Gahcho Kué delivers fancies, large stones

Partners Mountain Province Diamonds (TSX: MPVD; NASDAQ: MPVD) and De Beers seem to be finding their stride at the Gahcho Kué mine, in the Northwest Territories.

Mountain Province owns a 49% stake in the open pit mine, while De Beers is the majority owner and operator.

The partners are in the early stages of making changes in the plant that will allow them to recover larger and higher quality diamonds at a faster pace. Those changes, which will result in a slightly lower recovered grade, include an increase in sieve sizes to increase tonnes treated.

“The main objective of this initiative is to increase revenue per hour generated in the plant by eliminating lower quality and smaller stones in the early stages of treatment. The benefits of the changes are starting to be seen in the value of the production sold,” the company said in a news release.

The mine is expected to produce 6.6-6.9 million carats this year, with Mountain Province’s share being a targeted 3.3-3.45 million carats.

In the first quarter, Mountain Province reported net earnings of $2.5 million on revenues of $60.7 million from sales of 643,739 carats. Prices for the quarter averaged US$71 per carat compared to US$99 per carat in the first quarter of 2018.

In February, Mountain Province sold an exceptional quality, 60.59-carat fancy vivid yellow stone recovered from Gahcho Kué last October. In the same sale, the company also had more than 50 other large, high-quality white and fancy coloured diamonds.

Last year Mountain Province sold more than 400 diamonds larger than 10.8 carats.

Mountain Province also recently released an updated resource for its Faraday 2 kimberlite, which is adjacent to Gahcho Kué. The kimberlite holds 5.5 million carats in 2 million inferred tonnes of kimberlite grading 2.63 carats per tonne. The average value of the diamonds was estimated at US$140 per carat.

Haywood Capital Markets mining analyst Geordie Mark has a buy rating on Mountain Province with a price target of $4.80. The stock was trading at $1.33 at press time.

–This article originally appeared in the June 2019 issue of Diamonds in Canada magazine.