Stornoway Reports Fourth Quarter and 2017 Financial Results

LONGUEUIL, Québec, March 26, 2018 (GLOBE NEWSWIRE) -- Stornoway Diamond Corporation (TSX-SWY; the “Corporation” or “Stornoway”) is pleased to report financial and operating results for the fourth quarter and year ended December 31, 2017.

Earnings, operating expenses and capital expenses quoted reflect the recent adoption of a change in accounting policy regarding the capitalization of certain underground mine development costs (see “Change in Accounting Policy” below).

Year Ended December 31, 2017 Highlights:

(All quoted figures in CAD$, unless otherwise noted)

• For the year ended December 31, 2017, Stornoway reported net loss of $114.6 million ($0.14 per share on a basic and fully diluted basis), compared to net income of $19.6 million in 2016 ($0.03 per share basic and fully diluted). Included in 2017 earnings is a non-cash impairment charge of $171.0 million, reflecting a lower diamond price environment than was originally forecast by the Corporation. Net income before impairment¹ was $11.1 million for the fourth quarter and $15.0 million for the year.
• During 2017, the Renard Diamond Mine attained commercial production, completed the processing ramp-up on schedule and accomplished two full quarters at or above plant nameplate operating capacity.
• Mining in the Renard 2-3 and Renard 65 open pits in the fourth quarter comprised 827,181 tonnes, with 442,476 tonnes of ore extracted. For the full year, open pit mining stood at 4,475,854 tonnes (102% of plan), with 2,091,782 tonnes of ore extracted.
• A total of 398,267 carats were recovered in the fourth quarter from the processing of 518,817 tonnes of ore at a grade of 77 carats per hundred tonnes (“cpht”). For the full year, a total of 1,642,934 carats were recovered from 1,956,436 tonnes of ore at 84 cpht (98%, 97% and 99% of plan respectively).
• Diamond sales of 486,633 carats² were completed in the fourth quarter with gross proceeds1^,3 of $52.6 million at an average price of US$86 per carat ($108 per carat⁴). For the full year, Stornoway sold 1,701,561 carats for gross proceeds^1,3 of $186.2 million at an average price of US$85 per carat ($109 per carat⁵).
• In the fourth quarter, cash operating costs per tonne processed^1,[6] were $42.10 per tonne ($54.85 per carat) and capital expenditures^1,6 were $47.7 million. For the full year, cash operating costs per tonne processed^1,6 were $45.02 per tonne ($53.60 per carat) and capital expenditures^1,6 were $126.9 million.
• In the fourth quarter, the Corporation reported adjusted EBITDA^1,6 of $25.2 million, or 45.5% of revenues, and $85.0 million, or 43.3% of revenues, for the full year ended December 31, 2017.
• At year end, cash, cash equivalents and short-term investments stood at $81.0 million and available liquidity¹ to the Corporation, including available credit facilities, stood at $101.8 million.

¹ See “Non-IFRS Financial Measures” section
² Including 32,989 carats that were sold in the third quarter for which revenue was realized in the fourth quarter.
³ Before stream and royalty
⁴ Based on an average $:US$ conversion rate of $1.26
⁵ Based on an average $:US$ conversion rate of $1.29
⁶ See “Change in Accounting Policy” section

Matt Manson, President and CEO, commented: “In 2017, Stornoway’s Renard Diamond Mine produced a strong performance in mining, carat production, processing ramp-up, and cost. It has delivered strong operating margins, with EBITDA of $85 million, despite the lower diamond pricing environment that has characterised our first year of sales. As 2017 ended, Renard had established itself as the lowest cost diamond mine in Canada, and Renard diamonds had developed a strong position in the rough diamond market. The first half of 2018 will see ore production transition from our starter open pit to our underground mine. Ensuring an efficient ramp-up of the underground operations is a key priority for the Renard team. At the same time, we are introducing our new ore-waste sorting circuit designed to improve the quality of our diamond production and provide future processing expansion capacity. Both of these capital projects, once completed, will define the character of the project for the next decade.” Mr. Manson continued, “Since the completion of our project fund-raising in 2014, and through four years of mine construction and operations, Stornoway has maintained a strong balance sheet and liquidity position. This will remain a priority for us in our financial management as we pass through the scheduled capital spending of 2018 and pursue the production and revenue growth potential of our business.”

