Stornoway Diamond (SWY.TO) has released a new mine plan for its diamond mine in Canada. There is a 25% increase in the probable mineral reserves which increases the total resources that the 22.3 million carats which increases the mine life for 11 years to 14 years. This also means the average production rate will increase from 1.6 million carats per year to 1.8 million carats per year, which should have a positive impact on the annual cash flows of the company.
The company still expects to start production in September of this year and the construction cost of the mind will remain within budget. The initial capital expenditures were estimated at $775 million and the after-tax NPV discounted by discount rate of 7% is expected to be almost C$1 billion. Based on the average operating cost of less than C$85 per carat and the sales price in excess of C$200 per carat, the operating margin of this mine will be pretty impressive.
Go to Stornoway’s website
The author has no position in Stornoway Diamond. Please read the disclaimer
