2023-10-27 17:45 ET - Market Summary
by Will Purcell
The diamond and specialty minerals stocks box score on Friday was a positive 95-75-140 as the TSX Venture Exchange rose four points to 520. Well, hallelujah! Just when it appears Paul Zimnisky's global rough diamond price index knew of no direction but downward, this week's calculation shows a modest 0.2-per-cent increase over a week ago. Ahh, were it that simple: Investors need to take a closer look at the chart before breaking out the party hats and kazoos.
As it turns out, this is a too-good-to-be-true moment. Mr. Zimnisky has pegged the index at 152.2 points, you see, and last week the value sat at 152.8, so prices are in fact about 0.4 per cent lower than you thought they were a week ago. Mr. Zimnisky always corrects his index on the fly as late-to-arrive information appears, and there apparently was plenty of bleak and tardy news of late. Indeed, other than this week's upward jog, the previous two months now show a steady decline of about 0.5 per cent per week.
And so, rough prices are now pegged at an average of 26.6 per cent below their all-time high of early 2022, when Mr. Zimnisky put his index at 207.3 points. Worse, prices are essentially unchanged from those that prevailed through most of the 2010s, during a seven-year stretch of stagnation that followed the previous record high in the spring of 2011, when Mr. Zimnisky's index flirted with the 200-mark. Current prices, therefore, are 1.4 per cent higher than five years ago, when Mr. Zimnisky's index stood at 150 points, but they are 2.6 per cent lower than the fall of 2013, when the index rested at 156.2 points.
Little wonder then that Canada's few remaining public diamond miners are flirting with all-time lows, with spooky charts fitting for Halloween, and their officers are experiencing varying degrees of panic. Dermot Desmond and Mark Wall's Mountain Province Diamonds Inc. (MPVD), up 1.5 cents to 23.5 cents on 194,000 shares today, set a recent low of 19.5 cents, a level last seen, well, never -- not at least since Canadian diamonds became a thing 30 years ago.
Mr. Desmond, an Irish billionaire with eclectic investment tastes -- tastes that usually yield big profits -- may well rue the day over a quarter of a century ago when he invested big in Canadian diamonds. (Mr. Desmond currently holds over 35 per cent of the company's shares -- shares that traded above $7 in the fall of 2016. At the time, his investment in Mountain Province was worth over $400-million. Today, Mr. Desmond's 75 million shares are worth barely $16-million.)
Mr. Wall, Mr. Desmond's current pick as president and chief exploration officer of Mountain Province, is not brimming with optimism. When he revealed the latest gloom in his company's sales data earlier this month, Mr. Wall said that "in these very challenging markets we have decided to pause all discretionary spending" so that the company can "focus on maximizing cash generation and repaying the debt" -- much of that debt owed to Mr. Desmond and his companies.
It is unclear how well Mr. Wall is sleeping these nights. Recall that he came by his job two years ago, after the company's Desmond-controlled board and Stuart Brown "reached a mutual decision" that Mr. Brown would "depart the company, effective immediately." At the time, Mountain Province's shares were trading near 40 cents, about half of their 82-cent high reached several months earlier.
(There is a pattern here: Mr. Brown arrived five years ago as a replacement for Patrick Evans, who was the victim of another of Mr. Desmond's mutual decisions. At that time -- mid-2017 -- Mountain Province's stock was trading handily above the $4 mark, but that was barely half of where it had been the previous fall. Perhaps Mr. Desmond has not yet reviewed Mountain Province's current chart, which shows a 99-cent high in the spring of 2022, and a 52-week high of 79 cents, set last fall.)