Will P's take on the Mpvd news Dermott Desmond's Mountain Province Diamonds Inc.(MPVD) lost 16 cents to $4.05 on 221,000 shares on word that it is parting way with its 11-year president and chief executive officer, Patrick Evans. The company said after the close yesterday that it had "reached a mutual decision" with Mr. Evans that he would "depart the company, effective immediately" -- a statement suggestive of the "you're fired; no, I quit" sophomoric scenario that plays out in the mailrooms and loading docks of companies around the world. (Mr. Evans's departure does not appear to be dripping with rancour, as he remains a director and has agreed to lend a hand during the transitional period.) Investors did not welcome the news. Mountain Province's stock tumbled as low as $3.61 in early trading, tripping a regulatory circuit breaker and prompting a four-minute halt.
Mr. Evans's interim replacement is David Whittle, Mountain Province's "lead outside director." He joined the company in 1997 when Mountain Province amalgamated with his Glenmore Highlands Inc. in 1997. (Glenmore held a 40-per-cent interest in what became the Gahcho Kue project.) Mr. Whittle was also a director of Lytton Minerals Ltd., a major explorer in Canada's North during the 1990s. (Lytton subsequently transformed into Tahera Diamond Corp., which later dissolved in bankruptcy.)
Mountain Province's chairman, Jonathan Comerford, offered the usual pleasantries to his former CEO. He said that Mr. Evans had "worked tirelessly" to bring the Gahcho Kue project to a positive development decision and has brought the company "to where we are today as a diamond producer and marketer." That is certainly true: Mr. Evans, seemingly singlehandedly, battled to advance Gahcho Kue when his majority partner, De Beers Canada, was content to leave the project in mothballs indefinitely. Mountain Province commissioned its own feasibility study of the project and subsequently got De Beers to accept the document, allowing the co-venturers to proceed with building the billion-dollar mine.
Unfortunately, it is still unclear where Mountain Province is today as a diamond producer and marketer, as some big questions remain about the performance of Gahcho Kue, which began operations last summer and declared commercial production at the end of February. The grade is in line with the feasibility study estimates, but the flow of large and exceptional diamonds has not lived up to Mr. Evans's hype. Gahcho Kue produced two exceptional diamonds during bulk sampling, stones that essentially doubled the value of the parcels. That value was partially included in the modelled valuations, which came close to $140 (U.S.) per carat for the 5034 pipe currently being mined, and Mr. Evans liked to tout the full appraised value of about $170 (U.S.) per carat. Unfortunately, Mountain Province's diamond sales averaged just $72 (U.S.) per carat in its first quarter.
Mr. Evans's departure from the Mountain Province group began a year ago, when Mr. Comerford, who is also the chairman of Mr. Desmond's Kennady Diamonds Inc. (KDI: $3.50), said that Kennady's board determined that having a president and CEO that was independent of Mountain Province was the next key step in separating the two companies. As a result, Mr. Evans, who founded Kennady as a spin-off from Mountain Province in 2012 and was the head of both companies, was replaced at Kennady. Now he is gone from both.