Renard Diamond Mine Financing Presentation


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Renard Diamond Mine Financing Presentation

  1. 1. BUILDING QUÉBEC’S FIRST DIAMOND MINE Announcing C$944 Million Financing Package to Fully-Fund the Renard Diamond Project to Production April 9th, 2014 Matt Manson President, CEO & Director Orin Baranowsky Director of Investor Relations A preliminary prospectus containing important information relating to the securities described in this document has been filed with the securities regulatory authorities in each of the provinces of Canada. A copy of the preliminary prospectus, and any amendment, is required to be delivered with this document. The preliminary prospectus is still subject to completion. There will not be any sale or any acceptance of an offer to buy the securities until a receipt for the final prospectus has been issued. This document does not provide full disclosure of all material facts relating to the securities offered. Investors should read the preliminary prospectus, the final prospectus and any amendment for disclosure of those facts, especially risk factors relating to the securities offered, before making an investment decision.
  2. 2. 2 Forward-Looking Information and Other Disclaimers 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. These forward looking statements and information, 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 2011 Feasibility Study or the 2013 Optimization Study; (v) assumptions relating to gross revenues, operating cash flow and other revenue metrics set out in the 2011 Feasibility Study or the 2013 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; (x) the economic benefits of using liquefied natural gas rather than diesel for power generation; and (xi) 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”, “schedule” 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 by Stornoway and its consultants 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 assumptions by Stornoway or its consultants in making 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 relating to the financing transactions 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 Diamond Project’s value; (vii) the Corporation’s ability to raise the required capital to construct a mine at the Renard Diamond Project; and (viii) future exploration plans and objectives.
  3. 3. 3 Forward-Looking Information and Other Disclaimers (contd) We caution readers not to place undue reliance on these forward-looking statements as a number of important risk factors could cause the actual outcomes, results, performances or achievements to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates, assumptions and intentions expressed in such forward-looking statements, including, but not limited to: (i) increases in the costs of proposed capital and operating expenditures; (ii) increases in financing costs or adverse changes to the terms of available financing, (iii) tax rates or royalties being greater than assumed; (iv) results of exploration in areas of potential expansion of resources; (v) changes in development or mining plans due to changes in other factors or exploration results of Stornoway; (vi) changes in project parameters as plans continue to be refined and the potential impact on the Renard Project’s value; xiii) the ability of the Corporation to conclude definitive agreements with the financing parties and close the recently announced financing transactions. Additional risk factors are discussed in the section “Description of the Business — Risk Factors” of the Corporation’s most recently filed Annual Information Form and in the section “Risks and Uncertainties” of the Corporation’s most recently filed Interim Management’s Discussion and Analysis available under the Corporation’s profile at: 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 as of February 28th, 2013 entitled “The Renard Diamond Project, Quebec, Canada, Feasibility Study Update, NI 43-101 Technical Report, February 28, 2013” in respect of the January 2013 Optimization Study, and the press release dated July 23, 2013 in respect of the July 2013 Mineral Resource estimate for further details and assumptions relating to the project. The Qualified Persons that prepared the technical reports and press releases that form the basis for the presentation are listed in the Company’s AIF dated July 25, 2013. Disclosure of a scientific or technical nature in this presentation has been reviewed and approved by Robin Hopkins, P.Geol. (NT/NU), Vice President, Exploration, a “qualified person” under NI 43-101. The Financing Transactions described in this presentation are intended to provide a comprehensive financing package for the construction of the Renard Diamond Project and, as such, the completion, effectiveness or availability, as the case may require, of each of the Financing Transactions is conditioned on the completion (excluding the equipment facility), effectiveness or availability, as the case may require, of each of the other Financing Transactions. An investment in Subscription Receipts involves a high degree of risk and must be considered speculative due to the nature of Stornoway’s business and the present stage of exploration and development of its mineral properties. Prospective investors should carefully consider the risk factors described in and incorporated by reference into the preliminary prospectus, including the “Forward-Looking Statements” and “Risk Factors” sections thereof. Prospective investors should be aware that the purchase of Subscription Receipts may have tax consequences. The preliminary prospectus may not describe these tax consequences fully. Prospective investors should read the tax discussion in the preliminary prospectus, including the “Canadian Federal Income Tax Considerations” section thereof, and should consult with a tax advisor. The potential quantity and grade of any Target for Further Exploration (“TFFE”) was defined on the basis of geological modelling, outcrop mapping, limited delineation drilling, surface sampling and projecting kimberlite volumes from the base of the Inferred Mineral Resource to a depth of approximately 775m below surface, representing the base of current drilling as established at the Renard 4 deposit.
