BUILDING QUÉBEC’S FIRST DIAMOND MINE
Update December 3rd, 2013

Matt Manson

Orin Baranowsky

President, CEO & Director

D...
2

Forward-Looking Information
This presentation contains "forward-looking information" within the meaning of Canadian sec...
3

Stornoway Diamond Corporation TSX:SWY
100% Ownership in Renard, Québec’s First
Diamond Mine
One of the World’s Few New ...
4

Stornoway’s Board and Management Team
Executive Officers
Head Office: Longueuil, Québec
Exploration Office: North Vanco...
5

Stornoway’s Platform for Project Development and Financing
BALANCE SHEET*
Market Capitalization: Update
(based on votin...
6

Towards Québec’s First Diamond Mine
7

Renard Kimberlite Bodies
0

1

2

Kilometers

N
60

0

60

120

Kilometers

Laforge 2
Laforge 1

R10
LG2

R7
Hibou

LG3...
8

Key Project Parameters
Reserve Based Mine Plan
(Feasibility Study Nov. 2011, Optimization Jan. 2013)

Mine Life
Mineral...
9

What has Changed Since the January 2013 Optimization Study?
14% Increase in Indicated Resources

Renard 65
29/24cpht

0...
Renard’s Resource Upside

10

A Project with a Long Resource Tail and Very Long Mine Life Potential

0m

Renard 65
29/24cp...
11

Mineral Resource Continuing to Grow
July 2013: 14% Increase in Indicated Mineral Resources
Renard 65
Renard 3

Stornow...
12

Resource Expansion
Targets for Resource Expansion in 2013 and Beyond
Renard 3

Renard 2

490 m
asl

Renard 4

Renard 6...
13

Mine Plan
A Combined Open Pit and Underground Mine
Renard 65

Open Pit Mining
(years 1-2).
Underground Mining
(years 3...
14

General Project Arrangement
Small Project Footprint of 3.1km2, Modest Environmental Impact

Processed Kimberlite
Conta...
15

Mine Plan Production Schedule and Cash Flow
(Mineral Reserves Only)
Open Pit & Underground Mining

Ore Tonnage (t)

2,...
16

Stornoway will be a Significant Diamond Producer
Current and Future Diamond Producers

2012 World Diamond Production D...
Renard’s Diamonds

17

Recent Valuation Conducted by WWW International Diamond Consultants Ltd. March 2013
The Renard kimb...
Permitting and Social Acceptability
Strong Regulatory and Public Support for Québec’s First Diamond Mine
Social Licence
Ma...
19

Project Schedule
January 2013 Optimization Study

2011
2H

2013

2012
1H

2H

1H

2H

2014
1H

2H

2016

2015
1H

2H

...
20

The Route 167 Extension and the Renard Mine Road
A Canadian Diamond Project with Road Access Opened Ahead of Schedule
...
21

Stages of Road Construction

“Slashing” or Tree Clearing

Preparation of Road
Foundation

Grading

Bridges or Culverts...
22

Views of the Road
KM 210

KM 155

KM 237
23

Renard Aerodrome
Renard Project Site

The Renard Aerodrome will be located 8 km south of
the project site.
The airstri...
24

Aerodrome Progress
October 2013

First Landing: November 5th

Tree Cutting Area

Runway
Centerline
25

Site Progress
October 2013

Renard Mine Road
Bulk Sample
DMS Plant
Tree Clearing
R9

R2

R4
Construction Camp
R65

R65...
Liquefied Natural Gas Power Plant
Feasibility Study Released October 2013
With a view to project optimization,
Stornoway h...
27

Liquefied Natural Gas Power Plant
Feasibility Study Released October 2013
An LNG fuelled powerplant for Renard offers ...
28

Québec’s First Diamond Mine – Ready to Build
Project Green-lighted: Authorizations Issued
Community Agreements in Plac...
29

Appendix 1: NI 43-101 Mineral Reserves and Mineral Resources
30

NI 43-101 Probable Mineral Reserves
Updated January 28th 2013

Mining Recovery Factors Utilized in the Reserve
Calcula...
31

Renard NI 43-101 Mineral Resources
Published July 23rd 2013. Changes to January 2011 Mineral Resource in Italics
Grade...
32

Target for Further Exploration
Published July 23rd 2013. Changes to January 2011 Estimates in Italics

Grade

Renard 2...
33

Renard Resource Upside
Inferred Resources and TFFE Not in Reserve Case Mine Plan

Renard’s Inferred Resources and
TFFE...
34

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 Decemb...
36

Optimization Study Financial Analysis
Project Assumptions, Valuation and Pay-Back
Key Assumptions in the Financial Mod...
37

