Fancies & Specials Boost Mountain Province's 2nd Sale of 2018, Eyes Dividend

Mining and Exploration
16/03/2018 10:10

At its recently completed second diamond sale of 2018 in Antwerp, Mountain Province Diamonds (MPD) realized a value per carat of US$142, the highest achieved by Mountain Province in any tender sale to date, with total proceeds of US$25.1 million on approximately 177,000 carats sold. While the number of carats sold amounted to approximately half of the amount sold at the first sale of 2018, (351,000 carats), total revenues declined by only US$2 million as a result of a large number of fancies and specials included in this tender. MPD explains that the average value of US$142 per carat reflects in part the deferral into this sale of half of the fancies and specials from the last production split of 2017, as well as an acceleration into this sale of certain fancies and specials that would otherwise have been scheduled for Sale 3. As a result, the value per carat realized in Sale 3 is expected to be lower than typical. 

They note that customer sentiment in this second tender remained positive, with 192 companies attending the tender and an average of 14.2 bids received per lot. Not including the fancies and specials, MPD noted that, "pricing remained stable, with increases generally in the low single digits over the preceding sale." Reid Mackie, MPD's Vice President of Diamond Marketing said, "These results demonstrate that, over the past year, our customer base has successfully optimized their approach to the polishing and marketing of Gahcho Kué large gem goods. Our customers’ willingness to competitively bid for these goods at our tenders provides important validation of our efforts to acquire these stones.”

David Whittle, MPD's Interim President and CEO, added, “We are very pleased with the total proceeds and average value per carat yielded by this sale, which substantially beat our expectations. This strong performance reflects an encouraging start to the year for rough diamonds across all categories, as well as the quality of the fancies and specials on offer." Commenting on the fact that volume of ore processed in February fell to 217,00 tons from 327,000 tons, leading to a decline in carats recovered from 618,000 to 444,000 for a carat grade of 2.05 cpt, Whittle said volumes were, "affected by the replacement of a conveyor belt, which has since been completed and is not anticipated to impact full-year production guidance.” He further stated that their strategy is to return value to the shareholders by, "distributing available cash flow in a prudent manner in the form of dividends. With modest overheads and capital expenditure requirements, the Company’s goal is to initiate a dividend policy during this 2018 year."