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Mountain Province Diamonds announced second quarter and H1 2019 Results

12 august 2019

mountainprovince_logo.pngMountain Province Diamonds Inc.announced its financial and operating results for the second quarter ("Q2 2019") and first half 2019 ("H1 2019") ended June 30, 2019.  All figures are expressed in Canadian dollars unless otherwise noted.
Mountain Province mined 10,865,263 total tonnes in Q2 2019, 6% increase on comparable period (Q2 2018: 10,285,000). 
The company treated 882,374 tonnes of ore in Q2 2019, 2% decrease from comparable quarter (Q2 2018: 899,000 tonnes). 
It also recovered 1,730,147 carats at an average grade of 1.96 carats per tonne, 10% lower than comparable quarter (Q2 2018: 1,930,500 carats at 2.15 carats per tonne).  
The miner sold 1,077,730 carats at an average value of $89 per carat (US$67 per carat) for total proceeds of $95.8 million (US$71.7 million) in comparison to 1,113,724 carats sold at an average value of $89 per carat (US$69 per carat) for total proceeds of $99.1 million (US$76.8 million) in Q2 2018.  
Adjusted EBITDA for the three months ended June 30, 2019 amounted to $39.1 million ($41.1 million in Q2 2018). 
Q2 2019 Earnings from mine operations amounted to $17.8 million ($18.5 million in Q2 2018). 
Free Cash Flow for the three months ended June 30, 2019 amounted to $18.9 million ($4.8 million in Q2 2018).  Cash balance as of June 30, 2019 was $30.2 million. 
Q2 Net income was $10.3 million or $0.05 earnings per share ($6.4 million or $0.03 loss per shared in Q2 2018).  
the company mined 20.4 million total tonnes in H1 2019, 10% increase on comparable period (H1 2018: 18.5 million tonnes). 
It treated 1,753,323 tonnes of ore in H1 2019, 4% increase from comparable quarter (H1 2018: 1,684,479 tonnes). 
The company recovered 3,314,699 carats at an average grade of 1.89 carats per tonne, 7% and 10% lower than comparable quarter respectively (H1 2018: 3,571,510 carats and 2.12 carats per tonne).  
Total sales revenue at $156 million (US$118 million) compared to $165 million in 2018 (US$129 million) at an average realised value of $91 per carat (US$68) 2018: $101 per carat, (US$79). 
Half year Adjusted EBITDA of $58.8 million down 21% (2018: $74.7 million), 
Earnings from mine operations down 35% to $28.0 million (2018: $43.1 million). 
Cash costs of production, including capitalized stripping costs of $109 per tonne treated (2018: $96 per tonne) and $57 per carat recovered (2018: $45 per carat).  
Net income for half year 2019 at June 30, 2019 was $12.8 million or $0.06 earnings per share (2018: net loss $6.2 million or $0.03 loss per share).  
Capital expenditures in H1 2019 were $20.5 million, $15.9 million of which were deferred stripping costs, with the remaining $4.6 million accounting for sustaining capital expenditures related to mine operations. 
Quarter end cash position of $30.2 million (2018: $33.5 million) and net working capital of $107.4 million (2018: $100.4 million), with US$50 million revolving credit facility remaining undrawn.
The Company completed five sales during H1 2019 where it saw continued pressure on prices in the smaller, cheaper rough categories.  Prices for the larger, better-quality product categories that contribute the majority of the Company's sales value remained stable through the second quarter after gains made earlier in the year. 
According to Mountain Province, broader macro-economic uncertainties are further dampening market sentiment, however long-term industry supply and demand fundamentals are positive. In 2018 the global rough diamonds production declined by 3.1% to 145m carats.  This trend is expected to accelerate with the recently announced closure of the Argyle mine in 2020 expected to remove 14 million carats from global rough supply.  At the same time there continues to be long term growth forecast for global diamond jewellery consumption. 
Mountain Province President and CEO Stuart Brown commented: "The rough diamond market continues to present challenges, and we expect to see continued volatility in the market for rough diamonds in the near term.  We will focus our efforts to maintain our production at the lower end of our cost guidance and will continue to improve the cash generated at every opportunity.  We remain on track to achieve our 2019 forecast of 3.3 – 3.45 million carats (our 49% share of the full production) recovered."

Alex Shishlo, Editor of the Rough&Polished European Bureau