Presentation at the TD Securities Mining Conference
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Transcript of Presentation at the TD Securities Mining Conference
BUILDING QUÉBEC’S FIRST DIAMOND MINETD Securities Mining Conference, Wednesday Jan 27th, 2016
Matt MansonPresident & CEO
2
Forward-Looking Information
This presentation contains "forward-looking information" within the meaning of Canadian securities legislation. This information and these statements, referred to herein as “forward-looking statements”, are made as of the date of this presentation and the Corporation does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by law. These forward-looking statements include, among others, statements with respect to our beliefs, plans, objectives, expectations, anticipations, estimates and intentions. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.
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) assumptions relating to recovered grade, average ore recovery, internal dilution, mining dilution and other mining parameters set out in the 2011 Feasibility Study or the Optimization Study; (iv) assumptions relating to gross revenues, operating cash flow and other revenue metrics set out in the 2011 Feasibility Study or the Optimization Study; (v) mine expansion potential and expected mine life; and (vi) future exploration plans. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”, “plans”, “projects”, “estimates”, “assumes”, “intends”, “strategy”, “goals”, “objectives”, “schedule” or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.
Forward-looking statements are made based upon certain assumptions by Stornoway or its consultants and other important factors that, if untrue, could cause the actual results, performances or achievements of Stornoway to be materially different from future results, performances or achievements expressed or implied by such statements. Such statements and information are based on numerous assumptions regarding present and future business prospects and 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, regulatory developments, development plans, exploration, development and mining activities and commitments. Although management considers its assumptions on such matters to be reasonable based on information currently available to it, they may prove to be incorrect. Certain important assumptions by Stornoway or its consultants in making forward-looking statements include, but are not limited to: (i) anticipated geological formations; (ii) Stornoway’s interpretation of the geological drill data collected and its potential impact on stated Mineral Resources and mine life; (iii) future exploration plans and objectives. Additional risks are described in Stornoway's most recently filed Annual Information Form, annual and interim MD&A, and other disclosure documents available under the Corporation’s profile at: www.sedar.com. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. We caution readers not to place undue reliance on these forward- looking statements as a number of important risk factors could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates, assumptions and intentions expressed in such forward-looking statements. These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur, including the assumption in many forward-looking statements that other forward-looking statements will be correct, but specifically include, without limitation: (i) risks relating to variations in the grade, kimberlite lithologies and country rock content within the material identified as Mineral Resources from that predicted; (ii) variations in rates of recovery and breakage; (iii) the uncertainty as to whether further exploration of exploration targets will result in the targets being delineated as Mineral Resources; (iv) uncertainty of results of exploration in areas of potential expansion of resources; (v) changes in development or mining plans due to changes in other factors or exploration results; and (vi) the additional risks described in Stornoway's most recently filed Annual Information Form, annual and interim MD&A and Stornoway's anticipation of and success in managing the foregoing risks. Stornoway cautions that the foregoing list of factors that may affect future results is not exhaustive, and new, unforeseeable risks may arise from time to time.
3
Forward-Looking Information (continued)
Readers are referred to the technical report dated as of February 28th, 2013 entitled “The Renard Diamond Project, Québec, Canada, Feasibility Study Update, NI 43-101 Technical Report, February 28, 2013” in respect of the January 2013 Optimization Study, and the press release dated September 24, 2015 in respect of the September 2015 Mineral Resource estimate for further details and assumptions relating to the project.
The Qualified Persons that prepared the technical reports and press releases that form the basis for the presentation are listed in the Company’s AIF dated July 27, 2015. Disclosure of a scientific or technical nature in this presentation 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. Darrell Farrow, PrSciNat, P.Geo.(BC), Ordre des geologues du Quebec (Special Authorisation # 332) of GeoStrat Consulting Services Inc. is the independent Qualified Person responsible for preparation of the mineral resource estimate for the Renard Diamond Project. GeoStrat Consulting Services Inc, a mineral resources consultancy, focuses on client interaction and involvement in developing resource models, and has experience in exploration, geological modeling, resource evaluation, production, resource reconciliation and accounting of diamond deposits around the globe. GeoStrat has verified the results disclosed herein with respect to the mineral resources, and has conducted appropriate verification on the underlying data, including visitations to the Renard site and the primary process laboratories.
The Renard Diamond Project, December 23, 2015
4
Stornoway Diamond Corporation TSX:SWY
Notes: 1. Assuming a C$:US$ conversion rate of C$1.10
Fully Financed, Strong Balance SheetC$946M1 project financing completed July 2014
On Budget, On ScheduleConstruction 52.7% complete compared to 49.0% planned by end October 2015. Forecast cost to complete within C$811m budget. Plant Commissioning 2H 2016. Commercial Production 2Q 2017.
