Rob O’Flanagan
Saskatoon StarPhoenix
Dreams of a commercial diamond mine in Saskatchewan may come true, as a junior mining firm dusts off plans to uncover what may be one of the world’s largest deposits of the precious stone.
Star Diamond Corp., based in Saskatoon, holds the majority interest in a number of mineral deposits in the Fort à la Corne provincial forest, a remote area northeast of Saskatoon. After years of seeing its projects stalled, the company has landed a new investor and launched a process to update a historic feasibility study, with hopes to attract interest and more investment in Saskatchewan diamonds.
In an interview, Mark Shimell, Star Diamond’s vice-president of exploration, said the project has been hampered by “unfortunate turns of events within the mining world.”
But there is little doubt that the resource, first discovered in 1989, has major wealth and job creation potential, he said. Drilling operations consistently turned up large, high-quality diamonds. The area, just north of the Saskatchewan River, is accessible by highway and gravel roads, with electrical infrastructure nearby.
In May of this year, Calgary-based Spirit Resources Inc. invested $4 million in Star Diamond through a private placement, and provided a $800,000 loan for working capital and general corporate purposes, including a pre-feasibility study.
“That basically brought new life back into the project,” Shimell said. “The reason why the pre-feasibility study is so important is that we want to be able to demonstrate that even since the last feasibility study was done, the project is still able to stand on it’s own two feet, and that it’s a project worth pursuing from an investment point of view.”
Shimell is a veteran exploration geologist who has spent nearly 25 years exploring Canadian diamond fields. He said the Fort à la Corne deposit has suffered many setbacks over the years, but it appears to be gathering momentum once more.
In 2018, a preliminary assessment of two exploration sites showed very favourable results, Shimell said. A revised estimate, carried out in 2024, suggested there are higher grades and more diamonds than what was previously understood. The mineral resource was as much as 37 per cent bigger, reaching 36.9 million carats at one of its sites.
“Being that it’s a world-class diamond deposit, it has more than enough economic potential to provide an amazing amount of economic assistance to a region of Saskatchewan that needs some assistance,” he said. “It would be transformative to the area.”
The kimberlite field is surrounded by boreal forest and fertile farmland. The main territory of James Smith Cree Nation is directly south across the Saskatchewan River, and also includes lands near the diamond zone. The city of Melfort and several small towns and villages are close by.
Over 70 kimberlites have been identified in the deposit. Kimberlites are volcanic pipes shaped like tornadoes. Rapid volcanic action pushes diamonds — the Earth’s hardest natural mineral — upward from the Earth’s upper mantle to the surface.
Potash, uranium and critical minerals tend to get the mining limelight in Saskatchewan. But Cory Hughes, assistant deputy minister of resource development at the Saskatchewan Ministry of Energy and Resources, said the province remains hopeful that diamonds will become part of the mix. The government, he said, will work with any company that is interested in diamond exploration.
“We still have a lot of extensive geological knowledge of those resources, which is available to companies looking to explore,” he said.
Diamond exploration in the province peaked almost 20 years ago with the work carried out by Shore Gold, he said. Much was done to amass bulk samples and identify the diamond resource at the Fort à la Corne field. High quality diamonds that would typically be used in the jewelry market were discovered there, he said.
“Star (Diamond) is using all that historical knowledge that was developed from those bulk samples,” Hughes said. “The ultimate goal is to determine a path forward for an economic deposit. There is certainly support from the government. Diamonds are still part of our resource and we’re hopeful that this additional work can lead to a diamond mine in some form in the province.”
Diamond prices and operating costs are the two biggest factors in making the decision to mine the mineral, he added. Canada has been a major producer of diamonds, but production has been decreasing.
“There is certainly a need and an appetite to see increased production in Canada on diamonds, and there isn’t a lot of projects out there right now.”
The Government of Saskatchewan, Hughes said, has a royalty system in place to encourage investment in mining. The province offers companies a “short holiday” when no royalties are collected, after which a one per cent base rate is charged, as well as a royalty on profits of up to 10 per cent.
“We continue to listen to industry on what challenges they may face, and where supports could be aligned to help them develop a project,” he said.
Shore Gold began exploring the Fort à la Corne area in 1996, having discovered the Star kimberlite at that time. The company later changed its name to Star Diamond, now a recognized leader in diamond exploration and development in Saskatchewan.
In 2018, the junior mining company entered into a joint venture with Rio Tinto Exploration Canada to push the diamond project forward. But the partnership fell apart in 2019 over a dispute related to the terms of the agreement. The project was stalled for roughly five years. Rio Tinto eventually sold its 75 per cent stake to Star Diamond in 2023, giving it full control.
“We had the joint venture which ended unfortunately in 2019, and that really started to set the project backward, as opposed to going forwards,” Shimell said. “That really left us reeling. The actual project got lost. But it’s a world-class diamond deposit that has more than enough economic potential to provide an amazing amount of assistance to an economic region of Saskatchewan that needs some assistance.”
He added that Star Diamond “has been fighting ever since to bring the project back into the limelight. It’s been a bit of a struggle to get moving again because, obviously, you can imagine that left quite a negative impact in the investment community’s mind.”
The market for natural diamonds has been slumping for roughly three years. Following the COVID-19 pandemic, prices temporarily rose by 44 per cent, only to slump by 40 per cent by late 2023, according to jewelry insurance company BriteCo.
The Rapaport Group, representing players in the diamond and jewelry industries, characterizes the present state of the global diamond industry as being in its deepest crisis in history. A sharp decline in demand that started in late 2022 has since intensified. Competition from synthetic diamonds, significant structural weaknesses in the industry, and losses throughout the supply chain are the main contributors.
Even with all of the uncertainty swirling around the global diamond industry, Shimell is feeling optimistic about the prospects for mining diamonds in Saskatchewan.
“Spirit Resources certainly has the ability to move the project forward if they choose to do so,” Shimell said. “We are just fortunate to have them at this point in time, because the diamond industry is in a bit of a downturn. But the outlook is quite good for projects, because a lot of the very famous diamond mines are coming to their mine-life ends.”
New projects will have to take over the production of diamonds from the old mines, he added.
“Our project is the only world-class diamond project that is anywhere close to being put into production in the near future,” he said. “We have the benefit of having very high quality diamonds. And we have a project life of over 35 years.”
