Mountain Province Diamonds Announces Third Quarter and Nine Months Ended September 30, 2022 Results

Press Release

11.09.2022

TORONTO and NEW YORK – Mountain Province Diamonds Inc. (“Mountain Province”, the “Company”) (TSX: MPVD) (OTC: MPVDF) is pleased to release its financial and operating results for the third quarter (“Q3 2022”) and nine months ended September 30, 2022. All figures are expressed in Canadian dollars unless otherwise noted.

Third Quarter 2022 Key Highlights

• Revenue of $110.1M representing the highest quarterly revenue in the Company’s history and a 12% increase relative to that achieved in Q2 2022
• Robust Quarterly Adjusted EBITDA of $54.1M¹
  
• Strong average price per carat sold of US$104 during the quarter, which when adjusted for mix of goods sold, on a like-for-like basis represented a 2% increase in average price per carat relative to Q2 2022
• During the quarter, repurchase for cancellation of approximately US$16.9 million aggregate principal amount of 8.000% Senior Secured Second Lien Notes, bringing the total 2022 repurchase amount to US$26.9M
• Subsequent to quarter-end, the Company executed a non-binding term sheet with certain holders of its 8.000% Senior Secured Second Lien Notes (“Existing Notes”) due December 15th, 2022 for a partial refinancing (“Proposed Transaction”) of the Existing Notes. The Proposed Transaction is currently expected to include the exchange of approximately US$190.0 million aggregate principal amount of Existing Notes for approximately US$195.9 million aggregate principal amount of new Loan Notes. The New Loan Notes are expected to bear interest at a rate of 9.0% per annum and have a three-year term. The Company expects to retire the remaining balance of the Existing Notes with cash on hand, drawing down the Dunebridge facility and the consummation of the Proposed Transaction. The Proposed Transaction is pending shareholder and regulatory review.

Mark Wall, the Company’s President and Chief Executive Officer, commented:

“The third quarter was incredibly positive for the company on many levels. Firstly, the non-binding term sheet for debt refinancing of US$190 million with a three-year term with a 9% coupon. Production in the third quarter saw improvement from both Q1 & Q2 which was the result of detailed operational and maintenance focus.

The discovery of the Hearne Northwest Extension reported during Q2 has been the source of ongoing work and those results provide the opportunity to consider the feasibility of underground extraction of diamonds at Gahcho Kué in the future to extend the mine life, as we have seen in other diamond mines in the Northwest Territories. We continue to work on these opportunities.

With all of this happening to achieve the highest revenue quarter in the Company’s history in Q3 is a very encouraging result.”

Operational Highlights for Third Quarter 2022 (“Q3 2022”)

• 1,452,000 carats recovered at an average grade of 1.78 carats per tonne, a 15% increase relative to Q2 2022 and a 7% decrease compared to the 1,562,000 carats recovered at 1.88 carats per tonne in Q3 2021 (Q2 2022: 1,261,000 carats recovered).
• 817,000 ore tonnes treated, a 9% increase relative to Q2 2022, and an 2% decrease relative to Q3 2021 (Q2 2022, 749,000 ore tonnes treated; Q3 2021: 832,000 ore tonnes treated).
• 1,346,000 ore tonnes mined, a 29% increase relative to 1,043,000 tonnes mined in Q2 2022 and a 30% increase relative to the 1,034,000 tonnes mined in Q3 2021.
• 7,753,000 total tonnes mined, a 2% decrease relative to Q2 2022 and a 25% decrease from 10,280,000 total tonnes mined in Q3 2021.

Financial Highlights for Third Quarter 2022 (“Q3 2022”)

• Revenue from 805,000 carats sold at $110.1 million (US$83.3 million) at an average realised price of $137 per carat (US$104) compared to $94.2 million from 1,027,000 carats sold in Q3 2021 (US$74.1 million) at an average realized price of $92 per carat (US$72).
• Adjusted EBITDA¹ of $54.1 million compared to $41.2 million in Q3 2021.
• Earnings from mine operations $44.7 million compared to $35.5 million in Q3 2021.
• Cash costs of production, including capitalized stripping costs¹ of $128 per tonne treated (2021: $101 per tonne) and $72 per carat recovered (2021: $54 per carat).
• Net loss at September 30, 2022 was $7.2 million or $0.03 loss per share (2021: Net income of $8.8 million or $0.04 earnings per share). Included in the determination of the net loss at September 30, 2022 are unrealized foreign exchange losses of $26.3 million, on the translation of the Company’s USD-denominated short-term and long-term debt. The unrealized foreign exchange losses are a result of the weakening of the Canadian dollar versus US dollar.

Operational Highlights for the nine months ended September 30, 2022

• 3,898,000 carats recovered at an average grade of 1.71 carats per tonne, 17% lower than the 4,718,000 carats, 2.08 carats per tonne, recovered for the nine months ended September 30, 2021.
• 2,274,000 tonnes of ore treated in September 30, 2022; compared to the 2,269,000 tonnes treated for the nine months ended September 30, 2021.
• 23.8 million total tonnes mined for the nine months ended September 30, 2022, a 3% decrease from the 24.6 million total tonnes mined for the nine months ended September 30, 2021.

Financial Highlights for the nine months ended September 30, 2022

• Total sales revenue of $292.5 million (US$226 million) at an average realised price of $154 per carat (US$119) compared to $213.2 million in 2021 (US$169.4 million) at an average realized price of $91 per carat (US$72).
• Adjusted EBITDA² of $153.8 million compared to $98.2 million for the nine months ended September 30, 2021.
• Earnings from mine operations of $138.9 million (2021: $82.1 million).
• Cash costs of production, including capitalized stripping costs², of $133 per tonne treated (2021: $110 per tonne) and $78 per carat recovered (2021: $53 per carat).
• Net income for the nine months ended September 30, 2022 was $39.8 million or $0.19 earnings per share (2021: net income $38.5 million or $0.18 earnings per share). Included in the determination of the net income for the nine months ended September 30, 2022 are unrealized foreign exchange losses of $33.8 million, on the translation of the Company’s USD-denominated short-term and long-term debt. The unrealized foreign exchange losses are a result of the weakening of the Canadian dollar versus US dollar.
• Capital expenditures in the nine months ended September 30, 2022 were $34.1 million, $26.1 million of which were deferred stripping costs, with the remaining $8 million accounting for sustaining capital expenditures related to mine operations.

Market Highlights for Q3 & nine months ended September 2022

During Q3 2022, 805,227 carats were sold for total proceeds of C$110.6 million (US$83.3 million), resulting in an average price of C$137 per carat (US$104 per carat). This Q3 2022 sales result represents a 13% increase in revenue relative to Q2 2022, and a 10% reduction on an US$ average price per carat basis. Adjusting for mix of goods sold, on a like-for-like basis the Q3 2022 sales result represented a 2% increase in average price per carat relative to Q2 2022.

Year-to-date 2022, 1,898,557 carats have been sold at an average price of $154 per carat (US$119 per carat) for total proceeds of $292.9 million (US$226.0 million) in comparison to 2,349,644 carats sold at an average price of $90 per carat (US$72 per carat) for total proceeds of $212.5 million (US$169.4 million) during the same period in 2021.

Gahcho Kué Mine Operations

The following table summarizes key operating statistics for the Gahcho Kué Mine in the three and nine months ended September 30, 2022 and 2021.

IBF4

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