TSX and OTC: MPVD
TORONTO, May 9, 2023
/CNW/ - Mountain Province Diamonds Inc. ("Mountain Province", the
"Company") (TSX: MPVD) (OTC: MPVD) today announces financial
results for the first quarter ended March
31, 2023 ("the Quarter" or "Q1 2023") from the Gahcho Kué
Diamond Mine ("GK Mine"). All figures are expressed in Canadian
dollars unless otherwise noted.
Financial Highlights for First Quarter 2023
- 961,000 carats sold, with total proceeds of $128.7 million (US$95.0
million) at an average realised value of $134 per carat (US$99), a record quarterly revenue result for
the Company.
- Record Adjusted EBITDA1 of $67.5 million.
- Earnings from mine operations of $47.2
million.
- Record Net income of $28.2
million or $0.13 basic and
diluted earnings per share2.
- Repaid US$12.0 million of second
lien bond debt principal on April
4th 2023.
1Cash costs
of production, including capitalized stripping costs, and adjusted
EBITDA are non-IFRS measures with no standardized meaning
prescribed under IFRS. See "Reconciliation of non-IFRS
measures" at the end of the news release for explanation and
reconciliation.
|
|
2
Record Net Income, with Q4 2021, normalised for Impairment reversal
of $240.6 million
|
Operational Highlights for First Quarter 2023
(all
figures reported on a 100% basis unless otherwise
stated)
- 766,786 ore tonnes treated, an 8% increase relative to Q1 2022,
(Q1 2022: 707,553 tonnes treated;)
- 1,319,603 carats recovered, 11% higher than the comparable
quarter (Q1 2022: 1,185,156 carats)
- Average grade of 1.72 carats per tonne, a 3% increase relative
to Q1 2022 (1.67 carats per tonne)
- Cost per carat recovered, including capitalized stripping of
$90/carat, and cost per tonne
processed, including capitalized stripping of $155/tonne.
-
- Increase in unit cost relative to prior periods reflects
greater capitalized stripping incurred in Q1 2023 (approximately
$42 million vs $20 million in Q1 2022), as well as an increase
in one-off maintenance related costs (numerator).
- Net of Capitalized stripping, cost per carat recovered was
$58/carat in Q1 2023 vs $56 in Q1 2022.
Sales Highlights for First Quarter 2023
As previously released, during the first quarter 961,024 carats
were sold for total proceeds of $128.7
million (US$95.0 million),
resulting in an average value of $134
per carat (US$99 per carat). Three
open market sales were completed in the quarter to deliver the
highest Q1 revenue recorded by the Company to date. These results
compare favourably with two open market sales during Q1 2022 when
506,567 carats were sold for total proceeds of $84.7 million (US$66.7
million).
Reid Mackie, the Company's
Vice President Sales and Marketing, commented:
"In Q1 2023 the Company achieved record sales on the
back of a three-sale first quarter, which included
three full production shipments and buoyant prices for smaller
diamonds. Compared with Q1 2022, the lower average
sales price achieved can be primarily attributed to the different
mix of goods sold in both quarters with market prices
also adjusting downwards from the record high seen early last
year."
Growth
The latest round of drilling at Hearne has been highly
successful with the results strongly supporting the Hearne
Extension as modeled. Ten holes have been completed, with each
featuring kimberlite intercepts. One scheduled hole remains to be
drilled on Hearne, with two additional holes planned to test for
extension to the known Tuzo orebody. Final drilling results are
expected later in Q2 2023. The Company continues to work with its
joint venture partner to study the economic viability of extending
the life-of-mine at Gahcho Kué to include underground mining and
the potential inclusion of the Kennady North Project
kimberlites.
Mark Wall, the Company's
President, and Chief Executive Officer, commented:
"In the first quarter we saw an improvement in production
compared to Q1 in 2022 despite unplanned maintenance
challenges. There remains work to be done to fully optimize
production and we are working with our joint venture partner on the
required opportunities. The mine operator expects to see production
increase as we move through the year in response to these
initiatives and warmer weather.
Quarter 1 was an excellent sales period, with our sales team
bringing three sales to the market to achieve record sales results
in a market that continues to oscillate. We continue to
enjoy healthy adjusted EBITDA to revenue margins.
On costs, the mine entered a period of heavy capitalized
waste stripping during the quarter, which coupled with some one-off
maintenance related costs, resulted in a high unit cost per carat
recovered and tonne processed. We expect these costs to reduce as
we phase out of the heavy waste stripping, and return to normal
operations in the plant.
Reducing our debt by US$12
million in early April was a positive as Q1 is a
capital-intensive period for the Company, with all of the bulk
commodities and heavy equipment for the year transported up the
winter ice road. We remain focused on paying down our debt from
free cashflow and we are fortunate to have no early repayment
penalties in our debt facilities.