Optimization Study Financial Analysis
Capital Costs
Capital Costs1 (C$m)
Site Preparation & General
Mining

$151.2

Mi...
38

Optimization Study Financial Analysis
Operating Costs
Open Pit Unit Costs1 $/tonne
Open Pit

21.22

Processing

15.29
...
39

Optimization Study Financial Analysis
Carat Production and Revenue
Production Parameters1 (Mcarats)

Diamond Productio...
40

Optimization Study Financial Analysis
Project Valuation Sensitivities
30.0%

Pre-Tax
IRR

1,200

Pre-Tax
NPV

25.0%

1...
Rough Diamond Price Movements
The Diamond Market, January 2010 to September 2013

May 2011 Valuation
utilized in the FS ba...
42

Appendix 3: Project Comparables
Diamond Industry Cost Curve
Source: Published FY2012 Results, FS Life of Reserve Data and Company Estimates
World Diamond ...
44

Project Comparables
Recent Canadian Diamond Mines Compared as of the Date of each FS

Ekati (1998)
BHPB, As Built
Esti...
45

Project Comparables
Recent Canadian Diamond Development Projects Compared as of the Date of each FS

Gahcho Kué FS (20...
46

Appendix 4: The Diamond Market
Major Diamond Mines and Development Projects Worldwide
Few Enough Mines to Fit on One Map
Canada
•

Ekati (BHPB)

•

Diavi...
The Rough Diamond Business in Context
1/8th the Size of the Copper Business

Source: USGS, LME, Kimberly Process

48
49

The Diamond Pipeline
An Industry with Many Intermediaries

Mine Production

Rough Trading and Diamond Polishing

Sourc...
50

Future Rough Diamond Supply
Almost all rough diamond production forecasts show flat or declining production long term....
51

Diamond Jewelry Demand is Forecast to Grow Dramatically
Share of World Diamond Jewelry Market, 2005 to 2020

2020F: $1...
Rough Diamond Supply and Demand Forecasts
An Example: Bain September 2013

Since 2012, Bain & Co in partnership with the
A...
53

Rough Diamond Pricing Since 2003
Rough and Polished Diamonds Against a Basket of Indicators, 2003- October 2013

Commo...
54
55

Stornoway Diamond Corporation TSX:SWY

Head Office:
1111 Rue St. Charles Ouest,
Longueuil, Québec J4K 4G4
Tel: +1 (450...
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Stornoway Diamond Corporation Corporate Update Presentation

