Stornoway swings to FY loss

VANCOUVER (miningweekly.com) – Quebec diamond producer Stornoway Diamond Corp has swung to a 2017 net loss of $114.6-million, from net income of $19.6-million in 2016, the company reported on Monday.

Longueuil, Quebec-based Stornoway said its full-year results reflected a lower diamond price environment than was originally forecast.

The company noted that net income before impairment came to $11.1-million for the fourth quarter and $15-million for the year.

For the full year, Stornoway sold 1.7-million carats, to raise gross proceeds of $186.2-million at an average price of $85/ct. Diamond sales totalled 486 633 ct in the fourth quarter, raising gross proceeds of $52.6-million at an average price of $86/ct.

“In 2017, Stornoway’s Renard diamond mine produced a strong performance in mining, carat production, processing ramp-up, and cost. It has delivered strong operating margins, with EBITDA of C$85-million, despite the lower diamond pricing environment that has characterised our first year of sales,” president and CEO Matt Manson said in a statement.

Renard has established itself as the lowest-cost diamond mine in Canada, and its diamonds have developed a strong position in the rough diamond market, according to him.

Manson advised that the first half of 2018 will see ore production transition from the starter openpit to the underground mine. Ensuring an efficient ramp-up of the underground operations is a key priority for the Renard team.

Stornoway believes that it can improve diamond prices further by addressing the continued breakage problem. The secondary cone crusher and tertiary high-pressure grinding roll crusher have been singled out as the source of the breakage, and appears associated with the high proportion of hard, internal dilution inherent in Renard ore, producing an abrasive environment within the crushers.

To this end, Stornoway is introducing a new ore-waste sorting circuit designed to improve the quality of its diamond production and provide future processing expansion capacity.

Manson stated that both of these capital projects, once completed, will define the character of the project for the next decade.

“Since the completion of our project fund-raising in 2014, and through four years of mine construction and operations, Stornoway has maintained a strong balance sheet and liquidity position. This will remain a priority for us in our financial management as we pass through the scheduled capital spending of 2018 and pursue the production and revenue growth potential of our business.”

Stornoway has guided for full-year 2018 output of 1.6-million carats of diamonds.