Fireside Chat With George Read & Ewan Mason of Star Diamond

0:07 I'm so pleased to be joined today by George Reid, Senior Vice President of Corporate Development for Star Diamond Corporation. How are you today, George? Oh, I'm very well. Thank you. Awesome. So we wanted to get into, we've got a number of questions that really we think will help look into both your past experience, but also how it illuminates what you do currently at Star Diamonds. So we wanted to start with, you know, 39 years. That's more than I've been alive by a bit, diamond exploration globally.

0:39 Why diamonds over precious metals or base metals?

0:42 Yeah, interesting question. And it will be 40 years in at the beginning of March this year, which is, I suppose, a fair milestone. My final year at university was December 1983 or in 1983 and I had 2 professors John Gurney and Tony Erlunk both of whom have passed away but they were

1:06 mantle rock specialists and John Gurney, particularly in the rocks and the diamonds and timber lights and Tony Erlunk in mantle processes. And he was one of the initial movers with a concept called mantle metasomatism and mantle metasomatism is now really the process that's probably responsible for the creation of diamonds within mantle rock. So it was an early stage and I was introduced to that there and I became, it was very keen because these mantle rocks, particularly peridotites are basically the building blocks of the earth. And all, and they formed under extremely high temperatures and pressures and notably also the home for diamonds. But while we were introduced to diamonds at university, it was not in great depth.

1:59 And then fortunately, after university, I returned to see Tony Erlang to ask him if I could cite him as a reference for a job with the Nuclear Corporation of South Africa for the disposal of radioactive wastes. And he said, I'll give you the reference, but don't worry about that job. He says, I've just had a guy from De Beers on the phone and I said you're the man so okay but I had lined up already I had volunteered to be part of a Scripps Oceanographic Institution cruise, Scripps based in La Jolla, California, but the cruise was to commence in Cape Town. It was the fifth leg of the protea expedition on the research vessel Melville, and we were scheduled to go and spend a month in the southern ocean sampling the southwest Indian ridge for

2:57 oceanic rocks but mantle rocks were also the target in these very deep fracture zones that offset the ridge down in the wilds of the southern ocean. We went down to 49 south before the really bad weather hit us. The sea became colossal. The swell was running at 12 to 15 meters and the wind was howling. It snowed while we were at sea in the middle of the southern summer. So it was a real adventure but we were very successful in our sampling and we did sample

3:33 mantle prototypes from a trench that was 6.2 kilometers deep, so 6.2 kilometers of water which was quite an experience. Anyway, that was the introduction to Mantle Rocks in a big way. And so I was then I already knew then that I was heading towards De Beers in Johannesburg. And I was looking forward to it. So that I returned from the cruise on the middle of February and I started with De Beers at the beginning of March in Johannesburg. That's a swashbuckling start to a career. Yeah. I mean, expanding on that. So you started with the De Beers, a wild place to start and diamonds, but you've worked on projects worldwide at this point.

4:25 Now, how does that kind of global exposure? How has it shaped your understanding of diamond geology and different exploration methods because this is you know different different parts of the world. So I should say that I in starting in Johannesburg obviously I had exposure to rocks in southern Africa particularly South Africa, Botswana and Namibia to a lesser degree in Zimbabwe and in all of those there are generally very dry weathering environments and kimberlites manifest themselves in certain ways with the beers I also went to West Africa to Mali in a very tropical weathering environment, very different exploration approaches are required to understand how to find the indicator minerals used to recover to find diamond deposits in these environments. Some of the indicators, particularly in the tropical environments, are very quickly destroyed and certain indicators will persist for a long time on surface and are recoverable.

5:28 So there is a, you have to use your techniques and apply them correctly. I also spent time in Brazil with De Beers and then subsequently went back there as a consultant some years later. I also came, had the good fortune of coming to Canada with De Beers and had very good, the Canadian diamond discoveries had been made in early 1991 and from 92 to 94 I worked out of Thunder Bay in Ontario. My first child was born in Thunder Bay. So it's a place that we will always remember.

6:06 And it's the Canadian exploration, obviously was very different. And it's a glacial environment, you have to glacial environments are usually very dilutive, The Kimberlites are maybe scraped away by glaciers and ground up and disappear. But fortunately, underneath glaciers, you have eskers, which are rivers that flow underneath the glacier, and they can concentrate the indicators and eskers were very important in the discovery of the kimberlites in the northwest territories.

6:40 So different approaches have to be made for these different environments. I can also say that in all of these different environments,

6:54 you have to bear in mind that you're out to discover diamonds, but the diamonds have to make you money. So you're not just looking for carats, you're looking for dollars. And kimberlites, you have to worry about the size, the number of tons, the grade and the number of carats per ton or per hundred tons because sometimes they're very few carats present in the deposit but you also have to worry most importantly about the macro diamond price in other words the price that that will the diamonds will be sold for from the mine in the future and that means only diamonds above 1 millimeter. So you have to get a bulk sample which is a difficult or can be a difficult and expensive process.

