Quebec diamond miner ends 2018 in the red

The low price environment in which the Renard diamond mine began its operations two years ago is continuing to affect the company operating the Quebec-based mine, with Stornoway Diamonds ending 2018 in the red.

The listed diamond miner on Thursday reported a net loss of C$329.4-million, or C$0.39 a share, on lower revenue of C$165.5-million. This compares with a net loss of C$144.22-million in 2017 on revenue of C$196.5-million.

The 2018 results include a noncash impairment charge of C$83.2-million on the carrying value of the company’s property, plant and equipment. These were attributed to a downward revision of expected diamond pricing.

Adjusted earnings before interest, taxes, depreciation and amortisation came to a loss of C$7.9-million for the year.

Stornoway recovered fewer carats during the year, with output falling from 1.64-million carats to 1.32-million carats, with recoveries affected by delays in the ramp-up of the Renard 2 underground mine, mainly owing to delays in mobile equipment deliveries and a competitive specialised labour market for underground workers.

“2018, the second year of commercial production for Stornoway’s Renard diamond mine, was one of transition from openpit mining to primarily underground production. This transition proved to be challenging, but our team overcame the difficulties we faced, safely and successfully completing the ramp up of the underground mine in August,” said president and CEO Patrick Godin, who took over from Matt Manson on January 1.

In October, the miner announced a series of financing transactions, totalling $129-million, with lenders and key stakeholders to provide greater financial and operational flexibility.

The financing package is made up of a deferral of certain loan principal repayments for a 24-month period, representing debt service cost deferral of up to C$54-million; amendments to the Renard diamond streaming agreement and a private placement.

The company’s share price fell 8.57% to C$0.16 a share, giving the company a market capitalisation of C$143.66-million.