Mountain Province sells diamonds; poised for 157-carat Polaris diamond sale

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Mountain Province Diamonds Inc. [MPVD-TSX, NYSE] on Monday January 25 announced the results of its latest diamond sale in Antwerp, Belgium, which closed on January 22, 2021.

In this sale, 241,827 carats were sold for total proceeds of $27.8 million (US$21.8 million), resulting in an average value of $115 million per carat (US$90 per carat).

“The first sale of the year was excellent, the growing confidence amongst rough diamond buyers translated into a healthy price improvement of 8% on a like for like basis when compared to our record high volume December sale,” said Mountain Province President and CEO Stuart Brown.

“We expect to see a continuation of the positive trend as rough and polished markets continue to strengthen post a successful retail season,” Brown said.

“Looking ahead, our upcoming February sale will also include, amongst other high value diamonds, the recently recovered 157-carat diamond. Named “Polaris” after the North Star, this exceptional diamond exhibits a rare natural blue fluorescence that echoes its Arctic origins.”

The Polaris diamond appears colourless in daylight, but under ultraviolet light its deep blue colour, as pictured, is reminiscent of the northern lights seen overhead on clear winter nights in the Canadian Arctic.

Mountain Province shares reacted by rising 2.9% or $0.02 to $0.70 on volume of 562,188. The shares are trading in a 52-week range of $1.21 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 – located in Canada’s Northwest Territories.

Gahcho Kue is a fly-in-fly out operation located 280 kilometres northeast of Yellowknife 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 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 the second quarter of 2020 were heavily impacted by COVID-19 headwinds and associated global migration efforts to slow down the spread of the virus.

The severe impact of COVID-19 meant that the market for rough diamonds came to a virtual halt in the second quarter and the company was unable to execute any 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.

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