Mountain Province Diamonds Inc. (“Mountain Province”, the “Company”) (TSX: MPVD) (OTC: MPVD) today announces financial results for the first quarter ended March 31, 2023 (“the Quarter” or “Q1 2023”) from the Gahcho Kué Diamond Mine (“GK Mine”). All figures are expressed in Canadian dollars unless otherwise noted.
Financial Highlights for First Quarter 2023
- 961,000 carats sold, with total proceeds of $128.7 million (US$95.0 million) at an average realised value of $134 per carat (US$99), a record quarterly revenue result for the Company.
- Record Adjusted EBITDA1 of $67.5 million.
- Earnings from mine operations of $47.2 million.
- Record Net income of $28.2 million or $0.13 basic and diluted earnings per share2.
- Repaid US$12.0 million of second lien bond debt principal on April 4th 2023.
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1Cash costs of production, including capitalized stripping costs, and adjusted EBITDA are non-IFRS measures with no standardized meaning prescribed under IFRS. See “Reconciliation of non-IFRS measures” at the end of the news release for explanation and reconciliation. |
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2 Record Net Income, with Q4 2021, normalised for Impairment reversal of $240.6 million |
Operational Highlights for First Quarter 2023
(all figures reported on a 100% basis unless otherwise stated)
- 766,786 ore tonnes treated, an 8% increase relative to Q1 2022, (Q1 2022: 707,553 tonnes treated;)
- 1,319,603 carats recovered, 11% higher than the comparable quarter (Q1 2022: 1,185,156 carats)
- Average grade of 1.72 carats per tonne, a 3% increase relative to Q1 2022 (1.67 carats per tonne)
- Cost per carat recovered, including capitalized stripping of $90/carat, and cost per tonne processed, including capitalized stripping of $155/tonne.
- Increase in unit cost relative to prior periods reflects greater capitalized stripping incurred in Q1 2023 (approximately $42 million vs $20 million in Q1 2022), as well as an increase in one-off maintenance related costs (numerator).
- Net of Capitalized stripping, cost per carat recovered was $58/carat in Q1 2023 vs $56 in Q1 2022.
Sales Highlights for First Quarter 2023
As previously released, during the first quarter 961,024 carats were sold for total proceeds of $128.7 million (US$95.0 million), resulting in an average value of $134 per carat (US$99 per carat). Three open market sales were completed in the quarter to deliver the highest Q1 revenue recorded by the Company to date. These results compare favourably with two open market sales during Q1 2022 when 506,567 carats were sold for total proceeds of $84.7 million (US$66.7 million).
Reid Mackie, the Company’s Vice President Sales and Marketing, commented:
“In Q1 2023 the Company achieved record sales on the back of a three-sale first quarter, which included three full production shipments and buoyant prices for smaller diamonds. Compared with Q1 2022, the lower average sales price achieved can be primarily attributed to the different mix of goods sold in both quarters with market prices also adjusting downwards from the record high seen early last year.”
Growth
The latest round of drilling at Hearne has been highly successful with the results strongly supporting the Hearne Extension as modeled. Ten holes have been completed, with each featuring kimberlite intercepts. One scheduled hole remains to be drilled on Hearne, with two additional holes planned to test for extension to the known Tuzo orebody. Final drilling results are expected later in Q2 2023. The Company continues to work with its joint venture partner to study the economic viability of extending the life-of-mine at Gahcho Kué to include underground mining and the potential inclusion of the Kennady North Project kimberlites.
Mark Wall, the Company’s President, and Chief Executive Officer, commented:
“In the first quarter we saw an improvement in production compared to Q1 in 2022 despite unplanned maintenance challenges. There remains work to be done to fully optimize production and we are working with our joint venture partner on the required opportunities. The mine operator expects to see production increase as we move through the year in response to these initiatives and warmer weather.
Quarter 1 was an excellent sales period, with our sales team bringing three sales to the market to achieve record sales results in a market that continues to oscillate. We continue to enjoy healthy adjusted EBITDA to revenue margins.
On costs, the mine entered a period of heavy capitalized waste stripping during the quarter, which coupled with some one-off maintenance related costs, resulted in a high unit cost per carat recovered and tonne processed. We expect these costs to reduce as we phase out of the heavy waste stripping, and return to normal operations in the plant.
