each
stage of the diamond pipeline
Rough Mining: 0 to 50% Rough Dealing: 0 to 10%
$6.0B $13.37B $15.5B $15.2B $17.6B $21.9B
$72.1B
50
Future Rough Diamond Supply
0
20
40
60
80
100
120
140
160
180
Pro
duci
ton
/ Sup
ply
Mct
Production and Supply Forecast (Rio Tinto)
Alluvial
Open Cut
U/G
3x increase in U/G caratsHigher cost
De Beers Production Forecast Rio Tinto Production Forecast
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 diamond mine has been discovered since the discovery of EKATI and Diavik in the early 1990s. The movement to underground mining in Russia, South Africa and Canada will lower overall industry margins.
51
Diamond Jewelry Demand is Forecast to Grow Dramatically
Share of World Diamond Jewelry Market, 2005 to 2020
US49%
Japan14%
Europe10%
India (and Asia-Arabia)
13%
China (and Asia-Pacific)
10%
Others4%
2005: $62B
US42%
India (and Asia-Arabia)
18%
China (and Asia-Pacific)
15%
2010: $74B
US27%
India (and Asia-Arabia)25%
China (and Asia-Pacific)
32%
2020F: $128B
Source: AllanHochtreiter after De Beers, Tacy Ltd.,
1 CAGR estimates after Alrosa October 2011. Nominal Terms
Diamond Jewelry CAGR of 5.6%1
2010-2020
Rough Diamond CAGR of 10%1
2010-2020
5252Rough Diamond Supply and Demand ForecastsAn Example: Bain September 2013
Rough Diamond Demand
Supply and Demand
Rough Diamond Supply
Since 2012, Bain & Co in partnership with the 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% and a rough diamond demand CAGR of 5.1%.
53
2007 2008 2009 2010 2011 2012 20130
100
200
300
400
500
600
700
0
2
4
6
8
10
12
$109
00000
$121
00000000000000000
$117
000000000000000000
$182
0000000000000000
$190
Commodity Index Data
WWW R.I. Polished Prices Index Gold IMF CPIIMF IPI IMF CPI NonFuel IMF Coal(Aust) IMF MetalIMF Cu S&P TSX Comp Index
Ind
ex
Oc
tob
er
20
03
= 1
00
S&
P T
SX
Co
mp
os
ite
Ind
ex
We
ek
ly C
los
ing
S&
P T
SX
Co
mp
os
ite
Ind
ex
We
ek
ly C
los
ing
S&
P T
SX
Co
mp
os
ite
Ind
ex
We
ek
ly C
los
ing
S&
P T
SX
Co
mp
os
ite
Ind
ex
We
ek
ly C
los
ing
Rough Diamond Pricing Since 2003Rough and Polished Diamonds Against a Basket of Indicators, 2003- October 2013
Source: LME, IMF, Rough Diamond Price data after WWW International Diamond Consultants Limited Indexed to October 2003. CAGR in Nominal Terms. WWW R.I. to May 2013
8% CAGR in Rough Prices
2003-2012
54
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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