Mountain Province Diamonds Announces Full Year and Fourth Quarter 2022 Results

Rhea-AI Summary

Mountain Province Diamonds Inc. (MPVD) announced its Q4 2022 and FY 2022 financial results, reporting a 31% increase in adjusted EBITDA to $177.2 million. Total sales revenue reached $388.9 million, up from $298.3 million in 2021, driven by an average realized value of $146 per carat. Despite these gains, carats recovered dropped 12% year-over-year to 5.5 million carats, impacting overall production. The company successfully repaid $110 million in debt and refinanced its notes with a 9% coupon. Looking forward, the production outlook for 2024 is estimated at 4.0 million to 4.4 million carats.

Positive

• Adjusted EBITDA increased by 31% to $177.2 million.
• Total sales revenue rose to $388.9 million, highest since operations began.
• Average realized value per carat improved to $146.
• Successfully repaid $110 million in debt.

Negative

• Carats recovered decreased by 12% year-over-year to 5.5 million.
• Ore tonnes mined decreased by 4% year-over-year.
• Net income declined significantly to $49.2 million from $276.2 million due to prior year's impairment reversal.

TSX and OTCQX: MPVD

TORONTO and NEW YORK, March 22, 2023 /PRNewswire/ - Mountain Province Diamonds Inc. ("Mountain Province", or the "Company") (TSX: MPVD) (OTCQX: MPVD) today announces its financial and operating results for the fourth quarter ("the Quarter" or "Q4 2022") and the full year ended December 31, 2022 ("FY 2022").

All figures are expressed in Canadian dollars unless otherwise noted and are unaudited.

FY 2022 Highlights

• Adjusted EBITDA¹ of $177.2 million, up 31% relative to 2021 (2021: $135.4 million).
  
  
• Total sales revenue at $388.9 million (US$297.3 million) compared to $298.3 million in 2021 (US$237 million: sales revenue in 2021 does not include the 'upside' revenue of $10.4m from the Dunebridge agreement), at an average realized value of $146 per carat (US$112) 2021: $94 per carat (US$75).
  
  
• During 2022 the Company repaid US$110 million in debt, US$60 million from operating cash flow and utilizing the US$50 million junior secured term loan credit facility (‘Junior Credit Facility’)
  
  
• In December 2022, the Company completed the refinancing transaction involving the issuance of US$195 million aggregate principal amount of its 9.000% Senior Secured Second Lien Notes due 2025 (‘Notes’), to refinance US$189.2 million aggregate principal amount of the Company’s existing 8.000% Senior Secured Second Lien Notes due 2022 (‘Old Notes’)
  
  
• Significant discovery beside and connected to the Hearne open pit that has potential to transition Gahcho Kué to an underground producer, and potentially increasing mine life.
  
  
• Updated Technical Report filed March 2022 which featured a pre-tax/royalty NPV 7.5% attributable to Mountain Province Diamonds of $1,233 million.

Operational Highlights for Q4 and FY 2022
(all figures reported on a 100% basis unless otherwise stated)

• 1,621,800 carats recovered during the quarter at an average grade of 1.96 carats per tonne, 7% higher than the comparable quarter (Q4 2021: 1,511,253 carats at 1.86 carats per tonne). 5,519,309 carats recovered during FY 2022 at an average grade of 1.78 carats per tonne, 12% lower than the comparable period (FY 2021: 6,229,042 at 2.02 carats per tonne).
  
  
• 705,924 ore tonnes mined during the quarter, a 31% decrease on the comparable period (Q4 2021: 1,019,671). 4,113,648 ore tonnes mined during FY 2022, a 16% increase from the comparable period (FY 2021: 3,561,417).
  
  
• 828,644 ore tonnes treated during the quarter, a 2% increase on the comparable period (Q4 2021: 813,308). 3,102,219 ore tonnes treated during FY 2022, a 1% increase from the comparable period (FY 2021: 3,082,572).
  
  
• 10,144,844 total tonnes mined during the quarter, a 6% decrease on the comparable period (Q4 2021: 10,812,723). 33,947,188 total tonnes mined during FY 2022, a 4% decrease from the comparable period (FY 2021: 35,447,014).

