By entering into the deal with lenders and key company stakeholders, Stornoway will strengthen its balance sheet and enjoy increased operational flexibility.
By entering into the deal with lenders and key company stakeholders, Stornoway will strengthen its balance sheet and have increased operational flexibility.
“The multiple financing transactions announced today demonstrate once again the strong support Stornoway has from its stakeholders, and their positive outlook on the Renard asset and the diamond mining sector,” Matt Manson, president and CEO of Stornoway, said in the announcement.
The C$129-million package includes the deferral of loan principal repayments over 24 months, representing a debt service cost deferral of up to C$54 million. Additionally, it includes modifications to the current Renard diamond streaming agreement totaling C$45 million in cash and sales and pricing changes; and a private placement of common shares and warrants, valued at roughly C$20 million, with up to C$10 million, subscribed by existing shareholders.
“The combination of reduced debt costs and new capital has been designed to greatly strengthen our balance sheet for the long term, while at the same time being sensitive to shareholder value,” added Manson.
“With major capital expenditures at Renard behind us and our underground mine now fully ramped up, this comprehensive deal allows our team to now focus fully on bringing forward the operating and cash flow potential of the business.”
The Renard mine, located in north-central Quebec, is Stornoway’s flagship project and the first diamond mine in the province. The mine, which is now in production, is expected to produce roughly 1.6 million carats per year (approximately 1 percent of global supply) over a 14-year mine life.
During the second quarter of 2018, the diamond producer recovered 223,351 carats from Renard. In the same period, Stornoway completed two tender sales comprised of 201,283 carats, worth C$28.6 million.
Stornoway share were up slightly on Wednesday (October 3), trading at C$0.39.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.