Purcell SOUNDS LIKE THE TREMINATOR HAS BEEN BROUGHT IN
Dermot Desmond and Stuart Brown's Mountain Province Diamonds Inc. (MPVD) closed unchanged at 45 cents on 194,000 shares. The company appointed a new director late last week to replace Tom Peregoodoff, who had resigned earlier this month -- just not in time to prevent his re-election at the company's annual meeting a week later. The new fellow, hailed as an "accomplished leader in the mining industry" with extensive experience in diamonds and mines in Canada's North, is Dan Johnson, a principal of JDS Energy and Mining Inc.
Jonathan Comerford, Mountain Province's chairman and one of the directors picked by Mr. Desmond, was "very pleased" to have Mr. Johnson on board given his "extensive involvement with the Gahcho Kue mine" and his "decades of industry experience" -- experience that, Mr. Comerford cheers, "will be hugely beneficial to us as we continue to maximize the value of our top-tier assets."
Mountain Province can use all the value maximizing it can get, as what was a $7 stock in the fall of 2016 has been gurgling at or below the 50-cent mark for most of the past 18 months as it fought through what it admitted were serious financial difficulties. Mountain Province's fortunes appear on the upswing, thanks to a lifeline thrown in mid-2020 by Mr. Desmond, who bought $50-million (U.S.) of the company's rough and later gave it a cut when he sold them at a hefty profit.
While Mr. Johnson has considerable experience with assessing and developing diamond mines -- notably serving as BHP Billiton's general manager of the Ekati mine during its development and construction -- he also has plenty of expertise with diamond mines in financial peril.
In 1997, Mr. Johnson left BHP to become president and chief executive of Jean-Raymond Boulle's Diamond Fields International Ltd., a spinoff from Inco's takeover of Diamond Fields Resources in 1996. The new company set to work under the direction of Mr. Johnson, pursuing its predecessor's original promotion: offshore diamonds along Namibia's Forbidden Coast.
Mr. Johnson beavered away on the project and saw the first diamonds trickle in, but he quietly resigned late in 2000, accompanied by a tidy bon-voyage package. Diamond Fields' Namibian misadventure continued until 2008, when it mothballed the project and sold its mining vessel after having racked up about $50-million in losses over the preceding decade.
Mr. Johnson then laboured as a self-employed consultant for the next few years, resurfacing in 2004 as vice-president of operations with Tahera Corp. to direct the construction and development of its Jericho mine, well northwest of Ekati in Nunavut. He did so -- Tahera got its mine developed and constructed by 2006 -- but without the advertised high grades and diamond values laid out in a 2003 feasibility study.
That study proposed a $65-million mine based on a reserve of 2.6 million tonnes averaging 1.2 carats per tonne and $81 (U.S.) per carat. Reality was different: The mine cost well over $100-million to build, and it whimpered to its demise within two years, done in by a surging Canadian dollar and a failed resupply in the abnormally warm winter of 2006 -- but mainly because the mine failed to make its 2,000-tonne-per-day target and its per-tonne revenue was well below targets. The overly enthusiastic feasibility study came before Mr. Johnson's arrival and he bid adieu to Tahera in 2007, ahead of the company's bankruptcy the following year.
Mr. Johnson did have a hand in another feasibility study, the 2014 update prepared by JDS Energy and Mining, his next employer. Save for a wildly optimistic diamond valuation -- an estimate prepared by another consulting group that was roughly double what subsequently proved to be the case -- the constructing, developing and mining costs were well in line with those laid out by JDS. That -- and Mr. Johnson's experience with hard times in the diamond sector -- may be the reason Mountain Province gave him a call.