Following Star Diamond filing documents in a Canadian court alleging Rio Tinto had engaged in “bad faith predatory practices” last year, it has now objected to Rio Tinto's call for a budget meeting for the Star-Orion South project.
According to Star Diamond, Rio Tinto has set a proposed budget for June 2021 to March 2022 of $CA17.8 million ($AU19.03 million) and will seek to add a further $CA64.4 million ($AU68.8 million) of expenses from 2019 to May 2021 to that budget.
Star Diamond’s management believes the proposed meeting is invalid, contending that no joint venture has been formed with Rio Tinto Canada; this claim forms the basis of a legal case currently before the Court of Queen’s Bench for Saskatchewan.
On 8 July 2021, Star Diamond announced that it had written to Dave S Andrews, head of exploration growth at Rio Tinto, responding to the company's attempt to convene a meeting of the joint venture’s management committee.
“Star Diamond is deeply disappointed by Rio Tinto's latest conduct. This appears to signal a return by Rio Tin to its prior predatory and coercive tactics designed to misuse its economic clout to misappropriate from Star Diamond and its shareholders some portion of the very significant value that exists in the Star-Orion South Diamond Project,” the letter states.
“Rio Tinto has already irresponsibly run wildly over-budget.”
According to Star Diamond’s statements, Rio Tinto has spent roughly $CA168 million ($AU179.7 million) to complete a 10-hole bulk sample program that Rio told Star Diamond would cost approximately $CA18.5 million ($AU19.8 million).
The company has also objected to Rio Tinto exercising an option to acquire a 60 per cent stake in the Star-Orion site, which is located in Fort à la Corne in Saskatchewan, five years earlier than anticipated.
According to various media reports, the long-running dispute over the development of the Star-Orion South Diamond project surrounds a 2017 arrangement, in which Star Diamond entered an earn-in agreement with Rio Tinto Exploration Canada that gave the Anglo-Australian miner an option to earn up to a 60 per cent interest in the project.
Star Diamond has accused Rio Tinto of overspending on the project while exercising earn-in options before completing and delivering results from its bulk sampling program.
The claim is that Rio Tinto’s actions were an attempt to boost its stake in the project at below market value.
Rio Tinto has previously denied the allegations as “false, baseless and made in bad faith” in its own court documents, filed in early April 2020, adding that it “at all times, conducted itself in good faith and carried out the operations in a good and workmanlike manner”.
It claimed that the withheld sampling results “do not exist” and that Star Diamond Corp had itself improperly retained ownership of mineral dispositions and surface rights.
Rio Tinto also stated that the exploration costs – totalling $CA103 million ($AU113 million), incurred between 2017 and 2019 – were not previously disputed by Star Diamond Corp and were “justified in the context of the project”.
A preliminary economic assessment of the Star and Orion South kimberlites estimated 66 million carats could be recovered from the sites over 34-year period, generating $CAD3.3 billion ($AU3.6 billion) in revenue.
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