100% Ownership in Renard, Québec’s First Diamond MineRoad Accessible; Strong Social License; Fully Permitted; Under Construction
The Renard Diamond Project, December 23, 2015
5Publicly Listed Diamond Producers, Developers and ExplorersConsensus Analyst Views on Value
Ticker Price(8/21/16)
Shares O/S
(mm)
Market Cap
($mm)NAV/sh(1) Current
P/NAV(1) Target (1) % Return to Target
AnnualDividend
Diamond ProducersALROSA ALRS:M ₽56.70 7,365.0 ₽417,593 (n/a) (n/a) ₽72.15 30% ₽1.47/sh
Dominion Diamonds DDC:T $14.25 85.1 $1,213.2 $30.82 0.5x $23.29 67% US$0.40/sh
Gem GEMD:LN £1.08 138.3 £149.3 £2.10 0.5x £1.74 65% US$0.05/sh
Lucara LUC:T $2.16 379.6 $819.8 $2.88 0.7x $3.00 42% $0.06/sh
Petra PDL:LN £0.695 512.1 £355.9 £1.64 0.4x £1.41 106% £0.02/sh
Diamond DevelopersFirestone FDI:LN £0.175 309.0 £54.1 £0.49 0.4x £0.45 157% (n/a)
Mountain Province MPV:T $3.86 159.7 $616.3 $6.23 0.7x $5.57 61% (n/a)
Stornoway SWY:T $0.70 732.3 $512.6 $1.38 0.5x $1.15 65% (n/a)
Diamond ExplorersKennady Diamonds KDI:LN $2.72 46.3 $125.8 (n/a) (n/a) (n/a) (n/a) (n/a)
North Arrow Minerals NAR:V $0.155 54.0 $8.4 (n/a) (n/a) (n/a) (n/a) (n/a)
Peregrine Diamonds PGD:T $0.105 282.7 $29.7 (n/a) (n/a) (n/a) (n/a) (n/a)
Shore Gold SGF:T $0.195 248.7 $48.5 (n/a) (n/a) (n/a) (n/a) (n/a)
Notes:
1. Bloomberg and Thomson One Analyst Consensus
All Currencies in C$ unless specified
66
Renard: Québec’s First Diamond Mine
7
Lynx
R10
N
R7
R1Hibou
R4
R9R2 R3
R65
R8
Kimberlite Bodies with Measured and Indicated
Resources
Hibou
Lynx
R4
R9R2
R3
R65
Kimberlite Bodies with Resource Potential
R1Hibou
Lynx
Legend
Stornoway PropertiesHydro-Québec FacilityRenard KimberlitesKimberlitic DykeRegional Kimberlites
Hydro-Québec PowerlinesRoute 167 Extension/ Renard Mine RoadRoadExploration/ Mining Projects
LEGEND:
0 1 2
Kilometers
60 0 60 120
Kilometers
Renard
LG3LG2LG4
Laforge 1
Laforge 2
Brisay
Foxtrot Property
StratecoEastmain MineWestern Troy
Troilus Mine
Eleonore
Temiscamie
Mistissini
ChibougamauMatagami
Wemindji
Renard Kimberlite Bodies
Kimberlite Bodies with Inferred Resources
8
800m
900m
1100m
1200m
1000m
Renard Mine Plan and Key Operating AssumptionsA Combined Open Pit and Underground Operation
Notes1. Key Assumptions:C$1=US$1, Oil US$95/barrel, 2.5% real terms diamond price
growth, 82.9% ore recovery, 23.8% mining and internal dilution, 0cpht dilution grade.
2. Expressed in May 2011 terms. Average price US$190/carat in March 2014 terms.
3. Expressed in October 2012 terms, as adjusted in October 2013 LNG FS. Includes C$754m of costs and contingencies and C$57m of escalation allowance.
4. Expressed in October 2012 terms. Operating costs C$54/tonne in October 2013 LNG FS terms. Excludes capitalized preproduction costs.
5. Before stream
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 .
Reserve Based Mine Plan1
(Jan 2013 FS Optimization and October 2013 LNG Option FS)
Mine Life 11 yearsMineral Reserve 17.9 mcaratsAve. Diamond Price2 $180/caratProduction Rate 2.2 mtonnes/yrAve. Diamond Production 1.6 mcarats/yrGross Revenue (C$M)2 $4,268Initial Capital Costs3 $811mOperating Cost4 $58/t ($76/carat)Operating Margin5 67%Payback 4.8 years
0m
100m
200m
400m
600m
700m
500m
300m
Renard 4
Renard 9
Renard 65Renard 2 Renard 3
Mineral Resource Estimate Effective September 24, 2015 (NI 43-101)
13 mcarats Inferred Mineral Resources33 to 71 mcarats TFFE
30 mcarats Indicated Mineral Resources
An Updated Renard Mine Plan, scheduled for Q2 2016, is expected to include additional mine production from new Indicated Mineral Resources in Renard 2 and Renard 65, deepening of the Renard 2-3 open pit, extension of the underground mine infrastructure to 700m, and an optimized schedule for plant commissioning and ramp-up.
9
0
20
40
60
80
100
120
140
160
180
The Feasibility: 11 years of mining on 18mcarat Mineral Reserve (24mtonnes)
Permitting and Long Term Plan
The Vision: Deposit still Open
Millions of Tonnes TFFE High Range
Inferred Mineral Resource
TFFE Low Range
Indicated Mineral Resource
The Renard Diamond ProjectA Large, High Value Diamond Resource with a Very Long Mine Life Potential
0m
100m
200m
400m
900m
700m
500m
300m
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.
Renard 6529/24cpht
Renard 3102/112cpht
Renard 461/52cpht Renard 9
53cpht
Renard 284/59cpht
800m
600m
1100m
1200m
1000m
30 mcarat Indicated Mineral Resource
13 mcarat Inferred Mineral Resource
33-71 mcarat TFFE
Mineral Resource Estimate Effective September 24, 2015 (NI 43-101)
10
Rough Diamond Pricing 2009-2016
WWW Rough Diamond Price Index
1-Jan-09 1-Jan-10 1-Jan-11 1-Jan-12 1-Jan-13 1-Jan-14 1-Jan-15 1-Jan-1650
100
150
200
250
300
350
WWW Rough Index, Renard Model Price Growth, No Inflation
Inde
x to
200
9=10
0
USD
CAD
FS 2.5% Price Model (Nominal, adjusted
for CPI) with +/- 10% Sensitivity
May 2011 FS Diamond Valuation
March 2014 Diamond Valuation
11Why Stornoway? Renard’s Cash Flow PotentialBased on Base Case Economics
Renard is Expected to Generate Substantial Cash Flow over its first 11 years of Mining
After Tax, After Stream Operating Cash Flow of between $150 and $250 million, or $0.20 to $0.30 per share
Assumptions
Mineral reserve case only, averaging 1.6mcarats per annum at US$190/carat
Capital and operating cost parameters as established in the January 2013 Optimization Study and October 2013 LNG FS
Base case diamond pricing from March 2014; No “special” diamonds.
