Mountain Province sees ‘positive momentum’ in battered diamond market

Since resuming regular diamond tenders in September, Mountain Province Diamonds (TSX: MPVD) has seen prices for its goods start to rise.

In fact, the diamond junior, which owns a 49% stake in the Gahcho Kué mine in the Northwest Territories, says its Oct. 30 sale in Antwerp was its largest open market sale to date, setting a new record in terms of both value and volume.

The record sale follows a near total closure in the diamond market in the spring due to the Covid-19 pandemic and related travel restrictions.

The October sale – its second regular commercial sale since the beginning of the pandemic – brought in $45.7 million from 559,528 carats sold at an average realized diamond price of US$61 per carat.

That compares with third-quarter sales for the period ended Sept. 30 of 956,000 carats at an average realized price of US$37 per carat. (In the third quarter of 2019, Mountain Province sold 791,000 carats at an average of US$53 per carat.)

“After a sustained period of negative news with respect to the diamond industry and dealing with the impact of the Covid-19 pandemic, we are pleased to see that the market for rough diamonds is starting to show some positive momentum,” said Stuart Brown, Mountain Province’s president and chief executive, in a statement.

“In the third quarter, we have seen prices recovering close to pre-Covid levels from the lows seen during the peak of the pandemic. Although demand for rough diamonds is not yet back to pre-Covid-19 levels, the low amount of supply coming into the market has helped raise industry confidence levels which has been a driving factor impacting demand and rough prices during the quarter.”

Mountain Province reported a net loss of $6.5 million for the quarter on revenues of $47.3 million, compared to a net loss of $25.8 million in the same period of last year on revenues of $54.8 million.

About 75% of the company’s third-quarter revenues came from its sales agreement with Dunebridge Worldwide, instituted in June. The company has now used US$49.4 million of the US$100-million agreement, which is good through the end of 2020, and applies only to stones under 10.8 carats.

Gahcho Kue is operated by Mountain Province’s 51% partner De Beers. For the quarter, 1.8 million carats were recovered at an average grade of 2.19 carats per tonne, up 17% from the 1.5 million carats recovered at a grade of 1.71 carats per tonne in last year’s comparable quarter. Total tonnes mined decreased by 16% to 9.9 million tonnes.

The mine is expected to produce 6.3-6.4 million carats (on a 100% basis) in 2020 at cash costs of $100 to $110 per tonne.

— This article first appeared in the Canadian Mining Journal, part of Glacier Resource Innovation Group.