iamond & Specialty Minerals Summary for March 17, 2023
2023-03-17 18:07 ET - Market Summary
by Will Purcell
The diamond and specialty minerals stocks box score on Friday was a positive 96-85-129 as the TSX Venture Exchange rose two points to 605. Rough diamond prices edged downward this week, ending six slow-but-steady weeks of gains in which Paul Zimnisky's global rough diamond price index tacked on about 2.2 per cent. While rough prices dipped by 0.1 per cent this week, they remain 2.7 per cent higher than their 52-week low, set in the first week of January. The modest rebound, remember, followed a 13.4-per-cent drop that began in mid-February of 2022 when rough prices bubbled to an all-time high.
The chart looks much like it did a decade ago, after rough diamond prices soared to a then record high following the near collapse of the sector in the depths of the Great Recession. Once that bubble burst in the spring of 2011, rough prices zigzagged gradually lower through much of the 2010s, only beginning to recover it seemed, just as COVID-19 was escaping Wuhan.
And so, while rough diamond prices are higher now than at any point in the past decade -- save, of course, the brief bubble last year -- the gains lag inflation. Rough prices are up just under 20 per cent since the late winter of 2018, and are barely 17 per cent higher than in early 2013. Inflation, meanwhile, has boosted the consumer price index by 21 per cent over the past five years and by 30 per cent over the past decade.
Promoters and analysts continue to put a hefty spin on their expectations for rough diamond prices in the years to come -- just as they have done since the days when Chuck Fipke and Chris Jennings were stamping about Canada's North in the quest for the first big diamond discovery. Forecasts of most anything carry a high risk of error, but none so much, it appears, as do diamond price forecasts.
On the other hand, perhaps those looking for an accurate forecast should consult some of the more astute backers of Dermot Desmond's Mountain Province Diamonds Inc. (MPVD). Mountain Province's stock had been trundling along in a range near 55 cents until a week ago, when it suddenly slumped to an intraday low of 42 cents -- a level last seen in the early fall of 2021. The stock did bounce back to end last Friday at 47 cents, down eight cents on 2.45 million shares, but it has been moving sideways since: Mountain Province added two cents to 48 cents on 20,000 shares today.
There was no news to account for the move, and while the company will release its 2022 financials next week, the key performance data is already public. After last week's Friday close, there was some news: Mountain Province Diamonds will "voluntarily file a Form 15 G with the United States Securities and Exchange Commission," a move that will end its reporting obligations in the United States.
And so, Mountain Province ends its direct flirtation with the United States market, a relationship that began in 2005 when California-based Jan Vandersande, then the company's president and chief executive officer, cheered Mountain's listing on the American Stock Exchange as a $2 stock. Nine years later, $5 Mountain Province welcomed a Nasdaq listing as it began construction of its Gahcho Kue mine.
Mountain Province's stock got as high as $7.14 in the fall of 2016, but by the summer of 2019 it was trading at just $1.26, thanks to weak diamond prices and a weaker array of goods coming from the mine. And so, Nasdaq huffed that the company had to get its stock above $1 (U.S.) or bid the exchange adieu. The company waited out the six-month grace period, then "voluntarily delisted" its stock from Nasdaq in early 2020.
At that time, Mountain Province said it would continue file the required reports with the SEC, but also said that it "currently intends at a future date, when permitted under SEC rules, to terminate the company's registration with the SEC." That future date has now arrived, three years on.