TSX and NASDAQ: MPVD
TORONTO and NEW YORK, Nov. 12,
2018 /PRNewswire/ -- Mountain Province Diamonds Inc.
("Mountain Province", or the
"Company") (TSX: MPVD) (NASDAQ: MPVD) today announces its financial
and operating results for third quarter ended September 30, 2018 ("Q3 2018"). All figures
are expressed in Canadian dollars unless otherwise stated.
Highlights
- Earnings from mine operations for the three and nine months
ended September 30, 2018 amounted to
$25.2 million and $68.3 million respectively.
- The net income for the three and nine months ended September 30, 2018 was $17.5 million or $0.08
cents earnings per share and $11.3
million or $0.06 cents
earnings per share. Included in the determination of net income for
the three and nine months ended September
30, 2018 are unrealized foreign exchange gains (losses) of
$6.7 million and ($11.5) million respectively, on the translation
of the Company's USD-denominated long-term debt. Generally, the
weakening Canadian dollar compared to US dollar is beneficial to
the Company.
- Adjusted EBITDA1 of $38.0 million and $112.7
million in the three and nine months ended September 30, 2018 respectively.
- During the quarter ended September 30,
2018, the Company repurchased $19.7
million (US$15.0 million) of
secured notes.
- For the nine months ended September 30,
2018, approximately 2,443,000 tonnes of ore treated and
5,391,000 carats recovered, on a 100% basis, for an average
recovered grade of 2.21 carats per tonne ("cpt"), ahead of
expectations. The recovered grade for Q3 2018 was also very high at
2.40 cpt. The Company's 49% attributable share of diamond
production for the three and nine months ended September 30, 2018 was approximately 891,000
carats and 2,642,000 carats respectively.
- Sales for the nine months ended September 30, 2018 were $240.5 million (US$186.4
million) at an average realized value of $99 per carat (US$77 per carat).
- Cash costs of production, including capitalized stripping
costs1, for the three and nine months ended September 30, 2018 were $88 ($70 without
stripping) and $94 ($77 without stripping) per tonne of ore processed
respectively.
- Cash costs per carat recovered including stripping were
$37 ($29 without stripping) for the quarter and
$42 ($35 without stripping) for the nine months ended
September 30, 2018.
- Quarter end cash position of $27.9
million and net working capital of $92.0 million, with the US$50 million revolving credit facility remaining
undrawn. As of September 30, 2018,
the debt balance was $406.5 million
(US$314.9 million). During the
quarter ended September 30, 2018, the
Company repurchased $19.7 million
(US$15.0 million) of secured
notes.
- $3.6 million of exploration
expenditure for ongoing exploration work on the Kennady properties
was incurred in the nine months ended September 30, 2018.
1
|
Cash costs of
production, including capitalized stripping costs, and adjusted
EBITDA are non-IFRS measures with no standardized meaning
prescribed under IFRS. See the Non-IFRS Measures section of
the Company's September 30, 2018 MD&A for explanation and
reconciliation.
|
Stuart Brown, the Company's
President and CEO, commented, "The performance of the Gahcho Kué
Mine was as expected for the quarter, we remain on track to achieve
or exceed all production targets for the year in a safe and
sustainable manner. The sales for the quarter were in line with our
expectations but do reflect the somewhat difficult trading
conditions that have been widely reported in the rough diamond
market over the recent period. The market for fancies and
specials has remained strong with firm pricing in all categories.
The impact of the weakening Indian Rupee, together with the
overhang from demonetisation and a major fraud in India have combined to reduce the availability
of credit offered to diamantaires in the industry. A
consequence of this has been a price weakening of goods of the
small lower quality and brown categories where we have seen price
decreases during Q3. With major diamond jewellery retailers
reporting strong results to date in 2018 and the industry
forecasting a positive holiday season for sales in the US, the
industry is well positioned to see some price stability return in
the first half of 2019.
