Stornoway Diamonds Manson Project 2012
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Stornoway Diamonds Manson Project 2012 Stornoway Diamonds Manson Project 2012 Presentation Transcript

  • The Creation and Growth of a Mineral Resourceat Renard: Québec’s First Diamond MineNovember 21st, 2012Matt Manson 2012 Congrès de l’AEMQPresident, CEO & Director La prochaine génération de mines au Québec
  • 2Forward-Looking InformationThis 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 hereinas “forward-looking statements”, are made as of the date of this presentation and the Company does not intend, and does not assume anyobligation, 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 andinclude, but are not limited to, statements with respect to: (i) the amount of mineral resources and exploration targets; (ii) the amount of futureproduction over any period; (iii) net present value and internal rates of return of the mining operation; (iv) capital costs and operating costs; (v) mineexpansion potential and expected mine life; (vi) expected time frames for completion of permitting and regulatory approvals and making aproduction decision; (vii) future exploration plans; (viii) future market prices for rough diamonds; and (ix) sources of and anticipated financingrequirements. 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 statementsof 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 bysuch statements. Such statements and information are based on numerous assumptions regarding present and future business strategies and theenvironment in which Stornoway will operate in the future, including the price of diamonds, anticipated costs and ability to achieve goals. Certainimportant factors that could cause actual results, performances or achievements to differ materially from those in the forward-looking statementsinclude, but are not limited to: (i) estimated completion date for the Environmental and Social Impact Assessment; (ii) required capital investmentand estimated workforce requirements; (iii) estimates of net present value and internal rates of return; (iv) receipt of regulatory approvals onacceptable terms within commonly experienced time frames; (v) the assumption that a production decision will be made, and that decision will bepositive; (vi) anticipated timelines for the commencement of mine production; (vii) anticipated timelines related to the Route 167 extension and theimpact on the development schedule at Renard; (viii) anticipated timelines for community consultations and the conclusion of an Impact andBenefits Agreement; (ix) market prices for rough diamonds and the potential impact on the Renard Project’s value; and (x) future exploration plansand objectives. Additional risks are described in Stornoways most recently filed Annual Information Form, annual and interim MD&A, and otherdisclosure 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 theforegoing factors and other uncertainties and potential events. Stornoway does not undertake to update any forward-looking statement, whetherwritten or oral, that may be made from time to time by Stornoway or on our behalf, except as required by law.
  • 3Renard 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 with Probable Reserves Legend LEGEND: Kimberlite Bodies with Stornoway Properties HydroQuébec Inferred Resources HydroQuébec Facility Powerlines Renard Kimberlites Route 167 Extension Kimberlite Bodies with Road Kimberlitic Dyke Resource Potential Exploration/ Mining Regional Kimberlites Projects View slide
  • 4The Route 167 ExtensionA Canadian Diamond Project with All Season Highway Access 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 Segments C & D mining grade road. Stornoway This agreement puts Stornoway in charge of the Renard 97km of Mining project’s overall project schedule for the first time. Grade Road (50km/hr) All season access is now scheduled for Q4 2013. Construction, September 2012 Segments A & B Ministry of Transport 143km of Regional Highway (70km/hr) View slide
  • 5The Route 167 ExtensionConstruction Images September 2012
  • 6 Key Project Parameters Renard 65 November 2011 Feasibility Study* 0m 29cpht Renard 3 106/118cpht Mine Life 11 years 100m Mineral Reserve 18 mcarats Initial Cap-ex $802m 200m Operating Cost $55/t ($70/carat) 300m Operating Margin 68% Operating Cash Flow $2.7B 400m Diamond Valuation $180/carat 500m Peak Diamond Production 2.1 mcarats/yr After Tax NPV (7%; Jan 1 2012) $376m 600m After Tax IRR 14.9% 710m Project Startup July 2015 *Key Assumptions: C$1=US$1, Oil US$90/barrel, 2.5% real terms diamond price growth Q311-Q425, 83.5% ore recovery, 19.4% mining dilution, 0cpht dilution grade, January 1 2012 effective date for NPV and IRR calculation. Renard 4 53/44cpht Renard 2 Renard 9 Long Term Plan 47cpht 103/118cpht (Basis of December 2011 ESIA) 24 mcarat Indicated Mineral Resource Includes the mining of the 17mcarat Inferred Resources within the scope of the Feasibility Study mine infrastructure: Extended mine life, increased 17 mcarat Inferred Mineral Resource annual production, increased project valuation 24-49 mcarat Exploration UpsideNotes: 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 DefinitionStandards 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 ExplorationTarget (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.
