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Good morning. My name is Jessica, and I will be your conference operator today. At this time, I would like to welcome everyone to Mountain Province Diamonds' Q1 2020 Conference Call. [Operator Instructions] Mr. Stuart Brown, you may begin your conference.
Thank you very much, Jessica, and good day to everyone who has joined us on the call and the webcast. Thank you very much. Format for today, pretty normal. I'll give you a brief introduction. Perry will cover the financial and production highlights. And then I'll try and cover 3 broad topics. We can all see that Q1 was good. However, we know we're in a different world at the moment. So we're trying to address some of those issues and information imparted in the announcement. Before I move on, I'd just like to remind everyone of the forward-looking statement. Anything covered today, so you should please make yourselves familiar. Read the content on Page 2 of the webcast presentation and also will be reference to some financial metrics and non-IFRS standards. But without further ado, if I could hand over to Perry to cover the production and the highlights of Q1. Thank you.
Thanks, Stuart. Good morning, everyone. As Stuart mentioned, I will provide some brief highlights for the first quarter 2020. All production stats are on a 100% basis unless otherwise noted, and all financial figures will be in Canadian dollars unless otherwise noted. Starting with the production stats, if you're looking at the webcast, it's on Slide 4. We've mined just under 9.4 million tonnes in the first quarter compared to 9.5 million tonnes in the prior year first quarter. [ The only thing is ] that the stripping ratio was a little bit lower this year compared to last year as we've mined just over 1 million tonnes of ore compared to 600,000 tonnes in the prior year. We just began the early phases of the initial stripping of the Tuzo pits with 55,000 tonnes mined there in the quarter. But otherwise, our mining was still focused on 5034 and Hearne. Tonnes moved were -- and productivity were generally at or above 2019 levels prior to the initial impact of COVID-19 and precautionary measures taken at the mine beginning in March, which did have some impact on mining rates towards the end of the quarter. Looking at tonnes treated. Tonnes treated continued strongly throughout this whole period, with the plant running at approximately 10,000 tonnes per day for a total of 903,000 tonnes treated versus 871,000 tonnes in the prior period, and grade was generally consistent at 1.83 carats per tonne compared to 1.82 last year. This combined to result in carats recovered of 1.66 million carats compared to 1.59 million carats last year Q1. And just commenting briefly on the impact of COVID-19, De Beers and mine personnel have done a tremendous job working with local authorities on mitigation plans that focus on worker safety at the mine and ensuring that there is minimal risk of transmission of COVID into remote Northern communities. As mentioned earlier, mine production was impacted late in the first quarter, which continued into the second quarter due to personnel shortages as a result of COVID measures. But since then, we've onboarded temporary contractors, which are expected to have addressed this issue going forward. Turning now, I guess, to the financial highlights on the next slide, Slide 5. I'll just start there, noting that top line revenue for the quarter was $65 million from the sale of just under 659,000 carats at an average price of USD 75 per carat. This compares to revenue of $61 million from the sale of 644,000 carats at USD 71 per carat in the prior year. The higher prices realized compared to the same period in 2019 were affected by the source of diamonds from varying parts of the ore body as well as the overall sentiment in the rough diamond market having improved in early 2020 compared to -- prior to the impact of COVID-19. It is also partially attributed to the volume and quality of fancies and specials included in the product mix. I would note our third sale of the year was scheduled to begin mid-March, however, was canceled due to COVID-19 lockdowns imposed in Belgium. Did not significantly impact our Q1 budgeted revenue expectations as we did not expect to receive these proceeds from Sale 3 until the second quarter. But obviously, we will feel that impact during the current quarter. Looking at our adjusted EBITDA. It was $23 million for the quarter compared to $20 million the same period in 2019, largely due to higher sales and realized prices. On a production basis, for the first quarter, overall cost declined both on a per tonne and per carat recovered basis, which is primarily attributable to higher throughput through the plant, lower input cost of consumables and the build of ore stockpile in the first quarter of 2020 compared to a large depletion of the ore stockpile during the first quarter of 2019. You'll note that our EBITDA margin increased in the quarter to 35% compared to 33% in the same period 2019. Looking at our GAAP reported income and loss, we recorded a net loss of $41 million or $0.19 a share compared to net income of $2 million or $0.01 a share for 2019 first quarter. The reported GAAP loss was primarily attributable to a $31 million unrealized foreign exchange loss on the translation of our U.S.-denominated debt into Canadian dollars, which weakened significantly at the end of the first quarter due to the COVID-19 pandemic and the impact on oil prices. Obviously, a weaker Canadian dollar is beneficial for the company on an operating cost basis, given that the vast majority of our operating costs are denominated in Canadian dollars. Lastly, I'll just mention our balance sheet, where we ended the quarter with $31 million in cash compared to $35 million at the beginning of the quarter. We did draw down in April USD 25 million of our revolving credit facility to provide further liquidity given the pause in sales. But otherwise, I'll stop my presentation there and turn it back to Stuart Brown.
