Canada's Star Diamond objects to Rio Tinto push for joint venture meeting

TORONTO (Reuters) -Junior miner Star Diamond Corp on Thursday said it objected to Rio Tinto's "predatory and coercive" actions after the global miner called a meeting for a joint venture the Canadian company says does not yet exist.

Rio Tinto responded by saying it "disagrees with Star Diamond’s interpretations in all material respects."

The companies have been in a long-running dispute over development of Star Diamond's Star-Orion South Diamond Project in the Canadian province of Saskatchewan.

In 2017, Star Diamond entered an earn-in agreement with Rio Tinto Exploration Canada Inc that gave the Anglo-Australian miner an option to earn up to a 60% interest in the project.

Saskatoon-based Star Diamond later said Rio overspent on the project while exercising its earn-in options before completing and delivering results from its bulk sampling program. It said Rio Tinto was trying to boost its stake at below market value.

Rio has spent roughly C$168 million to complete a 10-hole bulk sample program that Rio told Star Diamond would originally cost about C$18.5 million, the Canadian company said on Thursday.

"Rio Tinto now seeks to call a management committee meeting that it has no legal right to call for a joint venture that Rio Tinto knows has not been duly formed," Star Diamond said in a release.

A Rio Tinto spokesman said the miner has a right to call a meeting of the management committee and that Star Diamond’s latest attempt to prevent it from exercising that right was denied by a court on June 24.

A preliminary study in 2018 estimated 66 million carats of diamonds could be recovered from the C$2 billion Star-Orion project over a 38-year mine life.

Rio faced similar acrimony with its junior partner Turquoise Hill Resources over expansion of the pair's Oyu Tolgoi copper-gold mine in Mongolia, although that dispute was put to bed in April.

(Reporting by Jeff Lewis; Editing by David Gregorio and Paul Simao)

By Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

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