from stockwatch by Will Purcell
The diamond and specialty minerals stocks box score for Thursday was a positive 85-73-126. The TSX Venture Exchange fell four points to 763 while polished diamond prices rose 0.2 per cent.
Dermot Desmond's Mountain Province Diamonds Inc. (MPVD), down 17 cents to $3.30 on 2.60 million shares, is cheering one of the best diamonds recovered to date from its Gahcho Kue mine, 250 kilometres northeast of Yellowknife. The company says it recovered the 95-carat gem from the mine, but more accurately, it recovered the stone from the clutches of its majority partner, De Beers Canada, during their latest auction showdown over the monthly haul of fancies and special diamonds from the mine. (While Mountain Province cheered its latest auction win, it did not say how much it paid for the haul of valuable stones.)
Reid Mackie, the company's vice-president of diamond marketing, described the gem as the largest gem-quality diamond, and the fourth-largest diamond of any quality, from the mine so far. He says the gem was a white octahedral of top clarity. That is enough to get a diamantaire to raise an eyebrow, but had the stone been D-coloured and internally flawless, the company would probably have said so. (From Howe Street to Wall Street, what is not said is usually as important as what is revealed.) Either way, the diamond is likely to sell for a significant sum.
Mr. Mackie says that the recovery of the big gem "firmly establishes Mountain Province as a reliable producer" of exceptional, high-quality Canadian diamonds in very large sizes, which "bodes well for the future discovery of similar gems." With Gahcho Kue regularly producing diamonds at grades topping two carats per tonne over the past 18 months, there is no doubt that Mountain Province is a reliable producer of gems. Whether the company will be a regular producer of large, exceptional and high-quality stones is another matter, especially given that sales of the company's diamonds have averaged under $80 (U.S.) per carat since the mine reached production a year ago.
The average price achieved so far from Gahcho Kue is disappointing, since the company's 2014 feasibility study had projected a price of nearly $140 (U.S.) per carat for the 5034 pipe, which is currently being mined. That hefty value was based on an expectation that there would be plenty more, and larger versions of diamonds like the 9.9-carat stone from the 5034 pipe that was appraised 10 years ago at $15,000 (U.S.) per carat and the 25.14-carat gem from Tuzo that was assessed at $17,000 (U.S.) per carat. Those two gems came from mini-bulk tests of the two pipes years ago, prompting hopes that the valuable stones would pop up with regularity during mining.
Investors will have to wait for at least another month to find out what effect the 95-carat gem will have on Mountain Province's bottom line. The gem will be sold in the company's next sale in mid-June. While it is likely to fetch a significant sum, it is unlikely to skew the company's average diamond price significantly, in part because Mountain Province must also account for what it paid De Beers to acquire the stone. As a result, a $3-million (U.S.) diamond would probably boost the company's normalized average sale price by about $5 (U.S.) per carat. Of course, with the company looking to start a dividend payment shortly, every bit helps.