Q4 and FY 2022 Production Statistics

	2022 Q4	2021 Q4	YoY Variance
Total tonnes mined (ore and waste)	10,144,844	10,812,723	-6 %
Ore tonnes mined	705,924	1,019,671	-31 %
Ore tonnes treated	828,644	813,308	2 %
Carats recovered	1,621,800	1,511,253	7 %
Carats recovered (49% share)	794,682	740,514	7 %
Recovered grade (carats per tonne)	1.96	1.86	5 %

 

	FY 2022	FY 2021	YoY Variance
Total tonnes mined (ore and waste)	33,947,188	35,447,014	-4 %
Ore tonnes mined	4,113,648	3,561,417	16 %
Ore tonnes treated	3,102,219	3,082,572	1 %
Carats recovered	5,519,309	6,229,042	-12 %
Carats recovered (49% share)	2,704,461	3,052,231	-11 %
Recovered grade (carats per tonne)	1.78	2.02	-12 %

Financial Highlights for Q4 2022

• 758,000 carats sold (Q4 2021: 809,000), with total proceeds of $96.3 million (US$71.3 million) compared to $85.1 million in Q4 2021, (US$67.6 million), at an average realised value of $127 per carat (US$94), Q4 2021: $105 per carat, (US$84).
  
  
• Adjusted EBITDA¹ of $23.4 million.
  
  
• Earnings from mine operations of $31.6 million.
  
  
• Cash costs of $160 per tonne treated and $82 per carat recovered, include capitalized stripping costs¹.
  
  
• Net income of $9.4 million or $0.04 earnings per share.  Included in the determination of net income for the three months ended December 31, 2022, is an unrealized foreign exchange gain of $5.6 million, on the translation of the Company's USD-denominated long-term debts. The unrealized foreign exchange gains are a result of the relative strengthening of the Canadian dollar versus the US dollar.

1Cash costs of production, including capitalized stripping costs, and adjusted EBITDA are non-IFRS measures with no standardized meaning prescribed under IFRS. See the Non-IFRS Measures section of the Company's December 31, 2022 MD&A for explanation and reconciliation.

Financial Highlights for Full Year 2022

• Total sales revenue at $388.9 million (US$297.3 million) compared to $298.3 million in 2021 (US$237 million sales revenue in 2021 does not include the 'upside' revenue of $10.4m from the Dunebridge agreement) at an average realized value of $146 per carat (US$112) 2021: $94 per carat, (US$75).
  
  
• Adjusted EBITDA² of $177.2 million up 31% (2021: $135.4 million).
  
  
• Earnings from mine operations of $170.5 million (2021: earnings from mine operations $113.7 million).
  
  
• Cash costs of production, including capitalized stripping costs^2,3 of $122 per tonne treated (2021: $110 per tonne) and $69 per carat recovered (2021: $55 per carat). 
  
  
• Net income of $49.2 million or $0.23 earnings per share (2021: net income $276.2 million or $1.31 earnings per share. In 2021 there was an impairment reversal of $240.6 million, which was included in the net income figure above.) Included in the determination of net income is an unrealized foreign exchange loss of $28.2 million (2021: gain of $2.3 million) on the translation of the Company's USD-denominated long-term debt. The unrealized foreign exchange loss is a result of the weakening of the Canadian dollar versus US dollar. 
  
  
• Capital expenditures were $60.4 million, $49.7 million of which were deferred stripping costs, with the remaining $10.7 million accounting for sustaining capital expenditures related to mine operations.

2 Cash costs of production, including capitalized stripping costs, and Adjusted EBITDA are non-IFRS measures with no standardized meaning prescribed under IFRS.  See the Non-IFRS Measures section of the Company's December 31, 2022 MD&A for explanation and reconciliation.

3 In FY 2022 a total of 33.9 million tonnes mined, compared to a total of 35.4 million tonnes mined in 2021; a 4% decrease year over year.

Market Highlights for Q4 and Full Year 2022

In Q4 2022, 758,000 carats were sold at an average value of $127 per carat (US$94 per carat) for total proceeds of $96.3 million (US$71.3 million) in comparison to 808,750 carats sold at an average value of $105 per carat (US$84 per carat) for total proceeds of $85.1 million (US$67.6 million) in Q4 2021. 

During FY 2022, 2,657,000 carats were sold at an average value of $146 per carat (US$112 per carat) for total proceeds of $388.9 million (US$297.3 million) in comparison to 3,158,429 carats sold at an average value of $94 per carat (US$75 per carat) for total proceeds of $298.3 million (US$237 million: sales revenue in 2021 does not include the 'upside' revenue of $10.4m from the Dunebridge agreement in FY 2021). 

