Star Diamond points to breakage in Fort à la Corne mining project samples

MELFORT — Saskatoon junior miner Star Diamond Corp. is claiming that work performed by one of the world’s largest mining firms – and against whom it has a pending lawsuit filed – may have caused breakage in some early diamond samples.

The allegations are directed at its larger partner, Rio Tino Exploration Management Inc., which Star Diamond has a previous and unrelated lawsuit against.

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In a Wednesday news release, Star Diamond said “recent diamond breakage has occurred in the diamond parcels recovered” at the Project Falcon site in the Fort à la Corne forest, potentially stemming from project partner Rio Tinto’s excavation of samples there.

Star Diamond added that studies will be needed to assess Rio Tinto’s extraction and processing systems, determining the “impact of these systems including diamond breakage.” It added Rio Tinto used technology that hadn’t been used in bulk sample collecting or processing with similar projects.

The overall findings are from the first of 10 trenches at the site and include more than 2,500 diamonds weighing roughly 120 carats, the news release said.

A Rio Tinto spokesperson was unable to directly comment on Star Diamond’s news release, but said work will continue to process further samples.

“Processing has been successfully completed of samples from the first trench drilled at the Falcon project. We are continuing our 2020 work program, to process samples from a further nine trenches,” the spokesperson said.

The statement follows months of legal back and forth between the two miners.

In 2017, Rio Tinto and Star Diamond, then Shore Gold Inc., reached an option agreement where the former could spend up to $75 million to get 60 per cent of Saskatchewan’s first commercial diamond mine.

Last November, Star Diamond filed a lawsuit after Rio Tinto decided to exercise all its options in the 7.5-year deal to acquire a 60 per cent stake. In court documents filed in March, Star Diamond alleged the mining giant engaged in “bad faith predatory practices.” Rio Tinto characterized the allegations as “false” and “baseless” the following month.

“Given the legal situation between the two companies at the moment,” there may be more to Star Diamond’s suggestion that Rio Tinto’s systems may have caused breakage, industry analyst Paul Ziminsky said. He said the project samples seemed largely on track.

“This is a larger sample than they’ve ever taken and they want to see it consistent with the smaller samples that they’ve recovered in the past,” he said.

That grade consistency, coupled with proportionally larger and higher quality stones, would make it work economically, Ziminsky said, adding that more experience may alleviate the breakage concerns.

“As far as the indication that there may have been some breakage, that’s not something that really concerns me,” he said.

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