Mountain Province Gets Boost from Canadian Dollar as Sales Dip in Q2

Mining and Exploration
08/08/2019 10:57

Mountain Province Diamonds reported a decline in carats recovered and sales in Q2 2019, but the miner's profit rose 61% to C$10.3 million (US$7.8 million) via foreign exchange gains resulting from the relative strengthening of the Canadian dollar versus US dollar. Mountain Province achieved production targets for the quarter and was ahead of plan at the end of the first half of the year despite a “very difficult rough diamond market”.

The Canadian miner sold 1,077,730 carats from their Gahcho Kué deposit at an average value of C$89 per carat (US$ 67 per carat) for total proceeds of C$95.8 million (US$71.7 million), representing a 7% decline from the C$99.1 million (US$ 76.8 million) earned in Q2 2018 from the sale of 1,113,724 carats at an average value of C$89 per carat (US$69 per carat) as the miner sold rough from the lower-quality portion of the mine, it stated.

"Our financial results are also slightly ahead of our expectations for the first half supported by the ongoing success of our 2019 strategic milestones and operational initiatives put in place prior to the start of the year," said Mountain Province President and CEO Stuart Brown. “The Company's diamond sales were also marginally ahead of expectations due to a better product mix and despite the lower quality and grade ore feed. The rough diamond market continues to present challenges, and we expect to see continued volatility in the market for rough diamonds in the near term." Overall, Mountain Province completed five sales during H1 2019 through Bonas tender house in Antwerp where it saw continued pressure on prices in the smaller, cheaper rough categories. Prices for the larger, better-quality product categories that contribute the majority of the Company's sales value remained stable through the second quarter after gains made earlier in the year.

In the first six months of 2019, the Company recovered 3,314,699 carats at an average grade of 1.89 carats per tonne, 7% and 10% lower than in the comparable period respectively (H1 2018: 3,571,510 carats and 2.12 carats per tonne). For H1 2019, total sales revenue stood at C$156 million (US$ 118 million) compared to C$165 million in 2018 (US$ 129 million) at an average realized value of C$ 9 per carat (US$ 68) 2018: C$101 per carat (US$79). CEO Brown said, "We will focus our efforts to maintain our production at the lower end of our cost guidance and will continue to improve the cash generated at every opportunity.  We remain on track to achieve our 2019 forecast of 3.3 – 3.45 million carats (our 49% share of the full production) recovered."

Mountain Province recovered 1,730,147 carats in Q2 at an average grade of 1.96 carats per tonne, 10% lower than comparable quarter (Q2 2018: 1,930,500 carats at 2.15 carats per tonne), which was mainly a function of mining lower grade ore and ongoing plant modifications which resulted in the removal of the very small, lowest value diamonds from the recovery process further contributing to fewer carats recovered. The company owns 49% of the Gahcho Kué mine, with De Beers holding the remaining 51%.