Canadaian diamond miner Stornoway suffered higher losses during the first quarter of 2018 as it makes the transition from open pit to underground mining, which has had a negative impact on carat production as they have moved to the processing of lower grade ore. This has led to a reduction of their full year production and sales guidance, but prices in the diamond market are gettting stronger, which is welcome news for Stornoway, and showed up clearly on their balance sheet. For the three months ended March 31, 2018, Stornoway reported net loss of US$8.6 million (C$11.0 million), compared to net loss of US$933,100 (C$1.2 million) for the three months ended March 31, 2017. Adjusted net loss for the quarter was US$10.9M (C$14.0M and US1.9M (C$2.5M) in the corresponding period of 2017.
During the quarter, three tender sales in Antwerp totalling 399,135 carats were completed for gross proceeds of US$44 million (C$56.6 million) at an average price of US$112 per carat (C$142 per carat), a marked improvement from the US$88.6 per carat (C$114) achieved from the sale of 486,633 carats for US$43.1 (C$55.5) in the fourth quarter of 2017. Revenue from the third Antwerp tender of the year, which comprised 127,616 carats of run of mine production sold at an average price of US$123 per carat ($156 per carat), will be recognised in the second quarter. During the quarter, Stornoway also recovered and sold a 37 carat Type II-a, D colour, internally flawless stone, earning $1.7 million ($45,000 per carat4), or US$1.3 million (US$36,000 per carat), the highest price achieved for an individual stone from the Renard mine to date.
Matt Manson, President and CEO, commented: “Our first quarter results reflect the transitional nature of our business, as we move from open pit to underground mining. 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 stopes. This has prompted us to reduce our full year production and sales guidance. At the same time, however, we have been encouraged by strong pricing in the diamond market, with first quarter prices trending well ahead of those achieved in 2017, and our operating and capital expenditures are within plan. We are also encouraged by the progress of our underground mining and the initial results from our ore-waste sorting, which is giving some very early indications of improved diamond recoveries and exceeding our expectations in terms of the volume and quality of the material sorted.” He added that the Renard Mine will have fully transitioned to underground mining supported by ore sorting, and major capital expenditures will be behind us by the end of the second quarter, 2018.