Star Diamond's Saskatchewan projects shine with C$2bn after-tax NPV

VANCOUVER (miningweekly.com) – The TSX-quoted equity of project developer Star Diamond (formerly Shore Gold) closed in the black on Monday after a preliminary economic assessment (PEA) on its fully-owned Star-Orion South kimberlite projects reported strong metrics.

The PEA reported an after-tax net present value on a conceptual 66-million-carat mine plan, at a 7% discount rate, of C$2-billion, with an estimated 19% internal rate of return.

Over a 34-year mine life, the plant will process 470-million tonnes of ore grading, on average, 14 carats per hundred tonnes.

The pre-production capital will amount to C$1.41-billion, rising to C$1.87-billion when one includes the direct, indirect and contingency costs.

“On the shoulders of more detailed drilling and the revised resource estimate of 2015, the corporation has taken a fresh look at the project and has refined the mining and processing plans with exciting and positive results. The PEA describes a lean, profitable, industry-leading plan,” president and CEO Kenneth MacNeill commented in a statement.

Star Diamond said the PEA cash flow model is based on developing two openpits, initially on Orion South, and subsequently on Star. The cash flow model assumes one processing plant and infrastructure that will serve both openpits and assumes the project has a four-year pre-production development period.

The plant’s processing rate of 45 000 t/d of kimberlite will employ autogenous milling followed by screening, X-ray transmission diamond recovery and dense media separation of heavy mineral concentrate. The recovery section employs X-ray technology with grease as the scavenging technology to recover the low-luminescence diamonds. The diamonds will be sorted into parcels at an on-site sorting facility.

With federal approval of its environmental-impact statement, the company is waiting on the provincial decision.

The company's Toronto-listed equity gained as much as 29% on Monday, before settling up 2.63% at C$0.20 apiece. Since the start of the year, the stock has gained a steady 11%.