Desmond-backed Canadian diamond miner fails to sparkle following merger

Mountain Province Diamonds said sales were affected by “difficult trading conditions” in the wholesale market

The world’s largest new diamond mine, Gahcho Kue, in the Canadian tundra

The world’s largest new diamond mine, Gahcho Kue, in the Canadian tundra

 

Mountain Province Diamonds (MPD), a Toronto-listed miner in which Dermot Desmond holds a 28 per cent stake, sold 240 million Canadian dollars (€161 million) worth of gemstones in the first nine months of the year, it has reported.

This compares to 93 million Canadian dollars for the first nine months of 2017, although that period only included about three months of operation of Gahcho Kue, the world’s largest new diamond mine.

MPD has a 49 per cent stake in the mine, which is located within the Arctic tundra, north of Yellowknife. South African gemstone giant De Beers owns the rest, and also operates the mine. MPD receives a regular allocation of diamonds extracted from the mine, which it then sells wholesale.

MPD, which is chaired by Mr Desmond’s associate Jonathan Comerford, said its sales so far this year within expectations, but were still affected by “difficult trading conditions” in the wholesale market for rough diamonds.

The third quarter financial results show MPD sold more than 2.6 million carats of diamonds since January. It recorded net income over the period of about 11.3 million Canadian dollars.

Mr Desmond has had investments in the Canadian mining sector since the 1990s, and is by far the largest shareholder in MPD. He recently backed its 176 million Canadian dollar merger with Kennady Diamonds, another company in which he is the largest shareholder.

MPD’s share price has struggled since the April merger, however, and is down by about 44 per cent. This has wiped more than 85 million Canadian dollars off the value of Mr Desmond’s stake in the business.