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The Gahcho Kue diamond mine is 280 kilometres northeast of Yellowknife. NNSL file photo

Mountain Province Diamonds Inc. is reporting its third-quarter net revenue fell 27 per cent to $54.8 million, compared with $74.9 million in the same period of 2018.

The company owns 49 per cent of the Gahcho Kue diamond mine alongside De Beers Canada, which operates the venture and is a 51 per cent owner.

“2019 was always going to be a difficult year,” stated Mountain Province president and CEO Stuart Brown in a Nov. 5 news release.

The company’s declining revenue is tied to the growing crisis in the diamond business. At every stage of the supply chain there are too many of these precious gemstones, while the appeal has long depended on their rarity, say industry experts.

According to diamond industry analyst Paul Ziminsky, prices for rough diamonds have been falling since 2015 and declined about 3.8 per cent this year.

“That’s not good for any of the mines up here,” said Tom Hoefer, executive director of the NWT and Nunavut Chamber of Mines. “Analysts were predicting that prices would be higher than they are but some things have happened in the industry that have just not supported that.”

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Low prices could also hurt the territory’s mineral exploration and development industry, which has already been lagging in recent years, said Hoefer.

“If you’re looking to develop new deposits, if the value is low, then there are going to be some deposits you can’t mine at this price,” he said. “This will have an effect on new ore body development so it’s not a good news story.”

The NWT’s investment in mineral exploration has fallen behind the other territories, he said, pointing to an NWT and Nunavut Chamber of Mines report that claims the NWT has missed out on over $1 billion in exploration investment compared to the Yukon and Nunavut since 2007.

In response to the growing glut of rough diamonds, Mountain Province has cut costs and revised its mining strategy at Gahcho Kue. It reduced what it pays to process ore from $110 to $120 per tonne to $95 to $105 per tonne for 2019, states the news release.

It is also aiming to process 3.3 to 3.4 million tonnes of ore, up from its previous goal of 3.2 to 3.3 tonnes in an effort to increase production.

In addition, the company was mining poor quality ore due to, “Extreme and prolonged cold weather conditions encountered during the earlier part of the year,” which prevented miners from accessing higher-grade ore.

This also affected revenue. During the third-quarter, the company recovered about 1.5 million carats at a rate of 1.72 carats per tonne, which was 16 per cent lower compared to the same period last year, states the release.

Overall, Mountain Province sold 791,252 carats at an average value of $69 per carat in the third-quarter of 2019 in comparison to 788,842 carats sold at an average value of $95 per carat during the same period last year, it continues.

“The current quarter (Q4 2019) is trending positively as access to higher grade blocks has been re-established with record carat production achieved in October,” states the news release.

 

 

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