Thanks very much, Perry. As I said in upfront, there's probably 3 broad issues I'd like to cover: first being the operations and the impact there on what we're doing; the second being the market and our sales preparation; and finally, the third, our financial situation and give you a bit of an update of what we're doing there. So as Perry mentioned, a lot of the impacts. Firstly, for us, what we're very proud of is actually, we've stayed, we're one of the few operations globally who has managed to stay open throughout this crisis. And all stakeholders that have been involved in that and our operating partners and the Northwest Territories communities are to be commended for assisting us in doing this. We had success in the winter road campaign. It closed slightly early because we got all our loads in. What that does mean is we got all our costs in as well as all our materials, so that does make us a largely fixed cost basis, having committed all that expenditure. So that then draws you logically to you want to continue to mine. We have done so. Obviously, health and safety has been our operational priority. We've had numerous operational changes. Perry mentioned the temporary labor that we're looking at, because we've been forced to not utilize all of our full workforce due to some of the medical and concerns and local community issues. This has had impact on some of our crews. We're not able to fully utilize all of our operating fleet in procuring the right tonnes and then doing all the waste stripping. So we've run a number of scenarios, and we're just bedding those down. And now we were sort of running with May to see how we are operating before we select the best option, which is why we point to updating the market in the near future on what likely guidance we'll have for the rest of the year. The plant is still running fully operational. We haven't had a dip in production at all. We've had some maintenance issues, but those are normal issues we've dealt with, the normal operating measures. We do have a different ore that we had planned to treat through the ore, so we had some lower grade material. But so far, May has been a pretty good month, where we're well ahead on carats. But apart from all of those issues, we are maintaining our operating cost structure. We have implemented a number of cost savings, wage structures, temporary workers, savings where we can make them. We made some savings on the oil, or the diesel rather. On that front, I think we're pretty comfortable in rebuilding our stocks. We have a number of stockpiles around the world where our goods have been tracked, and they're now slowly being released as the world's opening, which turns me to the markets. As Perry said, we canceled our March sale and our next sale hasn't gone through. But where we are right now is we're assessing when we will open up on the formal sales front. In our favor here, we've got a number of positives that we can look to. China is nearly fully operational as an economy. The sales levels across their normal market and their demand-driven consumerism is approaching levels that were at pre-COVID level. So that gives us encouragement. And also as we see the rest of the world now looking at that recovery model. And while there might be still a lot of difficulty happening across Europe and the rest of the world, we can see that turning to opening up. More importantly for us, we're seeing Antwerp open up in the middle of this month, so that's next week. India following suit and is emerging from lockdown, and other important diamond hubs more specific [ geo in ] our industry are opening up through May and we hope to see that continue. We have made, in this interim period, some small sales outside of our formal normal structure, and we are encouraged by this. We've done those at prices that we think are reasonable in those markets, and we wouldn't have made them if we thought they were detrimental to us. And our intent is to test the market later in the quarter. We don't know what the world will look like, but there's many outcomes. And I think over the next few weeks, we'll become a lot wiser on this. So hence, our cautious approach to how we would want to test the market. There are many unknowns like price and volume and demand. And those will be dictated to