Mountain Province ends talks with third parties for Gahcho Kué financing

Canadian diamond explorer Mountain Province Diamonds Inc said it has ended talks with third parties which had expressed interest in the project.

The firm owns 49 percent of the Gahcho Kué project in North West Territories, while De Beers Canada owns 51 percent.

Reuters last week reported that Mountain Province Diamonds was conducting discussions with a major bank over financing for its part of the development costs for Gahcho Kue.

It is estimated that the project's development costs are approximately $600 million, while the joint venture would raise around $400 million in project financing through a consortium of banks.

Mountain Province said it will insteadfocus attention on the permitting of the Gahcho Kué project, arranging its share of the financing for the first mine at Gahcho Kué, advancing the Tuzo Deep drill program at Gahcho Kué and exploration at its fully owned Kennady North project.

Mountain Province President and CEO Patrick Evans, said: "Gahcho Kué is the world's largest and highest grade diamond development project, located in the world's most stable diamond producing region, so it's inevitable that we've attracted the interest of other participants in the diamond industry. While the board has welcomed third party interest in Mountain Province, the company is currently focused on advancing the permitting and financing for the first mine at Kennady Lake, two activities that require the full attention of management.

"Also, our two major exploration programs at Kennady Lake - the planned Kennady North airborne gravity survey and the Tuzo Deep drill program - both have the potential to add significantly to Gahcho Kué's current 49-million carat reserve. Under the circumstances, the board is of the view that further engagement with third parties might be premature before the results of these exploration programs have been announced."

Gahcho Kue will become the fourth diamond mine in the North West Territories, and is forecast to have annual production of around 4.5 million carats when it starts production in three to four years.