by Will Purcell The diamond and specialty minerals stocks box score on Friday was an upbeat 100-61-149 as the TSX Venture Exchange rose five points to 623. Rough diamond prices appear to have flattened anew, although at a lower plateau than occurred in fall. Paul Zimnisky nudged last week's setting of his global rough diamond price index upward by 0.1 point to account for tardy data, but he then peeled that sliver away this week, leaving his index at 128.2 points, exactly where we thought it was a week ago.
The past three weeks have been flattish, if not completely flat, unlike the five weeks before that, during which the index shed nearly nine points, or about 6.5 per cent. That slump, and a more gradual one earlier in the year that consumed 13 points -- about 8.7 per cent -- across a five-month period, accounted for nearly all the 2024 decline of 23.8 points, a drop of about 16.3 per cent from the first January fix at 152.0 points.
And so, the current index sits barely above the COVID-19 low of spring in 2020, when Mr. Zimnisky estimated his index at barely 120 points. Mind you, he also cautioned that the value was essentially meaningless, as most diamond miners wanting to sell goods were unable to do so at any price. Nevertheless, the comparison highlights how far rough diamond prices have fallen since the index reached a post-COVID high of 207.3 points in early 2022.
Indeed, not long after Mr. Zimnisky created the current iteration of his index late in 2007, launching it at 100 points, the first major crisis plaguing the diamond sector set in. What became known as the Great Recession was more of a depression to those operating in the diamond sector, and the depth of that depression in the spring of 2009 saw Mr. Zimnisky lower his index to about 75 points.
Yes, the current setting is about 70 per cent higher than then -- then being a time when even Harry Winston Inc. was teetering on the brink of bankruptcy despite the company having the financial horsepower to pay a $1 (U.S.) annual dividend through the mid-2000s. Unfortunately, inflation has eaten away most of that 70-per-cent gain. Consumer price indices have cumulative inflation nearing 50 per cent since early 2009, and if there was a mining price index, it would certainly have eroded more -- if not all -- of the gain in rough prices.
And so, here we are. Harry Winston, which became Dominion Diamond Corp. in 2012 and went private as Dominion Diamond Mines Ltd. in 2017, did go bankrupt in 2020 amid the COVID crisis. Today, Canada's last public diamond miner, Mountain Province Diamonds Inc. (MPVD), has been evading a similar fate only because its major shareholder, Irish billionaire Dermot Desmond, has been willing to tide the company over on occasion through timely loans and diamond purchases.
Even so, Mountain Province drifted to a new low late last year of 9.5 cents as the company expressed increasing concerns about maintaining compliance with its various debt covenants. There also have been rumours about De Beers, the company's majority co-venturer at its 49-per-cent-owned Gahcho Kue mine in the Northwest Territories, looking to sell its share of the mine.
While the rumours may well be just speculative spinoff from Anglo American PLC looking to sell De Beers, remember that De Beers had begun scaling back its Canadian operations dramatically a few years ago, and over the past year it has significantly cut exploration and operating costs at Gahcho Kue, which is De Beers's last major presence in Canada. (Either way, Mountain Province is unlikely to be in a position to buy out De Beers without a clear nod and significant financial support from Mr. Desmond.) Mountain Province lost one-half cent to 11 cents on 31,000 shares today.