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TD Securities Mining ConferenceToronto, January 16th-17th, 2019
Forward Looking Information
2
This document contains forward-looking information (as defined in National Instrument 51 102 – Continuous Disclosure Obligations) and forward-looking statements within the meaning of Canadian securities legislation and theUnited States Private Securities Litigation Reform Act of 1995 (collectively referred to herein as “forward-looking information” or “forward-looking statements”). These forward-looking statements are made as of the date of thisdocument and, the Corporation does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by law.
These forward-looking statements relate to future events or future performance and include, among others, statements with respect to Stornoway’s objectives for the ensuing year, our medium and long-term goals, andstrategies to achieve those objectives and goals, as well as statements with respect to our management’s beliefs, plans, objectives, expectations, estimates, intentions and future outlook and anticipated events or results. Althoughmanagement considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.
Forward-looking statements reflect current expectations or beliefs regarding future events and include, but are not limited to, statements with respect to: (i) the amount of Mineral Reserves, Mineral Resources and explorationtargets; (ii) the estimated amount of future production over any period; (iii) net present value and internal rates of return of the mining operation; (iv) expectations and targets relating to recovered grade, size distribution andquality of diamonds, average ore recovery, carats recovered, carats sold, internal dilution, mining dilution and other mining parameters set out in the 2016 Technical Report as well as levels of diamond breakage; (v) expectations,targets and forecasts relating to gross revenues, operating cash flows and other revenue metrics set out in the 2016 Technical Report, growth in diamond sales, cost of goods sold, cash cost of production, gross margins estimates,planned and projected diamond sales, mix of diamonds sold, and capital expenditures, liquidity and working capital requirements; (vi) mine and resource expansion potential, expected mine life, and estimated incremental orerecovery, revenue and other mining parameters from potential additional mine life extension; (vii) expected time frames for completion of permitting and regulatory approvals related to ongoing construction activities at theRenard Diamond Mine; (viii) the expected time frames for the completion of the open pit and underground mine at the Renard Diamond Mine; (ix) the expected financial obligations or costs incurred by Stornoway in connectionwith the ongoing development of the Renard Diamond Mine; (x) mining, development, production, processing and exploration rates, progress and plans, as compared to schedule and budget, and planned optimization, expansionopportunities, timing thereof and anticipated benefits therefrom; (xi) future exploration plans and potential upside from targets identified for further exploratio; (xii) expectations concerning outlook and trends in the diamondindustry, rough diamond production, rough diamond market demand and supply, and future market prices for rough diamonds and the potential impact of the foregoing on various Renard financial metrics and diamondproduction; (xiii) the economic benefits of using liquefied natural gas rather than diesel for power generation; (xiv) requirements for and sources of, and access to, financing and uses of funds; (xv) the ability to meet SubjectDiamonds Interest delivery obligations under the Purchase and Sale Agreement; (xvi) the foreign exchange rate between the US dollar and the Canadian dollar; and (xvii) the anticipated benefits from recently approved plantmodification measures and the anticipated timeframe and expected capital cost thereof. 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”, “schedule” orvariations 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 ofhistorical fact and may be forward-looking statements.
