Desmond’s diamond miner warns of sales slump

Company cites market sentiment, prices and bad weather

Dermot Desmond owns 30 per cent of Mountain Province Diamonds.

Dermot Desmond owns 30 per cent of Mountain Province Diamonds.

 

Diamond sales at Mountain Province Diamonds, a Canadian miner backed by Dermot Desmond, were down by more than 25 per cent in the third quarter as gemstone prices come under pressure.

Toronto and Nasdaq-listed Mountain Province Diamonds, which is 30 per cent owned by Mr Desmond, is a 49 per cent shareholder alongside majority partner De Beers in the Gahcho Kue diamond mine in the Canadian Arctic tundra.

The company says diamond sales in the three months to the end of September were 54.8 million Canadian dollars (€37.4 million), down from C$75 million in the same period last year. Diamond ore mined fell 13 per cent, average carat recovered fell 16 per cent, while the average price it received per carat fell from $95 to $69.

The company blamed market sentiment, industry price pressure and bad weather that forced the mine’s operators to target lower-grade deposits in easier-to-reach areas.

Mountain Province Diamonds said the medium-to-long term outlook was positive, however, and it estimates that reduced market supply from diamond mine closures elsewhere will boost Gahcho Kue in the near future.

The company has cash on its balance sheet in excess of $30 million and it is understood to have been buying back its bonds in recent times, with a view to retiring them early.

Mr Desmond has mopped up more shares in the company in the last week, spending C$345,000 at $1.38 per share to bring his stake right up to the 30 per cent limit, beyond which he would have to make a bid for the company which has seen its share price tumble by about two-thirds since last year.