from stockwatch 2018-07-24 15:27 PT - Market Summary
by Will Purcell
Dermot Desmond's Mountain Province Diamonds Inc. (MPVD), unchanged at $3.22 on 84,000 shares, should have a solid second quarter at its Gahcho Kue mine despite lower than expected ore production. The company mined just 341,000 tonnes of ore during the quarter, compared with an average of nearly 880,000 tonnes during the four quarters of 2017, and the 940,000 tonnes that the mine managed in the second quarter last year. The company's new president and chief executive officer, Stuart Brown, says that this was primarily because the mine was in a "high waste cycle," thanks to the start-up of the Hearne open pit. Gahcho Kue mined nearly 10 million tonnes of waste during the quarter.
Nevertheless, the mine managed to produce 1.93 million carats during the quarter, as it put nearly 900,000 tonnes of ore through the plant. Last year, the company mined nearly 740,000 more tonnes than it processed, leaving it with more than enough kimberlite to see it through the quarter. Further, the mine averaged 2.15 carats per tonne from the rock, slightly ahead of its 2017 average of 2.14 carats per tonne.
With the year now half complete, Mountain Province and De Beers Canada, its majority co-venturer at Gahcho Kue, say that their mine "remains well positioned" to hit the upper end of its 2018 production guidance of 6.3 million to 6.6 million carats. Through the first half, the mine yielded 3.57 million carats, suggesting that the mine could break the seven-million-carat mark for the full year.
Gahcho Kue's grade should remain healthy with mining about to ramp up at Hearne, as the pipe has a higher grade than the 5034 pipe, which has been the sole source of ore for the past two years. Hearne averaged 2.07 carats per tonne in a 2014 feasibility study, compared with just under 1.7 carats per tonne at 5034. The latter pipe has been averaging just over two carats per tonne so far, handily topping the earlier projections, so investors will be watching closely to see if Gahcho Kue gets the same bump at Hearne.
Investors will also be watching the rough diamond sales closely, as Hearne's diamonds were modelled at just $107 (U.S.) per carat, compared with nearly $140 (U.S.) per carat at 5034. Diamond value has been the only disappointment at Gahcho Kue so far, as the mine averaged just $70 (U.S.) per carat from 5034 last year. This year has been a bit better, with Mountain Province averaging just over $80 (U.S.) per carat through the first five of 10 sales this year.