  4. 4. 4 Summary of the Transaction The Renard Diamond Project is Permitted and Ready to Build Stornoway is Now Pleased to Announce a C$944 Million Financing Agreement to Fully Fund the Project to Production Highlights of the Transaction: One-shot financing of all project costs, contingencies, working capital requirements and financing costs. Largest single project financing transaction for a publically listed diamond company. Careful balance of stream, debt and equity to maximize shareholder value growth from project development. Sponsors: • Orion Mine Finance • Investissement Québec/Ressources Québec • Caisse de dépôt et placement du Québec
  5. 5. 5 Transaction Structure Type Amount (% of Total) Description Common Equity C$427M (45%) • C$184M marketed public equity offering of subscription receipts • C$243M private placement to Orion (US$110M), RQ (C$100M) and Caisse (C$22M) Diamond Stream US$250M (29%) • 20% diamond stream (Orion 16%, Caisse 4%) with ~US$56/ct(1) ongoing payment Convertible Debentures US$50M (6%) • Provided by Orion; 7 year, 6.25% coupon, 35% conversion premium to equity issue price Senior Debt C$100M (11%) • Provided by IQ; 7 year amortizing payment, Fixed (QC Bond)+5.75% or Prime +4.75% Equipment Financing US$35M (4%) • Provided by Caterpillar Cost Overrun Facility C$48M (5%) • C$20M provided by IQ (same terms as senior debt) • C$28M provided by Caisse (unsecured, 7 year term, 10% coupon) Total C$944M (100%) Assumes US$1.00 = C$1.10 1. Includes reimbursement of marketing expenses Counter-Party Amount (% of Total) Orion Mine Finance C$396M (42%) Investissement Québec/ Ressources Québec C$220M (23%) Caisse de dépôt et placement du Québec C$105M (11%) Caterpillar Financial C$39M (4%) Public C$184M (20%) Total C$944M (100%) C$87M C$811M C$944M C$70M C$69M Financing Funding Requirements New Financing Existing Financing C$48M COF & C$33M Working Capital Financing Costs & Interest During Construction Renard Mine Road Initial Capex & Escalation Allowance
  6. 6. 6 World’s First Diamond Streaming Agreement Why a Stream? Project Cash Operating Margin (Reserve Case, Nominal Terms) The Renard Diamond Project is ideally suited for a streaming arrangement: the project has a high operating margin and its capital requirements are front-ended. The proposed stream-debt-equity financing structure minimizes shareholder dilution and is accretive to Stornoway’s NAV per share. US$250m for a 20% stream represents 34% of the Renard Diamond Project’s initial capital cost and 29% of the overall financing plan. 67.2% 2013 Optimization Study ` 20% Stream -6.6% +2.6% +3.8% -2.1% Current Reserve Case Mine Plan October 2013 LNG Operating Case Exchange Rate Diamond Price Assumptions1 64.9% Notes: 1. The January 2013 Optimized FS utilized May 2011 diamond pricing
  7. 7. 7 Recent Comparative Project Financing Transactions1 Redacted fr In accordance with Subsection 13.7(4)(b) of Regulation 41-101 respecting General Prospectus Requirements, certain comparables and related disclosure were removed om this template version of the presentation.
