Stornoway Diamonds, the operator of Quebec’s first diamond mine, has told shareholders that weak conditions in the rough diamond market continue to persist, with CEO Patrick Godin saying on Wednesday that further decreases in pricing were observed during the second quarter of the year.
The company, which operates the Renard mine, sold 460 832 ct in two tender sales, netting gross proceeds of C$47-million, achieving an average price of $76/ct.
Weak market conditions resulted in a 9% quarter-on-quarter fall in the average price during the second quarter and it was not only lower quality goods affected. Stornoway said that the pricing of higher quality goods and specials was also negatively affected by the oversupply of rough diamonds relative to demand, the high inventory levels in the mid-stream and the reduced availability of bank financing in India.
Smaller and lower quality goods continue to sell at the lower prices experienced in the fourth quarter of 2018 and first quarter of 2019.
Despite the weak market conditions, Stornoway managed to keep its gross proceeds relatively stable, by pushing up the sales volumes by 7% quarter-on-quarter.
Meanwhile, second-quarter diamond production was 463 136 ct recovered from the processing of 695 934 t of ore at an average grade of 67 carats per hundred tonnes.
Carat recoveries increased by 4% compared with the first quarter, mainly owing to greater plant utilisation. The average processing rate was 7 648 t/d, above the budgeted rate of 7 000 t/d.
“During the second quarter, both mining and processing operations at Renard have demonstrated strong performance, with an average ore hauling rate of 6 813 t/d from the underground mine, and an average processing rate well above the budgeted rate. The average grade recovered is lower than for the first quarter, as a result of mining of lower grade ore blocks from the block cave sequence at Renard 2. The average grade is anticipated to increase for the remainder of the year, as the extraction of higher grade production ore from the Renard 3 kimberlite pipe ramps up, and with the development of the second underground mining horizon of Renard 2, also of higher average grade,” said Godin.
During the quarter, process plant feed was derived from the Renard 2 underground mine (87%), the Renard 65 stockpiles (9%), and the Renard 3 underground mine (4%).