On growth we continue to work with our joint venture partner
De Beers on reviewing mine life extension possibilities for the
project via the drilling we are currently doing on the underground
potential of the Gahcho Kué mine, as well as reviewing any
potential to incorporate kimberlites from the Kennady
property.
We will continue to push hard in quarter 2 where we have
important maintenance work scheduled that is planned to further
optimize the processing plant at Gahcho Kué."
Gahcho Kué Mine Operations
The following table summarizes key operating statistics for the
Gahcho Kué Mine in the three months ended March 31, 2023 and 2022.
|
|
Three months
ended
|
Three months
ended
|
|
|
March 31,
2023
|
March 31,
2022
|
|
|
|
|
GK operating
data
|
|
|
|
Mining
|
|
|
|
*Ore tonnes
mined
|
kilo
tonnes
|
428
|
1,019
|
*Waste tonnes
mined
|
kilo
tonnes
|
8,507
|
7,149
|
*Total tonnes
mined
|
kilo
tonnes
|
8,935
|
8,168
|
*Ore in
stockpile
|
kilo
tonnes
|
1,420
|
1,059
|
|
|
|
|
Processing
|
|
|
|
*Ore tonnes
processed
|
kilo
tonnes
|
767
|
708
|
*Average plant
throughput
|
tonnes per
day
|
8,247
|
7,867
|
*Average diamond
recovery
|
carats per
tonne
|
1.72
|
1.67
|
*Diamonds
recovered
|
000's
carats
|
1,320
|
1,185
|
Approximate diamonds
recovered - Mountain Province
|
000's carats
|
647
|
581
|
Cash costs of
production per tonne of ore, net of capitalized stripping
**
|
$
|
99
|
93
|
Cash costs of
production per tonne of ore, including capitalized
stripping**
|
$
|
155
|
122
|
Cash costs of
production per carat recovered, net of capitalized
stripping**
|
$
|
58
|
56
|
Cash costs of
production per carat recovered, including capitalized
stripping**
|
$
|
90
|
73
|
|
|
|
|
Sales
|
|
|
|
Approximate diamonds
sold - Mountain Province***
|
000's carats
|
961
|
507
|
Average diamond sales
price per carat
|
US
|
$
99
|
$
132
|
* at 100%
interest in the Gahcho Kué Mine
|
**See "Reconciliation
of non-IFRS measures" at the end of the news release for
explanation and reconciliation.
|
***Includes the sales
directly to De Beers for fancies and specials acquired by De Beers
through the production split bidding process
|
Financial Performance
|
|
Three months
ended
|
Three months
ended
|
(in thousands of
Canadian dollars, except where otherwise noted)
|
|
March 31,
2023
|
March 31,
2022
|
|
|
|
|
Sales
|
$
|
128,657
|
84,653
|
Carats sold
|
000's
carats
|
961
|
507
|
Average price per carat
sold
|
$/carat
|
134
|
167
|
Cost of sales per
carat*
|
$/carat
|
85
|
83
|
Earnings from mine
operations per carat
|
$
|
49
|
84
|
Earnings from mine
operations
|
%
|
37 %
|
50 %
|
Selling, general and
administrative expenses
|
$
|
4,007
|
3,994
|
Operating
income
|
$
|
41,091
|
35,018
|
Net income for the
period
|
$
|
28,224
|
24,327
|
Basic earnings per
share
|
$
|
0.13
|
0.12
|
Diluted earnings per
share
|
$
|
0.13
|
0.11
|
Conference Call
The Company will host its quarterly conference call on
Wednesday, May 10th, 2023
at 11:00am ET.
Title: Mountain Province Diamonds Inc Q1 2023 Earnings
Conference Call
Conference ID: 44495174
Date of call: 05/10/2023
Time of call: 11:00 Eastern Time
Expected Duration: 60 minutes
Webcast Link:
https://app.webinar.net/dpA23QXRjg8
Participant Toll-Free Dial-In
Number:
(+1) 888-390-0561
Participant International Dial-In
Number: (+1) 416-764-8668
A replay of the webcast and audio call will be available on the
Company's website.
Reconciliation of Non-IFRS measures
This news release refers to the terms "Cash costs of production
per tonne of ore processed" and "Cash costs of production per carat
recovered", both including and net of capitalized stripping costs
and "Adjusted Earnings Before Interest, Taxes Depreciation and
Amortization (Adjusted EBITDA)" and "Adjusted EBITDA Margin". Each
of these is a non-IFRS performance measure and is referenced in
order to provide investors with information about the measures used
by management to monitor performance. These measures are intended
to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS. They do not have any standardized meaning
under IFRS and therefore may not be comparable to similar measures
presented by other issuers.
