Stornoway Diamond Corporation (TSX:SWY)
(the “Corporation” or “Stornoway”) is pleased to
provide production and sales results at the Renard Diamond Mine for
the quarter and year ended December 31, 2017. Highlights are as
follows:
(All quoted figures in CAD$ unless otherwise
noted)
- Fourth Quarter diamond production of 398,267 carats produced
from the processing of 518,817 tonnes of ore with an attributable
grade of 77 carats per hundred tonnes (“cpht”), compared to a plan
of 415,940 carats from 540,000 tonnes at 77 cpht (96%, 96% and 100%
respectively).
- FY2017 diamond production of 1.64 mcarats produced from the
processing of 1.96 mtonnes of ore with an attributable grade of 84
cpht, compared to a plan of 1.69 mcarats from 2.00 mtonnes at 85
cpht (97%, 98% and 99% respectively).
- Fourth Quarter sales of 453,646 carats sold in two tenders
(2017 sales #8 and #9) for gross proceeds1 of $49.1 million2, at an
average price of US$86 per carat ($108 per carat2).
- FY2017 diamond sales of 1.7 mcarats sold in nine tenders and
three out of tender sales for gross proceeds1 of $186.2 million3,
at an average price of US$85 per carat ($109 per carat3).
In addition, Stornoway is providing production, sales and cost
guidance for FY2018. Highlights are as follows:
- Approximately 1.6 mcarats to be produced from the processing of
2.5 mtonnes of ore at an average grade 65 cpht.
- Of the 1.6 mcarats produced, approximately 1.1 mcarats are
expected to be larger than +7 DTC sieve size (+3mm) with average
pricing between US$125 and US$165 per carat. Approximately 0.5
mcarats are expected to be smaller than +7 DTC sieve size (-3mm)
with average pricing of between US$15 and US$19 per carat.
- Approximately 1.6 mcarats to be sold in 9 tender sales, to be
operated through the offices of Stornoway’s sales agent Bonas
Couzyn in Antwerp, Belgium.
- Cash operating costs per tonne processed4 of $56 to $60 per
tonne ($87 to $92 per carat) and capital expenditures4 of $82
million.
_________________________1 Before stream and royalty.2 Based on
an average $: US$ conversion rate of $1.2636.3 Based on an average
$: US$ conversion rate of $1.2916.
Matt Manson, President & CEO commented: “We
are pleased that in our first year of production at the Renard Mine
we are reporting carats, tonnes and grade results broadly in line
with guidance. This is a strong testament to the dedication of our
operating team and the quality of our Mineral Resource estimates.
We continue to see a lower price environment for our diamond sales,
in part due to what has been a challenging rough diamond market for
a new producer, and in part due to the lower than expected quality
and size attributes of our initial production as we process its
recovery. For the Stornoway team, 2018 will be a year of process
improvement in diamond recovery, as well as focus on the initiation
and ramp-up of our underground mine. It will also be a year with
renewed focus on the future at Renard, with opportunities evident
to us in processing expansion, resource conversion, and new
exploration. Most importantly, we will seek to continue the
excellent EH&S performance that we achieved in 2017, with no
lost time injuries amongst Stornoway personnel or environmental
derogations against permits recorded during the course of the
year.”
Fourth Quarter and FY2017 Production
Results
During the fourth quarter, 518,817 tonnes of ore
were processed compared to a plan of 540,000 tonnes resulting in
diamond production of 398,267 carats compared to a plan of 415,940
carats (96% and 96% of plan respectively). Recovered grade was 77
cpht compared to a plan of 77 cpht (100% of plan). Carat production
was lower than planned due to the unscheduled batch processing of
lower grade Renard 65 ore in November for the purpose of obtaining
a valuation sample of Renard 65 diamonds (as described
below).
For the full year FY2017, 1.96 mtonnes were
processed with diamond production of 1.64 mcarats at an
attributable grade of 84 cpht. This compares to FY2017 guidance of
2.00 mtonnes for 1.69 mcarats at 85 cpht (97%, 98% and 99% of plan
respectively).