and showing the speed of recovery. And note, I'm saying recovery, so obviously, we do believe there will be a recovery, but this will depend on a number of factors. It will become clearer as we gather more information and the correct data over the coming weeks. I don't want to say too much about the sales and the volumes, but it's certainly something that we've seen with our customers getting hold of us to ask when we're going to open up again, and have we got goods available for them to look at. So that we take as encouragement. If I could then move on to the funding. As Perry said, we sort of ended the quarter with $30-odd million in the bank. And we also drew down a further USD 25 million, which came through as an advanced exchange rate of around $35 million. We've utilized some of that money to keep ourselves operational, meeting all our financial commitments, and we are looking at a range of options. We are following a number of confidential negotiations with our bankers and our key stakeholders to plan for a way through this. Certainly, no sales is not a long-term strategy. So while we build stock, we are looking at all sorts of options around how we could realize value for that as well as extend further credit as we approach recovery. These negotiations and potential sales outside of our normal channels will be concluded very shortly, and then we'll be in a position to update the market. Finally, our thanks to all our stakeholders for their support as we go through this difficult time, their understanding, and we are confident that we will come out the other side. Our industry is nothing if not resilient, and our product is unique and special. I will -- I believe we will thrive again as a survivor post this crisis and a lot needs to unfold and action taken to find a way around this, which I can assure all the people on the call is precisely what we are doing. So with that, I'm happy to take questions. I have the rest of the team available as well.
[Operator Instructions] Your first question comes from Edward Sterck of BMO.
So just on the stress testing things a little bit. It looks like you're going to be able to make some sales this quarter. But if you can't make any sales, could you just outline how cash flows would look or the cash balance would look over the course of the quarter? And when things would get to an exceptionally tight point? That's my first question.
Okay. I'll take that. Ed, obviously, with no sales and starting off with no debt and then drawing down would indicate that we've got a cash burn rate that's going to eat that up pretty soon. So we have contingency plans. We have sales available that we can make that we would rather not do, given the price being offered. But we also have other plans on sales that we're in advanced stages of negotiating with. So I don't want to say too much about that because obviously, price-sensitive to the people we're negotiating with as well as trying to make sure that we can get a fair price for our goods in a market that's quite difficult. But it's -- we need to focus our minds on this, is the best way of answering that, I think.
Okay. And then my second question is just with regards to cash calls from the joint venture. I presume during a period of no -- well, I mean presumably you have to repatriate cash from revenue to pay for the cost anyway. But are cash calls ongoing [ in that sense ], and is there any chance that your joint venture partner might backstop Mountain Province for a period of time?
Okay. So we're currently up-to-date on all cash calls of our JV partner. And there's a lot of mechanisms within the JV to cover timing of payment and things like that. We consider that important that we maintain our place there. We are -- put them in amongst the stakeholders we're negotiating with and talking to on that. So yes, again, when I say we're looking at all options around trying to find a way around this until we can see the market open, but there are a number of solutions. So yes, we're having ongoing discussions with our partner on that.
Okay. And then, look, I'm going to ask one final question. And again, it's probably one you won't be able to give too much color on right now. But just thinking about the bonds, are there any discussions with the major bondholders at the moment?