Cash costs of production per tonne of ore processed and cash
costs of production per carat recovered are used by management to
analyze the actual cash costs associated with processing the ore,
and for each recovered carat. Differences from production costs
reported within cost of sales are attributed to the amount of
production cost included in ore stockpile and rough diamond
inventories.
Adjusted EBITDA is used by management to analyze the operational
cash flows of the Company, as compared to the net income for
accounting purposes. It is also a measure which is defined in the
Notes documents. Adjusted EBITDA margin is used by management to
analyze the operational margin % on cash flows of the Company.
The following table provides a reconciliation of the Adjusted
EBITDA and Adjusted EBITDA margin with the net income on the
consolidated statements of comprehensive income:
|
Three months
ended
|
Three months
ended
|
|
March 31,
2023
|
March 31,
2022
|
|
|
|
Net income for the
period
|
$
28,224
|
$
24,327
|
Add/deduct:
|
|
|
Non-cash depreciation
and depletion
|
25,318
|
8,948
|
Share-based payment
expense
|
340
|
444
|
Fair value (gain) loss
of warrants
|
(146)
|
1,525
|
Net finance
expenses
|
9,522
|
9,140
|
Derivative
losses
|
1,065
|
77
|
Deferred income
taxes
|
1,820
|
4,270
|
Current income
taxes
|
750
|
|
Unrealized foreign
exchange losses (gains)
|
645
|
(4,146)
|
Adjusted earnings
before interest, taxes, depreciation and depletion (Adjusted
EBITDA)
|
$
67,538
|
$
44,585
|
Sales
|
128,657
|
84,653
|
Adjusted EBITDA
margin
|
52 %
|
53 %
|
The following table provides a reconciliation of the cash costs of
production per tonne of ore processed and per carat recovered and
the production costs reported within cost of sales on the
consolidated statements of comprehensive income:
|
|
Three months
ended
|
Three months
ended
|
(in thousands of
Canadian dollars, except where otherwise noted)
|
|
March 31,
2023
|
March 31,
2022
|
|
|
|
|
Cost of sales
production costs
|
$
|
49,116
|
27,120
|
Timing differences due
to inventory and other non-cash adjustments
|
$
|
(11,835)
|
5,150
|
Cash cost of
production of ore processed, net of capitalized
stripping
|
$
|
37,281
|
32,270
|
Cash costs of
production of ore processed, including capitalized
stripping
|
$
|
58,241
|
42,154
|
|
|
|
|
Tonnes
processed
|
kilo
tonnes
|
376
|
347
|
Carats
recovered
|
000's
carats
|
647
|
581
|
|
|
|
|
Cash costs of
production per tonne of ore, net of capitalized
stripping
|
$
|
99
|
93
|
Cash costs of
production per tonne of ore, including capitalized
stripping
|
$
|
155
|
122
|
Cash costs of
production per carat recovered, net of capitalized
stripping
|
$
|
58
|
56
|
Cash costs of
production per carat recovered, including capitalized
stripping
|
$
|
90
|
73
|
About Mountain Province Diamonds Inc.
Mountain Province Diamonds is a 49% participant with De
Beers Canada in the Gahcho Kué diamond mine located in Canada's Northwest
Territories. The Gahcho Kué Joint Venture property consists
of several kimberlites that are actively being mined, developed,
and explored for future development. The Company also controls more
than 113,000 hectares of highly prospective mineral claims and
leases surrounding the Gahcho Kué Mine that include an Indicated
mineral resource for the Kelvin kimberlite and Inferred mineral
resources for the Faraday kimberlites. Kelvin is estimated to
contain 13.62 million carats (Mct) in 8.50 million tonnes (Mt) at a
grade of 1.60 carats/tonne and value of US$63/carat, at February
2019. Faraday 2 is estimated to contain 5.45Mct in 2.07Mt at
a grade of 2.63 carats/tonne and value of US$140/ct, at February
2019. Faraday 1-3 is estimated to contain 1.90Mct in 1.87Mt
at a grade of 1.04 carats/tonne and value of US$75/carat, at February
2019. All resource estimations are based on a 1mm diamond
size bottom cut-off.
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 Matthew MacPhail, P.Eng., MBA,
and Tom E. McCandless, Ph.D.,
P.Geo., both employees of Mountain Province Diamonds and 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 operational
hazards, including possible disruption due to pandemic such as
COVID-19, its impact on travel, self-isolation protocols and
business and operations, 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
the development of operation hazards which could arise in relation
to COVID-19, including, but not limited to protocols which may be
adopted to reduce the spread of COVID-19 and any impact of such
protocols on Mountain Province's
business and operations, 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.
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SOURCE Mountain Province Diamonds Inc.