  1. 1. BUILDING QUÉBEC’S FIRST DIAMOND MINE Update December 3rd, 2013 Matt Manson Orin Baranowsky President, CEO & Director Director of Investor Relations
  2. 2. 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 “forwardlooking 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.
  3. 3. 3 Stornoway Diamond Corporation TSX:SWY 100% Ownership in Renard, Québec’s First Diamond Mine One of the World’s Few New Diamond Projects Under Development 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 Focused on the Timely Completion of Final Project Financing
  4. 4. 4 Stornoway’s Board and Management Team Executive Officers Head Office: Longueuil, Québec Exploration Office: North Vancouver, BC Matt Manson President, CEO & Director Pat Godin COO & Director Community Offices: Mistissini & Chibougamau Québec Zara Boldt CFO and VP Finance Non-Executive Directors Ebe Scherkus Independent/ Board Chairman Michel Blouin Independent/ IQ Designate Yves Harvey Independent Hume Kyle Independent John LeBoutillier Independent/ IQ Designate Monique Mercier Independent/ IQ Designate Peter Nixon Independent Serge Vézina Independent Key Managers Ghislain Poirier VP Public Affairs Yves Perron VP Engineering & Construction Robin Hopkins VP Exploration Martin Boucher Brian Glover Guy Bourque VP Sustainable Development VP Asset Protection Chief Mining Engineer Helene Robitaille Mario Courchesne Orin Baranowsky Jean-Charles Dumont Freddie Mianscum Director, HR Construct. Manager Director, IR Corporate Controller IBA Implem. Officer
  5. 5. 5 Stornoway’s Platform for Project Development and Financing BALANCE SHEET* Market Capitalization: Update (based on voting and non-voting shares) C$ 163 million (Basic and Non-voting convertible shares) Total Options & Warrants Outstanding: Consolidated Debt: ($100m Standby Facility with IQ undrawn) MAJOR SHAREHOLDINGS* IQ** (common shares) (non-voting convertible shares) Agnico-Eagle Ed Sterck November 13th 2013 34 million (9m Options $0.40-$2.40; 25m warrants $1.20) (as of July 31, 2013) 12 MONTH ANALYST TARGETS BMO Total Shares Outstanding: Consolidated Cash: 139 million C$ C$ RBC na Buy $2.10 OutperformSpeculative Risk $1.20 Speculative Buy $1.70 Buy $2.00 OutperformSpeculative Risk $2.00 Laurentian 25 million Market Perform 39 million Eric Lemieux November 13th 2013 Des Kilalea, November 13th 2013 Desjardins Basic Fully Diluted John Hughes October 21st 2013 Paradigm 25.0% 35.4% David Davidson June 26th 2013 10.5% 9.0% National Bank Caisse de dépôt et placement du Québec 8.1% (est) 7.0% (est) Float 56.4% Paolo Lostritto December 11th 2012 48.6% 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
  6. 6. 6 Towards Québec’s First Diamond Mine
  7. 7. 7 Renard Kimberlite Bodies 0 1 2 Kilometers N 60 0 60 120 Kilometers Laforge 2 Laforge 1 R10 LG2 R7 Hibou LG3 Foxtrot Property R1 Wemindji Eleonore R65 R4 Renard Western Troy Eastmain Mine Strateco R8 R9 R2 Brisay LG4 Troilus Mine R3 Temiscamie Mistissini Lynx Matagami Kimberlite Bodies with Probable Reserves Kimberlite Bodies with Inferred Resources Kimberlite Bodies with Resource Potential LEGEND: Chibougamau 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
  8. 8. 8 Key Project Parameters Reserve Based Mine Plan (Feasibility Study Nov. 2011, Optimization Jan. 2013) Mine Life Mineral Reserve Initial Cap-ex Operating Cost Operating Margin Operating Cash Flow Average Diamond Price Average Diamond Production After Tax NPV (7%; Jan 1 2013) After Tax IRR Production Startup Renard 65 29/24cpht 0m 11 years 17.9 mcarats 100m $752m Renard 3 103/112cpht 200m $58/t ($76/carat) 67% $2.7B 300m 400m $180/carat 1.6 mcarats/yr $391m 16.3% December 2015 *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. 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 500m 600m 700m Renard 4 60/50cpht Renard 9 53cpht Renard 2 104/119cpht 27 mcarat Indicated Mineral Resource 17 mcarat Inferred Mineral Resource 26-48 mcarat Exploration Upside 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.
  9. 9. 9 What has Changed Since the January 2013 Optimization Study? 14% Increase in Indicated Resources Renard 65 29/24cpht 0m An additional 2.3Mcarats at Renard 65 (7.87 Mtonnes at 29cpht) amenable to open pit mining to 150m depth (July 2013). Renard 3 103/112cpht 100m 200m 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. 300m 400m 500m 600m 700m Renard 4 60/50cpht Renard 9 53cpht Renard 2 104/119cpht 27 mcarat Indicated Mineral Resource 17 mcarat Inferred Mineral Resource 26-48 mcarat Exploration Upside
