Star Diamond boosts Star-Orion resource, eyes 2026 feasibility

Star Diamond (TSE: DIAM) has upped resources at its Star-Orion South diamond project in Saskatchewan, after former joint venture partner Rio Tinto (NYSE: RIO; LSE: RIO; ASX: RIO) returned its 75% interest in the project to the company for a 19.99% stake in Star instead.  

Indicated resources for the Star kimberlite have increased 22% to 34.8 million carats and the grade has increased 20% to 19.4 carats per hundred tonnes (cpht). Indicated resources for the Orion South kimberlite have increased 37% to 36.9 million carats and the grade has increased 32% to 17.9 cpht.  

Star Diamond says it’s now working on a prefeasibility study, with a feasibility study to follow.   

“Our technical team and outside consultants have been working hard for the last year and a half to arrive at this incredible outcome,” Star Diamond CEO Ewan Mason said in Wednesday’s news release.  “We intend to have a feasibility study completed by the end of 2026, with hopes that shovels could be in the ground within 3-5 years.” 

The company says the project is the largest undeveloped diamond deposit in the world, and contains large, high-value stones. It’s also low grade, however, and the need to remove a large amount of overburden would add to development costs for the planned open pit mine. A 2018 preliminary economic assessment put preproduction capital costs at $1.4 billion.

The study estimated 66 million carats could be recovered from the project over a 38-year period, generating $3.3 billion (US$2.6 billion) in revenue.

Rio spending

Exploration has been ongoing at Star-Orion for years, but the company only became sole owner in March. 

Although the explorer made peace with Rio Tinto Exploration Canada in 2021, the two companies faced off in court in 2020 due to a drawn out dispute over the development of what was once a joint diamond project. 

The legal row stemmed from a 2017 earn-in deal under which Rio Tinto’s Canadian exploration arm committed to spend US$75 million in phases to acquire 60% of the Star-Orion South project. 

When Rio exercised all its options simultaneously, Star Diamonds objected, alleging the the world’s second-largest miner did so to boost its stake at below market value. 

“We ended up with 100% of it, plus $100 million in machinery, equipment, and supplies, plus a 10-year environmental bond, plus $4 million in cash. And for that, we gave them 17% of our stock, which is roughly $8.5 million,” Mason told The Northern Miner‘s sister website MINING.com in an interview. 

Mason also said when Star Diamond and Rio first entered a JV, the mining giant’s executives were eyeing new diamond projects to fill the gap that the aging Diavik mine in the Northwest Territories – which is running out of ore – would leave. However, Rio’s focus has now shifted to expanding its critical minerals portfolio.   

Red tape   

First discovered in the ’80s, in the Fort à la Corne provincial forest of central Saskatchewan, 60 km east of the city of Prince Albert, the site contains at least 70 kimberlite pipes, Mason said.  

“We already have over 500 million tons of ore from just two kimberlite pipes. We’ve been at it 30 years, and we’ve extracted over 150,000 diamonds already, and we still haven’t built the mine.” 

Mason said Star Diamond has already spent over a billion dollars on the late-stage project and the last PEA showed that it was going to contribute $25 billion to the province over the first 34 years. 

The diamonds that have been extracted so far are not on the market because the company is not permitted to sell them under Saskatchewan mining legislation until it has a mining permit. 

Star Diamond had 160 diamonds from Fort à la Corne property cut and placed into the Black Rod of the Saskatchewan Legislature in Regina. 

 “We keep them in a bank vault, but we’ve started to take them out and cut and polish them and display them, and they’re magnificent,” Mason said.

Star Orion is a Type IIa prevalent deposit, meaning high purity diamonds and contain no boron, Mason said.

“Not one of the mines operating now, or the ones that did operate, had Type IIa. These diamonds are very rare and most mines around the world do not have them. Nobody (else) in Canada has them,” Mason said.

“We have extracted diamonds up to 50 carats so far, just in sampling, and some of those diamonds are worth over US$100,000 each. It’s a very high-quality deposit, there’s really nothing like it in the world, not even close.”

A (real) diamond is forever 

Synthetic diamonds have disrupted the market in recent years, and while Mason believes lab diamonds have a place in the jewelry market, he pointed out that a synthetic diamond, “the second it leaves the store, is worth nothing.”

“They can make an infinite number of these diamonds. They have no resale value, so a lot of wholesalers are [saying] they’re garbage,” he said. “They say they’re chemically equivalent to an actual stone [because] it’s carbon, except that it’s not formed the same way. It’s not formed naturally.”

Mason added Star’s mine would be electric powered and carbon neutral, if not carbon negative. 

Mason said legacy diamond supply is down 15% over the last three years and by the end of this decade will be down even more.  

“Where are you going to get the conflict-free diamonds that are not from Russia? Canada. And Russia produces 30% of diamonds that are for jewelry purposes right now and the West eats 70% of all diamonds for jewelry purposes.” 

Indigenous engagement 

Mason said the project is being built out on Cree Nation territory in Saskatchewan with the cooperation of the local community, and the company aims to provide ample opportunities for Indigenous employment.  

Star Diamond chose the trademark “Kīwētin” (pronounced “kee-way-tin”), meaning north wind in the Cree language, for its Fort à la Corne diamonds. 

“We’re at a very pivotal time in our country with respect to these types of projects,” Mason said. 

“I think it’s the best province to be building a mine in Canada right now – and this is an exciting project – it’s going to be a market mover when it gets up and running.” 

Star Diamond shares trade at 6¢ apiece within a 52-week range of 6-10¢. The junior has a market cap of $33.4 million.