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Mountain Province Loss Widens Amid Weak Pricing

Market slowdown at end of 2019 leads to devaluation of Gahcho Kué mine.
Mar 24, 2020 12:08 PM   By Rapaport News
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RAPAPORT... Mountain Province’s losses intensified in 2019 as weaker anticipated diamond prices led to the devaluation of its Gahcho Kué mine.

The miner posted a net loss of CAD 128.8 million ($89 million), compared with a loss of $14.1 million in 2018, it said Monday. The miner was hit by an impairment charge of CAD 115.8 million ($80 million) on the value of Gahcho Kué’s property, plant and equipment. That devaluation was mainly attributable to the downward revision of future expected diamond pricing in light of the weak market conditions in the industry at the end of the year.

Revenue for the year fell 11% to $208.2 million. Although sales volume increased 1% to 3.3 million carats, it was outweighed by a 15% drop in the average selling price to $63 per carat. Total production for the year slipped 2% to 6.8 million carats. Mountain Province owns 49% of Gahcho Kué and receives a proportional share of run-of-mine production for sale. De Beers holds the remaining 51%.

In the three months ending December 31, revenue at Mountain Province was down 8% to $49.2 million, with sales volume of 772,000 carats at an average price of $64 per carat. 

Mountain Province has withdrawn its forecast for 2020 until it assesses the effect of the COVID-19 pandemic on its operations.

“Though the full extent of the impact of COVID-19 is still unknown at the moment, the company believes that, [as with] many other businesses, the COVID-19 will have a material impact on 2020 sales,” the company noted.

The miner is also looking at different ways to offset the downturn from the virus.

“[The year] 2020 started off positively with a continuation of good production and a confidence-boosting January sale in Antwerp,” said Mountain Province CEO Stuart Brown. “This positive momentum has now been swept aside by the COVID-19 virus that is having a devastating effect on the world. Together with De Beers Canada and our stakeholders, we are assessing a range of mitigating actions. We are also taking all the necessary precautions to protect the mine site. We will be monitoring the situation very closely and update the market accordingly."

Image: The Gahcho Kué mine. (Mountain Province)
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Tags: Coronavirus, COVID-19, De Beers, Gahcho Kué, mountain province, Rapaport News, stuart brown
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