Mountain Province Says Gahcho Kué Production and Sales for Q2 2019 are in Line With Expectations
Mountain Province Diamonds Inc. announcing production and sales results for the second quarter ended June 30, 2019 (Q2 2019) from the Gahcho Kué Diamond Mine (GK Mine) reported that a total of 10,865,263 tonnes were mined, representing a 6% increase compared to the same period for the previous year.
Of this, 882,374 tonnes of ore were treated -- a 2% decrease compared Q2 2018 when 899,000 tonnes were treated. A total of 1,730,147 carats were recovered in Q2 2019 at an average grade of 1.96 carats per tonne, marking a decrease of 10% compared to the same period in the previous year (Q2 2018: 1,930,500 carats and 2.15 carats per tonne).
“The grade variance year over year is mainly a function of mining lower grade ore tonnes in Q2 2019 from Hearne and SWC Kimberlites in comparison to higher grades from the 5034 Kimberlite in Q2 2018,” Mountain Province explained. “In addition, the ongoing plant enhancement modifications and size frequency optimisation result in the removal of the very small, lowest value diamonds from the recovery process further contributing, as expected, to fewer carats recovered.”
Mountain Province noted that production results were in line with the Company's expectations; and though the total carats recovered and the grade in Q2 2019 were lower than the same period last year, the figures were yet ahead of plan.
In terms of sales, 1,077,730 carats were sold 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), as compared to 1,113,724 carats sold at an average value of C$ 89 per carat (US$ 69 per carat) for total proceeds of C$ 99.1 million (US$ 76.8 million) in Q2 2018.
“It is important to note that the majority of the carats sold in Q2 2019 were from the Hearne and SWC kimberlites as per plan, which contain lower average values per carat than the 5034 ore body, that made up most of the production in the previous year,” the Company pointed out.
The Company also reported that at its Q2 2019 sales, values for the larger (greater than 5 carats), better quality diamonds that contribute the majority of the Company's revenue, remained stable. However, values for smaller diamonds and lower quality categories “have again come under pressure”, Mountain Province underlined.
Further, Mountain Province stated: “The Company's sales results in Q2 2019, and year over year value per carat performance demonstrate that the plant process changes are having a positive impact on the average value of the diamonds recovered. Considering that lower quality ore was being mined during Q2 2019 in comparison to Q2 2018, and in addition to a softer diamond market year over year, achieving similar average values per carat in Q2 2019 is very encouraging. The Company and its JV Partner, De Beers Canada, continue to implement these changes and expect full completion by early Q2 2020. Therefore, the Company is well positioned for 2020 and beyond, as it plans to mine larger percentages of the 5034 Kimberlite.”
Stuart Brown, the Company's President and Chief Executive Officer, commented: "We have completed the first half of the 2019 financial year ahead of expectations and seen continued improvement in production through the first half of 2019.”
Commenting on the current market scenario, Brown said: “As widely reported by various diamond producers and industry commentators, the rough diamond market is challenging at present, and we expect to see continued volatility in the market for rough diamonds in the near term. Despite the current market conditions, we are pleased to see our diamonds selling consistently at competitive prices. With lower volumes being sold into the rough market of late, and the relatively positive retail sales reported, we expect to see price stability over the coming months. We remain on track to achieve our 2019 forecast of 3.3 – 3.45 million carats (our 49% share of the full production) recovered, and look forward to updating the market further as we deliver on our milestones for the rest of 2019 and beyond."