From the beginning of ore processing at the
Renard Mine in July 2016 to December 31, 2017, 2.35 mtonnes of ore
have been delivered to the process plant resulting in the
production of 2.09 mcarats of diamonds at 89 cpht. This compares
favourably with the March 2016 mine plan of 2.22 mtonnes and 1.91
million carats at 86 cpht (109%, 106% and 103% of plan
respectively).
The average processing rate of the plant during
the fourth quarter, the second quarter of full production following
completion of the project ramp-up, was 6,014 tonnes per day
compared to the nameplate capacity of the plant of 6,000 tonnes per
day.
Fourth Quarter and 2017 Diamond Sales
Results
Two tender sales were completed during the
fourth quarter. In total, 453,646 carats were sold for gross
proceeds1 of $49.1 million2, at an average price of US$86 per carat
($108 per carat2; Table 1).
For the full year FY2017, 1.7 mcarats were sold
for gross proceeds of $186.2 million, at an average price of US$85
per carat ($109 per carat). This compares to FY2017 guidance of 1.8
mcarats sold at pricing of between US$100 to US$132 per carat.
_______________________4 See “Non-IFRS Financial
Measures” section.
Full year diamond sales results were impacted by
the timing of tender sales, market factors, and the mix and quality
of product sold. Diamond recoveries at the Renard Mine through 2017
were impacted by high levels of diamond breakage, and a higher than
expected recovery of smaller diamonds than planned. In addition,
diamond pricing for smaller and lower quality items were severely
impacted by the impacts of de-monetization in India in late 2016,
recovery from which was slow during the course of 2017 and remained
incomplete at year end.
Table (1) FY2017 Sales Data |
|
|
Three months ended March 31, 20175 |
Three months ended June 30, 2017 |
Three months ended September 30, 20176 |
Three months ended December 31, 20176 |
Full year results, FY2017 |
Number of Sales7 |
3 |
2 |
2 |
2 |
9 |
Carats Sold |
459,126 |
350,159 |
438,632 |
453,646 |
1,701,561 |
Gross Proceeds ($M)1 |
44.5 |
40.9 |
51.6 |
49.1 |
186.2 |
Average Price per Carat (US$/ct) |
73 |
87 |
94 |
86 |
85 |
Average Price per Carat ($/ct) |
97 |
117 |
118 |
108 |
109 |
Average Exchange Rate ($:US$) |
1.3242 |
1.3453 |
1.2520 |
1.2636 |
1.2916 |
________________________5 Includes 52,681 carats
of smaller and lower quality goods carried over from Stornoway’s
first sale in November 2016. Excluding these goods, on a
run-of-mine basis, 406,446 carats were sold in the first quarter
for gross proceeds of $43.8 million, at an average price of US$81
per carat ($108 per carat).6 Third quarter results include 32,989
carats sold during the third quarter’s last tender sale, but for
which revenues will be realized in the fourth quarter. Results for
the fourth quarter exclude these goods.7 In the first quarter, four
out of tender sales were concluded in addition to the three regular
tender sales.
Figure 1 illustrates a FY2017 price index for
Renard diamonds on a sale by sale basis, normalized for variations
in quality and size distribution. Stornoway sells its diamond
production in an open market by tender and, other than in
exceptional circumstances, is a market price-taker. The market
price index generated by Renard sales data shows a steady increase
in achieved pricing from the first sale in November 2016 to July
2017, as market conditions improved and Stornoway’s clientele
gained familiarity with the Renard production. A rough market price
correction, estimated at between 6% and 8%, was observed at the
time of the annual market slow-down in the late summer and affected
achieved sales pricing at the seventh sale of the year in
September. Following this correction, price growth was renewed,
with an approximately 3% increase achieved in the fourth quarter.
Overall, pricing for Renard diamonds increased by 13.5% in real
terms during 2017. Attendance at the 9th and final sale of 2017 in
December achieved a record attendance of 163 companies, with 41
separate companies winning diamond parcels.