Reducing our debt by US$12 million in early April was a positive as Q1 is a capital-intensive period for the Company, with all of the bulk commodities and heavy equipment for the year transported up the winter ice road. We remain focused on paying down our debt from free cashflow and we are fortunate to have no early repayment penalties in our debt facilities.
On growth we continue to work with our joint venture partner De Beers on reviewing mine life extension possibilities for the project via the drilling we are currently doing on the underground potential of the Gahcho Kué mine, as well as reviewing any potential to incorporate kimberlites from the Kennady property.
We will continue to push hard in quarter 2 where we have important maintenance work scheduled that is planned to further optimize the processing plant at Gahcho Kué.”
Gahcho Kué Mine Operations
The following table summarizes key operating statistics for the Gahcho Kué Mine in the three months ended March 31, 2023 and 2022.
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March 31, 2023 |
March 31, 2022 |
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GK operating data |
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Mining |
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*Ore tonnes mined |
kilo tonnes |
428 |
1,019 |
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*Waste tonnes mined |
kilo tonnes |
8,507 |
7,149 |
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*Total tonnes mined |
kilo tonnes |
8,935 |
8,168 |
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*Ore in stockpile |
kilo tonnes |
1,420 |
1,059 |
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Processing |
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*Ore tonnes processed |
kilo tonnes |
767 |
708 |
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*Average plant throughput |
tonnes per day |
8,247 |
7,867 |
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*Average diamond recovery |
carats per tonne |
1.72 |
1.67 |
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*Diamonds recovered |
000’s carats |
1,320 |
1,185 |
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Approximate diamonds recovered – Mountain Province |
000’s carats |
647 |
581 |
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Cash costs of production per tonne of ore, net of capitalized stripping ** |
$ |
99 |
93 |
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Cash costs of production per tonne of ore, including capitalized stripping** |
$ |
155 |
122 |
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Cash costs of production per carat recovered, net of capitalized stripping** |
$ |
58 |
56 |
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Cash costs of production per carat recovered, including capitalized stripping** |
$ |
90 |
73 |
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Sales |
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Approximate diamonds sold – Mountain Province*** |
000’s carats |
961 |
507 |
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Average diamond sales price per carat |
US |
$ 99 |
$ 132 |
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* at 100% interest in the Gahcho Kué Mine |
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**See “Reconciliation of non-IFRS measures” at the end of the news release for explanation and reconciliation. |
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***Includes the sales directly to De Beers for fancies and specials acquired by De Beers through the production split bidding process |
Financial Performance
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(in thousands of Canadian dollars, except where otherwise noted) |
March 31, 2023 |
March 31, 2022 |
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Sales |
$ |
128,657 |
84,653 |
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Carats sold |
000’s carats |
961 |
507 |
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Average price per carat sold |
$/carat |
134 |
167 |
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Cost of sales per carat* |
$/carat |
85 |
83 |
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Earnings from mine operations per carat |
$ |
49 |
84 |
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Earnings from mine operations |
% |
37 % |
50 % |
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Selling, general and administrative expenses |
$ |
4,007 |
3,994 |
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Operating income |
$ |
41,091 |
35,018 |
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Net income for the period |
$ |
28,224 |
24,327 |
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Basic earnings per share |
$ |
0.13 |
0.12 |
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Diluted earnings per share |
$ |
0.13 |
0.11 |
Conference Call
The Company will host its quarterly conference call on Wednesday, May 10th, 2023 at 11:00am ET.
Title: Mountain Province Diamonds Inc Q1 2023 Earnings Conference Call
Conference ID: 44495174
Date of call: 05/10/2023
Time of call: 11:00 Eastern Time
Expected Duration: 60 minutes
Webcast Link:
https://app.webinar.net/dpA23QXRjg8
Participant Toll-Free Dial-In Number: (+1) 888-390-0561
Participant International Dial-In Number: (+1) 416-764-8668
A replay of the webcast and audio call will be available on the Company’s website.