I think I'll give you the same answer I gave you to the previous question, Ed. We're talking to all major stakeholders about that. I think you can -- I think everyone on the call can take assurance that we are looking at every single option that we can to get through this. This is a deeply stressing crisis for every single company out there that's probably in the extractive industry and a number of others. There's obviously some companies out there that are doing exceptionally well, but they're not what we're involved in. We believe the market in the future is there. We're having demand for diamonds. People are buying diamonds again in China. So if we have that premise on there, our goal is to survive and make sure we get through this. We have a number of interested parties and our producing partner who operates the mine. Obviously, our creditors, we're up-to-date with all of them. We are meeting our commitments. But now we're talking to all groups of stakeholders, which includes our lenders, bondholders as well as various other parties to find the solutions here. Sales, if we could open up tomorrow, we have quite a lot of stock on hand, got quite a lot of it in Antwerp. We continue to produce. So we're building up stock on mine. We need to get that process rolling again. So as soon as the market opens up, we're ready to sell. Back to the price and the volume, that we'll see, but we're trying to find all ways around that. We don't want to be sellers at a price that doesn't make sense, because that's not going to be beneficial to us, our shareholders, anyone in the market or our bondholders. So multiple solutions, and [ everyone ] working really hard on that.
Your next question comes from Daniel McConvey of Rossport Investments.
Stuart, from your last call -- first question for me, last call a couple of months ago, whenever that was, it sounds like you are seeing a little blue sky. What has changed maybe sequentially from how you felt 1.5 months ago about the situation?
I think 1.5 months ago, China was shut as well. So the big change is they have opened up, and they've demonstrated that retail is coming back. And in some places -- and again, all this is limited reporting, but where we have seen the reporting, it's come back very positively. I was reading a note this morning from BMO on -- which is Ed Sterck that he was just asking the previous question, on China retail and China sales of motor industry, for example, which is a discretionary purchase, if you would consider yourself in the middle of a global crisis where those levels are at above pre-COVID levels. So year-on-year, we're seeing China showing positive results. And I think as that's now opened up, we're 1.5 month wiser from the last call that we had or whatever that time frame is, so that's given us confidence. I think the inquiries from people about our goods and our products has given us that information. But mostly, China has led with the positive news. So if we can sort of parlay that on to how the rest of the world may open up and the U.S. opening up again. Obviously, caveated with all things are, as we can see, in the public domain. There's a lot of caveats [ with ] how quickly it will happen, which I was feeling more positive this morning at the start of the call than I was going into the crisis and seeing the rest of the world going into massive lockdown and China not being open.
Okay. Great. Second question. If closing the operation for a while is a possibility, are the -- would the temporary closing be prohibitively expensive just in terms of start and restarting?
Yes, there were a number of factors on that, but we did look at that. So it's dependent on the timing of the year. We're going through a period called freshets, which is where the ice and the snow that's been standing for the whole winter is now busy melting. And for our kind of operation, which runs on a dike and water management system, it's quite complex. So we went through when would be the best time to close and if it was forced upon us. We looked at all of those options. But economically, given the complexity of managing the water and keeping everything right, we would have had to have quite a large workforce still managing that and pumping and building dikes to prevent breaches. So that was a big factor into our consideration. The second consideration, as I mentioned right upfront, was we've incurred all the cost. So from a cash flow perspective, we've spent the money. We may not have been using all the consumables if we closed the mine, but the complexity of closing it down and then preparing it for opening was quite prohibitively expensive. And the longer we stayed closed, there was a tipping point whether you should stay closed for even longer to get past the next winter period. So we looked at all of those options and so far, we've discounted those, because they're not beneficial. If the market opens and we've got stock, we can participate. If the market opens and our stock's still sitting in the ground, we wouldn't be able to do that until we reopened. And obviously, our debt obligations continue regardless of whether we're mining or not. So under certain circumstances, we looked at this and made the decision to continue operating, which suited I think everyone in the Northwest territories, our employees, many of our stakeholders and indeed De Beers.
Okay. Last question. Is COVID going to add costs just in terms of having to manage people, distancing, et cetera, bringing in contractors, having less of your workforce available? Is this -- I'm getting senses from other parts of the mining industry that it could add to cost. Is that -- how much of that is...
