Mountain Province reports Gahcho Kué production miss; ups guidance

Mountain Province Diamonds (TSX: MPVD; US-OTC: MPVD) has increased the 2023 production outlook for its Gahcho Kué mine in Canada’s Northwest Territories despite reporting a slight miss on the mine’s production targets for 2022. 

For the December quarter Mountain Province recovered 1.6 million carats at an average grade of 1.96 ct. per tonne, taking full-year output to 5.52 million carats against the guidance of 5.6-5.8 million carats.

The fourth-quarter diamond sales came in at an average value of $127 per ct., for total proceeds of $96.3 million. In 2022, the company sold about 2.7 million ct., at an average value of $146 per ct., for proceeds totalling $388.8 million.

In the medium to longer-term, the outlook for rough diamonds remains positive, the company said in a news release.

“Retail diamond jewellery sales in the important U.S. market confirm a growing preference for smaller, lower-priced diamonds which align well with the diamond profile of the Gahcho Kué mine,” Mountain Province said in its news release Thursday.

For 2023, Mountain Province expects recoveries of around 5.6–6.1 million carats, with production costs of $70–$80 per ct. recovered. Sustaining capex is expected to be $7 million.

Mountain Province said it reduced total debt by about $60 million in 2022 compared to this time prior year.

Kimberlite discovery

Mountain Province reported late last year the summer drilling results revealed a significant new kimberlite discovery.

Of 16 drillholes from its 5,040-metre phase one program on the Hearne Northwest Extension, 10 showed “significant kimberlite intersections,” the company said in a news release at the time.
 
Mountain Province holds a 49% interest in the Gahcho Kué mine, in a joint venture with De Beers Canada. The project is about 280 km northeast of Yellowknife and is one of Canada’s three producing diamond mines, all located in the same general region of the Northwest Territories.

Mountain Province CEO Mark Wall said in the release that the results show the latest discovery could potentially equal in volume the Hearne orebody.

“As the extension is only in the exposed lower benches of the open pit and plunges to the northwest, an underground operation to recover this ore is a logical pursuit, and the Gahcho Kué joint venture is actively reviewing underground options for economic recovery of this material,” he said.

The Hearne kimberlite is one of four kimberlites being mined at Gahcho Kué, which is slated to operate until 2028.

The territory’s two other diamond mines – Ekati, operated by Arctic Canadian Diamond – and Rio Tinto‘s (NYSE: RIO; LSE: RIO; ASX: RIO) Diavik are expected to close in 2024 and 2025, respectively. Diavik is about 30 km southeast of Ekati, and Gahcho Kué is 125 km southeast of Diavik.

Gahcho Kué’s open pit operation has a mine area of 12 sq. km and produces around 4.5 million carats annually.