Table 1. Financial Results Highlights

(expressed in millions of Canadian dollars, except as otherwise noted)

Financial Summary

Revenue for the fourth quarter is estimated at $55.5 million, and at $196.5 million for the full year FY2017. Revenue includes amortization of upfront proceeds received by the Corporation under the Renard Stream Agreement in consideration for future commitments to deliver diamonds at contracted prices.

Under the changed accounting policy, the Corporation reported FY2017 Adjusted EBITDA^1,6 of $85.0 million, or 43.3% of revenue. The Corporation incurred a non-cash impairment charge of $171.0 million as at December 31, 2017 on the carrying value of the Corporation’s property plant and equipment, reflecting an outlook of lower than expected diamond pricing. Prior to this charge, the Corporation reported net income before impairment¹ for FY2017 of $15.0 million.

During the fourth quarter the Corporation drew down funds available under its senior loan facility with Diaquem Inc. (a wholly-owned subsidiary of Ressources Québec) prior to its scheduled expiry at year-end, and made $16.0 million of principal repayments on existing indebtedness. As at December 31, 2017, cash, cash equivalents and short-term investments stood at $81.0 million and Available Liquidity¹ to the Corporation, including available credit facilities, stood at $101.8 million.

Change in Accounting Policy

The fourth quarter and full year FY2017 results incorporate the impact of an accounting policy change recently adopted by the Corporation in accordance with IAS 8 “Accounting policies, changes in accounting estimates and errors” wherein certain costs associated with the development of the underground mine that were previously expensed will now be capitalized and amortized over the period during which the underground infrastructure can be expected to contribute to the revenue-earning capability of the mine. Mining companies use different accounting treatments on development expenditure incurred during the production phase. This change will result in the financial statements providing reliable and more relevant information on Stornoway’s financial performance, such as operating expense, capital expense, and earnings. 

Table 2 illustrates a reconciliation certain financial and operating metrics impacted by the accounting policy change for the three 2017 interim consolidated financial statements of the Corporation.

Table 2. Reconciliation of Key Financial and Operating Metrics Pursuant to Accounting Policy Change

(expressed in millions of Canadian dollars, except as otherwise noted)

Operational Summary

Environment, Health, Safety and Communities

No lost time incidents (“LTI”) were recorded during the quarter, for a year to date LTI rate of 0.4 for contractors and zero for Stornoway employees. Average daily manpower at site in December averaged 324 workers (Stornoway and contractors) of which 12% were Crees of the Eeyou Istchee. Stornoway employees stood at 505 as at December 31, 2017, including 437 mine located employees, of which 12% were Crees, 26% were from Chibougamau and Chapais, and 62% were from outside the region. One incident of administrative environmental non‐conformity was identified during the quarter due to reporting an accidental glycol spill outside of the 24-hour prescribed delay.

Commercial Production, Ramp-Up and Completion Certification

Stornoway formally declared commercial production at the Renard Diamond Mine on January 1, 2017, marking the end of the project’s initial capital expense period. Production ramp-up was completed on schedule at the end of the second quarter of 2017, with an average processing rate of 6,149 tonnes per day achieved in June 2017. Since then, two full operating quarters have been completed at average processing rates of 5,957 tonnes per day and 6,014 tonnes per day respectively.

Subsequent to the year end, on February 7, 2018, the Corporation announced the attainment of full Completion Certification at the Renard Mine pursuant to the terms of Stornoway’s July 2014 material project finance agreements.

Mining and Processing

During the fourth quarter, 827,181 tonnes were mined from the Renard 2-3 and Renard 65 open pits, with 442,476 tonnes of ore extracted. 518,817 tonnes of ore from the Renard 2 and Renard 3 kimberlites were processed with a diamond recovery of 398,267 carats at an attributable grade of 77cpht.

During the year, 4,475,854 tonnes were mined from the Renard 2-3 and Renard 65 open pits, compared to a plan of 4,369,532 tonnes (102%), with 2,091,782 tonnes of ore extracted. 1,956,436 tonnes of ore were processed with a diamond recovery of 1,642,934 carats at an attributable grade of 84cpht, compared to a plan of 1,999,000 tonnes and 1,694,312 carats at 85 cpht (98%, 97% and 99% respectively).

