Struggling Stornoway Seeks Buyer for Renard

RAPAPORT... Stornoway Diamond Corporation is looking for investors to help salvage its Renard mine, as the company continues to incur high financial losses. The miner called for offers to purchase its Canada operations after receiving $11.7 million in bridge financing - a short-term loan to maintain Renard until it can secure permanent financing or pay off existing debt, Stornoway explained Tuesday.  If the company fails to find a buyer or pay its debt by September 16, when the bridge loan is due, it will be consideredto have defaulted on the loan. "[We] have formally launched the...process with the objective ofseeking out proposals for a restructuring transaction that would involve aninvestment in, or the acquisition of, all or substantially all, of theproperty, assets and undertakings of Stornoway and its direct and indirectsubsidiaries," the miner noted. Stornoway launched commercial production at Renard in January 2017, but has struggled with losses stemming from delays intransitioning Renard from open-pit to underground mining, and a prolongedweakness in the small-stone market. "The global diamond market is going through a difficulttime and Stornoway's mine sells its product at a lower price than in previousyears, and much lower than initially anticipated during the construction of themine," the miner explained. The continued weakness in demand has inhibited the company'sability to generate profit, casting significant doubt about its ability to continue as a going concern, the company added. In January, the miner appointed Patrick Godin as CEO followingthree successive quarterly losses. Stornoway's loss deepened to $36 million inthe first quarter, which ended March 31, compared with a loss of $8.2 millionduring the same period last year. The company will suspend open-pit operationsat Renard during the course of the year, which it estimates will save between$13.4 million and $14.9 million. Image: The Renard mine. (Stornoway Diamond Corporation)