Mountain Province Diamonds (TSE:MPVD) reported record quarterly diamond production in the first quarter of 2026, but management said weak rough diamond prices, tariff uncertainty and geopolitical disruption continued to weigh heavily on its financial results and liquidity position.
Jonathan Comerford, president and chief executive officer, said the quarter was defined by “strong operating performance with higher grades offset by a weaker diamond price environment,” resulting in an adjusted EBITDA loss of CAD 600,000. The company owns 49% of the Gahcho Kué mine in the Northwest Territories, with De Beers Group, a division of Anglo American plc, owning the remaining 51%.
Record Carat Recovery Despite Lower Tonnes Treated
Mountain Province said total tonnes treated in Q1 2026 were down 18% from the same period in 2025, while total tonnes mined were also lower year over year. Comerford attributed the reduction to challenging winter conditions and a decision by the joint venture partners to pause mining at Tuzo to conserve cash and maintain flexibility.
Despite lower throughput, the mine produced more than 2 million carats in the quarter, a record for the company. Comerford said grade was 2.64 carats per tonne, compared with 0.82 carats per tonne in Q1 2025, and remained ahead of budget.
However, he noted that the size frequency distribution was below expectations, with a larger share of recovered stones in smaller categories. Those stones are facing the greatest pressure in the current market, according to management.
Revenue Falls as Diamond Prices Drop
Chief Financial Officer Steve Thomas said Mountain Province sold 858,000 carats in Q1 2026 at an average price of US$34 per carat, or CAD 47, generating CAD 40 million in revenue. That compared with 426,000 carats sold at US$72 per carat, generating CAD 44 million in revenue, in Q1 2025.
Thomas said the company sold twice the volume of carats compared with the prior-year quarter, but at less than half the price. He pointed to continued volatility around a tariff regime, noting that an exemption for rough diamonds had been indicated but was not yet enacted.
The company reported a mine operating loss of CAD 36 million for Q1 2026, compared with a loss of CAD 22.4 million in Q1 2025. Net loss after tax was CAD 65.1 million, or CAD 0.31 per share, compared with a loss of CAD 34.4 million, or CAD 0.16 per share, in the prior-year period.
Adjusted EBITDA was negative CAD 600,000, compared with positive CAD 5.8 million in Q1 2025. Cash flow from operating activities was an outflow of CAD 18 million, compared with an outflow of CAD 1 million a year earlier.
Liquidity Remains Central Concern
Thomas said the company’s working capital position stood at negative CAD 63.1 million at quarter-end, slightly less negative than at year-end. Inventories increased by CAD 54 million to CAD 206 million, driven primarily by winter road deliveries, including 55 million liters of fuel.
Accounts payable increased to CAD 169 million from CAD 126 million at the end of 2025. Thomas said cash calls owed to De Beers rose from CAD 30 million at year-end to CAD 81 million by the end of Q1 2026 and to approximately CAD 123 million by April 30. Later in the call, he said in-kind election notice amounts that had come due totaled CAD 130 million as of the call date.
Thomas said De Beers drew down CAD 33 million from the restricted cash balance to partially fund cash flows owed to the operator, adding that the balance will need to be replenished. He also said the repayment dates for a US$40 million short-term term loan and a CAD 33 million working capital facility were recently extended from April 30 to June 30, 2026.
Management said it is continuing discussions with lenders and other stakeholders. Thomas said the company was grateful to Mr. Dermot Desmond, who provided a working capital injection and agreed to extend repayment dates tied to the working capital facility and bridge loan. He also said De Beers had remained supportive by extending in-kind election notice due dates.
Comerford said he could not provide further details on in-kind elections and stakeholder discussions because the company is in a “critical and sensitive process.” He thanked the government for its support of the diamond industry, De Beers for giving the company time to address its liquidity issues, and Desmond for providing working capital.
Diamond Market Remains Under Pressure
Reid Mackie, vice president of diamond sales and marketing, said the rough diamond market entered 2026 with cautious sentiment due to uncertainty around U.S. tariffs and the pending sale of De Beers. While the market improved slightly early in the year, he said the outbreak of war in the Middle East pushed buyers back into a “wait and see” stance.
Mackie said the conflict had caused disruptions through Dubai, an important diamond trading center, though he characterized the impact so far as primarily logistical and related to local retail rather than a broader structural shift.
He said larger goods continued to outperform smaller stones, with prices for stones above 2 carats stabilizing in Q1 and demand remaining steady for large, high-quality stones. Smaller goods, by contrast, saw further price declines. Mackie said De Beers formally adjusted its price book lower in April, and recent tender results in Antwerp indicated Q1 pricing pressure was continuing into Q2.
On the retail side, Mackie said China appeared to be stabilizing after adjustments in jewelry store counts and inventory levels, while India remained robust due to bridal demand and investment purchases. He said lab-grown diamonds continued to pressure the natural diamond market in the U.S., especially on price, though affluent customers and major luxury brands continued to favor natural diamonds.
Q&A Highlights Small-Stone Exposure
During the question-and-answer session, an independent analyst asked about the company’s exposure to higher-value stones and the proportion of small stones in inventory. Mackie said the company had not been building inventory to “play the market” and had been focused on selling goods to retrieve revenue.
He said small stones typically represented about 20% to 30% of value, while accounting for roughly 80% by volume. Management emphasized that the company does not typically disclose detailed production distribution information.
Asked whether small-stone pricing covered variable costs, Thomas said cash management and working capital were the company’s major challenges. He noted that, because Gahcho Kué is a fly-in, fly-out mine, about 75% of annual cash calls occur in the first half of the year, while sales are limited in Q1. He said cash conditions become easier in the second half as spending declines, but described pricing around US$33 per carat as “challenging, to say the least.”
Comerford said Mountain Province’s priority for the rest of 2026 is to navigate the difficult diamond market and resolve liquidity challenges while protecting the approximately 700 jobs at Gahcho Kué.
About Mountain Province Diamonds (TSE:MPVD)
Mountain Province Diamonds Inc is engaged in the discovery and development of diamond properties in Canada’s Northwest Territories. The company holds interests in Gahcho Kue Diamond Mine in Canada’s Northwest Territories as a joint venture partner with De Beers Canada. Its other projects include the Kennady North which covers a portion of the southeastern Slave Geological Province, an Archean terrain.