7:45 But all of those facts were learnt into beers. I worked as a technical assistant

7:52 for the consulting geologists that ruled the world and obviously had exposure to unusual places prospecting in China, prospecting in Australia, prospecting all over Africa

8:07 and huge varieties of places. They often went on missions to investigate things. That's what the mission to Mali was all about. We spent some 3 weeks on the ground in Mali and under very extreme conditions in a very remote part of West Africa. So very exciting. And then also with De Beers, I got and in working in Canada, I worked in Quebec, Ontario to a limited extent. I was associated with the discovery of Victor Kimberlight, which has now been worked out in the James Bay Lowlands in Saskatchewan and Alberta. So early discoveries in Saskatchewan before the Fort O'Lourke Corn, I participated in that.

8:56 And then I had the advantage of going into the Northwest territories and seeing the activity there in the early 90s, which was amazing. There were helicopters and float plans buzzing around all over the place. It was an exciting time. I also had the opportunity to go to as far as 72 degrees north on Victoria Island in the high Arctic where we obviously were doing indicator mineral sampling and there's more about that but a bit later on. That's it going from you know Brazil, Australia, Botswana. Let's let's fast forward narrowing on Saskatchewan just a little bit. So how did you get started at Star Diamond? What really attracted you to the company? And what do you think is unique about the deposits? So I was working with Canabra Diamond Corporation based here in Vancouver, We had projects in Canada and in Brazil.

9:50 We had reached a stage of difficult financing. I was perhaps looking for some other opportunity. There was some company politics. We don't need to go into the details, but out of the blue came a message from a former Star Diamond Corporation, which was then called Shaw Gold Inc. Director, Eddie Schiller, who said

10:17 a company with which he's associated needs a George Reid kind of guy. Are you interested? So I said, well, how can you refuse that? Anyway, the long and the short of it is I spent the August long weekend of 2003. I spent a couple of days in Saskatoon and I had an interview and that was on a very low profile. We spent the holiday weekend of the holiday in the office and then in the afternoon we went out and looked at some rocks in an old core shed that I'd actually visited the neighboring shed with De Beers many years before, which is a small world.

10:58 Anyway, it was the rocks that convinced me and the rocks look good they had what we call macro-crystic olivines which are big olivine crystals that have been dragged up from the mantle in the region where diamonds may crystallize and in as a diamond exploration geologist first you have to find the indicators then eventually you find the deposit and then the deposit doesn't have any diamonds in it so here we had the deposit it had diamonds in it. So I thought we're 50% ahead or maybe more in the game. So I took the position. That's great.

11:42 That's I mean, over such a career, you've obviously solved a number of diverse problems in diamond exploration over the years. Can you share just an example for our audience? I know there's a lot of geologists who watch these. An example of a complex problem and the solution that your team came up with for it? I'll share 2. The second one is perhaps a bit more complex is

12:09 when I first in 1996 I resigned from De Beers and I elected to come to Canada as a landed immigrant and I came here on my own dime with my family and having arrived early on 2 exploratory visits in 1996 I met a company that was interested in my services and they had some data that they were convinced there was a greater opportunity with it, it had mostly been thrown out of the window as being not good and so they thought they'd get my opinion on it anyway I did basically day or twos work

12:54 and defied decided that one they had a kimberlite and 2 it had a probability of diamonds and well if you fast forward a couple of years lo and behold it was the snowy owl kimberlite found on Victoria Island in the high arctic and it did have diamonds in it so while it was not a huge economic success it was a real technical success which was very nice and it was reinterpreting data from

13:23 good knowledge or good experience and deciding that certain factors that were being thrown out at the time were really smokescreen and were perhaps not particularly valid.

13:38 One of the ideas was that there was not a stable critonic rocks on Victoria Island. I disagreed with that idea and certainly we found diamond bearing Kimberlite subsequently on Victoria Island. Now we'll come right up to the recent

13:59 is I'm currently part of a team that is investigating the similarities of diamond populations on the star Kimberlite and the Orion South Kimberlite, but not just in a in a small way. We're looking at a very, very detailed approach, which requires quality sorting of the diamond populations, very large, both large diamond drilling populations as underground bulk sampling populations, all of the diamonds are sorted into very specific categories. And the idea is that adjacent kimberlites

14:35 usually have completely different diamond populations. It's very rare in kimberlite eruptions for adjacent kimberlites to even have diamond populations that are the same. However, there is a great similarity and age comparison between star and Orion South, they basically erupted, essentially synchronously.