  8. 8. 8 Transaction Schedule Date Description April 9 • Launch of marketed Public Equity Offering via Subscription Receipts April 10 – May 1 • Marketing for the Public Equity Offering End of April/Early May • Pricing and close of Public Equity Offering and release of funds to an escrow account End of April/Early May • Management information circular mailed to Stornoway shareholders End of May • Special meeting of Stornoway shareholders June 1 • Release of proceeds and issuance of common shares to holders of Subscription Receipts • Execution of definitive documentations for all Financing Transactions
  9. 9. 9 Current Major Shareholdings Share Price (TSX-SWY): April 8, 2014 C$ $0.99 52 week High-Low C$ $0.49–$1.22 Average Daily Volume: 6 month average 164,800 Market Capitalization: (based on voting and non-voting shares) C$ 174 million Total Shares Outstanding: (Basic and Non-voting convertible shares) 175 million Total Options & Warrants Outstanding: (7.7m Options $0.40-$2.39; 18.1m warrants $0.95-$1.21) 26 million Consolidated Cash: (as of January 31, 2014) C$ 21 million Consolidated Debt: ($100m Standby Facility with IQ undrawn) C$ 66 million Reserve Case Project NPV1: (January 2013 Optimized Feasibility Study) US$ 391 million Reserve Case P/NPV: (January 2013 Optimized Feasibility Study) 0.51x Balance Sheet Pre-Transaction Capital Structure Notes 1. 7% NPV as of Jan 1st 2013 2 Year Share Performance IQ (common shares, plus non- voting convertible shares) 23.1% 33.0% Agnico-Eagle 9.7% 8.4% Float 67.2% 58.6% DilutedBasic
  10. 10. 10 Merits of the Transaction Stornoway’s Proposed C$944 Million Project Financing Agreement for Renard Provides Both New and Existing Shareholders the Following Opportunities: Fully funds Renard to production: clear view for shareholders through to project completion. Addresses Stornoway financing needs and unlocks project value. Allows company valuation re-rating from explorer/developer to producer. Includes a cost over-run facility (COF) and covers all expected financing costs and working capital requirements. Minimizes potential shareholder dilution compared to all-equity or debt+equity+equity COF structures, yielding higher potential NAV per share. Fair for shareholders: shareholders get to vote, private and public equity to be priced equally.
  11. 11. 1111 Québec’s First Diamond Mine
  12. 12. 12 Lynx R10 N R7 R1Hibou R4 R9 R2 R3 R65 R8 Kimberlite Bodies with Probable Mineral Reserves Hibou Lynx R4 R9 R2 R3 R65 Kimberlite Bodies with Mineral 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 LG3LG2 LG4 Laforge 1 Laforge 2 Brisay Foxtrot Property Strateco Eastmain MineWestern Troy Troilus Mine Eleonore Temiscamie Mistissini Chibougamau Matagami Wemindji Renard Kimberlite Bodies Kimberlite Bodies with Inferred Mineral Resources
  13. 13. 13 The Feasibility: 11 years of mining on 18mcarat Mineral Reserve (24mtonnes) Permitting and Long Term Plan The Vision: Deposit still Open 40 60 80 100 120 140 Millions of Tonnes 20 0 TFFE High Range Inferred Mineral Resource TFFE Low Range Indicated 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 and grade of any TFFE is conceptual in nature, and it is uncertain if further exploration will result in the target being delineated as a mineral resource. Renard’s Mineral Resource Potential Based on 2013 Mineral Resource Estimate 0m 100m 200m 400m 600m 700m 500m 300m Renard 65 29/24cpht Renard 3 103/112cpht Renard 2 104/119cpht Renard 9 53cpht Renard 4 60/50cpht 27 mcarat Indicated Mineral Resource 17 mcarat Inferred Mineral Resource 26-48 mcarat TFFE Source: Stornoway, 2014
