Stornoway for Sale Again Following Significant Losses

Stornoway Diamonds is seeking a buyer after the weak market forced the miner to enter insolvency for the second time in just over four years.

Deloitte Corporate Finance is conducting the sale and investment solicitation process (SISP) for the Stornoway’s entire business, property and assets, the professional services firm said Tuesday. The miner, which operates the Renard deposit in Canada, has insufficient liquidity to operate and is in “a precarious financial situation,” Deloitte explained in a filing at the Superior Court of Quebec.

Stornoway reported a net loss of CAD 13.1 million ($9.6 million) for the nine months that ended September 30, according to the court documents. That compares to a profit of CAD 42.2 million ($30.7 million) for the full year of 2022.

“[India’s] unilateral ongoing import freeze and ongoing downward pressure on price[s] since March 2023…have resulted in a dramatic loss of revenue for Stornoway, and [have] seriously impaired Stornoway’s ability to sell its inventory at acceptable and profitable market prices,” the filing stated.

Prices for the company’s rough have been progressively decreasing throughout the year, Stornoway noted. From a total of six sales held since January, the miner has seen prices fall from $118 per carat to $82 per carat.

“Management estimates that Stornoway’s working capital is not sufficient to allow it to meet its financial obligations, commitments and necessary budgeted expenditures for the foreseeable future,” the filing said.

Last month, Stornoway halted operations at Renard, laid off 425 of its 500 employees, and filed for creditor protection as it sought to weather the slowdown.

This is not the first time Stornoway has faced liquidity issues. In 2019, the miner was forced to sell the business to its major lenders after accumulating debt it attributed to “continued downward pressure” on the rough market.

Stornoway currently lists assets of about CAD 287.3 million ($209.6 million) from inventory, property and plant equipment, cash and other sources.


Stornoway Halts Operations at Renard Diamond Mine

Stornoway Diamonds has suspended operations at its Renard mine in Canada amid the prolonged slowdown in demand for rough.

“The growing uncertainty of the diamond price in the short and medium term, coupled with the significant and sudden drop in the price of the resource on the world market, has had a major impact on the company’s long-term financial situation,” Stornoway said Friday. “This was in part due to the halt in the import of rough diamonds to India, and [in part to] the global geopolitical climate.”

The company will put Renard on care and maintenance to “preserve the assets and facilitate a rapid return to normal operations,” it explained. It will keep 75 of its 500 workers on staff to perform necessary tasks.

Stornoway will also seek creditor protection under the Canadian Companies’ Creditors Arrangement Act (CCAA), which allows financially troubled corporations owing more than $5 million to restructure their businesses and avoid bankruptcy. As part of this effort, the miner is “implementing a process for soliciting investment and sale proposals,” it added.

The Indian diamond-manufacturing sector announced in September that it was implementing a two-month moratorium on rough imports, from October 15 to December 15, to help reduce some of the oversupply that has built up in the midstream due to weak industry demand.

This is not the first time Stornoway has sought creditor protection under CCAA. In 2019, one of its creditors, Osisko Gold Royalties, acquired and revived the company during a restructuring process. Under the new ownership, the miner restarted operations in 2020 following a six-month halt due to Covid-19.




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