In line with our policy of assessing cash flow and striking a
balance between paying dividends ($8.4
million) and reducing debt ($19.7
million) during the third quarter, the Company has taken a
view that with the current pricing pressure it will not be
declaring a dividend this quarter but will continue to buy back the
debt when the opportunity arises. We will also continue to
review the balance between debt reduction and any surplus cash
being available for dividends on a quarter per quarter basis
throughout 2019.
Notwithstanding the current rough market and its impact on the
performance of most diamond companies, I believe that with the
margins and the longevity of available ore at the Gahcho Kué Mine
and Kennady ore bodies that Mountain
Province is well placed for the future.
Financial Highlights
(in thousands of
Canadian dollars,
except where
otherwise noted)
|
|
Three months
ended
September 30,
2018
|
Three months
ended
September 30,
2017
|
Nine months
ended
September 30,
2018
|
Nine months
ended
September 30,
2017
|
|
|
|
|
|
|
Sales
|
$
|
74,852
|
65,218
|
240,492
|
92,866
|
Carats
sold
|
000's
carats
|
789
|
765
|
2,430
|
980
|
Average price per
carat sold
|
$/carat
|
95
|
85
|
99
|
95
|
Cost of sales per
carat*
|
$/carat
|
63
|
54
|
71
|
58
|
Earnings from mine
operations per carat
|
$
|
32
|
31
|
28
|
37
|
Earnings from mine
operations
|
%
|
34%
|
37%
|
28%
|
40%
|
Selling, general and
administrative expenses
|
$
|
3,178
|
3,334
|
10,519
|
10,878
|
Operating
income
|
$
|
19,952
|
20,657
|
51,244
|
24,892
|
Net income for the
period
|
$
|
17,483
|
27,669
|
11,270
|
33,079
|
Basic and diluted
earnings per share
|
$
|
0.08
|
0.17
|
0.06
|
0.21
|
* This cost of sales
per carat includes the cost of acquiring 51% of the fancies and
specials which have been sold, after having been won in a tendering
process with De Beers.
|
Gahcho Kué Mine Operations
The following table summarizes key operating statistics for the
Gahcho Kué Mine in the three and nine months ended September 30, 2018 and 2017.
|
|
Three
months ended
|
Three months
ended
|
Nine months
ended
|
Nine months
ended
|
|
|
September 30,
2018
|
September 30,
2017
|
September 30,
2018
|
September 30,
2017
|
GK operating
data
|
|
|
|
|
|
Mining
|
|
|
|
|
|
*Ore tonnes
mined
|
kilo
tonnes
|
1,155
|
1,123
|
2,237
|
2,674
|
*Waste tonnes
mined
|
kilo
tonnes
|
10,437
|
7,190
|
27,841
|
21,698
|
*Total tonnes
mined
|
kilo
tonnes
|
11,592
|
8,313
|
30,078
|
24,372
|
*Ore in
stockpile
|
kilo
tonnes
|
634
|
695
|
634
|
695
|
|
|
|
|
|
|
Processing
|
|
|
|
|
|
*Ore tonnes
processed
|
kilo
tonnes
|
759
|
823
|
2,443
|
2,082
|
*Average plant
throughput
|
tonnes per
day
|
8,433
|
8,944
|
8,949
|
7,626
|
* Average diamond
recovery
|
carats per
tonne
|
2.40
|
2.22
|
2.21
|
2.07
|
*Diamonds
recovered
|
000's
carats
|
1,819
|
1,825
|
5,391
|
4,306
|
Approximate diamonds
recovered - Mountain Province
|
000's
carats
|
891
|
894
|
2,642
|
2,110
|
Cash costs of
production per tonne, net of
capitalized stripping **
|
$
|
70
|
73
|
77
|
77
|
Cash costs of
production per tonne of ore,
including capitalized stripping**
|
$
|
88
|
73
|
94
|
80
|
Cash costs of
production per carat recovered,
net of capitalized stripping**
|
$
|
29
|
33
|
35
|
36
|
Cash costs of
production per carat recovered,
including capitalized stripping**
|
$
|
37
|
33
|
42
|
37
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
Approximate diamonds
sold - Mountain Province***
|
000's
carats
|
789
|
764
|
2,430
|
1,650
|
Average diamond sales
price per carat
|
US
|
$
|
73
|
$
|
69
|
$
|
77
|
$
|
75
|
* at 100% interest in
the GK Mine including ramp-up period in 2017
|
**See Non-IFRS
Measures section
|
***Includes the sales
directly to De Beers for fancies and specials acquired by De Beers
through the production split bidding process
|
Three and Nine Months Ended September
30, 2018 Operational and Financial Highlights
(all figures reported on a 100% basis unless otherwise
stated)
- The plant treated 759,000 tonnes during the quarter and for the
nine months ended September 30, 2018,
the plant treated 2,443,000 tonnes.