2.5% annual real diamond price escalation
C$:US$ conversion rate of C$1.10
Based on terms of Financing Transaction closed on July 8th 2014
Assumes full conversion to equity of US$81million of Convertible Debentures giving 825 million shares outstanding.
Significant Upside Potential from Resource, Large Diamonds and Processing Capacity
1212
Renard Construction Progress
13
Jean-Charles Dumont
VP Finance
SWY since 2011Formerly Corporate Controller of La Mancha.
Ebe ScherkusChairman of the
Board
Stornoway’s Management CredentialsExperience in Building and Operating Major Projects
Matt Manson President, CEO
& Director
Pat GodinCOO & Director
SWY since 2011Formerly President and COO of Agnico Eagle Mines Ltd. Executive Chairman of Premier Gold
SWY since 2007Formerly VP Marketing/VP Technical Services, Aber Diamond Corp (Dominion Diamond; Diavik Project)
SWY since 2010Formerly VP Project Development Gmining (Essakane Mine). Successive mine management and project development positions, Cambior
Ian HollVP Processing
SWY since 201420 years experience De Beers in plant construction, commissioning and operation (Victor, Snap Lake, Jwaneng Mines) Yves Peron
VP Engineering & Construction
SWY since 2012Formerly VP Bus. Dev. at Delsaer and Seneca. Successive management roles at ArcelorMittal and Xstrata.
Martin BoucherVP Sustainable Development
SWY since 2010Formerly Canadian Royalties (Nunavik Project) and Xstrata (Raglan, Gaspesia, Koniambo Mines)
Brian GloverVP Asset Protection
SWY since 2012Formerly Director Security Operations at Harry Winston (Dominion Diamond). More than 20 years experience RCMP.
Robin HopkinsVP Exploration
SWY since 2006Formerly Aber Resources and discovery of the Diavik Mine.
14
R2-R3
R65
Site ProgressSite Overview Dec 23, 2015
Admin
Process Plant
Accommodation
Maintenance Shop
R2-R3 PitR65 Pit
UG Mine Portal
Crusher
Power Plant
15Access Infrastructure In PlaceThe 240km long Route 167 Extension and the Clarence and Abel Swallow Airport
Eastmain River Bridge March 2015
September 2015July 2014
November 2015
Airport Naming Ceremony, March 2015
16Site ProgressMajor Facilities
Maintenance Facility Inauguration, September 24, 2015
Maintenance Facility
LNG Power Plant
Jan 6, 2016
LNG Power Plant
17
6,000tpd (2.2Mt/a) nameplate capacity, expandable to 7,000tpd (2.6Mt/a)
Large Diamond Recovery (“LDR”) to optimize large stone potential of Renard size frequency distribution.
Flow sheet:• Primary jaw crushing to < 230mm• Twin DMS circuits at +1mm -19mm• LDR circuit at +19mm -45mm,
scalable to -60mm• Oversize +45mm to secondary cone
crusher• LDR and DMS tails +6mm -19mm to
tertiary High Pressure Grinding Rolls
Thickening and centrifugal treatment of fines and tails to create a truckable product for dry-stack disposal.
Diamond Processing PlantRepresents Single Largest Cap-ex Item and Critical Path for Overall Construction
18Project ScheduleBased on Construction Mobilization July 10th 2014
Feasibility Study (Complete)
ESIA (Complete)
Public Hearings (Complete)
Reg. Authorizations (Complete)
Specific Operating Permits (50)
Road Construction (Complete)
Project Financing (Complete)
Detailed Engineering
Site Construction
Commissioning and Ramp-up
Commercial Production
2012
2H 2H 2H 2H2H 1H 1H 1H1H
2013 2014 2015 2016
2H1H
2017
Based on the Renard Diamond Project Construction Schedule, Plant Commissioning is Planned for H2 2016 and Commercial Production in Q2 2017.
