Canadian diamond miner Stornoway Diamond Corp. has cut its production and sales guidance for the year, putting pressure on its balance sheet at a critical time as it shifts operations at its Renard mine from open pit to below ground.
The shares fell 5 per cent to $0.54 in Toronto trading on Wednesday afternoon. Longueuil, Que.-based Stornoway said in a release it now expects to produce between 1.35 million and 1.4 million carats of diamonds this year, down from an initial forecast of 1.6 million carats.
The company also revised its expectation for carats sold, to between 1.2 million carats and 1.25 million carats from 1.6 million previously.
As Stornoway exhausts its open-air pits at Renard and shifts to underground mining, the transition left the company with lower-grade ore from stockpiles and from initial subterranean mining during the first three months of the year. That in turn means lower diamond volumes processed and sold.
“You eat what you kill,” chief executive Matt Manson said in an interview, repeating an expression from a call with analysts earlier in the day. “And that’s essentially what we have to process.” The situation was not helped by the fact that the miner decided to leave some high-grade ore in the bottom of the pits, rather than take it out for safety reasons during poor winter weather conditions, he said.
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