  10. 10. Renard’s Resource Upside 10 A Project with a Long Resource Tail and Very Long Mine Life Potential 0m Renard 65 29/24cpht Millions Renard 3 of Tonnes 103/112cpht 140 Exploration Target High Range Exploration Target Low Range 100m Inferred Resource 120 200m Probable Reserve 300m 100 400m 80 500m The Vision: Deposit still Open 600m 60 700m 40 Renard 4 60/50cpht Renard 9 53cpht Renard 2 104/119cpht 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. 20 Permitting and Long Term Business Plan The Feasibility: 11 years of mining 0 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.
  11. 11. 11 Mineral Resource Continuing to Grow July 2013: 14% Increase in Indicated Mineral Resources Renard 65 Renard 3 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. 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 4 Renard 9 Renard 2 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
  12. 12. 12 Resource Expansion Targets for Resource Expansion in 2013 and Beyond Renard 3 Renard 2 490 m asl Renard 4 Renard 65 Renard 9 0 m 1 2 3 790 m -275 m asl Legend 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) Indicated Resource Inferred Resource Inferred Resource of R2 CRB Low TFFE High TFFE
  13. 13. 13 Mine Plan A Combined Open Pit and Underground Mine Renard 65 Open Pit Mining (years 1-2). Underground Mining (years 3-11). Underground method: Blast Hole Shrinkage, Panel Retreat with waste backfill from pits. Renard 3 Ramp access 610 meter level. 6,000 tpd plant capacity (2.2Mtonnes/year) expandable to 7,000 tpd (2.5Mtonnes/year). Renard 4 Pit at Renard 65 (initially) as a borrow-pit and waste water sump, pending resource conversion. Renard 2 View looking Northeast Renard 2 Renard 3
  14. 14. 14 General Project Arrangement Small Project Footprint of 3.1km2, Modest Environmental Impact Processed Kimberlite Containment (PKC) R65 Waste Rock R2-R3 Plant Ore Stockpile Camp Road from Chibougamau Overburden Stockpile
  15. 15. 15 Mine Plan Production Schedule and Cash Flow (Mineral Reserves Only) Open Pit & Underground Mining Ore Tonnage (t) 2,500,000 2,000,000 1,500,000 1,000,000 500,000 R2 Pit R3 Pit R2 UG Diamond Production 2027 R4 UG Gross Revenue (Real Terms) 500,000 Revenue (k C$) 600,000 2,000,000 2026 2025 R3 UG 2,500,000 1,500,000 1,000,000 500,000 400,000 300,000 200,000 100,000 - R2 R3 R4 R2 R3 R4 2027 2026 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2027 2026 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Diamonds (carats) 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 -
  16. 16. 16 Stornoway will be a Significant Diamond Producer Current and Future Diamond Producers 2012 World Diamond Production Data/ Forecast Future Production 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 $403m 6 Stornoway 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 (note 1; L: PDL) (note 2; TSX: SWY) Alrosa 28% BHPB/ Dominion 6% RioTinto 5% $306m DeBeers 39% Petra 2% Others 14% LUC 1% GEM 1% SWY 2% MPV 2% 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. Source: Kimberly process and Company Reports
  17. 17. Renard’s Diamonds 17 Recent 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 $2,240 per carat for 5-10ct stones. Potential c.15% revenue upside. • Diamonds larger than 10.8ct (“Specials”) estimated at three to six 50-100ct stones and one to two +100ct stones every 100,000 carats (two weeks). Not accounted for in the revenue model Size of Valuation Sample WWW March 2013 Sample Price (carats) (US$/carat)1 Renard 2 1,580 $180 Renard 3 2,753 $173 Renard 4 2,674 Renard 65 997 Kimberlite Body WWW March 2013 Base Case Price Model Renard 3 Bulk Sample Stones larger than 2 carats. “Run of Mine” Sensitivities (Minimum to High) (US$/carat)1 $171 to $214 $100 $190 $151 $104 ($150)2 $250 $180 $169 to $203 $141 to $185 $98 to $168 Notes 1. All prices in US$/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.
  18. 18. Permitting and Social Acceptability Strong Regulatory and Public Support for Québec’s First Diamond Mine Social Licence 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 Permitting 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. 18