Jan 2016
First Vehicle Access
Completion Status
Construction (to Oct 31): 52.7% (planned 49.0%)
Engineering (to Oct 31): 94.3% (planned 97.7%)
19
Renard Site Progress
Follow the construction of the Renard major mine facilities and
process plant interior at www.stornowaydiamonds.com
@swydiamonds @MattLManson
20Open Pit MiningRenard 2 – Renard 3 Pit Pre-stripping Commenced March 2015
R2-R3
R65
Portal
Mining Progress as of October 31 2015 4,819,672 tonnes extracted from R2/R3 and R65 pits vs
plan of 5,210,884 (92%)
R2-R3 Pit October 30, 2015
21
Jumbo in Decline, May 25, 2015 Decline Ventilation, Sept 25, 2015
R2-R3
R65
Portal
Decline Progress as of October 31, 2015
837m against plan of 916m (91%)
Underground Mining
2222
Corporate Data
23
ShareholdingShare Price (TSX-SWY):Jan 21, 2016 C$ $0.70
52 week High-Low C$ $0.51–$0.85
Average Daily Volume:Last 12 Months 337,760
Market Capitalization: C$ 513 million
Total Shares Outstanding: 732 million
Total Options & Warrants Outstanding:(28.9m Options $0.51-$2.50; 123.3m warrants $0.90-$1.21)
152 million
Consolidated Cash1: (as of October 31, 2015) C$ 290 million
Consolidated Debt1: (as of October 31, 2015) C$ 219 million
Undrawn Financing Commitments2: (Subject to Financing Agreement CPs) C$ 214 million
Balance Sheet
Balance Sheet and Capital Structure
Notes1. Unaudited2. Assuming a C$:US$ conversion rate of C$1.10. Does not include $48 million in Cost Overrun Facilities
Investissement Québec 28.6% 22.7%
Orion Mine Finance 19.5% 17.5%
CDPQ 6.1% 6.2%
Float 45.8% 53.6%
DilutedBasic
24Sources and Uses of Funds to October 31, 2015On Current C$:US$ Exchange Rates, Unless Noted. Unaudited
(all amounts in millions of C$) AssumedActual use
of Proceeds to Oct 31,
2015
Renard Diamond Project
Capital Expenditures 811 421
Route 167 Extension (1) 70 70
Financing Costs, Interest during Construction, Loan Repayments 58 27
Mine Closure Guarantee 16 3
Pre-production Net Revenue (26) -
Total Project Costs 929 521
General Corporate Purposes
Equity fees and transaction costs 18 27
General working capital, administrative and salary expenses 14 6
Total Uses 961 554
Costs
Notes1. The total amount borrowed pursuant to the Renard Mine Road loan was $77 million, of which $70 million was used for construction of the Renard Mine Road and
$7 million was used for civil works related to the airstrip. Costs related to the airstrip were included in the $811 million capital expenditures line in the table above.2. Assuming a C$:US$ conversion rate of C$1.253. Cost Overrun Facility includes the $20 million Senior Loan Facility, Tranche B and the $28 million Cost Overrun Facility with the CDPQ4. This forecast assumes a project cost of $811 million (which includes assumed levels of escalation and contingencies), the satisfaction of all covenants and
conditions precedent for future funding, and a CAD$:US$ exchange rate of $1.25 for unfunded US dollar denominated financing commitments. As construction of the Renard Diamond Project progresses, this forecast is expected to change quarter to quarter based on the timing of expenditures and receipts, volatility in the CAD$:US$ exchange rate, and any change to the forecast cost of the project..
(all amounts in millions of C$)
Sources of Funds
Stream Deposits not yet received (2) 113
Senior Loan Facility, Tranche A 100
Cost Overrun Facility(3) 48
Equipment Financing Facility(2) 17
Undrawn Sources of Funds
As of October 31, 2015, Stornoway forecasts excess financing capacity available to complete the project of approximately $100 million comprised of $52 million of cash, receivables and expected mine tax credits and $48 million of undrawn cost overrun facilities(4).
25
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
Tel: +1 (416) 304-1026 x2103
www.stornowaydiamonds.com
2626
Appendix 1: Stornoway’s C$946M Project Financing for Renard
27
Renard Project Financing Transaction Structure
Type Amount (% of Total) Description
Common Equity C$374M (40%)• C$132M marketed public equity offering of subscription receipts• C$242M private placement to Orion (US$110M), RQ (C$100M) and Caisse (C$22M)
Diamond Stream US$250M (29%) • 20% diamond stream (Orion 16%, Caisse 4%) with ~US$56/ct(1) ongoing payment
Convertible Debentures US$81M (9%) • Provided by Orion; 7 year, 6.25% coupon, 35% conversion premium to equity issue price
Senior Debt C$120M (11%) • Provided by IQ; 7 year amortizing payment, Fixed (QC Bond)+5.75% or Prime +4.75%
Equipment Financing US$35M (4%) • Provided by Caterpillar
Cost Overrun Facility C$48M (5%) • C$20M provided by IQ (same terms as senior debt)• C$28M provided by Caisse (unsecured, 7 year term, 10% coupon)
Total C$946M (100%)
Assumes US$1.00 = C$1.101. Includes reimbursement of marketing expenses
Counter-Party Amount (% of Total)
Orion Mine Finance C$367M (39%)
Investissement Québec/ Ressources Québec C$240M (25%)
Caisse de dépôt et placement du Québec C$105M (11%)
Caterpillar Financial C$39M (4%)
Public C$195M (21%)
Total C$946M (100%)
C$77M
C$811MC$946M
C$70M
C$67M
Financing Funding Requirements
New Financing
Existing Financing
C$48M COF & C$27M Working Capital
Financing Costs & Interest During Construction
Renard Mine Road
Initial Capex & Escalation Allowance
28The Renard Diamond StreamThe World’s First Diamond Streaming Arrangement
The buyers of the Renard stream purchased 20% of the LOM production from R2, R3, R4, R9 and R65 for US$56/carat1, escalating at 1% per annum on 3rd anniversary of commercial production.
Stornoway is to receive US$250million as a deposit on the streaming agreement, funded in three tranches, representing 34% of the initial capital for the project and 29% of the overall financing plan.
The high operating margins of the Renard project and front-ended capital requirements make it ideally suited for a streaming arrangement.