  • 7Establishing the Geological ModelRenard 3 as an Example Renard 10 Understanding a kimberlite’s geology is key toN developing a robust diamond resource Renard Geological Data: Renard 7 250 m • 88,585m of core drilling from surface Kimberlite • 2,382 m of underground drilling Kimberlite affected • 6,151m of reverse circulation (RC) drilling Country Rock Renard 1 • 780 m of underground drifting (200 m in kimberlite) • +2,000 petrographic thin sections Renard 65 0.3ha N Renard 4 Renard 8 Renard 9 Renard 3 Renard 2 Renard 3
  • 8 Establishing the Geological Model “Transitional” Kimberlites with TK, HKt/TKt, HK units Renard 3 0m N x x o x x100m x o 2 mm x x200m o o o Xenolith % Olivine x Magmaclasts 2 mm300m & Reaction % o 55-75 Low 10-20 Abundant TK o x 20-50 o Moderate 15-50 Occasional HKt/TKt400m o o 0-25 High 35-50 Absent HK o 2 mm455m
  • 9 Establishing the Geological Model Multiple Units Representing Multiple Venting Events Renard 3 0m R3 has 5 main phases of kimberlite N 7 2 3 4 5 6 1 FCR 3 2 CRB100m 3 TK 4 TKt / HKt 5 HKt 4 6 7 HK200m 1 5 Sharp Contacts (here in R2 U/G Drift) TK TKt/HKt 6300m 7 Additional late HK dykes 5 cm400m455m 8
  • 10 Establishing the Geological Model Each Unit Carries a Distinct Grade Renard 3 0m Nunderground drift Bulk Sample Grades shown in Carats per100m Hundred Tonnes (cpht)200m300m400m455m View looking North
  • 11 Establishing the Geological Model Drilling Renard 2 & 3 at Depth (2009) 2008 model2008 Model 0m Renard 2 Renard 3 Renard 2 and 3 predominantly TK type Renard 2 simpler internal geology 100m Deep diatreme to root zone 200m Deep drilling required 300m 400m 500m 600m 710m View looking North
  • 12 Establishing the Geological Model Drilling Renard 2 & 3 at Depth (2009) 2010 (and current) modelAfter 2009 Drill Program 0m Renard 2 Renard 3 Renard 2 and 3 transitional TKt to HKt/TKt type 100m Renard 2 volume quadrupled to 710m depth 200m Renard 3 volume doubled to 450m depth Appreciation of affected country rock 300m (CCR/CRB) in emplacement model 400mConfidence in the Model During the 2009 drill program, Stornoway updated the R2 and R3 geological 500m models dynamically with each drill hole completed. 600m Ultimately, drill intersected contacts were being predicted within 5m. 710m View looking North
  • 13 Establishing the Geological Model Drilling Renard 2 & 3 at Depth (2009) 2010 (and current) modelAfter 2009 Drill Program 0m Renard 2 Renard 3 Renard 2 and 3 transitional TKt to HKt/TKt type 100m Renard 2 volume quadrupled to 710m depth 200m Renard 3 volume doubled to 450m depth Appreciation of affected country rock 300m (CCR/CRB) in emplacement model 400mConfidence in the Model During the 2009 drill program, Stornoway updated the R2 and R3 geological 500m models dynamically with each drill hole completed. 600m Ultimately, drill intersected contacts were being predicted within 5m. 710m View looking North
  • 14Establishing Diamond GradeSuccessive Diamond Sampling Campaigns 2002-2010 Renard Diamond Sampling Data: • 4,563 tonnes of underground bulk samples • 3,520 tonnes of surface trench bulk samples • 903 tonnes of RC chip samples • 154 tonnes of drill core samples • 9,212 carats of macrodiamonds (+1 DTC) from DMS work • 16.4 tonnes of samples submitted for microdiamond analysis • Diamond valuation exercises in 2005, 2007, 2008, 2009 and 2011 Bulk Sample Dense Media Separation (DMS) Plant Surface Sample Renard 4 Underground Sampling
  • 15Establishing Diamond Grade at Renard The Renard diamond grade estimation methodology starts from the geology: In HKt/TKt (“Transitional”) Kimberlites the following paradigms apply: • The diamond population within the ore has not been sorted. • Each lithological unit should show continuity of diamond grade and size distribution (“SFD”). Grade in the Renard kimberlites is therefore a combination of: • Pure (undliluted) grade of the lithological unit. • The degree of dilution (eg country rock xenoliths) in the ore Grade models derived this way are Testable • Test for grade and SFD continuity by sampling with microdiamonds across the breadth of the ore body. • Test accuracy of grade block model by using it to back-calculate sample results from RC drilling and bulk sampling.
