Mountain Province Diamonds Inc.

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Good morning, ladies and gentlemen, and welcome to the Mountain Province Diamonds Inc. Q1 2026 webcast and conference call. At this time, all lines are in a listen-only mode. Following the presentation, we'll conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, May 13, 2026. I would now like to turn the conference over to Jonathan Comerford, CEO of Mountain Province Diamonds. Please go ahead.

Good day to everyone who is dialed in to listen to our Q1 to 2026 results call. My name is Jonathan Comerford and I'm the President and CEO of the company. Also present on this call is Steve Thomas, our CFO, Reid Mackey, our Vice President, Diamond Sales and Marketing. At the conclusion of this presentation, the team will then be available for any questions you may have. Firstly, I would like to draw your attention to our cautionary statement regarding forward-looking information. This presentation will be posted on our website for anyone who needs additional time to review this statement. Mountain Province Diamonds produces Canadian diamonds to the highest standard of corporate social responsibility, and that is something that we continue to be proud of. We own 49% of the Goucher Quay mine in the Northwest Territories with De Beers Group, a division of Anglo-American PLC, owning the remaining 51%. Today, I will speak to our Q1 2026 results and provide some insight into our operational and financial performance. Following that, Steve, our CFO, will discuss the Q1 financial performance of the company and Reid will comment on the overall diamond market. I will then make some closing remarks to complete the presentation and answer any questions that you may have. I will start the review of Q1 results with safety. Gaiter Quay's operations have continued to be lost time injury free and we are now approaching a full year without a lost time injury. The very challenging winter months are behind us and the operations are now focused on safety navigating the fresh ash period, which is now upon us. Q1 results highlights. I'm now going to run through some highlights from our first quarter of 2026. The story of Q1 is one of strong operating performance with higher grades offset by a weaker diamond price environment, resulting in a 600,000 EBITDA loss for the quarter. Turning first to the operations, total tons treated in Q1 2026 were down 18% compared to the same period in 2025. Despite this, we delivered a record quarter in terms of carrots recovered with over 2 million carrots produced. On the mining side, total tons mined were also lower year on year. This reduction reflects both the challenging winter conditions and by the joint venture partners to pause mining at Tuzo with a focus on conserving cash and maintaining operational flexibility. Importantly, Grade in Q1 was 2.64 carats per ton, compared to 0.82 carats per ton in Q1 2025. We continue to outperform budget on grade. However, it is worth noting that the size frequency distribution has been below expectations, with a greater proportion of recovered stands in the small categories, which are currently under the most pressure in the market. In summary, operation, safety, performance, These remain strong and cards will cover as ahead of plan despite lower tons treated and reduced mining rates. Turning briefly to the diamond market, Reid will cover this in more detail. At a high level, the market remains very challenging with ongoing uncertainty around U.S. tariffs and geopolitical tension in the Middle East weighing on sentiment. On in-kind elections and stakeholder discussions, we are in the middle of a critical and sensitive process. While I appreciate the importance of this topic, I'm not in a position to provide further detail at this stage. I would, however, like to thank the government for its support to the diamond industry, the beers for its patience in allowing the company time to resolve its liquidity issue, and Mr. Dermot Desmond providing working capital to the company, again, giving it time to explore these discussions. With that, I will hand over to Steve to take you through the financials.

