March 22, 2010 / 3:44 PM / 8 years ago

UPDATE 1-Stornoway sees higher margins from project; shares up

* Sees mine’s oper margin 70 pct vs prior est 55 pct

* Sees capex rising 66 pct, oper costs down 22 pct

* Shares up as much as 30 percent

March 22 (Reuters) - Stornoway Diamond Corp (SWY.TO) said an updated assessment of its Renard project showed the potential for higher operating margins on a six-fold rise in revenue from the diamond project and lower operating costs.

Shares of the diamond exploration and development company jumped as much as 30 percent to 65 Canadian cents, before paring some gains to trade at 61 Canadian cents Monday on the Toronto Stock Exchange.

The assessment showed an estimated 22 percent drop in its overall operating costs, while capital costs were seen rising 66 percent.

The resource base at the Renard diamond project in North Central Quebec increased three-fold, the study showed.

“As a consequence, we see Renard as a project with the potential to deliver a robust mining margin over a very long mine life,” Chief Executive Matt Manson said in a statement.

The new operating margin estimate for the mine is 70 percent, compared with its previous estimate of 55 percent in an assessment in December 2008, the company said in a statement.

The updated assessment now estimates a mine life of 25 years based on a production rate of 1.8 million tonnes per year with total diamond production of 30 million carats, at pre-production capital costs of C$511 million ($503.4 million).

The Renard diamond project is a 50:50 joint venture with Soquem Inc, a unit of Societe generale de financement du Quebec. ($1=1.015 Canadian Dollar) (Reporting by Aftab Ahmed; Editing by Maju Samuel)

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