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Stornoway Announces Funding of Second Tranche of Stream Financing
LONGUEUIL, Quebec, Oct. 1, 2015 (GLOBE NEWSWIRE) -- Stornoway Diamond Corporation (TSX:SWY) the "Corporation" or "Stornoway") is pleased to announce that it has successfully completed the drawdown of the second US$80m tranche of diamond stream funding from Orion Mine Finance ("Orion"), the Caisse de dépôt et placement du Québec ("CDPQ") and Blackstone Tactical Opportunities ("Blackstone").
Under Stornoway's C$946 million project financing transaction, which closed on July 8 , 2014, a total of US$250 million in upfront stream payments were committed by Orion and the CDPQ to fund in three tranches, scheduled for March 2015, September 2015 and March 2016. On April 28 , 2015, Blackstone announced that it had acquired a minority position in the Renard Diamond Stream from Orion by way of a secondary market transaction. Drawdown of each tranche is conditional upon the satisfaction of certain terms and conditions, including the independent certification of construction progress at the Renard Diamond Project and its cost to complete being within plan. With these conditions having been met, the second stream tranche has been funded on schedule.
As of July 31st, 2015, Stornoway's cash, cash equivalents and short-term investments stood at C$270 million . The US$80 million of funds received from the second tranche of stream payments were converted to Canadian dollars upon deposit at an exchange rate of $1.336, representing a cash gain to the Corporation of C$18.9 million compared to the July 2014 funding plan, which assumed a C$:US$ exchange rate of $1.10.
Stornoway's current cash resources are sufficient to cover all planned mine development expenses, financing and corporate costs into calendar 2016. Following funding of the third and final tranche of stream payments in March 2016, Stornoway expects to draw on a C$100 million senior secured loan in late 2016 to complete mine development at Renard. As of August 30 , 2015, overall construction progress at the project stood at 41.0% compared to a plan of 37.1%, with a forecast cost to complete within the capital budget of C$811 million (including contingencies and escalation allowances).
About the Renard Diamond Project
The Renard Diamond Project is located approximately 250 km north of the Cree community of Mistissini and 350 km north of Chibougamau in the James Bay region of north-central Québec. On July 8th 2014 Stornoway announced the completion of a $946 million project financing transaction to fully fund the project to production, and construction commenced on July 10th, 2014. First ore is scheduled to be delivered to the plant in the second half of 2016 with commercial production scheduled for the 2nd quarter of 2017.
In January 2013, Stornoway released the results of an Optimized Feasibility Study at Renard which highlighted the potential of the project to become a significant producer of high value rough diamonds over a long mine life. Probable Mineral Reserves, as defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"), stand at 17.9 million carats. In accordance with the Corporation's September 2015 Mineral Resource estimate, total Indicated Mineral Resources, inclusive of the Mineral Reserve, stand at 30.2 million carats, with a further 13.35 million carats classified as Inferred Mineral Resources, and 27.8 to 59.7 million carats classified as non-resource exploration upside. Average annual diamond production is forecast at 1.6mcarats/year over the first 11 years of mining, at an average valuation of US$190/carat based on a March 2014 assessment by WWW International Diamond Consultants Ltd.
Readers are cautioned that the potential quality and grade of any target for further exploration is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the target being delineated as a Mineral Resource. All kimberlites remain open at depth. Readers are referred to the technical report dated February 28th, 2013 in respect of the January 2013 Optimization Study, and the press release dated September 24, 2015 in respect of the September 2015 Mineral Resource estimate, for further details and assumptions relating to the project. Disclosure of a scientific or technical nature in this press release was prepared under the supervision of Patrick Godin, P.Eng. (Québec), Chief Operating Officer and Robin Hopkins, P.Geol. (NT/NU), Vice President, Exploration, both "qualified persons" under NI 43-101.
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For illustrative purposes. Assumes a C$: US$ conversion rate of $1.10. Actual proceeds of each financing tranche are measured at the C$: US$ exchange rate in effect the date the funds are received.
Assuming a C$: US$ conversion rate of $1.3047.
About Stornoway Diamond Corporation
Stornoway is a leading Canadian diamond exploration and development company listed on the Toronto Stock Exchange under the symbol SWY and headquartered in Montreal. Our flagship asset is the 100% owned Renard Diamond Project, on track to becoming Québec's first diamond mine. Stornoway is a growth oriented company with a world class asset, in one of the world's best mining jurisdictions, in one of the world's great mining businesses.
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