TORONTO and NEW YORK, August 9,
2017 /PRNewswire/ --
Shares Issued and Outstanding:
160,233,833
TSX and NASDAQ: MPVD
Mountain Province Diamonds Inc. ("Mountain Province", the "Company") (TSX and
NASDAQ: MPVD) today announces the results for the quarter ended
June 30, 2017.
Highlights for 2017 and to date
(All quoted figures in CAD$ unless indicated otherwise)
- For the three months ended June 30,
2017, the Company reported a net income of $7.6 million or $0.05 per share. The Company conducted two
diamond sales during the quarter of which only the second sale,
which took place in June, was reported in the statement of
comprehensive income. The proceeds from the first sale in the
quarter were credited against the mine construction costs as those
diamonds sold were recovered prior to the mine declaring commercial
production.
- Mining of overburden, waste rock and ore in the 5034 open pit
for the six months ended June 30,
2017 was approximately 16.1 million tonnes. Ore mined
in the first six months totalled 1,551,000 tonnes, with
approximately 395,600 tonnes of ore stockpiled at period-end on a
100% basis.
- For the six months ended June 30,
2017, the Gahcho Kué ("GK") Mine treated approximately
1,258,600 tonnes of ore through the process plant and recovered
approximately 2,481,200 carats on a 100% basis for an average grade
of approximately 1.97 carats/tonne. This recovered grade is
approximately 20% above budget for the six months ended
June 30, 2017. The Company's
attributable share of diamond production for the three months ended
June 30, 2017 was approximately
790,900 carats, and 1,215,800 carats for the six months ended
June 30, 2017. Production in the
second quarter was 86% higher than the first quarter, reflecting
the achievement of commercial production effective March 1, 2017.
- In the six months ended June 30,
2017, the Company conducted five sales through its diamond
broker based in Antwerp, Belgium
for a total of approximately 892,000 carats, which included fancies
and specials. Proceeds of approximately US$71.5 million or an average of US$80 per carat were received.
- Gem and near-gem diamonds for the six months ended June 30, 2017 contributed approximately 96% of
the diamond sales proceeds at an average price of US$128 per carat. The remaining 4% of
proceeds came from industrial diamonds at an average price of
US$7 per carat. Gem and
near-gem diamonds represented approximately 60% of sales by volume
to June 30, 2017.
- Subsequent to quarter end, on July 20,
2017, the Company closed its sixth and largest sale to date
at an average realized price of US$72
per carat. Certain of the fancies and specials from this assortment
were accelerated and sold in the fifth sale in June, and including
the value of these diamonds the average realized price on the sixth
sale assortment was US$87 per carat.
This sale confirmed the continued strong market interest in the
Gahcho Kué production, with 10.6 bids received per parcel and 83%
of winning bidders being repeat customers.
- Participation at the Company's sales has steadily increased in
recent months. Bids per parcel (approx. 120 parcels per sale)
increased from an average of 9.1 over the first three sales to 10.8
over the last three sales. There is a high level of market
interest and competition for Gahcho Kué diamonds with an average of
100 companies bidding each sale.
- The Company has increased 2017 production guidance on a 100%
basis by 25% to 5.5 million carats recovered (2.7 million
carats on a 49% basis) from 4.4 million carats previously (2.2
million carats on a 49% basis). Guidance on carats sold for
full-year 2017 has accordingly been increased by 20% to 2.4 million
carats from 2.0 million previously.
Financial Summary
For the three and six months ended June
30, 2017, the Company reported a net income of $7.6 million or $0.05 per share, and $5.4
million or $0.03 earnings per
share, respectively.
The Company undertook five sales of diamonds during the first
half 2017 through its broker in Antwerp,
Belgium, and a sixth sale was completed in July.
Although the GK Mine declared commercial production on
March 1st, the first four
sales have been recorded against the mine construction costs rather
than as revenue on the Company's statement of comprehensive income
as those diamonds sold were all recovered prior to the mine
declaring commercial production.