14:59 So the idea is, well, the diamond populations are probably the same and our work so far is proving that that is probably correct. Our work hasn't finished yet and certainly if that is correct we have a very substantial diamond population on star over 10,000 carats of plus 1 millimeter goods whereas on Orion South we have some 2,300 carats a smaller parcel but because Orion South has a shallower depth to the overburden, it would be economically sensible to start digging on Orion South but you don't want to put all your money onto something for which you are uncertain of the diamond price.

15:52 So we needed some assistance in supporting and mitigating the risk in the diamond price on Iran South. And I believe we are very close to that now without the requirement of additional

16:08 large diamond drilling or some form of bulk sampling which would be tediously time consuming and very very expensive. So we want to avoid that. And we believe we have a very robust statistical approach that will enable us to overcome this problem. We're not there yet, but we're working towards it. And we hope we will be there in the,

16:34 I would hope by the second quarter of this year we will have our answer. How exciting. Yeah. And here's a question. And like I said, there's, there's a good number of geologists in our, in our audience. Some of them young geologists, Would you given almost just shy of 4 decades of experience? Would you advise young geologists take a focus on diamond and kimberlite deposits? Well, without a doubt, diamond exploration is very different and very exciting. And there are still opportunities, but diamond exploration is, we have to never forget, is challenging and it can be very expensive. So if you go into these remote environments in the high Arctic, you need very significant

17:21 funds of money to fund the project, particularly if you make a discovery and you need to do some form of bulk sampling. So it's very expensive. So some of those go against it. However, with innovative thinking, I believe there may still be deposits that

17:46 are almost under our noses in places where there is infrastructure where it's cheaper to do bulk sampling. And one of the surprising places where there are no really substantial commercial diamond deposits is the United States. And I believe that there could still be opportunities in the US. There are some people that have looked at this, I've participated in that in the past. And it's, anyway, let's see, I think there

18:19 there are great opportunities for people to come to the Congo, and to be able to work with the people there. There are still opportunities, Angola there are, and the Democratic Republic of the Congo, there's certainly opportunities, but Botswana might also produce something yet.

18:45 There are still opportunities, but the finding of the next big one will probably be more difficult for the young geologist getting into the game. But certainly I've had a wonderful career, very exciting, very adventurous. That's good advice for people looking to become George Reid types. And just just to close off today, and I always like to ask this as we close off, but what are you most excited about at Stardiam in this year? Well, you you're fully familiar that we've announced

19:23 the commencement of this transaction with Rio Tinto Exploration Canada to recover their 75% of the Fortalecour and Kimberlites

19:35 such that Star Diamond Corporation will have 100% interest. And obviously, the completion of that transaction, which we will hope will happen in the next number of weeks. That is a huge step forward for our company and it will give us the opportunity to get our teeth back into the project. The first thing we want to do, which we've suggested already in a news release in early December, is we want to revise our mineral resource. We have some very good results which came from Rio Tinto's trench cutter bulk sampling program. We want to integrate those with results we have from underground bulk sampling and large diamond drilling.

20:24 We believe these results will strengthen the mineral resource and that will give us the building block on which to proceed with a pre-feasibility study which will enable us to take a very innovative approach to develop a project of this magnitude in central Saskatchewan. That's great. This is really fun. George, thanks so much for joining me today. Thank you very much. I'm thrilled to be joined today by Ewan Mason, Star Diamonds Chair and Interim CEO. Ewan, how are you today?

20:58 I'm very well. How are you? I'm good. So we've got a couple of questions here really to get into your past experience but then also I into your work at Star Diamond. So I'll get started. I know what you transition from this is such an interesting transition from contract geologist to corporate financing which to me is a really it's such a dramatic change in day-to-day activities. So I'm really curious what sparked that shift in your career and what it meant to you. Well, there were a couple of bartending gigs in between there too, I have to admit. But basically the mining industry, when I got into it, I had 3 decent years, but it was pretty, it started to get pretty, pretty tight and there weren't a lot of jobs out there and I was always a contract geologist in the last one there either wasn't enough work for me to come back for the field season or they didn't want me back one or the other.

21:48 I'm not sure which. And I just said, hell with this. I have to get something that I can grow with. And I'd always wanted to be a mining analyst. And so I went and got accepted to the top 3 MBA schools in the country and pick one of them and I thought I was going to be a mining analyst. So that's how it all started. It didn't end up that way. That's careers never quite end up exactly where you think they're going to go. So I know I mean you worked at the Canada's largest banks for sure at RBC and TD RBC Dominion Securities it looked like you played a key role in global coverage of mining conglomerates so adjacent to being a mining analyst for sure. It also looks like you relaunched the investment banking team mining investment banking team at TD Securities.

