Mountain Province Diamonds Inc. said its second diamond sale of 2018 of approximately 177,000 carats raised $25.1 million, with a price per carat of $142 which is the highest achieved by Mountain Province in any tender sale to date.
The price per carat of $142 "reflects in part the deferral into this sale of half of the fancies and specials from the last production split of 2017, plus an acceleration into this sale of certain fancies and specials that would otherwise have been scheduled for Sale 3. Because of this acceleration, the value per carat realized in Sale 3 is expected to be lower than typical, though the normalized value per carat figure will adjust for the acceleration impact," the miner said.
Customer sentiment in the second sale remained positive, with 192 companies attending the tender and an average of 14.2 bids received per lot. Pricing remained stable, with increases generally in the low single digits over the preceding sale, it added.
Reid Mackie, the company’s Vice President for Diamond Marketing, said: “Our product offering this tender was heavily weighted towards fancies and specials, with a record number of stones contributing over 50% by value and driving our highest average value per carat achieved to date. These results demonstrate that, over the past year, our customer base has successfully optimized their approach to the polishing and marketing of Gahcho Kué large gem goods. Our customers’ willingness to competitively bid for these goods at our tenders provides important validation of our efforts to acquire these stones.”
David Whittle, the company’s Interim President and Chief Executive Officer, commented: “We are very pleased with the total proceeds and average value per carat yielded by this sale, which substantially beat our expectations. This strong performance reflects an encouraging start to the year for rough diamonds across all categories, as well as the quality of the fancies and specials on offer. Operationally, February tonnes processed were affected by the replacement of a conveyor belt, which has since been completed and is not anticipated to impact full-year production guidance.
“Mountain Province, in its short operating life, is already demonstrating its strong margins and cashflow generating capability. The Board confirms its corporate strategy of returning value to the shareholders by distributing available cash flow in a prudent manner in the form of dividends. With modest overheads and capital expenditure requirements, the Company’s goal is to initiate a dividend policy during this 2018 year. The specifics of the policy are expected to be established within the coming months as rough diamond price trends are confirmed, and in conjunction with determining the allocation of capital to the callable component of the Company’s senior notes.
“In addition, the Board confirms its corporate strategy of focusing on the long-term development of the Gahcho Kué asset. The Board firmly believes that the proposed Kennady Diamonds transaction will add significant project value through the potential to access defined kimberlite resources, with the potential to smooth out the existing Gahcho Kué mine plan and substantially increase mine life, allowing the company to sustain its dividend policy for the long term.”