Stornoway Diamond Corporation Corporate Update Presentation
2. 2Forward-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. 3Stornoway Diamond Corporation TSX:SWY 100% Ownership in Renard, Québec’s First Diamond Mine One of the World’s Few New Diamond Projects Under DevelopmentStrong 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 FundamentalsFocused on the Timely Completion of Final Project Financing4. 4Stornoway’s Board and Management Team Executive Officers Head Office: Longueuil, Québec Exploration Office: North Vancouver, BC Matt Manson President, CEO & DirectorPat Godin COO & DirectorCommunity Offices: Mistissini & Chibougamau QuébecZara Boldt CFO and VP FinanceNon-Executive DirectorsEbe Scherkus Independent/ Board ChairmanMichel Blouin Independent/ IQ DesignateYves Harvey IndependentHume Kyle IndependentJohn LeBoutillier Independent/ IQ DesignateMonique Mercier Independent/ IQ DesignatePeter Nixon IndependentSerge Vézina IndependentKey ManagersGhislain Poirier VP Public AffairsYves Perron VP Engineering & ConstructionRobin Hopkins VP ExplorationMartin BoucherBrian GloverGuy BourqueVP Sustainable DevelopmentVP Asset ProtectionChief Mining EngineerHelene RobitailleMario CourchesneOrin BaranowskyJean-Charles DumontFreddie MianscumDirector, HRConstruct. ManagerDirector, IRCorporate ControllerIBA Implem. Officer5. 5Stornoway’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-EagleEd Sterck November 13th 201334 million(9m Options $0.40-$2.40; 25m warrants $1.20)(as of July 31, 2013)12 MONTH ANALYST TARGETS BMOTotal Shares Outstanding:Consolidated Cash:139 millionC$ C$RBCnaBuy$2.10OutperformSpeculative Risk$1.20Speculative Buy$1.70Buy$2.00OutperformSpeculative Risk$2.00Laurentian25 millionMarket Perform39 millionEric Lemieux November 13th 2013 Des Kilalea, November 13th 2013Desjardins BasicFully DilutedJohn Hughes October 21st 2013Paradigm 25.0%35.4%David Davidson June 26th 201310.5%9.0%National BankCaisse de dépôt et placement du Québec8.1% (est)7.0% (est)Float56.4%Paolo Lostritto December 11th 201248.6%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 region6. 6Towards Québec’s First Diamond Mine7. 7Renard Kimberlite Bodies 012KilometersN 60060120KilometersLaforge 2 Laforge 1R10 LG2R7 HibouLG3Foxtrot PropertyR1 WemindjiEleonoreR65 R4RenardWestern TroyEastmain Mine StratecoR8R9 R2BrisayLG4Troilus MineR3Temiscamie MistissiniLynxMatagamiKimberlite Bodies with Probable Reserves Kimberlite Bodies with Inferred Resources Kimberlite Bodies with Resource PotentialLEGEND:ChibougamauLegendStornoway Properties Hydro-Québec Facility Renard Kimberlites Kimberlitic Dyke Regional KimberlitesHydro-Québec Powerlines Route 167 Extension/ Renard Mine Road RoadExploration/ Mining Projects8. 8Key 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 PriceAverage Diamond Production After Tax NPV (7%; Jan 1 2013) After Tax IRR Production StartupRenard 65 29/24cpht0m11 years 17.9 mcarats100m$752mRenard 3 103/112cpht200m$58/t ($76/carat) 67% $2.7B300m400m$180/carat1.6 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 valuation500m600m 700mRenard 4 60/50cphtRenard 9 53cphtRenard 2 104/119cpht27 mcarat Indicated Mineral Resource 17 mcarat Inferred Mineral Resource26-48 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 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. 9What has Changed Since the January 2013 Optimization Study? 