The following table summarizes the results of each sale:
000's of carats sold Gross proceeds (US$) Revenue/carat (US$)
Sale 1[1] 96 $ 6,423 $ 67
Sale 2 231 $ 16,484 $ 71
Sale 3[2] 195 $ 14,794 $ 76
Total Q1[3] 522 $ 37,701 $ 72
000's of carats sold Gross proceeds (US$) Revenue/carat (US$)
Sale 4[4] 148 $ 12,729 $ 86
Sale 5[5] & [6] 222 $ 21,118 $ 95
Total Q2 370 $ 33,847 $ 91
Total year to date 892 $ 71,548 $ 80
000's of carats sold Gross proceeds (US$) Revenue/carat (US$)
Sale 6[6] 290 $ 20,952 $ 72
Total Q3 290 $ 20,952 $ 72
(1) Assuming the diamonds withdrawn were sold in sale 1
instead of sale 2.
(2) Although the diamond sale closed on March 29, 2017, US$13.7
million of the proceeds reflecting the sale of 194,000
carats was received during the first week of April.
(3) Although 522,000 carats were sold, in accordance with IFRS
only 416,000 carats could be recognized as sales proceeds in the
quarter. The remaining 106,000 carats have been recognized
subsequent to the quarter end. The portion of sales proceeds
related to the 106,000 carats is approximately US$7.1 million of the US$37.7 million above.
(4) Sold carats were produced in the period before declaration
of commercial production, therefore were recorded against the
property, plant and equipment in accordance with IFRS.
(5) Sale 5 represents the first sale of diamonds produced
after the declaration of commercial production on March 1, 2017, and therefore has been recorded as
revenue on the statement of comprehensive income. Although
222,000 carats were sold, in accordance with IFRS only 215,000
carats could be recognized as sales proceeds in the quarter.
The remaining 7,000 carats have been recognized subsequent to the
quarter end. The portion of sales proceeds related to the
7,000 carats is approximately US$0.2
million of the US$21.1 million
above.
(6) A selection of fancies and specials from the assortment
slated for Sale 6 were accelerated and sold in Sale 5. Adjusting
for the effects of this acceleration, the revenue per carat for
Sale 5 would have been US$75 and for
Sale 6 would have been US$87.
At June 30, 2017, the Company had
drawn US$357 million of its
US$370 million project lending
facility and had cash and restricted cash totalling $101.4 million.
Financial Highlights
Three months Three months Six months Six months
ended ended ended ended
(in millions of Canadian dollars, June 30, June 30, June 30, June 30,
except where otherwise noted) 2017 2016 2017 2016
Sales $ 27,648 - 27,648 -
000's
Carats sold carats 215 - 215 -
Average price per
carat sold $/carat 129 - 129 -
Cost of sales per carat* $/carat 75 75
Earnings from mine
operations per carat $ 54 - 54 -
Earnings from mine operations % 42% - 42% -
Selling, general and
administrative expenses $ 4,116 1,204 7,544 2,372
Operating income (loss) $ 7,663 (1,204) 4,235 (2,372)
Net income (loss) and
comprehensive income (loss) $ 7,554 (352) 5,410 18,491
Basic and diluted
earnings (loss) per share $ 0.05 (0.00) 0.03 0.12
*This cost of sales per carat includes the cost of acquiring 51%
of the fancies and specials which have been sold, after having been
won in a tendering process with De Beers.
Mountain Province Interim President and CEO David Whittle commented: "Mine operations have
performed well with the declaration of commercial production at the
beginning of March. The diamond recovery plant has been
running at and above nameplate capacity, and the on-site safety
record is commendable. Price realization remains a challenge
as rough diamond markets, while showing some signs of strengthening
in recent months, nonetheless continue to be under pressure and are
expected to be relatively flat through the balance of the
year. However, on a revenue per tonne basis the mine has
performed well, bolstered by a solid overperformance in grade as
compared to original plan. The operating cost structure is
also solidly in line with plan as well. Our ability to
generate a 43% gross margin on mine operations in our first quarter
of reported results, in spite of the challenges in the rough
diamond markets, speaks well to the resiliency of the GK
Mine. And with that grade performance, we are able to
increase our production guidance for full-year 2017 to 2.7 million
carats, from a previous guidance level of 2.2 million carats."
