The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Strong diamond prices help to offset lower Gahcho Kué output North of 60 Mining News – July 15, 2022
The Gahcho Kué Mine in Northwest Territories produced 1.26 million carats of diamonds during the second quarter of 2022.
Strong diamond prices are helping Mountain Province Diamonds Inc. overcome higher diesel costs, a slower-than-expected post-COVID ramp up of operations, and a primary crusher bearing failure during the first quarter at the Gahcho Kué diamond mine in Northwest Territories.
During the second quarter of 2022, Gahcho Kué produced 1.26 million carats of diamonds, which is a 6% improvement over the first quarter but down 29% from the second quarter of 2021. This sharp decrease compared to last year is primarily due to lower grade ore.
Earlier this year, Mountain Province reported that the mining operation had encountered a previously unrecognized pocket of diamond-bearing kimberlite. While this is good news for the longevity of Gahcho Kué, the ore grades are lower. As a result, the average grade of kimberlite processed through the mill during the second quarter of this year averaged 1.68 carats per metric ton, which is 23% lower than the 2.17 c/t processed during the same period of 2021.
Due to the processing of lower-grade kimberlite, coupled with the downtime to repair the mill during the first quarter, the Gahcho Kué Mine owners – De Beers Canada (51%) and Mountain Province (49%) – are expecting lower diamond output and higher production costs this year.
Under a new 2022 guidance published by Mountain Province, Gahcho Kué is expected to produce 5.6 to 5.8 million carats of diamonds, which is roughly 10% less than the 6.2 to 6.4 million carats estimated at the beginning of the year.
Primarily due to the lower diamond output, the cost per carat produced this year is expected to be between C$76 and $80, a roughly 7% increase over the C$71 to $76 per carat estimated.
The updated production and costs guidance is primarily a reflection of the first quarter, and the mine partners have implemented action plans to ensure these issues do not carry forward.
While lower grade ore put a dent in diamond production, strong diamond prices boosted revenues for Mountain Province.
Mountain Province brought in US$76 million (C$98.8 million) from the sale of 586,763 carats of diamonds during the second quarter. This marks the second highest quarterly revenue ever for the company.
"The action plan that has been developed to drive operational improvements is working, however efforts to recover from the lower production throughout Q1 were slower than anticipated, and as such it is appropriate to provide updated production and cost guidance to the market," said Mountain Province Diamonds CEO Mark Wall. "Despite this, I am pleased to see the diamond market continues to remain strong, with our second highest revenue in history achieved in Q2. With this improved financial position, we continue to remain on track with our refinancing and strategic objectives."
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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