The outlook for rough diamond pricing in the
first half of 2018 is positive, owing to good holiday sales in the
principal diamond jewellery retail markets and a flat supply
outlook.
FY2018 Production and Sales
Guidance
In FY2018, Stornoway expects to produce 1.6
mcarats from the processing of 2.5 mtonnes of ore at an average
grade 65 cpht. During the first quarter, ore will be derived
primarily from the Renard 2-Renard 3 and Renard 65 open pits.
Starting in the second quarter, ore supply will be primarily from
the Renard 2 underground mine. This is consistent with the Life of
Mine (“LOM”) plan published in March, 2016, with the processing of
Renard 65 ore earlier than previously planned.
So as to achieve a better look-through of
potential variations in quality and size distribution from sale to
sale, Stornoway is providing production and pricing guidance for
FY2018 segmented by diamond size category. Of the 1.6 mcarats
expected to be produced:
- Approximately 1.1 mcarats are expected to be larger than the +7
DTC sieve size (+3mm), which Stornoway expects to sell at prices
between US$125 and US$165 per carat ($156 to $206)8.
- Approximately 0.5 mcarats are expected to be smaller than the
+7 DTC sieve size (-3mm), with average sales pricing of between
US$15 and US$19 per carat ($19 to $24)8.
Price guidance has been established on the basis
of the ranges of prices achieved on each product segment during
2017, and the expected mix of diamond production to be sold
including, for the first time, from the Renard 65 kimberlite. Final
achieved pricing will be dependent, amongst other things, on
external market factors.
Any improvements in the quality and size
distribution of Renard’s diamond production that is achieved from
ongoing process improvement initiatives are expected to be
reflected, principally, in the pricing achieved for the +7 DTC
sieve size product segment.
The production and sale of -7 DTC sieve size
diamonds is expected to be the most volatile in potential quantity
and price, reflecting an historically more uncertain market for
this product segment and changes that Stornoway may elect to make,
from time to time, in the recovery bottom-cut-off in the Renard
process plant.
________________________8 Based on an average $:
US$ conversion rate of $1.25.
2018 Cost Guidance
For FY2018, cash operating costs are estimated
at $142 to $150 million, representing $56 to $60 per tonne
processed4 or $87 to $92 per carat. Cash operating costs for FY2018
in the March 2016 LOM plan were estimated at $61 per tonne
processed and $91 per carat.
FY2018 capital expenditures4 are estimated at
$82 million, principally related to the development of the
underground mine at Renard. Capital costs for FY2018 in the March
2016 LOM plan were estimated at $58 million. The increase is
principally attributable to the transfer into cap-ex of $12 million
of site G&A costs associated with underground mine development
that were previously budgeted as operating expenses, and spending
associated with the $22 million capital program approved by the
Stornoway board of directors in August 2017 for a new waste-ore
sorting circuit at the Renard Process Plant.
Operations Update
In early August the Stornoway board of directors
approved an extraordinary capital budget of $22 million for a
program of plant improvements aimed at improving the quality
profile of the Renard production. At the center of this plan is the
introduction of an ore-waste sorting circuit, rated at 7,000 tonnes
per day and expandable, designed to extract waste rock in the
+30mm-200mm size range immediately prior to its introduction to the
secondary cone crusher.
The ore-waste sorting circuit will include
covered conveyors, a gravity fed tower containing primary,
secondary and scavenging spectral sorters, and a waste rock load
out. Work on the concrete foundations was completed in December.
Steel erection began in November and was 50% complete at year end.
The ore sorting building and conveyor galleries are expected to be
completed by mid-February, allowing the subsequent installation of
spectral sorting equipment. Commissioning is scheduled to commence
at the end of the first quarter.
In the fourth quarter mining operations focussed
on advancing the development of the underground mine. On the
principal initial production level on the upper mining horizon at
290 meters, two production accesses have been completed and 26 draw
points excavated out of the 32 required for FY2018 production.
Ground support enforcement and remaining draw point construction
are ongoing and progressing on schedule. Production drilling began
during the fourth quarter and by year end an inventory of 436,424
tonnes of drilled ore had been established. The first production
blast occurred successfully on December 20th, 2017.