Carat production was lower than planned in the fourth quarter and on a full year basis, due to the unscheduled batch processing of lower grade Renard 65 ore in November for the purpose of obtaining a valuation sample of Renard 65 diamonds.

In the fourth quarter, cash operating costs per tonne processed^1,6 were $42.10 per tonne ($54.85 per carat recovered^1,6). On a full year basis, cash operating costs per tonne processed^1,6 were $45.02 per tonne ($53.60 per carat recovered^1,6). Under the changed accounting policy, cash operating costs are lower and capital expenditures are higher than was contemplated in the 2017 guidance.

Diamond Sales

During the fourth quarter, Stornoway sold a total of 486,633² carats in 2 tender sales with gross proceeds^1,3 of $52.6 million, at an average price of US$86 per carat ($108 per carat⁴). On a full year basis Stornoway sold 1,701,561 carats for gross proceeds^1,3 of $186.2 million, at an average price of US$85 per carat ($109 per carat⁵).

Commentary on Diamond Production and the Rough Diamond Market

During 2017, the quality and size distribution of diamond recoveries at Renard were negatively impacted by high levels of diamond damage incurred during processing, producing a commensurate reduction in the average price achieved at sale. The Corporation believes that significant value improvement may be achieved upon successful mitigation of the breakage to more acceptable levels. The source of the breakage has been localized, primarily, within the secondary cone crusher and tertiary high pressure grinding roll crusher, and appears associated with the high proportion of hard, internal dilution inherent in Renard ore producing an abrasive environment within the crushers. The Corporation believes that the introduction of ore-waste sorting, approved under an extraordinary capital plan by the Board of Directors in August 2017, will contribute to a higher quality diamond product through the removal of a large proportion of the abrasive dilution from the crushing circuits. Commissioning of the new ore-waste sorting circuit is expected to commence shortly.

Between the first sale of Renard diamonds in November 2016, and the tenth sale in December 2017, the average run of mine pricing for Renard diamonds, after accounting for size distribution and quality variations, increased in real terms by 13.5%. This increasing trend reflected a positive reaction by the rough market to the qualities, colours and polished yields of the Renard diamond production, and increasing participation in the Corporation’s diamond tenders. This result was attained despite a challenging rough diamond market in 2017, which was characterized by an increase in sales from rough producers (including from three new diamond mining projects) and flat to low sales growth for polished diamonds and diamond jewellery. These market conditions were exacerbated by the Indian demonetization events of late 2016, which impacted rough diamond pricing for smaller and lower quality items during the course of 2017. By year end, the effect of the Indian demonetization event had largely been removed from the rough diamond market, and a strong holiday selling season, particularly in Asian markets, had resulted in moderate price growth at the start of 2018 for both rough and polished diamonds.

Subsequent to the year end, the Corporation announced on January 29, 2018 that in the first tender of 2018 it had sold 138,687 carats were sold for gross proceeds^1,3 of US$14.4 million at an average price of US$104 per carat. This is the highest price for Renard diamonds achieved to date, and reflected the strengthening diamond market and appreciable improvements in breakage levels, size distribution and quality mix.

Capital Projects

Under the changed accounting policy, capital expenditures^1,6 in the fourth quarter were $47.7 million, primarily related to the development of the underground mine and the construction of the ore-waste sorting circuit. For the year ended December 31, 2017, capital expenditures^1,6 stood at $126.9 million. Under the changed accounting policy, cash operating costs are lower and capital expenditures are higher than was contemplated in the 2017 guidance.

Development of the underground mine during the fourth quarter focussed on lateral development in kimberlite and waste for the drill drift on levels 160, 240 and 270, and also for the draw-points on level 290. Development of the fresh air raise was also completed during this period. Lateral development comprised 1,227 meters compared to a plan of 1,062 meters (+16%). On a yearly basis, lateral development stood at 4,869 meters compared to a plan of 4,460 meters (+9%).

The first production blast in the underground mine occurred successfully on December 20^th, 2017. Full production from the underground mine is on schedule to commence within the second quarter of 2018.

