Stornoway Diamond Corp (TSE:SWY) has inked an agreement for an unsecured non-revolving bridge credit facility of up to $20 million with Ressources Québec, a subsidiary of Investissement Québec, Stornoway's largest shareholder, the Montreal-headquartered diamond explorer announced Thursday.
Stornoway, busily engaged in advancing the Renard diamond project in north-central Quebec, will be using the proceeds of the facility for the development of the project and for general corporate purposes, including costs relating to Stornoway's ongoing project financing activities.
"This credit facility is intended to provide Stornoway with good funding flexibility as we pursue our project financing activities and begin the ramp-up to the capital programs anticipated at Renard in 2014 and 2015,” said president and CEO, Matt Manson.
“We are particularly pleased to acknowledge the continued and constructive support of our major shareholder, Investissement Québec, in the development of this important new Québec mining project.
"With major regulatory authorizations in hand and the Renard Mine Road now open for construction traffic, Stornoway's primary objective is the timely conclusion of our principal project financing arrangements."
Under the facility, Ressources Québec's indirect wholly-owned subsidiary, Diaquem, will loan up to an aggregate amount of $20 million to Stornoway in two tranches, an initial tranche of $10 million and a second tranche of up to $10 million, each of which will bear interest at 12 per cent per annum and be repayable in early 2014.
As recently as this summer, the company increased the resource estimate at the diamond project, with the resource report completed by GeoStrat Consulting Services showing a total of 27.1 million carats in the indicated category, a 14 per cent increase over the previous estimate.
The company said it converted 2.3 million carats of near-surface inferred mineral resources from the Renard 65 deposit to the indicated category. The updated resource report follows Stornoway's successful Renard 65 bulk sample earlier this year, and improvements to the geological model since the project's last resource estimate in January 2011.
The latest report also includes total inferred resources of 16.9 million carats, a 3.5 per cent decline from the previous estimate.
Between 25.7 and 47.8 million carats have also been designated as target for further exploration, the company said, to 775 metres depth, below which each kimberlite remains open.
Shares in the company were trading up the day of the announcement, adding 2 cents in early trades in Toronto to hit 71 cents.