TSX and NASDAQ: MPVD
TORONTO and NEW YORK, Nov. 27, 2018 /CNW/ - Mountain Province Diamonds Inc. ("Mountain Province", the "Company") (TSX and NASDAQ: MPVD) is pleased to provide guidance for fiscal year 2019 for the Gahcho Ku Mine as well as an update on company's performance in 2018. All amounts expressed in Canadian dollars unless otherwise stated.
Highlights 2019: (all figures quoted on a 100% basis)
- 3.1 to 3.2 million ore tonnes processed
- 6.6 – 6.9 million carats recovered
- Production costs of $110 – $120 per tonne processed
- Production costs of $50 – $54 per carat recovered
In addition to the 2019 guidance, the Company also provides a 3-year production outlook for the Gahcho Ku Mine from the updated life of mine plan as summarized in the following table.
| | | | | |
| | | 2019 | 2020 | 2021 |
| ore tonnes processed | million | 3.1- 3.2 | 3.1-3.2 | 3.1-3.2 |
| carats recovered | million | 6.6 – 6.9 | 6.6 – 6.9 | 6.8 - 7.1 |
| cash costs of production per tonne1 | $ | $110 - $120 | $110 - $120 | $110 - $120 |
| cash costs of production per carat | $ | $50 - $54 | $49 - $53 | $48 - $52 |
| Sustaining Capital Expenditures | $ million | $20 | $10 | $7 |
| 1 including capitalized stripping |
The production guidance over the three-year period 2019 to 2021 is evidence of a sustainable and smooth mining rate as the mine performance maintains a steady state. In the near term, ore tonnes mined and processed for 2019 will be predominantly from the Hearne pit where knowledge of the various kimberlite facies is still being gained as mining into this new area is being expanded.
The mine has performed well in 2018 and there is high confidence that the tonnes treated will be on target for the year and carats recovered will be above the upper end guidance of 6.6 million carats, all of which will be achieved within the expected working cost and capital budgets stated for 2018.
Update on Exploration Programs
2018 has been a busy year for exploration, the company previously announced (September 17th 2018) the results of the first drilling campaign with the discovery of the intersection of kimberlite ore at depth between 5034 and Tuzo. During the remainder of 2018 and into 2019, and on the back of successful work completed so far, additional drilling will be undertaken to further delineate the extension of mineralization along these ore bodies. The Company has confidence in this project and further potential success could improve the longer term prospects for the Gahcho Ku Mine.
In addition to the resource extension work underway on the JV property, Mountain Province will be conducting additional enhancement work on its 100%-held Kennady properties. Drilling conducted in 2017 extended the Faraday 2 kimberlite by 150 meters to the northwest, and core from this program has been submitted to Saskatchewan Research Council for microdiamond recovery. The microdiamond data will then be used to extend the inferred resource at Faraday 2, which will be reported in early 2019. A winter 2019 exploration program is also scheduled to drill test geophysical anomalies located immediately to the southwest of the Gahcho Ku Mine.
Debt Repayment
In line with the Company's policy of reviewing and managing cash flow, post the completion of the 9thsale, an additional $6.65 million (US$5 million) of the Company's debt was repurchased, which brings the total debt repurchased for the year to $26.6 million (US$20 million).
CEO Commentary
Stuart Brown, the Company's President and Chief Executive Officer commented, "with the 2018 fiscal year coming to an end, we are well on our way to exceed the upper end of our 2018 guidance. As we look forward to 2019 and beyond, our business plan demonstrates the quality of our core asset and the excellent work that the operations team has carried out over the past year; both in exceeding the targets for the current year, and building a stronger longer term business plan that should extend the life of mine beyond 2028. We will continue to build on our operational success of the past year as we further explore all opportunities within our highly prospective land package. Our forecasts for 2019 and beyond demonstrate that our operating margins remain healthy and the mine continues to generate positive free cash flow to cover all our operating costs and debt service requirements while still being able to fund the potential expansion of the asset and continued debt reduction. Any surplus cash available after this will be considered for potential dividend payments"
Mr. Brown, added, "2018 has certainly been a difficult year for producers in the industry. The first half of the year was relatively calm with modest price increases seen across all categories of diamonds; however, from July onwards we have witnessed some price pressure, particularly in the smaller, lower quality diamond space. We did see a slight price improvement in the smaller lower quality goods in our recent 9thsale where we again sold all our available production. The improved sales performance was encouraging as we head into the peak diamond retail season, which if successful should hopefully translate into an improvement of confidence in the rough diamond market in 2019."
The Company is also pleased to announce that the latest bid for fancies and specials was successful. Included in the lot was an exceptional 60 carat vivid yellow sawable stone, the first one of this size and quality to come from the mine. The find demonstrates the mine's potential to produce excellent, large sized, fancy coloured stones. During 2018, the Company performed very well in its bids for Fancies and Specials, winning 8 out of 9 bids to date with profits achieved at sales representing a material contribution to revenue during the period.
Mountain Province Diamonds is a 49% participant with De Beers Canada in the Gahcho Ku diamond mine located in Canada's Northwest Territories. Gahcho Ku is the world's largest new diamond mine, consisting of a cluster of four diamondiferous kimberlites, three of which are being developed and mined under the initial 12-year mine plan. It also controls 61,000 hectares adjacent to Gahcho Ku that includes the Kelvin and Faraday assets, under its wholly-owned subsidiary Kennady Diamonds Inc.