Stornoway Diamond Corporation reported today that it recorded a net loss of C$ 51 million during the quarter ended March 31, 2019 (Q1) with carats recovered at its Renard mine declining by 8% over the previous quarter and the market for rough “not showing any notable improvement”. The Company however announced that there was a significant increase in sales over Q4 2018, attributable to a significant improvement in average grade recovered.

First quarter diamond production was 444,562 carats, Stornoway said. This was produced from the processing of 582,613 tonnes of ore at an average grade of 76 carats per hundred tonnes.

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, the Company clarified. It said that in March, the process plant surpassed its budgeted daily rate with an average of 7,209 tonnes processed per day. In the month of April, an average of 7,734 tonnes per day were processed.

During the quarter, two tender sales totalling 429,506 carats were completed for gross proceeds of C$ 47.3 million at an average price of US$ 83 per carat (C$ 110 per carat). Revenue recognized during the quarter was C$ 53.3 million. In terms of total carats sold, gross proceeds and pricing, this represents increases of 38%, 47% and 8% over the fourth quarter of 2018, respectively. First quarter diamond sales represent diamonds recovered during the fourth quarter of 2018.

For the first quarter, the Corporation reported adjusted EBITDA of C$ 13.4 million, or 25.2% of revenues, which includes an C$ 8.9 million write-down of cash costs to bring inventory to its net realizable value. For the first quarter of 2018, adjusted EBITDA was C$ 24.7 million, or 44.2% of revenues.

Q1 2019 cash operating costs per tonne processed1 were C$ 57.14 per tonne (C$ 74.88 per carat) and capital expenditures were C$ 17.0 million.

Patrick Godin, President and CEO, commented: “The first quarter saw significant improvements in sales, attributable to the increases in grade recovered during the fourth quarter of 2018. 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. In terms of processing, January and February were challenging months due to very cold weather, but March saw outperformance over the budgeted average daily processing rate, and we are pleased to report that the month of April saw an average of 7,734 tonnes per day processed, the highest single monthly performance ever achieved at Renard. Underground development of the next mining horizon in Renard 2 is progressing according to plan, and the initiation of underground production in Renard 3 took place in late April, over two months in advance of target.”

The operations of the Renard Mine are performing in accordance with plan, Stornoway said.

Stornoway’s exploration plans for 2019 are focused on resource upside at the Renard Mine, including the Renard 3 and Renard 4 kimberlites, with a view to convert certain Mineral Resources to Mineral Reserves, and to accelerate the inclusion of both ore bodies in the Renard mine plan. Re-evaluation of the Renard 7 kimberlite, not currently part of the project Mineral Resource, commenced during the first quarter of 2019.