BUILDING QUÉBEC’S FIRST DIAMOND MINE
Scotia Mining Conference, December 1st 2011
Matt Manson
President and CEO
2
Forward-Looking Information
This presentation contains "forward-looking information" within the meaning of Canadian securities legislation and “forward-looking statements”
within the meaning of the United States Private Securities Litigation Reform Act of 1995. This information and these statements, referred to herein
as “forward-looking statements”, are made as of the date of this presentation and the Company does not intend, and does not assume any
obligation, to update these forward-looking statements, except as required by law.
Forward-looking statements relate to future events or future performance and reflect current expectations or beliefs regarding future events and
include, but are not limited to, statements with respect to: (i) the amount of mineral resources and exploration targets; (ii) the amount of future
production over any period; (iii) net present value and internal rates of return of the mining operation; (iv) capital costs and operating costs; (v) mine
expansion potential and expected mine life; (vi) expected time frames for completion of permitting and regulatory approvals and making a
production decision; (vii) future exploration plans; (viii) future market prices for rough diamonds; and (ix) sources of and anticipated financing
requirements. 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” 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 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 strategies and the
environment in which Stornoway will operate in the future, including the price of diamonds, anticipated costs and ability to achieve goals. Certain
important factors that could cause actual results, performances or achievements to differ materially from those in the forward-looking statements
include, but are not limited to: (i) estimated completion date for the Environmental and Social Impact Assessment; (ii) required capital investment
and estimated workforce requirements; (iii) estimates of net present value and internal rates of return; (iv) receipt of regulatory approvals on
acceptable terms within commonly experienced time frames; (v) the assumption that a production decision will be made, and that decision will be
positive; (vi) anticipated timelines for the commencement of mine production; (vii) anticipated timelines related to the Route 167 extension and the
impact on the development schedule at Renard; (viii) anticipated timelines for community consultations and the conclusion of an Impact and
Benefits Agreement; (ix) market prices for rough diamonds and the potential impact on the Renard Project’s value; and (x) future exploration plans
and objectives. Additional risks are described in Stornoway's most recently filed Annual Information Form, annual and interim MD&A, and other
disclosure documents available under the Company’s profile at: www.sedar.com.
When relying on our forward-looking statements to make decisions with respect to Stornoway, investors and others should carefully consider the
foregoing factors and other uncertainties and potential events. Stornoway does not undertake to update any forward-looking statement, whether
written or oral, that may be made from time to time by Stornoway or on our behalf, except as required by law.
3
Why Stornoway?
100% Ownership in Renard:
One of the World’s Best Development
Stage Diamond Projects
In Québec, one of the World’s Best
Mining Jurisdictions
Renard
Strong Feasibility Base Case Economics
Extensive Resource Upside
Diamonds
Excellent Long Term Fundamentals
Few New Mining Projects
Stornoway
Experienced Team
Strong Québec Backing
4
Renard Kimberlite Bodies
0 1 2
Kilometers
N
60 0 60 120
Kilometers
Laforge 2
Laforge 1
R10 Brisay
LG4
LG2
R7 LG3
Foxtrot Property
Hibou R1
Eleonore
Wemindji Renard
R65 Western Troy Eastmain Mine
R4 Strateco
R8
R9 R3
Troilus Mine
R2 Temiscamie
Lynx Mistissini
Matagami
Chibougamau
Kimberlite Bodies with
Probable Reserves
Legend
LEGEND:
Kimberlite Bodies with Stornoway Properties HydroQuébec
Inferred Resources HydroQuébec Facility Powerlines
Renard Kimberlites Route 167 Extension
Kimberlite Bodies with Road
Kimberlitic Dyke
Resource Potential Exploration/ Mining
Regional Kimberlites
Projects
5
Summary of Feasibility Results
Valuation
NPV7% and IRR of C$672m and 18.7% (Pre-Tax) and C$376m and 14.9% (After-Tax)
Mining and Production Parameters
11 year reserve-based mine life
Peak diamond production reaching 2.1Mcarats per year, averaging 1.7Mcarats over LOM, and
at a weighted average US$180/carat
Operating cash flow of C$2.7B
Costs
Initial Capital Cost Estimate of C$802m including contingencies
LOM Operating Cost Estimate of C$54.71/tonne (C$70.27/carat) giving a 68% operating margin
Reserves and Resources1
Probable Mineral Reserve of 18.0 Mcarats (23.1Mtonnes at an average 78 cpht)
Inferred Mineral Resources of 17.5 Mcarats (31.1Mtonnes at an average 56 cpht)
Key Assumptions
C$1=US$1, Oil US$90/barrel, 2.5% real terms diamond price growth Q311-Q425, 83.5% ore recovery, 19.4% mining dilution, 0cpht
dilution grade, January 1 2012 effective date for NPV and IRR calculation.
1
Reserve and Resource categories are compliant with the "CIM Definition Standards on Mineral Resources and Reserves". Mineral resources that are not mineral reserves do
not have demonstrated economic viability.