In 2022 the Company recorded its highest annual revenues since commencement of operations. Price performance was strong, with the Company benefitting from favourable production characteristics in its recovered diamonds and the ability of the Company to capitalize on a positive market price environment, particularly for smaller size diamonds.

The first quarter of 2022 saw exceptional price growth for rough diamonds but uncertainty following Russia's invasion of Ukraine and extended delays to China's covid recovery weighed upon market sentiment during Q2 and Q3. The impact of these challenges to the Company's diamond prices were mitigated by strategically stocking weaker performing diamond categories during this time. 

Stability returned to the market during Q4 and the Company saw solid price performance at its final sales of the year and into 2023. Price performance has been particularly positive for smaller sized diamonds which represent greater than 40% of the Company's production value.

The Company's rough tenders continue to attract strong competition from a large base of regular customers and a high level of competition is generated for all product segments.

2024 Production Outlook

The Company wishes to provide the following production outlook for 2024. While some additional carats have come into the plan, the aggregate quantity across the Life-of-Mine is not materially different from the NI 43-101 Technical Report filed in March 2022. Work has been done in order to smooth the production profile via mine sequence optimization. The Company will continue to review both 2024, and the entire Life-of-Mine plan in our normal strategic business plan process during 2023 to seek further optimization and improvement. The 2024 production outlook is as follows:

2024: 4.0 million to 4.4 million carats

Mountain Province Diamonds President and CEO Mark Wall commented:

"2022 was a transitional year for the company.  We repaid US$110 million in debt, US$60 million from operating cash flow and utilizing the US$50 million Junior Credit Facility, leading to a significantly improved debt to EBITDA ratio, and refinanced our bonds with a 9% coupon and with no dilution to equity holders.  We also discovered the Hearne Northwest Extension which has led us to review the underground potential of the Gahcho Kué mine, including how the Kennady assets may integrate into this scenario, with the objective of understanding the opportunities that may exist to substantially extend the mine life.

As we move into 2023, we continue to focus on safety, sustainability, and operational performance at the mine level. We'll continue to optimize our sales pipeline, and focus on our organic growth opportunities at the mine and at Kennady North. On the financial side of things, we are striving to improve our balance sheet by working on reducing debt directionally towards a 1:1 debt to EBITDA ratio to enable a disciplined approach to capital allocation.

We have taken the additional step of providing an outlook for 2024 where we have seen production that was in our study in the low three million carat range substantially improved, and we will continue to review as we work through the planning process."

Hearne Drilling Update

The Hearne Northwest Extension was discovered in late 2021, when kimberlite measuring 25 meters in a bench face was exposed during routine mining operations. A delineation drilling program was subsequently launched with initial results reported last year (see news release, July 18, 2022). Drilling of the Hearne Northwest Extension as at the end of 2022 totaled 16 drillholes and 5,026 meters. Ten of the sixteen drillholes had significant kimberlite intersections that have been used to model the Hearne Northwest Extension (see news release, November 30, 2022). Phase two drilling started in early 2023 with 13 drillholes planned (5,580 meters total) of which three have been completed. Two drillholes intersected HK and HK transitional kimberlite. Logging, petrographic, mineral chemistry and microdiamond analysis is underway to properly define the HK and TK contacts in the extension and their relationship to the main Hearne kimberlite. Details for the 2023 drilling results are provided in the table below.

Drill Hole		Azimuth2		Inclination2		Kimberlite Intersect1,2 (m)						Initial		End of
						From		To		Length1		Rock ID2		Hole2(m)
MPV-22-609C		227		-61.5		366.4		423.8		57.4		HK		477
MPV-22-610C		268		-68		340.3		390.9		50.6		HK		428
MPV-23-612C		257		-51		--		--		--		--		402

1Intersects are not true thicknesses. 2Initial measurements and rock ID may change with further logging. HK = hypabyssal kimberlite; TK = fragmental kimberlite; TK/HK = intervals of both HK and TK

The results of this ongoing drill program will inform the next stage of study on potential underground mining at Gahcho Kué. Results, interpretation and decisions regarding next steps are expected to be complete by the end of Q3 of 2023.

Gahcho Kué Mine Operations

The following table summarizes the key operating statistics for Q4 2022 and FY 2022, and the previous year, at the Gahcho Kué Mine.

