Carat111% more carats, 44% less per carat: Mountain Province's quarter
Mountain Province sold 869,520 carats in the second quarter against 411,114 a year earlier, and took CAD 50 a carat against CAD 90. Revenue rose 18% to CAD 43.5 million. The net loss more than trebled to CAD 120.6 million.
§1Volume answered price, almost exactly.
Mountain Province Diamonds sold 869,520 carats from the Gahcho Kue mine in the three months to 30 June, against 411,114 carats in the same quarter a year earlier. That is 111% more stones out of the door. The price it got for them was CAD 50 a carat against CAD 90, a fall of 44%. The two moves very nearly cancel: 869,520 carats at CAD 50 is CAD 43.48 million, and the company reports quarterly revenue of CAD 43.5 million against CAD 36.8 million a year ago, up 18%. Volume more than doubled to lift the top line by less than a fifth.
The volume came from the plant rather than the market. Carats recovered reached 2,014,563 in the quarter against 708,072 a year earlier, up 185%, the second consecutive quarter above two million carats. That scale is what moved the cost line: cash cost of production fell to CAD 108 a tonne treated from CAD 167, and to CAD 48 a carat recovered from CAD 209. Set the CAD 48 recovery cost beside the CAD 50 realised on each carat sold and the margin per stone reads at about CAD 2, though the two figures do not share a denominator: the mine recovered 2.01 million carats in the quarter and sold 0.87 million of them, so the cost line is spread across roughly 2.3 times as many stones as the price line. Adjusted EBITDA came in at CAD 8.4 million against negative CAD 2.2 million a year ago.
Volume more than doubled to lift the top line by less than a fifth.
§2The operating quarter and the reported quarter.
Below EBITDA the quarter looks nothing like that. The net loss was CAD 120.6 million, or 57 cents a share, against a CAD 37.7 million loss and 18 cents a year earlier. The loss is 2.8 times the quarter's entire revenue, and it sits about CAD 129 million below the positive adjusted EBITDA line. The release discloses foreign-exchange losses of CAD 11.3 million within that gap. This desk is not able to attribute the remaining distance to any single line from the figures it has verified, and does not guess at one: what is established is that the operating quarter and the reported quarter point opposite ways, and that the difference is roughly three times revenue.
One divergence between outside sources is worth recording rather than smoothing. The company's own release gives the US dollar equivalent of quarterly revenue as $31.2 million; Rapaport, reporting the same CAD 43.5 million on 16 August, gives $31.3 million. The gap is a rounding difference on a conversion, not a disagreement about the underlying figure, and every number above is stated in the Canadian dollars the company reports in. Rapaport puts the net loss at $86.9 million on the same basis.
Jonathan Comerford, the chief executive, said the diamond market "continues to face significant challenges" while calling the operating performance strong. Both halves of that are in the numbers.
This is what a rough market looks like when a producer cannot answer a price fall by selling less. Gahcho Kue is running at record recovery, the unit cost has fallen far enough to keep operating cash positive at CAD 50 a carat, and the response to a 44% price decline has been to push 111% more carats through the same door. That works while the cost curve keeps falling. It is also the mechanism by which a weak rough price feeds itself, because
the volume that defends one producer's cash line is the same volume arriving at everyone else's. A buyer pricing rough against this quarter should read the CAD 50 as a number the mine can live with, not as a floor it is defending.
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