Stornoway Diamond Corporation
Based out of North Vancouver, BC, Stornoway Diamond Co. is a company determined to expand Canada’s diamond production industry. With a focus on growth through exploration, as well as maintaining a focus on mining and marketing rough diamonds, Stornoway prides itself on its experienced exploration team and management with a history of success. The company has laboratories in North Vancouver and Thunder Bay, Ont., where it conducts a variety of testing and quality control activities. Its major shareholders include Agnico-Eagle Mines Ltd. (17.7%) and Rio Tinto Plc. (11.2%).
Stornoway is headed by CEO and Director Eira Thomas, a geologist with a long history in diamond mining, and President Matt Manson, who presides over Ashton Mining of Canada and Contact Diamond Corporation, both of which are wholly owned by Stornoway.
Stornoway classifies its held properties as being either “development track,” “advanced stage,” or “grassroots.” The locations of its grassroots projects are spread across the North, from Calling Lake and the Northern Alberta projects in Alberta, to the RAM Project, Mackenzie properties, and properties in the Southern Northwest Territories, and Nunavut’s Coronation Diamond District, Itza Lake and TIM/IC projects. Stornoway’s advanced stage projects include Aviat, discussed below, Churchill and Qilalugaq in Eastern Nunavut, and the Timiskaming project in Northeastern Ontario and Northwestern Quebec. In total, the company has exposure to more than 20 million acres of under-explored properties in remote areas of the country.
Stornoway is striking out into areas of Canada that have not previously been mined for diamonds. On the Melville Peninsula in Eastern Nunavut, it’s Aviat Property, a joint venture with the Hunter Exploration Group, where, since 2002, they have identified 12 separate but likely related kimberlites (instances of magma that originates very deep within the earth and passes through the regions that contain diamonds that have crystallized in mantle host rocks). The total area is 476,213 acres, and Stornoway has a 90 per cent stake. The diamonds from the Aviat Project are recovered at Stornoway’s dense media separation (DMS) plant in Thunder Bay.
The company has got one site on its development track, the Renard Project on its Foxtrot property, which is jointly owned with Soquem Inc.’s subsidiary Diaquem. Located in North Central Quebec, Renard received a positive preliminary assessment in late October of 2008. The company is confident that within a few years, the Renard mine will be brought into operation, making it Quebec’s first operating diamond site. The assessment reported that there is a NI 43-101 compliant mineral resource comprising 7 million carats of Indicated Resource and 4.5 million carats of Inferred Resource. The estimated capital cost for the project, which will utilize both open pit and underground mining, is $308 million, including contingencies. The Company’s 50 percent interest in this joint venture covers exploration, property acquisition, and development of mineral interests.
In September 2007, Stornoway announced it was beginning work on the Sua Pan Project in Botswawn, a venture with Motapa Diamonds Inc. in which the company had a 50 per cent interest. However, no kimberlite was intersected in the preliminary drilling, and, as a result, the Stornoway returned the licenses to Motapa.
Stornoway’s financial reports from 2008 state that as an exploration stage company it is currently not self-supporting and will need to secure additional financing by mid-2009 to continue its operations. Other options include joint ventures and the sale of assets to raise capital. In June 2008, Stornoway cut back operations at its North Vancouver observing laboratory, allowing it to focus on exploration and development activities. Stornoway has minimum commitments under its operating leases for its various properties of approximately $300,000 on average each year through 2013. It’s shares (SWY) are traded on the TSX. The complexity of predicting the company’s outlook rests on the nature of exploration stage ventures, where not only is it uncertain whether deposits will be discovered, but it is also not guaranteed that once located, deposits will yield sufficient ore to make the development of the site profitable. Further complications include the remote locations of Stornoway’s exploration sites, which can become inaccessible in extreme weather conditions. The company is still positive about its outlook, however. In her letter to shareholders in the 2007 annual general report, Eira Thomas wrote: “Despite the volatile, and generally poor, stock performance by the entire diamond exploration sector over a period of close to two years, the market outlook for diamond prices remains strong, an opinion echoed by experienced diamond producing companies and analysts active throughout the world.”