- 1,819,000 carats were recovered at an average grade of
approximately 2.40 carats per tonne in Q3 2018. Year to date,
5,391,000 carats have been recovered at an average grade of 2.21
carats per tonne. Q3 2018 recovered grade of 2.40 carats per
tonne, was 8% higher than the same quarter last year, reflecting a
strong grade performance in the third quarter.
- 1,155,000 ore tonnes were mined in Q3 2018. Year to date, a
total of 2,237,000 tonnes of ore have been mined.
Mining operations continue to exceed targets with the plant
producing over 5.39 million carats in the first nine months of the
year. Tonnes treated and carats recovered are both tracking
ahead of forecast figures and at September
30 2018, the Company remains well positioned to exceed the
upper end of its full year 2018 production guidance of 6.3 – 6.6
million carats recovered.
Cash on hand at September 30, 2018
was $27.9 million, a $5.6 million decrease from the prior quarter
balance of $33.5 million due to the
Company repurchasing $19.7 million of
its bond debt and a dividend payment of $8.4
million. Net working capital at September 30, 2018 was $92.0 million and the Company's US$50 million revolving credit facility remained
undrawn.
Conference Call
Full details of the financial and operating results for the
three and nine months ended September 30,
2018 are described in Mountain
Province's unaudited condensed consolidated interim
financial statements with accompanying notes and related
Management's Discussion and Analysis. These documents are
available on the Company's website
at www.mountainprovince.com and on SEDAR
at www.sedar.com and on EDGAR
at www.sec.gov/edgar.shtml. Shareholders may contact
Mountain Province at 161 Bay
Street, PO Box 216, Toronto, ON,
M5J 2S1, to request, free of charge, hard copies of the unaudited
condensed consolidated interim financial statements and related
Management's Discussion and Analysis.
The Company will host an earnings conference call for analysts
and investors on Tuesday, November 13,
2018, at 11:00 a.m. Eastern
Time. The conference call can be accessed using the
following details. A replay of the call will also be
available on the Company's website.
Conference ID: 5565909
Date of call: 11/13/2018
Time of call: 11:00 Eastern Time
Expected Duration: 60 minutes
Participant Toll-Free Dial-In Number: (866) 300-0510
Participant International Dial-In Number: (636) 812-6656
Replay:
Toll-Free Dial-In: (855) 859-2056
International Dial-In: (404) 537-3406
Passcode: 5565909
Mountain Province Diamonds is a 49% participant with
De Beers Canada in the Gahcho Kué Mine located in Canada's Northwest Territories. Gahcho
Kué 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.
Qualified Person
The disclosure in this news release
of scientific and technical information regarding Mountain Province's mineral properties has
been reviewed and approved by Keyvan
Salehi, P.Eng., MBA, and Tom E.
McCandless, Ph.D., P.Geo., both Qualified Persons as defined
by National Instrument 43-101 Standards of Disclosure for
Mineral Projects.
