Company Interview with Stornoway Diamond

Stornoway Diamond Corp TSX:SWY
Published on: June 12, 2015
Author: NAI500

Stornoway Diamond Corp (TSX:SWY) 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, 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.



Interviewer:
  NAI500’s President, Gilbert Chan
Interviewee: Orin Baranowsky, Director of Investor Relations

NAI500’s President, Gilbert Chan, recently had a phone interview with Stornoway Diamond’s (TSX:SWY) Director of Investor Relations, Orin Baranowsky, to discuss the latest developments of the company.

Q1) With the recent announcement of the concrete pour at the Renard diamond project, what are some other upcoming milestones for Stornoway? What are the remaining obstacles before the commercial production in 2017? 

Orin: Stornoway will put out a revised resource estimate this summer. With the exploration plan, Stornoway will find a place for foundation, start putting up the walls, and expect to have the roof on structures and heating by the end of 2015. In terms of other development sites, Stornoway will complete the power plant next summer, which means we will have a power solution for commercial production. The biggest obstacle will be to keep the project on schedule and budget.

Q2) Your Renard project is located in Quebec, one of the world’s best mining jurisdictions. How has the support from the government been? Have there been any incentives given during this development and future production process?

Orin: There aren’t any special incentives given to us from the Quebec government. However, the government has supported the project pretty much since the beginning. It was initially a joint venture between a division of the Quebec government, “SOQUEM”, and Stornoway bought them out in 2010 and made them a shareholder of the company. The government has mainly helped through the construction of majority of the public road connecting the mine to the provincial highway network. We also have very good relationships with the local cree community and signed impact and benefit agreements with them. The crees are also one of the major contractors of building the roads and mine.

Q3) Talking about Canadian diamonds in general, how are they different from other parts of the world like in Africa or other places? How is Stornoway’s Renard project compared to other leading diamond projects in the world? (grade, tonnage, etc?)

Orin: Diamond has different grade and value. The differentiation from Stornoway’s Canadian mine to the rest of the world’s mining industry, Stornoway has a higher than average diamond value and grade. Based on Stornoway’s research on March, 2014, the mine of Stornoway is 190 U.S. dollars/ Cal, which is 50% higher than the rest of the world’s mines.

Q4) With the preservation of the environment being a bigger issue nowadays, what steps has Stornoway taken to ensure that the mining in Quebec will be environmentally responsible?

Orin: Compared to others in the mining sector, diamond exploration has the lowest impact to the environment. But we still try minimizing our environmental damage during the production. Such as improve the water system during the drilling process to reduce the water pollution.

Q5) Why should investors look to invest in Stornoway as opposed to other diamond mining companies? What does Stornoway have over its peers?  What are the major risks remaining for the Renard project that the investors should be aware of?

Orin: Why Stornoway:

  • Attracted Valuation: Stornoway has a higher than average diamond value and grade. Stornoway is 190 U.S. dollars/ Cal, which is 50% higher than the world mine.
  • In construction now: Stornoway has 16 years of experience from exploration to development. Once Stornoway has the diamond mine up and running with a stable operation, it will have a good cash flow in the future.
  • Project: The Renard project is fully financed and has full permits.
  • Risk: The biggest risk is the risks in the execution. In other words, to keep the project on schedule and on budget without any external factors affecting the project. For example, equipment is being damaged, or no other major mining projects being built in Eastern Canada.

Q6) Why there are so few diamond companies in the world?

Compared to other sectors of mining, it is harder to find a high grade, and high valuation diamond is even harder to find. That’s why there is only very few diamond companies in the world. Therefore, due to the high barrier to entry and a good long term demand, diamond should be a great sector in mining to invest.

Diamond