Stornoway strikes new deal with Quebec on diamond mine road – by Nicolas Van Praet (National Post – November 16, 2012)

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MONTREAL – Stornoway Diamond Corp. has struck a new deal with the Quebec government on a controversial highway leading to its Renard diamond mine that will see it pay a bigger share of the total costs but ensures construction of the mine itself remains on target for 2013.

The renegotiated agreement is the first of several the Parti Québécois government is looking to revamp as it grapples with significant cost overruns on 20 major infrastructure projects inherited from the previous Liberal administration. The new deal saves Quebec taxpayers $124-million and marks the start of new effort to recoup public money that was bargained away to benefit the private sector, PQ ministers said.

“There are other cases where it will be harder to save money, but we’ll do as much as we can on all the projects,” Quebec Finance Minister Nicolas Marceau told reporters. “We will make sure that, in those deals, Quebecers are not paying too much.”

The Stornoway deal involves the Route 167 extension, a 243-kilometre all-season highway leading to the company’s Renard site. The road, championed publicly by former Premier Jean Charest as one of the centrepieces of his Plan Nord development project, had become a political lightning rod after costs ballooned from initial estimates of $260-million to more than $470-million.

Under the new deal, Stornoway assumes responsibility to finish construction of the two northernmost segments of the highway. The leg, which is about 97-km long, will be built as a single-lane mining-grade road, a downsizing of the two-lane project previously planned.

Quebec has agreed to provide Stornoway with an unsecured credit facility of up to $77-million to complete the work at an annual interest rate of 3.35% amortized over 15 years. Repayment is tied to the start of commercial production at Renard. Maintenance costs will be divided between the company and the government.

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