Canadian diamond miner sees early signs of price recovery

The rough diamond market is showing signs of stability and early signs of a potential price recovery in the cheaper run-of-mine products, Canadian miner Mountain Province VP of diamond marketing Reid Mackie said on Thursday.

He reported that the company, whose primary asset is its 49% interest in the Gahcho Kué mine in the Northwest Territories with De Beers Canada, has had a strong start to 2019, with increased customer demand for its product and price increases observed across most rough diamond categories, particularly for the high-value diamonds.

In the low-quality market, where the downturn in prices has hammered a number of diamond juniors, Mackie said that prices had increased in the low single digits.

In the first-quarter, Mountain Province sold 643 739 ct at an average grade of $71/ct for total proceeds of $45.8-million. This compares with 527 000 ct sold at an average of $99/ct for $52-million in the first three months of 2018.

Mountain Province’s first-quarter sales and production results were slightly ahead of management expectations, with more than 9.5-million tonnes of material mined – 16% more than the same period last year. The plant treated 11% more at 870 949 t, but with a lower grade of 1.82ct/t, Gahcho Kué recovered 1.58-million carats, which is 3% less than the comparative period.

Mountain Province explained that the lower grade was the function of two key factors: mine plan sequencing, which allowed for lower grade ore tonnes to be treated, and the early impacts of initiatives to increase plant performance by increasing sieve size cut offs. The main objective of the initiative is to increase revenue for each hour generated in the Gahcho Kué plant by eliminating lower quality and smaller stones in the early stages of treatment. 

The mine is forecast to produce between 6.6-million and 6.9-million carats.

“We remain on track to achieve our 2019 target of 3.3-million to 3.45-million carats (our 49% share of the full production) recovered, which together with the improving diamond market and the planned plant enhancements will translate into a better operating margin,” said president and CEO Stuart Brown.