Stornoway Diamond granted creditor protection

stornoways diamond mine

Stornoway Diamond Corp. of Montreal has been granted protection under the Companies’ Creditors Arrangement Act from the Superior Court of Quebec while the company restructures its business and financial affairs.

Protection is extended to subsidiaries Stornoway Diamonds Canada, Ashton Mining of Canada, and FCDC Sales and Marketing.

Stornoway has signed a letter of intent with creditors Osisko Gold Royalties and Diaquem, a wholly owned subsidiary of Ressources Quebec, concerning a bridge financing agreement entered into in June this year. The LOI confirms that the creditors intend to acquire all of the assets and properties of Stornoway and assume the debts and liabilities owed them as creditors. Stornoway will continue to be the operator of the mine 320 km north of Chibougamau in the James Bay region.

Osisko says that under the terms of the bridge loan, It will retain its 9.6% diamond stream on the Renard mine and continue to receive diamond deliveries. The proceeds of any diamond sales will be reinvested in the mine for a period of one year.

Osisko and certain of the secured creditors have also agreed to supply an initial C$20 million of working capital to Stornoway. The working capital is intended to keep the mine operating without interruption.

Stornoway still seeking partner to ease finances

Stornoway diamonds

Stornoway Diamond Corp. of Montreal released its Q2 2019 report and repeated its plea for a partner or buyer for the money losing Renard mine 350 km north of Chibougamau.

The company began the hunt for a buyer or investor this spring, but no indications of interest were received by the July 15, 2019, deadline. Instead, the deadline has been extended to the middle of September and Stornoway arranged bridge financing to keep the mine open during this time.

For Q2 2019, Stornoway recorded a net loss of $346.3 million, due primarily to a non-cash impairment charge of $442.7 million. The impairment was driven by the sagging prices for rough diamonds that forced the company to write down the value of property, plant, equipment, right of use assets and deferred transaction costs.

Revenues during the three months ended June 30, 2019, were $189.4 million made up of cash sales revenues of $40.7 million and non cash revenues of $148.7 million. Cash operating costs per carat recovered was $63.8, compared to $147.7 in Q2 2018. Cash and cash equivalents stood at $21.3 million, excluding $5.1 million of restricted deposits related to debt service and reserve account.

Said Stornoway in its Q2 news release: “Management estimates that the working capital as at June 30, 2019, and forecasted cash flows will not be sufficient to meet the corporation’s obligations, commitments and budgeted expenditures through June 30, 2020, in the current diamond market price conditions.”

Source: canadianminingjournal



Canadian diamond miner Stornoway Diamonds has produced 1.32 million carats in the 2018 financial year, missing its guidance of “at least 1.35 million carats” for the year, Mining Weekly reports.

President and CEO Patrick Godin said that 2018 was a “challenging year” for the company, as the ramp-up of underground production of the Renard 2 underground mine was “impacted by delays in equipment deliveries, a competitive labour market and the presence of more-than-expected low-grade mineralisation on the northern margin of the Renard 2 orebody”. However, the company’s third and fourth quarter production results “demonstrated significant improvements in grade and carat recoveries”. For 2019, Stornoway expects to produce between 1.8 million and 2.10 million carats.

As for sales, in 2018 Stornoway sold 1.04 million carats for gross proceeds of C$141 million ($106,362,645). In the fourth quarter, sales amounted to 253,929 carats, netting C$31 million (23,384,695).

Souce: israelidiamond