6
Feasibility Study Contributors
Capital and Operating Cost Estimates, Onsite Infrastructure Design,
Construction Strategy, Risk Assessment
Process Plant, Underground Mine Design and Underground Reserve
Open Pit Design, Open Pit Reserve and Financial Analysis
Geotechnical, Processed Kimberlite Containment, Waste Water Management
Environmental, Social and Permitting Considerations
Rock Mechanics, Hydrogeology
NI 43-101 Resource
Human Resources, Operating Plan, Marketing Plan
7
General Project Arrangement
Small Footprint of 3.1km2
Processed Kimberlite
Containment (PKC)
R65
Waste Rock
R2-R3 Overburden
Stockpile
Plant
Ore Stockpile
Camp
Route 167 Extension
8
Mine Plan
A Combined Open Pit and Underground Mine
Open Pit Mining at Renard 2 & 3
Renard 65
(years 1-2)
Underground Mining Renard 2,
3 & 4 (years 3-11)
Blast Hole Shrinkage with waste
backfill from pits.
Ramp & shaft access
6,000 tpd plant capacity, Renard 3
(2.2mtonnes/annum).
Pit at Renard 65 (initially) as a borrow-
pit and waste water sump, pending
resource conversion. Renard 4
Renard 2
Renard 3
Renard 2
9
Production and Revenue Schedule
Open Pit & Underground Mining
Schedule (Ktonnes of Ore) Plant Feed (Ktonnes)
2,500 2,500
2,000 2,000
R4 UG
1,500 R3 UG 1,500 R4
1,000 R2 UG 1,000 R3
500 R3 Pit 500 R2
‐ R2 Pit ‐
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
Carat Production (Kcarats) Gross Revenue (C$M, Real)
2,500 600.0
2,000 500.0
400.0
1,500 R4 R4
300.0
1,000 R3 R3
200.0
500
R2 R2
100.0
‐ ‐
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
10
Carat Production and Revenue
Diamond Production by Mining Method
Production Parameters (mCarats)
Renard 2 Open Pit 1.24 11%
Renard 3 Open Pit 0.67
Total Open Pit 1.91
Renard 2 Underground 13.67
Renard 3 Underground 0.84
Renard 4 Underground 1.58
Open Pit
Total Underground 16.09 89%
Underground
Total 18.00
Diamond Production by Kimberlite Pipe
Revenue Parameters (Real)
9%
Total Gross Revenue (C$m) $4,112 8%
Marketing Costs (C$m) 2.7%
DIAQUEM Royalty (C$m) 2.0%
Net Cash Flow $3,921
Operating Cash Flow (C$m) $2,677
Operating Margin 68%
Renard 2
Taxes and Mining Duties (C$m) $571 Renard 3
Cumulative After Tax Cash Flow (C$m) $1,151 Renard 4 83%
11
Capital Costs (Escalated)
Capital Costs (C$m) Direct Costs (C$531m)
Site Preparation & General $22.9 Onsite
Plant utilities
Mining $236.9 and infra.
32%
Mineral processing plant $168.4 19%
Onsite utilities and infrastructures $102.4
Owner’s Cost $86.2
Spares, fills, tools $10.2 Site Prep.
EPCM services $45.0 & General
Mining 4%
Field indirect costs, vendor representatives $22.5 45%
Construction camp & Catering $25.0
Freight and duties $8.1 Field,
Indirect Costs (C$271m)
$74.3 Vendor
Contingency EPCM reps
Total Pre-Production Capital $801.8 17% 8%
$57.3 Spares Camp
Escalation Allowance on Initial Capital
4% 9%
Pre-Production Revenue ($24.6)
Freight
Deferred & Sustaining Capital $138.8 3%
Deferred Capital (Route 167 Extension) $44.0
Salvage Value2 ($22.9) Owner’s
Cost
Total LOM Capital $994.4 32% Conting.
27%
12
Operating Costs (Real)
Operating Costs (C$1,244m)
G&A,
Operating Costs (C$m) C$338M
27%
Dollars $/tonne $/carat
Plant,
Open Pit Mine $6 $0.27 $0.34 C$344M,
28%
Underground Mine $556 $24.45 $31.41
Open Pit
Plant $344 $15.13 $19.43 Mine,
G&A $338 $14.86 $19.09 C$6M 0%
Total $1,244 $54.71 $70.27
Notes: Pit costs incurred before January 1st, 2016 are capitalized
UG Mine,
C$556M,
45%
13
Long Term Business Plan
Stornoway has also developed a Long Term Business
Plan (“LTBP”) based on the Project’s total Indicated and
Inferred Mineral Resources to a depth of 700m.
This material is within the scope of the mine
infrastructure costed within the Feasibility Study, and
includes 6.1 Mcarats of high grade Inferred Mineral
Resources between 600-700 meters depth in Renard 2.
The LTBP also contemplates an increased production
rate within the scope of the process plant’s design
parameters, which allows for expansion up to 7,000
tonnes per day (2.6 Mtonnes/annum).
Expansion mill feed is expected to be derived from the A 4 carat, top quality diamond
open pit on the Renard 65 kimberlite. recovered from Renard 65 drillcore
Although highly accretive, the project’s Inferred Mineral
Resources are not included in the Feasibility Study
economic analysis in accordance with NI 43-101.