Forward-looking statements are made based upon certain assumptions by Stornoway or its consultants and other important factors that, if untrue, could cause the actual results, performances or achievements of Stornoway to bematerially 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 businessprospects and strategies and the environment in which Stornoway will operate in the future, including the recovered grade, size distribution and quality of diamonds, average ore recovery, internal dilution, and levels of diamondbreakage, the price of diamonds, anticipated costs and Stornoway’s ability to achieve its goals, anticipated financial performance, regulatory developments, development plans, exploration, development and mining activities andcommitments, access to financing, and the foreign exchange rate between the US and Canadian dollars. Although management considers its assumptions on such matters to be reasonable based on information currently availableto it, they may prove to be incorrect. Certain important assumptions by Stornoway or its consultants in making forward-looking statements include, but are not limited to: (i) the accuracy of our estimates regarding capital andestimated workforce requirements; (ii) estimates of net present value and internal rates of return; (iii) recovered grade, size distribution and quality of diamonds, average ore recovery, carats recovered, carats sold, internaldilution, mining dilution and other mining parameters set out in the 2016 Technical Report as well as levels of diamond breakage; (iv) the expected mix of diamonds sold, and successful mitigation of ongoing issues of diamondbreakage in the Renard Diamond Mine process plant and realization of the anticipated benefits from plant modification measures within the anticipated timeframe and expected capital cost; (v) the stabilization of the Indiancurrency market and full recovery of prices; (vi) receipt of regulatory approvals on acceptable terms within commonly experienced time frames and absence of adverse regulatory developments; (vii) anticipated timelines for the
Forward Looking Information (continued)
3
development of an open pit and underground mine at the Renard Diamond Mine; (viii) anticipated geological formations; (ix) continued market acceptance of the Renard diamond production, conservative forecasting of futuremarket prices for rough diamonds and impact of the foregoing on various Renard financial metrics and diamond production; (x) the timeline, progress and costs of future exploration, development, production and mining activities,plans, commitments and objectives; (xi) the availability of existing credit facilities and any required future financing on favourable terms and the satisfaction of all covenants and conditions precedent relating to future fundingcommitments; (xii) the ability to meet Subject Diamonds Interest delivery obligations under the Purchase and Sale Agreement; (xiii) Stornoway’s interpretation of the geological drill data collected and its potential impact on statedMineral Resources and mine life; (xiv) the continued strength of the US dollar against the Canadian dollar and absence of significant variability in interest rates; (xv) improvement of long-term diamond industry fundamentals andabsence of material deterioration in general business and economic conditions; and absence of significant variability in interest rates; (xvi) increasing carat recoveries with progressively increasing grade in LOM plan; (xvii)estimated incremental ore recovery, revenue and other mining parameters from potential additional mine life extension with minimal capital expenditures; (xviii) availability of skilled employees and maintenance of keyrelationships with financing partners, local communities and other stakeholders; (xix) long-term positive demand trends and rough diamond demand meaningfully exceeding supply; (xx) high depletion rates from existing diamondmines; (xxi) global rough diamond production remaining stable; (xxii) modest capital requirements post-2018 with significant resource expansion available at marginal cost; (xxiii) substantial resource upside within scope of mineplan; (xxiv) opportunities for high grade ore acceleration and processing expansion and realization of anticipated benefits therefrom; (xxv) significant potential upside from targets identified for further exploration; and (xxvi) limitedcash income taxes payable over the medium term.
By their very nature, forward-looking statements involve inherent risks and uncertainties. We caution readers not to place undue reliance on these forward- looking statements as a number of important risk factors could cause theactual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates, assumptions and intentions expressed in such forward-looking statements. The operating results and financial conditionof the Corporation are subject to a number of inherent risks and uncertainties associated with its business activities, which include the financing, exploration, development, construction and operation of its mine and processingfacility. The operating results and financial condition are also subject to numerous external factors, which include economic, regulatory, legal, tax and market risks impacting, among other things, supply of materials and demand forrough diamonds, rough diamond prices, foreign exchange rates, inflation and the availability and cost of capital to fund the capital requirements of the business. Each of these risks could have a material adverse effect on theCorporation’s future business, financial condition, prospects, results of operations or cash flow, and could cause actual results to differ materially from those described in any forward-looking statements contained in thisdocument. There can be no assurance that the Corporation has been or will be successful in identifying all risks or that any risk-mitigating strategies adopted to reduce or eliminate risk will be successful. These risks should beconsidered when evaluating the Corporation and its guidance. With the exception of the going concern risk, which is described in the Corporation’s most recently filed MD&A, a comprehensive discussion of the risks faced by theCorporation can be found in the Corporation’s 2017 Annual MD&A and most recently filed AIF, which are available on SEDAR at www.sedar.com under the Corporation’s profile.
Qualified Persons
The Qualified Persons that prepared the technical reports and press releases that form the basis for the presentation are listed in the Company’s AIF dated March 29, 2018. Disclosure of a scientific or technical nature in thispresentation was prepared under the supervision of Mr. Patrick Godin, P.Eng. (Québec), President and Chief Executive Officer and Mr. Robin Hopkins, P.Geol. (NT/NU), Vice President, Exploration, both “qualified persons” underNational Instrument (“NI”) 43-101.