14% Increase in Indicated ResourcesRenard 65 29/24cpht0mAn additional 2.3Mcarats at Renard 65 (7.87 Mtonnes at 29cpht) amenable to open pit mining to 150m depth (July 2013).Renard 3 103/112cpht100m200mUpdated 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.300m400m500m600m 700mRenard 4 60/50cphtRenard 9 53cphtRenard 2 104/119cpht27 mcarat Indicated Mineral Resource 17 mcarat Inferred Mineral Resource26-48 mcarat Exploration Upside10. Renard’s Resource Upside10A Project with a Long Resource Tail and Very Long Mine Life Potential0mRenard 65 29/24cphtMillionsRenard 3 of Tonnes 103/112cpht 140Exploration Target High Range Exploration Target Low Range100mInferred Resource120200mProbable Reserve300m100 400m80500mThe Vision: Deposit still Open600m60 700m40Renard 4 60/50cpht Renard 9 53cphtRenard 2 104/119cphtThe 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 43-101.20Permitting and Long Term Business PlanThe Feasibility: 11 years of mining0 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. 11Mineral Resource Continuing to Grow July 2013: 14% Increase in Indicated Mineral Resources Renard 65 Renard 3Stornoway 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 4Renard 9 Renard 2Three 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 200312. 12Resource Expansion Targets for Resource Expansion in 2013 and Beyond Renard 3Renard 2490 m aslRenard 4Renard 65Renard 90 m1 23 790 m-275 m aslLegend1.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 TFFE13. 13Mine Plan A Combined Open Pit and Underground Mine Renard 65Open Pit Mining (years 1-2). Underground Mining (years 3-11). Underground method: Blast Hole Shrinkage, Panel Retreat with waste backfill from pits.Renard 3Ramp access 610 meter level. 6,000 tpd plant capacity (2.2Mtonnes/year) expandable to 7,000 tpd (2.5Mtonnes/year).Renard 4Pit at Renard 65 (initially) as a borrow-pit and waste water sump, pending resource conversion.Renard 2View looking NortheastRenard 2Renard 314. 14General Project Arrangement Small Project Footprint of 3.1km2, Modest Environmental ImpactProcessed Kimberlite Containment (PKC)R65Waste Rock R2-R3 PlantOre StockpileCampRoad from ChibougamauOverburden Stockpile15. 15Mine Plan Production Schedule and Cash Flow (Mineral Reserves Only) Open Pit & Underground MiningOre Tonnage (t)2,500,000 2,000,000 1,500,000 1,000,000 500,000R2 PitR3 PitR2 UGDiamond Production2027R4 UGGross Revenue (Real Terms)500,000 Revenue (k C$)600,0002,000,00020262025R3 UG2,500,0001,500,000 1,000,000 500,000400,000 300,000 200,000 100,000-R2R3R4R2R3R4202720262025202420232022202120202019201820172016201520142013202720262025202420232022202120202019201820172016201520142013Diamonds (carats)202420232022202120202019201820172016201520142013-16. 16Stornoway will be a Significant Diamond Producer Current and Future Diamond Producers2012 World Diamond Production Data/ Forecast Future Production 1De Beers (Anglo/Botswana)$6,074m2Alrosa (Russia)$4,497m3BHPB/Dominion Diamond (TSX: DDC)$894m4Rio Tinto (ASE: RIO)$741m5Petra$403m6Stornoway7Mountain Province (note 3; TSX: MPV)$273m8Gem (L: GEMD)$202m9Lucara (note 4; TSX: LUC)$118m10Others$2,200mTotal$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, 20132.Renard estimated at FS average annual diamond production of 1.7 million carats, and WWW April 2011 weighted diamond price of $180/ct, un-escalated3.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-escalated4.Karowe estimated as per Lucara FY2013 Operating Guidance. Source: Kimberly process and Company Reports17. Renard’s Diamonds17Recent 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 $2,240 per carat for 5-10ct stones. Potential c.15% revenue upside. • Diamonds larger than 10.8ct (“Specials”) estimated at three to six 50-100ct stones and one to two +100ct stones every 100,000 carats (two weeks). Not accounted for in the revenue modelSize of Valuation SampleWWW March 2013 Sample Price(carats)(US$/carat)1Renard 21,580$180Renard 32,753$173Renard 42,674Renard 65997Kimberlite BodyWWW March 2013 Base Case Price ModelRenard 3 Bulk Sample Stones larger than 2 carats. “Run of Mine” Sensitivities (Minimum to High)(US$/carat)1$171 to $214$100$190 $151 $104 ($150)2$250$180$169 to $203$141 to $185 $98 to $168Notes 1.All prices in US$/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. 