The first valuation of diamonds from the Renard 65 kimberlite at Stornoway Diamond’s (SWY-T) Renard project, in north-central Quebec, has yielded positive results for the mine developer.
A valuation on 997-carat parcel of diamonds from Renard 65 by WWW International Diamond Consultants produced an average price of US$250 per carat. The average value was somewhat skewed by two stones that are among the highest-value so far recovered at Renard: a 9.77-carat G-colour stone worth US$8,500 per carat, and a 6.4-carat F-colour stone valued at US$5,900.
For that reason, WWW has modelled a base-case diamond price of US$180 per carat for Renard 65, with a high-sensitivity price of US$203 per carat and a minimum sensitivity case of US$169 per carat.
The diamonds were extracted via a 5,000-tonne bulk sample last year.
In a press release, Stornoway president and CEO Matt Manson noted that WWW’s work has shown that the quality of kimberlite’s diamond population is “different and generally better” than the other kimberlites at the project.
This new information should allow Stornoway to add new open-pit resources and extend the mine life of Renard.
Renard 65 currently contains an inferred resource of 3.7 million carats in 12.9 million tonnes grading 29 carats per hundred tonnes. Reserves at the project, which are contained in the Renard 2, 3 and 4 kimberlites, come to 17.9 million carats in 23.8 million tonnes grading 75 carats per hundred tonnes.
The company has taken a look at its valuation models for the project, which had assumed a single diamond population in multiple pipes. WWW has recommended using individual price models for each pipe, with the small but observable differences in quality and size distribution be treated as real.
This has the effect of lowering prices that can be expected from the Renard 3 and 4 kimberlites, but increasing modelled prices for Renard 2, which contains 83% of reserves. Renard 2 diamonds are now modelled at US$190 per carat, up from US$182 per carat.
Renard 3 and 4 diamonds are modelled at US$151 and US$104 per carat, down from US$183 and US$112 per carat, respectively.
Diamond prices recovered in the first quarter, after falling substantially in 2012. Prices for Renard diamonds are currently estimated to be about 7-8% lower than the prices used in the project’s November 2011 feasibility study (May 2011 prices).
Stornoway is currently building an all-season mining road that should give it road access to Renard in the fourth quarter to begin construction of an open-pit and underground mine with a current mine life of 11 years.
Shares in the junior ended the day up 5% on the news at 64¢. The company has 139.7 million shares outstanding that have traded in a 52-week range of 45¢-99¢.