  19. 19. 19 Project Schedule January 2013 Optimization Study 2011 2H 2013 2012 1H 2H 1H 2H 2014 1H 2H 2016 2015 1H 2H 1H 2H BFS (Complete) ESIA (Complete) Community Hearings (Complete) Reg. Authorizations (Complete) Specific Operating Permits (50) Detailed Engineering Project Financing Road Construction First Vehicle Access Site Construction Commissioning and Ramp-up Commercial Production 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
  20. 20. 20 The Route 167 Extension and the Renard Mine Road A Canadian Diamond Project with Road Access Opened Ahead of Schedule Construction of an all-season access road connecting Renard to the Québec Highway network began in February 2012. Renard Lac Naococane Km240 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”. Segments C & D Stornoway 97km of Mine Road (50km/hr) Lac Hecla Km195 Eastmain To complete this work, Québec provided Stornoway up to $85m of debt financing, repayable upon commercial production at Renard. WesternTroy Abitex Km143 Strateco All 4 segments have been connected. The road is open to construction traffic 2 months ahead of schedule and approximately 10% below budget. Km82 Segments A & B Min. of Transport 143km of Regional Highway (70km/hr) Legend Lac Km 0 Mistassini Lac Albanel Renard Project Explor./Mining Projects Stornoway Properties Albanel-TémiscamieOtish Par Mistissini Transportation of PreFabricated Temporary Bridge Spans March 2013 Eastmain Bridge, March 2013 50 km Segment A: 0-82km Segment B: 82-143km Segment C: 143-195km Segment D: 195-240km
  21. 21. 21 Stages of Road Construction “Slashing” or Tree Clearing Preparation of Road Foundation Grading Bridges or Culverts on Stream Crossings Construction of Permanent Bridges Connection of the Renard Mine Road September 2013
  22. 22. 22 Views of the Road KM 210 KM 155 KM 237
  23. 23. 23 Renard Aerodrome Renard Project Site The 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. Shoulder Runway Taxi way Apron
  24. 24. 24 Aerodrome Progress October 2013 First Landing: November 5th Tree Cutting Area Runway Centerline
  25. 25. 25 Site Progress October 2013 Renard Mine Road Bulk Sample DMS Plant Tree Clearing R9 R2 R4 Construction Camp R65 R65 Borrow Pit
  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 gensets. 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. 26
  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 $2.6m. • Up to 43% less greenhouse gas emissions. • Long term, stable supply market utilizing existing commercial distribution network within Quebec. • Elimination of on-site propane, as LNG will be used for building and underground mine heating. Diesel will continue to be used for the mobile mining fleet and construction activities Cost Improvements with LNG Unit Power Cost (C$/kWh) 1 Jan 2013 Optimization Study with Diesel Jan 2013 Optimization Study with LNG Unit Operating Cost (C$/tonne) 1,2 $0.299 $57.63 $0.188 $53.84 (-37%) (-7%) Initial Capital Cost (C$m) 1 $752.1 $754.0 (+0.3%) Life of Mine Capital Cost (C$m) 1,3 $1,013 $1,010 (-0.3%) 27.5 5.9 (-79%) n/a 3.5 41.7 n/a Annual Diesel Consumption (million litres) Annual LNG Consumption (thousand m3/annum) Annual Propane Consumption (thousand m3/annum) Notes Key Assumptions 1. January 2013 Optimization Study costs expressed in October 2012 terms. 2. Excludes capitalized preproduction costs. 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 3. Includes all initial, sustaining and deferred capital, contingencies and escalation
  28. 28. 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
  29. 29. 29 Appendix 1: NI 43-101 Mineral Reserves and Mineral Resources
  30. 30. 30 NI 43-101 Probable Mineral Reserves Updated January 28th 2013 Mining Recovery Factors Utilized in the Reserve Calculation Probable Mineral Reserve Grade Tonnes (cpht) (millions) Contained Carats Renard 4 UG 95 80 93 84 42 1.31 17.03 0.72 1.00 3.72 Total 75 23.79 Kimberlite Renard 2 OP Renard 2 UG Renard 3 OP Renard 3 UG R4, 16% Tonnage R4, 9% R3, 8% Internal Dilution Mining Recovery Mining Dilution 1.24 13.62 0.67 0.84 1.58 0.0% 7.0% 0.0% 21.1% 1.4% 96.0% 82.4% 96.0% 85.0% 78.2% 7.1% 20.2% 10.5% 14.0% 14.0% 17.95 5.9% 82.9% 17.9% (Millions) Carats R4, 9% R3, 8% Revenue R3, 7% R2 , 77% R2 , 83% R2 , 83% 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.
