Stornoway Diamond Corporation yesterday provided an update on its production and sales results for the Renard Diamond Mine for the quarter and year ended December 31, 2018.

The Corporation reported that in the fourth quarter, 253,929 carats of diamonds were sold in two tenders for gross proceeds of C$31 million, at an average price of US$ 92 per carat (C$ 122 per carat). The Corporation clarified that fourth quarter diamond sales represent diamonds mainly recovered during the third quarter.

“In addition to the sale of run-of-mine production, an additional 58,313 carats of supplemental diamonds smaller than the -7 DTC sieve size were sold in an out of tender contract sale for gross proceeds of C$ 0.83 million at an average price of US$ 14 per carat (C$ 19 per carat),” Stornoway added. “The supplemental diamond production represents recoveries of small diamonds produced between July 21st and October 5th that are in excess of that expected from the Renard Mineral Resource.”

In FY 2018, nine tenders were held during which 1.04 million carats of run-of-mine production was sold for gross proceeds amounting to C$ 141 million; thus realising   an average price of US$ 105 per carat (C$ 136 per carat).

In addition, in FY 2018, 164,322 carats of “supplemental diamond production” were sold for gross proceeds of C$ 3.5 million at an average price of US$ 16 per carat (C$ 21 per carat).   

“The achieved pricing of US$ 92 per carat for run-of-mine goods during the quarter represents a decrease of 11% compared to the third quarter,” Stornoway reported. “The sales for the quarter continue to reflect a challenging rough diamond market over the period.  While the pricing of higher quality goods and specials remains strong, certain categories of lower quality goods saw weaker prices in the fourth quarter. These categories include -7, brown and rejection goods.”

Stornoway bases its marketing strategy on a market real price index generated using Renard sales data. “The real price index trend shows a steady increase (+27%) in the real price index from the first sale in November 2016 to June 2018, as the rough market conditions improved, goods quality and size improved and tender viewing and bids increased as buyers’ familiarity with the Renard production increased,” notes the Corporation. “The second half of 2018 saw a significant rough market price correction resulting in a price index decrease of -13% as compared to June 2018 index. This market decline is partly attributed to the further weakening Indian Rupee, the lack of credit available to Indian diamantaires, and the fluctuating seasonal effects caused by important Indian and Jewish holidays in the third and fourth quarters.”

Stornoway announced a diamond production of 485,616 carats recovered from the processing of 605,960 tonnes of ore at an attributable grade of 80 carats per hundred tonnes (cpht) for the fourth quarter. “Grade and carat recoveries improved by 45% and 47% respectively compared to the third quarter, attributed to the mining of higher grade ore and an increase in tonnes processed,” observed the Corporation.

In FY2018, diamond production touched 1.32 million carats, recovered from the processing of 2.33 million tonnes of ore at an attributable grade of 57 cpht.

Patrick Godin, President and CEO of Stornoway, commented: “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.”

He added: “Our third and fourth quarter production results have demonstrated significant improvements in grade and carat recoveries as mining progressed towards the high-grade center of the Renard 2 kimberlite. We expect these results to continue into 2019, as we continue mining Renard 2 from the 290 m level, and bring into production the higher-grade Renard 3 orebody from underground.”

He said the ramped-up underground operations have been resulting in carat recoveries “currently exceeding those predicted by our mineral resource model”.

Godin stated: “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.”

The Corporation, providing its guidance for 2019, said that it expects to produce between 1.80 and 2.10 million carats from the processing of 2.40 to 2.55 million tonnes of ore this year.  

“Between 1.80 and 2.10 mcarats are expected to be sold in 8 tender sales at prices between US$ 80 and US$ 105 per carat,” Stornoway said.