Steve. Thank you, Jonathan, and good morning, everyone. Noting all numbers discussed will be in Canadian dollars unless otherwise stated. In Q1 2026, we sold twice the volume of carrots compared to Q1 2025, but at less than half the price due to continued volatility. There's a tariff regime for which exemption of rough diamonds has been indicated, is not yet enacted. Cost of sales in Q1 2026 are higher than Q1 2025, but when normalized for carrots sold, were comparatively much lower. The quarter saw minimal net depletion of the oil stockpile, although 860,000 tons less than at the end of Q1 2025. as in that period, carrots recovered were drawn heavily from the stockpile. The company's working capital position at minus $63.1 million is slightly less negative than it was at the year end, with the increase in current assets of rough diamonds on hand and consumables from the winter road deliveries offsetting the marked increase in accounts payable balances, which I will discuss shortly. Q1 2026 saw a slight strengthening in the U.S. dollar, resulting in an unrealized foreign exchange loss on U.S. dollar debt conversion. With $4 million less revenue in Q1 2026 than Q1 2025, and $10 million higher cost of sales, operating income was $14 million lower than the comparative period in 2025, but with increased finance expenses and a higher FX loss, net income was $31 million lower, and cash from operations $16 million lower than Q1 2025. Turning to the balance sheet, since the year end, the most significant changes are inventories increased by $54 million to $206 million, which is comparable to the balance at the same time last year. That increase has been driven by a $47 million increase in consumables, notably 55 million liters of fuel from the winter road deliveries. Rough diamond values increased by 6.5 million, reflecting a volume increase from 643,000 carats at the year end to 768,000 carats at the end of Q1. And lastly, all stockpile value stayed relatively flat at about $53.5 million, despite a slight decrease in total tons from 2.31 million to now 2.28 million tons. And that comprises growth in the NEX ore-related tons in the stockpile and the reduction in the Tuzo tons as we treated some of that lower-grade Tuzo material in this quarter. Accounts payable increased from $126 million at the 25-year end to $169 million, reflecting a $47 million increase in commercial payables as the bulk commodities were delivered via the winter road during the quarter. Amongst other items, this balance is higher than the comparable Q125 balance, as we took delivery of 55 million litres this year, in line with our strategic plan, compared to only 51 million litres in 2025's Winter Road. The accounts payable balance at the year end includes the cash calls owing to De Beers of $30 million at the year end, which by the end of Q1 2026 had increased to $81 million, and by April the 30th this year to closer to $123 million. Property, plant and equipment decreased to $487 million from 518 million at the year end, reflecting only 3.1 million increase in capitalized waste stripping, in line with our recent announcement to pause two-zone stripping in order to preserve cash. The total capitalized value within PP&E stands at $136 million. That small increase is offset by a $3.2 million reduction in decommissioning and restoration costs and a $32.9 million depreciation charge. Turning to the embedded derivative asset, which is the repayment feature in the senior loan notes, that decreased to $106,000 from $343,000 at the year end due to the higher discount rates used in the fair value calculation. It's worth noting that there is no longer a derivative asset or liability calculated on currency hedges, as none are outstanding at Q1 2026, with the last hedge having been settled in March. For long-term liabilities, the slight strengthening in the closing U.S. dollar rate from Q1 2026 has tended to increase the derived Canadian value of the U.S. dollar denominated debt and explains the unrealized FX loss of 6.3%. That balance compares to a $300,000 loss in Q1 2025 when FX did not move over the course of that quarter. Decommissioning liabilities decreased by $5 million to $113 due largely to $2 million being paid in reclamation expenditures in the quarter and a slightly higher discount rate used in the calculation. Turning now to cash flow and earnings. In Q1, 2026, 858,000 carats was sold at an average price of US $34 a carat or 47 Canadian, generating $40 million in revenue compared to only 426,000 carats, but at US $72 a carat for 44 million of revenue in Q1, 2025. Market conditions have remained challenging during this quarter, and the decision was taken to blend lower-grade 2-Zero ore from the stockpile, along with the NXO ore mined to improve throughput rates in the plant. Q1, 2026 production costs increased to $50.5 million from $39 million, but went, in the previous quarter, but when adjusted for equivalent carrots sold, are comparatively much lower than Q1 2025. Both quarters experienced a similar inventory write-down charge of approximately $10 million, given that net realizable value was lower than cost. Cash cost per ton in Q1 2026, at $131 are 20% above Q1 2025, as all 926,000 tons treated in Q1 2025 were drawn from the existing stockpile, compared to only 30,000 tons of the 759,000 treated in this quarter. When looking at cost per carat, Q1 2026 is far lower than Q1 2025 because of the grade of the ore treated being three times higher, resulting in far higher carats recovered. Costs inclusive of waste stripping are lower per ton in Q1 2026 as the cash cost of waste stripping was only $3 million compared to $31 million in Q1 2025. Given this and the far higher tariff recovery due to grade, waste inclusive costs per tariff at $53 in Q1 26 compared to $192 in Q1 2025. The company reported a mine operating loss of $36 million in Q126 versus a loss of $22.4 million in Q125. Other items include a $0.9 million loss related to the write-down of assets under construction, a net derivative loss of $130,000 compared to a gain of $815,000 in Q1 2025. The Q1 26 loss comprises a realized loss of $56,000 on closing out the last U.S. dollar hedge and a $74,000 loss on the embedded derivative we have for the early repayment option on the senior loan notes. The finance expense of $23 million compared to only $10 million in Q125 reflects the continued accumulation of interest on the senior secured notes and junior credit facility, as well as on the short-term US dollar $40 million term loan and the Canadian $33 million working capital facility. For those short-term debts, The term date was recently extended from April the 30th to June 30th, 2026. The deferred tax recovery of $4.5 million reflects the operating losses compared to a recovery of $3.8 million in Q1 2025. Cash flow from operating activities was an outflow of $18 million compared to an outflow of $1 million in Q1 2025, primarily due to lower revenue and higher cash costs of production. In order to partially fund the cash calls owed to the operator, De Beers drew down $33 million from the restricted cash balance, as it did at the end of Q3 2025, and that balance will need to be replenished in due course. Adjusted EBITDA was negative $600,000 compared to positive 5.8 million at the end of Q1 2025, and with a resulting margin reducing to minus 2% compared to the comparative period being plus 13%. Net loss after tax was $65.1 million, compared to a loss of $34.4 million in Q1 2025, with the loss per share in Q1 26 being $0.31, compared to a loss of $0.16 in Q1 25. In conclusion, although operational performance remains strong, with the mine producing a record 2 million carats, The quarter was financially challenging due to continued weak pricing and REIT will expand upon general market conditions shortly. The company is in ongoing discussion with our lenders and are particularly grateful to Mr. Desmond, who in addition to providing a working capital injection, agreed to extend the repayment dates in respect of the working capital facility and bridge loan to June the 30th. De Beers has remained supportive throughout and agreed to extend the in-kind election notice due dates for those amounts that have come due and which in total, as of today's date, now stand at $130 million. We are also exploring other opportunities through the LETL program as a potential source of working capital to enable the company to meet its cash flow obligations. It's through successful negotiation with these three parties that the company hopes to come through what is a historically challenging price environment. Thank you. And with that, I will turn the presentation over to Reid Mackey, our VP Diamond Sales and Marketing. Reid. Thanks, Steve.

