Ramp Up Done; Stornoway Diamond Production Rises 47 Percent

Canadian gem miner Stornoway Diamond (TSX:SWY) reported a 47-percent quarter-on-quarter production increase at its Renard mine for the final reporting period of 2018.

The increase in output came on the back of a production ramp up that occurred at the Quebec-based site throughout the fourth quarter.

Despite a rise in carats recovered, the company was disappointed that the two tender sales that took place between October and December did not bring in the value per carat recorded at prior sales.

The miner recovered 485,616 carats at an attributable grade of 80 carats per hundred tonnes in Q4.

Carat and grade tallies were up 47 percent and 45 percent, respectively, from the third quarter due to the mining of higher-grade ore, as well as an increase in tonnes sorted.

While Stornoway was able to make up for some of the production shortfall seen in Q3, CEO Patrick Godin noted that company dealt with several issues over the year that interrupted some of its plans.

“2018 was a challenging year, with the ramp-up of underground production impacted by delays in equipment deliveries, a competitive labour market and by the presence of more low-grade mineralization than anticipated on the northern margin of the Renard 2 orebody, where the initial underground production ore was sourced,” Godin said in the announcement.

In addition to production woes, a globally weak market for smaller gems also impacted the company’s bottom line.

Stornoway sold 253,929 carats worth of stones in Q4 through two tender sales. Gross proceeds were US$31 million, averaging US$92 per carat, a decrease of 11 percent per carat from the previous quarter.

“The sales for the quarter continue to reflect a challenging rough diamond market over the period,” said the company. “While the pricing of higher quality goods and specials remains strong, certain categories of lower quality goods saw weaker prices in the fourth quarter.”

The Canadian diamond miner expects 2019 to be a more productive year now that the ramp up at Renard is complete and carat recoveries are increasing.

“2019 will also see the development of the next underground mining horizon at Renard 2, as well as surface and underground exploration work to seek improvements to the current mine plan.”

Stornoway shares sat at C$0.215 on Wednesday (January 16).

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.