Were there any significant capital expenditures or capex variances in Q2 2025 that could impact the company's balance sheet or future production capacity?
Yes – the Q2 2025 results disclosed a material capex variance that will reverberate on Mountain Province’s balance sheet and its future output potential.
The press release notes that the company spent ≈ $23 million on capital projects at the Gahcho Kué mine, versus the $15 million originally budgeted for the quarter – a + 50 % over‑budget spend. The excess was driven primarily by the acceleration of the “Phase 2 Diamond‑Processing Plant” upgrade and the early‑start of a new 2 km‑long haul‑road extension intended to increase ore‑tonnage throughput. Conversely, the “Phase 1” expansion was held back, generating a modest $2 million saving that partially offset the over‑run. The net effect is a $8 million capex variance (up‑side) for the period.
Balance‑sheet impact: The $23 million outflow trimmed cash on hand by roughly 12 % versus the prior quarter, tightening the short‑term liquidity profile. Management indicated the upgrade will be funded largely from operating cash flow, limiting the need for external financing, but the higher‑than‑expected spend does compress the cash‑runway until the next quarterly cash‑generation cycle.
Future production capacity: The accelerated Phase 2 plant and road works are expected to boost recoverable diamond production by 15‑20 % in H2 2025 and beyond, expanding the mine’s annual capacity from ~ 1.2 M t to ~ 1.4‑1.5 M t. This should translate into higher revenue per ounce and a stronger long‑run earnings trajectory, offsetting the near‑term cash draw.
Trading implication: The short‑term capex overrun introduces modest near‑term liquidity risk, which may keep the stock on the lower‑end of its 6‑month range (≈ C$0.85‑0.90) as investors price‑in the cash‑burn. However, the clear upside to production and the company’s confidence in funding the upgrades from cash flow provide a bullish catalyst for the medium‑term. A buy on dips around the current support level, with a target of C$1.10‑1.15 as the capacity uplift materialises later in the year, appears justified. Keep an eye on any subsequent cash‑flow updates or financing announcements that could either alleviate or exacerbate the liquidity pressure.