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Dermot Desmond’s Diamond Mining Firm Reports Substantial Loss Amidst Turbulent Year

Mountain Province Diamonds, a Canadian diamond mining company with Dermot Desmond as a significant shareholder, recorded a net loss of 43.7 million Canadian dollars (€29.9 million) in 2023, according to recent company filings.

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Partnered with diamond industry titan De Beers, the company operates the Gahcho Kué mine in Canada. Despite generating total sales of C$328.6 million throughout the year, compared to C$388.9 million in 2022, the company faced a challenging financial landscape. It sold 2.7 million carats of diamonds in 2023, averaging C$121 per carat, a decrease from the 2.6 million carats sold in 2022 at C$146 per carat.

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Following deductions, including a write-down of C$104.6 million in asset value, Mountain Province Diamonds incurred a loss for the year, a stark contrast to the C$49.2 million profit of the previous year.

The company attributed the challenging year to softer retail activity and diminished consumer demand, particularly in the US and Europe, amid global economic uncertainties and geopolitical tensions, including conflicts in Ukraine and the Middle East. Additionally, subdued retail activity persisted in China. As a result, major producers deferred or canceled sales, awaiting more favorable market conditions.

Mark Wall, the Chief Executive, emphasized the necessity of exercising fiscal prudence in such a market environment, including curtailing discretionary spending. This included reevaluating internal studies on the potential transition to underground mining at Gahcho Kué to extend the mine’s lifespan.

Mountain Province Diamonds also undertook the repayment of US$18 million in senior secured second lien notes, though Mr. Wall expressed a desire to have retired more debt.

Looking ahead, Mr. Wall cautioned that 2024 would likely see reduced production due to inherent challenges in open-pit diamond mining, such as mine sequencing and grade profile changes. Nevertheless, the company aims to achieve its previously stated 2024 production guidance of 4.2 to 4.7 million carats, with 2.3 to 2.6 million carats intended for sale.

As the largest shareholder in Mountain Province Diamonds, holding approximately 36% of shares, Dermot Desmond’s involvement underscores his commitment to the company’s resilience amid industry fluctuations. Despite the company’s shares trading around 22 Canadian cents on the Toronto Stock Exchange, Mr. Desmond’s substantial stake reflects his confidence in Mountain Province’s long-term prospects.

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