Stornoway Diamond Corporation saw its losses widen in Q1 2019 as the miner faced "continued downward pressure on the market price for rough diamonds." The Canadian miner reported a net loss of C$48.4 million (US$36 million) in the first quarter of 2019, in comparison to a net loss of C$11.0 million (US$8.2 million) in the first quarter of 2018. The latest results follow a year in which Stornoway encountered a host of difficulties on its way to a US$246.8 million (CA$329.4 million) loss, substantially widening the loss of US$85.6 million (CA$114.2 million) recorded the year prior. The miner's challenges in 2018 included delays in the ramp-up of the Renard 2 underground mine, the processing of low-grade stockpiles during the transition from open pit to underground operations and weak diamond prices.
Stornoway in Q1 2019 sold 429,506 total carats at two tender sales a Bonas tender house in Antwerp, earning gross proceeds of C$47.3 million (US$35 million) at an average price of US$83 per carat ($110 per carat). Revenue recognized during the quarter was C$53.3 million (US$39.5). The results represent a 38% increase in carats sold over Q4 2018 (up from 312,242 carats), and a 47% rise in revenue, with the average price per carat rising 8%. Still, the results lag behind Q1 2018, mainly due to the 19% decline in prices from $103 per carat to $83 per carat in a challenging market for diamond miners. "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," the company noted. The same issue carried over into 2019.
“The first quarter saw significant improvements in sales, attributable to the increases in grade recovered during the fourth quarter of 2018," said Patrick Godin, President and CEO. "Average pricing also showed a slight increase, due to higher quality of goods and the mix sold. The market, however, did not show notable improvements from the fourth quarter." The miner plans to suspend open-pit operations at its Renard mine in order to save C$18 million to C$20 million (US$13.4 million to US$14.9 million) during the course of the year. It will continue to mine from two underground ore bodies at Renard. First quarter diamond production was 444,562 carats produced from the processing of 582,613 tonnes of ore at an average grade of 76 carats per hundred tonnes (“cpht”). Carats recoveries decreased by 8% compared to the fourth quarter of 2018, principally due to mechanical issues at the front end of the process plant related to very cold weather in January and February.