Mountain Province Diamonds, part-owner of the NWT’s Gahcho Kué diamond mine, says it lost $263.4 million in 2020, largely due to a loss in value of physical assets.
The company released its 2020 results on Thursday. Though Mountain Province had lost $129 million the previous year, in 2020 that figure more than doubled.
The majority of the reported loss was due to a $217.4 million impairment loss on property, plant and equipment. An impairment loss is when the accounting value of an asset exceeds its recoverable amount. It does not represent a profit loss at the mine.
“2020 was a challenging year for the company and Gahcho Kué mine, with pandemic-related personnel shortages and an inability to trade in the rough markets due to global lockdowns driving our underperformance,” said company president and chief executive Stuart Brown in a statement.
Many diamond mining companies faced challenges at the onset of the pandemic as some mines and jewellery stores closed and the world’s natural diamond market supply chain froze. By December, however, experts said the market was beginning to recover.
That same month, Mountain Province announced it planned to sell its largest diamond recovered to date. At the time, the company said most sales prices in the fourth quarter of 2020 were higher than before the pandemic hit.
“The company remains optimistic that as the world emerges from the effects of the coronavirus pandemic, the recovery of both rough diamond and polished diamond prices will continue,” Mountain Province said in a statement.
“Retail sales have recovered well and should continue to benefit from the pent-up savings that will be spent when economies reopen.”
Mountain Province said it sold a total of 3,329,289 carats for $227 million in 2020 at an average price of $68 per carat. Comparatively, in 2019, the company sold 3,284,520 carats for $276 million.
Brown noted the company has already faced challenges in early 2021. Work at Gahcho Kué was suspended for three weeks in February after a Covid-19 outbreak at the mine.
“2020 was certainly a very challenging year and 2021, although positive from a diamond price recovery perspective, has been equally challenging from a planning and production perspective,” Brown said in a statement.
“We remain focused on production and meeting our cashflow objectives in an ever-changing environment.”
Gahcho Kué is 49-percent owned by Mountain Province. The remaining 51 percent is owned by De Beers, which operates the mine.
Clarification: March 26, 2021 – 10:13 MT. This article has been updated to clarify that the majority of Mountain Province’s net loss in 2020 was the result of an impairment loss on property, plant and equipment.