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Mountain Province Holds Back Dividend

Prices drop for lower-value stones.
Nov 14, 2018 4:38 AM   By Rapaport News
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RAPAPORT...
 Mountain Province decided not to pay a quarterly dividend to shareholders due to challenging conditions in the diamond market, the miner reported.

Demand for rough from its Gahcho Kué mine in Canada was sluggish in the third quarter amid weakness in India, the company said Monday. Prices of lower-value diamonds dropped even as sales increased 15% year on year to CAD 74.9 million ($56.6 million) for the period.

Profit slumped 37% to CAD 17.5 million ($13.2 million), weighed by foreign-exchange losses and expenses related to exploration work at the Kennady asset, which it acquired in January.

The miner has to balance paying dividends and reducing debt, it said. As such, “the company has taken a view that with the current pricing pressure, it will not be declaring a dividend this quarter,” it continued. Its share price fell 13% on the Toronto Stock Exchange Tuesday following the news.

“The impact of the weakening Indian rupee, together with the overhang from demonetization and a major fraud in India, have combined to reduce the availability of credit offered to diamantaires in the industry,” Mountain Province CEO Stuart Brown explained. “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 [the third quarter].”

By contrast, demand was strong for stones weighing 10.80 carats or higher and those that produce fancy-color polished, Brown noted. As a result, the average selling price climbed 12% to CAD 95 ($72) per carat for the quarter.

Revenue for the first nine months jumped to CAD 240.5 million ($181.7 million) from CAD 92.9 million ($70.2 million) for the same period a year ago. The average price increased 4% to CAD 99 ($75) per carat, while profit dropped 66% to CAD 11.3 million ($8.5 million).

Image: Gahcho Kué mine. (Mountain Province)
Tags: Gahcho Kué, kennady, mountain province, Rapaport News, stuart brown
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