Stornoway Diamond Co. Storms Past Production Estimates in 2016

Mining and Exploration
06/02/2017 23:56

Stornoway Diamond Corporation has announced 2016 production results from its Renard Mine in Quebec that far outstrip its projected output. For the year ended December 31, 2016, Stornoway mined 2,074,827 tons of ore from the Renard 2- Renard 3 and Renard 65 open pits, compared to a plan of 879,641 tons (+136%). At the end of the year the ore stockpile stood at 1,842,068 tons, excluding an additional 63,243 tons of non-resource Renard 3 material. A total of 399,162 tons of ore were processed with carat production of 448,887 carats, compared to a plan of 218,400 carats (+106%), with an attributable grade of 112 cpht compared to a plan of 97 cpht (+15%). The higher tonnage of ore processed was due to the earlier than expected availability of the plant, and the higher grade was due to a better than expected mix of ore units available in the Renard 2-3 open pit, the company reported.

One diamond sale was completed in Antwerp during the year, being 38,913 carats sold for gross proceeds of US$7.6 million, representing un-budgeted pre-production revenue. Matt Manson, President and CEO commented: “In 2016 we completed construction of the Renard Diamond Mine ahead of schedule and below budget, achieving commercial production at year end. Today’s press release highlights an operating performance that was similarly strong, with better than expected production in the open pits, and development of the underground mine proceeding comfortably on-schedule. Our ability to bring the project into production early resulted in significantly higher carat production than planned for the year, and an earlier than expected first sale that gave us unbudgeted pre-production revenue."

In 2017 Stornoway says it plans to mine 4.4 million tons of ore and waste from the open pits and 0.5 million tons from the underground mine. 2 million tons of ore will be processed for a planned recovery of 1.7 million carats at a grade of 86 cpht. Full name-plate capacity of 6,000 tons per day, based on 73% plant utilization, is scheduled to be achieved by the end of the second quarter. Based on the profile of diamonds recovered to date, market conditions, and the results of early sales and valuations, Stornoway forecasts average diamond pricing during 2017 of between US$100 and US$132 per carat. This yields a gross revenue forecast of US$180 million to US$230 million based on planned diamond sales.

Manson comments: "For 2017 we are being cautious with our diamond price forecasting, due to uncertain market conditions and a reduction in pricing for smaller and certain lower quality items. This trend began earlier in 2016, deepened with the Indian demonetization events, and was reflected in the results of our first two diamond sales. Our price forecasting further reflects higher than expected levels of diamond breakage that we are experiencing in the process plant and which is influencing our initial diamond recovery profile. The source of this breakage is evident to us and a mitigation plan is underway to reduce it to acceptable levels." 2017 pricing guidance further reflects the profile of diamonds recovered at Renard in the initial ramp-up period. During the first few months of operation, the Renard diamond process plant has liberated a higher proportion of small diamonds than expected, and has induced higher levels of diamond breakage than expected. Both of these factors have a strong influence on average run-of-mine pricing.