Going into 2026, the overall market sentiment was fairly cautious. I made ongoing uncertainty over U.S. tariffs and the pending sale of De Beers. The market picked up slightly early in the year and many in the industry were feeling more optimistic about the year to come. But the outbreak of war in the Middle East has now shifted the market back to a more of a wait-and-see approach. The war has caused disruptions through Dubai, giving its proximity to the conflict and its importance as a diamond trading centre. We still see mainly logistical and local retail disruptions rather than larger structural market shifts, However, some customers have reported difficulty moving goods in and out of Dubai, and we will continue to monitor the situation closely. Rough diamond producers continue to face a subdued market, with some reducing productions to control supply and operating costs. Dyzik Mines ceased production in March as planned, leaving only two operating Canadian mines, Gatukwe and Akati, although Akati's filing for CCAA recently is of concern. Tightening Canadian supply has the potential to increase the strategic importance of these mines amid ongoing demand for responsibly sourced and traceable natural diamonds. Pricing pressures do continue, as Steve pointed out, and as we've seen for a while, larger goods continue to outperform smalls, with prices for stones above 2 carats stabilizing in Q1, with steady demand for large, high-quality stones. At the same time, though, smaller goods have experienced further price decline. Beers formally adjusted its price book down in April, and recent tender results in Antwerp indicate Q1's price pressure is continuing into Q2. Traders and wholesalers continue to exercise caution. The midstream as a whole is still selectively purchasing to fulfill specific orders rather than to maintain or take position in broader or inventories. On the retail side, China appears to be stabilizing after an adjustment period in jewelry store count and inventory levels. And there is a modest recovery in consumer spending. While in India, retail remains robust, supported by bridal demand and investment purchases. Indian consumers are still showing strong preference for natural diamonds over lab-grown. Lab-grown diamonds are still putting pressure on the naturals market in the U.S., driven mainly by price, although more affluent customers and major luxury brands are still favoring natural diamonds, valuing the exclusivity that natural diamonds represent. U.S. commercial retailers continue to enjoy high margins on lab-grown stones, but as their wholesale costs continue to fall, that value differentiation between the two products has become more obvious, highlighting differentiation. Luxury jewelry brands continue to perform well, as evidenced by Carings' recorded Q1 results, which saw their jewelry sales up 14% overall over Q1 2025, as the remainder of the group's revenue flatlined. Marketing campaigns are leveraging the rarity and exclusivity of naturals to drive diamond jewelry demand, and the World Federation of Diamond Bourses has announced a dedicated budget for global marketing of natural diamonds. With this volatility and uncertainty continuing to buffet global economies, strategic marketing efforts for natural diamonds remain essential to maintain relevance with increasingly cost-conscious consumers. The industry will need to focus on opportunities for long-term growth for natural diamonds with verifiable origin and responsible sourcing.

And with that, I'll pass it back to Jonathan for closing remarks.

Thank you, Reid.