Reconciliation of Non-IFRS measures
This news release refers to the terms “Cash costs of production per tonne of ore processed” and “Cash costs of production per carat recovered”, both including and net of capitalized stripping costs and “Adjusted Earnings Before Interest, Taxes Depreciation and Amortization (Adjusted EBITDA)” and “Adjusted EBITDA Margin”. Each of these is a non-IFRS performance measure and is referenced in order to provide investors with information about the measures used by management to monitor performance. These measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. They do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers.
Cash costs of production per tonne of ore processed and cash costs of production per carat recovered are used by management to analyze the actual cash costs associated with processing the ore, and for each recovered carat. Differences from production costs reported within cost of sales are attributed to the amount of production cost included in ore stockpile and rough diamond inventories.
Adjusted EBITDA is used by management to analyze the operational cash flows of the Company, as compared to the net income for accounting purposes. It is also a measure which is defined in the Notes documents. Adjusted EBITDA margin is used by management to analyze the operational margin % on cash flows of the Company.
The following table provides a reconciliation of the Adjusted EBITDA and Adjusted EBITDA margin with the net income on the consolidated statements of comprehensive income:
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March 31, 2023 |
March 31, 2022 |
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Net income for the period |
$ 28,224 |
$ 24,327 |
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Add/deduct: |
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Non-cash depreciation and depletion |
25,318 |
8,948 |
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Share-based payment expense |
340 |
444 |
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Fair value (gain) loss of warrants |
(146) |
1,525 |
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Net finance expenses |
9,522 |
9,140 |
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Derivative losses |
1,065 |
77 |
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Deferred income taxes |
1,820 |
4,270 |
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Current income taxes |
750 |
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Unrealized foreign exchange losses (gains) |
645 |
(4,146) |
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Adjusted earnings before interest, taxes, depreciation and depletion (Adjusted EBITDA) |
$ 67,538 |
$ 44,585 |
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Sales |
128,657 |
84,653 |
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Adjusted EBITDA margin |
52 % |
53 % |
The following table provides a reconciliation of the cash costs of production per tonne of ore processed and per carat recovered and the production costs reported within cost of sales on the consolidated statements of comprehensive income:
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(in thousands of Canadian dollars, except where otherwise noted) |
March 31, 2023 |
March 31, 2022 |
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Cost of sales production costs |
$ |
49,116 |
27,120 |
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Timing differences due to inventory and other non-cash adjustments |
$ |
(11,835) |
5,150 |
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Cash cost of production of ore processed, net of capitalized stripping |
$ |
37,281 |
32,270 |
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Cash costs of production of ore processed, including capitalized stripping |
$ |
58,241 |
42,154 |
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Tonnes processed |
kilo tonnes |
376 |
347 |
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Carats recovered |
000’s carats |
647 |
581 |
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Cash costs of production per tonne of ore, net of capitalized stripping |
$ |
99 |
93 |
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Cash costs of production per tonne of ore, including capitalized stripping |
$ |
155 |
122 |
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Cash costs of production per carat recovered, net of capitalized stripping |
$ |
58 |
56 |
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Cash costs of production per carat recovered, including capitalized stripping |
$ |
90 |
73 |
About Mountain Province Diamonds Inc.
Mountain Province Diamonds is a 49% participant with De Beers Canada in the Gahcho Kué diamond mine located in Canada’s Northwest Territories. The Gahcho Kué Joint Venture property consists of several kimberlites that are actively being mined, developed, and explored for future development. The Company also controls more than 113,000 hectares of highly prospective mineral claims and leases surrounding the Gahcho Kué Mine that include an Indicated mineral resource for the Kelvin kimberlite and Inferred mineral resources for the Faraday kimberlites. Kelvin is estimated to contain 13.62 million carats (Mct) in 8.50 million tonnes (Mt) at a grade of 1.60 carats/tonne and value of US$63/carat, at February 2019. Faraday 2 is estimated to contain 5.45Mct in 2.07Mt at a grade of 2.63 carats/tonne and value of US$140/ct, at February 2019. Faraday 1-3 is estimated to contain 1.90Mct in 1.87Mt at a grade of 1.04 carats/tonne and value of US$75/carat, at February 2019. All resource estimations are based on a 1mm diamond size bottom cut-off.
