by Greg Klein | September 30, 2014
With a $100-million private placement announced September 30, “the world’s largest and richest new diamond mine” should get a very considerable cash infusion. Mountain Province Diamonds TSX:MPV, which holds a 49% stake in Gahcho Kué, stated $75 million will come from a bought deal. The full amount is expected to close around October 16.
The joint venture with De Beers has production scheduled for the second half of 2016, making it the fourth diamond mine to open in the Northwest Territories’ Lac de Gras region. Canada also hosts De Beers’ Victor diamond operation in northern Ontario and Stornoway Diamond’s (TSX:SWY) Renard project in Quebec, like Gahcho Kué due for production in 2016.
Gahcho Kué marked another milestone with last week’s receipt of a water licence. Mountain Province’s latest private placement follows a July announcement that the company appointed three banks to arrange and underwrite a loan up to US$370 million, expected to close by year-end.
A revised feasibility study released in April gave the JV a 32.6% after-tax internal rate of return. Using a 10% discount rate, the net present value came to $1.005 billion. Capital costs, in unescalated 2013 dollars, came to $858.5 million. The report estimated a 12-year mine life producing a total of 53.4 million carats selling for an average $149.66 per carat.
The mine would employ nearly 700 people during the two-year construction phase and about 400 people when in operation.
In other private placements this year, Mountain Province raised $45.5 million in June and $28.24 million in March.
The 4,189-hectare property lies about 280 kilometres northeast of Yellowknife.