Mountain Province Diamonds Announces Third Quarter and Nine Months Ended September 30, 2021 Results, Second Highest Quarterly Revenue and Adjusted EBITDA in Company History

9 November 2021

TSX and OTCQX: MPVD

TORONTO and NEW YORK, Nov. 9, 2021 /CNW/ - Mountain Province Diamonds Inc. ("Mountain Province", the "Company") (TSX: MPVD) (OTCQX: MPVD) today announces its financial and operating results for the third quarter ("Q3 2021") and nine months ended September 30, 2021. All figures are expressed in Canadian dollars unless otherwise noted.

Operational Highlights for Third Quarter 2021 ("Q3 2021")

  • 832,000 tonnes treated, a 1% increase from the 821,000 tonnes treated in Q3 2020.
  • 1,562,000 carats recovered at an average grade of 1.88 carats per tonne, a 13% decrease compared to the 1,795,000 carats recovered at 2.19 carats per tonne of Q3 2020.
  • 10,280,000 total tonnes mined, a 4% increase from 9,884,000 total tonnes mined in Q3 2020.

Financial Highlights for Third Quarter 2021 ("Q3 2021")

  • Revenue from 1,027,000 carats sold at $94.2 million (US$74.1 million) at an average realised value of $92 per carat (US$72) compared to $47.3 million from 956,000 carats sold in Q3 2020 (US$35.3 million) at an average realized value of $50 per carat (US$37). Third quarter revenue of 2021 represents the second highest quarterly revenue in the company's history.
  • Adjusted EBITDA1 of $41.2 million compared to $15.3 million in Q3 2020 Third quarter adjusted EBITDA of 2021 represents the second highest quarterly adjusted EBITDA in the company's history.
  • Earnings from mine operations $35.5 million compared to a loss from mine operations of $2.2 million in Q3 2020.
  • Cash costs of production, including capitalized stripping costs1 of $101 per tonne treated (2020: $95 per tonne) and $54 per carat recovered (2020: $44 per carat).
  • Net income at September 30, 2021 was $8.8 million or $0.04 earnings per share (2020: net loss $6.5 million or $0.03 loss per share). Included in the determination of the net income at September 30, 2021 are unrealized foreign exchange losses of $9.9 million, on the translation of the Company's USD-denominated long-term debt. The unrealized foreign exchange losses are a result of the weakening of the Canadian dollar versus US dollar.

1 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 September 30, 2021 MD&A for explanation and reconciliation.

Operational Highlights for the nine months ended September 30, 2021

  • 24.6 million total tonnes mined, an 6% decrease from comparable period (September 30, 2020: 26.1 million tonnes).
  • 2,269,000 tonnes of ore treated; a 10% decrease from comparable period (September 30, 2020: 2,510,000 tonnes.
  • 4,718,000 carats recovered at an average grade of 2.08 carats per tonne, (September 30, 2020: 4,997,000 carats and 1.99 carats per tonne).

Financial Highlights for the nine months ended September 30, 2020

  • Total sales revenue of $213.2 million (US$169.4 million) at an average realised value of $91 per carat (US$72) compared to $146.8 million in 2020 (US$109.5 million) at an average realized value of $62 per carat (US$46).
  • Adjusted EBITDA2 of $98.2 million compared to $14.2 million for the nine months ended September 30, 2020.
  • Earnings from mine operations of $82.1 million (2020: loss from mine operations $24.3 million).
  • Cash costs of production, including capitalized stripping costs2, of $110 per tonne treated (2020: $100 per tonne) and $53 per carat recovered (2020: $50 per carat).
  • Net income at September 30, 2021 was $35.5 million or $0.18 earnings per share (2020: net loss $74.3 million or $0.35 loss per share). Included in the determination of the net loss for the nine months ended September 30, 2021 are unrealized foreign exchange gains of $0.4 million, on the translation of the Company's USD-denominated long-term debt. The unrealized foreign exchange gains are a result of the strengthening of the Canadian dollar versus US dollar.
  • Capital expenditures were $27.3 million, $17.6 million of which were deferred stripping costs, with the remaining $9.7 million accounting for sustaining capital expenditures related to mine operations.
  • Quarter end cash position of $42.5 million (December 31, 2020: $35.2 million) and a net working capital of $91.6 million (December 31, 2020: $52.8 million).

2Cash 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 September 30, 2021 MD&A for explanation and reconciliation.

Market Highlights

As previously disclosed, during the third quarter of 2021, 1,028,327 carats were sold for total proceeds of $93.9 million (US$74.1 million) resulting in an average value of $91 per carat (US$72 per carat). This compares to 718,549 carats sold at an average value of $90 per carat (US$73 per carat) for total proceeds of $64.7 million (US$52.6 million) in Q2 2021. This brings year-to-date sales to 2,349,644 carats, for total proceeds of $212.5 million (US$169.4 million) resulting in a year-to-date average value of $90 per carat (US$72 per carat).

The positive market environment which began early in the year persisted through the third quarter, resulting in strong price growth across all size classes. Indexed on a like-for-like basis, the Company is now achieving sales prices 47% above its pre-Covid benchmark of February 2020. As global economies continue to recover and the Covid-19 pandemic becomes less restrictive, consumer confidence heading into the important holiday retail buying season is expected to strengthen, further supporting price growth in the Diamond industry. Additionally, supply-demand dynamics are expected to favour the company as volumes sold by industry majors remain at multi-year lows.

Jonathan Comerford, the Company's Chairman and Interim Chief Executive Officer, commented:

"We're extremely pleased to report the strong third quarter operating and financial results. With the mine returning to peak efficiency levels and the diamond market exceeding pre-Covid levels, the company is on a strong footing as we enter 2022. With our new incoming CEO Mark Wall at the helm, we're looking forward to taking full advantage of the strong rebound in the diamond market, with our Gahcho Kué Diamonds in a great position to fill the gap that the Argyle Mine closure has left.

As we head into the end of the year with a good amount of cash in the bank, and an improved financial outlook backstopped by the strong performance we're seeing at the mine, we have many more options available to us than before as we explore ways to streamline the balance sheet, as we work with our supportive and constructive bondholders.

We believe that Mountain Province Diamonds is exiting a challenging time for the diamond industry as a whole. With the Covid-19 overhang on the industry slowly fading, supply and demand dynamics are expected to continue to tilt in our favour, to the benefit of all of our stakeholders."

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