Mountain Province Diamonds Inc T.MPVD

Mpvd press release

[Power33]

I have to be honest and say that yesterdays press release was fantastic news. However it was extremely confusing to follow. There was zero guidance on revenue either in terms of carats or usd sales. I thought the guidance was very poorly worded and for most normal investors impossible to interpret. I would strongly recommend to the management team to drop this opaque wording on cost estimates and to give some guidance on revenue. There is nothing at first glance in the press release yesterday that implies mpvd is going to firstly make a profit in 2023, or secondly be able to pay any money off their debts. How could a discerning investor make a decision to buy shares in mpvd if the company gives zero guidance on revenue forecasts. Is this lack of transparency one of the reasons that  the share price is so low?. I suspect strongly this is the case. Anyway, I have tried to dissect the release and see what it really says. I should not have to be doing this. It is the responsibility of the board to do this, I see mpvd mined 1.6m carats in q4 2022. This is 6.4m carats on an annual basis. I note Mark Wall highlighted again the production problem issues in press release in early 2022 and he stated that these problems were sorted out and that each quarter was getting better. While in q4 they did 1.6m carats, which on an annual basis was 6.4m carats, the guidance for 2023 is 5.6m/6.1m carats. Considering 2022 guidance was initially 6.5m carats and with all the well publicised production issues, they did only 5.5m carats in 2022. With all production problems reportedly sorted, and as reported every quarter is getting better , why is production guidance for this year only 5.6/6.1m carats??Why is it not 6.4m carats, which is based on annualising q4 2022 production of 1.6m carats.The guidance seems very very low. I think management need to answer this question on the next investor call. I think because of the number of times 2022 production guidance had to be revised downwards, has led to a very cautious 2023 outlook. I would assume that mpvd share of production costs are fixed every year. They know the number of staff and what they get paid every year. The price of oil would be a guess unless it was hedged in advance. If I take 70 usd dollar a carat and  the higher end of production guidance of 6.1m carats this year  , and attribute 49pc for mpvd share, this gives an estimate of 209m cad of production costs for 2023. I would repeat that for your average investor the poor wording of the press release does not make this obvious. This 209m should be pretty much a definitive figure. We have been told that there is going to be 7m of capital expenditure this year in press release. In fact this is basically the only guidance that was given for this year, being 216m cad in production and capital costs for this year. So now I am going to try and help investors by trying to see what the real guidance was in yesterdays press release. It should be the board that is doing this but in the absence of them doing not doing it , I am going to give it a go. There is debt of 240m usd at the end of 2022. It was 300m usd at end of 2021 and yesterdays release said that 60m usd was paid off the debt in 2022. If I take a 10 pc rate of interest on full 240m use for year, this is 24m usd in interest for 2023, being 32m cad if you take current usd/cad exchange rate of 1.34. So now we can calculate that production costs, capital costs and interest will be 248m cad for this year. If I look at corporate costs for last five years 12m cad is a reasonable estimate for 2023. I see that mpvd had already announced there will be further exploration work done in Hearne and Kennady this year. I will put an estimate of say 10m cad this year. So this gives 270m of cad expenditure  in this year. Let's add another 10m for contingency for something I may have missed. So in my opinion based on yesterdays cost guidance and filling in the gaps based on historical information, 280m cad should be the total costs for 2023. How someone could actually work this out from yesterdays announcement is another days work. So now let's go to the revenue line. I see that mpvd sold their carats at an average of 113usd in 2022 . We have no idea if this was ahead or below of guidance because company never issued one for 2022 which I cannot actually understand. We were also told that mpvd sold 2.7m carats last year. Given the production disaster last year, one would have to assume this was below what the company projected. However again nobody was ever relesesd anything what the revenue or sales of carats were projected to be. This needs to change so investors can make informed decisions on whether to buy or sell this stock. I am going to be