1. The Creation and Growth of a Mineral Resource
at Renard: Québec’s First Diamond Mine
November 21st, 2012
Matt Manson 2012 Congrès de l’AEMQ
President, CEO & Director La prochaine génération de mines au Québec
2. 2
Forward-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 “forward-looking 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) capital costs and operating costs; (v) mine
expansion potential and expected mine life; (vi) expected time frames for completion of permitting and regulatory approvals and making a
production decision; (vii) future exploration plans; (viii) future market prices for rough diamonds; and (ix) 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 ability to achieve 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) estimated completion date for the Environmental and Social Impact Assessment; (ii) required capital investment
and estimated workforce requirements; (iii) estimates of net present value and internal rates of return; (iv) receipt of regulatory approvals on
acceptable terms within commonly experienced time frames; (v) the assumption that a production decision will be made, and that decision will be
positive; (vi) anticipated timelines for the commencement of mine production; (vii) anticipated timelines related to the Route 167 extension and the
impact on the development schedule at Renard; (viii) anticipated timelines for community consultations and the conclusion of an Impact and
Benefits Agreement; (ix) market prices for rough diamonds and the potential impact on the Renard Project’s value; and (x) 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 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.
4. 4
The Route 167 Extension
A Canadian Diamond Project with All Season Highway Access
On November 15th 2012 Stornoway announced an
agreement by which the Government of Quebec will
provide $77m of financing to Stornoway to complete Renard
segments “C” and “D” of the Route 167 Extension as a
Segments C & D
mining grade road.
Stornoway
This agreement puts Stornoway in charge of the Renard 97km of Mining
project’s overall project schedule for the first time. Grade Road
(50km/hr)
All season access is now scheduled for Q4 2013.
Construction, September 2012
Segments A & B
Ministry of Transport
143km of Regional
Highway (70km/hr)
6. 6
Key Project Parameters
Renard 65
November 2011 Feasibility Study*
0m 29cpht Renard 3
106/118cpht
Mine Life 11 years
100m
Mineral Reserve 18 mcarats
Initial Cap-ex $802m 200m
Operating Cost $55/t ($70/carat)
300m
Operating Margin 68%
Operating Cash Flow $2.7B 400m
Diamond Valuation $180/carat
500m
Peak Diamond Production 2.1 mcarats/yr
After Tax NPV (7%; Jan 1 2012) $376m 600m
After Tax IRR 14.9%
710m
Project Startup July 2015
*Key Assumptions: C$1=US$1, Oil US$90/barrel, 2.5% real terms diamond price growth
Q311-Q425, 83.5% ore recovery, 19.4% mining dilution, 0cpht dilution grade, January 1
2012 effective date for NPV and IRR calculation.
Renard 4
53/44cpht Renard 2
Renard 9
Long Term Plan 47cpht
103/118cpht
(Basis of December 2011 ESIA)
24 mcarat Indicated Mineral Resource
Includes the mining of the 17mcarat Inferred
Resources within the scope of the Feasibility Study
mine infrastructure: Extended mine life, increased
17 mcarat Inferred Mineral Resource
annual production, increased project valuation
24-49 mcarat Exploration Upside
Notes: 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.
7. 7
Establishing the Geological Model
Renard 3 as an Example
Renard 10 Understanding a kimberlite’s geology is key to
N developing a robust diamond resource
Renard Geological Data:
Renard 7 250 m
• 88,585m of core drilling from surface
Kimberlite • 2,382 m of underground drilling
Kimberlite affected • 6,151m of reverse circulation (RC) drilling
Country Rock Renard 1
• 780 m of underground drifting (200 m in
kimberlite)
• +2,000 petrographic thin sections
Renard 65
0.3ha N
Renard 4
Renard 8
Renard 9 Renard 3
Renard 2
Renard 3
8. 8
Establishing the Geological Model
“Transitional” Kimberlites with TK, HKt/TKt, HK units
Renard 3
0m
N x
x o
x
x
100m
x
o
2 mm
x x
200m
o
o
o
Xenolith % Olivine x
Magmaclasts 2 mm
300m & Reaction % o
55-75
Low
10-20 Abundant TK o
x
20-50 o
Moderate
15-50 Occasional HKt/TKt
400m
o o
0-25
High
35-50 Absent HK
o 2 mm
455m
9. 9
Establishing the Geological Model
Multiple Units Representing Multiple Venting Events
Renard 3
0m R3 has 5 main phases of kimberlite
N
7
2 3 4
5
6 1 FCR 3
2 CRB
100m
3 TK
4 TKt / HKt
5 HKt 4
6
7
HK
200m 1
5
Sharp Contacts (here in R2 U/G Drift)
TK TKt/HKt
6
300m
7
Additional late HK dykes 5 cm
400m
455m 8
10. 10
Establishing the Geological Model
Each Unit Carries a Distinct Grade
Renard 3
0m
N
underground
drift
Bulk Sample Grades
shown in Carats per
100m Hundred Tonnes (cpht)
200m
300m
400m
455m View looking North
11. 11
Establishing the Geological Model
Drilling Renard 2 & 3 at Depth (2009)
2008 model
2008 Model 0m Renard 2 Renard 3
Renard 2 and 3 predominantly TK type
Renard 2 simpler internal geology 100m
Deep diatreme to root zone
200m
Deep drilling required
300m
400m
500m
600m
710m
View looking North
12. 12
Establishing the Geological Model
Drilling Renard 2 & 3 at Depth (2009)
2010 (and current) model
After 2009 Drill Program 0m
Renard 2 Renard 3
Renard 2 and 3 transitional TKt to HKt/TKt
type
100m
Renard 2 volume quadrupled to 710m
depth
200m
Renard 3 volume doubled to 450m depth
Appreciation of affected country rock 300m
(CCR/CRB) in emplacement model
400m
Confidence in the Model
During the 2009 drill program, Stornoway
updated the R2 and R3 geological
500m
models dynamically with each drill hole
completed.