Notes1. includes reimbursement of marketing expenses. 2. Average over 11 Year Mineral Reserve Case, Nominal Terms. 3. Shows the impact of a US$1.00 = C$1.25 exchange rate compared to the US$1.00 = C$1.00 rate utilized in the January 2013 Optimization Study
$58.92$5.04
$20.43
$76.63 $7.76 $58.92
OS Jan 2013 LNG OS Oct 2013 Stream Exchange Rate Cash cost/ct
Effective Project Cash Cost, Before and After Stream (US$/ct)1
2929
Appendix 2: Renard Technical Data
30The Renard Diamond ProjectQuébec’s First Diamond Mine
Chibougamau
Montréal
Toronto
800km
360km
Renard
1996: Start of initial regional exploration by Ashton & SOQUEM
2001: First kimberlite discovery
2001-08: Drilling, “mini-bulk” sampling, bulk sampling
2008-10: First NI 43-101 Resource and PEA
November 2011: Feasibility Study issued. First mineral reserve
December 2012: ESIA filed
February 2012: Road construction commences under Plan Nord
March 2012: “Mecheshoo Agreement” executed
Nov.-Dec.2012: Mining Lease and Québec Authorizations issued
January 2013: Optimization Study issued
July 2013: Federal Canadian Authorizations Issued
September 2013: Road opens
April-July 2014: $C946m financing completed. Construction commences
2Q 2017: Scheduled Commercial Production
2001: First Kimberlite Discovery
+7-9 Years: First NI 43-101 Resource and PEA
+16 Years: Commercial Production
+12 Years: Final Authorizations Issued
31Renard Diamond Project NI 43-101 Mineral Resource EstimateEffective September 24 2015. Changes to Previous Estimate Shown in Italics
Notes1 Resource categories were completed in accordance with the "CIM Definition Standards on Mineral Resources and Reserves". Mineral resources that are not mineral reserves do not have demonstrated economic viability. 2 Totals may not add due to rounding.3 Carats per hundred tonnes. Estimated at a +1 DTC sieve size cut-off.4 Diamond valuation data utilized for the test of prospects of reasonable economic extraction are derived from a diamond valuation exercise undertaken in March 2014 (see Stornoway Annual Information Form dated July 2015).
Indicated Mineral Resources(1,2,4)
Contained Carats (millions) Tonnes (millions) Grade (cpht)(3)
Renard 2, All Units 21.58 +15.6% 25.70 +38.3% 84 -16.4%Renard 2, w/o CRB-2A, CRB 20.39 +11.0% 20.52 +15.9% 99 -4.3%
CRB-2A 0.29 +2.6% 0.90 +2.6% 32 --CRB 0.90 n/a 4.28 n/a 21 n/a
Renard 3 1.86 +2.3% 1.82 +3.4% 102 -1.0%Renard 4 4.44 +3.0% 7.25 -- 61 +3.0%Renard 65 2.30 -- 7.87 -- 29 --
Total Indicated Mineral Resources 30.17 +11.4% 42.63 +20.2% 71 -7.4%
Inferred Mineral Resources(1,2)
Contained Carats (millions) Tonnes (millions) Grade (cpht)(3)
Renard 2, All Units 3.88 -48.0% 6.59 -44.0% 59 -7.2%Renard 2, w/o CRB 3.36 -46.1% 4.08 -22.0% 82 -30.9%CRB 0.53 -57.6% 2.51 -61.6% 21 +10.5%
Renard 3 0.61 -- 0.54 -- 112 --Renard 4 2.46 +3.5% 4.75 -- 52 +3.5%Renard 65 1.18 -- 4.93 -- 24 --Renard 9 3.04 -- 5.70 -- 53 --Lynx 1.92 -- 1.80 -- 107 --Hibou 0.26 -- 0.18 -- 144 --
Total Inferred Mineral Resources 13.35 -20.8% 24.49 -17.5% 54 -4.0%
Inferred Mineral Resources
Indicated Mineral Resources
High Range TFFE
Renard 65775m depth
Renard 4775m depth Renard 9
775m depth
Renard 21,250m depth Renard 3
1,250m depth
North East View
32Renard Diamond Project Exploration PotentialEffective September 24 2015. Changes to Previous Potential Shown in Italics
Notes1 Target for Further Exploration: represents potential upside that can be reasonably assumed given the nature and grade of material within the current 2015 Mineral Resource. The Renard 2 shape has been projected 250m below the deepest kimberlite intersection at 1,000m depth. Tonnage and grade ranges are not directly applicable to potential total carats.The potential quantity and grade of any Exploration Target is conceptual in nature, there has been insufficient information to define a mineral resource, and it is uncertain if further exploration will result in the target being delineated as a mineral resource. 2 Carats per hundred tonnes. Potential at a +1 DTC sieve size cut-off.
NotesResource categories were completed in accordance with the "CIM Definition Standards on Mineral Resources and Reserves". Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Area indicated in yellow represents a gap in drill coverage that may represent additional exploration potential outside of the current Mineral Resource Estimate and not included in the current Targets for Further Exploration.
Renard 65775m depth
Renard 4775m depth Renard 9
775m depth
Renard 21,250m depth Renard 3
1,250m depth
Inferred Mineral Resources
Indicated Mineral Resources
High Range TFFE
North East View
Targets for Further Exploration(1)
Contained Carats (millions)
Tonnes (millions) Grade (cpht)(2)
Renard 1 1.7 to 3.9 8.6 to 13.0 20 to 30
Renard 2, All Units 3.7 to 15.5 6.1 to 15.5 60 to 100
Renard 3 3.6 to 6.3 3.4 to 3.8 105 to 168
Renard 4 5.6 to 11.8 11.1 to 15.4 50 to 77
Renard 65 7.3 to 13.5 29.0 to 40.9 25 to 33
Renard 7 1.9 to 3.8 6.3 to 9.4 30 to 40
Renard 9 2.0 to 4.3 3.9 to 6.3 52 to 68
Renard 10 0.7 to 2.1 1.2 to 1.7 60 to 120
Lynx 3.0 to 3.8 3.1 to 3.2 96 to 120
Hibou 3.6 to 6.1 3.5 to 4.0 104 to 151
Total TFFE 33.0+28% to 71.1
+40%76.2
+49% to 113.2+51%
R10 R7 R1 R65
R4 R9
R2R3
NW 4 km SE
33Renard 2 Mineral Resource UpdateEffective September 24 2015. Changes to Previous Estimate Shown in Italics
Pipe shape at surface (1.89ha)
High TFFE at 1,250m (1.38ha)
Notes1 Reserve and Resource categories were completed in accordance with the "CIM Definition Standards on Mineral Resources and Reserves". Mineral resources that are not mineral reserves do not have demonstrated economic viability. 2 Totals may not add due to rounding.3 Carats per hundred tonnes. Estimated at a +1 DTC sieve size cut-off.4 Diamond valuation data utilized for the test of prospects of reasonable economic extraction are derived from a diamond valuation exercise undertaken in March 2014 (see Stornoway Annual Information Form dated July 2015).
