Mountain Province Diamonds Inc. Reports Modeled Revenues Per Tonne for the Hearne and 5034 Diamond Pipes
ONTARIO, Calif.--(BUSINESS WIRE)--April 3, 2003--Mountain Province
Diamonds Inc., (OTC BB:MPVI), (TSX:MPV) announced that it has received
from its joint-venture partner De Beers Canada Exploration Inc. (De
Beers Canada), a wholly owned subsidiary of De Beers Consolidated
Mines Limited (De Beers), modeled revenue per tonne and grade
estimates for the 5034 and Hearne diamond pipes.
The average value per carat for the 5034 pipe is in line with, if
not slightly less than, the decrease in diamond prices since Sept. 11,
2001 while that for the Hearne pipe experienced a larger drop. It has
now definitely been confirmed that a sub-population of high quality,
top color diamonds exists in both the 5034 and Hearne pipes.
De Beers will now update the desk-top study, an estimate of the
project's internal rate of return, and present the results to the
company later in April. The 5034 and Hearne kimberlite pipes are two
of the largest and have the two highest values of the five
diamondiferous bodies in the cluster at Kennady Lake, located within
the joint-venture's AK leased claims in the Northwest Territories of
Canada.
As was mentioned in the April 24, 2002 news release, De Beers
completed the winter 2002 bulk sample program of the 5034 and Hearne
pipes on April 20, 2002. The purpose of the bulk sampling program was
to increase the available revenue information for these two pipes.
Since revenue is determined by grade and diamond value, and since the
two kimberlite pipes contain internal zones that vary in grade, it is
important in this work to combine diamond grade estimates along with
diamond revenue estimates.
The large number of diamonds obtained in the 2002 program would
increase the confidence in, and accuracy of, revenue modeling via an
enhanced understanding of grade, diamond size and frequency
distributions, and diamond values.
The 1,215 carats recovered from the 5034 pipe and the 1,174 carats
recovered from the Hearne pipe as well as the diamonds recovered from
the 1999 and 2001 bulk samples (all to a 1.5 mm lower cut-off) were
all valued, based on the January 2003 diamond prices, at the Diamond
Trading Company (DTC) in London. The De Beers Mineral Resource
Department in Johannesburg has used these values for all three (1999,
2001, 2002) bulk samples to update the modeled revenue per carat for
each pipe.
It is important to note that production recovery factors,
determined by De Beers, have been applied and that the commonly used
commercial bottom cut-off recovery size screen with a 1.50 mm square
mesh has been used. These diamond values were then combined with the
updated grade information to give modeled revenue per tonne values.
The table shows the weighted average modeled grades, values per
carat and revenues per tonne for the four lobes in the 5034 pipe and
the various geologic zones in the Hearne pipe. The 5034 pipe has an
indicated resource of 8.6 million tonnes and an inferred resource of
4.5 million tonnes, while Hearne has an indicated resource size of 5.5
million tonnes and an inferred resource of 1.6 million tonnes, all to
a depth of 290 m below lake surface.
-0-
*T
Pipe Modeled Grade Modeled Values Revenue per tonne
(Carats per tonne) (U.S.$ Carat) (U.S.$)
5034 1.67 62.70 104.70
Hearne 1.67 50.00 83.50
*T
The previous valuation of the diamonds from the 1999 and 2001 bulk
samples was in August 2001. After Sept. 11, 2001, diamond prices
decreased in value by an average of around 20% with more severe
decreases in certain categories of diamonds according to industry
sources. Since then De Beers has increased diamond prices twice and on
average diamond prices are now nearly back to pre Sept. 11, 2001
levels. Specifically, the January 2003 valuations of the 1999 and 2001
bulk sample diamonds were on average 5-6% less than the August 2001
valuations for the same diamonds.
The average modeled value per carat of U.S. $62.70 for the 5034
pipe compares with the average value of U.S. $65.50 based on the
August 2001 price book, reported in December 2001. The drop is
slightly less than the average drop in diamond values since then. The
weighted average modeled grade for the 5034 pipe increased to 1.67
carats per tonne from 1.64 carats per tonne as reported in December
1999. The upper and lower limits for the value per carat modeling are
+/- 18% - 20%.
The average modeled value per carat of U.S. $50.00 for the Hearne
pipe compares with a value of U.S. $63.30 based on the August 2001
values. The weighted average modeled grade for the Hearne pipe
decreased to 1.67 carats per tonne from 1.71 carats per tonne as
reported in December 1999. The upper and lower limits for the value
per carat modeling are 18% and 16% respectively.
It has now definitely been confirmed by both De Beers and the
company's consultant, Overseas Diamonds N.V., that a sub-population of
high quality, top color diamonds exists in both the 5034 and Hearne
pipes. The 3.4 carat diamond recovered from the Hearne pipe is such a
diamond and has been valued at U.S. $7,140. These diamonds represent a
significant part of the total value of the diamonds even though they
only represent a small fraction of the total number of diamonds.
De Beers this year used a De Beers group composite of a year's
production from kimberlite mines with wide ranges of production but
similar dollar per carat values, in the value per carat modeling in
the over two carat size range. The reason for this is that relatively
speaking only a small number of over two carat diamonds were recovered
from the Hearne and 5034 pipes and these diamonds have a wide range of
values.
This modeling technique models the shape of the revenue curves for
the Hearne and 5034 pipes to be similar to the shape of the curves for
a composite of producers above the two carat size range. This
technique is slightly more conservative than the technique used
previously but is more representative of an actual production
scenario.
The revenue per tonne values will now be used in updating the
desk-top study, which was originally reported in August 2000. The
desk-top study is an estimate of the project's internal rate of return
(IRR) using estimated capital and mining costs and the modeled revenue
per tonne values. De Beers is expected to present the results of the
updated study to the company later in April.
Mountain Province Diamonds is a diamond exploration and
development company. The AK claims, located in the Northwest
Territories of Canada are now held 44.1% by Mountain Province Diamonds
Inc., 4.9% by Camphor Ventures (TSX-V:CFV), and 51% by De Beers Canada
Exploration Inc. As reported in its news release on March 7, 1997,
Mountain Province Diamonds and its partner entered into a joint
agreement with De Beers Canada Exploration formerly known as Monopros
Ltd. (a wholly owned subsidiary of De Beers Consolidated Mines
Limited) under which De Beers Canada Exploration has the right to earn
up to a 60% interest in the AK property by taking the project to
commercial production. |