  14. 14. Mineral Reserve Based Mine Plan 2013 Optimization Study 0m 100m 200m 400m 600m 700m 500m 300m Notes 1. 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. 2. Expressed in May 2011 terms. 3. Expressed in October 2012 terms, as adjusted in 2013 LNG Study capex would be $754m and operating costs would be $54/t or $71/ct. 4. Actual. 5. Excludes capitalized preproduction costs. 6. Expressed in de-escalated nominal terms. Reserve Based Mine Plan1 (2013 Optimization Study using Parity Dollar and May 2011 Diamond Pricing) Mining Parameters Mine Life 11 years Mineral Reserve 17.9 mcarats Avg. Diamond Price2 $180/carat Production Rate 2.2 mtonnes/yr Ave. Diamond Production 1.6 mcarats/yr Gross Revenue (C$M) $4,268 Initial Capital Costs Initial Cap-ex3 $752m Escalation Allowance $45m Renard Mine Road4 $70m Operating Parameters Operating Cost3,5 $58/t ($76/carat) Operating Margin 67% Operating Cash Flow $2.7B Valuation Parameters6 After Tax NPV (7%; Jan 1 2013) $391m After Tax IRR 16.3% Payback 4.8 years Renard 65 Renard 2 Renard 3 Renard 4 14 Source: Stornoway, 2014
  15. 15. 15 Mineral Resource Based Mine Plan Long Term Plan: Foundation of Permitting and ESIA 0m 100m 200m 400m 600m 700m 500m 300m Renard 65 Renard 2 Renard 3 Renard 4 Renard 9 27 mcarat Indicated Mineral Resource 17 mcarat Inferred Mineral Resource 26-48 mcarat TFFE Mineral Resource Based Mine Plan (Basis of December 2012 ESIA and Mine Permitting) An Extended Mine-Life Operating Plan Includes 2.3mcarat of Indicated Resources within the Renard 65 open pit, up to 17 mcarats of Inferred Mineral Resources within Renard 2, 3, 4 & 9, and an increase in annual ore processing to 2.5mtonnes/yr. Represents the mine plan contained within the December 2012 ESIA and Renard’s operating authorizations but does not form part of the 2013 Optimization Study consistent with NI 43-101. 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 Target for Further Exploration (“TFFE”) is conceptual in nature, and it is uncertain if further exploration will result in the target being delineated as a mineral resource. The Renard 2013 Optimization Study Does Not Include: 1. The potential for extending mine life from additional Mineral Resources and exploration targets at depth. 2. The potential positive impact on price from large diamonds. 3. Volume upside from additional plant processing capacity. Source: Stornoway, 2014
  16. 16. 16 What has Changed Since the 2013 Optimization Study? 0m 100m 200m 400m 600m 700m 500m 300m Renard 65 Renard 2 Renard 3 Renard 4 Renard 9 27 mcarat Indicated Mineral Resource 17 mcarat Inferred Mineral Resource 26-48 mcarat TFFE 14% Increase in Indicated Mineral Resources July 2013: Additional 2.3Mcarats at Renard 65 (7.9 Mtonnes at 29cpht), open pittable to 150m depth. 7% Reduction in Op-ex with LNG Option October 2013: Annual op-ex reduction of up to $10m using LNG for power generation, with incremental cap- ex increase of just $2.6m. 10% Improvement in C$:US$ Exchange 90% of Project Capex is C$ denominated. The 2013 Optimization Study assumed a parity dollar. Current C$1.10:US$ rate boosts margins and increases NPV. Sustained Recovery in Diamond Prices March 2014: Revised estimates of US$197/ct for R2; US$187/ct for R65, a market increase of 4% since March 2013 and within 2% of May 2011 dated assumptions in the 2011 Feasibility Study and 2013 Optimization Study. 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 Target for Further Exploration (“TFFE”) is conceptual in nature, and it is uncertain if further exploration will result in the target being delineated as a mineral resource. Source: Stornoway, 2014
  17. 17. 17 Stornoway will be a Significant Diamond Producer Current and Future Diamond Producers Source: Kimberly process and Company Reports Redacted fr In accordance with Subsection 13.7(4)(b) of Regulation 41-101 respecting General Prospectus Requirements, certain comparables and related disclosure were removed om this template version of the presentation.