  31. 31. 31 Renard NI 43-101 Mineral Resources Published July 23rd 2013. Changes to January 2011 Mineral Resource in Italics Grade Renard 2 – Total Renard 2 Renard 2 CRB-2a Renard 3 Renard 4 Renard 65 Tonnes Contained Carats (cpht) Kimberlite (millions) (Millions) 100 104 32 103 60 29 (n/a) 18.58 17.71 0.87 1.76 7.25 7.87 (n/a) (+1.2%) (n/a) (-2.2%) (+13.1%) (na) 18.66 18.38 0.28 1.82 4.31 2.30 (n/a (-0.4%) (n/a) (+0.5%) -- (n/a) (+1.6%) (n/a) (-1.7%) (+13.0%) (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) 119 19 112 50 53 24 107 144 (+1.2%) (+0.4%) -- 6.23 1.24 0.61 2.37 2.69 1.18 1.92 0.26 (+1.6%) -- 5.23 5.23 0.54 4.75 5.70 4.93 1.80 0.18 (+3.7%) 28.36 (-8.9%) 16.50 Renard 2 Renard 2 CRB Renard 3 Renard 4 Renard 9 Renard 65 Lynx Dyke Hibou Dyke Total Inferred 58.2 (n/a) (-4.5%) (+13.7%) (+13.2%) (-16.8%) -- (n/a) (+0.2%) (-0.1%) (+0.1%) (-61.9%) -- (n/a) (-4.2%) (+13.7%) (+13.2%) (-68.3%) --- (-5.4%) 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.
  32. 32. 32 Target for Further Exploration Published July 23rd 2013. Changes to January 2011 Estimates in Italics Grade Renard 2 Renard 3 Renard 4 Renard 9 Renard 65 Lynx Dyke Hibou Dyke Total Exploration Upside 104 105 50 52 25 96 104 Tonnes Contained Carats (cpht) Kimberlite (millions) (Millions) to to to to to to to 158 168 77 68 33 120 151 4.0 0.8 11.1 3.9 29.0 3.1 2.7 54.6 (-0.8%) to to to to to to to to 4.6 1.7 15.4 6.3 40.9 3.2 2.9 74.9 (-0.8%) 4.2 0.8 5.6 2.0 7.3 3.0 2.9 25.7 (+9.1%) to to to to to to to to 7.3 2.8 11.8 4.3 13.5 3.8 4.3 47.8 (-1.4%) 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.
  33. 33. 33 Renard Resource Upside Inferred Resources and TFFE Not in Reserve Case Mine Plan Renard’s Inferred Resources and TFFE represent a potential increase over the current Indicated Resource of 156% to 237%. 0m 100m 2.7 mcarats 1.2 mcarats 200m Each kimberlite remains open at 770m depth 300m 2.4 mcarats 0.6 mcarats 1.2 mcarats 400m 500m 0.8 to 2.8 mcarats 6.2 mcarats 600m 700m Exploration Target 7.3 to 13.5 mcarats 5.6 to 11.8 mcarats Inferred Resource 2.0 to 4.3 mcarats 4.2 to 7.3 mcarats Indicated 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 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.
  34. 34. 34 Appendix 2: Feasibility Study and Feasibility Optimization
  35. 35. 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
  36. 36. 36 Optimization Study Financial Analysis Project Assumptions, Valuation and Pay-Back Key Assumptions in the Financial Model1 Mining Parameters Cost Parameters Revenue Parameters Diamond Price Parameters3 Schedule Parameters Reserve Carats (M) Tonnes Processed (M) Recovered Grade (cpht) Average Ore Recovery (%) Average Mining Dilution (%) Dilution Grade (cpht) Processing Rate (Mtonnes/annum) Mine Life (years) Initial Cap-ex (C$M)2 LOM Cap-ex (C$M)4 Oil Price (US$/barrel)2 LOM Op-ex (C$/tonne)2 LOM Op-ex (C$/carat)2 Gross Revenue (C$M)2 Marketing Costs DIAQUEM Royalty Cash Operating Margin (C$M)2 % Operating Margin Income Tax, Mining Duties and IBA Payments (C$M)1 After Tax Net Cash Flow (C$M) Renard 2 and Renard 3 (US$/carat) Renard 4 (US$/carat) Diamond Price Escalation Exchange rate Effective Date for NPV Calculation Construction Mobilization/Early Works Plant Commissioning Commences Commercial Production Declared 17.9 23.8 75 82.9% 17.9% 0 2.2 11 $752 $1,013 $95 $57.63 $76.63 $4,268 2.7% 2.0% $2,693 67% Valuation Results5 (C$m) Pre-Tax After Tax NPV5% $894 $537 NPV7% (Base Case) $683 $391 NPV9% $514 $274 20.4% 16.3% 4.69 4.82 IRR Pay-Back (years) 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. $625 $1,084 $182 $164 2.5% 1C$=1US$ Jan. 1 2013 Aug. 1 2013 Dec. 1 2015 Jun. 1 2016
  37. 37. 37 Optimization Study Financial Analysis Capital Costs Capital Costs1 (C$m) Site Preparation & General 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 Direct Costs (C$474m) $32.7 Freight and duties $64.7 Plant 37% Mining 32% Site Prep. & General 7% $5.5 Contingency Onsite utilities and infrastruc. 24% Total Initial Capital $752.1 Escalation Allowance on Initial Capital $45.1 Pre-Production Revenue $(25.0) Deferred & Sustaining Capital2 Indirect Costs (C$278m) EPCM 17% Spares 3% $175.9 Deferred Capital (Route 167 Extension) Renard Mine $78.0 Value2 $(13.3) Total LOM Capital $1,012.9 Salvage Notes 1. Optimization Study, released January 28th 2013. Camp 9% $0.0 Road2 2. After Escalation Field, Ven dor reps 12% Owner’s Cost 34% Freight 2% Contin. 23%