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.1819. 19Project Schedule January 2013 Optimization Study2011 2H20132012 1H2H1H2H2014 1H2H20162015 1H2H1H2HBFS (Complete) ESIA (Complete) Community Hearings (Complete)Reg. Authorizations (Complete) Specific Operating Permits (50) Detailed Engineering Project Financing Road ConstructionFirst Vehicle AccessSite Construction Commissioning and Ramp-up Commercial ProductionWith first vehicle access achieved on the Renard Mine Road, the timely completion of mine project financing is the now principal driver on project schedule20. 20The 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.RenardLac NaococaneKm240Segments 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 HeclaKm195EastmainTo complete this work, Québec provided Stornoway up to $85m of debt financing, repayable upon commercial production at Renard.WesternTroyAbitexKm143 StratecoAll 4 segments have been connected. The road is open to construction traffic 2 months ahead of schedule and approximately 10% below budget.Km82Segments A & B Min. of Transport 143km of Regional Highway (70km/hr) LegendLac Km 0 Mistassini Lac AlbanelRenard Project Explor./Mining Projects Stornoway Properties Albanel-TémiscamieOtish ParMistissiniTransportation of PreFabricated Temporary Bridge Spans March 2013Eastmain Bridge, March 201350 kmSegment A: 0-82km Segment B: 82-143km Segment C: 143-195km Segment D: 195-240km21. 21Stages of Road Construction“Slashing” or Tree ClearingPreparation of Road FoundationGradingBridges or Culverts on Stream CrossingsConstruction of Permanent BridgesConnection of the Renard Mine Road September 201322. 22Views of the Road KM 210KM 155KM 23723. 23Renard Aerodrome Renard Project SiteThe Renard Aerodrome will be located 8 km south of the project site. The airstrip will be certified by Transport Canada to receive Dash 8-300 turboprop and Hercules aircraft. Design criteria (3C-NP): • Gravel surface • 30m wide by 1,494m long • Taxiway and 100mx100m apron • Equipped with assisted landing capabilityTraffic 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.ShoulderRunwayTaxi wayApron24. 24Aerodrome Progress October 2013First Landing: November 5thTree Cutting AreaRunway Centerline25. 25Site Progress October 2013Renard Mine Road Bulk Sample DMS Plant Tree Clearing R9R2R4 Construction Camp R65R65 Borrow Pit26. 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.2627. 27Liquefied 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) 1Jan 2013 Optimization Study with DieselJan 2013 Optimization Study with LNGUnit 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%)27.55.9(-79%)n/a 3.541.7 n/aAnnual Diesel Consumption (million litres) Annual LNG Consumption (thousand m3/annum) Annual Propane Consumption (thousand m3/annum) NotesKey Assumptions1.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/barrel3.Includes all initial, sustaining and deferred capital, contingencies and escalation28. 28Québec’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 201629. 29Appendix 1: NI 43-101 Mineral Reserves and Mineral Resources30. 30NI 43-101 Probable Mineral Reserves Updated January 28th 2013Mining Recovery Factors Utilized in the Reserve CalculationProbable Mineral Reserve GradeTonnes(cpht)(millions)Contained CaratsRenard 4 UG95 80 93 84 421.31 17.03 0.72 1.00 3.72Total7523.79Kimberlite Renard 2 OP Renard 2 UG Renard 3 OP Renard 3 UGR4, 16%TonnageR4, 9% R3, 8%Internal DilutionMining RecoveryMining Dilution1.24 13.62 0.67 0.84 1.580.0% 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%17.955.9%82.9%17.9%(Millions)CaratsR4, 9% R3, 8%RevenueR3, 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. 