The LTBP is the basis of the Renard mine permit
application, and as such will form part of the project’s
public disclosure in connection with the environmental
assessment regulatory process under applicable federal
and provincial legislation.
14
Renard NI 43-101 Mineral Reserves and Resource
Resource announced January 24th, 2011. Reserve announced November 16th, 2011
PROBABLE RESERVE Renard 65
29cpht
Drill Delineated Renard 3
Micro/Macro Diamond Sampling Renard 2 106/118cpht
103/118cpht
Bulk Sampling for Value
18 million carats
Renard 4
53/44cpht Renard 9
INFERRED RESOURCE 47cpht
Lower Resolution Drilling,
or no Bulk Sample
17 million carats
EXPLORATION UPSIDE
Lower Resolution Diamond
Sampling, or no Drilling.
24 - 49 million carats
Notes: Grades illustrated are for Indicated and Inferred Mineral Resources respectively at a +1DTC sieve size cut-off. Reserve and Resource categories are compliant with the "CIM Definition
Standards on Mineral Resources and Reserves". Mineral resources that are not mineral reserves do not have demonstrated economic viability. The potential quantity and grade of any Exploration
Target (previously referred to as a “Potential Mineral Deposit”) is conceptual in nature, and it is uncertain if further exploration will result in the target being delineated as a mineral resource.
15
Renard’s Resource Upside
A Project with a Long Resource Tail and Very Long Mine Life Potential
Millions
(Tonnes, Carats, $)
140 140
Expenditures ($)
120 120
Carats (IND+INF)
Tonnes “Conceptual” The Vision: Deposit still
100 100 Open
Tonnes PMD High
Tonnes PMD Low
80 Tonnes Inferred Resource 80
Tonnes Indicated Resource
60 Tonnes Probable Reserve 60
Permitting and Long
Term Business Plan
40 40
20 20 The Feasibility: 11
years of mining
0 0
2001-2004 2005-2006 2007-2008 2009 2011
Notes: Reserve and Resource categories are compliant with the "CIM Definition Standards on Mineral Resources and Reserves". Mineral resources that are not
mineral reserves do not have demonstrated economic viability. The potential quantity and grade of any Exploration Target (previously referred to as a “Potential
Mineral Deposit”) is conceptual in nature, and it is uncertain if further exploration will result in the target being delineated as a mineral resource.
16
Permitting and Development Schedule
2011 2012 2013 2014 2015
2H 1H 2H 1H 2H 1H 2H 1H 2H
BFS
ESIA
Community Hearings
COMEX and CEAA Review
Specific Mine Permits (50)
Detailed Engineering
Project Financing
Road Construction First Vehicle Access
Mine Construction
Commissioning and Ramp-up
Commercial Production
17
Infrastructure: Power and Road Access
A Canadian Diamond Project with an All Season Highway and Potential Grid Power
Road: The Québec Ministry of Transportation
“Route 167 Extension”, connecting Renard to Route 167 Extension Hydro Facility
Caniapiscau
the provincial highway to the south. Existing Winter Road Existing Hydro Line
Stornoway Claims Potential Hydro Line
Initial road construction cost of $332m will Mining/Exploration Projects
be funded by Québec. Stornoway will Laforge 2
contribute $44m amortized over 10 years, Brisay
starting in 2015. Additional Industry Laforge 1
contributions expected. LG4
LG2 LG3
Mirage Potential
Road ground-breaking expected shortly. Camp Powerline
Vehicle access is expected to be available
to the Renard site to commence project
construction by mid-2013. Eleonore Renard
(Goldcorp)
McLeod Lake
Power: Separate feasibility study on a 165km (Western Troy)
Eastmain
161kV powerline connecting Renard to the Eastmain 1
(Eastmain)
Laforge-1 generating station is ongoing. Route 167 Matoush
Extension (Strateco)
The powerline would add capital cost to the (268km) Existing
Winter Road
project but offers substantial operating cost
savings. Troilus Temiscamie
(Inmet)
Hydro-Québec expect to complete their Mistissini
study in 2012, and the impact of the 60 0 60 120
powerline on the Renard Diamond Project Kilometers
Chibougamau Scale: 1:3,000,000
will be assessed at that time.
18
Québec’s “Plan Nord”: Launched May 9th 2011
One of the World’s Best Mining Jurisdictions
The Renard Diamond Project is at the
center of the Plan Nord, the visionary
initiative to sustainably develop Québec
north of the 49th parallel through
infrastructure investment, community
development and biodiversity
conservation.
Investments include:
$1.2b for infrastructure projects, including
the Route 167 Extension
$434m for social measures
$500m for direct investments through
Investissement Québec Jean Charest, Premier of Québec, and Matt Manson, CEO of Stornoway, in
Chibougamau on August 1st for the announcement of Route 167 Extension
The “Route 167 Extension” and Financing Agreement. Mr. Charest is holding core from Renard 65 containing a
four-carat diamond.
Investissement Québec’s investment in
Stornoway are key planks of the Plan
19
Community Relations
The Renard Diamond Project is situated close to the
Cree Nation of Mistissini (CNM) and the mining
community of Chibougamau.
