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First Gahcho Kué Diamond Sale Disappoints

Jan 30, 2017 3:04 AM   By Rapaport News
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A cash crunch in the Indian diamond industry forced Mountain Province to withdraw a quarter of rough diamonds from its first sale of production from the Gahcho Kué mine in Canada, the company reported.

The retracted goods were mostly brown and lower-quality items which either did not receive bids or attracted offers that were unacceptably low, the miner explained.  

The tender, which took place in Antwerp from January 16 to 25, fetched $6.3 million from 49,420 carats of rough. The average realized price of $127 per carat was inflated because of the removal of lower-value diamonds from the sale, Mountain Province pointed out. Demand for these items has been particularly weak as liquidity has been sapped among smaller and medium-sized Indian companies in the aftermath of the country's demonetization policy.

“The level of demand for our smaller lower-quality diamonds was disappointing, but we expect improvements as Indian liquidity issues abate,” said Patrick Evans, chief executive officer of Mountain Province.

Production at the Gahcho Kué mine launched in September, with output climbing to 862,000 carats by the end of 2016. Mountain Province is entitled to 49 percent of the mine's output, while the remaining 51 percent belongs to De Beers, its partner in developing the mine.

Mountain Province expects to achieve commercial production at the mine, meaning 70 percent of capacity, by the end of March.

Shares in Mountain Province slumped 5.4 percent on the Nasdaq exchange following the sales update.
Tags: Canada, De Beers, Gahcho Kué, mining, mountain province, Patrick Evans, Production, Rapaport News, Rough Diamonds
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