31Renard NI 43-101 Mineral Resources Published July 23rd 2013. Changes to January 2011 Mineral Resource in Italics GradeRenard 2 – Total Renard 2 Renard 2 CRB-2a Renard 3 Renard 4 Renard 65TonnesContained 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 Indicated76.4(-14.3%)35.45(33.1%)27.09(+14.0%)Renard 2 – Total64(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%)16.50Renard 2 Renard 2 CRB Renard 3 Renard 4 Renard 9 Renard 65 Lynx Dyke Hibou DykeTotal Inferred58.2(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. 32Target for Further Exploration Published July 23rd 2013. Changes to January 2011 Estimates in ItalicsGradeRenard 2 Renard 3 Renard 4 Renard 9 Renard 65 Lynx Dyke Hibou DykeTotal Exploration Upside104 105 50 52 25 96 104TonnesContained Carats(cpht)Kimberlite(millions)(Millions)to to to to to to to158 168 77 68 33 120 1514.0 0.8 11.1 3.9 29.0 3.1 2.7 54.6 (-0.8%)to to to to to to to to4.6 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 to7.3 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. 33Renard Resource Upside Inferred Resources and TFFE Not in Reserve Case Mine PlanRenard’s Inferred Resources and TFFE represent a potential increase over the current Indicated Resource of 156% to 237%.0m100m2.7 mcarats1.2 mcarats 200mEach kimberlite remains open at 770m depth300m2.4 mcarats0.6 mcarats1.2 mcarats400m500m0.8 to 2.8 mcarats6.2 mcarats600m700mExploration Target7.3 to 13.5 mcarats 5.6 to 11.8 mcaratsInferred Resource2.0 to 4.3 mcarats4.2 to 7.3 mcaratsIndicated ResourceNotes: 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. 34Appendix 2: Feasibility Study and Feasibility Optimization35. 35Chronology 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 standardsOptimization 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 caratsLNG Feasibility Study Released October 2013. Modified project Cap-ex and Op-ex for LNG powered gensets36. 36Optimization Study Financial Analysis Project Assumptions, Valuation and Pay-Back Key Assumptions in the Financial Model1Mining ParametersCost ParametersRevenue ParametersDiamond Price Parameters3 Schedule ParametersReserve 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 Declared17.9 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$537NPV7% (Base Case)$683$391NPV9%$514$27420.4%16.3%4.694.82IRR 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 201637. 37Optimization Study Financial Analysis Capital Costs Capital Costs1 (C$m) Site Preparation & General Mining$151.2Mineral processing plant$175.4Onsite utilities and infrastructures$114.8Owner’s Cost$94.7Spares, fills, tools$7.1EPCM services$47.9Field indirect costs, vendor representatives$33.9Construction camp & Catering$24.5Direct Costs (C$474m)$32.7Freight and duties$64.7Plant 37%Mining 32%Site Prep. & General 7%$5.5ContingencyOnsite utilities and infrastruc. 24%Total Initial Capital$752.1Escalation Allowance on Initial Capital$45.1Pre-Production Revenue$(25.0)Deferred & Sustaining Capital2Indirect Costs (C$278m) EPCM 17% Spares 3%$175.9Deferred Capital (Route 167 Extension) Renard Mine$78.0Value2$(13.3)Total LOM Capital$1,012.9SalvageNotes 1. Optimization Study, released January 28th 2013.Camp 9%$0.0Road22.After EscalationField, Ven dor reps 12%Owner’s Cost 34%Freight 2% Contin. 23%38. 38Optimization Study Financial Analysis Operating Costs Open Pit Unit Costs1 $/tonne Open Pit21.22Processing15.29G&A2 and Infrastructure18.27Total Open Pit354.78Operating Cost (C$1,352m) G&A, $42 9m, 32%Underground Unit Costs1 $/tonne Underground23.64Processing15.29G&A2 and Infrastructure18.27Total Underground357.20Open Pit, $10m, 1%Life of Mine Operating Costs1,4 (Real Terms) Total Operating Cost (C$M)1,352Diamond Prod. (Mcarats)Plant, $359m, 2 6%17.6Production Cost357.63 C$/ t 76.63 C$/ ctNotes: 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, $55 5m, 41%39. 