Mountain Province Diamonds will hand over its 49% interest in the Gahcho Kué mine to joint-venture partner De Beers as it struggles amid the industry downturn.
In return, De Beers will release Mountain Province from all associated obligations and liabilities to the mining partnership, including reclamation payments and outstanding debts, Mountain Province said last week.
“This agreement follows an extensive review of the alternatives available to the company against the backdrop of a material decline in diamond prices over the past year, driven in the main by tariff-related uncertainty and the conflict in the Middle East,” said Mountain Province CEO Jonathan Comerford. “It provides the most credible path to protect stakeholder value in the current circumstances.”
Additionally, the agreement makes room for Mountain Province to regain ownership of the mine in the future. The company will have the right of first offer and first refusal to acquire the mine and/or the mineral rights of Gahcho Kué in the event De Beers decides to sell all, or a large portion of the site. Mountain Province can also purchase back its 49% share before December 3, 2029, for a price equal to the share of decommissioning costs of its portion.
Meanwhile, the Canadian miner has struck a deal with major shareholder and creditor Dunebridge, which will suspend interest and capital repayments for a six-month period, giving the company time to restructure its balance sheet and pursue new funding, it said.
Besides its 49% interest in Gahcho Kué, Mountain Province also owns the Kennady project, consisting of 96,000 hectares surrounding Gahcho Kué, including the Kelvin and Faraday kimberlites, which are indicated and inferred diamond-bearing ore pipes.
“If diamond-market conditions continue to improve, [new] funding could support the future exercise of the company’s rights in relation to Gahcho Kué and the continued development of the Kennady diamonds assets,” Comerford added.
Image: The Gahcho Kué mine in Canada. (Mountain Province Diamonds)
