Mr. Mark Wall reports

MOUNTAIN PROVINCE DIAMONDS ANNOUNCES THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2023 RESULTS

Mountain Province Diamonds Inc. has released its financial and operating results for the third quarter (Q3 2023) and nine months ended Sept. 30, 2023. All figures are expressed in Canadian dollars unless otherwise noted.

Q3 2023 key highlights:

• 478,653 carats were sold for total proceeds of $60.3-million ($45.3-million (U.S.)) at an average price of $126 per carat ($95 (U.S.));
• Quarterly adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $25.1-million (1);
• Earnings from mine operations of $2.7-million;
• Net loss of $13.4-million or basic and diluted loss of six cents per share;
• Included in the determination of the net loss at Sept. 30, 2023, is a non-cash adjustment to net realizable value from carrying cost of $9.7-million in respect of total rough diamond inventories held by the company;
• At Sept. 30, 2023, the company held $214-million in current assets and $153-million in net working capital;
• Capital expenditures in the nine months ended Sept. 30, 2023, were $62.8-million, $57.0-million of which were deferred stripping costs, with the remaining $5.8-million sustaining capital expenditures related to mine operations (1);
• Repurchase for cancellation of approximately $6-million (U.S.) aggregate principal amount of the 9.000 per cent senior secured second lien notes during the fiscal quarter.

(1) Cash costs of production, including capitalized stripping costs, and adjusted EBITDA are non-IFRS (international financial reporting standards) measures with no standardized meaning prescribed under IFRS.

Company to pause all discretionary spending and focus on cash generation

Given the challenging state of the current rough diamond market, the company agreed with its joint venture (JV) partner, De Beers, to pause all discretionary spending and cut costs where appropriate to focus on maximizing cash generation. Growth related expenditure at the Gahcho Kue mine will be suspended, with the option to resume when the company and its JV partner deem appropriate. This includes pausing spending and further work on the Gahcho Kue underground expansion. As a part of this spending reduction, Dr. Tom McCandless, vice-president of exploration, will transition from a full-time role to continuing to provide support on an as-needed basis via a consulting arrangement.

Mark Wall, the company's president and chief executive officer, commented:

"For most of 2023, the diamond market has been under pressure as a result of various factors, which include: a slowing market in the U.S.; low Chinese demand; and the uncertainty in the diamond supply chain related to Lab Grown diamonds and continued supply of Russian diamonds following the invasion of Ukraine. Despite this, MPD performed reasonably well through H1 compared to our peers, largely as a result of our sales strategy and mix of goods outperforming the general market. In Q3, the market deteriorated further. The major diamond producers have reacted by significantly cutting their sales and the Indian diamond industry announced a two-month import moratorium to run from Oct. 15 to Dec. 15. The hope being that this pause in selling rough diamonds, together with December being the busiest time for diamond purchases, will reduce the excess supply in the sector and stabilize prices.

"For our part, the company took the decision to withhold some of our lower-value goods during quarter 3 and took the unprecedented step in October to sell some of our production directly to our joint venture partner, De Beers. In addition, and as stated in our Oct. 6 press release, we have also agreed with De Beers to pause all discretionary spend and reduce costs wherever prudent. We continue to monitor the market closely, while focusing on the controllables, which are costs, production and operating efficiencies. We aim to maintain the optionality of growth opportunities for an improved price environment.

"On the production front, Q3 saw continued strong performance from the process plant, with overall plant utilization of 84 per cent, above the design range of 80 to 82 per cent. Continued strong performance from the plant, combined with a planned improved grade profile coming out of the 5034 and Hearne pits will be required to hit our carat production guidance for the year."

Operational highlights for Q3 2023:

• 1,326,610 carats recovered in Q3 2023 at an average grade of 1.51 carats per tonne, a 9-per-cent decrease relative to Q3 2022 (Q3 2022: 1,451,455 carats recovered);
• 877,617 ore tonnes treated in Q3 2023, an 8-per-cent increase relative to Q3 2022 (Q3 2022: 816,201 ore tonnes treated);
• 887,695 ore tonnes mined in Q3 2023, a 34-per-cent decrease relative to 1,345,654 tonnes mined in Q3 2022;
• 9,145,849 total tonnes mined, an 18-per-cent increase relative to Q3 2022.

Financial highlights for Q3 2023:

• Revenue from 478,653 carats sold in Q3 2023 at $60.3-million ($45.3-million (U.S.)) at an average realized price of $126 per carat ($95 (U.S.)), compared with $110.1-million ($83.3-million (U.S.)) from 805,000 carats sold in Q3 2022 at an average realized price of $137 per carat ($104 (U.S.));
• Adjusted EBITDA (1) of $25.1-million in Q3 2023, compared with $54.1-million in Q3 2022;
• Earnings from mine operations of $2.7-million in Q3 2023, compared with $44.7-million in Q3 2022;
• Cash costs of production, including capitalized stripping costs (1), of $118 per tonne treated (2022: $128 per tonne) and $78 per carat recovered (2022: $72 per carat);
• Net loss in Q3 2023 was $13.4-million or six cents per share (2022: net loss of $7.2-million or three cents per share). Included in the determination of the net loss for Q3 2023 are foreign exchange losses of $5.7-million, the majority of which is an unrealized loss arising on the translation of the company's U.S.-dollar-denominated long-term debt, as a result of the weakening of the Canadian dollar versus U.S. dollar.