Non-IFRS Financial Measures
This document refers to certain financial measures, such as Adjusted Net Loss, Adjusted Revenues, Adjusted EBITDA, Adjusted EBITDA Margin, Average Diamond Pricing Achieved, Cash Operating Cost per Tonne Processed, CashOperating Cost per Carat Recovered and Capital Expenditures, which are not measures recognized under IFRS and do not have a standardized meaning prescribed by IFRS. As a result, these measures may not be comparable tosimilar measures reported by other corporations. Each of these measures have been derived from the Corporation’s financial statements and have been defined and calculated based on management’s reasonable judgement.These measures are used by management and by investors to assist in assessing the Corporation’s performance. The measures are intended to provide additional information to the user and should not be considered in isolationor as a substitute for measures prepared in accordance with IFRS. Refer to the “Non-IFRS Financial Measures” section of the Corporation’s Management Discussion and Analysis as at and for the quarter ended September 30, 2018for further discussion of these items, including reconciliations to IFRS measures.
100% Owned Renard Diamond Mine – Québec’s First Diamond MineThe only Canadian Diamond Mine Connected by Permanent Road Access
4
2017: First Full Operating Year$85m Adjusted EBITDA1 in FY2017 at 43% Adjusted EBITDA margin1. Lower pricing than expected. Good resource reconciliation. Cost targets achieved.
2018: Mining and Processing TransitionRamped up UG mine. Implemented ore waste sorting. Improved diamond recoveries and pricing. Steady state operations achieved late August 2018.
2019: Steady-state Underground Operations, Upside EvaluationProduction from existing R2 290m level. Introduction of higher-grade R3 ore into feed. Evaluation of R4-R9 open pit. Drilling of R7 kimberlite pipe.
Low Cost, Long Life Asset with Strong Sector FundamentalsLowest cost diamond producer in Canada; Life of Mine Plan to FY2030; Upside on mine life, processing capacity and market pricing.
Strong Social License and Institutional SupportPartnered with the Crees of Eeyou Istchee; Investissement Québec, CDPQ, Orion and Osisko as investors, lenders and/or streamers.
1. See Note on “Non-IFRS Financial Measures”
160L
240L
290L
2018: First underground mining panels in Renard 2 (Blasted and/or mucked ore)
R9
R4
R65
R2
R3
2016-2017: Renard 2-3 open pit mining 2017-2018: Renard 65 open pit mining
Q2 2019: First Renard 3 underground production planned
2019: development of second Renard 2
underground mining horizon
2018: Transitioning to Underground MiningUG to be principal source of production ore 2018-2030.
First production blast December 2017; production ramp-up completed August 2018.
Ramp access; 6,000 tpd ore design capacity; surpassed this target in each month of Q4 2018.
First Experiences
More competent country rock and less competent kimberlite than expected.
Migration to assisted block caving as principal mining method: long term benefits in production costs and dilution.
First production panels developed at the north pipe margin of the 290m level in highly dilute, low grade kimberlite.
Grade has significantly increased as mining has progressed to the center of R2; recovered grade of 80 cpht in Q4 2018.
6
1,445
1,982
4,172
3,5853,848
5,801 5,5876,218
7,128 7,046
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18
Aver
age
Daily
Ton
nage
(ton
nes p
er d
ay)
Underground Production - Ore Tonnes Hauled to Surface
UG Mine Design Capacity = 6,000 tpd
5 Quarter Processing and SalesAt December 31, 2018. All quoted figures in CAD$ unless noted
7
Processing
Carat Sales1,2,3
ROM Sales: Gross Proceeds and Pricing4,5
1. Q1 FY18 includes 127,616 carats that were sold in the first quarter for which revenue was realized in the second quarter.
4. See note on “Non-IFRS Financial Measures”5. Before Stream and royalty
2. “ROM” Carats represent all diamonds larger than +1 DTC sieve size. “Supplemental” carats represent additional diamonds smaller than the 7 DTC sieve size that have been recovered in excess of that expected in the Renard Mineral Resource statement.
3. Q1 to Q4 2018 supplemental sales were 42,663 carats sold for gross proceeds of $1.0M (US$18.50/ct), 41,979 carats sold for gross proceeds of $1.0M (US$18.50/ct), 21,367 carats sold for gross proceeds of $0.4M (US$13/ct), and 58,313 carats sold from gross proceeds of $1.1M (US$14/ct).
