Mountain Province sells diamond receivables to shore up cash flow amid market slump
Mountain Province sold nearly $1 million in future diamond receivables for $833,000 cash, a sharp discount that exposes the rough market’s weakness.
Mountain Province turned $999,999 of future diamond receivables into $833,000 in cash, a steep discount that says as much about the rough market as any sales chart. When a miner accepts less than dollar-for-dollar value for money it expects to collect later, it is not just raising liquidity. It is signaling that near-term cash has become more valuable than waiting for full payment.
The sale went to the related-party lender and majority shareholder side of the capital structure, with the buyer identified as Mr. Dermot Desmond through a purchase and sale agreement involving 2435386 Ontario Inc. Mountain Province said the cash would provide operating capital while it reviews strategic alternatives, a phrase that now sits alongside a second lifeline: the company also pushed the maturity date on its US$40 million term loan and the principal repayment date on its US$33 million working capital facility to June 30, 2026 from April 30. For a diamond producer, that combination is a distress signal. It shows how thin the margin has become between running the mine and scrambling for runway.
The pressure is coming from the Gahcho Kué mine, where Mountain Province holds 49 percent and De Beers Canada holds 51 percent. The mine, about 300 kilometers east-northeast of Yellowknife in the Northwest Territories, sits on the traditional territories of Tłįchǫ, Dene and Métis peoples, and its open-pit life has been extended to 2031. But the long mine life has not insulated the company from short-term strain. On March 17, Mountain Province said unpaid cash calls tied to De Beers in-kind election notices totaled CAD$49,171,619, with CAD$38,847,140 due that day, and warned that a failure to pay within 60 days could trigger a formal default and cross-default under other financing documents.
The first quarter offered a bitter contrast: production surged, but pricing collapsed. Mountain Province recovered a record 2,006,135 carats, up 163 percent year over year, on grade of 2.64 carats per tonne, up 222 percent. Yet it sold 858,173 carats for $40 million, or US$29.2 million, at an average of $47 per carat, down from 426,268 carats sold for $44 million, or US$30.7 million, at $103 per carat in the same quarter a year earlier. CEO Jonathan Comerford said the first quarter is historically difficult because of adverse weather, and that this year brought a particularly cold winter at Gahcho Kué. He also said Tuzo waste stripping was paused to conserve cash, preserve liquidity and maintain strategic optionality.
Mountain Province said the higher-grade material included smaller stone sizes, the category facing the greatest pressure in the diamond market. That is the part jewelry manufacturers feel first: when smaller rough weakens, the economics of cutting and polishing tighten quickly, and the whole supply chain starts to move more carefully.
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