Stornoway Diamond Corporation (Stornoway) announces production and sales results at the Renard diamond mine for the quarter ended 31 March 2019. Highlights are as follows:
- 429 506 total carats sold in two tender sales for gross proceeds of US$47 million at an average price of US$83 per carat (US$110 per carat2). In terms of total carats sold, pricing and gross proceeds, this represents increases of 38%, 8% and 47% over 4Q18, respectively. 1Q19 diamond sales represent diamonds recovered during the 4Q18.
- First quarter diamond production was 444 562 carats recovered from the processing of 582 613 t of ore at an average grade of 76 cpht. Carats recoveries decreased by 8% compared to 4Q18, principally due to mechanical issues at the front end of the process plant related to very cold weather in January and February. In March, the process plant surpassed its budgeted daily rate with an average of 7209 t processed per day.
- Stornoway has made the decision to suspend open pit mining operations starting in April, as the current stockpile of Renard 65 open pit ore is sufficient to meet planned process plant feed requirements into 2Q20.
Patrick Godin, President and CEO of Stornoway, commented: “Sales in the first quarter were significantly higher than the previous quarter on the good production results of the last three months of 2018, which was the first full quarter with fully ramped-up underground operations. The average pricing obtained increased as well, primarily due to improvements in the quality of the goods and the mix sold. The rough diamond market, however, did not show notable improvement from the fourth quarter. Processing results were down sequentially on mechanical issues at the plant experienced in January and February, but March showed modest outperformance versus budgeted daily rate, and we are confident that this rate can be maintained looking forward and believe that the small underperformance relative to budget in the first two months will be caught up over the balance of 2019. We have taken the decision to temporarily halt production from the Renard 65 open pit, as current Renard 65 ore stockpiles are sufficient to maintain its planned contribution to the process plant’s feed into the second quarter of 2020. As such, no effect on revenue in 2019 is to be expected. Surface equipment operators were trained and have begun transitioning to our underground operations.”
First quarter sales results
Two tender sales were completed during the first quarter from diamonds that were recovered between 6 October and 27 December 2018.
The achieved pricing of US$83 per carat for all goods sold during the quarter represents an increase of 8% compared to 4Q18, attributed to the quality of goods and mix sold. The sales for the first quarter continue to reflect a challenging rough diamond market. While the pricing of higher quality goods and specials continues to remain strong, smaller and lower quality goods have remained stable at the lower prices experienced in the fourth quarter of 2018.
First quarter production results
First quarter production was 444 562 carats recovered from the processing of 582 613 t of ore at an attributable grade of 76 cpht. Tonnes processed, grade and carats recoveries decreased by 4%, 5% and 8% respectively compared to the fourth quarter of 2018 as a results of lower plant availability. Tonnes processed, grade and carats recovered increased by 4%, 50% and 55% year over year, due to an improved mix of ore sent to the process plant.
During the quarter, mill feed was derived from the Renard 2 underground mine (89%), the Renard 65 open pit (6%), and Renard 3 underground development (5%). Processing rates in January (5520 tpd) and February (6715 tpd) were lower than budgeted due to mechanical issues reducing plant availability. Most of these issues were at the front end of the process plant and related to the very cold weather experienced on site at the beginning of the year. In March (7209 tpd), the average processing rate was above the budgeted rate of 7000 tpd, demonstrating improvements in plant reliability. Stornoway is confident it will be able to continue surpassing the processing rate over the balance of the year to be able to catch up on the shortfall of the first two months. The average ore tonnage hauled to surface from the underground mine was 6707 tpd during the first quarter, significantly above the design capacity of 6000 tpd.
Suspension of opencast mining operations
The Corporation has made the decision to suspend open pit mining operations in the Renard 65 open pit. This decision comes as the current stockpile of Renard 65 open pit ore is sufficient to sustain planned processing requirements into the second quarter of 2020. The suspension will enable the idling of part of the surface mobile equipment fleet, thus realising operating cost savings and pushing forward capital maintenance costs.
Amendments to certain agreements
By 29 March 2019, the Corporation had entered into amendments to (i) the restated Purchase and Sale Agreement with Osisko Gold Royalties Ltd, Caisse de dépôt et placement du Québec, Triple Flag Mining Finance Bermuda Ltd., Albion Exploration Fund LLC and Washington State Investment Board, as buyers, to (ii) the Master Lease Agreement executed on 25 July 2014, as amended with Caterpillar Financial Services Limited, and to (iii) the Credit Agreement dated 8 July 2014, as amended, with Diaquem inc., an affiliate of Investissement Québec, pursuant to which the definition of “Tangible Net Worth” in each agreement was amended to discount the non-cash impact of IFRS 15 from the calculation of Tangible Net Worth and the Corporation’s covenant, under each agreement, to maintain a tangible net worth on a consolidated basis of no less than US$250 million, was reduced to US$225 million until 31 December 2019, inclusively.
Read the article online at: https://www.globalminingreview.com/finance-business/10042019/stornoway-announces-production-and-sales-results-for-1q19/
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