from stockwatch 2021-03-01 17:22 PT - Market Summary
by Will Purcell
The diamond and specialty minerals stocks box score on Monday was a positive 101-87-112 as the TSX Venture Exchange rose 15 points to 1,034, while polished diamond prices rose 0.2 per cent. Dermot Desmond and Stuart Brown's Mountain Province Diamonds Inc. (MPVD) had a good day, adding three cents to 80 cents on 148,000 shares.
Mr. Brown, president and chief executive officer, said late last week that Mountain Province's 49-per-cent-owned Gahcho Kue mine, 250 kilometres northeast of Yellowknife, has begun a "ramp-up to resume operations." The mine essentially ran to plan through the COVID-19 pandemic last year, achieving (at least its revised) production guidance, but it was suddenly shuttered early this month because of an outbreak, with two confirmed and six presumptive cases of the virus among its workers.
The ramp-up began a week ago today with an essential services crew change, which saw two industrial hygienists arrive to oversee the mine's work protocols and to complete a further deep cleaning of the facility. Essential services include power generation, water treatment and management, ploughing roads, critical maintenance and receiving fuel and cargo shipments arriving on the winter road. (In other words, most everything but mining rock and recovering diamonds.)
Mr. Brown says that the production crew returned late last week, and they began the "buildup to production" over the weekend. Presumably, ore trucks will start moving again and the processing plant will begin spitting out diamonds shortly, but the net effect of the halt and return to full production is that up to a month of full production has been lost at Gahcho Kue.
Not to worry: Mr. Brown says that "plans to mitigate the loss of production are being assessed and will continue to be reviewed over the coming weeks." In other words, Mountain Province and its majority co-venturer, De Beers Canada, are hoping to find a way to make up for the lost time. There would appear to be two options -- boost the processing rate or improve the grade -- but there undoubtedly will be some devils lurking in the details of whatever they plan.
Mountain Province said late in 2019 -- just as a virology lab in Wuhan was secretly dealing with a new coronavirus -- that it expected to produce 6.75 million to 6.95 million carats in 2020. At the end of that year the company cheered that it had mined 6.51 million carats, beating guidance, although the guidance it had beaten was a forecast prepared in mid-June that peeled roughly 500,000 carats from the initial estimate. (A closer look reveals that the mine fell a bit short of tonnages mined and processed but beat the carat target thanks to improved grades.)
That drop in production was the result of the mine sending home its (not so) local employees to their various communities in spring, and to other COVID-related protocols that made mining and processing less efficient, but Gahcho Kue did manage to run through 2020. The good news is that Mountain Province and De Beers will not have to deal with the embarrassment of lowering their 2021 guidance for Gahcho Kue: They have not yet uttered a peep about their forecast for the year.
There is a precedent. While the two co-venturers rolled out their (ill-fated) prognostication for 2020 just two weeks before the start of the year and the 2019 forecast was revealed in mid-November of 2018, Mountain Province, then led by Patrick Evans, did not produce its 2017 production guidance until late April of that year.
It appears that 2021 will be another year of production uncertainty, as when Mr. Brown most recently got around to discussing the matter, he did so with a blatant dodge: "With respect to production targets for 2021," segued Mr. Brown, "we remain focused on maintaining the health and safety of all our employees and contractors." When pressed on the matter in January by those looking to plug hard numbers into their spreadsheets, Mr. Brown said only that the Gahcho Kue partners were "finalizing all the metrics" and an update would be ready when there is more certainty on the performance of the mine and the status of the pandemic.