Shares Issued and Outstanding: 160,233,833
TSX and
NASDAQ: MPVD
TORONTO and NEW YORK, Aug. 9,
2017 /CNW/ - 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
ended
|
Three months
ended
|
Six months
ended
|
Six months
ended
|
(in millions of
Canadian dollars, except where otherwise noted)
|
June 30,
2017
|
June 30,
2016
|
June 30,
2017
|
June 30,
2016
|
|
|
|
|
|
|
Sales
|
$
|
27,648
|
-
|
27,648
|
-
|
Carats
sold
|
000's
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.
SOURCE Mountain Province Diamonds Inc.