Quebec’s first diamond mine has a grating problem: Its gemstones are breaking more than anyone anticipated. And that’s hitting the shares of its owner, Stornoway Diamond Corp.
The emerging diamond producer built the Renard mine in the Otish Mountains, a range of hills north of Lac Mistassini in north-central Quebec, in the summer of 2016 with a $946-million financing package. The project came in under budget and five months ahead of schedule, igniting hopes that it will lead to other resource development in the province’s vast northern territory.
But Stornoway has hit a snag. The Renard diamonds are breaking in processing to a higher degree than the company expected, hurting both the price they’re fetching at auction as well as Stornoway stock. In the diamond industry, bigger is better. And too many big Renard diamonds are getting smashed in its crushers. The quality profile of the diamonds has suffered as well.
“It’s serious for us but we’re making money here even with this issue on top of us,” Matt Manson, Stornoway chief executive, said in an interview. “It’s not an existential problem for us. It’s a quality problem. We should be doing better. We can be doing better and that’s what we’re engaged on. The underlying business is very strong.”
The development adds pressure to Mr. Manson’s ambitions for the diamond producer. Stornoway was among the potential suitors for Dominion Diamond Corp., which controls the Ekati diamond mine in the Northwest Territories and owns 40 per cent of the territory’s Diavik mine as well, when it entertained offers earlier this year.
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