Agreement between SGF and Stornoway Diamond Corporation
SGF cedes its interest in the Renard Diamond Project to become a significant shareholder of Stornoway Diamond Corporation
Montréal, December 14, 2010 - Société générale de financement du Québec (SGF) announces it has signed an agreement with Stornoway Diamond Corporation ("Stornoway"), one of Canada's leading diamond exploration and development companies.
In accordance with said agreement, Diaquem, a subsidiary of SOQUEM, itself a wholly owned subsidiary of SGF, will cede its 50% interest in the Renard Project, a major undeveloped diamond deposit located in North-Central Québec. Through this transaction, Stornoway, which already controls 50% of the project, will control all of the diamond mine's operations and marketing activities.
In turn, Stornoway will issue common shares and non-voting convertible shares, which will provide SGF with a total interest of 37% in Stornoway. Furthermore, SGF will receive a 2% royalty on the value of the Renard's mining production and will nominate three representatives to Stornoway's Board of Directors. The completion of the proposed transaction is subject to the receipt of the requisite approval of Stornoway shareholders.
Concurrently with this agreement, SGF commits to contributing $100M to the senior debt financing of this project.
"In the past eighteen months, we have established Renard as a large and growing diamond resource with compelling economics, said Matt Manson, President and CEO of Stornoway. We believe this transaction will be equally beneficial to Stornoway's shareholders, to Québec, and to our supportive community and regional stakeholders."
For the past several years, SGF has supported Québec's diamond exploration and development activities through SOQUEM, one of its wholly owned subsidiaries. "We are proud to support Stornoway's future growth and contribute to the Renard diamond development project in Québec, said Pierre Shedleur, President and General Manager of SGF. The realization of this considerable project and the support we offer Stornoway are true to SGF's mission."
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