(1) Cash costs of production, including capitalized stripping costs, and adjusted EBITDA are non-IFRS measures with no standardized meaning prescribed under IFRS.

Operational highlights for the nine months ended Sept. 30, 2023:

• 3,985,000 carats recovered in the nine months ended Sept. 30, 2023, at an average grade of 1.66 carats per tonne, 2 per cent higher than the 3,898,000 carats, 1.71 carats per tonne, recovered for the nine months ended Sept. 30, 2022;
• 2,395,000 tonnes of ore treated in the nine months ended Sept. 30, 2023, compared with the 2,274,000 tonnes treated for the nine months ended Sept. 30, 2022;
• 27.3 million total tonnes mined for the nine months ended Sept. 30, 2023, a 15-per-cent increase from the 23.8 million total tonnes mined for the nine months ended Sept. 30, 2022.

Financial highlights for the nine months ended Sept. 30, 2023:

• Total sales revenue of $248.9-million ($184.9-million (U.S.)) for the nine months ended Sept. 30, 2023, at an average realized price of $138 per carat ($103 (U.S.)), compared with $292.5-million in 2022 ($226-million (U.S.)) at an average realized price of $154 per carat ($119 (U.S.));
• Adjusted EBITDA (2) of $123.3-million for the nine months ended Sept. 30, 2023, compared with $153.8-million for the nine months ended Sept. 30, 2022;
• Earnings from mine operations for the nine months ended Sept. 30, 2023, of $76.8-million (for the nine months ended Sept. 30, 2022: $138.9-million);
• Cash costs of production, including capitalized stripping costs (2), of $142 per tonne treated (2022: $133 per tonne) and $85 per carat recovered (2022: $78 per carat);
• Net income for the nine months ended Sept. 30, 2023, was $32.1-million or 15 cents per share (for the nine months ended Sept. 30, 2022: net income of $39.8-million or 19 cents per share);
• Capital expenditures in the nine months ended Sept. 30, 2023, were $62.8-million, $57.0-million of which were deferred stripping costs, with the remaining $5.8-million accounting for sustaining capital expenditures related to mine operations.

(2) Cash costs of production, including capitalized stripping costs, and adjusted EBITDA are non-IFRS measures with no standardized meaning prescribed under IFRS.

Market comment for Q3 2023 and nine months ended Sept. 30, 2023

As previously reported, during Q3 2023, 478,653 carats were sold for total proceeds of $60.3-million ($45.3-million (U.S.)), resulting in an average price of $126 per carat ($95 (U.S.) per carat). These results compare with Q3 2022, where 805,227 carats were sold for total proceeds of $110.6-million ($83.3-million (U.S.)), resulting in an average value of $137 per carat ($103 (U.S.) per carat).

The relative reduction in volume sold in Q3 2023 reflects the company's decision to strategically stock certain categories of the lower-valued goods in order to defend its prices in the rough diamond market. In addition, recognizing the overall lack of confidence in the rough diamond market and a direct result of the Indian import ban, the company took the unprecedented decision, subsequent to the quarter-end, to sell a portion of its production to the company's JV partner, De Beers, thereby removing it temporarily from the diamond market. The company intends to recommence its tender sales in mid-December following the end of the Indian import moratorium.

Year to date in 2023, 1,799,985 carats have been sold at an average price of $138 per carat ($103 (U.S.) per carat) for total proceeds of $248.9-million ($184.9-million (U.S.)), in comparison with 1,898,557 carats sold at an average price of $154 per carat ($119 (U.S.) per carat) for total proceeds of $292.9-million ($226.0-million (U.S.)) during the same period in 2022.

The diamond market is experiencing low levels of demand since returning from the August holiday period. Macroeconomic concerns and delays to post-COVID-19 restocking of diamond jewellery in China, coupled with continued erosion to polished prices downstream, have motivated diamond polishers to temporarily halt rough diamond buying and reduce polished inventories. This includes a temporary measure tabled by the Indian cutting and jewellery trade to voluntarily reduce rough diamond imports into the country.

Gahcho Kue mine operations

An attached table summarizes key operating statistics for the Gahcho Kue mine in the three and nine months ended Sept. 30, 2023, and Sept. 30, 2022.

Conference call

The company will host its quarterly conference call on Friday, Nov. 10, 2023, at 11 a.m. EST.

Title:  Mountain Province Diamonds Q3 2023 earnings conference call

Conference ID:  47510442

Date of call:  Nov. 10, 2023

Time of call:  11 a.m. Eastern Time

Expected duration:  60 minutes

Webcast:  A webcast will be available.

Participant toll-free dial-in number:  1-888-390-0546

Participant international dial-in number:  1-416-764-8688

A replay of the webcast and audio call will be available on the company's website.

Mountain Province Diamonds is a 49-per-cent participant with De Beers Canada in the Gahcho Kue diamond mine, located in Canada's Northwest Territories. The Gahcho Kue joint venture property consists of several kimberlites that are actively being mined, developed and explored for future development. The company also controls more than 113,000 hectares of highly prospective mineral claims and leases that surround the Gahcho Kue joint venture property, which include an indicated mineral resource for the Kelvin kimberlite and inferred mineral resources for the Faraday kimberlites.

Qualified person

The disclosure in this news release of scientific and technical information regarding Mountain Province Diamonds' mineral properties has been reviewed and approved by Matthew MacPhail, PEng, MBA, an employee of Mountain Province Diamonds and a qualified person as defined by National Instrument 43-101, Standards of Disclosure for Mineral Projects.

We seek Safe Harbor.