At June 30, 2017, the Company is
subject to maintaining a cash call reserve account balance of
approximately US$27.9 million under
its project lending facility. On March
27, 2017, the lenders provided a waiver whereby funding of
the amount was deferred to May 31,
2017. On May 31, 2017,
the Company received an additional waiver extension to August 31, 2017. Despite encouraging recent
operating and sales results, the Company expects to require further
waivers in respect of other reserve account funding requirements
during 2017. The Company is in active discussions with its
lending group to defer and realign the reserve account funding
requirements to reflect current market conditions. With the
benefit of additional operating and sales results, and subject to
continued improvements on both fronts, the Company expects to
conclude the realignment of the reserve account funding schedule by
late 2017. Subject to agreement between the Company and
lenders, the $65 million cost overrun
account in restricted funds in treasury could be used to support
reserve account funding. While good progress is being made,
there are no assurances that the lenders will accommodate further
waivers or amendments the Company may seek.
Conference Call
The Company will host a second quarter earnings conference call
for analysts and investors on Thursday,
August 10, 2017, at 11:00 a.m.
Eastern Time. This call may be accessed by calling
1-844-241-0551 toll free in North
America, or 1-647-427-3415 from international locations,
with conference ID 65049251. A telephonic replay of the
conference call will be available from two hours after the
completion of the call until August 18,
2017 and is also available on the Company's website.
Mountain Province Diamonds is a 49% participant with
De Beers Canada in the Gahcho Kué diamond mine located in
Canada's Northwest
Territories. Gahcho Kué is the world's largest new diamond
mine and projected to produce an average of 4.5 million carats a
year over a 12-year mine life.
The Gahcho Kué Diamond Mine consists of a cluster of four
diamondiferous kimberlites, three of which are being developed and
mined under the current mine plan.
Qualified Person
This news release has been prepared under the supervision of
Carl G. Verley, P.Geo., who serves
as the qualified person under National Instrument 43-101.
Forward-Looking Statements
Cautionary Statement: This news release contains
forward-looking statements under applicable Canadian
and US securities regulations and legislation in which
Mountain Province discusses its
potential future performance. Forward-looking
statements are all statements other than statements of
historical facts, such as projections or expectations relating to
ore grades and processing rates, production and sales volumes, cash
costs, operating cash flows, capital expenditures, debt management
initiatives, exploration efforts and results, development and
production activities and costs, liquidity, tax rates, the impact
of diamond price changes, reserve estimates, and future dividend
payments. The words "anticipates," "may," "can,"
"plans," "believes," "estimates," "expects," "projects," "targets,"
"intends," "likely," "will," "should," "to be", "potential" and any
similar expressions are intended to identify those assertions as
forward-looking statements. Under its current project
finance facility Mountain Province
is not permitted to pay dividends on common stock unless and until
obligations under the facility have been satisfied.
The declaration of dividends is at the discretion of
Mountain Province's Board of
Directors, subject to restrictions under the Company's project
finance facility, and will depend on Mountain Province's financial results, cash
requirements, future prospects, and other factors deemed relevant
by the Board.
Mountain Province cautions
readers that forward-looking statements are not guarantees of
future performance and actual results may differ materially from
those anticipated, projected or assumed in the forward-looking
statements. Important factors that can cause
Mountain Province's actual results
to differ materially from those anticipated in the forward-looking
statements include supply of and demand for, and prices of,
diamonds, mine commissioning, mining sequencing, production rates,
cash flow, industry risks, regulatory changes, political risks,
labor relations, weather- and climate-related risks, environmental
risks and other risk factors.
Investors are cautioned that many of the assumptions upon
which Mountain Province's
forward-looking statements are based are likely to change after the
forward-looking statements are made, including for example diamond
prices, which Mountain Province
cannot control, and production volumes and costs, some aspects of
which Mountain Province may not be
able to control. Further, Mountain Province may make changes to its
business plans that could affect its results.
Mountain Province
disclaims any intention or obligation to update or revise any
forward-looking information, whether as a result of new
information, future events or otherwise, except as required by
law.
Mountain Province Diamonds Inc., David
Whittle, Interim President and CEO, 161 Bay Street, Suite
1410, Toronto, Ontario M5J 2S1,
Phone: +1(416)361-3562, E-mail: info@mountainprovince.com