Burgundy Revenue Slides Amid Continued Market Challenges

Sales of rough diamonds from the Ekati mine in Canada fell 38% year on year in the fourth quarter as the company faced challenges due to low market demand.

Burgundy Diamonds sold 680,000 carats of rough during the three months that ended December 31, compared to 1.1 million during the same period a year ago, the miner said last week. The decrease came amid continued lack of demand and lower available supply.

Output from the deposit fell 47% to 540,000 carats, because the miner was unable to maintain production at Misery underground amid financial constraints. Additionally, the market for Misery goods deteriorated during the quarter, causing the price per carat for rough from that portion of the deposit to fall.

During the quarter, Burgundy started preparatory work to reenter the Sable open pit and recover the remaining ore. Although the miner initially stopped working at Sable, it believed that the higher-value goods contained in that region of the mine would offset some of the lower-value product from Misery.

The miner secured a CAD 115 million ($84.6 million) loan from the Canada Enterprise Emergency Funding Corporation (CEEFC) as part of a financial restructuring to keep the business afloat during the ongoing downturn in the diamond sector.

At the end of the quarter, diamond inventory was down 84% from the same period a year ago to 170,000 carats. The company’s debt increased to $96.2 million as of December 31, versus $82 million at September 30.

Image: Rough diamonds. (Shutterstock)