All mining equipment required to achieve FY2018
underground production targets have been ordered and no delays in
equipment deliveries are anticipated at this time.
On December 15, 2017 Stornoway’s employees
achieved one year without a lost time incident for a total 1.15
million hours worked. There were no environmental derogations
recorded against operating permits in FY2017.
Renard 65 Diamond Valuation
During November 2017, a parcel of 5,741 carats
of diamonds were recovered from the processing of specially batched
Renard 65 ore in the Renard process plant. This parcel, combined
with a 946 carat parcel of Renard 65 diamonds recovered by bulk
sampling in 2012, were valued by TID Consulting (“TID”), an
independent agency, between December 5th and 8th 2017 utilizing
current Stornoway sales pricing data. The combined sample of 6,687
carats returned a valuation of US$133 per carat. For FY2018
budgeting purposes, TID have recommended the adoption of a modeled
price for Renard 65 diamond production of US$140 per carat, with
sensitivities of US$129 per carat and US$151 per carat.
As previously observed, the Renard 65 kimberlite
exhibits a diamond population distinct from that seen in the Renard
2 and Renard 3 kimberlites. Renard 65 diamonds are characterized by
a high proportion of gem qualities in the larger sizes, most with a
characteristic light surface frosting. The 6,687 carat valuation
parcel contains thirteen stones larger than 5 carats in size,
including two “specials” of 11.98 carats and 17.69 carats. Nine of
these thirteen stones are high quality gems and four have been
valued in excess of US$4,500 per carat. This is a higher proportion
of gem qualities in the large size fractions than is seen in the
Renard 2 and Renard 3 kimberlites. The smaller diamond size
fractions at Renard 65 are likewise distinct, with a higher
proportion of brown gems than at Renard 2-Renard 3, but a lower
proportion of the lowest quality “rejection” category.
About the Renard Diamond
Mine
The Renard Diamond Mine is Quebec’s first
producing diamond mine and Canada’s sixth. It is located
approximately 250 km north of the Cree community of Mistissini and
350 km north of Chibougamau in the James Bay region of
north-central Québec. Construction on the project commenced on July
10, 2014, and commercial production was declared on January 1,
2017. Average annual diamond production is forecast at 1.8 million
carats per annum over the first 10 years of mining. Readers are
referred to the technical report dated January 11, 2016, in respect
of the September 2015 Mineral Resource estimate, and the technical
report dated March 30, 2016, in respect of the March 2016 Updated
Mine Plan and Mineral Reserve Estimate for further details and
assumptions relating to the project.
Qualified Person
Disclosure of a scientific or technical nature
in this press release was prepared under the supervision of M.
Patrick Godin, P.Eng. (Québec), Chief Operating Officer, a
“qualified persons” under NI 43-101.
About Stornoway Diamond
Corporation
Stornoway is a leading Canadian diamond
exploration and production company listed on the Toronto Stock
Exchange under the symbol SWY and headquartered in Montreal. A
growth oriented company, Stornoway owns a 100% interest in the
world-class Renard Mine, Québec’s first diamond mine.
On behalf of the BoardSTORNOWAY DIAMOND
CORPORATION/s/ “Matt Manson”Matt MansonPresident and Chief
Executive Officer
For more information, please contact Matt Manson
(President and CEO) at 416-304-1026 x2101or Orin Baranowsky (CFO)
at 416-304-1026 x2103 or Jodi Hackett (Manager, Communications) at
416-304-1026 x2104 or toll free at 1-877-331-2232
Pour plus d’information, veuillez contacter M.
