Stornoway Loss Deepens Amid Renard Delays

RAPAPORT… Stornoway Diamond Corporation increased its net loss in
2018 after experiencing delays in the transition to underground mining at its Renard project in Canada.



The deficit widened to CAD 329.4 million ($246.8 million),
compared with a loss of CAD 114.2 million ($85.6 million) the previous year,
the miner said last week.

The delays held back operations as Stornoway moved from open-pit to underground mining, and affected the average volume of diamonds the miner was able to retrieve from ore during the transition, Stornoway CEO Patrick Godin said. Weak pricing also created challenges.


“The low diamond-pricing environment in which Renard began
operating persisted in 2018,” Godin added. 


An impairment charge — a devaluation of the company’s assets —
of CAD $83.2 million ($62.3 million), as well as a deferred income-tax payment
of CAD 77.4 million ($58 million), also contributed to the loss.



Revenue for the year dropped 16% to CAD 165.5 million ($124
million), with sales volume down 29% to 1.2 million carats. Annual production
fell 19% to 1.3 million carats, missing the bottom end of the company’s guidance
range. A technical problem at the miner’s processing plant caused it to perform
below capacity, the company said.


Stornoway sold 1 million run-of-mine carats for CAD 141
million ($105.6 million) in 2018, at an average price of $105 per carat. It
sold an additional 164,322 carats of supplemental diamonds for CAD 3.5 million
($2.6 million), at an average price of $16 per carat.


In the fourth quarter, the company reported a loss of CAD
244.9 million ($183.5 million), versus a loss of CAD 118.4 million ($88.7
million) a year earlier. Revenue fell 58% to CAD 23.3 million ($17.4 million).


Stornoway expects output to rise to between 1.8 million and
2.1 million carats in 2019, as it moves to a higher-grade area of the mine, it
said in January.


Image: The path leading out of the Renard mine. (Stornoway Diamond Corporation)