$49.1$56.6
$28.6 $24.7 $30.6
$86
$112 $109 $103$92
$108
$142 $142 $134$122
$0
$20
$40
$60
$80
$100
$120
$0
$50
$100
$150
Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18
Mill
ions
dol
lars
Pric
e pe
r Car
at GrossProceeds
US$/ct
$/ct
519 563 562 598 606
398286
223329
486
7751
4055
80
0
200
400
600
800
1,000
Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18
Thou
sand
Ton
nes/
Cara
ts
Tonnes
Carats
Grade (cpht)
454 399
201 185 25443 42 21 58
0
200
400
600
Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18
Thou
sand
To
nnes
/Car
ats
ROM Carats
Supplemental Carats
1314151617181920212223 Looking West12
Underground Mine Ore SupplyAssisted Block Cave and Horizontal Panels
17
Nov-2018Dec-2018
Pre Nov-2018
Caving/Mucking Sequence
290L
160L
240L
270LPost 2018
R2R3
Steady State Operations AchievedMining
Ramp-up in the underground mine achieved late August 2018
Underground mining rates: 3,641 tpd in July, 6,168 tpd in August, 5,707 tpd in September, 6,100 tpd in October, 7,037 tpd in November, 6,564 tpd in December
Transition to assisted block cave mining completed. 22 draw points open as of end October 2018
Breakthrough to the R2-R3 open pit achieved October 11, 2018
Processing
Steady state processing with ore-sorting (“OSP”) fully operational
Processing rates: 5,712 tpd in July, 6,971 tpd in August, 6,820 tpd in September, 7,053 tpd in October, 6,332 tpd in November, 6,366 tpd in December
Diamond recoveries since OSP introduction have exhibited lower levels of breakage than previously observed with comparable feed composition, ongoing efforts to improve process plant front-end throughput (rockbreaker availability, steam-heated ore bins)
9
6-Month Processing Performance, July to December 2018
UG Mine Design Capacity Achieved
Production halted for 3 days in July due to
forest fire
177
216 205 219190 197
77
123 130161 165 160
4357
6374
8781
0
50
100
150
200
250
300
350
400
Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18Th
ousa
nd T
onne
s/Ca
rats Tonnes
Carats
Grade (cpht)
FY2019 GuidanceProvided January 16, 2019All quoted figures in CAD$ unless noted
10
MINING AND PROCESSINGCarats Recovered1 (million) 1.80 to 2.10
Grade1 (cpht) 71 to 87
Tonnes Processed (million) 2.40 to 2.55
SELLING AND MARKETING
Carats Sold1 (million) 1.80 to 2.10
Average Diamond Pricing1 (US$/ct) US$ 80-105
COST
Capital Expenditures2 (million) C$ 70-80
Cash Operating Cost per Tonne Processed2 ($/t) C$ 47-54
Cash Operating Cost per Carat Recovered2 ($/ct) C$ 57-72
1. Inclusive of both run-of-mine and supplemental diamond production2. See note on “Non-IFRS Financial Measures”
Diamond Market
11
SWY Real Price Index vs WWW’s Rough Price Index2, Real Terms1
1. Sale by sale basis, normalized for variations in quality and size distribution2. Roughprices.com
Stornoway sells its production by tender through the Antwerp offices of its sales agent Bonas-Couzyn.
In real terms (excluding changes in mix) pricing for Renard diamonds increased 27% between the first sale in November 2016 and June 20181.
Market weakness is being shown principally in smaller and lower quality items.
Underlying polished diamond demand remains strong, particularly in the US market. Rough market weakness is being affected by currency weakness in the emerging markets and cutting centers amidst global trade concerns, and market uncertainty on the impact of synthetic diamonds in small diamond categories.
