Star Diamond Corp (TSX: DIAM) – Timing is (Almost) Everything
We are initiating coverage on Star Diamond Corporation. The company holds a 100% interest the Star–Orion South Diamond Project in central Saskatchewan. A PEA in 2018 estimated 66M carats of diamonds could be recovered in an open pit mine over a 34-year life with an NPV (7%) of $2.0B and IRR of 19% (after-tax). The project has a significant portion of high-value Type IIa diamonds and a coarse diamond size frequency distribution. Unlike any current or previous Canadian diamond mines, Star-Orion South is very close to all required infrastructure. In addition, the project has already received environmental approval from the Federal and Provincial governments. Importantly, the company’s potential JV partner and operator (Rio Tinto) has accelerated the development timelines and capital spending on the project. We believe Star Diamond Corp. stock will re-rate as the market begins to appreciate the augmented pace of news flow and potential for it to become an M&A target.