0m
700m
850m
1250m
INDICATED
INFERRED
TFFE
600m: Base of Previous Indicated Mineral Resources
Depth Below
SurfaceKimberlite
outlineat surface (0.75ha)
Low TFFE at 1,250m (0.62ha)
Base of New Indicated
Resources (1.55ha)
Indicated Mineral Resources(1,2,4)
Contained Carats (millions) Tonnes (millions) Grade (cpht)(3)
Renard 2, All Units 21.58 +15.6% 25.70 +38.3% 84 -16.4%Renard 2, w/o CRB-2A, CRB 20.39 +11.0% 20.52 +15.9% 99 -4.3%
CRB-2A 0.29 +2.6% 0.90 +2.6% 32 --CRB 0.90 n/a 4.28 n/a 21 n/a
Inferred Mineral Resources(1,2)
Contained Carats (millions) Tonnes (millions) Grade (cpht)(3)
Renard 2, All Units 3.88 -48.0% 6.59 -44.0% 59 -7.2%Renard 2, w/o CRB 3.36 -46.1% 4.08 -22.0% 82 -30.9%CRB 0.53 -57.6% 2.51 -61.6% 21 +10.5%
Target for Further Exploration(1)
Contained Carats (millions)
Tonnes (millions) Grade (cpht)(2)
Renard 2, All Units 3.7 to 15.5 6.1 to 15.5 60 to 100
North View Renard 2 NI 43-101 Mineral Resource Estimate
Renard 2 Targets for Further Exploration
Notes1 Represents potential upside that can be reasonably assumed given the nature and grade of material within the current 2015 Mineral Resource. The potential quantity and grade of any Exploration Target is conceptual in nature, there has been insufficient information to define a mineral resource, and it is uncertain if further exploration will result in the target being delineated as a mineral resource. 2 Carats per hundred tonnes. Potential at a +1 DTC sieve size cut-off.
Pinch in model in area lacking drill
coverage
34Renard 2 Geological Model and Unit GradesEffective September 24 2015. Changes to Previous Estimate Shown in Italics
Within the Indicated Mineral Resources Average Grade
(cpht)(1)Average Dilution
(%)(2)
Kimb 2a (“Blue”) 76 +3.0% 52 -0.9%Kimb 2b (“Brown”) 145 +1.0% 30 -0.9%Kimb 2c (HK)3 229 +0.5% 12 -3.1%CRB-2a 32 -- 93 --CRB 21 n/a 96 n/a
Within the Inferred Mineral Resources Average Grade
(cpht)(1)Average Dilution
(%)(2)
Kimb 2a (“Blue”) 67 -2.4% 65 +9.2%Kimb 2b (“Brown”) 145 +0.3% 30 +1.5%Kimb 2c (HK)3 229 +0.5% 12 -3.1%CRB 21 +10.5% 96 --
Notes1 Carats per hundred tonnes. Estimated at a +1 DTC sieve size cut-off.2 Represents the average amount of non-diamond bearing country rock estimated within each geological unit. 3 The Kimb 2c (Hypabyssal Kimberlite, or “HK”) unit is a constituent component of each of the Kimb2a, Kimb2b, CRB and CRB-2a units.
Renard 2 Average Mineral Resource Grades, by Geological Unit
Kimb2b (“Brown”)
Kimb2a (“Blue”) CRB CRB-2a Kimb2c (HK)
West View
Contact
Pinch in model in area lacking drill coverage
0m
700m
850m
1250m
INDICATED
INFERRED
TFFE
600m: Base of Previous Indicated Mineral Resources
Depth Below
Surface
North View
Photographs of geological units from
the 2007 Renard underground bulk sample program
35Renard 2 Geological Model and Renard 2-Renard 3 ConvergenceEffective September 24 2015
Pipe shape at surface (1.89ha)
Kimberlite outlineat surface (0.75ha)
Kimb2b (“Brown”)
Kimb2a (“Blue”)
CRBCRB-2a
Surface View, Looking Down
Surface View, Looking Down
0m
700m
850m
1250m
R2 INDICATED
R2 INFERRED
R2 TFFE
Depth Below
Surface
R3 INDICATED
R3 INFERRED
R3 TFFE
North East View
Resource categories were completed in accordance 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, there has been insufficient information to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource.
Renard 2 Renard 3
Renard 2
Renard 3
126.6m R3 intersection in DDH R2-81J (in red) starting 942.2m downhole: 47m true width.