22:34 So I'd love to know how these 2 experiences on kind of that side of the industry shaped your view of it altogether. Shaped your view of the mining industry. Well I originally was hired by Richardson Green Shields in the investment banking industry and so I became an investment banker not a mining analyst and then shortly thereafter RBC bought Richardson Green Shields and so I was a vice president at that point in time and the powers that be decided that they wanted to send me to their London England office because they really wanted to get started on the international mining business which was a great idea. They did not have a mining guy in the office at that time but they had people that were making some good efforts. So I transferred over there and you know RBC has great contacts around the world and from there I covered South America, Australia, New Zealand, Europe, you know pretty much everywhere that there was a mind.

23:34 And I met a lot of people and a lot of good people. And I really started to understand that the parochial view that we have as Canadians isn't the way it is. There's a whole other world out there. And so that was a big part in building my career success. I did meet a lot of people. I did bring in some foreign deals. And even to this day, I'm still in touch with a lot of those people that I had met early on days. No, that's great. It's a, it's, it's weird. It's one of those industries that it's global spanning, that it's, it's smaller than people think sometimes. Like it's a, it's a pretty tight community when you think about it. Sure is. Yeah. I know at TD, it seems like you brought in some some pretty significant companies. So I'm curious in broad strokes how you grew reputation in the space like how that developed over time so you were able to bring in the kind of a bigger players.

24:32 Well TD had made the mistake of you know improperly exiting the mining business years before I arrived there. They pulled their loans and a lot of the biggest mining companies were like we're never doing business with you payholes ever again. So you know TD had a bit of a management change and they realized they needed to get back into it and they were looking around for someone like me and at that time I was doing a lot of the mid-market deals that were big movers and a lot of bringing a lot of big foreign business And so they came to me and said, look, what do you need to do this? And I gave them a number and they gave it to me. So, you know, it was tough going, though, TD, because like I say, they had really poisoned the water with a lot of mining companies the way they left the last time. But, you know, I had a bunch of good years there. I had some great people there and we did some great deals. You know we brought in companies like Vale, Xstrata, Buenaventura, you know, BHP, Anglo-American, we did all kinds of things. And you know that was that was the beginning of it but TD didn't really understand the significance of the international business in the mining sector and they weren't all that terribly impressed I don't think.

25:45 I'm curious this is just to jump off that last question so when you've got the you know TD name and your signature and you're starting to restart these conversations with companies knowing that TD had kind of turned their back on mining how did you start those conversations Like what did that experience look like? I'm sorry. Somebody else did it. And I'm here to tell you we're back. And then I would get the get the F out of my office thing anyways. It was very very hard going. To the extent that we were actually limited in the North American marketplace because people have long memories and I couldn't even get staff to join me there because they were aware of what had happened. It was just a tough tough road. But despite that I did plenty of business. I had lots of great clients and it all worked out OK. And I think they're doing pretty well now.

26:39 Great. Let's zoom in on Saskatchewan now. I'm curious. This is fast forward to the present. What made you decide to take on the task of becoming CEO of Star Diamond Corp? Well, I've been asked to join the board in 2017. And then in 2018, there was a little bit of a conflagration in the boardroom and I was made the chairman, not because I wanted to be. And so I was the chairman for quite a while. And then when the issues with Rio started, which was the early option earn-in, we quickly realized that the agreement we had wasn't the greatest agreement, but we thought it had been violated and so obviously with my background it was determined by the board that I should be the one running a special committee and taking care of all this and then a couple years later when everything blew up again everybody went okay I think it's time for a change in the chair And let's put you in there until we can find somebody who more adequately meets our needs. And so that's how it happened.

27:42 Yeah, fair enough. And I mean, as you're looking forward to what this year is obviously you know big news with you know Rio returning 75% to you guys curious with a lot upcoming what are you most excited about at Star Diamond this year so in 2024? Well you know the number 1 thing is we are now going to own 100% of this project. We've never owned 100% before. Now we're going to 100% of what we have 2 big shareholders, Newmont and Rio Tinto. And in the March 2022 joint venture meeting with Rio they had already mapped out an 84 year mine life for this deposit. They were not fooling around, they wanted to get going on this. So now of course we've become aware of other work they did which was of course carbon capture studies and we know that all of the in kimberlites absorbs carbon which makes it a carbon neutral project most likely and then on top of that we're talking to our indigenous neighbors about partnership in this project We think it's really important as we move forward that the folks that have spiritual hunting grounds over top of the deposit be involved in it. And so, you know, the diamonds haven't changed. They've been there for 100 million years. What has changed are people's attitudes and the way that we're going to go forward with this. So I'm really excited to finish this pre-feasibility study, feasibility study, and then go out there and look for a financial partner, an indigenous partner. We don't

29:12 need a mining company to do this again because that's just going to take too long. That makes sense. Well, I've got to say a lot of exciting on the radar and looking forward to seeing it come to fruition. Me too. But, Ewan, thanks so much for your time today. All right, Romeo. Thank you.