There have been -- so the cost overall, how we've approached this, we've had some savings that we've made, and we've had some cost increases. So far, the savings that we're able to effect have far outweighed the cost increases. There are, obviously -- we have made use of some of the government subsidies on wages and benefits, both at the Mountain Province level and at the De Beers level, so that's helping to offset some of those. Some of the transport arrangements we had to make have been more expensive, but then we've had quite a lot of savings on other transport events. So what we've done very briefly is we run our own transport system now, no reliance on any commercial flights, partly because of the social distancing and to have complete control of our workforce as they arrive and they depart. So that has added a bit of cost. We've lost some employees, and we've gained others, and we're having a different wage structure on that. But these are all temporary arrangements. So, so far, the plant has continued to operate. So that's been good. Mining's been affected, just as I said, the equipment is not always [ optimally ] utilized. And we're building that back up, but not material on the cost increase front, Daniel.
Okay. Great. And just in terms of updating the market, would you hope that the time frame for that, would you be hoping for something in the next 6 weeks, or...
Yes.
Your next question comes from one of our webcast listeners. They ask, can you please explain the $40 million loss in more detail?
Sure. Perry?
Sure. I can take that. So I'll try to explain it. It's -- we are a Canadian dollar reporting company, and our debt, our $300 million second lien secured notes payable is denominated in U.S. dollars. So even though we didn't make any payments on that debt during the quarter other than interest payments, we're required to report it in Canadian dollars at the rate at the end of the period. So given the Canadian dollar weakened quite a bit compared to the beginning of the quarter, you take that and you apply the difference in the rate times your amount outstanding and you report that as a financial loss, even though it's unrealized. But at the same time, we sell our diamonds in U.S. dollars and then convert that to Canadian dollars to pay for the costs at the mine. So the weaker the Canadian dollar is, the more Canadian dollars we receive when we sell diamonds. So on an operating cost basis, it actually benefits us. But when you look at just the pure math on our bond, there's an unrealized expense when the Canadian dollar depreciates. Hopefully, that helps.
Yes. So just on the -- thanks, Perry. So this is a noncash item when we say it's unrealized. And the other thing, if we do have to settle our bonds, our sales are in dollars, U.S. dollars and our settlement is in U.S. dollars. So there's no currency risk on translation up there. So I think that also helps. We're doing the right things here. And equally, if this goes the other way, we show a lower amount out so we have a foreign exchange gain, that also nonfinancial. We don't actually see that hard cash.
Your next question comes from Zev Halstuch of HSBC.
Can you update us where your cash balance is as of today or as of end of April?
Perry?
Yes. As of now our current cash balances are similar to where we ended the first quarter. So haven't drawn down from the last -- so basically, we expended the USD 25 million that we drew down, the USD 25 million that we drew down.
Okay. And then -- and you still have obviously the bond payment coming up in June. That's going to be about CAD 18 million or so, right?
That's correct. [ Par is then in ].
Okay. Do you also have, for us, if you can, the kind of rough update on the inventory? I assume you've been building inventory on the diamond side since the end of the quarter?
Yes. Yes, I think Stuart mentioned mining rates have been going -- production rate has been going well. We continue to build stock. We had well over 1 million carats at the end of the first quarter and continue to build that even higher since then.
Okay. Stuart, I'm sorry, did you want to say something?
No. Sorry, I was ruffling some paper. My apologies.
Okay. Can you give us an update on the, kind of a cash burn rate? I mean, obviously, Perry just gave us a little insight there over the month or so. Obviously, we all can speculate into when -- the impact of Antwerp opening and all that good stuff. Is there any way you can give us a sense of like what the cash burn rate is right now on a monthly basis?
It does -- go ahead, Stuart.
No, no, you go.