Caution Regarding Forward Looking
Information
This news release contains certain
"forward-looking statements" and "forward-looking information"
under applicable Canadian and United
States securities laws concerning the business, operations
and financial performance and condition of Mountain Province
Diamonds Inc. Forward-looking statements and forward-looking
information include, but are not limited to, statements with
respect to estimated production and mine life of the project of
Mountain Province; the realization
of mineral reserve estimates; the timing and amount of estimated
future production; costs of production; the future price of
diamonds; the estimation of mineral reserves and resources; the
ability to manage debt; capital expenditures; the ability to obtain
permits for operations; liquidity; tax rates; and currency exchange
rate fluctuations. Except for statements of historical fact
relating to Mountain Province,
certain information contained herein constitutes forward-looking
statements. Forward-looking statements are frequently
characterized by words such as "anticipates," "may," "can,"
"plans," "believes," "estimates," "expects," "projects," "targets,"
"intends," "likely," "will," "should," "to be", "potential" and
other similar words, or statements that certain events or
conditions "may", "should" or "will" occur. Forward-looking
statements are based on the opinions and estimates of management at
the date the statements are made, and are based on a number of
assumptions and subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ
materially from those projected in the forward-looking
statements. Many of these assumptions are based on factors
and events that are not within the control of Mountain Province and there is no assurance
they will prove to be correct.
Factors that could cause actual results to vary materially
from results anticipated by such forward-looking statements include
variations in ore grade or recovery rates, changes in market
conditions, changes in project parameters, mine sequencing;
production rates; cash flow; risks relating to the availability and
timeliness of permitting and governmental approvals; supply of, and
demand for, diamonds; fluctuating commodity prices and currency
exchange rates, the possibility of project cost overruns or
unanticipated costs and expenses, labour disputes and other risks
of the mining industry, failure of plant, equipment or processes to
operate as anticipated.
These factors are discussed in greater detail in Mountain Province's most recent Annual
Information Form and in the most recent MD&A filed on SEDAR,
which also provide additional general assumptions in connection
with these statements. Mountain
Province cautions that the foregoing list of important
factors is not exhaustive. Investors and others who base
themselves on forward-looking statements should carefully consider
the above factors as well as the uncertainties they represent and
the risk they entail. Mountain
Province believes that the expectations reflected in those
forward-looking statements are reasonable, but no assurance can be
given that these expectations will prove to be correct and such
forward-looking statements included in this news release should not
be unduly relied upon. These statements speak only as of the
date of this news release.
Although Mountain Province
has attempted to identify important factors that could cause actual
actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors
that cause actions, events or results not to be anticipated,
estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Mountain Province undertakes no obligation to
update forward-looking statements if circumstances or management's
estimates or opinions should change except as required by
applicable securities laws. The reader is cautioned not to
place undue reliance on forward-looking statements.
Statements concerning mineral reserve and resource estimates may
also be deemed to constitute forward-looking statements to the
extent they involve estimates of the mineralization that will be
encountered as the property is developed.
Further, Mountain Province
may make changes to its business plans that could affect its
results. The principal assets of Mountain Province are administered pursuant to
a joint venture under which Mountain
Province is not the operator. Mountain Province is exposed to actions taken
or omissions made by the operator within its prerogative and/or
determinations made by the joint venture under its terms.
Such actions or omissions may impact the future performance of
Mountain Province. Under its current note and revolving
credit facilities Mountain
Province is subject to certain limitations on its ability to
pay dividends on common stock. The declaration of dividends
is at the discretion of Mountain
Province's Board of Directors, subject to the limitations
under the Company's debt facilities, and will depend on
Mountain Province's financial
results, cash requirements, future prospects, and other factors
deemed relevant by the Board.
Stuart Brown, President and CEO,
161 Bay Street, Suite 1410, Toronto,
Ontario M5J 2S1, Phone: (416) 361-3562, E-mail:
info@mountainprovince.com; Keyvan
Salehi, Investor Relations, 161 Bay Street, Suite 1410,
Toronto, Ontario M5J 2S1, Phone:
(416) 361-3562, E-mail: info@mountainprovince.com