  18. 18. 1818 Project Execution
  19. 19. 19 Waste Rock Processed Kimberlite Containment (PKC) Overburden Stockpile R2-R3 Ore Stockpile R65 Camp Plant Road from Chibougamau General Project Arrangement
  20. 20. 20 Project Execution Accommodation Complex Process and Power Plants Access Infrastructure Pre-Financed and Already Constructed Renard Mine Road open to traffic since August 30th 2013. Aerodrome open since November 5th 2013. Favourable Cost and Labour Environment Limited amount of recent mine construction activity in Québec means competitive cost environment and good contractor/labour availability. Owner’s Team and EPCM Contract in Place Montreal based owner’s team in place for planning, engineering, environment, stakeholder relations and cost management. Stornoway will also enter into an EPCM agreement with SNC-Lavalin & AMEC. LNG Power Option Completed for Reduced Operating Cost Risk LNG power option utilizes all-season access road and existing commercial LNG distribution network in Québec.
  21. 21. 21 Permitting and Social Acceptability Strong 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. 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.
  22. 22. 22 The Route 167 Extension and the Renard Mine Road The Only Canadian Diamond Mine with an All-Season Access Road 50 km Renard Diamond Project Explor./Mining Projects Stornoway Properties Albanel-Témiscamie- Otish Par Segment A: 0-82km Segment B: 82-143km Segment C: 143-195km Segment D: 195-240km Legend Renard WesternTroy Eastmain Abitex Strateco Mistissini Lac Mistassini Lac Naococane Lac Hecla Lac Albanel Km 0 Km82 Km240 Km195 Km143 Construction of an all-season access road connecting Renard to the Québec highway system began in Feb. 2012. Road segments A & B (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”. All 4 segments were connected and opened for mine construction traffic on August 30th 2013, 2 months ahead of schedule and approximately 10% below budget. To complete this work, Québec provided Stornoway $77m of debt financing, repayable upon commercial production at Renard. Stornoway has been able to apply $7m of debt savings to complete the civil works for the Renard Mine Airport. Segments C & D Stornoway 97km of Mine Road (50km/hr) Segments A & B Min. of Transport 143km of Regional Highway (70km/hr) Road Link-Up August 30th 2013 Transportation of Pre- Fabricated Temporary Bridge Spans March 2013
  23. 23. 23 Views of the Road KM 210 KM 237 KM 155
  24. 24. 24 Eastmain River Bridge KM 184 KM 184
  25. 25. 25 Renard Mine Airport The Renard Mine Airport is located 8 km south of the project site. Certification will be sought from 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 Civil works completed: First landing Nov 2013. Renard Diamond Project Site Oct 2013 Nov 2013 Sept 2013
  26. 26. 26 Liquefied 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 2013 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.
  27. 27. 27 Liquefied Natural Gas Power Plant Feasibility 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 $2.6m. • Up to 43% less greenhouse gas emissions. • Long term, stable supply market utilizing existing commercial distribution network within Québec. • Elimination of on-site propane, as LNG will be used for building and underground mine heating. Diesel will continue to be used for the mobile mining fleet and construction activities Cost Improvements with LNG 2013 Optimization Study with Diesel 2013 Optimization Study with LNG Unit Power Cost (C$/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. 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 2013 Optimization Study, with a normal operating load of 9.49MW, C$1=US$1, Oil US$95/barrel
  28. 28. 28 Site Progress October 2013 R65 Borrow Pit Tree Clearing Bulk Sample DMS Plant Construction Camp Renard Mine Road R65 R2 R9 R4
  29. 29. 29 Project Schedule Revised March 2014 on Basis of Renard Diamond Project Financing Schedule Feasibility Study (Complete) ESIA (Complete) Public Hearings (Complete) Reg. Authorizations (Complete) Specific Operating Permits (50) Detailed Engineering Project Financing Road Construction Site Construction Commissioning and Ramp-up Commercial Production 2012 2H 2H 2H 2H2H 1H 1H 1H1H 2013 2014 2015 2016 2H1H 2017 First Vehicle Access Based on the Renard Diamond Project Financing Schedule, Plant Commissioning is Planned for Q3 2016 and Commercial Production in Q2 2017.
