MONTREAL - The Renard diamond mine in northern Quebec is to reopen this month after being shut down in March as part of the province's mining lockdowns in response to the COVID-19 pandemic.
Minority shareholder Osisko Gold Royalties Ltd. says operator Stornoway Diamonds Canada Inc. has approved a plan that includes $30 million in cost reductions over the first 16 months of operation.
It adds shareholders of the company, including Diaquem Inc., Osisko, TF R&S Canada Ltd. and CDPQ Resources Inc., have agreed to inject up to $30 million ($7.5 million for Osisko) to provide financial flexibility for Stornoway in view of the current "challenging" global diamond market.
Stornoway decided to extend the shutdown at Renard in April after Quebec lifted its mining prohibition because of disruptions to diamond cutting and selling caused by global travel bans, as well as the affect on retail diamond sales and prices because of the pandemic economic slowdown.
The suspension impacted about 540 individuals, although nearly 50 people continued working on site to provide care and maintenance.
Osisko says Stornoway has $10 million in cash and about 332,000 carats of unsold diamond inventory so it will not need to draw down the cash injection immediately, adding structural impediments to diamond sales are easing and increased demand seems to be resulting in better prices.
"The Stornoway team has shown an ability to operate the Renard mine efficiently and the near-term cost reductions will further help improve profitability," said Osisko chair and CEO Sean Roosen.
"We feel there is significant value in the Renard mine given the scarcity of diamond mines globally and the approximately $1 billion of well-built infrastructure."
This report by The Canadian Press was first published Sept. 14, 2020.
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