600m
Ultimately, drill intersected contacts were
being predicted within 5m.
710m
View looking North
13. 13
Establishing the Geological Model
Drilling Renard 2 & 3 at Depth (2009)
2010 (and current) model
After 2009 Drill Program 0m
Renard 2 Renard 3
Renard 2 and 3 transitional TKt to HKt/TKt
type
100m
Renard 2 volume quadrupled to 710m
depth
200m
Renard 3 volume doubled to 450m depth
Appreciation of affected country rock 300m
(CCR/CRB) in emplacement model
400m
Confidence in the Model
During the 2009 drill program, Stornoway
updated the R2 and R3 geological
500m
models dynamically with each drill hole
completed.
600m
Ultimately, drill intersected contacts were
being predicted within 5m.
710m
View looking North
14. 14
Establishing Diamond Grade
Successive Diamond Sampling Campaigns 2002-2010
Renard Diamond Sampling Data:
• 4,563 tonnes of underground bulk samples
• 3,520 tonnes of surface trench bulk samples
• 903 tonnes of RC chip samples
• 154 tonnes of drill core samples
• 9,212 carats of macrodiamonds (+1 DTC) from
DMS work
• 16.4 tonnes of samples submitted for
microdiamond analysis
• Diamond valuation exercises in 2005, 2007, 2008,
2009 and 2011 Bulk Sample
Dense Media Separation (DMS) Plant
Surface Sample Renard 4 Underground Sampling
15. 15
Establishing Diamond Grade at Renard
The Renard diamond grade estimation methodology starts from the geology: In HKt/TKt
(“Transitional”) Kimberlites the following paradigms apply:
• The diamond population within the ore has not been sorted.
• Each lithological unit should show continuity of diamond grade and size distribution (“SFD”).
Grade in the Renard kimberlites is therefore a combination of:
• Pure (undliluted) grade of the lithological unit.
• The degree of dilution (eg country rock xenoliths) in the ore
Grade models derived this way are Testable
• Test for grade and SFD continuity by sampling with microdiamonds across the breadth of the ore body.
• Test accuracy of grade block model by using it to back-calculate sample results from RC drilling and
bulk sampling.
16. 16
Diamond Grade Models
Diamond grade models were created for each Renard lithology from the totality of all
micro and macro diamond data (Renard 2 Kimb2a or “Blue” illustrated)
Grade models are adjusted (reduced) for the expected non-recovery of small
diamonds in a commercial process plant
Micros and Macros Recovered fromSpht_ui Stones per Tonne per
Caustic Dissolution of Drill Core Unit Interval (sptpui)
10
Commercial Sized Stones Recovered
8 from RC and Bulk Sampling
Log Stone Freq
6
Quadratic Best Fit Macro
4
after Chapman and
Boxer (2004) Micro
2
Kimb2a Kimb2a Model
0 83cpht
-2
-5 -4 -3 -2 -1 0 1
Unadjusted grade
log MSS
Adjusted grade: after non-recovery of small stones
17. 17
Dilution Models
Dilution data from drill core was measured
using:
• ‘modal’ visual estimates of dilution over 3m core
intervals
• ‘line scan’ observations measuring dilution per
metre of core in quantitative and consistent
manner.
A block model of dilution was created and each
block coded by lithology.
Input of pure grade model for each lithology
derived a grade block model.
The grade model can be used to successfully
back-calculate RC and bulk sample grades.