Ghislain Poirier, Vice-président Affaires publiques de
Stornoway au 418-254-6550, gpoirier@stornowaydiamonds.com
** Website: www.stornowaydiamonds.com Email:
info@stornowaydiamonds.com **
Forward-Looking Statements
This document contains forward-looking
information (as defined in National Instrument 51 102 – Continuous
Disclosure Obligations) and forward-looking statements within the
meaning of Canadian securities legislation and the United States
Private Securities Litigation Reform Act of 1995 (collectively
referred to herein as “forward-looking information” or
“forward-looking statements”). These forward-looking statements are
made as of the date of this document and, the Corporation does not
intend, and does not assume any obligation, to update these
forward-looking statements, except as required by law. Capitalized
terms under this section not otherwise defined in this document
have the meaning attributed thereto in the most recently filed
Annual Information Form of the Corporation.
These forward-looking statements relate to
future events or future performance and include, among others,
statements with respect to Stornoway’s objectives for the ensuing
year, our medium and long-term goals, and strategies to achieve
those objectives and goals, as well as statements with respect to
our management’s beliefs, plans, objectives, expectations,
estimates, intentions and future outlook and anticipated events or
results. Although management considers these
assumptions to be reasonable based on information currently
available to it, they may prove to be incorrect.
Forward-looking statements made in this document
include, but are not limited to, statements with respect to: (i)
the amount of Mineral Reserves, Mineral Resources and exploration
targets; (ii) the estimated amount of future production over any
period; (iii) net present value and internal rates of return of the
mining operation; (iv) expectations and targets relating to
recovered grade, size distribution and quality of diamonds, average
ore recovery, internal dilution, mining dilution and other mining
parameters set out in the 2016 Technical Report as well as levels
of diamond breakage; (v) expectations, targets and forecasts
relating to gross revenues, operating cash flows and other revenue
metrics set out in the 2016 Technical Report, growth in diamond
sales, cost of sales, cash cost of production, gross margins
estimates, planned and projected diamond sales and capital
expenditures, liquidity and working capital requirements; (vi) mine
expansion potential and expected mine life; (vii) expected time
frames for completion of permitting and regulatory approvals
related to ongoing construction activities at the Renard
Diamond Mine; (viii) the expected time frames for the
completion of the open pit and underground mine at the Renard
Diamond Mine; (ix) the expected financial obligations or
costs incurred by Stornoway in connection with the ongoing
development of the Renard Diamond Mine; (x) mining, development,
production, processing and exploration rates, progress and plans,
as compared to schedule and budget; (xi) future exploration plans;
(xii) expectations concerning trends in the diamond industry and
future market prices for rough diamonds; (xiii) the economic
benefits of using liquefied natural gas rather than diesel for
power generation; (xiv) sources of and anticipated financing
requirements; (xv) the ability to meet Subject Diamonds Interest
delivery obligations under the Purchase and Sale Agreement; (xvii)
the foreign exchange rate between the US dollar and the Canadian
dollar; and (xvi) the anticipated benefits from recently approved
plant modification measures and the anticipated timeframe and
expected capital cost thereof. Any statements that express or
involve discussions with respect to predictions, expectations,
beliefs, plans, projections, objectives, assumptions or future
events or performance (often, but not always, using words or
phrases such as “expects”, “anticipates”, “plans”, “projects”,
“estimates”, “assumes”, “intends”, “strategy”, “goals”,
“objectives”, “schedule” or variations thereof or stating that
certain actions, events or results “may”, “could”, “would”, “might”
or “will” be taken, occur or be achieved, or the negative of any of
these terms and similar expressions) are not statements of
historical fact and may be forward-looking statements.