In July 2010 Stornoway concluded a Pre-Development
Agreement with the CNM and the Grand Council of the
Crees (EI).
Negotiations are ongoing towards an Impact and
Benefits Agreement (IBA).
Stornoway opened a liaison office in Mistissini in Project consultation meeting in Chibougamau
February 2011 to develop local skills and business
capacity.
The Renard Environmental Exchange group meets
regularly in Mistissini, giving a forum for the exchange of
environmental and traditional knowledge, and input on
project design.
Renard will provide meaningful employment and
business opportunities for several communities within
the James Bay region of Québec, and will be developed
on the principal of respect for local communities and
traditional values.
Opening of Mistissini liaison office
20
Environmental and Social Impact Assessment (ESIA) and Permitting
ESIA:
Stornoway has concluded Comprehensive Environmental
and Social Baseline Study (“ESBS”), incorporating data
collected since 2003.
The ESIA incorporates all ESBS findings and Feasibility
Study design elements, and will be filed shortly.
An Environmental Management Program will be
implemented during construction, operation, closure and
post closure phases with stakeholder participation.
PERMITTING:
The project is under the environmental protection regime of
the James Bay and Northern Québec Agreement (“JBNQA”)
and the New Relationship Agreement (or Paix des Braves).
Subject to a schedule established by the Review Committee
of the JBNQA (“COMEX”) and the Canadian Environmental
Assessment Agency, it is expected public hearings on the
project will be held in the first half of 2012.
It is anticipated that the project will be eligible for receipt of
Certificates of Authorization from the relevant Québec and
federal regulators by the middle of 2012.
Thereafter, up to 50 specific permits will be sought from the
Québec Ministère du Développement durable, de
l'Environnement et des Parcs, the Ministère des Ressources
Naturelles et de la Faune, and all relevant federal authorities.
21
Stornoway’s Project Pipeline
Mineral resources that are not mineral reserves
Stornoway possess a strong pipeline do not have demonstrated economic viability.
The potential quantity and grade of any non-
of advanced and grassroots exploration resource potential mineral deposit” (“PMD”) is
conceptual in nature, and it is uncertain if
projects. further exploration will result in the target
being delineated as a mineral resource.
Internal growth opportunities through
the advanced Aviat and Qilalugaq Aviat (90%)
Projects. Qilalugaq (100%) Advanced Project
Advanced Project 24-40 mcarats “PMD”
2011 expenditures focused on
discovery oriented exploration. Hammer (75%)
$5.6m budgeted. Discovery Project
LG4-Consorem (25%)
New claim acquisition in Saskatchewan Grassroots Exploration
(“Pikoo”) and Québec (“AEON”)
following up pre-2008 indicator
anomalies: potential for new kimberlite Pikoo (100%)
cluster close to infrastructure. Grassroots Exploration
New LG4-Consorem Project in Québec
with three partners. Virginia Mines Inc.
Renard (100%)
operator. NI 43-101 Resource
AEON (100%) 24 mcarats Indicated
Follow-up of Hammer kimberlite Grassroots 17 mcarats Inferred
discovered in Nunavut in 2009. Exploration 24-49 mcarats “PMD”
22
Stornoway’s Platform for Project Development and Financing
BALANCE SHEET*
Market Capitalization:
C$ 146 million
(based on voting and non-voting shares)
Total Shares Outstanding:
146 million ANALYST COVERAGE
(fully diluted)
Cash and Short Term Deposits: RBC Outperform-
C$ 25 million
(as of July 31st 2011) Des Kilalea, Speculative $3.50
April 4th, 2011 Risk
Debt Facility:
C$ 100 million
(undrawn) Raymond James
Bart Jaworski Outperform $2.50
Nov 21st, 2011
PRO-FORMA SHAREHOLDING*
Paradigm
Basic Fully Diluted David Davidson Buy $3.15
(common shares) 25.0% 21.0% Nov 17th, 2011
IQ**
(non-voting convertible shares) -------- 16.0% BMO
Agnico-Eagle 10.8% 9.1% Ed Sterck Market Perform $1.50
Nov 17th, 2011
Rio Tinto plc 5.3% 4.4%
Desjardins
Lorito Holdings (Lundin Family) 3.5% 2.9% Brian Christie Speculative Buy $2.00
Nov 17th, 2011
Float 55.4% 46.6%
Notes:
Debt Facility: In December 2010 Stornoway announced a credit support agreement with a subsidiary of Société générale de financement du Québec, now Investissment Québec, with
respect to future project debt financing of a minimum of $100 million. The credit support bears an annual commitment fee of 175 bps undrawn, and will take the form of a direct project
loan ranking pari passu with concurrent senior lenders or, as appropriate, on a stand alone basis on terms no less favourable than prevailing commercially reasonable market terms.
