Mountain Province reports $32.5 million diamond sale

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Mountain Province Diamonds Inc. [MPVD-TSX, NYSE] has announced the results of its first diamond sale of 2022, saying 181,851 carats were sold for $32.5 million. Adjusting for a mix of goods sold, this result represents a run-of-mine price of $124 per carat, the company said in a press release.

Aside from the diamond sale results, Mountain also released production forecasts as well as an operational update for its Gahcho Kue diamond mine in Canada’s Northwest Territories.

“With the strengthening of the rough diamond market that we saw through 2021, we expected the results of the first sale of the year to be favourable,” said Mountain Province President and CEO Mark Wall. “These sales results put us on a solid footing as we head into a pivotal year,” he said.

“The company’s 2022 guidance demonstrates that despite the risks, impacts and costs associated with the ongoing COVID-19 pandemic, the mine continues to generate positive free cash flow, enhanced further by the strong rough diamond market.”

According to the latest forecast, Mountain Province expects to recover 6.3 million to 6.7 million carats this year at a cost of $64 to $68 recovered

Meanwhile, following a declaration of an outbreak of COVID-19 at Gahcho Kue by the Office of the Chief of Public Health Officer in the N.W.T. on December 27, 2021, additional cases of COVID-19 have been detected, primarily during shift rotation, the company said.

Gahcho Kue has implemented heightened preventative measures on site, with production continuing with some impacts due to quarantine requirements. The company said it continues to manage the COVID-19 situation at site, and to engage with all stakeholders.

Mountain Province is a Canadian diamond mining company. In a joint venture with De Beers Ltd., it operates the world’s largest and richest new diamond mine – Gahcho Kue – located 280 kilometres northeast of Yellowknife.

Gahcho Kue is a fly-in-fly out operation and is expected to produce an average of 4.5 million carats per year (100%) over an initial 12-year lifespan.  Production during the first five years (2017 to 2021) was expected to average 5.4 million carats annually.

De Beers Canada has a 51% stake in the operation, with Mountain Province holding the other 49%.

In early 2021, the company reported an outbreak of COVID-19 at its Northwest Territories mine site, which resulted in the temporary suspension of production-related activities.

More recently, Mountain Province released details of a proposed balance sheet strengthening package that is expected to include the issuance of approximately US$50 million of new debt to an entity controlled by the company’s largest shareholder Dermot Desmond.

On December 29, 2021, the company said it has executed a non-binding term sheet with Desmond for the proposed package, which aims to provide the company with more financial flexibility

The diamond sales results and operational update were released after the close of trading on January 25, 2022, when Mountain Province shares rose 5.7% or $0.04 to 74 cents. The shares are currently trading in a 52-week range of 88 cents and 39.5 cents.

 


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