Mountain Province Diamonds Inc. (“Mountain Province”, the “Company”) (TSX: MPVD, NASDAQ: MPVD) announced today the results for the quarter ended March 31, 2017.
As quoted in the press release:
Mountain Province President and CEO Patrick Evans commented: “Since declaring commercial production on March 1 the ramp-up has been strong and we expect to reach full production in the current quarter.”
Mr. Evans added: “The Company’s first diamond sales took place in the midst of a perfect storm for a first-time seller with significant challenges in four areas. First, all new producers go through a ‘price discovery’ process as buyers of rough diamonds assess the quality and potential profitability of the new production. This process usually extends over the first six months of sales as it takes approximately six months before the first rough purchased from a new mine is sold into the polished market. We expect to be through the price discovery period in the second half of the year.
“Secondly, demonetization in India caused severe liquidity challenges in the world’s major diamond cutting and polishing country. Liquidity began returning to the Indian cutting centers during the first quarter and is expected to be fully restored by midyear. The lower quality production sold in the first quarter was particularly affected by this one-off event.
“Thirdly, the world’s two major diamond producers sold a record combined 14.2 million carats into the rough market during the first quarter. This was 58% more than their combined production during the quarter making it particularly challenging for a first-time seller introducing new product to the market.
“Fourthly, the production sold during the first quarter was sourced primarily from the upper portion of the NE lobe of the 5034 kimberlite. The predominantly transitional tuffisitic kimberlite in this zone has a higher population of lower quality diamonds compared to the hypabyssal kimberlite found at depth at the NE lobe and also at the Center lobe. As a consequence, realized prices achieved during the first quarter were below the expected average for the 5034 kimberlite as a whole, but are expected to improve as more production is sourced from hypabyssal kimberlite at the Center lobe and deeper portions of the NE lobe .”