*Based on market close of $1.00 on November 18, 2011
**IQ: Investissement Québec, the Québec government's industrial and financial holding company whose mission is to foster the growth of investment in Québec, thereby contributing to
economic development and job creation in every region
23
The Year Ahead
12 MONTH OUTLOOK
Completion of the Renard Bankable Feasibility Study
Ground Breaking on the Route 167 Extension
Completion of the Renard Environmental and Social Impact Assessment
Community Consultations and Certificates of Authorization (end 1H-2012)
Continued Renard Resource Expansion (Renard 65)
Pipeline Project Exploration and Target Drilling
18 MONTH OUTLOOK
Finalisation of Renard Project Financing
Renard Construction Mobilization (end 1H-2013)
BUILDING QUÉBEC’S FIRST DIAMOND MINE
Appendix Materials
25
Appendix: Financial Analysis
Project Assumptions, Valuation and Pay-Back
Key Assumptions in the Financial Model
Reserve Carats (m) 18.0
Tonnes Processed (m) 23.0
Recovered Grade (cpht) 78
Mining Average Ore Recovery (%) 83.5%
Parameters Average Mining Dilution (%) 14%
Dilution Grade (cpht) 0
Processing Rate (Mtonnes/a) 2.2
Mine Life (years) 11
Pre-Production Cap-ex (C$m) $802 Valuation Results (C$m)
Cost LOM Cap-Ex (C$m) $994
Parameters Oil Price (US$/barrel) $90 Pre-Tax After Tax
LOM Op-ex (C$/tonne) $54.71
NPV5% $899 $534
LOM Op-ex (C$/carat) $70.27
Gross Revenue (C$m) $4,112 NPV7% (Base Case) $672 $376
Marketing Costs 2.7% NPV9% $490 $248
Revenue DIAQUEM Royalty 2.0%
Parameters Operating Cash Flow (C$m) $2,677 IRR 18.7% 14.9%
(real terms) Operating Margin 68% Pay-Back (years) 4.65 4.80
Total Taxes and Mining Duties (C$m) $571
After Tax Net Cash Flow (C$m) $1,151
Renard 2 and Renard 3 (US$/carat) $182
Diamond
Renard 4 (US$/carat) $164
Price
Diamond Price Escalation, 2012-2025 2.5%
Parameters
Exchange Rate 1C$=1US$
Effective Date for NPV Calculation January 1 2012
Schedule Construction Mobilization July 1 2013
Parameters Plant Commisioning Commences July 1 2015
Commercial Production Declared January 1 2016
26
Appendix: Financial Analysis
Valuation Sensitivities
30.0% PRE-TAX IRR 1,200,000 PRE-TAX NPV7%
25.0% 1,000,000
20.0% 800,000
15.0% 600,000
10.0% 400,000
5.0% 200,000
0.0% ‐
80% 90% 100% 110% 120% 80% 90% 100% 110% 120%
Operarting Cost 20.7% 19.7% 18.7% 17.7% 16.7% Operating Cost 808,813 740,372 671,932 603,487 535,040
Capital Cost 23.7% 21.0% 18.7% 16.7% 15.0% Capital Cost 829,526 750,717 671,932 593,125 514,316
Revenue 11.6% 15.4% 18.7% 21.8% 24.6% Revenue 235,672 453,813 671,932 890,040 1,108,14
30.0% AFTER-TAX IRR 700,000 AFTER-TAX NPV7%
25.0% 600,000
500,000
20.0%
400,000
15.0%
300,000
10.0%
200,000
5.0% 100,000
0.0% ‐
80% 90% 100% 110% 120% 80% 90% 100% 110% 120%
Operating Cost 16.5% 15.7% 14.9% 14.0% 13.2% Operating Cost 463,661 419,627 375,577 331,523 287,283
Capital Cost 19.1% 16.8% 14.9% 13.2% 11.8% Capital Cost 488,669 432,381 375,577 318,658 261,323
Revenue 9.2% 12.2% 14.9% 17.4% 19.8% Revenue 94,589 236,370 375,577 513,934 651,296
27
Appendix: Financial Analysis
Renard Diamond Valuation, Announced June 13th, 2011
Renard kimberlite pipes have a diamond population with a coarse size distribution and high proportion of
large white gems. Lynx and Hibou kimberlite dykes have a finer distribution of browner stones.
99% by weight gem/near-gem quality. 1% industrial quality boart.
Coarse size distribution: potential for significant “Specials”, not accounted for in the current resource work.
(Three to six 50-100ct stones and one to two +100ct stones every 100,000 carats.)
Implied grade loss through sampling breakage 15%-38%, not accounted for in the current resource work.
Diamond Valuation Conducted by WWW International Diamond Consultants Ltd. May 9th-13th 2011.
Size of Largest Diamonds May 2011 Price % Increase since Sensitivities
Kimberlite Body Valuation Sample Recovered Diamond Price September 2009 (Minimum to High)
(carats) (carats) (US$/carat)1
Renard 2 1,580 15.46, 8.80, 8.42 $163 to $236
$182 +56%
Renard 3 2,753 10.15, 7.78, 6.36 $153 to $205
Renard 4 2,674 5.92, 5.74, 3.99 $1122 +49% $105 to $185
Lynx Dyke 535 21.53, 5.36, 5.34 $119 +109% $99 to $144
Hibou Dyke 772 3.14, 3.07, 2.72 $118 +107% $88 to $136
1
Based on an average of five independent valuations conducted between May 9th and 13th 2011, and supervised by WWW International Diamond Consultants Limited.
