Mountain Province Reports 26% Drop in Q3 Revenue on Lower Grade Ore, Tight Market Conditions
Mountain Province Diamonds Inc., releasing its financial and operating results for the quarter ended September 30, 2019, said that its Q3 revenue from sales declined by 26% due its carrying out to mining activity in the lower grade and quality areas as well as the continued tight market conditions.
"2019 was always going to be a difficult year in the Life of Mine Plan,” said Stuart Brown, Mountain Province President and CEO, while confirming that the company was confident going into Q4 2019 and was increasing its full year production guidance
The Company said it sold 791,252 carats at an average value of $ 69 per carat (US$ 52.5 per carat) for total proceeds of $ 54.8 million (US$ 41.6 million) in comparison to 788,842 carats sold at an average value of $ 95 per carat (US$ 72.5 per carat) for total proceeds of $ 74.9 million (US$ 57.2 million) in Q3 2018.
This was despite a 1% rise in ore mined and a 17% increase in ore treated during the period, Mountain Province said. It added that 1,528,494 carats were recovered at an average grade of 1.72 carats per tonne, 16% lower than comparable quarter (Q3 2018: 1,819,000 carats at 2.40 carats per tonne), and 12% lower than the previous quarter (Q2 2019: 1,730,147 carats at 1.96 carats per tonne).
While adjusted EBITDA amounted to $ 10.6 million ($ 37.9 million in Q3 2018), the loss from mine operations amounted to $ 6.1 million (earnings from mine operations $ 25.2 million in Q3 2018).
The company stated that the grade variance year-over-year was primarily due to the mining and processing of lower grade ore tonnes from the 5034 South West Corridor (SWC), in addition to larger volumes of ore tonnes mined and treated from the 5034 Center Lobe, which is the lowest grade part of the 5034 kimberlite.
It added that Q4 2019 is trending positively as access to higher grade blocks has been re-established with record carat production achieved in October.
Mountain Province President and CEO Stuart Brown commented: "With the exception of the grade for the most recent quarter, GK is performing to plan and all other mining and processing metrics are trending higher on a year over year basis. The GK mine has extracted 7% more total tonnes and the plant has treated 8% more tonnes than what was achieved in the same period last year. Q4 2019 is also trending positively, as access to the higher-grade blocks of the orebody has been re-established.”
He also said that, the Company's diamond sales were in line with expectations considering the expected poorer product mix; which he described as “a creditable performance given the challenging rough diamond market”.
Brown added, “The rough diamond market remains tight. The Company's medium to long-term view of the market remains positive. The major producers have seen reduced levels of sales in their recent rough diamond sales events and this, together with the closure of older mines, should have a positive effect on the supply side of the market in 2020 and beyond and should help to restore confidence across the diamond pipeline. At Mountain Province Diamonds, the focus of our efforts will be the continuous improvement of our operations and maximizing free cash flow generation."
The Company increased its full year 2019 production guidance from 3.2 – 3.3 million tonnes processed to 3.3 – 3.4 million tonnes processed and narrowed its full year 2019 production guidance from 6.6 – 6.9 million carats to 6.7 – 6.8 million carats (100% basis).