100 101 102
95 98
100 101 98
96 93 94
95 97 97 98
100 102
100 100 101 102 100
112 110
114 115
119 119
110 111 114
120 119 120
125 127
123
118
113 114
90
95
100
105
110
115
120
125
130
Nov
-16
Dec-
16
Jan-
17
Feb-
17
Mar
-17
Apr-
17
May
-17
Jun-
17
Jul-1
7
Aug-
17
Sep-
17
Oct
-17
Nov
-17
Dec-
17
Jan-
18
Feb-
18
Mar
-18
Apr-
18
May
-18
Jun-
18
Jul-1
8
Aug-
18
Sep-
18
Oct
-18
Nov
-18
WWW SWY
Renard Resource Development
12
79
10
11
R3 OPEN PITR2 OPEN PITR65 OPEN PIT
RETURN AIR RAISE FRESH AIR
RAISEPORTAL
BACKFILL RAISES IN CROWN PILLAR
410L
270L
710L
590L
470L
290L
400L
250L
860L
VENTILATION RAISE
5
1
4
23
86
RENARD 65
RENARD 4
RENARD 9
RENARD 2
RENARD 3
Reserve and Resource categories conform to "CIM DefinitionStandards on Mineral Resources and Reserves". Mineral resourcesthat are not mineral reserves do not have demonstrated economicviability. The potential quantity and grade of any Exploration Target(previously referred to as a “Potential Mineral Deposit”) is conceptualin nature, and it is uncertain if further exploration will result in thetarget being delineated as a mineral resource.
Renard Mine Plan, Including Inferred Mineral Resources, March 30, 2016 Indicated Mineral Resources
Inferred Mineral Resources
Target for Further Exploration
Renard 4
13,546 tonne sample excavated from surface at R4 to evaluate potential future open pit at Renard 4 and Renard 9 in area of Mineral Resources currently outside the Renard Mine Plan
Surface sample results to date (evaluation ongoing as of Jan 11, 2019)Unit “4a” sample (2018) 2,444 carats from 10,359t at 24 cphtUnit “4b” sample (2018) 574 carats from 1,287t at 45 cphtUnit “4d” sample (2007) 2,722 carats from 2,104t at 129 cpht
R4A and R4B samples also processed in Renard bulk sample plant for QA/QC purposes
Three “special” stones recovered: 14.9ct, 12.4ct and 11.1ct
Initial indications suggests grade, size distribution and quality of the new recoveries are consistent with previous sampling.
2018-2019 drilling and sampling aimed at accelerating the mining of R3 and R4 in the Renard mine plan. Renard 3
5,345m delineation drilling completed to 315m depth
Confirmed widths and location of R3, and presence of high grade 3dg and 3h units
R3 ore above the 290m mining level included in the 2019 production schedule, several years earlier than expected
Exploration drilling planned at depth in 2019 to expand resource base
12.4 ct 14.9 ct
Renard 9
To be tested with sustaining drilling from existing underground workings in 2019
Renard 2
Exploration drilling planned at depth to expand resource base
Victor De Beers
Komsomolskaya ALROSA
Argyle2 Rio Tinto
Voorspoed De Beers
Koffiefontein Petra
Diavik Rio Tinto / Washington Corp
Sable, Pigeon, Lynx,Misery Main, Koala (Ekati)
Washington Corp
30
25
20
15
0
35
2016 2017F 2018F 2019F 2020F 2021F
10
5
2022F 2023F 2024F 2025F
The supply outlook, driven by the depletion of existing mines and handicapped to “likely production”, shows a downward trending CAGR of -1% to -2% to 2030
Rough-Diamond Supply, Mct, Base Scenario
2010 2014 2018F 2022F 2026F 2030F
120
90
60
30
0
180
150
Existingmines
CAGR(2016-2030)
9%
-3%
-
-1 – -2%
New mines/projects
Additionalproduction
Forecast
Diamond Supply Outlook1 Decrease in mine supply from 2018
Source: Bain & Company “The Global Diamond Industry 2017: The Enduring Story in a Changing World”1. Additional resources include tailings retreatment, which could be viable in older mines as run-of-mine is depleted, early-stage projects and projects currently marginal, which may become viable as rough prices increases2. Argyle production profile based on SWY management estimates
13
Argyle Mine, Australia Diavik Mine, Canada
Ekati Mine, Canada
Rough-Diamond Depletion Curve, Mct
14
Head Office:
1111 Rue St. Charles Ouest,
Longueuil, Québec J4K 4G4
Tel: +1 (450) 616-5555
Investor Relations Contact:
Alex Burelle, Manager – IR and Business Development
Tel: +1 (450) 616-5555 x2264
www.stornowaydiamonds.com
Stornoway Diamond Corporation TSX:SWY, TSX:SWY.DB.U