from will purcell Dermot Desmond and Patrick Evans's Mountain Province Diamonds Inc. (MPV) gained eight cents to $5.10 on 115,000 shares. The company says construction of its Gahcho Kue mine, 250 kilometres northeast of Yellowknife, is 94 per cent complete. Mr. Evans, president and chief executive officer, says that the build remains on schedule for first production in the second half of 2016. He also says the work is proceeding according to budget, but he means the revised budget that the company and its majority co-venturer, De Beers Canada, recently adopted. The partners had been working to a $1.02-billion budget, but the costs have increased since then. How much is not certain as Mountain Province goes to some lengths to avoid mentioning a new bottom line, but it appears to be on the order of $1.08-billion.
According to the latest feasibility study, Gahcho Kue will produce an average of 4.5 million carats per year over a 12-year run, based on a reserve estimate of 35.4 million tonnes averaging 1.57 carats per tonne -- about 55.5 million carats. Extending the mine life will improve the project economics and Mountain Province and De Beers believe several million carats in the depths of the Tuzo pipe could do just that. In addition to the reserve, the partners list over 11 million tonnes of inferred kimberlite, most of it at depth in Tuzo, and at an average of 1.64 carats per tonne it hosts another 18.5 million carats.
As well, rumours persist that a recent management shakeup at Mr. Desmond and Mr. Evans's other diamond company, Kennady Diamonds Inc. (KDI: $3.69), is a precursor to Mountain Province reabsorbing Kennady. Mountain spun off Kennady in 2012 to facilitate exploration and development of what were believed to be two small Kennady North kimberlites, Kelvin and Faraday. Mr. Evans, who stepped down as president and CEO of Kennady last week, steadily increased the tonnage target for Kennady North, which reached up to 16 million tonnes at roughly two carats per tonne at last report. Unfortunately, the modelled diamond values have been unimpressive so far, making an independent mine based on Kelvin and Faraday more difficult to promote. Still, the kimberlite and its diamonds could add several years to the life of Gahcho Kue.