Fort à la Corne diamond dispute sees escalation in criticism but Star Diamond hoping for resolution

paNOW asked Mason if he had a message of hope for Star Diamond shareholders, as well as the potential workforce that has waited years for the diamond mining project to get off the ground, given some may be wondering if the mine will ever happen.

“I would say we don’t need hope,” Mason said. “We have a great asset; we actually have a great partner [Rio Tinto] — when their eyes are on the ball — and I’m pretty sure we’re going to resolve this.”

Mason said the board was not sitting on their hands and discussions were ongoing. He hopes for a positive outcome after some scathing criticism of Rio Tinto.

‘Bait and switch’ tactics

In a recent media release, he said the board would not allow Rio Tinto to add Star Diamond and its shareholders “…to the unfortunately growing list of junior mining companies that fall victim to Rio Tinto’s bait and switch approach…”

He added, Rio Tinto “…has little regard for the agreements it signs, business ethics, local stakeholder interests or anything other than its own monetary self-interest.”

Since their legal battle started, Star Diamond’s executives have been very public in their criticism of their partner at Fort à la Corne, but Mason’s recent comments were the first in a media release by the board chair regarding the dispute.

However, he didn’t think there was anything unusual about him commenting because the board had set up a special committee last year to look into the legal process.

“It’s not really surprising that I’m talking about it, it’s just that we’re over a year into the lawsuit, and hopefully we’ll see a business solution,” he said, noting a legal fight could be dragged through the courts for the next decade. There is no fixed court date for the case, although it’s not likely to happen until next year.

Cost overruns

His highly critical ‘bait and switch’ comments about Rio Tinto were a commentary on their joint venture, according to Mason.

“We had expected 30 trench holes to be drilled, all the sample results to be returned, and then we expected a feasibility study for a gross expenditure by our partners [Rio Tinto] of $75 million,” he explained. “It seems now they’ve spent well over $150 million and are not even one third of the way through that program.”

Star Diamond contends Rio Tinto told them the first ten-hole drill sampling program would cost approximately $18.5 million.

It has further written to the mining giant claiming they “tried to wrongfully jump Star Diamond” through an Option to Joint Venture Agreement that “was not simply bad judgement exercised by local Rio personnel, but an intentional tactical decision made at the highest executive levels of Rio Tinto to try to unjustifiably dilute Star Diamond’s interest” in the project.

At the crux of their legal dispute Star Diamond argues Rio Tinto’s behavior means they have not validly exercised their four options to become a 60 per cent partner in the massive diamond venture.

Project on ‘standby’

The latest Star Diamond criticism had come because Rio Tinto was trying to convene a meeting of management last month to push the project onto its next phase of work. Star Diamond was vehemently opposed to that.

It is not clear what transpired. Rio Tinto told paNOW the meeting was not public and confidential.

paNOW asked Rio Tinto to respond following the increased criticism from Star Diamond. The company would not offer comment except to say: “The FalCon project remains on standby, while Rio Tinto evaluates options for future work. Activity into the first half of 2022 is expected to remain focused on technical studies to investigate options for optimal mining methods and maintaining the site.”

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glenn.hicks@pattisonmedia.com

Twitter: @princealbertnow

by Glenn Hicks

Fort à la Corne diamond dispute sees escalation in criticism but Star Diamond hoping for resolution

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