Mountain Province Shifts to Loss as Rough Prices Plummet

Mountain Province crept into the red in the second quarter amid a significant drop in prices for its rough and a weakening of its local currency. 

The company, which operates the Gahcho Kué mine in Canada, reported a net loss of CAD 6.5 million ($4.7 million) for the three months that ended June 30, it said Wednesday. That compared to a profit of CAD 17.3 million ($12.6 million) during the same period a year ago. 

The loss was primarily due to the current soft market for rough as the average price dropped 39% to CAD 102 ($74) per carat. The mining of lower-grade ore than expected at the deeper portions of its pits — meaning there was less rough available for sale — also affected the company, as did the weakening of the Canadian dollar versus US currency. Mountain Province earns money in local currency but pays its debt in US dollars, it said.  

“These results came in the context of a softer diamond market and the grade challenges in the second quarter,” said Mountain Province CEO Mark Wall. “At all levels of the business, we will continue to focus on operational efficiency and cost control as we move into the second half of the year.” 

Revenue for the period slipped 5% year on year to CAD 56.8 million ($41.5 million), while sales volume rose 55% to 557,361 carats. Output for the three months fell 2% to 1.3 million carats. 

Revenue for the first half decreased 22% to CAD 146.3 million ($107.7 million). Net profit plunged 99% to CAD 340,000 ($247,499). 

Mountain Province owns 49% of Gahcho Kué, with De Beers controlling the rest.   

Image: The Hearne pit at the Gahcho Kué mine. (Mountain Province)