Mountain Province Diamonds Inc. (NASDAQ:MPVD) Q3 2018 Earnings Conference Call - Final Transcript

Nov 13, 2018 • 11:00 am ET


Mountain Province Diamonds Inc. (NASDAQ:MPVD) Q3 2018 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the Mountain Province Third Quarter Results Conference Call. (Operator Instructions) As a reminder, this call will be recorded.

I would now like to introduce your host for today's conference, President and CEO, Stuart Brown. Please go ahead, sir.

Stuart Brown

Thanks very much, Chris, and good day to everyone on the call. Just a brief way of introduction. On the call today with me I have Perry Ing, Keyvan Salehi and we've got Reid Mackie on the line also on the call from Antwerp where he is closing our ninth sale for the year.

The format for today: just a general introduction from myself, and then I'll hand over immediately to Perry who will take us through the financials and all the production and then I'll give some commentary on the market, what we're doing on the mine and the future of the Company. And then we'd be happy to take your questions.

So without further ado, if I could hand over to Perry to take us through the numbers. Thanks very much.

Perry Ing

Thanks, Stuart. Good morning everyone.

I will take you through the financial and production results. All figures stated will be in Canadian dollars unless otherwise noted. The third quarter results reflect a continuation of the strong operational performance seen in the first half of the year as the GK mine continues to run at a healthy steady state.

Starting first with our income statement, our headline earnings number, we reported net income of CAD17.5 million for the quarter or CAD0.08 a share, which compares to CAD27.7 million or CAD0.17 a share in the same period in 2017.

On an adjusted EBITDA basis, stripping out the effects of unrealized foreign exchange movement, we reported adjusted EBITDA of CAD38 million for the third quarter, which was approximately the same as the adjusted EBITDA in the same quarter in 2017.

Adjusted EBITDA for the year-to-date stands at an impressive CAD113 million. We believe that this demonstrates the strong cash margins that the GK mine can provide as a high-volume, low cost per carat producer despite some challenges with top line revenue in recent sales. These margins allow us to comfortably service our debt and provide a cushion against any further weakening in diamond prices.

Reported revenue for the quarter was CAD75 million from the sale of 789,000 carats at an average price of US$73 per carat. The Company conducted two tender sales, which took place within the quarter, sales 6 and 7 at an average price of US$66 a carat. However, I should note from a revenue recognition standpoint, we also recorded roughly a third of sale 5 which started in June in the third quarter as some of the revenue slipped into the third quarter due to the timing of cash receipts. This included the sale of 43,000 carats at an average price of US$188 a carat for total proceeds of US$8.1 million.

Overall, the sales of CAD75 million on 789,000 carats compares to