Forward-looking statements are made based upon
certain assumptions by Stornoway or its consultants and other
important factors that, if untrue, could cause the actual results,
performances or achievements of Stornoway to be materially
different from future results, performances or achievements
expressed or implied by such statements. Such statements and
information are based on numerous assumptions regarding present and
future business prospects and strategies and the environment in
which Stornoway will operate in the future, including the recovered
grade, size distribution and quality of diamonds, average ore
recovery, internal dilution, and levels of diamond breakage, the
price of diamonds, anticipated costs and Stornoway’s ability to
achieve its goals, anticipated financial performance, regulatory
developments, development plans, exploration, development and
mining activities and commitments, and the foreign exchange rate
between the US and Canadian dollars. Although management considers
its assumptions on such matters to be reasonable based on
information currently available to it, they may prove to be
incorrect. Certain important assumptions by Stornoway or its
consultants in making forward-looking statements include, but are
not limited to: (i) the accuracy of our estimates regarding capital
requirements and expenditures and estimated workforce requirements;
(ii) estimates of net present value and internal rates of return;
(iii) recovered grade, size distribution and quality of diamonds,
average ore recovery, internal dilution, mining dilution and other
mining parameters set out in the 2016 Technical Report as well as
levels of diamond breakage; (iv) successful mitigation of ongoing
issues of diamond breakage in the Renard Diamond Mine process plant
and realization of the anticipated benefits from plant modification
measures within the anticipated timeframe and expected capital
cost; (v) the stabilization of the Indian currency market and full
recovery of prices; (vi) receipt of regulatory approvals on
acceptable terms within commonly experienced time frames and
absence of adverse regulatory developments; (vii) anticipated
timelines for the development of an open pit and underground mine
at the Renard Diamond Mine; (viii) anticipated geological
formations; (ix) market prices for rough diamonds and market
acceptance of the Renard diamond production; (x) the timeline,
progress and costs of future exploration, development, production
and mining activities, plans, commitments and objectives; (xi) the
availability of any required future financing on favorable terms
and the satisfaction of all covenants and conditions precedent
relating to future funding commitments; (xii) the ability to meet
Subject Diamonds Interest delivery obligations under the Purchase
and Sale Agreement; (xiii) Stornoway’s interpretation of the
geological drill data collected and its potential impact on stated
Mineral Resources and mine life; (xiv) the Corporation’s ability to
meet its Subject Diamonds Interest delivery obligations under the
Purchase and Sale Agreement; (xv) the continued strength of the US
dollar against the Canadian dollar and absence of significant
variability in interest rates; and (xvi) absence of material
deterioration in general business and economic conditions.
By their very nature, forward-looking statements
involve inherent risks and uncertainties, both general and
specific, and risks exist that estimates, forecasts, projections
and other forward-looking statements will not be achieved or that
assumptions do not reflect future experience. We caution readers
not to place undue reliance on these forward- looking statements as
a number of important risk factors could cause the actual outcomes
to differ materially from the beliefs, plans, objectives,
expectations, anticipations, estimates, assumptions and intentions
expressed in such forward-looking statements. These risk factors
may be generally stated as the risk that the assumptions and
estimates expressed above do not occur, including the assumption in
many forward-looking statements that other forward-looking
statements will be correct, but specifically include, without
limitation: (i) risks relating to variations in the grade, size
distribution and quality of diamonds, kimberlite lithologies and
country rock content within the material identified as Mineral
Resources from that predicted; (ii) variations in rates of recovery
and levels of diamond breakage; (iii) the uncertainty as to whether
further exploration of exploration targets will result in the
targets being delineated as Mineral Resources; (iv) risks
associated with our dependence on the Renard Diamond Mine and the
limited operating history thereof; (v) unfavorable developments in
general economic conditions and world diamond markets; (vi)
variations in diamond valuations and fluctuations in diamond prices
from those assumed; (vii) insufficient demand and market acceptance
of our diamonds; (viii) risks associated with the production and
increased consumer demand for synthetic gem-quality diamonds; (ix)
risks relating to fluctuations in the Canadian dollar and other
currencies relative to the US dollar and variability in interest
rates; (x) inaccuracy of our estimates regarding future financing
and capital requirements and expenditures, significant additional
future capital needs and unavailability of additional financing and