R3 TFFE: >500m potential between drill intersections
36
Chronology of Renard StudiesFeasibility 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 PlanCompanion 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 gen-sets
Resource UpdateReleased September 2015. NI 43-101 Resource update with 11% increase in Indicated Resource contained carats
37January 2013 Optimization Study Project Assumptions, Valuation and Pay-Back in the January 2013 FS Optimization Study
Key Assumptions in the Financial Model1
Mining Parameters
Reserve Carats (M) 17.9Tonnes Processed (M) 23.8Recovered Grade (cpht) 75Average Ore Recovery (%) 82.9%Average Mining Dilution (%) 17.9%Dilution Grade (cpht) 0Processing Rate (Mtonnes/annum) 2.2Mine Life (years) 11
Cost Parameters
Initial Cap-ex (C$M)2 $752LOM Cap-ex (C$M)4 $1,013Oil Price (US$/barrel)2 $95LOM Op-ex (C$/tonne)2 $57.63LOM Op-ex (C$/carat)2 $76.63
Revenue Parameters
Gross Revenue (C$M)2 $4,268Marketing Costs 2.7%DIAQUEM Royalty 2.0%Cash Operating Margin (C$M)2 $2,693% Operating Margin 67%Income Tax, Mining Duties and IBA Payments (C$M)1 $625After Tax Net Cash Flow (C$M) $1,084
Diamond Price
Parameters3
Renard 2 and Renard 3 (US$/carat) $182Renard 4 (US$/carat) $164Diamond Price Escalation 2.5%Exchange rate 1C$=1US$
Schedule Parameters6
Effective Date for NPV Calculation Jan. 1 2013Construction Mobilization/Early Works Aug. 1 2013Plant Commissioning Commences Dec. 1 2015Commercial Production Declared Jun. 1 2016
Valuation Results5 (C$m)
Pre-Tax After Tax NPV5% $894 $537
NPV7% (Base Case) $683 $391 NPV9% $514 $274
IRR 20.4% 16.3% Pay-Back (years) 4.69 4.82
Notes
1. Optimization Study, released January 28th 2013.
2. Expressed in October 2012 terms.
3. Expressed in May 2011 terms.
4. Expressed in nominal terms.
5. Expressed in de-escalated nominal terms.
6. Schedule parameters are based on the schedule in the Optimizaton Study, released on January 28th 2013. For revised schedule, please see our AIF dated July 27th, 2015.
38
Probable Mineral Reserve Mining Recovery Factors Utilized in the Reserve Calculation
Kimberlite Grade(cpht)
Tonnes(millions)
Contained Carats(Millions)
Internal Dilution
Mining Recovery
MiningDilution
Renard 2 OP 95 1.31 1.24 0.0% 96.0% 7.1%Renard 2 UG 80 17.03 13.62 7.0% 82.4% 20.2%Renard 3 OP 93 0.72 0.67 0.0% 96.0% 10.5%Renard 3 UG 84 1.00 0.84 21.1% 85.0% 14.0%Renard 4 UG 42 3.72 1.58 1.4% 78.2% 14.0%
Total 75 23.79 17.95 5.9% 82.9% 17.9%
Notes: Reserve categories are compliant with the "CIM Definition Standards on Mineral Resources and Reserves". Totals may not add due to rounding. Grades are estimated at a +1DTC sieve size cut-off.
R2 ; 83%
R3, 8%R4, 9%
Revenue
R2 ; 77%
R3; 7%
R4; 16%Tonnage
R2 ; 83%
R3; 8%R4; 9%
Carats
NI 43-101 Probable Mineral ReservesJanuary 28th 2013
39Renard’s DiamondsLarge Diamond Potential Not Included in Base Case Diamond Valuation Models
March 2014 Diamond Valuations (WWW International Diamond Consultants Ltd.)
Kimberlite Body
Size ofValuation Sample(carats)
WWW March 2014 Sample
Price(US$/carat)1
WWW March 2014 Base Case
Price Model(US$/carat)1
Sensitivities(Minimum to High)
Renard 2 1,580 $187 $197 $178 to $222
Renard 3 2,753 $179 $157 $146 to $192
Renard 4 2,674 $101 $106 ($155)2 $100 to $174
Renard 65 997 $262 $187 $175 to $211
Notes
1. All prices in US$/carat. Samples utilizing a +1 DTC sieve size cut-off.
2. Should the Renard 4 diamond population prove to have a diamond population with a size distribution equal to the average of Renard 2 and 3, WWW have estimated that a base case diamond price model of $155 per carat based on March 2014 pricing. Source: WWW March 2014 Valuation Update
Three Renard 65 diamonds: 9.78 ct and 6.41 ct diamonds recovered from bulk sampling and a 4 carat stone discovered in drillcore in 2003
Base Case Diamond Valuation Estimates Using Best Practice Methodology
Average diamond price estimate in March 2014 for the Mineral Reserves at US$190/ct (un-escalated) compared to US$180/ct in the January 2013 Optimization Study.
High Quality Production with Large Stone Potential
The Renard kimberlites have similar, but marginally different diamond populations exhibiting a high incidence of large white gems.
Coarse Size Distribution in Renard 2 predicts three to six 50-100ct stones and one to two +100ct stones every 100,000 carats (two to three weeks).
Substantial revenue potential from large diamonds not accounted for in the base case cash-flow model.
40Stornoway will be a Significant Diamond ProducerCurrent and Future Diamond Producers
Source: Kimberly Process, WWW and Company Reports
Latest 12 Month Sales/ Forecast Future Average Sales 1 De Beers (Anglo/Botswana) $6,312m
2 Alrosa (Russia) $4,901m
3 Dominion Diamond (TSX: DDC) $872m
4 Rio Tinto (ASE: RIO) $801m
5 Petra (L: PDL) $425m
6 Stornoway (note 2; TSX: SWY) $310m7 Mountain Province (note 2; TSX: MPV) $259m
8 Gem Diamonds (TSX: GEMD) $241m
9 Lucara (TSX: LUC) $229m
10 Firestone (note 3; L: FDI) $125m
11 Others $2,525m
Total $17,000m
DeBeers37%
Alrosa29% Domin-
ion5%RioT-into5%
Petra3%
SWY2%
MPV1%
GEM1%LUC
1%Fire-
stone1%
Others15%
Notes:
1. Renard estimated at FS average annual diamond production of 1.63 million carats, and WWW March 2014 weighted diamond price of US$190/ct, un-escalated
2. Gahcho Kué estimated at 49% of Revised FS average annual production of 4.45 million carats, and average modeled diamond price of US$118/ct, un-escalated
3. Firestone estimated at revised 2015 mine plan average annual production of 0.95 million carats at an average price of US$132/ct un-escalated
6 Stornoway (note 1; TSX: SWY) $310m
41
Liquefied Natural Gas Power Plant
The November 2011 Feasibility Study and January 2013 Optimization Study both contemplated on-site power generation using traditional diesel fueled gen-sets.