optimistic and say I think mpvd should produce 6.4m carats in 2023 based on q4 2022 production of 1.6m carats. I am going to assume mpvd sells as much as it produces this year, which is a reasonable assumption. I am guessing because no guidance was issued by mpvd. This is 3.136m carats this year. I see nothing in yesterdays press release that indicated the company expected to achieve less than 113usd a carat this year. Mark Wall seems very upbeat about the state of the diamond market. I will though exercise a little prudence and use 105usd a carat sales price in 2023. This is 140.7 cad a share using current usd/cad exchange rate. This is 441m usd of sales for 2023. I am therefore estimating that mpvd will have revenue of 441m cad and costs of 280m cad. This shows 161m possible free cash flow this tear. Obviously costs and revenue may be higher or lower in reality but my assumptions are based on previous financial statements and dissecting what the company has publicly announced. If we take the current usd/cad exchange rate of 1.34, this gives 120m usd to pay off the debt this year. This could reduce the full company debt to 120m usd at the end of this year. The net current assets at end of q3 2022 is actually close to this, if you recast  bond loans as long term liabilities. Mpvd have said they found significant kimberlite in Hearne in December 2021. They state they are in discussions with De Beers re incorporating Kennady assets into extended mining plan.They are doing more exploration for new kimberlite in Kennady this year, after positive exploration results in 2022. It would appear that mpvd has done an adjusted ebitda of over 200m cad in 2022 and will do more than this again in 2023. The current share price of 62c is a total joke. I calculate based on normal ratios for diamond companies the share price should be minimum 4cad today. I will repeat again that yesterdays press release was very confusing. There was opaque references to cost guidance and zero guidance for revenue. I think yesterdays press release was very good  for investors but only if you looked at it in detail the way I did. 2022 blew away the record for best sales by over 60m usd. This is huge news but not even highlighted at all. I may well be off on my figures but only on the revenue front because my costs are based on facts and yesterdays guidance. I think it is high time the board of mpvd give revenue guidance to the market. They can only estimate at a particular time and as long as they caveat their forecasts, they are not doing anything illegal. I hope now investors can see themselves how shockingly undervalued mpvd is today. Mpvd is highlighted on TMX as the most undervalued company on their exchange. The debt could be fully paid of in 2024 and a 1 cad dividend per share dividend is very possible for possibly up to 2050 or later if more kimberlite is found. For someone wanting a long term stable income , mpvd is what you should be buying today. I just hope management start getting the right messaging out, because yesterdays press release was not informative at first glance, unless you did a deeper dive like I did. Anyway folks let's see what 2023 brings. I really believe there is some exciting and profitable days ahead for mpvd shareholders. The bonds being extended was unbelievably good news, but simply ignored by the market for some bazaar reason. Roll on the great days ahead for mpvd

[Diamondboy123]

Great analysis power. Got bids at 58 and 59 cents.  Bid at 60 cents munched. Have a great weekend. Cheers to a dividend soon. 

[Macloud1]

If you read the technical report released by MPVD in 2022 , you will understand why the stock is where it is . They have the forecasted diamond prices until 2030 in ther as well as the diamond recovery forecast until 2030. You will note that the count drops for 2023 and especially 2024. The cost wil go up drastically because of all the country rock they have to deal with in the TUZU. They are

[Diamondboy123]

Does that mean they will never pay the debt off? Ever. 

[Power33]

That same technical report said that the discounted mpvd of mpvd shares is 2.40 cad per share, with zero value on Kennady, Hearne find or any other find in the future. I think that says it all

[Diamondboy123]

So the debt will be repaid and a divie is coming. Nice. I'm buying at these levels. 

[IslandOracle]

I share the confusion about what the release means for 2023.  The approach I took is multiplying the midpoint of the estimate for the tonnes of ore treated (3.35 million) by the midpoint of the production cost for each treated tonne ($133).  That gets you to production costs of $445 million if you do the math.  This is far higher than your estimate and suggests a break even

[Power33]

The 445m cad is on a 100 pc basis. Mpvd is 49pc of the costs