  30. 30. 3030 Project Potential
  31. 31. 31 490 m asl -275 m asl 0 m 790 m Indicated Mineral Resource Legend Inferred Mineral Resource Low Range TFFE High Range TFFE Ongoing Mineral Resource Expansion $10m Deep Resource Conversion Drill Program to Begin in April 2014 Renard 2 Renard 3 Renard 4 Renard 65 Renard 9 1. Conversion of Renard 65 Inferred Mineral Resources to Indicated to 150m depth (July 2013: Completed) 2. Addition of Renard 2 Country Rock Breccia to both Indicated and Inferred Mineral Resources (July 2013: Completed) 3. Targeting conversion of high grade Renard 2 Inferred Mineral Resources to Indicated (6.2 Mcarats in 5.23 Mtonnes) and targeting an additional 4.2 to 7.3 Mcarats of exploration upside between 700m and 770m depth. Open below 770m. (2014 Drill Program) 1 2 3 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 TFFE is conceptual in nature, and it is uncertain if further exploration will result in the target being delineated as a mineral resource.
  32. 32. 32 Renard’s High Value Diamonds Large Diamond Potential Not Included in Base Case Diamond Valuation Models 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: 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. The 2013 Optimization Study assumed an average diamond valuation of US$180/ct (calculated on an un-escalated basis) based on May 2011 prices. The current estimate of average diamond value, as of March 2014, is US$190/carat (un-escalated). March 2014 Diamond Valuations (WWW International Diamond Consultants Ltd.) Kimberlite Body Size of Valuation Sample (carats) WWW March 2014 Sample Price (US$/carat)1 WWW March 2014 Base Case Price Model (US$/carat)1 Sensitivities (Minimum to High) Renard 2 1,580 $187 $197 $178 to $222 Renard 3 2,753 $179 $157 $146 to $192 Renard 4 2,674 $101 $106 ($155)2 $100 to $174 Renard 65 997 $262 $187 $175 to $211 Notes 1. All prices in US$/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 $155 per carat based on March 2014 pricing. Source: WWW March 2014 Valuation Update Renard 3 Bulk Sample Stones larger than 2 carats. “Run of Mine”
  33. 33. 33 100 150 200 250 300 350 01/01/10 01/01/11 01/01/12 31/12/12 01/01/14 Indexto2009=100 WWW Rough Index, CPI Adjusted Renard Model Price Growth WWW R.I. CPI Adj Base Price May 2011 Mar 2013 +20% -10% +10% -20% Mar 2014 Rough Diamond Price Movements The Diamond Market, January 2010 to March 2014 A tracking of the diamond market since the publication of the 2011 Feasibility Study and 2013 Optimization Study indicates rough diamond prices have generally remained within the bounds of sensitivities contained within the financial model (May 2011 spot prices and a 2.5% real terms annual price escalator). May 2011 Valuation utilized in the 2011 Feasibility and 2013 Optimization Study based on the average of 5 diamantaires c.10% below the WWW rough index price
  34. 34. 34 Rough Diamond Supply Diamond Market Outlook Compelling Supply and Demand Fundamentals Rough Diamond Demand Rough diamond supply forecasting is robust given the small number of diamond producers worldwide and the difficulty in finding and bringing to production new deposits. Consensus is for a modest increase in supply to 2018 and a decline in supply thereafter. Demand growth forecasting is based upon applying regional diamond consumption habits to GDP growth forecasts. The August 2013 report issued by Bain & Co and the Antwerp World Diamonds Center forecasts a rough diamond supply CAGR of 2.0% and a rough diamond demand CAGR of 5.1%. The January 2013 Optimization Study contains a real diamond price CAGR of 2.5%, consistent with consensus forecasts. The actual rough diamond price CAGR has been 8.9% between October 2003 and March 2014 in nominal terms. Sources: WWW International Diamond Consultants Ltd.; The Global Diamond Report, August 2013: Bain & Co/Antwerp World Diamond Centre CAGR (2012-2023) 5.1% CAGR (2012-2023) 2.0%
  35. 35. 3535 Summary
  36. 36. 36 Stornoway Diamond Corporation TSX:SWY Mining Lease and Certificates of Authorization Issued Access infrastructure already completed: the only Canadian Diamond Mine with an all-season road. Strong Public Support in Québec; IBA in Place Excellent Diamond Supply & Demand Fundamentals Favourable Project Execution and Operating Environment Additional Potential from Mineral Resource, Diamond Pricing and Plant Capacity Not Incorporated in Reserve- Case Feasibility 100% ownership in the Renard Diamond Project, One of the World’s Few New Diamond Projects Under Development Permitted and Shovel-Ready Now, Announcing the World’s Largest Single Project Financing Transaction for a Publicly Listed Diamond Company to Fully- Fund the Project to Production.
