Star Diamond Considers Nixing Deal with Rio Tinto

RAPAPORT... Star Diamond Corporation may end its partnership with Rio Tinto, stating it believes the Australian mining giant is responsible for the unnecessary breakage of large diamonds.Rio Tinto recovered 3,005 diamonds weighing a total of 131.82 carats from its most recent bulk sampling at the Star-Orion South project in Saskatchewan, Star Diamond said Wednesday. Those included 2.69-, 2.03- and 1.26-carat stones. However, the Canada-based miner thinks the results could have been even better."The results to date continue to validate our belief in the significant economic merit of the Star-Orion South project," noted Ken MacNeill, CEO of Star Diamond, which operates the project. "However, these results also continue to reinforce our belief that Rio Tinto Canada's extraction and diamond recovery methodologies...are causing undue diamond breakage, resulting in significant unnecessary cost overruns and materially damaging Star Diamond's interest in the project."This is not the first issue the two have had. Star Diamond started legal proceedings against Rio Tinto in March, accusing it of failing to comply with the terms of the joint-venture agreement. It is now considering severing the partnership altogether."Star Diamond continues to vigorously pursue the litigation it previously commenced against Rio Tinto Canada related to the project, and is committed to taking all actions necessary to protect Star Diamond and its shareholders from the practices and conduct of Rio Tinto Canada, including if necessary by seeking to remove Rio Tinto Canada from the project," MacNeill added.However, Rio Tinto denies any wrongdoing and intends to pursue the project."Star Diamond's allegations are unfounded, and we will continue to strongly defend this case," a Rio Tinto Canada spokesperson told Rapaport News.Image: The Star-Orion South site. (Star Diamond Corp.)