Mountain Province Diamonds Inc. [MPVD-TSX, NYSE] says results of its latest diamond sale are an indication that confidence is returning to the rough diamond market.
In the latest sale in Antwerp, Belgium, which closed October 30, 2020, Mountain Province said 559,528 carats were sold for total proceeds of $45.7 million (US$34.3 million). That resulted in an average value of $81/carat (US$61), the company’s second commercial diamond sale since the start of the pandemic. “This is also the company’s largest open-market sale to date, a record in both volume and value terms; this shows confidence is returning to the rough diamond market,” Mountain Province said in a press release.
Mountain Province shares reacted by rising 10% or $0.035 to $0.385 in light trading volume. Shares are trading in a 52-week range of $1.29 and 25 cents.
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 – in the Northwest Territories.
Gahcho Kue is a fly-in/fly-out operation located 280 km northeast of Yellowknife and is expected to produce an average of 4.5 million carats/year (100%) over an initial 12-year lifespan. Production during the first five years (2017 to 2021) is expected to average 5.4 million carats annually.
De Beers Canada has a 51% stake in the operation with Mountain Province holding 49%.
Mountain Province’s largest shareholder, Dermot Desmond, recently agreed to refinance the company’s US$25 million maturing revolving credit line after its financial and operational results in Q2 2020 were heavily impacted by COVID-19 that meant the market for rough diamonds came to a virtual halt in Q2 and the company was unable to execute normal sales.
The solution to the recently liquidity problems also included an increase from US$50 million to US$100 million in the sales capacity under a previous diamond sales agreement between the company and subsidiaries of Dunebridge Worldwide Ltd.
The aim was to allow the company to continue selling its run-of-mine diamonds (below 10.8 carats) at the prevailing market price, and potentially share in the future upside should the traditional sales channels for rough diamonds remain closed or subdued.