As part of that resolution, the companies agreed to revised joint venture arrangements that best position the joint venture to advance the development of a diamond mining operation on the Fort Ã la Corne property 60 km east of Prince Albert, Saskatchewan.
Under these new arrangements, all expenditures on the project prior to December 31, 2021, will be the sole responsibility of Rio Tinto’s subsidiary, Rio Tinto Exploration Canada Inc. (RTEC). All expenditures between January 1, 2022, and the public announcement of a decision to develop a diamond mining operation, based upon the completion of a positive feasibility study, will initially be advanced by RTEC. Star Diamond will not be required to begin reimbursing RTEC for Star Diamond’s share of these expenditures unless and until commercial production has been achieved. The effect of the foregoing is that Star Diamond will have no obligation to contribute additional investment to the project until a decision to develop the mine is made and publicly announced.
Once the decision to develop the mine has been made and announced, Star Diamond will have six months to begin contributing to the joint venture Star Diamond’s share of the capital costs and expenditures required to build the mine.
In exchange for these amendments, the parties have agreed that the participating interests of RTEC and Star Diamond in the joint venture have been adjusted to 75% for RTEC and 25% for Star Diamond (from 60% and 40%, respectively).
These arrangements de-risk the project for Star Diamond and ensure that key project milestones, and the certainty associated with them, will have been achieved before Star Diamond has to contribute any additional capital, while also providing Rio Tinto with a greater participating interest in the project. They also align the interests of Rio Tinto and Star Diamond in moving the project forward for the benefit of both companies and their respective shareholders.
“This is a major step forward for the Fort Ã la Corne project, Star Diamond and its shareholders. We are very pleased to have reached a constructive resolution with Rio Tinto that puts our differences in the past, fully aligns our interests, and allows both of us to singularly focus on jointly and expeditiously moving forward with what Star Diamond believes is one of the most promising diamond projects in the world,” stated Ewan Mason, chair of the board of Star Diamond.
Rio Tinto head of exploration, Dave Andrews, said: “These new arrangements and our alignment with Star Diamond represent a major milestone in the continued development of the Fort Ã la Corne property. Building on the comprehensive studies and successful bulk sampling program on the Star kimberlite, we are very pleased to now be working cooperatively with Star Diamond on a diamond project that we believe has the potential to be a significant contributor to both the local communities around the Fort Ã la Corne property and the broader Saskatchewan economy.”
The Fort Ã la Corne kimberlites are near infrastructure, including paved highways and the electrical power grid, which provide significant advantages for future mine development.