Stornoway’s diamond production in June quarter is 13% lower than planned

Diamond production reached 417,362 carats
Image Courtesy: Stornoway Diamond Corporation
Image Courtesy: Stornoway Diamond Corporation

Stornoway Diamond Corporation announced results of its diamond production and sales at the Renard Diamond Mine for the quarter ended June 30, 2017. Production was 512,005 tonnes of ore processed compared to the plan of 513,000 tonnes in the quarter. Ore was sourced primarily from the Renard 2 kimberlite and stockpiles. Diamond production reached 417,362 carats or 13 percent lower than the planned 486,591 carats primarily due to the processing of lower grade ore. The average processing rate of the plant increased to 6,149 tonnes per day in June meeting the name plate capacity of the Renard process plant, which is 6,000 tonnes per day, and represents the completion of the project’s production ramp-up.

Matt Manson, President & CEO commented: “At the end of the second quarter, we are pleased to report robust production figures and the on-schedule attainment of our process plant’s nameplate capacity, marking the end of our processing ramp-up. With seven sales now completed, we are encouraged by strong growth in diamond pricing, reflecting the underlying market demand for the Renard product. This is despite the ongoing issue of diamond breakage which is impacting our production’s quality and size profile. Going into the second half of the year, we will remain focussed on maximising the value attributes of our diamond production and continuing the growth in revenue from sales.”

Two tender sales were completed during the quarter. In total, 350,159 carats were sold for gross proceeds of C$40.9 million, at an average price of US$87 per carat (C$117 per carat). This compares to an average price of US$81 achieved in the first quarter. Immediately subsequent to the quarter end, Stornoway completed its 6th sale of the year, where 151,135 carats were sold for gross proceeds1 of C$19.8 million, at an average price of US$101 per carat (C$131 per carat).

The average pricing being achieved in the Renard diamond sales was strongly impacted by the ongoing issues of diamond breakage in the process plant, which reduces the proportion of larger diamonds available for sale, and volatility in the proportion of small diamonds in the sales mix. Small diamonds continue to achieve substantially lower market pricing than was being achieved prior to the Indian de-monetization events of late 2016.

Nevertheless, the average run of mine pricing for Renard diamonds, after accounting for size distribution and quality variations, has increased in real terms by 19 percent since the first sale was completed in November 2016. While the rough market has strengthened modestly during this period, the size of the increase reflects the growing acceptance of the Renard diamond production by Stornoway’s tender sale clientele.

Stornoway’s 6th sale of 2017 achieved the first result above US$100 per carat with a standard run-of-mine sales mix, despite continuing to exhibit a lower than expected proportion of larger diamonds. The company noted this to be an encouraging result, and consistent with Stornoway’s FY2017 pricing guidance of US$100 to US$132 per carat. Stornoway expects to conclude two additional sales in the third quarter (2017 sales 7 and 8) and two in the fourth quarter (2017 sales 9 and 10).


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