So to conclude, in 2026 we have continued to focus on safety performance, achieving nearly a full year without a lost time injury. We have maintained strong recovery driven by exceptionally high grades. As we move through 2076, the priority for Mountain Province is clear. We need to navigate a very challenging diamond market caused by geopolitical and U.S. tariffs, which has resulted in diamond prices at cyclically low levels, with an aim to come up with a solution to the company's liquidity challenges. I would like to thank our stakeholders as we work collaboratively to identify solutions and establish a path towards resolving this issue and protecting the 700 jobs that get required that rely on us. Thank you very much for your time. My team is now available to take any questions you may have.

Thank you. At this time, if you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw a question, press star 2. One moment please for your first question. Again, if you'd like to ask a question, please press star one. Your first question comes from Michael Beach from Independent. Please go ahead.

Thanks very much for the challenging situation. I guess I would ask two questions initially. One is, what proportion of your Total production is stones with a per carat value of more than $400. I know it's a very small proportion, but can you offer a comment in that regard? And the second question is, what's your current inventory of stones approximately? What proportion of that is small stones?

Thank you for your time. Hi, Michael.

Reid, do you have any thoughts on that?

Yeah, I can give a very... It's not the information we typically give out and we'd have to hand, but Reid, what do you think?

Yeah, what I can say, you know, at the current moment is we have, in terms of stock that we're holding, it's working capital. So we have not been stocking anything in terms of... trying to, you know, we haven't been stocking anything in terms of playing the market. So we've been selling everything, obviously, with the revenue, the priority based on revenue retrieval. That's kind of where our focus lies. In terms of actual, like, production distribution, what I can say is in smalls, from a value perspective, and that's, I think, the salient point here, we're usually looking at around, from a value perspective, about 20%. I'll kind of say 20% to 30% just to keep it vague. And so we obviously have an important exposure there in terms of volume, where it is sitting kind of more in the neighborhood of 80%. I think I'll leave it at that because it is not something we typically put out there. But I think that answers your question, Michael. Please chime in if there is anything missing there.

Michael, I'd also refer you to, in our financial statements, we do have a figure for the inventory, the total value of our inventory. So that will be on the balance sheet at the end of March 31st.

Yes, that's somewhat helpful. The proportion of stones that has a significant value is very small. I see the inventories. The inventory is very considerably from one quarter to another. That's probably reflecting the timing of sales. The timing of sales is... is intermittent, I guess I would venture to say. And so this quarter, I think you say that you propose to have three or four sales. Is that correct?

This quarter, we will have two sales, typically. Yes, for Q1, we have two sales.

Yes, for Q1, we typically have two sales. That's correct. There has been the odd occasion where we've been able to drag a later sale into Q1, but that wasn't the case this year.

So you should expect in Q2, three sales. Right.

Fair enough. Okay, so if 80% of the stones are small stones, then we know the fact that that component of the market is under severe pressure. And do you anticipate that... That will cover your variable costs, I guess is my final question.

When you say 80%, that would be typical.

That's 20%, 80% by number of carats, not by value. Obviously, the value is in the highest zones.

Certainly. I understand that, but if you're using 20% as a broad category, then We really don't know what the proportion is of large stones, which have a significant value. So the 80% comprises all the small stones, and perhaps in the order of $35 U.S., $33 U.S., whatever the present pricing is. Does that cover your variable costs or no?

Michael, it's Steve here. I would say, obviously, as we've outlined, the big challenge for the company is cash, cash management, working capital management. And what we see for this mine, because it's a fly-in, fly-out mine, about 75% of the cash calls for the entire year go out in the first half of the year. So there's a significant outpouring of cash. And as Jonathan and Reid have indicated, you might only have two sales in the first quarter. So there's certainly a cash challenge in H1 that is lessened in H2 because you don't have as much cash spend. So on a cash front, things become easier in the second half of the year. From the point of view of variable costs, obviously at $33 a carat, that's challenging to say the least. And I'll say no more than that. But I just want you to understand the dynamic of why you're seeing such a cash challenge in H1, which will be different to the one we face in H2.

Right. Yes, I understand that. And so sales are lumpy and the expenditures are leaning towards the first half of the year. And if you can make it till June the 30th, then we'll hope for the best after that. And good work on everybody's part. Good work on everybody's part to keep things afloat thus far.

Thank you.

Thank you. Thanks.

Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star 1. And there are no further questions at this time. I will turn the call back over to Jonathan for closing remarks.

Thank you very much for that.

As long as there is no further questions, I'd like to thank everyone for listening. So I'd like to conclude the conference and thank everyone for participating.

Ladies and gentlemen, this concludes this conference call. You may now disconnect. Thank you.