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Diamond Market Dip Hits Stornoway

Nov 5, 2017 7:50 AM   By Rapaport News
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Stornoway Diamond Corporation recorded revenue of $39.2 million (CAD 50 million) in the third quarter as a decline in the rough-diamond market impacted prices.

Prices at rough tenders dropped by 6% to 8% during August and September, “which influenced the results of our final sales in the quarter,” chief financial officer Orin Baranowsky said in a conference call Friday transcribed by Seeking Alpha.

The company sold 405,643 carats for an average price of $95 per carat during the period, which represented an improvement from the previous quarter but was still below the $100 to $132 per carat it had initially projected for its Renard mine in Quebec, Canada.

Stornoway launched production at Renard in October 2016 and held its first sale a month later, meaning that no comparative data was available for its third-quarter earnings results.

One factor affecting the company’s sale prices was a high rate of diamond breakages at the mine’s processing plant, which impacted the size distribution, quality and grade of the rough recovered to date, the company explained.

CEO Matt Manson said prices were likely to remain flat for the rest of this year, given the slow market conditions. However, the company expects an improvement in the coming year, as it has located the source of the breakages in the processing plant and has approved a $17.2 million (CAD 22 million) investment to enhance the plant’s performance.

Development of an underground mine at Renard is also under way, accounting for most of the company’s $17.8 million (CAD 22.7 million) in capital expenditures for the quarter. Full underground production is expected in the second quarter of 2018.

Output from the existing open-pit mine amounted to 442,154 carats during the quarter, 5% higher than planned.

Stornoway also reported a net loss of $2.4 million (CAD 3.1 million) for the period, an improvement from its loss of $12.2 million (CAD 15.5 million) the previous year. In the first nine months of 2017, sales reached $110.5 million (CAD 141 million), with a net loss of $2.9 million (CAD 3.7 million).
Tags: Canada, mining, Rapaport News, renard, stornoway, Stornoway Diamond Corporation
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