from stockwatch 2019-05-29 17:00 PT - Market Summary
by Will Purcell
Dermot Desmond and Stuart Brown's Mountain Province Diamonds Inc. (MPVD) is still looking to manoeuvre its Kennady North project into the Gahcho Kue mine plan. Mountain Province, up 5.5 cents to $1.165 on 355,000 shares, continues to cheer a consultant's report on the Faraday 2 kimberlite, a key part of Kennady North. (The other key component, Kelvin, has already been adequately explored and well promoted by Mountain Province.)
Mountain Province credits Faraday 2 with 2.07 million tonnes of kimberlite at 2.63 carats per tonne, a total of 5.45 million carats that another consulting company, WWW International Diamond Consultants, has modelled at $140 (U.S.) per carat. Faraday 2 augments the larger Kelvin body, which hosts 8.5 million tonnes indicated at 1.6 carats per tonne, about 13.6 million carats, but with a diamond value of just $63 (U.S.) per carat.
The new numbers for Faraday 2, first revealed in mid-April, lifted Mountain Province's moribund stock off its multiyear low of $1.09, briefly sending it above $1.40. This week's regurgitation of the basic resource numbers at Faraday -- companies often take advantage of the 45-day filing window to mount an encore promotion -- kicked the stock, which had traded at $1.43 early Monday, down 14 cents to $1.11 on 2.8 million shares Tuesday.
The main problem with Kennady North is that Mountain Province owns a 100-per-cent interest but has just a 49-per-cent interest in the nearby Gahcho Kue mine. De Beers, which operates Gahcho Kue, would have to acquire a 51-per-cent interest in Kennady North to add its kimberlite into the mine plan, and negotiations to accomplish that are going slowly.
Mr. Brown, Mountain Province's chief executive officer for the past year, says that his company has "got to a stage where we are comfortable with what we understand in the Kelvin-Faraday information," adding that De Beers has access to that data. He says that De Beers is working on a new life-of-mine plan for Gahcho Kue that is expected to include additional kimberlite being delineated around the main Gahcho Kue pipes, particularly northward toward Tuzo and beyond. De Beers already has a 51-per-cent interest in that rock, so adding it to the mine plan remains a priority.
Mr. Brown says that once the mine plan is revised to include the new Gahcho Kue rock, the two companies will then be able to see how they can include the Kennady North rock as well. With Gahcho Kue's new kimberlite, the life of the mine now appears likely to extend beyond 2030, so it could be some time until the Kennady North rock is mined unless it is given a higher priority.
Much of that will depend upon the veracity of the Faraday 2 resource estimates. The hefty grade and high diamond value work out to a gross rock value of $370 (U.S.) per tonne, compared with barely $100 (U.S.) per tonne for Kelvin, but the calculation is subject to a large margin of error. (Unfortunately, with modelled diamond prices, the margin inevitably runs in one direction: lower. That was certainly the case at 5034, the flagship pipe at Gahcho Kue, where a $140-(U.S.)-per-carat modelled value turned into a $70-(U.S.)-per-carat production value.) Therefore, De Beers will presumably take a hard look at Mountain Province's data.