Canadian miner Stornoway Diamonds delivered a strong performance in rough sales as well as production in Q2 2019, but ever-softening diamond prices in a market that continues to be challenging kept proceeds level with those achieved in Q1.
Stornoway in Q2 2019 increased the volume of carats sold by 7%, moving 460,832 total carats in two tender sales at Bonas tender house in Antwerp, earning gross proceeds of C$47 million (US$36 million) at an average price of US$76 per carat (C$110 per carat). The average price per carat realized in Q2 represents a 9% decline compared to prices achieved in Q1, and an 18% decline compared to Q2 2018. Stornoway's carat production, however, surged 89% higher than during the same period a year ago.
The miner's second quarter diamond production of 463,136 carats represents a 4% increase compared to the first quarter. This was mainly due to greater plant utilization, as the plant at the Renard mine processed 19% more tonnes of ore, which was partially offset by a 13% decline in the recovery grade to 67 carats per hundred tonnes due to the mining of lower grade blocks as part of the mining sequence. Year-over-year, tonnes of ore processed, the average grade and carats recovered increased by 24%, 68% and 107% due to the ramp up of underground operations and the improved mix of ore sent to the process plant.
“During the second quarter, both mining and processing operations at Renard have demonstrated strong performance," said Patrick Godin, President and CEO of Stornoway. "The average grade is anticipated to increase for the remainder of the year, as the extraction of higher grade production ore from the Renard 3 kimberlite pipe ramps up, and with the development of the second underground mining horizon of Renard 2, also of higher average grade."
Godin adds, "The rough diamond market continues to be challenging, with further decreases in pricing observed during the second quarter sales. Nevertheless, the Corporation maintained comparable gross proceeds relative to the first quarter, as volume of carat sold increased.” The company attributes the decline in pricing for all goods sold during the quarter to weak market conditions. They said the pricing of higher quality goods and specials was also negatively affected by the oversupply of rough diamonds relative to demand, the high inventory levels in the midstream and the reduced availability of bank financing in India. Smaller and lower quality goods continue to sell at the lower prices experienced in the fourth quarter of 2018 and first quarter of 2019.