Mountain Province (MPVD-T) revealed its operating numbers for the third quarter ending Sept. 30, 2019, after Thursday's close. Its Gahcho Kue mine in the Northwest Territories, in which it holds a 49-per-cent interest, mined one million tonnes of kimberlite in the third quarter of 2019, down from 1.16 million tonnes in the third quarter of 2018. Worse, in the third quarter of 2019 the average grade dropped to 1.72 carats per tonne, down from 2.4 carats per tonne in the third quarter of 2018, and as a result the carat haul dropped to 1.563 million carats in the third quarter of 2019 from 1.82 million in the third quarter of 2018.
It would have been worse, but Gahcho Kue processed 890,000 tonnes of kimberlite in the third quarter of 2019, compared with just 759,000 tonnes in the third quarter of 2018. The lower throughput last year was the result of a planned maintenance shutdown; there was no such event this year, so the Gahcho Kue plant ran at an average of nearly 10,000 tonnes per day through the summer. It was not all hats and horns in the plant: The company mined more ore than expected from the 5034 pipe and less than expected from the Hearne pipe, resulting in changes in the process blend of kimberlite, which had a negative impact on the overall carat count during the quarter.
Unfortunately, the bulk of the kimberlite from 5034 came from the central lobe, which has a lower grade than the surrounding areas, particularly the northeastern lobe. As well, the mining encountered lower-grade areas within Hearne, and within the SWC kimberlite, which was not part of the original mine plan but which lies within the adjusted 5034 pit shell.
The worst news came not from the miners but from Mountain Province's diamond auctions. The company sold 791,252 carats during the quarter, fetching $41.6-million (U.S.), or just $52.50 (U.S.) per carat. A year earlier, in what had been a disappointing quarter in a tough rough diamond market, Mountain Province had sold nearly 789,000 carats for $57.2-million (U.S.), or $72.50 (U.S.) per carat.
This has been the worst quarter yet by average diamond value. Mr. Brown, president and chief executive officer, attributed the poor diamond price to three factors: the source of the diamonds, specifically the weaker Hearne and SWC pipes, the lower-quality material processed during the quarter and the weak "overall sentiment in the rough diamond market."
Nevertheless, Mr. Brown expects 2019 will be a successful year. (He is an optimistic fellow with modest expectations, it seems.) While Mountain Province still predicts Gahcho Kue will hit its production guidance of between 6.6 million and 6.9 million carats, the value of those carats is headed the wrong way. Through the first nine months of 2018, Mountain Province sold 2.43 million carats at an average of nearly $77 (U.S.) per carat. While it sold 2.53 million carats in the first nine months of 2019, they averaged just $63 (U.S.) per carat.
Despite it all, Mr. Brown still sees a glint of sparkle ahead. He says that major producers have experienced lower sales volumes of late and this, together with the closure of some older mines -- remember this is supposed to be good news -- will have a positive effect on the supply side next year and beyond, which will "help to restore confidence across the diamond pipeline." (He means that less supply will increase prices.)
Will Purcell |
