Mountain Province Holds Back Dividend

RAPAPORT... Mountain Province decided not to pay a quarterly dividend toshareholders due to challenging conditions in the diamond market, the minerreported. Demand for rough from its Gahcho Ku?(C) mine in Canada was sluggishin the third quarter amid weakness in India, the company said Monday. Prices oflower-value diamonds dropped even as sales increased 15% year on year to CAD74.9 million ($56.6 million) for the period. Profit slumped 37% to CAD 17.5 million ($13.2 million),weighed by foreign-exchange losses and expenses related to exploration work atthe Kennady asset, which it acquired in January. The miner has to balance paying dividends and reducing debt,it said. As such, "the company has taken a view that with the current pricingpressure, it will not be declaring a dividend this quarter," it continued. Itsshare price fell 13% on the Toronto Stock Exchange Tuesdayfollowing the news. "The impact of the weakening Indian rupee, together with theoverhang from demonetization and a major fraud in India, have combined toreduce the availability of credit offered to diamantaires in the industry,"Mountain Province CEO Stuart Brown explained. "A consequence of this has been aprice weakening of goods of the small, lower-quality and brown categories,where we have seen price decreases during [the third quarter]." By contrast, demand was strong for stones weighing 10.80carats or higher and those that produce fancy-color polished, Brown noted. As aresult, the average selling price climbed 12% to CAD 95 ($72) per carat for thequarter. Revenue for the first nine months jumped to CAD 240.5million ($181.7 million) from CAD 92.9 million ($70.2 million) for the sameperiod a year ago. The average price increased 4% to CAD 99 ($75) per carat, while profitdropped 66% to CAD 11.3 million ($8.5 million). Image: Gahcho Ku?(C) mine. (Mountain Province)