  37. 37. 3737 Appendix: Investor Resources
  38. 38. 38 Hume Kyle Independent Zara Boldt CFO and VP Finance Pat Godin COO & Director Matt Manson President, CEO & Director Michel Blouin Independent/ IQ Designate Yves Harvey Independent John LeBoutillier Independent/ IQ Designate Monique Mercier Independent/ IQ Designate Peter Nixon Independent Ebe Scherkus Independent/ 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 Vézina Independent Yves Perron VP Engineering & Construction Ghislain Poirier VP Public Affairs Brian Glover VP Asset Protection Martin Boucher VP Sustainable Development Robin Hopkins VP Exploration Orin Baranowsky Director, IR Ian Holl VP Processing
  39. 39. 39 Pat Godin COO & Director Biographies Ebe Scherkus Chairman of the Board Matt Manson was appointed President of Stornoway Diamond Corporation in March 2007 and subsequently President & CEO in January 2009. Between 1999 and 2005 he was employed by Aber Diamond Corporation (now Dominion Diamond Corporation) as VP Marketing and subsequently VP Technical Services & Control, during which time he participated in the US$230m project financing for the Diavik Diamond Project and oversaw Aber's technical and marketing operations. Mr. Manson is a graduate of the University of Edinburgh (BSc Geophysics, 1987) and the University of Toronto (MSc Geology 1989 and PhD Geology, 1996), and has over 18 years of experience in diamond exploration, development and production. Pat Godin joined Stornoway as COO in May 2010. He was previously VP, Project Development for GMining Services, responsible for the development of the Essakane Mine in Burkina Faso under contract to IAMGOLD, VP Operations for Canadian Royalties, and President and General Manager of CBJ-CAIMAN S.A.S., a French subsidiary of Cambior / IAMGOLD. For many years, he was involved in Cambior’s various Canadian properties in Abitibi-Témiscamingue, through progressive management positions in project development and mine management. He holds a bachelor’s degree in mining engineering from Université Laval in Québec and is a member of the “Ordre des Ingénieurs du Québec”. He is the Chairman of the Board of Geomega Resources and a director of Orbit-Garant Drilling. Mr. Scherkus served as the President and Chief Operating Officer and a director of Agnico-Eagle from 2005 to February 2012. Prior to his appointment as President and Chief Operating Officer in December 2005, Mr. Scherkus served as Executive Vice-President and Chief Operating Officer from 1998 to 2005, as Vice- President, Operations from 1996 to 1998, as a manager of Agnico Eagle LaRonde Division from 1986 to 1996 and as a project manager from 1985 to 1986. Mr. Scherkus is a graduate of McGill University (B.Sc.), a member of the Association of Professional Engineers of Ontario and past president of the Québec Mining Association. He is Chairman of the Board of Premier Gold Mines Ltd. Matt Manson President, CEO & Director
  40. 40. 40 Stornoway Diamond Corporation TSX:SWY Head Office: 1111 Rue St. Charles Ouest, Longueuil, Québec J4K 5G4 Tel: +1 (450) 616-5555 Contacts: Matt Manson PhD, President and CEO Tel: +1 (416) 304-1026 x101 Orin Baranowsky CFA, Director IR Tel: +1 (416) 304-1026 x103