2
The Renard NI 43-101 compliant Mineral Resource of January 2011 and the Feasibility Study of November 2011 utilize a higher diamond price based on an analysis of diamond breakage
and poor plant recovery of the Renard 4 valuation sample, which is $164/carat. All samples utilize a +0.85mm (+1 DTC) cutoff
28
Appendix: Financial Analysis
Renard Diamond Valuation Sensitivities
WWW determine High and Minimum sensitivities on their Base Case diamond price model. WWW state that
it is unlikely that an actual diamond price achieved for each kimberlite body upon production would fall below
the “Minimum” sensitivity, but it is possible that the actual diamond price achieved may be higher than the
“High” sensitivity, which is not a maximum price.
The Feasibility Study Base Case diamond price of US$182/carat for Renard 2 and 3 and US$164/carat for
Renard 4 derives from a value modeling approach that assumes a single diamond size distribution in the
three kimberlites.
An alternative interpretation, that each kimberlite’s diamond population is unique and is correctly represented
by its diamond sample, yields diamond price models of US$208/carat for Renard 2, US$165/carat for Renard
3 and US$112/carat for Renard 4.
WWW
WWW Base WWW "High"
"Minimum"
Kimberlite Body Case Model Model
Model
(US$/carat) (US$/carat)
(US$/carat)
Scenario 1 (Base Case): Utilizing an R2-R3 Size Frequency Model $182 $201 $163
Renard 2
Scenario 2 (Alternative): Utilizing an R2 only Size Frequency Model $208 $236 $186
Scenario 1 (Base Case): Utilizing an R2-R3 Size Frequency Model $182 $205 $168
Renard 2
Scenario 2 (Alternative): Utilizing an R3 only Size Frequency Model $165 $183 $153
Scenario 1 (Base Case): Utilizing an R2-R3 Size Frequency Model $164 $185 $152
Renard 2
Scenario 2 (Alternative): Utilizing an R4 only Size Frequency Model $112 $121 $105
29
Appendix: Financial Analysis
Renard Diamond Valuation Sensitivities
This “Alternative” diamond price model is highly accretive to the project’s valuation given the dominance of
Renard 2 in the mine plan. The interpretation of similarity in the diamond populations is the more
conservative approach.
Pre-Tax After-Tax
Kimberlite Body NPV7% Pay-Back NPV7% Pay-Back
IRR IRR
(C$m) (years) 1 (C$m) (years) 1
WWW Minimum Model $397 14.6% 5.34 $199 11.5% 5.46
Feasibility Study Base Case Model $672 18.7% 4.65 $376 14.9% 4.80
Alternative Model $871 21.8% 4.07 $502 17.4% 4.20
WWW High Model $1,261 26.5% 3.49 $747 21.4% 3.90
1Calculated on an after-tax basis
A real-terms diamond price growth factor of 2.5% per annum has been applied between 2012 and 2025.
This is consistent with well constrained rough diamond supply and demand forecasts and industry best-
practice. WWW have advised that Stornoway’s assumptions on diamond price and diamond price growth
are “reasonable in the context of the overall supply and demand environment” of the diamond industry.
The project shows strong sensitivity to future diamond price growth.
Pre-Tax After-Tax
1
Diamond Price Escalation (2012-2025)
NPV7% Pay-Back NPV7% Pay-Back
IRR IRR
(C$m) (years) 1 (C$m) (years) 1
0% per annum $227 11.8% 5.80 $93 9.2% 5.91
2.5% per annum (Base Case) $672 18.7% 4.65 $376 14.9% 4.80
5% per annum $1,228 25.1% 3.87 $724 20.3% 4.00
1Calculated on an after-tax basis
30
Appendix: Reserves and Resources
Renard Mineral Reserve Estimate, Announced November 16th, 2011
Mining Recovery Factors Utilized in the Reserve
Probable Mineral Reserve
Calculation
Contained Internal Mining Mining
Kimberlite Grade Tonnes
(cpht) (millions)
Carats Dilution Recovery Dilution
(Millions)
Renard 2 OP 95 1.31 1.24 0.0% 96.0% 7.1%
Renard 2 UG 84 16.30 13.66 6.9% 83.2% 14.0%
Renard 3 OP 93 0.72 0.67 0.0% 96.0% 10.5%
Renard 3 UG 84 1.00 0.84 21.1% 85.0% 14.0%
Renard 4 UG 42 3.72 1.58 1.4% 78.2% 14.0%
Total
Indicated
78 23.06 18.00 5.9% 83.5% 13.5%
Tonnage Carats Revenue
R4,
R4, 9% R4, 8%
16%
R3, R3, 8%
8%
R3,
R2 ,
7%
76% R2 , R2 ,
83% 84%
Notes: Reserve categories are compliant with the "CIM Definition Standards on Mineral Resources and Reserves". Totals may not add due to rounding. Grades are estimated at a
+1DTC sieve size cut-off.