Updated FY2018 Guidance

Under the changed accounting policy, cash operating costs¹ in FY2018 are expected to be $48 to $50 per tonne processed ($75 to $77 per carat recovered), and capital expenditures¹ are expected to be $100 million. This compares to previous FY2018 guidance of $56 to $58 per tonne processed ($87 to $92 per carat recovered) and $82 million of capital expenditures¹. Other FY2018 guidance (Table 3) is un-impacted by the accounting changes.

Table 3. Updated FY2018 Guidance

Mineral Reserves Update

Mineral Reserves as of December 31, 2017 have been updated based on mining depletion. At December 31, 2016, Proven and Probable Mineral Reserves for the Renard Diamond Mine were 30.2 million tonnes at a grade of 66.3 carats per hundred tonnes (“cpht”) for 20.0 million attributable carats.

Exclusive of the Mineral Reserves, the Renard Diamond Mine includes additional Indicated Mineral Resources of 2.8 million carats (6.1 million tonnes at 46 cpht), Inferred Mineral Resources of 13.1 million carats (23.4 million tonnes at 56 cpht), and 33.0 to 71.1 million carats of non-resource exploration upside (76.2 to 113.2 million tonnes at grades ranging from 20 to 168 cpht). Readers are cautioned that the potential quantity and grade of any such exploration target is conceptual in nature, there has been insufficient exploration to define a mineral resource, and it is uncertain if further exploration will result in the target being delineated as a mineral resource. All kimberlites remain open at depth. The 2017 Updated Mineral Resource incorporates geological data on kimberlite contacts and internal geology as revealed on the 160 meter, 270 meter and 290 meter levels in the Renard underground mine.

Non-IFRS Financial Measures

This document refers to certain financial measures, such as Net Income Before Impairment, Adjusted EBITDA, Adjusted EBITDA Margin, Average Diamond Pricing Achieved, Cash Operating Cost per Tonne Processed, Cash Operating Cost per Carat Recovered, Capital Expenditures, and Available Liquidity, 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 to similar 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 isolation or 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 year ended December 31, 2017 for further discussion of these items, including reconciliations to IFRS measures.

About the Renard Diamond Mine

The Renard Diamond Mine is Quebec’s first producing diamond mine and Canada’s sixth. It is located approximately 250 km north of the Cree community of Mistissini and 350 km north of Chibougamau in the James Bay region of north-central Québec. Construction on the project commenced on July 10, 2014, and commercial production was declared on January 1, 2017. Average annual diamond production is forecast at 1.8 million carats per annum over the first 10 years of mining. Readers are referred to the technical report dated January 11, 2016, in respect of the September 2015 Mineral Resource estimate, and the technical report dated March 30, 2016, in respect of the March 2016 Updated Mine Plan and Mineral Reserve Estimate for further details and assumptions relating to the project.

Qualified Person

Disclosure of a scientific or technical nature in this press release was prepared under the supervision of M. Patrick Godin, P.Eng. (Québec), Chief Operating Officer and Mr. Robin Hopkins, P.Geol. (NT/NU), Vice President, Exploration, both “qualified persons” under National Instrument (“NI”) 43-101.

About Stornoway Diamond Corporation

Stornoway is a leading Canadian diamond exploration and production company listed on the Toronto Stock Exchange under the symbol SWY and headquartered in Montreal. A growth oriented company, Stornoway owns a 100% interest in the world-class Renard Mine, Québec’s first diamond mine.

On behalf of the Board
STORNOWAY DIAMOND CORPORATION
/s/ “Matt Manson”
Matt Manson
President and Chief Executive Officer

For more information, please contact Matt Manson (President and CEO) at 416-304-1026 x2101
or Orin Baranowsky (CFO) at 416-304-1026 x2103 or Jodi Hackett (Manager, Communications) at 416-304-1026 x2104
or toll free at 1-877-331-2232

Pour plus d’information, veuillez contacter M. Ghislain Poirier, Vice-président Affaires publiques de Stornoway au 418-254-6550, gpoirier@stornowaydiamonds.com

