|
|
Home Technology / Education Events & News Archives Designs e - NewsLetter |
Stornoway Announces 2016 Production Results and 2017 Guidance Stornoway Diamond Corporation recently announced 2016 production results for the Renard Diamond Mine and 2017 guidance. Highlights are as follows:
Matt Manson, President and CEO commented: “In 2016 we completed construction of the Renard Diamond Mine ahead of schedule and below budget, achieving commercial production at year end. Today’s press release highlights an operating performance that was similarly strong, with better than expected production in the open pits, and development of the underground mine proceeding comfortably on-schedule. Our ability to bring the project into production early resulted in significantly higher carat production than planned for the year, and an earlier than expected first sale that gave us unbudgeted pre-production revenue. With the first few months of ore processing behind us, we are pleased with the performance of the project’s Mineral Resource, with better than expected grades reflecting better than expected geology at the top of the Renard 2 and Renard 3 ore bodies. For 2017 we are being cautious with our diamond price forecasting, due to uncertain market conditions and a reduction in pricing for smaller and certain lower quality items. This trend began earlier in 2016, deepened with the Indian de-monetization events, and was reflected in the results of our first two diamond sales. Our price forecasting further reflects higher than expected levels of diamond breakage that we are experiencing in the process plant and which is influencing our initial diamond recovery profile. The source of this breakage is evident to us and a mitigation plan is underway to reduce it to acceptable levels. Our focus in 2017 is the maintenance of our good operating performance and the progressive improvement in the quality of our recoveries as our plant ramp-up continues. At year end, our (preliminary, unaudited) total financial liquidity stood at C$159 million1, comprised of cash and cash equivalents, expected receivables, and undrawn debt facilities.” 1Excludes an undrawn C$48 million project cost-overrun facility. 2016 Production Results A total of 399,162 tonnes of ore were processed with carat production of 448,887 carats, compared to a plan of 218,400 carats (+106%), with an attributable grade of 112 cpht compared to a plan of 97 cpht (+15%). The higher tonnage of ore processed was due to the earlier than expected availability of the plant, and the higher grade was due to a better than expected mix of ore units available in the Renard 2-3 open pit. One diamond sale was completed during the year, being 38,913 carats sold for gross proceeds of US$7.6 million, representing un-budgeted pre-production revenue. 2,729 meters of development was completed in the underground mine, compared to a plan of 2,768 meters (-1%). There has been no recurrence of the water inflow issues that slowed ramp development towards the end of 2015. The Renard 2 kimberlite was intersected at the 160 meter level on December 4, 2016 and by year end 117 meters of development within ore had been completed in good ground conditions. Stornoway’s lost time incident frequency rate for the year was 1.55, with zero incidents of environmental non-compliance. During the year, the proportion of Stornoway employees and contractors who were Crees of the Eeyou Istchee averaged 19% 2017 Guidance 2,300 meters of underground development and 2,600 meters of production stope development is planned in the underground mine. Diamond sales of 1.8 million carats are planned in ten tender sales in Antwerp, Belgium. Capital and Operating Costs Capital costs are forecast at C$78.7 million. This includes scheduled cap-ex of $45.5 million for the underground mine, and sustaining capital items associated with the project’s process plant, power plant, and processed kimberlite containment facility. The capital cost estimate includes $11.8 million of site service costs associated with capital items but previously shown as operating general and administrative costs, and $1.7 million of costs deferred from 2016. Diamond Pricing and Revenue Compared to previous estimates, the 2017 pricing guidance incorporates reduced pricing for smaller and certain lower quality rough diamond categories seen during the course of 2016 and confirmed in the first two Renard sales. This trend, already underway, was exacerbated by the Indian de-monetization event of late 2016 which has prompted many diamond producers, including Stornoway, to temporarily withhold this material from sale. Stornoway’s 2017 price guidance assumes stabilization of the Indian currency market and the beginning of price recovery prior to the end of the second quarter of 2017. 2017 pricing guidance further reflects the profile of diamonds recovered at Renard in the initial ramp-up period. During the first few months of operation, the Renard diamond process plant has liberated a higher proportion of small diamonds than expected, and has induced higher levels of diamond breakage than expected. Both of these factors have a strong influence on average run-of-mine pricing. Diamond breakage occurs in all diamond process plants, and is measurable and remediable. Stornoway is undertaking a breakage mitigation plan in conjunction with 3rd party experts and equipment vendors. This work will be ongoing through the first half of 2017. Achieved diamond pricing will continue to be influenced by this breakage until it is resolved.
|