Weakness in Low-Value Stones Hits Stornoway

RAPAPORT… Stornoway Diamond Corporation’s sales fell in the final
three months of last year as weakness in the Indian market dented prices of
lower-value rough from its Renard mine in Canada.



Fourth-quarter proceeds dropped 35% to CAD 32.1 million
($24.2 million), the company reported last week.


“While the pricing of higher-quality goods and specials
remains strong, certain categories of lower-quality goods saw weaker prices in
the fourth quarter,” the company added. The worst-performing categories
included brown and rejection goods, as well as very small stones, known as
“-7,” it said.


Rough demand suffered from a weaker rupee and tighter credit
to Indian diamond firms, as well as the seasonal impact of Indian and Jewish
holidays, Stornoway explained. The miner’s price index, which monitors prices
on a like-for-like basis, fell 13% during the second half of the year.


Sales volume fell 31% to 312,000 carats for the quarter. Production
grew 22% to 486,000 carats.


Revenue for the full year declined 22% to CAD 144.4 million
($108.8 million), with sales volume down 29% to 1.2 million carats. Annual
production of 1.3 million carats missed the company’s guidance, and was 19%
lower than in 2017, due to delays to the development of Renard’s underground
mine, as well as technical problems at the processing plant.


Stornoway expects output to rise to between 1.8 million and
2.1 million carats in 2019. It plans to sell all of that production at eight
tenders.


Image: Underground operations at the Renard mine. (Stornoway Diamond Corporation)