On the back of a positive feasibility study for the Gahcho Ku 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.
Gahcho Ku is owned 49% by Mountain Province and the rest 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 Ku hosts an open-pittable reserve of 31.3 million tonnes grading 1.57 carats 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 72.1 million shares outstanding.
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