The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Strong diamond prices more than offset drop in gem output North of 60 Mining News – March 24, 2023
Mountain Province realized an average price of US$112 per carat from the 2.66 million carats of Gahcho Kué diamonds it sold in 2022.
Mountain Province Diamonds Inc. March 23 reported that strong diamond prices during 2022 resulted in the company's highest-ever annual revenue from the Gahcho Kué Mine in Canada's Northwest Territories.
Owned under a joint venture between Mountain Province (49%) and De Beers Canada Inc. (51%), Gahcho Kué produced 5.52 million carats of diamonds during 2022. While this is a 12% drop from the 6.23 million carats produced during 2021, higher diamond values last year more than made up for the smaller quantity.
During 2022, Mountain Province sold 2.66 million carats of diamonds out of its share of Gahcho Kué production at an average price of C$146 per carat (US$112 per carat) for total proceeds of C$388.9 million (US$297.3 million) during 2022. This compares to 3.16 million carats sold for C$94 per carat (US$75 per carat) for total proceeds of $298.3 million (US$237 million) in 2021.
The company said that the global market for rough diamonds experienced incredible growth early in 2022 but was moderated somewhat during the second and third quarters by Russia's invasion of Ukraine and extended delays to the recovery from COVID in China. To lessen the impact of these events, Mountain Province strategically stockpiles diamonds in categories that were performing weaker during midyear.
Stability returned to the market toward the end of 2022 and Mountain Province saw solid price performance at its final sales of the year and into 2023. The company says price performance has been particularly positive for smaller-sized diamonds, which represent greater than 40% of its production value.
As a result, Mountain Province's 2022 earnings from operations at Gahcho Kué were C$177.2 million (US$129.8 million), 50% higher than the C$113.7 million (US$83.3 million) in 2021.
Strong financial performance in 2022 allowed the company to pay off US$110 million (C$150 million) in debt, US$60 million (C$82 million) from operating cash flow and US$50 million (C$68 million) with a junior secured term loan credit facility.
"2022 was a transitional year for the company," said Mountain Province Diamonds President and CEO Mark Wall.
The company forecasts that Gahcho Kué will produce 5.6 million to 6.1 million carats of diamonds in 2023, which would be similar to or slightly higher than last year.
Thanks to the results from follow-up drilling at the Hearne Northwest Extension, a discovery made in the northwest face of the Hearne pit at the end of 2021, Mountain Province is excited about the longer-term outlook for Gahcho Kué.
During 2022, the Gahcho Kué Joint Venture defined the Hearne Northwest Extension with 5,026 meters of drilling in 16 holes. These holes, which cut 23 to 114 meters of diamond-bearing kimberlite, show this extension trends in a more northerly direction than geophysics indicated.
Wall said the work at Hearne Northwest Extension has the company reviewing "the underground potential of the Gahcho Kué mine, including how the Kennady assets may integrate into this scenario, with the objective of understanding the opportunities that may exist to substantially extend the mine life."
Mountain Province's fully owned Kennady North is a 113,000-hectare (279,200acres) land package adjacent to the Gahcho Kué property.
Resources have been outlined at three Kennady North kimberlites – Kelvin, Faraday 1-3, and Faraday 2.
• Kelvin hosts 8.5 million metric tons of inferred resource averaging 1.6 carats per ton (13.62 million carats) of diamonds.
• Faraday 2 hosts 2.07 million metric tons of inferred resources averaging 2.63 c/t (5.45 million carats) of diamonds.
• Faraday 1-3 hosts 1.87 million metric tons of inferred resources averaging 1.04 c/t (1.9 million carats) of diamonds.
Late last year, Mountain Province announced that its 2022 drilling discovered a new and distinct kimberlite about 450 meters east of Kelvin.
Located within 10 kilometers (six miles) of the Gahcho Kué operation, these kimberlites have the potential to extend the life of the mine deeper into the 21st century.
"As we move into 2023, we continue to focus on safety, sustainability, and operational performance at the mine level," said Wall. "We'll continue to optimize our sales pipeline, and focus on our organic growth opportunities at the mine and at Kennady North."
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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