TORONTO and NEW YORK, November 13,
2017 /PRNewswire/ --
Shares Issued and Outstanding: 160,245,166
(TSX: MPVD) (NASDAQ: MPVD)
Mountain Province Diamonds Inc. ("Mountain Province", the "Company")
(TSX: MPVD) (NASDAQ: MPVD) today announces the results for the
quarter ended September 30, 2017.
Highlights for 2017 and to date
(All quoted figures in CAD$ unless indicated otherwise)
- For the three months ended September 30,
2017, the Company reported a net income of $27.7 million or $0.17 per share. Included in sales reported for
the quarter are the results of two diamond tenders that were
conducted.
- Revenue recognized in the three months ended September 30, 2017 totaled $65,218,000. Revenue recognized in the nine
months ended September 30, 2017
totaled $160,359,000 of which
$67,493,000 was capitalized as
pre-commercial production revenue and $92,866,000 is reported as sales in the statement
of earnings. Revenue recognized year to date reflects an average
realization of US$75 per carat.
- For the nine months ended September 30,
2017, the Gahcho Kué Diamond Mine ("GK Mine") treated
approximately 2,082,000 tonnes of ore through the process plant and
recovered approximately 4,306,000 carats on a 100% basis for an
average grade of approximately 2.07 carats per tonne. This
recovered grade is approximately 28% above the original budget for
the nine months ended September 30,
2017. The Company's 49% attributable share of diamond
production for the three months ended September 30, 2017 was approximately 894,000
carats and 2,110,000 carats for the nine months ended September 30, 2017.
- Cash costs of production, including capitalized stripping
costs[1], for the three and nine months ended
September 30, 2017 were $73 and $80 per
tonne respectively, and $33 and
$37 per carat recovered
respectively.
- Participation at the Company's tender sales has been strong
from the outset, with participation rates increasing through the
year. Bids per lot (approximately 125 lots per sale) increased from
an average of 8.1 in January to 11.8 in September. There is a high
level of market interest and competition for Gahcho Kué diamonds
with an average of 100 companies bidding each sale.
[1]Cash costs of production, including capitalized
stripping costs, is a non-IFRS measure with no standardized meaning
prescribed under IFRS. See the Non-IFRS Measures section of the
Company's September 30, 2017 MD&A
for explanation and reconciliation.
Financial Summary
For the three and nine months ended September 30, 2017, the Company reported a net
income of $27.7 million or
$0.17 earnings per share, and
$33.1 million or $0.21 earnings per share, respectively.
The Company undertook seven tender sales of diamonds during the
first three quarters of 2017 through its broker in Antwerp, Belgium, and the eighth and ninth
sales were completed in October and November. 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.
At September 30, 2017, the Company
had cash and restricted cash totaling $125.9
million, and had drawn US$357
million of its US$370 million
project lending facility. As the availability period defined under
the facility has now ended, no further draws against the facility
will be made.
Financial Highlights
Three months ended Three months ended
(in millions of Canadian dollars,
except where otherwise noted)
September 30, 2017 September 30, 2016
Sales $ 65,218 -
000's
Carats sold carats 765 -
Average price per carat sold $/carat 85 -
Cost of sales per carat* $/carat 54 -
Earnings from mine
operations per carat $ 31 -
Earnings from mine operations-
margin on sales % 37% -
Selling, general and
administrative expenses $ 3,334 1,426
Operating income (loss) $ 20,657 (1,426)
Net income (loss) and
comprehensive income(loss) $ 27,669 (5,387)
Basic and diluted earnings
(loss) per share $ 0.17 (0.03)
*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.
Table continued...
Nine months ended Nine months ended
(in millions of Canadian dollars,
except where otherwise noted)
September 30, 2017 September 30, 2016
Sales $ 92,866 -
000's
Carats sold carats 980 -
Average price per carat sold $/carat 95 -
Cost of sales per carat* $/carat 58 -
Earnings from mine operations
per carat $ 37 -
Earnings from mine operations
- margin on sales % 40% -
Selling, general and
administrative expenses $ 10,878 3,798
Operating income (loss) $ 24,892 (3,798)
Net income (loss)
and comprehensive income(loss) $ 33,079 13,103
Basic and diluted earnings
(loss) per share $ 0.21 0.08
*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: "In our first full
quarter of reported mining operating results, we've recorded a net
income of $27,669,000 and earnings
from mining operations of $23,991,000. Our cash costs of production for the
quarter, including capitalized stripping costs, were $73 per tonne and $33 per carat, reflecting strong mine
performances in both plant throughput and recovered grade. This
favourable production cost experience has enabled us to generate
net cash flows from operating activities in the quarter of
$49,238,000, despite the price
realization pressures that have been affecting the rough diamond
markets in general."
Operating Plan Update
Annually at the GK mine, an internal operational review is
undertaken mid year and the results are incorporated into updated
budgets and operating plans for the subsequent years. The review
conducted in 2017 has identified three main areas of update to the
operating plans for 2018 and subsequent years.
