Canadian miner Stornoway Diamonds reported a net loss of US$27.5 million (C$35.9 million) during the second quarter despite higher revenues, as the transition to underground mining at the Renard mine impacted the company's carat recoveries and sales during the first half of the year. The move underground has taken longer than anticipated, as equipment availability and management problems have slowed their progress. The recorded loss compares unfavorably to the $3.1 million in profit the company achieved in the second quarter last year.
During the quarter, two tender sales totaling 201,283 carats were completed in Antwerp for gross proceeds of US$22 million (C$28.6 million) at an average price of US$109 per carat (C$142 per carat). Revenue recognized was US$43.3 million (C$56.9 million) - compared to US$32.6 million ($42.6 million) in the corresponding period of 2017 - derived from the sale of 328,899 carats of run of mine production in three tender sales at an average achieved price of US$115 per carat ($147 per carat), and the sale of 41,979 carats of incidental production in one out of tender contract sale at an average price of US$19 per carat ($25 per carat). The miner says the grade and carat recoveries reflect the processing of lower grade production ore and ore stockpiles as the Renard mine transitions from open pit to underground mining.
“Our second quarter results reflect the continuing transition to underground mining at Renard and the accompanying lower carat recoveries and sales during the first half of the year," said Matt Manson, President and CEO of Stornoway. "Ramp-up of the underground mine has been slower than expected ... [but the entire mine and operation] has been achieved with the capital structure established in our original 2014 construction funding. Sales revenue during this period has been less than initially forecast, resulting in lower financial liquidity and cash flow than expected." Stornoway expects higher-quality carat recoveries in the second half of the year, Manson said, as the company moves into the central mining areas, which contain higher-grade ore. The company is seeking additional funding.