39Optimization Study Financial Analysis Carat Production and Revenue Production Parameters1 (Mcarats)Diamond Production by Mining MethodRenard 2 Open Pit1.24Renard 3 Open Pit0.67Total Open Pit1.91Renard 2 Underground13.62Renard 3 Underground0.84Renard 4 Underground1.58Total Underground Total16.03 17.95Open Pit89%Underground Diamond Production by Kimberlite PipeRevenue Parameters1 (Real Terms) Total Gross Revenue (C$m)11%9%$4,268Marketing Costs (%)2.7%DIAQUEM Royalty (%)8%2.0%Cash Operating Margin (C$m)$2,693% Operating Margin67%Taxes and Mining Duties and IBA Payments (C$m)$625Cumulative After Tax Cash Flow (C$m) Notes: 1. Optimization Study, released January 28th 2013.$1,084Renard 2 Renard 3 Renard 483%40. 40Optimization Study Financial Analysis Project Valuation Sensitivities 30.0%Pre-Tax IRR1,200Pre-Tax NPV25.0%1,00020.0%80015.0%60010.0%4005.0%2000.0%080%90%100%110%120%90%100%110%120%Operating Cost 24.3%22.3%20.3%18.3%16.1%Operating Cost 891,143 789,142 683,499 574,143 461,111Capital Cost26.0%22.9%20.3%18.0%16.0%Capital Cost845,695 764,629 683,499 601,269 519,031Revenue12.1%16.4%20.3%23.9%27.2%Revenue231,318 457,408 683,499 909,511 1,135,6After Tax IRR80%After Tax NPV30.0% 25.0%600 50020.0%40015.0%30010.0%2005.0% 0.0%700100 090%100%110%120%Operating Cost 19.6%18.0%16.3%14.6%12.8%Operating Cost 526,139 460,174 391,480 320,039 245,911Capital Cost18.6%16.3%14.4%12.6%Capital Cost506,817 449,806 391,480 331,668 272,02022.1%Revenue99,135 246,431 391,480 535,409 677,695Revenue80% 21.2% 9.5%13.1%16.3%19.3%80%90%100%110%120%41. Rough Diamond Price Movements The Diamond Market, January 2010 to September 2013May 2011 Valuation utilized in the FS based on the average of 5 diamantaires c.10% below the WWW rough index priceA 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).4142. 42Appendix 3: Project Comparables43. Diamond Industry Cost Curve Source: Published FY2012 Results, FS Life of Reserve Data and Company Estimates World Diamond Project Comparables Cost/Revenue4344. 44Project Comparables Recent Canadian Diamond Mines Compared as of the Date of each FSEkati (1998) BHPB, As Built EstimatesDiavik (1999) Rio-Tinto, As Built EstimatesVictor (2008) De Beers, As Built EstimatesRenard FS Optimization Study (2013)16113341$10B$6.7B110 $60 25360 $50 25No data No data No data No data No data72102617.9$6B$5.5B$2.4B (est)$3.2B109 $84 $92 17400 $55 $220 1920 $400 $80 1275 $180 $136 11Annual Production (mCarats) Annual Revenue (US$m) LOM Op-ex (Cdn$/tonne) LOM Op-ex (Cdn$/carat) Canadian-US DollarUp to 3.6 $302 $100 to $60 $92 to $55 c.$0.75Up to 7 $385 $100 $25 $0.670.5 $215 No data No data c.$1.001.7 $306 $58 $76 $1.00Pre-Production Cap-ex (Cdn$)$900m$1.3B$982m$752mResource Parameters Resource (m carats) Resource (US$) Resource Grade (cpht) Average Resource Diamond Price Resource Mine Life$7.2B 72 $175 n/aReserve Parameters Reserve (carats) Reserve (dollars) Reserve Grade (cpht) Average Reserve Diamond Price Average Reserve Ore Value (US$) Reserve Mine LifeProduction ParametersSource: 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. 45Project Comparables Recent Canadian Diamond Development Projects Compared as of the Date of each FSGahcho Kué FS (2010) De Beers/Moun. Prov.Star-Orion FS (2011) Shore GoldRenard FS Optimization Study (2013)614341$5.1B$11B$7.2B168 $85 (WWW Apr 10) $65 (DTC Apr 10) n/a1272$256 (WWW Feb 11)$175 (WWW May 11)n/an/a493417.9$3.7B$8.2B$3.2B157 $75 $118 1112 $242 $30 2075 $180 $136 114.5 $338 $49 $31 0.96 $550m ($800m De Beers Dec 11)1.7 $411 $14 $114 0.9451.7 $306 $58 $76 1.00$1.9B$752mResource Parameters Resource (m carats) Resource (US$) Resource Grade (cpht) Average Resource Diamond Price Resource Mine LifeReserve Parameters Reserve (carats) Reserve (dollars) Reserve Grade (cpht) Average Reserve Diamond Price Average Reserve Ore Value (US$) Reserve Mine LifeProduction Parameters Annual Production (mCarats) Annual Revenue (US$m) LOM Op-ex (Cdn$/tonne) LOM Op-ex (Cdn$/carat) Canadian-US DollarPre-Production Cap-ex (Cdn$)Source: Company Reports. Excludes resource and diamond price upside from both projects. Excludes diamond price escalators. Assumes similar diamond recovery and mining dilution parameters.46. 