- Based on realized and sustained plant throughput rates in 2017
and confirmatory engineering assessments, the nameplate capacity of
the plant is being increased by 5% to 3,150,000 tonnes per
annum.
- Recovered diamond grade through the first three quarters of
2017 has exceeded plan. The 2014 Feasibility Study (entitled
"Gahcho Kué Project 2014 Feasibility Study", dated May 13, 2014 amended May
27, 2014) projected a 2017 recovered grade of 1.75 cpt, and
initial 2017 guidance provided by the Company in April 2017 anticipated a recovered grade of 1.62
cpt. Actual recovered grade through the first three quarters of
2017 was 2.07 cpt, and for the third quarter was 2.22 cpt. Work on
the annual GK mine reserve statement update is currently under way,
with public release anticipated for early 2018. In addition to
factoring in normal depletion from 2017 mining, also under
consideration is the manner and extent to which the update will
need to reflect this recovered grade increase, as well as actual
experience regarding stone size and quality distributions.
- As previously disclosed, for geotechnical reasons a layback of
the planned east wall of the 5034 open pit is required. Relating
primarily to a joint set encountered within the country rock, the
revised pit wall design calls for a shallower overall pit slope
angle of approximately 41°. The geotechnical issue was identified
in the opening several benches of the pit wall, and the pushback of
those opening benches was commenced during the summer. Accordingly,
the primary impact on the mine plan will be additional waste
removal due to the increased stripping requirements. If the joint
set issue persists through the full depth of the pit wall, the
additional waste removal over life of mine will be approximately 66
million tonnes (beyond initial design). Should the geotechnical
issue dissipate at lower bench levels, it may be possible to step
in and steepen the pit wall angle and commensurately reduce the
additional waste removal required.
For 2018, the GK operational plan anticipates total ore
processing of approximately 3,115,000 tonnes, recovering between
6.3 million and 6.6 million carats (100% basis) and reflecting a
recovered grade of between 2.02 cpt and 2.12 cpt. This reflects a
current expectation that the grade experience of 2017, specifically
that attributable to the Centre and East lobes of the 5034 pipe,
will continue at least into 2018, and may be subject to revision
pending completion of the annual GK mine reserve statement update.
Actual cash costs of production, including capitalized stripping
costs, over the first three quarters of 2017 were $80 per tonne processed, versus $79 projected for 2017 in the 2014 Feasibility
Study. The 2018 GK operational plan anticipates cash costs of
production, including capitalized stripping costs, increasing to a
run-rate of $100 per tonne. The
increase in cost is due primarily to the increased waste removal
attributed to the push back of the planned 5034 east wall. The 2018
GK operational plan anticipates sustaining and other capital
expenditures (other than capitalized stripping) of approximately
$47 million (100% basis),
approximately $31 million of which is
in respect of additional open pit mining equipment, including
drill, shovel, haul trucks and ancillary equipment to accommodate
the increased waste removal of the 5034 east wall. Exploration
expenditures for 2018, if any, will be expensed and not capitalized
based on the Company's accounting policy.
A summary of key parameters from the updated GK operational plan
over the next five years is provided as follows (100% basis):
2018 2019 2020 2021 2022
Ore tonnes processed 000s 3,115 3,153 3,161 3,153 3,153
Carats recovered 000s 6,300- 6,000- 6,300- 5,700- 5,300-
6,600 6,300 6,600 6,000 5,600
Cash costs of production
per tonne, net of
capitalized stripping $ 77 82 80 77 86
Cash costs of production
per tonne, including
capitalized stripping $ 100 102 104 104 109
Sustaining capital
expeditures $000 46,629 31,497 12,669 9,070 7,355
Not included in the updated GK operational plan is any potential
processing of diamondiferous kimberlite from the Southwest
Corridor, between the 5034 and Hearne pipes. Much of the Southwest
Corridor is already scheduled under the mine plan to be mined as
waste rock, and in the course of stripping activity to date, this
area has been recognized as containing diamondiferous kimberlite
that is not included in the current project resource or reserve
statements. An exploration program is being carried out in the area
of the Southwest Corridor to consider whether resource
identification may be validated, with initial results anticipated
in early 2018. Also, not included in the updated GK operational
plan is any potential grade increase associated with the West lobe
of the 5034 pipe. Evaluations are being conducted on the West lobe
to better isolate and assess its grade performance, the outcomes of
which are anticipated in early 2018 and may justify further
revision to production estimates.
Status of Project Lending Facility
At September 30, 2017, the Company
was subject to maintaining a debt service reserve account balance
of approximately US$57.1 million, a
sunk cost reserve account balance of $43.0
million and a cash call reserve account balance of
approximately $27.9 million, all
under its project lending facility. On August 31, 2017, the lenders provided a waiver
whereby funding of the amounts in the debt service reserve account
and the sunk cost reserve account were deferred to November 30, 2017. The waiver required the
Company to deposit a minimum of US$25
million in the cash call reserve account on or before
September 15, 2017, which the Company
has complied with.