access to capital, on reasonable terms, or at all; (xi)
uncertainties related to forecasts, costs and timing of the
Corporation’s future development plans, exploration, production and
mining activities; (xii) increases in the costs of proposed
capital, operating and sustainable capital expenditures; (xiii)
increases in financing costs or adverse changes to the terms of
available financing, if any; (xiv) tax rates or royalties being
greater than assumed; (xv) uncertainty of results of exploration in
areas of potential expansion of resources; (xvi) changes in
development or mining plans due to changes in other factors or
exploration results; (xvii) risks relating to the receipt of
regulatory approvals or the implementation of the existing Impact
and Benefits Agreement with aboriginal communities; (xviii) the
failure to secure and maintain skilled employees and maintain key
relationships with local communities and other stakeholders; (xix)
risks associated with ongoing issues of diamond breakage in the
Renard Diamond Mine process plant and the failure to realize the
anticipated benefits from plant modification measures within the
anticipated timeframe and expected capital cost, or at all; (xx)
the negative market effects of recent Indian demonetization and
continuous impact on pricing and demand; (xxi) the effects of
competition in the markets in which Stornoway operates; (xxii)
operational and infrastructure risks; (xxiii) execution risk
relating to the development of an operating mine at the Renard
Diamond Mine; (xiv) the Corporation being unable to meet its
Subject Diamonds Interest delivery obligations under the Purchase
and Sale Agreement; (xxv) future sales or issuances of common
shares lowering the share price and diluting the interest of
existing shareholders; (xxvi) the risk of failure of information
systems; (xxvii) the risk that our insurance does not cover all
potential risks; (xxviii) the risks associated with our substantial
indebtedness and the failure to meet our debt service obligations;
and (xxix) the additional risk factors described in Stornoway’s
annual and interim MD&A filed with the securities regulatory
authorities in Canada, available on SEDAR at www.sedar.com and on
the Corporation’s Website under the “Investors” section, its other
disclosure documents and Stornoway’s anticipation of and success in
managing the foregoing risks. Stornoway cautions that the foregoing
list of factors that may affect future results is not exhaustive
and new, unforeseeable risks may arise from time to time.
Non-IFRS Financial Measures
This document may refer to certain financial
measures, such as Adjusted EBITDA, Adjusted EBITDA Margin, Average
diamond price achieved, Cash Operating Cost per Tonne of Ore
Processed, Cash Operating Cost per Carat Recovered and Capital
Expenditures , which are not measures recognized under IFRS and do
not have a standardized meaning prescribed by IFRS.
“Adjusted EBITDA” and “Adjusted EBITDA Margin”
are used by management and investors to assess and measure the
underlying pre-tax operating performance of the Corporation and are
generally regarded by management as better measures to evaluate
performance trends. “Adjusted EBITDA” is defined as net income
(loss) before depreciation, interest and other financial (income)
expenses, and income tax, adjusted for impairment charges,
unrealized gains and losses related to the changes in fair value of
U.S. Denominated debt and other non-recurring or unusual items that
are not reflective of the Corporation’s underlying operating
performance and/or unlikely to occur on a regular basis. “Adjusted
EBITDA Margin” is the calculation of Adjusted EBITDA divided by
total revenues. “Average diamond price achieved” is a measure used
by the Corporation to measure the value of diamonds sold into the
market in the period, prior to adjustments to reflect the impact of
the stream. This measure is used by management and investors
as it reflects the average diamond price achieved during the period
and is more comparable to the average diamond price achieved by to
other diamond producers. Average diamond price achieved is
calculated based on reported revenues adjusted for the amortization
of deferred stream revenue, and remittances made to/from stream
participants and gains or losses from revenue hedging activities
divided by the number of carats sold in the period. “Cash
Operating Cost per Tonne Processed” and “Cash Operating Cost per
Carat Recovered” are used by management and investors to measure
the mine’s cash operating cost based on per tonne of ore processed
or per carat recovered. Cash Operating Cost Per Tonne Processed is
calculated based on reported operating expenses adjusted for the
impact of inventory variation, excluding depreciation, divided by
tonnes of ore processed for the period. Cash Operating Cost per
Carat Recovered is the total cash operating cost divided by carats
recovered. “Capital Expenditure” is the term used by the
Corporation and investors to describe capital expenditures incurred
during the period. This measure is used by management
and investors to measure the amount of capital spent by the
corporation on sustaining, margin improvement, and/or growth
capital projects in the period.
A photo accompanying this announcement is available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/4dc4689d-aade-4d81-91c8-74f853d0e335