Owned by the Stornoway company, the Renard mine, near Chibougamau, sold 409,000 carats at an average price of US$143.19 (around C$182) per carat for its diamonds in the first quarter of 2022.
Gold Royalties Osisko, headquartered in Montreal, holds a diamond stream of 9.6% of production value at Renard. Exceptionally, Osisko reinvested the royalties in Stornoway in the form of a mezzanine loan until last April.
Osisko resumed collecting royalties from Renard on May 1. Eventually, it will receive around US$16 million per quarter, if the carat price stays above US$100.
In the first quarter, Osisko’s revenue reached C$50 million.
“Stornoway’s cost reductions, coupled with strengthening diamond prices, have enabled Renard to generate positive cash flow,” the company said in its financial report. Renard even repaid in full the amounts owing on the working capital facility of approximately CA4 million.
Stornoway still owes CA28.5 million to Osisko in a mezzanine loan that matures in 2025, with an option to extend the maturity to 2028.
Once a listed company, Stornoway was taken private in November 2019 when Osisko Gold Royalties and secured creditors converted their claims into shares of the new Renard mine owner. Small shareholders have suffered in the process. Stornoway was carrying debts of CA 300 million. The construction of the mine had cost 1 billion CA. At the time, forecasts were for a price of US$190 per carat. In 2018 and 2019, its price fell as low as C$108.
An improvement in the global diamond price was expected after 2020 following the closure of Rio Tinto’s Argyle mine in Australia, which has long been the largest in the world.
Osisko owns 35.1% of the shares of 11,272,420 Canada, a Longueuil corporation owned through a wholly-owned subsidiary of Renard. The other owners are Investissement Québec, the Caisse de depot and Triple Flag Mining.
The largest gold producer in Quebec, Osisko was created in 2014. It owns more than 165 royalties and metal streams in the Americas.