Road to riches for diamond industry

Route des Monts Otish to pave way; Stornoway Diamond Corp. and other firms hail plan and hope to drive it in early 2013

When long-awaited details of Quebec's northern development plan aremade public, few will be more attentive than Matt Manson, CEO ofStornoway Diamond Corp.

Stornoway is deep in the development process of Quebec's first diamond mine in the Otish Mountains of the James Bay region.

Andwhen Natural Resources Minister Nathalie Normandeau rolls out the PlanNord, she will include specifics for the extension of a road north fromMistassini through the wilderness to Stornoway's Renard diamond project.

"Theroad, for us, means the difference between no mine or a mine with 10 or15 years' operations, employing about 200 to 300 people," Manson toldThe Gazette in March 2008.

That was before Renard's prospects wererevised upward to its current status as a $511-million project with a30-million carat potential.

In any event, a year later Quebec gavethe road extension its blessing and promised some preparatory fundingfor it in a highway infrastructure package.

That step was hailedby all exploration companies active in that sector of James Bay that hadto fly in supplies and personnel to their camps or build and rebuildwinter roads as supply lines and to haul in heavy equipment.

Abigger buzz followed last month's budget speech, in which FinanceMinister Raymond Bachand pledged that work would begin this year on theextension of Route 167 north of Mistassini "to the diamond deposits inthe Otish Mountains."

As things stand now, the 260-kilometre road,also known as Route des Monts Otish, could be built in either three orfive years, Manson said during a recent inter-view. Among the details tobe worked out is industry's contribution to the two-lane gravel-tophighway that will provide access to several mining projects as well as anew park.

Stornoway will work with the transportation department"to ensure that the construction sequence itself is such that by thefirst quarter of 2013 we are able to drive along the route by way oftemporary bridges over the rivers and winter road segments andconstruction easements," Manson said.

"That allows us to start mobilizing for mine construction in the first quarter of 2013; that is the schedule we want to hit."

Stornowayhas been preparing for a full feasibility study of its project, adetailed analysis to present to investors. That bankable feasibilitystudy is expected by September.

And the company is broadening itsagreements with the Grand Council of Crees, negotiating an impact andbenefits pact, Manson said.

In May 2010, Stornoway filed atechnical report for its preliminary assessment that estimated Renardcould produce 30 million carats of diamonds over a mine life of 25years.

Currently, Stornoway is "looking at between 1.5 million and two million carats a year of annual production," Manson said.

"Ourcurrent diamond price is about $117 per carat, but that is about oneyear old, and we do expect the next diamond evaluation to be higher."

Quebec has yet to create a mechanism for evaluating diamond production and a royalty regime for diamonds.

Mansonsaid Quebec's diamond royalty regime should be similar to that of thefederal government's for the Northwest Territories and that ofOntario's.

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