  38. 38. 38 Optimization Study Financial Analysis Operating Costs Open Pit Unit Costs1 $/tonne Open Pit 21.22 Processing 15.29 G&A2 and Infrastructure 18.27 Total Open Pit3 54.78 Operating Cost (C$1,352m) G&A, $42 9m, 32% Underground Unit Costs1 $/tonne Underground 23.64 Processing 15.29 G&A2 and Infrastructure 18.27 Total Underground3 57.20 Open Pit, $10m, 1% Life of Mine Operating Costs1,4 (Real Terms) Total Operating Cost (C$M) 1,352 Diamond Prod. (Mcarats) Plant, $359m, 2 6% 17.6 Production Cost3 57.63 C$/ t 76.63 C$/ ct 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. 3. 4. G&A unit costs do not include closure cost “Life of Mine Operating Costs” exclude diamond production prior to Commercial Production and exclude pre-production operating costs, which are capitalized. UG Mine, $55 5m, 41%
  39. 39. 39 Optimization Study Financial Analysis Carat Production and Revenue Production Parameters1 (Mcarats) Diamond Production by Mining Method Renard 2 Open Pit 1.24 Renard 3 Open Pit 0.67 Total Open Pit 1.91 Renard 2 Underground 13.62 Renard 3 Underground 0.84 Renard 4 Underground 1.58 Total Underground Total 16.03 17.95 Open Pit 89% Underground Diamond Production by Kimberlite Pipe Revenue Parameters1 (Real Terms) Total Gross Revenue (C$m) 11% 9% $4,268 Marketing Costs (%) 2.7% DIAQUEM Royalty (%) 8% 2.0% Cash Operating Margin (C$m) $2,693 % Operating Margin 67% Taxes and Mining Duties and IBA Payments (C$m) $625 Cumulative After Tax Cash Flow (C$m) Notes: 1. Optimization Study, released January 28th 2013. $1,084 Renard 2 Renard 3 Renard 4 83%
  40. 40. 40 Optimization Study Financial Analysis Project Valuation Sensitivities 30.0% Pre-Tax IRR 1,200 Pre-Tax NPV 25.0% 1,000 20.0% 800 15.0% 600 10.0% 400 5.0% 200 0.0% 0 80% 90% 100% 110% 120% 90% 100% 110% 120% Operating Cost 24.3% 22.3% 20.3% 18.3% 16.1% Operating Cost 891,143 789,142 683,499 574,143 461,111 Capital Cost 26.0% 22.9% 20.3% 18.0% 16.0% Capital Cost 845,695 764,629 683,499 601,269 519,031 Revenue 12.1% 16.4% 20.3% 23.9% 27.2% Revenue 231,318 457,408 683,499 909,511 1,135,6 After Tax IRR 80% After Tax NPV 30.0% 25.0% 600 500 20.0% 400 15.0% 300 10.0% 200 5.0% 0.0% 700 100 0 90% 100% 110% 120% Operating Cost 19.6% 18.0% 16.3% 14.6% 12.8% Operating Cost 526,139 460,174 391,480 320,039 245,911 Capital Cost 18.6% 16.3% 14.4% 12.6% Capital Cost 506,817 449,806 391,480 331,668 272,020 22.1% Revenue 99,135 246,431 391,480 535,409 677,695 Revenue 80% 21.2% 9.5% 13.1% 16.3% 19.3% 80% 90% 100% 110% 120%
  41. 41. Rough Diamond Price Movements The Diamond Market, January 2010 to September 2013 May 2011 Valuation utilized in the FS based on the average of 5 diamantaires c.10% below the WWW rough index price 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). 41
  42. 42. 42 Appendix 3: Project Comparables
  43. 43. Diamond Industry Cost Curve Source: Published FY2012 Results, FS Life of Reserve Data and Company Estimates World Diamond Project Comparables Cost/Revenue 43
  44. 44. 44 Project Comparables Recent Canadian Diamond Mines Compared as of the Date of each FS 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) 161 133 41 $10B $6.7B 110 $60 25 360 $50 25 No data No data No data No data No data 72 102 6 17.9 $6B $5.5B $2.4B (est) $3.2B 109 $84 $92 17 400 $55 $220 19 20 $400 $80 12 75 $180 $136 11 Annual Production (mCarats) Annual Revenue (US$m) LOM Op-ex (Cdn$/tonne) LOM Op-ex (Cdn$/carat) Canadian-US Dollar Up to 3.6 $302 $100 to $60 $92 to $55 c.$0.75 Up to 7 $385 $100 $25 $0.67 0.5 $215 No data No data c.$1.00 1.7 $306 $58 $76 $1.00 Pre-Production Cap-ex (Cdn$) $900m $1.3B $982m $752m Resource Parameters Resource (m carats) Resource (US$) Resource Grade (cpht) Average Resource Diamond Price Resource Mine Life $7.2B 72 $175 n/a Reserve Parameters Reserve (carats) Reserve (dollars) Reserve Grade (cpht) Average Reserve Diamond Price Average Reserve Ore Value (US$) Reserve Mine Life Production Parameters 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.
