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Stornoway Upbeat on Revenue After 2016 Profit

Feb 26, 2017 9:25 AM   By Rapaport News
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RAPAPORT... Stornoway Diamond Corporation recorded a profit in 2016 due to a tax refund, and received a performance boost from the launch of the Renard mine in October.

The company reported a net income of $15 million (CAD 19.6 million) for the year, versus a loss of $2.8 million in the comparable period of 2015. A deferred tax payment of $35.4 million lifted the company’s bottom line, as the company has yet to record revenue from the mine.

The mine reached commercial production – meaning 60 percent of processing capacity – in December, a month ahead of schedule.

“Our successful project build and earlier operational startup has contributed to a greatly strengthened balance sheet compared to what was contemplated in our original July 2014 project financing plan,” Matt Manson, Stornoway’s chief executive officer, said last week.

The first sale of rough diamonds from Renard took place in November in Antwerp, fetching $7.6 million at an average price of $195 per carat. This exceeded the projected average price of $155 per carat, mainly because a liquidity squeeze in India and a subsequent drop in demand for smaller diamonds prompted the company to withdraw lower-value goods from the sale.

The sale will be accrued to Stornoway's 2017 revenue, which the company anticipates will reach between $180 million and $230 million. It said it expects an average sale price of $100 to $132 per carat.

The company is seeing an improvement in the market for lower-quality categories, and stronger premiums for the larger, higher-quality goods, Manson added.

Stornoway held two sales in the first quarter of this year and plans another two by the end of March. Average annual diamond production is expected to be 1.8 million carats per year for the first 10 years.
Tags: Canada, Matt Manson, mines, mining, Rapaport News, renard, Renard mine, Rough Diamonds, stornoway, Stornoway Diamond Corporation
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