31
Appendix: Reserves and Resources
Renard Mineral Resource Estimate, Announced January 24th, 2011
Kimberlite Grade Tonnes Contained Carats
(cpht) (millions) (Millions)
Renard 2 103 17.63 18.09
Renard 3 106 1.75 1.85
Renard 4 53 7.25 3.81
Renard 9 -- -- --
Lynx Dyke -- -- --
Hibou Dyke -- -- --
Total Indicated 89 26.63 23.76
Renard 2 118 5.21 6.14
Renard 3 118 0.54 0.64
Renard 4 44 4.76 2.09
Renard 9 47 5.70 2.69
Renard 65 29 12.94 3.72
Lynx Dyke 107 1.80 1.92
Hibou Dyke 144 0.18 0.26
Total Inferred 56 31.12 17.45
Notes: Resource categories are compliant with the "CIM Definition Standards on Mineral Resources and Reserves". Mineral resources that are not mineral reserves do not have
demonstrated economic viability. Indicated Mineral resources are Inclusive of the Mineral Reserve. Totals may not add due to rounding. Grades are estimated at a +1DTC sieve size
cut-off.
32
Appendix: Reserves and Resources
Renard Exploration Upside, Announced January 24th, 2011
Kimberlite Grade Tonnes Contained Carats
(cpht) (millions) (Millions)
Renard 2 103 to 188 4.0 to 4.6 4.1 to 8.6
Renard 3 107 to 168 0.8 to 1.6 0.8 to 2.8
Renard 4 38 to 79 11.1 to 15.3 4.2 to 12.1
Renard 9 45 to 50 3.9 to 6.3 1.7 to 3.2
Renard 65 23 to 33 29.5 to 41.6 6.8 to 13.7
Lynx Dyke 96 to 120 3.1 to 3.2 3.0 to 3.8
Hibou Dyke 104 to 151 2.7 to 2.9 2.9 to 4.3
Total Exploration
Upside
55.1 to 75.5 23.5 to 48.5
Notes: The potential quantity and grade of any exploration target (previously referred to as “potential mineral deposit”) is conceptual in nature, and it is uncertain if further exploration
will result in the target being delineated as a mineral resource. The exploration upside for the Renard kimberlite pipes has been determined by projecting reasonable kimberlite
volumes from the base of the inferred Resource to a depth of 700m below surface. In the case of the Lynx and Hibou dykes, the exploration upside was established on the basis of
known drill intersections of kimberlite for which insufficient diamond sampling exists to adequately estimate a diamond resource grade.
33
Appendix: Communities, the Environment and Permitting
Processed Kimberlite Containment (“PKC”)
PKC site selection was based on a
comprehensive evaluation of 5 sites.
Geochemical characterisation of Processed
Kimberlite (“PK”) and country rock waste
indicates minimal metal leach potential and
no acid generation.
PKC facility will be a dry stacked facility with
no requirement for a liner. Dewatered PK Characterisation
PKC facility can accommodate all current
Indicated and Inferred Resources (44.3 Mt).
Waste rock can be used as construction
aggregate.
PK will be de-watered by centrifuge and
trucked to the PKC site. PKC is an
engineered facility requiring compaction of
berms and placement of erosion barriers.
The PK deposition plan allows for
progressive rehabilitation and re-vegetation.
No fish habitat will be impacted by PK
disposal.
PKC Facility in 2026
34
Appendix: Communities, the Environment and Permitting
Water Management
All water in contact with mining materials will be collected and treated prior to release. Treated water will
meet standards defined by Québec MDDEP Directive 019, Québec environmental effluent objectives for
the protection of aquatic life, and the Canadian Metal Mining Effluent Regulation.
Single watershed impacted by all mining activities.
Water recycling for process plant.
Water management system includes a network of collection ditches, a
pumping network, a catch basin sump at Renard 65, a water
treatment plant, and submerged discharge within Lake Lagopede Wastewater Treatment Plant
Waster Water Management Schematic
PKC
Mine wastewater
treatment plant
R65
Waste Rock
R2/R3 Overburden
Process Plant
Ore
Pump Station
Collection Ditches
35
Appendix: Communities, the Environment and Permitting
Closure and Rehabilitation Plan
Stornoway acknowledges that it is only a temporary
user of land that will be returned to its traditional
users at the end of mine life. In this context, project
design has prioritized minimal environmental
footprint and progressive rehabilitation.
Buildings have been designed and materials
selected to facilitate dismantling, recycling and site
re-vegetation at the end of the mine life.
Mine planning ensures that all waste rock will be
used for construction, backfill of the underground
Before
mine. Open-pits will be flooded to create new fish
habitats.
PKC facility has been designed to ensure
progressive re-vegetation and ease of maintenance
during operations.
Benches will be progressively rehabilitated.
Airstrip will either be rehabilitated or vested to
authorities to become a regional infrastructure.
Post-closure environmental monitoring program will
be implemented. After
36
Appendix: Why Diamonds?
Who Is Buying Diamonds
Share of World Diamond Jewelry Market, 2005 to 2020
China (and
Asia-Pacific) Others 2005: $62B
10% 4% By 2020 Asia will have grown to 57%
of the World Diamond Jewelry Market
India (and US
Asia-Arabia) 49%
13%
Europe
China (and
Asia-Pacific) 2010: $74B
10% 15%
Japan
14% US
42%
India (and
Asia-Arabia)
18%
2020F: $128B
China (and
Asia-Pacific)
32% US
27%
By 2020 the US will have declined to 27% of
the World Diamond Jewelry Market
India (and
Source: AllanHochtreiter June 2011 after De Beers, Tacy Ltd., Alrosa 1H results Asia-Arabia)
Presentation, October 2011 25%
37
Appendix: Why Diamonds?