46Appendix 4: The Diamond Market47. Major Diamond Mines and Development Projects Worldwide Few Enough Mines to Fit on One Map Canada •Ekati (BHPB)•Diavik (Rio Tinto/Harry Winston)Russia•Victor, Snap Lake, Gahcho Kue (De Beers)• Arkhangelsk District (Alrosa)•Renard (Stornoway)• Yakutia District (Alrosa)•Star (Shore Gold/Newmont)• Grib (LUKOIL)India • Bundar (Rio Tinto)Australia Sierra Leone• Argyle (Rio Tinto)•• Ellendale (Gem Diamonds)Koidu, (Steinmetz Group)Democratic Republic of CongoTanzania•• Williamson (Petra Diamonds)Mbuyi-MayiAngola •Catoca (Alrosa)Lesotho BotswanaSouth Africa• Letseng (Gem Diamonds)•Jwaneng, Orapa (De Beers)• Venetia (De Beers)• Kao (Namakwa Diamonds)•Gope (Gem Diamonds)• Finsch, Premier (Petra Diamonds)• Liqhobong (Firestone)•AK6 (Lucara Diamonds)• Lace (DiamondCorp)• Mothai (Lucara)4748. The Rough Diamond Business in Context 1/8th the Size of the Copper BusinessSource: USGS, LME, Kimberly Process4849. 49The Diamond Pipeline An Industry with Many IntermediariesMine ProductionRough Trading and Diamond PolishingSource: Tacy D.I.B.April 2013Production CostValue in US$B terms of each stage of the diamond pipelineEstimated Average Margins after Costs (%)$6.0BProduction Mine Sales to Value Industry$13.37BRough Mining: 0 to 50%$15.5BRough Sales to Cutting Centers$15.2BRough Dealing: 0 to 10%Value of Polished Produced$17.6BPolishing: -10 to 15%Diamond Jewelery Value of Diamonds in Retail Sales Retail of Diamond Jewelery Jewelery Sales $72.1B$21.9BJewelery Jewelery Manufac: -10 Retail: 20 to to 10% 50%50. 50Future 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 ForecastRio Tinto Production Forecast Production and Supply Forecast (Rio Tinto) 180Produciton / Supply Mct160 140Alluvial120 100U/G80 60 40 20 03x increase in U/G carats Higher costOpen Cut51. 51Diamond Jewelry Demand is Forecast to Grow Dramatically Share of World Diamond Jewelry Market, 2005 to 20202020F: $128B China (and Asia-Pacific) 32%Rough Diamond CAGR of 10%1 2010-20202010: $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 2010-2020US 49%India (and AsiaArabia) 13% Europe 10% Japan 14%Source: AllanHochtreiter after De Beers, Tacy Ltd., 1CAGR estimates after Alrosa October 2011. Nominal TermsUS 27%52. Rough Diamond Supply and Demand Forecasts An Example: Bain September 2013Since 2012, Bain & Co in partnership with the Antwerp World Diamonds Center have published an annual review of the diamonds sector.Rough Diamond DemandThe 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 Demand5253. 53Rough Diamond Pricing Since 2003 Rough and Polished Diamonds Against a Basket of Indicators, 2003- October 2013Commodity Index Data 18% CAGR in Rough Prices 2003-2012Index October 2003 = 1006005000.9 0.8 0.7 0.6400 0.5 300 0.4$109 10002007$190$182200$12120080.2$117WWW R.I. IMF CPI IMF Coal(Aust) S&P TSX Comp Index20090.3Polished Prices Index IMF IPI IMF MetalGold IMF CPI NonFuel IMF CuS&P TSX Composite Index Weekly Closing7000.1 02010201120122013Source: 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 201354. 5455. 55Stornoway Diamond Corporation TSX:SWYHead Office: 1111 Rue St. Charles Ouest, Longueuil, Québec J4K 4G4 Tel: +1 (450) 616-5555IR Contact: Orin Baranowsky, CFA, Director IR firstname.lastname@example.org Tel: +1 (416) 304-1026 x103www.stornowaydiamonds.com Info@stornowaydiamonds.com
- 1.BUILDING QUÉBEC’S FIRST DIAMOND MINE Update December 3rd, 2013Matt MansonOrin BaranowskyPresident, CEO & DirectorDirector of Investor Relations
Stornoway Diamond Corporation update presentation for investors.