Stornoway announces Renard Project Financing Agreement

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Image credit: flickr User: Max Avdeev

Stornoway Diamond Corporation, a leading Canadian diamond exploration and development company, has announced that it has entered into a binding commitment agreement with Orion Co-Investments I Limited, Ressources Québec (a wholly owned subsidiary of Investissement Québec) and the Caisse de dépôt et placement du Québec,  securing about $1 billion for the construction of the Renard Diamond Project — the first diamond mine in Quebec.

Image credit: flickr User: Max Avdeev
Image credit: flickr User: Max Avdeev

According to the news release issued by Stornoway Diamond Corporation, construction of the mine is forecasted to begin this year, while commercial production is planned for June 2016.

Under the terms of the Agreement, a series of proposed financing transactions for the mine will be completed, namely US$360 million from the Orion Mine Finance Group, C$220 million from Resources Quebec and C$105 million from the Caisse de depot et placement du Quebec.

“We are announcing today a comprehensive, one-shot financing package of C$944 MM designed to fund Renard through construction to the declaration of commercial production, and including all contingencies, capital escalation allowances, working capital requirements, and financing costs. These transactions have been carefully structured through a balance of debt, equity and stream with a goal of allowing full participation by our shareholders in the value that will be created with the project’s development. With our permits in hand, and the Renard Mine Road and Aerodrome already in place and ready for use, the successful completion of these transactions will remove the last remaining financing risk for the project and allow principal project construction to commence. We look forward to presenting the financing of Québec’s first diamond mine for approval by shareholders at a special meeting to be held in Montreal at the end of May 2014,” said Matt Manson, Stornoway’s President and CEO.

“Stornoway further announces that it has concurrently entered into a mandate letter with Caterpillar to arrange and underwrite an equipment financing facility for a minimum of US$35 MM for the purchase of certain mine equipment items manufactured by Caterpillar and others, including the project’s mobile mining fleet,” it says in the company’s news release.

Adertisement

Stornoway filed an updated feasibility study in March of 2013, revealing that the Renard project is sitting on one of the largest undeveloped sources of diamonds in the world, with a total value amounting to $683 million and an internal rate of return of 20% before taxes and mining duties.

However, results yielded from the drilling operations have confirmed that there are actually a lot more diamonds underground that would keep the mine operational for at least 20 years.

For more information, go to http://www.stornowaydiamonds.com/