** Website: www.stornowaydiamonds.com Email: info@stornowaydiamonds.com **

Forward-Looking Statements

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 the United 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 this document 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, and strategies 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. Although management 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 exploration targets; (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 and quality of diamonds, average ore recovery, 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 ore recovery, 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 the Renard 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 connection with 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, expansion opportunities, timing thereof and anticipated benefits therefrom; (xi) future exploration plans and potential upside from targets identified for further exploration; (xii) expectations concerning outlook and trends in the diamond industry, 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 diamond production; (xiii) the economic benefits of using liquefied natural gas rather than diesel for power generation; (xiv) sources of and anticipated financing requirements; (xv) the ability to meet Subject Diamonds 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 plant modification 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” or variations 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 of historical 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 be materially 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 business prospects 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 diamond breakage, 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 and commitments, 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 available to 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 and estimated 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, internal dilution, 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 diamond breakage 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 Indian currency 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 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 future market 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 favorable terms and the satisfaction of all covenants and conditions precedent relating to future funding commitments; (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 stated Mineral 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 and absence 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 key relationships 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 diamond mines; (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 mine plan; (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) limited cash income taxes payable over the medium term.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. We caution readers not to place undue reliance on these forward- looking statements as a number of important risk factors could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates, assumptions and intentions expressed in such forward-looking statements. These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur, including the assumption in many forward-looking statements that other forward-looking statements will be correct, but specifically include, without limitation: (i) risks relating to variations in the grade, size distribution and quality of diamonds, kimberlite lithologies and country rock content within the material identified as Mineral Resources from that predicted; (ii) variations in rates of recovery and levels of diamond breakage; (iii) the uncertainty as to whether further exploration of exploration targets will result in the targets being delineated as Mineral Resources; (iv) risks associated with our dependence on the Renard Diamond Mine and the limited operating history thereof; (v) unfavorable developments in general economic conditions and in world diamond markets; (vi) variations in diamond valuations and fluctuations in diamond prices from those assumed; (vii) insufficient demand and market acceptance of our diamonds; (viii) risks associated with the production and increased consumer demand for synthetic gem-quality diamonds; (ix) risks relating to fluctuations in the Canadian dollar and other currencies relative to the US dollar and variability in interest rates; (x) inaccuracy of our estimates regarding future financing and capital requirements and expenditures, significant additional future capital needs and unavailability of additional financing and capital, on reasonable terms, or at all; (xi) uncertainties related to forecasts, costs and timing of the Corporation’s future development plans, exploration, processing, production and mining activities; (xii) increases in the costs of proposed capital, operating and sustainable capital expenditures; (xiii) increases in financing costs or adverse changes to the terms of available financing, if any; (xiv) tax rates or royalties being greater than assumed; (xv) uncertainty of mine life extension potential and results of exploration in areas of potential expansion of resources; (xvi) changes in development or mining plans due to changes in other factors or exploration results; (xvii) risks relating to the receipt of regulatory approvals or the implementation of the existing Impact and Benefits Agreement with aboriginal communities; (xviii) the failure to secure and maintain skilled employees and maintain key relationships with financing partners, local communities and other stakeholders; (xix) risks associated with ongoing issues of diamond breakage in the Renard Diamond Mine process plant and the failure to realize the anticipated benefits from plant modification measures within the anticipated timeframe and expected capital cost, or at all; (xx) the negative market effects of recent Indian demonetization and continued impact on pricing and demand; (xxi) the effects of competition in the markets in which Stornoway operates; (xxii) operational and infrastructure risks; (xxiii) execution risk relating to the development of an operating mine at the Renard Diamond Mine; (xxiv) the Corporation being unable to meet its Subject Diamonds Interest delivery obligations under the Purchase and Sale Agreement; (xxv) future sales or issuances of Common Shares lowering the Common Share price and diluting the interest of existing shareholders; (xxvi) the risk of failure of information systems; (xxvii) the risk that our insurance does not cover all potential risks; (xxviii) the risks associated with our substantial indebtedness and the failure to meet our debt service obligations; and (xxix) the additional risk factors described herein and in Stornoway’s annual and interim MD&A, its other disclosure documents and Stornoway’s anticipation of and success in managing the foregoing risks. Stornoway cautions that the foregoing list of factors that may affect future results is not exhaustive and new, unforeseeable risks may arise from time to time.