		Three months ended	Three months ended	Year ended	Year ended
		December 31, 2022	December 31, 2021	December 31, 2022	December 31, 2021
GK operating data
Mining
*Ore tonnes mined	kilo tonnes	706	1,019	4,114	3,561
*Waste tonnes mined	kilo tonnes	9,439	9,794	29,833	31,886
*Total tonnes mined	kilo tonnes	10,145	10,813	33,947	35,447
*Ore in stockpile	kilo tonnes	1,759	748	1,759	748
Processing
*Ore tonnes processed	kilo tonnes	828	814	3,102	3,102
*Average plant throughput	tonnes per day	9,303	8,848	8,593	8,593
*Average diamond recovery	carats per tonne	1.96	1.86	1.78	2.02
*Diamonds recovered	000's carats	1,621	1,511	5,519	6,229
Approximate diamonds recovered - Mountain Province	000's carats	794	740	2,704	3,052
Cash costs of production per tonne of ore, net of capitalized stripping **	$	101	77	89	89
Cash costs of production per tonne of ore, including capitalized stripping**	$	160	111	122	110
Cash costs of production per carat recovered, net of capitalized stripping**	$	52	42	50	44
Cash costs of production per carat recovered, including capitalized stripping**	$	82	60	69	55
Sales
Approximate diamonds sold - Mountain Province***	000's carats	758	809	2,657	3,158
Average diamond sales price per carat	US	$                                      94	$                                       84	$                                 112	$                                    75
* at 100% interest in the GK Mine
**See Non-IFRS Measures section
***Includes the sales directly to De Beers for fancies and specials acquired by De Beers through the production split bidding process

Financial Performance

		Three months ended	Three months ended	Year ended	Year ended
(in thousands of Canadian dollars, except where otherwise noted)		December 31, 2022	December 31, 2021	December 31, 2022	December 31, 2021
Sales	$	96,315	85,144	388,853	308,723
Carats sold	000's carats	758	809	2,657	3,158
Average price per carat sold	$/carat	127	105	146	98
Cost of sales per carat*	$/carat	85	66	82	62
Earnings from mine operations per carat	$	42	39	64	36
Earnings from mine operations	%	33 %	37 %	44 %	37 %
Selling, general and administrative expenses	$	5,476	5,467	17,171	13,858
Impairment reversal on property, plant and equipment	$	-	240,593	-	240,593
Operating income	$	25,257	265,491	141,027	334,916
Net income for the period	$	9,421	237,619	49,195	276,167
Basic and diluted earnings per share	$	0.04	1.13	0.23	1.31

Conference Call

The Company will host its quarterly conference call on Wednesday, March 23rd, 2023 at 11:00am ET.

Title: Mountain Province Diamonds Inc Q4 Earnings Conference Call

Conference ID: 95971630
Date of call: 03/23/2023
Time of call: 11:00 Eastern Time
Expected Duration: 60 minutes

Webcast Link: https://app.webinar.net/Vq63nNZnRkK

Participant Toll-Free Dial-In Number:             (+1) 888-390-0546
Participant International Dial-In Number:       (+1) 416-764-8688

A replay of the webcast and audio call will be available on the Company's website.

About the Company

Mountain Province Diamonds is a 49% participant with De Beers Canada in the Gahcho Kué diamond mine located in Canada's Northwest Territories. The Gahcho Kué Joint Venture consists of several kimberlites that are actively being mined, developed, and explored for future development. The Company also controls over 113,000 hectares of highly prospective mineral claims and leases surrounding the Gahcho Kué Mine that include an Indicated mineral resource for the Kelvin kimberlite and Inferred mineral resources for the Faraday kimberlites. Kelvin is estimated to contain 13.62 million carats (Mct) in 8.50 million tonnes (Mt) at a grade of 1.60 carats/tonne and value of US$63/carat. Faraday 2 is estimated to contain 5.45Mct in 2.07Mt at a grade of 2.63 carats/tonne and value of US$140/ct. Faraday 1-3 is estimated to contain 1.90Mct in 1.87Mt at a grade of 1.04 carats/tonne and value of US$75/carat. All resource estimations are based on a 1mm diamond size bottom cut-off.

For further information on Mountain Province Diamonds and to receive news releases by email, visit the Company's website at www.mountainprovince.com.

Qualified Person

The disclosure in this news release of scientific and technical information regarding Mountain Province's mineral properties has been reviewed and approved by Matthew MacPhail, P.Eng., MBA, and Tom E. McCandless, Ph.D., P.Geo., both employees of Mountain Province Diamonds and Qualified Persons as defined by National Instrument 43-101 Standards of Disclosure for Mineral Projects.