The Company is well advanced in developing a near-term
resolution of the project lending facility. The Company anticipates
being in a position to publicly announce the specifics of such
resolution in the coming few weeks. While the Company is confident
that it will be successful in its efforts, any proposed solution
will be subject to a number of factors beyond its control. There
can be no guarantee of success, nor that the lenders will
accommodate any further waivers or amendments the Company may
seek.
Said David Whittle, Interim
President and CEO, "These third quarter results demonstrate the
solid cash flow generating capabilities of Mountain Province and the GK Mine, strongly
supporting our work to complete the resolution of the project
lending facility."
Conference Call
The Company will host a third quarter earnings conference call
for analysts and investors on Tuesday,
November 14, 2017, at 11:00 a.m.
Eastern Time. This call may be accessed by calling
1-888-241-0551 toll free in North
America, or 1-647-427-3415 from international locations,
with conference ID 3369379. A telephonic replay of the conference
call will be available from two hours after the completion of the
call until November 14, 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, consisting of a cluster of four diamondiferous kimberlites,
three of which are being developed and mined under the initial 12
year mine plan.
Qualified Person
Technical information included in this news release regarding the
Company's mineral property has been reviewed by Dino Pilotto, a Professional Engineer of JDS
Energy and Mining Ltd. and a Qualified Person as defined by
National Instrument 43-101.
Caution Regarding Forward Looking Information
This news release contains certain "forward-looking statements"
and "forward-looking information" under applicable Canadian and
United States securities laws
concerning the business, operations and financial performance and
condition of Mountain Province Diamonds Inc. Forward-looking
statements and forward-looking information include, but are not
limited to, statements with respect to estimated production and
mine life of the project of Mountain
Province; the realization of mineral reserve estimates; the
timing and amount of estimated future production; costs of
production; the future price of diamonds; the estimation of mineral
reserves and resources; the ability manage debt; capital
expenditures; the ability to obtain permits for operations;
liquidity; tax rates; and currency exchange rate fluctuations.
Except for statements of historical fact relating to Mountain Province, certain information
contained herein constitutes forward-looking statements.
Forward-looking statements are frequently characterized by words
such as "anticipates," "may," "can," "plans," "believes,"
"estimates," "expects," "projects," "targets," "intends," "likely,"
"will," "should," "to be", "potential" and other similar words, or
statements that certain events or conditions "may", "should" or
"will" occur. Forward-looking statements are based on the opinions
and estimates of management at the date the statements are made,
and are based on a number of assumptions and subject to a variety
of risks and uncertainties and other factors that could cause
actual events or results to differ materially from those projected
in the forward-looking statements. Many of these assumptions are
based on factors and events that are not within the control of
Mountain Province and there is no
assurance they will prove to be correct.
Factors that could cause actual results to vary materially
from results anticipated by such forward-looking statements include
variations in ore grade or recovery rates, changes in market
conditions, changes in project parameters, mine sequencing;
production rates; availability of waivers from lenders;
availability of alternative or additional financing; cash flow;
risks relating to the availability and timeliness of permitting and
governmental approvals; supply of, and demand for, diamonds;
fluctuating commodity prices and currency exchange rates, the
possibility of project cost overruns or unanticipated costs and
expenses, labour disputes and other risks of the mining industry,
failure of plant, equipment or processes to operate as
anticipated.
These factors are discussed in greater detail in Mountain Province's most recent Annual
Information Form and in the most recent MD&A filed on SEDAR,
which also provide additional general assumptions in connection
with these statements. Mountain
Province cautions that the foregoing list of important
factors is not exhaustive. Investors and others who base themselves
on forward-looking statements should carefully consider the above
factors as well as the uncertainties they represent and the risk
they entail. Mountain Province
believes that the expectations reflected in those forward-looking
statements are reasonable, but no assurance can be given that these
expectations will prove to be correct and such forward-looking
statements included in this news release should not be unduly
relied upon. These statements speak only as of the date of this
news release.
Although Mountain Province
has attempted to identify important factors that could cause actual
actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors
that cause actions, events or results not to be anticipated,
estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Mountain
Province undertakes no obligation to update forward-looking
statements if circumstances or management's estimates or opinions
should change except as required by applicable securities laws. The
reader is cautioned not to place undue reliance on forward-looking
statements. Statements concerning mineral reserve and resource
estimates may also be deemed to constitute forward-looking
statements to the extent they involve estimates of the
mineralization that will be encountered as the property is
developed.
Further, Mountain Province
may make changes to its business plans that could affect its
results. The principal assets of Mountain
Province are administered pursuant to a joint venture under
which Mountain Province is not the
operator. Mountain Province is
exposed to actions taken or omissions made by the operator within
its prerogative and/or determinations made by the joint venture
under its terms. Such actions or omissions may impact the future
performance of Mountain Province.
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 Diamonds Inc.: David
Whittle, Interim President and CEO, 161 Bay Street, Suite
1410, Toronto, Ontario M5J 2S1,
Phone: (416) 361-3562, E-mail: info@mountainprovince.com