With a view to project optimization, in 2013 Stornoway undertook an investigation into a more cost efficient alternatives for on-site power supply.
On October 21st 2013 Stornoway announced it will proceed with an LNG fuelled gen-set option, made possible by the ability to receive regular cryogenic LNG shipments on the Renard Mine Road.
The Renard LNG plant will comprise seven 2.1MW rated gas gen-sets, providing sufficient power generation capacity for the project’s normal operating specification of 9.5MW.
LNG has significant cost and environmental advantages over traditional diesel powered gen-sets and a Hydro-Québec power-line option.
Diesel will continue to be used for the mobile mining fleet and construction activities.
42Liquefied Natural Gas Power PlantFeasibility 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 $2.6m.• Up to 43% less greenhouse gas emissions.• stable supply market utilizing existing commercial distribution network within Québec.• Elimination of on-site propane, as LNG will be used for building and underground mine
heating
Cost Improvements with LNG 2013 Optimization Study with Diesel
2013 Optimization Study with LNG
Unit Power Cost (C$/kWh) 1 $0.299 $0.188 (-37%)Unit Operating Cost (C$/tonne) 1,2 $57.63 $53.84 (-7%)Initial Capital Cost (C$m) 1 $752.1 $754.0 (+0.3%)Life of Mine Capital Cost (C$m) 1,3 $1,013 $1,010 (-0.3%)Annual Diesel Consumption (million litres) 27.5 5.9 (-79%)Annual LNG Consumption (thousand m3/annum) n/a 41.7Annual Propane Consumption (thousand m3/annum) 3.5 n/a
Notes
1. 2013 Optimization Study costs expressed in October 2012 terms.
2. Excludes capitalized preproduction costs.
3. Includes all initial, sustaining and deferred capital, contingencies and escalation
Key Assumptions
Based on the 11 year reserve-based mine life (17.9 mcarats) contained within the 2013 Optimization Study, with a normal operating load of 9.49MW, C$1=US$1, Oil US$95/barrel
4343
Appendix 3: Management Biographies
44
Marie-Anne TawilIndependent/ IQ Designate
Hume KyleIndependent
Pat GodinCOO & Director
Matt Manson President, CEO
& Director
John LeBoutillierIndependent/ IQ Designate
Peter NixonIndependent
Ebe ScherkusIndependent/
Board Chairman
Executive Officers
Non-Executive Directors
Key Managers
Head Office: Longueuil, Québec
Exploration Office: North Vancouver, BC
Community Offices: Mistissini & Chibougamau Québec
Stornoway’s Board and Management Team
Serge VézinaIndependent
Yves PerronVP Engineering & Construction
Ghislain Poirier
VP Public Affairs
Brian Glover VP Asset Protection
Martin BoucherVP Sustainable Development
Robin Hopkins
VP Exploration
Orin Baranowsky
Director, IR
Douglas SilverOrion Designate
Ian HollVP Processing
Annie Torkia- Lagacé
VP Legal Affairs
Gaston MorinIndependent/ IQ Designate
Jean-Charles Dumont
VP Finance
Helene RobitailleDirector, HR
45
Pat GodinCOO & Director
Biographies
Ebe ScherkusChairman of the
Board
Matt Manson was appointed President of Stornoway Diamond Corporation in March 2007 and subsequently President & CEO in January 2009. Between 1999 and 2005 he was employed by Aber Diamond Corporation (now Dominion Diamond Corporation) as VP Marketing and subsequently VP Technical Services & Control, during which time he participated in the US$230m project financing for the Diavik Diamond Project and oversaw Aber's technical and marketing operations. In March 2015 he was awarded the Viola MacMillan award from the Prospectors and Developers Association of Canada for the financing and development of Stornoway’s Renard Diamond Project. Mr. Manson is a graduate of the University of Edinburgh (BSc Geophysics, 1987) and the University of Toronto (MSc Geology 1989 and PhD Geology, 1996), and has over 20 years of experience in diamond exploration, development and production.
Pat Godin joined Stornoway as COO in May 2010. He was previously VP, Project Development for GMining Services, responsible for the development of the Essakane Mine in Burkina Faso under contract to IAMGOLD, VP Operations for Canadian Royalties, and President and General Manager of CBJ-CAIMAN S.A.S., a French subsidiary of Cambior / IAMGOLD. For many years, he was involved in Cambior’s various Canadian properties in Abitibi-Témiscamingue, through progressive management positions in project development and mine management. He holds a bachelor’s degree in mining engineering from Université Laval in Québec and is a member of the “Ordre des Ingénieurs du Québec”. He is the Chairman of the Board of Geomega Resources.
Ebe Scherkus served as the President and Chief Operating Officer and a director of Agnico-Eagle from 2005 to February 2012. Prior to his appointment as President and Chief Operating Officer in December 2005, Mr. Scherkus served as Executive Vice-President and Chief Operating Officer from 1998 to 2005, as Vice-President, Operations from 1996 to 1998, as a manager of Agnico Eagle LaRonde Division from 1986 to 1996 and as a project manager from 1985 to 1986. Mr. Scherkus is a graduate of McGill University (B.Sc.), a member of the Association of Professional Engineers of Ontario and past president of the Québec Mining Association.
Matt Manson President, CEO
& Director
46
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
Tel: +1 (416) 304-1026 x2103
www.stornowaydiamonds.com