It’s about Economic Growth
2020
World Total
2010-2020 GDP GDP of $136
(PPP) Growth Trillion
Forecast
By 2020, China’s
GDP on a purchase
Rest of the power parity (PPP)
35%
2010 World basis is forecast to
World Total
GDP of $76
grow 190% to $28
Trillion Trillion and China will
rank #1 in the world.
India
8%
During this period,
40% 5% Japan
Rest of the world GDP CAGR will
World equal 6.1%
21% China
India 5%
Japan 6%
China 13%
USA
USA 19% 17%
Source: IMF
38
Appendix: Why Diamonds?
…and Demographics
PERCENTAGE CHANGE IN
CHINESE POPULATION, 2005-2020
120% 240M
100% 160M
80% The Baby Boomers of
60%
China and India are
40%
20% entering the age brackets
0% which, by experience from
-20%
Under 25 25-34 35-44 45-54 55-64 more developed markets,
are the peak years for
PERCENTAGE CHANGE IN
INDIAN POPULATION, 2005-2020 luxury goods purchases
250% 140M
200% 720 million potential
150% consumers will be aged
180M
100% between 45 and 64 in India
50%
and China by 2020
0%
-50%
Under 25 25-34 35-44 45-54 55-64
Source: AllanHochtreiter June 2011
39
Appendix: Why Diamonds?
Interesting Facts about Diamonds and China (after De Beers, May 2011)
Between 2010 and 2015 the middle class in both
China and India will double in size with each country
having a larger middle class than the next 6
developing countries combined
The Chinese upper middle class (income
>$30,000/a) outspend European and American
consumers by 7 times when it comes to luxury
goods on a per capita basis.
Chow Thai Fook is planning on opening 1,000 new
jewellery stores in China over the next 15 years
alone and will have an implied market valuation of
$20B following their upcoming Hong Kong IPO.
In China there are over 11 million marriages a year.
In India there are over 10 million.
If say in 15 years from now, the Chinese urban per
capital income increases to the level of Taiwan
today, and if urban Chinese consumers acquire
diamonds at the same per capita rate as the
Taiwanese do today, the diamond industry will need
to double the supply of diamonds annually just to
meet this demand.
40
Appendix: Why Diamonds?
World Supply, and Renard’s Role in this New World
Star-Orion (SGF)
Renard (SWY)
200 Gahcho Kue (MPV, De Beers)
AK6 (LUC)
160
2010-2020: Maximum
M Carats
120 23% increase in carat
80 supply according to the
40 most optimistic
0
forecaster (Alrosa).
Alrosa
Others 27.8%
Stornoway 9.8%
3.0%
Tans Hex Stornoway`s production
0.8%
Gem profile will be equivalent
2.2%
to 3% of world supply by
Petra
1.7% 2010 World value, normalized on
Harry Winston
2.4% Rough Diamond 2010 data.
BHP
3.6% Rio Tinto
Production:
5.8% De Beers $11.9B
42.9%
Source: Company Reports, Alrosa 1H results Presentation, October 2011
41
Appendix: Why Diamonds?
Rough and Polished Diamonds Against a Basket of Indicators, 2003-Present
COMMODITY INDEX DATA
700 16000
WWW Rough Diamond Index
Polished Prices Index
Gold Closing Fix 14000
600 IMF CPI
S&P TSX Composite Index Weekly Closing
IMF IPI
IMF CPI NonFuel
IMF Coal(Aust)
12000
500 IMF Metal
Index October 2003 = 100
S&P TSX Composite Index
10000
400
8000
300
6000
200
4000
100
2000
Successive WWW Valuations of the Sept07 Mar08 Sept09 May11
Renard Diamond Bulk Sample $109/ct $121/ct $117/ct $182/ct
0 0
01/01/03 01/01/04 31/12/04 31/12/05 01/01/07 01/01/08 31/12/08 31/12/09 01/01/11 01/01/12
Renard prices illustrated represent base case model valuations for the Renard 2-Renard 3 samples
Rough Diamond Price data after WWW International Diamond Consultants Limited Indexed to October 2003
42
Appendix: Management Biographies
Stornoway’s Board and Management Team
Additional Management
Robin Hopkins, VP Exploration
Dave Skelton, VP Project Development
Ghislain Poirier, VP Public Affairs
Matt Manson Pat Godin Zara Boldt Nick Thomas, Manager, Investor Relations
President, CEO COO & Director CFO and VP
& Director Nominee Finance
Michel Blouin John leBoutillier
Tony Walsh Independent/ Yves Harvey Independent/
Chairman IQ Designate Independent IQ Designate
Monique Mercier
Independent/ Peter Nixon Ebe Scherkus Serge Vézina
IQ Designate Independent Agnico-Eagle Independent
43
43
Appendix: Management Biographies
44
44
Appendix: Management Biographies
45
45
Appendix: Management Biographies