Junior miner Stornoway Diamond Corp, the owner and operator of the Renard mine in Quebec, has extended the deadline for bid submissions for a buyer or major investor by two months to September 16.

This comes as the company, which is relying on bridging finance to operate, has failed to receive an acceptable nonbinding indication of interest by its initial deadline of July 15.

Stornoway in June launched a formal sale and investment solicitation process (SISP) to seek out proposals for a restructuring transaction. The SISP is a condition to a bridge financing agreement that Stornoway entered into with Diaquem, an affiliate of Investissement Québec. Should the SISP fail to secure a qualified indication of interest by mid-September, it would constitute an event of default under the bridge financing agreement.

Like many other junior diamond miners, Stornoway has endured turbulent times amid an unfavourable market for its diamonds and needs to restructure to continue to operate. In the current diamond market price conditions, the company’s forecast cash flows will not be sufficient to meet its obligations, commitments and budgeted expenditures through June 30, 2020.

The diamond miner said in its second-quarter results announcement that the bridge lenders had indicated that they remained committed to continue collaborating with the company to arrive at a solution to secure the long-term financial viability of the business.

For the quarter under review, Stornoway reported a net loss of C$346.3-million, compared with the comparative quarter’s loss of C$35.9-million. The wider loss is mainly owing to a noncash impairment charge of C$442.7-million.

For the second quarter, the adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda), which adjusts for the noncash charges and is a good proxy of the cash flow and business profitability, stood at C$13.1-million, a significant increase on the comparative quarter’s adjusted Ebitda of C$1.6-million.

Revenue during the three months ended June 30 totalled C$189.4-million, compared with C$56.9-million a year earlier. Revenue is made up of cash sales of C$40.7-million and noncash revenue of C$148.7-million.

Two tender sales were completed in the second quarter for a total of 460 832 ct sold. During the quarter, revenue recognised was derived from 386 459 run-of-mine carats and 74 373 supplemental carats that were sold for gross proceeds of C$46.8-million at an average price of $76/ct. The achieved pricing represents a decrease of 9% compared to the first quarter of 2019, attributable to weak market conditions.

The miner pointed out that its average pricing achieved in 2018 was $93/ct, compared with $147/ct in the 2014 independent prefinancing evaluation of diamonds recovered during the bulk sampling of the Renard 2 and Renard 3 kimberlites.

“The diamond market continued to show significant weakness, with average prices further declining from already low levels. However, our operation was able to generate significant reductions in capital expenditures and cash operating cost, in great part attributable to the cost reduction initiatives we announced during the second quarter,” said CEO Patrick Godin.

“I am extremely proud of all our employees, contractors and suppliers for their dedicated efforts in generating further production and cost efficiencies. I am very thankful for their strong support and commitment. We also appreciate the support of the bridge lenders, providing us the runway to work on a sustainable solution for the operations.”