  • 16Diamond Grade Models Diamond grade models were created for each Renard lithology from the totality of all micro and macro diamond data (Renard 2 Kimb2a or “Blue” illustrated) Grade models are adjusted (reduced) for the expected non-recovery of small diamonds in a commercial process plant Micros and Macros Recovered fromSpht_ui Stones per Tonne per Caustic Dissolution of Drill Core Unit Interval (sptpui) 10 Commercial Sized Stones Recovered 8 from RC and Bulk Sampling Log Stone Freq 6 Quadratic Best Fit Macro 4 after Chapman and Boxer (2004) Micro 2 Kimb2a Kimb2a Model 0 83cpht -2 -5 -4 -3 -2 -1 0 1 Unadjusted grade log MSS Adjusted grade: after non-recovery of small stones
  • 17Dilution Models Dilution data from drill core was measured using: • ‘modal’ visual estimates of dilution over 3m core intervals • ‘line scan’ observations measuring dilution per metre of core in quantitative and consistent manner. A block model of dilution was created and each block coded by lithology. Input of pure grade model for each lithology derived a grade block model. The grade model can be used to successfully back-calculate RC and bulk sample grades. Provides the required +/-15% grade confidence for the Indicated Mineral Resource. Renard 2 Dilution Model
  • 18Grade Continuity in Renard KimberlitesMicro-diamond samples from across the breadthof Renard 2 (Kimb2b or “Brown” illustrated)demonstrate continuity of grade and sizedistribution at: • 50m depth slices (“A”); • Across N-E-S-W quadrants (“B”); and • Across the whole breadth of the ore body (“C”)This confidence allows the Renard 2 IndicatedResource to be extended to 600m depth, belowthe level of RC drilling and bulk sampling. C
  • Renard’s Diamonds 19Valuation 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 stones. 99% by weight gem/near-gem quality. 1% industrial quality boart. Coarse size distribution: potential for significant “Specials”, not accounted for in the current resource work. (Three to six 50-100ct stones and one to two +100ct stones every 100,000 carats.) Renard 3 Bulk Sample Stones larger than 2 carats. “Run of Mine” Size of Largest May 2011 Kimberlite Valuation Diamonds Diamond Sensitivities Body Sample Recovered Price (Minimum to High) (carats) (carats) (US$/carat)1 Renard 2 1,580 15.46, 8.80, 8.42 $163 to $236 Renard 3 2,753 10.15, 7.78, 6.36 $182 $153 to $205 Renard 4 2,674 5.92, 5.74, 3.99 $1122 $105 to $185 Lynx Dyke 535 21.53, 5.36, 5.34 $119 $99 to $144 Hibou Dyke 772 3.14, 3.07, 2.72 $118 $88 to $1361Based on an average of five independent valuations conducted between May 9 th and 13th 2011, and supervised byWWW International Diamond Consultants Limited.2 The Renard NI 43-101 compliant Mineral Resource of January 2011 and the Feasibility Study of November 2011utilize a higher diamond price based on an analysis of diamond breakage and poor plant recovery of the Renard 4valuation sample, which is $164/carat. All samples utilize a +0.85mm (+1 DTC) cutoff
  • Renard’s Resource Upside 20 A Project with a Long Resource Tail and Very Long Mine Life Potential Renard 65 Millions 0m 29cpht Renard 3 of Tonnes Exploration Target High Range 106/118cpht 140 Exploration Target Low Range100m Inferred Resource200m 120 Probable Reserve300m 100400m The Vision: Deposit still 80 Open500m600m 60710m Permitting and Long Term Business Plan 40 Renard 4 53/44cpht Renard 2 Renard 9 103/118cpht 47cpht 20 The Feasibility: 11 years of mining 24 mcarat Indicated Mineral Resource 0 17 mcarat Inferred Mineral Resource 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 24-49 mcarat Exploration Upside 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.
  • 21Renard is Continuing to GrowRenard 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 Resources to Reserve. Renard 65 currently contains: • 3.7 mcarats of Inferred Mineral Resources (12.9mtonnes at 29 carats per hundred tonnes) • 6.8 to 13.7 mcarats of Exploration Target (29.5 to 41.6 Renard 4 mtonnes at 23 to 33 cpht) Renard 9 Renard 2 Renard 65 has a good potential to return large diamonds. A 4 carat, top quality diamond Results are expected in Q1 2013 recovered from Renard 65 drillcore R65 Pit on September 2nd
  • 22General Project ArrangementSmall 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
  • 23Acknowledgements Stornoway • Robin Hopkins • John Armstrong • Isabelle Lepine • Colleen Laroulandie • Cathy Fitzgerald (now Peregrine) Geostrat Inc. • David Farrow • Darrell Farrow Mineral Services Inc. • Casey Hetman (now Northern Superior) Scott-Smith Petrology Inc. • Barbara Scott Smith WWW International Diamond Consultants Galaxy Diamond Experts SA
  • 24Renard: Québec’s First Diamond Mine