Industria
Mountain Province Diamonds Announces Full Year and Fourth Quarter 2023 Results
All figures are expressed in Canadian dollars unless otherwise noted and are unaudited.
In Q4 2023, 918,000 carats were sold at an average value of $87 per carat ( US$64 per carat) for total proceeds of $79.8 million ( US$58.9 million ) in comparison to 758,000 carats sold at an average value of $127 per carat ( US$94 per carat) for total proceeds of $96.3 million ( US$71.3 million ) in Q4 2022.
During FY 2023, 2,718,000 carats were sold at an average value of $121 per carat ( US$90 per carat) for total proceeds of $328.6 million ( US$243.8 million ) in comparison to 2,657,000 carats sold at an average value of $146 per carat ( US$112 per carat) for total proceeds of $388.9 million ( US$297.3 million .
After a record-breaking previous year, 2023 was more challenging for the diamond industry. Retail activity and consumer demand softened in the US and Europe amid global inflation concerns and ongoing conflict in Ukraine and the Middle East . Chinese retail remained persistently quiet.
Towards the end of the third quarter, major producers postponed or cancelled sales until more favourable market conditions prevailed. The Company elected to strategically stock select categories of goods to defend prices. In October, India's Gem and Jewellery Export Promotion Council, representing Indian manufacturers, introduced a two-month self-imposed import ban. These supply-tightening measures reduced manufacturers' inventories and moved polished goods downstream for the retail holiday season and anticipated restocking. By year end, diamond prices had steadied, and the Company sold most of its strategic stock at a premium to withdrawn prices.
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"Coming from record 2022 where multiple Company financial records were broken, 2023 saw reduced revenues primarily due to a softening market. Driven by this softening, the Company, along with its JV partner De Beers Group, made the prudent decision to limit discretionary spending, including continuing internal studies on a potential transition to underground mining at Gahcho Kué to extend mine life. The Company intends to take all reasonable steps to maintain the underground mining optionality.
Despite the challenging market in H2, during 2023 the Company paid down US$18 million in senior secured second lien notes. While we would have preferred to pay down more, this is aligned with our strategy to pay down debt principal as cash flows allow, to maintain financial flexibility.
Operationally, 2023 saw improvements on certain key metrics, including an increase in tonnes treated of 3.25 million tonnes in 2023 vs 3.10 million tonnes in 2022, primarily driven by improvement post the mid-2023 major plant shut-down.
Moving into 2024, the Company faces a lower production year due to the effects of mine sequencing and grade profile changes, all normal occurrences in open pit diamond mining. This lower production year was anticipated, and the mine remains on-track to achieve the previously stated 2024 production guidance of 4.2 - 4.7 million carats at the JV level and 2.3 - 2.6 million carats sold at the Company level.
On the rough diamond market, we continue to monitor developments closely as many factors are integrated in the market dynamic. Initial stages of a recent G7 sanction banning imports of Russian-origin rough diamonds have increased efforts through the diamond pipeline to track and promote diamond's origin tracing. This could yield a positive impact on demand for Canadian origin goods, and the Company is reviewing opportunities."
The following table summarizes the key operating statistics for Q4 2023 and FY 2023, and the previous year, at the Gahcho Kué Mine.
The Company will host its quarterly conference call on Tuesday, April 2 , 2024 at 11:00am ET .
Conference ID: 16709659
Date of call: 04/02/2024
Time of call: 11:00 Eastern Time
Expected Duration: 60 minutes
Webcast Link: https://app.webinar.net/relP03xo4Qa
Participant Toll-Free Dial-In Number: (+1) 888-390-0546
Participant International Dial-In Number: (+1) 416-764-8688
A replay of the webcast and audio call will be available on the Company's website.
The MD&A 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 "Operating Income", "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.
Operating (loss) income is used by management to analyze the profitability of the Company that is generated during the regular course of its mining operations. It excludes income and expenses that are derived from activities not related to the Company's core business operations such as finance expenses, derivative gains (losses), and foreign exchange revaluation gains (losses).
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 statement of comprehensive (loss) income:
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 (loss) income:
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 consists of several kimberlites that are actively being mined, developed, and explored for future development. The Company also controls over 113,000 hectares of highly prospective mineral claims and leases surrounding the Gahcho Kué diamond 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. 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. 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. All resource estimations are based on a 1mm diamond size bottom cut-off.
For further information on Mountain Province Diamonds and to receive news releases by email, visit the Company's website at www.mountainprovince.com.
The disclosure in this news release of scientific and technical information regarding Mountain Province Diamond's mineral properties has been reviewed and approved by Matthew MacPhail , P.Eng., MBA, an employee of Mountain Province Diamonds and Qualified Person as defined by National Instrument 43-101
Mark Wall , President and CEO, 161 Bay Street, Suite 1410, Toronto , Ontario M5J 2S1, Phone: (416) 361-3562, E-mail: info@mountainprovince.com; Matthew MacPhail , Chief Technical & Sustainability Officer, 161 Bay Street, Suite 1410, Toronto , Ontario M5J 2S1, Phone: (416) 361-3562, E-mail: info@mountainprovince.com
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