DIAMONDS: Stornoway rejigs Renard design to cut costs

QUEBEC - Stornoway Diamond Corp. of Montreal has optimized the design for the province's first diamond mine, Renard, located in the Otish Mountains, cutting costs and maintaining its high operating margin. The original feasibility study was released in November 2011. The new plans call for deferring the shaft for an underground mine, a modified underground mining sequence, and changes to the draw point design. Revisions have also been made to the development and production schedules.

• A revised initial capital cost of $752 million, including contingencies, in October 2012 terms, a reduction of $50 million from the previous estimate which was expressed in June 2011 terms.
• A revised operating cost averaging $57.63/tonne (C$76.63/carat) life of mine in October 2012 terms, an increase of $2.92/tonne from the previous estimate.
• Base case estimates of net present value $683 million at a 7% discount rate and internal rate of return of 20.3% before taxes and mining duties, and $391 million and 16.3% after taxes and mining duties, all improvements from the previous estimates.
• 11 years reserve-based mine life with diamond production averaging 1.6 million ct per year life of mine, real terms net revenue of $4.046 billion, and a cash operating margin of $2.693 billion (67% compared to 68% in the previous estimate).

Stornoway has also restated the Renard probable reserve at 17.9 million ct (23.8 million tonnes at 74 cpht), a reduction of 100,000 ct due to revised dilution and recovery estimates.

Further details of the changes are posted at StornowayDiamonds.com.