I was going to say, I think Stuart alluded to the fact that we're -- we just finished the winter road towards the end of March. So right now, we're not -- we're kind of still paying for some of those costs. They're still flowing through the final invoices and reconciliations on that. So this time of the year, our monthly costs are still elevated compared to the rest of the year. So it takes over $200 million a year in terms of total cost, but it's more -- much more heavily weighted to the first half of the year than the second half of the year. More like a 2/3, 1/3 kind of weighting. So that kind of gives you an approximate idea of what the monthly burn rate might be.
So if I can, though, cadence of that, I guess, even within the first half of the year, I assume it starts to curve down as you get into May and June, for the reasons you mentioned?
That's right. June, you really see the dip and then that more or less carries on through the rest of the year.
Okay. Stuart, you before in your prepared remarks, you mentioned India following suit, and I wasn't sure if that was an expectation or -- I haven't seen anything declared about the diamond-cutting business in India actually starting up or not. But I saw Antwerp was, but can you confirm that, that was actually -- it's been announced? Or is that something that you're expecting to happen at some time?
No. It's been announced, and they are opening up, some factories in Surat have opened up, not fully in [ mode yet ], but we think they'll start building up their capacity. They're open for imports and exports at the moment. So you've seen your first diamonds that obviously completed being exported, where that was all under lockdown. So our sorting factory, for example, that does our sorting is open and working again under all normal social distancing. So yes, we are seeing India open up their economy, and that was formally a decision taken, not by us.
Okay. Yes, no, I appreciate that. And then last for me. I think you mentioned before some change in workforce in terms of all this complexity that's been brought upon. Is there any way you can sort of help us understand on like, a mining rate perspective what exactly the impact has been on the substitute or alternative procedures that you've had to deal with? Sort of help us modeling out at least the next quarter of production?
Yes. So I think from a tonnes treated perspective, you won't see a change at all. So that shouldn't affect your revenue at all. However, we do think we will be mining different tonnes on different grade. And so there's likely to be a lowering of the carat expectation because we had to implement these things in March and April, and we got through it in April. So on a total tonnage processed through the plant, I don't expect to see too much movement from that -- from our original guidance. On the grade, we might see slightly an impact. But again, we're working through that. That's why we want to test these things through May. On the total ore moved, given that we lost some crews and we're now busy rebuilding those, we probably see a deficit there. That's really what it is. So it's -- we still need to work through the sense of not releasing it yet. We don't know the final numbers. And we want to see a sustainability to bed these new people down. And obviously, they're temporary. We're getting -- it's highly skilled people that we're getting. We're not -- there's no compromise on safety. We still have 100% safety record on mine. But the complexity of moving it around and every change-out that we've done has slightly complications with that. We don't quite know who's going to arrive and who is leaving. So we've gone on a 30-day cycle instead of 14 on, 14 off. We're 30 on, 30 off for the moment. So that's helped with stability. And we're now seeing the full benefit of that this month.
That will come up pretty soon.
And obviously, you're in a defense mode at this point given all that's going on, but there's a neighboring, relatively speaking, operator, that's in financial receivership right now. Any way that you see the marketplace overall finding interest, but whether it's your partner or somebody else, for consolidation of that operator? Is there anything you observed that would make sense for that to happen on a consolidation basis?
I can't -- I mean, we look at these things. But right now, I'm focused on a few other things.
Your next question comes from Bruno Costa with Concise Capital Management.
Stuart and Perry. So you mentioned from -- on the answer to a previous question that there were some wage subsidies, both on the level of the JV and the level of Mountain Province as well. And I wanted to know what's the magnitude of these wage subsidies. Can you give me a number or at least a ballpark number?
Perry, could you...
You want me to take that, Stuart?
Yes, please.