  45. 45. 45 Project Comparables Recent 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) 61 43 41 $5.1B $11B $7.2B 168 $85 (WWW Apr 10) $65 (DTC Apr 10) n/a 12 72 $256 (WWW Feb 11) $175 (WWW May 11) n/a n/a 49 34 17.9 $3.7B $8.2B $3.2B 157 $75 $118 11 12 $242 $30 20 75 $180 $136 11 4.5 $338 $49 $31 0.96 $550m ($800m De Beers Dec 11) 1.7 $411 $14 $114 0.945 1.7 $306 $58 $76 1.00 $1.9B $752m Resource Parameters Resource (m carats) Resource (US$) Resource Grade (cpht) Average Resource Diamond Price Resource Mine Life Reserve Parameters Reserve (carats) Reserve (dollars) Reserve Grade (cpht) Average Reserve Diamond Price Average Reserve Ore Value (US$) Reserve Mine Life Production Parameters Annual Production (mCarats) Annual Revenue (US$m) LOM Op-ex (Cdn$/tonne) LOM Op-ex (Cdn$/carat) Canadian-US Dollar Pre-Production Cap-ex (Cdn$) Source: Company Reports. Excludes resource and diamond price upside from both projects. Excludes diamond price escalators. Assumes similar diamond recovery and mining dilution parameters.
  46. 46. 46 Appendix 4: The Diamond Market
  47. 47. Major Diamond Mines and Development Projects Worldwide Few Enough Mines to Fit on One Map Canada • Ekati (BHPB) • Diavik (Rio Tinto/Harry Winston) Russia • Victor, Snap Lake, Gahcho Kue (De Beers) • Arkhangelsk District (Alrosa) • Renard (Stornoway) • Yakutia District (Alrosa) • Star (Shore Gold/Newmont) • Grib (LUKOIL) India • Bundar (Rio Tinto) Australia Sierra Leone • Argyle (Rio Tinto) • • Ellendale (Gem Diamonds) Koidu, (Steinmetz Group) Democratic Republic of Congo Tanzania • • Williamson (Petra Diamonds) Mbuyi-Mayi Angola • Catoca (Alrosa) Lesotho Botswana South Africa • Letseng (Gem Diamonds) • Jwaneng, Orapa (De Beers) • Venetia (De Beers) • Kao (Namakwa Diamonds) • Gope (Gem Diamonds) • Finsch, Premier (Petra Diamonds) • Liqhobong (Firestone) • AK6 (Lucara Diamonds) • Lace (DiamondCorp) • Mothai (Lucara) 47
  48. 48. The Rough Diamond Business in Context 1/8th the Size of the Copper Business Source: USGS, LME, Kimberly Process 48
  49. 49. 49 The Diamond Pipeline An Industry with Many Intermediaries Mine Production Rough Trading and Diamond Polishing Source: Tacy D.I.B.April 2013 Production Cost Value in US$B terms of each stage of the diamond pipeline Estimated Average Margins after Costs (%) $6.0B Production Mine Sales to Value Industry $13.37B Rough Mining: 0 to 50% $15.5B Rough Sales to Cutting Centers $15.2B Rough Dealing: 0 to 10% Value of Polished Produced $17.6B Polishing: -10 to 15% Diamond Jewelery Value of Diamonds in Retail Sales Retail of Diamond Jewelery Jewelery Sales $72.1B $21.9B Jewelery Jewelery Manufac: -10 Retail: 20 to to 10% 50%
  50. 50. 50 Future Rough Diamond Supply 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. De Beers Production Forecast Rio Tinto Production Forecast Production and Supply Forecast (Rio Tinto) 180 Produciton / Supply Mct 160 140 Alluvial 120 100 U/G 80 60 40 20 0 3x increase in U/G carats Higher cost Open Cut
  51. 51. 51 Diamond Jewelry Demand is Forecast to Grow Dramatically Share of World Diamond Jewelry Market, 2005 to 2020 2020F: $128B China (and Asia-Pacific) 32% Rough Diamond CAGR of 10%1 2010-2020 2010: $74B China (and Asia-Pacific) 15% US 42% India (and Asia-Arabia) 25% 2005: $62B China (and AsiaPacific) 10% Others 4% India (and Asia-Arabia) 18% Diamond Jewelry CAGR of 5.6%1 2010-2020 US 49% India (and AsiaArabia) 13% Europe 10% Japan 14% Source: AllanHochtreiter after De Beers, Tacy Ltd., 1 CAGR estimates after Alrosa October 2011. Nominal Terms US 27%
  52. 52. Rough Diamond Supply and Demand Forecasts An Example: Bain September 2013 Since 2012, Bain & Co in partnership with the Antwerp World Diamonds Center have published an annual review of the diamonds sector. Rough Diamond Demand The September 2013 edition forecasts a rough diamond supply CAGR of 2% and a rough diamond demand CAGR of 5.1%. Rough Diamond Supply Supply and Demand 52
  53. 53. 53 Rough Diamond Pricing Since 2003 Rough and Polished Diamonds Against a Basket of Indicators, 2003- October 2013 Commodity Index Data 1 8% CAGR in Rough Prices 2003-2012 Index October 2003 = 100 600 500 0.9 0.8 0.7 0.6 400 0.5 300 0.4 $109 100 0 2007 $190 $182 200 $121 2008 0.2 $117 WWW R.I. IMF CPI IMF Coal(Aust) S&P TSX Comp Index 2009 0.3 Polished Prices Index IMF IPI IMF Metal Gold IMF CPI NonFuel IMF Cu S&P TSX Composite Index Weekly Closing 700 0.1 0 2010 2011 2012 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
  54. 54. 54
  55. 55. 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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