Caution Regarding Forward Looking Information

This news release contains certain "forward-looking statements" and "forward-looking information" under applicable Canadian and United States securities laws concerning the business, operations and financial performance and condition of Mountain Province Diamonds Inc.  Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to estimated production and mine life of the project of Mountain Province; the realization of mineral reserve estimates; the timing and amount of estimated future production; costs of production; the future price of diamonds; the estimation of mineral reserves and resources; the ability to manage debt; capital expenditures; the ability to obtain permits for operations; liquidity; tax rates; and currency exchange rate fluctuations.  Except for statements of historical fact relating to Mountain Province, certain information contained herein constitutes forward-looking statements.  Forward-looking statements are frequently characterized by words such as "anticipates," "may," "can," "plans," "believes," "estimates," "expects," "projects," "targets," "intends," "likely," "will," "should," "to be", "potential" and other similar words, or statements that certain events or conditions "may", "should" or "will" occur.  Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements.  Many of these assumptions are based on factors and events that are not within the control of Mountain Province and there is no assurance they will prove to be correct.

Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include variations in ore grade or recovery rates, changes in market conditions, changes in project parameters, mine sequencing; production rates; cash flow; risks relating to the availability and timeliness of permitting and governmental approvals; supply of, and demand for, diamonds; fluctuating commodity prices and currency exchange rates, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the mining industry, failure of plant, equipment or processes to operate as anticipated.

These factors are discussed in greater detail in Mountain Province's most recent Annual Information Form and in the most recent MD&A filed on SEDAR, which also provide additional general assumptions in connection with these statements.  Mountain Province cautions that the foregoing list of important factors is not exhaustive.  Investors and others who base themselves on forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail.  Mountain Province believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon.  These statements speak only as of the date of this news release.

Although Mountain Province has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended.  There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.  Mountain Province undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws.  The reader is cautioned not to place undue reliance on forward-looking statements.  Statements concerning mineral reserve and resource estimates may also be deemed to constitute forward-looking statements to the extent they involve estimates of the mineralization that will be encountered as the property is developed.

Further, Mountain Province may make changes to its business plans that could affect its results.  The principal assets of Mountain Province are administered pursuant to a joint venture under which Mountain Province is not the operator.  Mountain Province is exposed to actions taken or omissions made by the operator within its prerogative and/or determinations made by the joint venture under its terms.  Such actions or omissions may impact the future performance of Mountain Province.  Under its current note and revolving credit facilities Mountain Province is subject to certain limitations on its ability to pay dividends on common stock.  The declaration of dividends is at the discretion of Mountain Province's Board of Directors, subject to the limitations under the Company's debt facilities, and will depend on Mountain Province's financial results, cash requirements, future prospects, and other factors deemed relevant by the Board.

•    During 2022 the Company repaid US$110 million in debt, US$60 million from operating cash flow and utilizing the US$50 million junior secured term loan credit facility (‘Junior Credit Facility’)

•    In December 2022, the Company completed the refinancing transaction involving the issuance of US$195 million aggregate principal amount of its 9.000% Senior Secured Second Lien Notes due 2025 (‘Notes’), to refinance US$189.2 million aggregate principal amount of the Company’s existing 8.000% Senior Secured Second Lien Notes due 2022 (‘Old Notes’)

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SOURCE Mountain Province Diamonds Inc.

FAQ

What were Mountain Province Diamonds' Q4 2022 financial highlights?

In Q4 2022, Mountain Province Diamonds reported total proceeds of $96.3 million, adjusted EBITDA of $23.4 million, and a net income of $9.4 million.

How did Mountain Province Diamonds perform in FY 2022?

For FY 2022, Mountain Province Diamonds achieved $388.9 million in sales, a 31% increase in adjusted EBITDA, and a net income of $49.2 million.

What is the production outlook for Mountain Province Diamonds in 2024?

Mountain Province Diamonds anticipates a production range of 4.0 million to 4.4 million carats in 2024.

What were the sales figures for Mountain Province Diamonds in Q4 2022?

Mountain Province Diamonds sold 758,000 carats in Q4 2022 at an average price of $127 per carat.

What challenges did Mountain Province Diamonds encounter in FY 2022?

The company faced a 12% decrease in carats recovered and a significant decline in net income compared to 2021.