Rio Tinto's huge trench cutter rig seen before its vertical deployment at Project Falcon east of Prince Albert. The mining giant denies all allegations made by its partner Star Diamond. (file photo/Star Diamond Corp.)

By Glenn Hicks

diamond dispute

Rio Tinto denies allegations in diamond project dispute

Apr 7, 2020 | 7:20 AM

Mining giant Rio Tinto has formally responded to claims by its partner Star Diamond Corp. that it breached their options agreement, racked up excessive costs, and failed to share information about the diamond exploration finds at Project Falcon east of Prince Albert.

In their Statement of Defence filed in Court of Queen’s Bench, Regina on Monday, April 6, Rio Tinto denies all allegations, and is countersuing Star Diamond for what it claims is their improper retention of the mineral dispositions and surface rights.

In terms of their options agreement Rio Tinto should become a 60 per cent stakeholder in the massive project, but Star Diamond is disputing the deal and started legal proceedings March 3.

In arguing the allegation of excessive expenditures, the court document details Rio Tinto’s defence that it “…at all times, conducted itself in good faith and carried out the operations in a good and workmanlike manner…”

Expenditures for the exploration work totalled over $103 million for the period June 2017 to November 2019.

National

India trashes Canada for linking home minister to Sikh activist plot

A few minutes ago

FSIN

Chief Bobby Cameron re-elected for fourth term as FSIN Chief

Oct 31, 2024

Economy

Economy stalled in August, Q3 growth looks to fall short of Bank of Canada estimates

Oct 31, 2024

Rio Tinto added Star Diamond “at no time …disputed that those expenditures were properly incurred and justified in the context of the project.”

Show me the diamonds

As for Star Diamond’s allegation that information related to the diamond finds has been withheld, Rio Tinto claims, “Star knows that these sampling results do not exist. Rio Tinto has advised Star that these results do not exist and that they will be provided to Star as soon as they become available.”

A field full of extracted kimberlite sits in huge bags on the Project Falcon site before being sent to the Bulk Sampling Plant. Star Diamond claims Rio Tinto has yet to share important data about the value of the diamonds contained in the kimberlite. (Ian Gustafson/paNOW Staff)

As part of its submission to the court, Rio Tinto contends Star Diamond’s allegations are “false, baseless and made in bad faith,” and claims “Star has encouraged and facilitated the public reporting and dissemination of these false allegations outside of the judicial process.”

Rio Tinto claims in any other context these “spurious allegations would constitute a basis for a defamation claim.”

What’s at stake

As part of its counterclaim, Rio Tinto argues it is entitled to the ownership of the mineral dispositions and the surface rights, and Star has improperly retained them. The mining giant said it would suffer irreparable harm if Star purported to transfer or sell these rights, and Rio Tinto’s loss would be to the value of $100 million.

There has been a workforce of up to 150 people on site, 50 of whom are Indigenous, although numbers have been curtailed due to the COVID-19 situation. However, if a fully fledged mining operation does get underway in the future it would employ as many as 700 people over many decades.

Prior to Rio Tinto serving its Statement of Defence, both parties submitted a Joint Request For Case Management Order on March 16, in an attempt to speed up the legal process given the big numbers at stake. That document puts the preliminary value of Project Falcon at $2 billion.

—

glenn.hicks@jpbg.ca

On Twitter:@princealbertnow