On the back of a positive feasibility study for the Gahcho Kué diamond project in Canada’s Northwest Territories, Mountain Province Diamonds (mpv-t, mdm-x) is looking to raise $23 million.
The company entered into an agreement with Wellington West Capital Markets to place 2 million shares priced at $5 on a best efforts basis to raise $10 million. Concurrent with the offering, Mountain Province is carrying out a non-brokered private placement at the same price for proceeds of $13 million.
The Gahcho Kué diamond project is owned 49% by Mountain Province and 51% by De Beers Canada. The final draft of an independently completed project feasibility study was delivered to the partners in September this year.
The feasibility study, completed at a cost of $10 million, provides a detailed cost estimate for the finalized project description. The study suggests the project can support a proposed open-pit mine life of 11 years, based on an average annual production of 4.5 million carats. The diamonds are expected to command an average price of US$102 per carat.
Initial capital costs total $599 million, including $49 million in working capital, while operating costs come in at $49 per tonne. The project’s after-tax internal rate of return, including sunk costs, is estimated to be 20.7%.
“As the internal rate of return surpasses the minimum 15% defined in the joint venture agreement between Mountain Province and De Beers Canada, the partners are now required to support a decision to build,” Patrick Evans, chief executive officer of Mountain Province, stated in a recent message to shareholders. “Our focus now turns to permitting and financing.”
Gahcho Kué hosts an open-pittable mineral reserve of 31.3 million tonnes grading 1.57 carat per tonne, equivalent to 49 million carats.
Mountain Province is trading around the $5-level in a 52-week range of $2.02-5.55 and has roughly 72.1 million shares outstanding.
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