Provides the required +/-15% grade confidence
for the Indicated Mineral Resource.
Renard 2 Dilution Model
18. 18
Grade Continuity in Renard Kimberlites
Micro-diamond samples from across the breadth
of Renard 2 (Kimb2b or “Brown” illustrated)
demonstrate continuity of grade and size
distribution at:
• 50m depth slices (“A”);
• Across N-E-S-W quadrants (“B”); and
• Across the whole breadth of the ore body (“C”)
This confidence allows the Renard 2 Indicated
Resource to be extended to 600m depth, below
the level of RC drilling and bulk sampling.
C
19. Renard’s Diamonds
19
Valuation Conducted by WWW International Diamond Consultants Ltd. May 8th-13th, 2011
Renard kimberlite pipes have a diamond population with a coarse size distribution and
high proportion of large white gems. Lynx and Hibou kimberlite dykes have a finer
distribution of browner stones.
99% by weight gem/near-gem quality. 1% industrial quality boart.
Coarse size distribution: potential for significant “Specials”, not accounted for in the
current resource work. (Three to six 50-100ct stones and one to two +100ct stones every
100,000 carats.)
Renard 3 Bulk Sample Stones larger
than 2 carats. “Run of Mine”
Size of Largest May 2011
Kimberlite Valuation Diamonds Diamond Sensitivities
Body Sample Recovered Price (Minimum to High)
(carats) (carats) (US$/carat)1
Renard 2 1,580 15.46, 8.80, 8.42 $163 to $236
Renard 3 2,753 10.15, 7.78, 6.36
$182 $153 to $205
Renard 4 2,674 5.92, 5.74, 3.99 $1122 $105 to $185
Lynx Dyke 535 21.53, 5.36, 5.34 $119 $99 to $144
Hibou Dyke 772 3.14, 3.07, 2.72 $118 $88 to $136
1
Based on an average of five independent valuations conducted between May 9 th and 13th 2011, and supervised by
WWW International Diamond Consultants Limited.
2
The Renard NI 43-101 compliant Mineral Resource of January 2011 and the Feasibility Study of November 2011
utilize a higher diamond price based on an analysis of diamond breakage and poor plant recovery of the Renard 4
valuation sample, which is $164/carat. All samples utilize a +0.85mm (+1 DTC) cutoff
20. Renard’s Resource Upside
20
A Project with a Long Resource Tail and Very Long Mine Life Potential
Renard 65 Millions
0m
29cpht Renard 3 of Tonnes Exploration Target High Range
106/118cpht 140 Exploration Target Low Range
100m
Inferred Resource
200m 120 Probable Reserve
300m
100
400m
The Vision: Deposit still
80 Open
500m
600m
60
710m Permitting and Long
Term Business Plan
40
Renard 4
53/44cpht Renard 2
Renard 9
103/118cpht
47cpht 20 The Feasibility: 11
years of mining
24 mcarat Indicated Mineral Resource
0
17 mcarat Inferred Mineral Resource 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
24-49 mcarat Exploration Upside 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.
21. 21
Renard is Continuing to Grow
Renard 65 Bulk Sample: Expansion in the Project Reserve
Renard 65
Stornoway commenced a 5,000 tonne bulk sample at Renard 3
Renard 65 in July 2012.
The objective is the recovery of a 1,000 carat parcel of
diamonds for valuation, to allow conversion of Inferred
Resources to Reserve.
Renard 65 currently contains:
• 3.7 mcarats of Inferred Mineral Resources
(12.9mtonnes at 29 carats per hundred tonnes)
• 6.8 to 13.7 mcarats of Exploration Target (29.5 to 41.6
Renard 4
mtonnes at 23 to 33 cpht)
Renard 9 Renard 2
Renard 65 has a good potential to return large diamonds.
A 4 carat, top quality diamond
Results are expected in Q1 2013
recovered from Renard 65 drillcore
R65 Pit on September 2nd
22. 22
General Project Arrangement
Small Project Footprint of 3.1km2, Modest Environmental Impact
Processed Kimberlite
Containment (PKC)
R65
Waste Rock
R2-R3 Overburden
Stockpile
Plant
Ore Stockpile
Camp
Route 167 Extension
23. 23
Acknowledgements
Stornoway
• Robin Hopkins
• John Armstrong
• Isabelle Lepine
• Colleen Laroulandie
• Cathy Fitzgerald (now Peregrine)
Geostrat Inc.
• David Farrow
• Darrell Farrow
Mineral Services Inc.
• Casey Hetman (now Northern Superior)
Scott-Smith Petrology Inc.
• Barbara Scott Smith
WWW International Diamond Consultants
Galaxy Diamond Experts SA
