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Stornoway Lowers Production Outlook

Loss widens in first quarter.
May 21, 2018 10:45 AM   By Rapaport News
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RAPAPORT... Stornoway Diamond Corporation has reduced its production-and-sales expectations for this year, as its shift to underground mining has resulted in lower grades.

The company now plans to produce between 1.35 million and 1.4 million carats from its Renard mine in Canada in 2018, a drop from its initial forecast of 1.6 million carats, it said in a statement last week. It also lowered its projection for sales volume to between 1.2 million and 1.25 million carats, from an earlier outlook of 1.6 million carats.

“Our first-quarter results reflect the transitional nature of our business, as we move from open-pit to underground mining,” Stornoway CEO Matt Manson said. “During this transition, carat production is being negatively impacted by the processing of the lower-grade ore currently available to us in our stockpiles and in the first underground [excavations].”

Stornoway expects to have transitioned fully to underground mining by the end of the second quarter, Manson added. The underground ore exceeded the company’s expectations in both volume and quality, based on initial results, he noted.

The miner recorded a net loss of $8.6 million (CAD 11 million) in the first quarter, compared with a net loss of $933,162 (CAD 1.2 million) for the same period last year.

Revenue grew 15% to $43.5 million (CAD 55.9 million) from the sale of 399,135 carats at two tenders during the quarter, at an average price of $112 per carat. The equivalent period a year ago was the inaugural quarter in which the company recorded revenue, as Renard did not reach commercial production until December 2016.

The company sold $15.5 million (CAD 19.9 million) worth of rough at its third tender of the quarter, which took place in March, achieving an average price of $123 per carat. That sale featured a 37-carat, D-color, internally flawless, type IIa diamond, which fetched $1.3 million. Proceeds from the tender will appear as revenue for the second quarter.
Tags: Matt Manson, Rapaport News, renard, stornoway, Stornoway Diamond Corporation
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