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RAPAPORT... Stornoway Diamond Corporation recorded net earnings of $11.7 million in the second fiscal-quarter that ended on October 31, compared with a loss of $1.6 million one year earlier. Net earnings were impacted by line items that were not reflective of underlying operating performance, including changes in the fair value of a derivative and unrealized gains and losses from foreign exchange rates. Cash and cash equivalents fell to $387.9 million compared with $438.3 million at the end of the previous quarter; however, cash resources remained sufficient to cover planned mine development expenses at the Renard diamond project and financing and corporate costs during calendar year 2015.
Construction mobilization at Renard continues to proceed rapidly, with incurred costs and commitments at the close of the second quarter totaling $179.7 million, or 22.1 percent of budget, according to the company.
Matt Manson, the president and CEO of Stornoway, said, “Stornoway’s second quarter of fiscal 2015 showed continued solid progress with our construction mobilization at the Renard diamond project. Unseasonably temperate weather conditions at the project site toward the end of the quarter allowed our civil works to advance modestly ahead of the planned schedule. Integration of our owner’s and EPCM teams for engineering is progressing and contractor efficiency at site has met our expectations. We are particularly gratified by the high proportion of local participation in employment and contracting that we have been able to achieve in the short time since construction began. Both the resource drilling and the diamond plant design optimization completed during the quarter offer potential value upside through an extended mine life and large diamond recovery respectively. The project remains on schedule for first ore in the plant in the second half of calendar 2016 and for commercial production in the second quarter of calendar 2017. The forecast cost to complete remains within our fully funded capital budget of $811 million.” The Renard diamond project is located approximately 250 kilometers north of the Cree community of Mistissini and 350 kilometers north of Chibougamau in the James Bay region of north central Québec. Renard is fully funded to production and construction commenced on July 10. Probable mineral reserves, as defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects, stand at 17.9 million carats, while total indicated mineral resources, inclusive of the mineral reserve, stand at 27.1 million carats. In addition, another 16.85 million carats are classified as inferred mineral resources and 25.7 million to 47.8 million carats classified as non-resource exploration upside. Stornoway anticipates annual diamond production of approximately 1.6 million carats for the first 11 years at an average valuation of $190 per carat based on a March 2014 assessment by WWW International Diamond Consultants Ltd.
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