Sure. So the federal wage subsidy, I think, is the most important one. So from a Mountain Province standpoint, we qualify for that. We're still working with De Beers to ensure that GK mine personnel qualify as well. But basically, the benefit is roughly $870 per week per employee. So that kind of gives you a sense that -- it helps, but it's -- I wouldn't say it's a game changer. And I believe the program is only in place for a total of 10 weeks at this point. I think it expires the first week of June. But every little bit helps, but it's not going to make or break, I don't think, in our minds.
Understood. And are there any other federal or provincial programs that -- for government assistance that you guys are looking into or already tapping into?
Government, certainly, we hope, can be part of the solution. As Stuart says, we're in negotiations with a number of stakeholders, and government is certainly in that camp.
Understood. And for my next question, what's the magnitude of the small sales from alternative channels that you guys mentioned before? Can you guys give us a number on this?
It's in the millions, but we'd rather not -- it's quite sensitive to our future sales strategy. So we'd rather not, at the moment, comment on it on the price, if we could. It's not that material, but it's certainly material for us, and it's giving us a lot of information about where we can price our future sales. So we don't really want to publish that, Bruno.
That's fine. That's fine. And my last question is you talked about India opening up -- so in fact Surat already. And I saw in the news recently that there has been talk within some of the Indian diamantaires about implementing an import ban for rough diamonds that would start in mid-May. Is this something that's still in its consideration within the Indian diamond buyers? Do you guys see this as a potential risk?
There's certainly a talk about that. It's not a formal organization or a government-driven initiative. It was more of a voluntary -- of the Gem and Jewellery Export Promotion Council and their members talking about it as to offering up one of the solutions as to export more polished before they import more roughs. So that certainly was talked about, but I think what we're seeing is that not all factories are the same. Some factories don't have goods. Some do have goods. Some have exporters [ not so ]. We think there will be responsible trading. No one's going to rush out to buy goods they don't need in this market. Certainly, there are people buying goods at prices to speculate. So there's a whole lot of issues playing there. But I personally don't see India as coming out with such a draconian issue like that, because that will be detrimental to some factories that want to reopen and then don't have any stock, not everyone is the same. They didn't all enter this crisis with the same levels of stock sitting on their wheels or in their safes. So yes, we've been aware of that, we're following it, but I think we have enough evidence to see goods are flowing out of India and some goods will flow in on that. So yes, we monitor that. But again, China is in demand. We've seen quite a lot of polish export to China already in the first week. So that's indicating there is demand. And our sale was to some very responsible buyers who are manufacturing and selling. So I think we're positive there.
Got you. And I think this is my last question. You guys posted some pretty good cost improvements on a per tonne basis, on a per carat base in this quarter. And I wanted to know whether this is just a blip in the data? Or are the costs going to revert up back to the average that we were seeing last year? Or is this the new normal?
Perry? Are you still there, Perry? I think we might have lost Perry. I can answer. I think there was a few timing issues. Okay. Do you want to go, Perry? We had got this, cost trends.
Yes. That's right. So I think productivity was good for the quarter. We also got the benefit of lower input costs on some of the consumables. So basically, when we're mining first quarter 2020, we're using the fuel costs from 2019, which were lower than the fuel costs for 2018 on the comparative period. So that helped us a lot. And as well, I think the bigger factor was that we actually built stockpiles, ore stockpile during the quarter. And the way the inventory costing model works, if you're building stockpile, you put some of those costs to the stockpile rather than production costs. So yes, despite the COVID-19 situation, we actually built about 50,000 tonnes of ore during the quarter. Whereas Q1 last year, we drew down nearly 0.25 million tonnes of ore. So that elevated our costs in the corresponding period. But overall, the cost trends, even without that, are pretty good. And then, as Stuart mentioned, we'll see maybe some small hiccups as we onboard some of these new people and adjust our working parameters, but we think costs are still trending in the right direction. And then these base subsidies, however temporary they are, if we qualify, those will help our cash costs as well.
Okay. Jessica, I'm hoping that we're running out of questions, so we've been going quite a while now, and I think we've covered quite a lot of the similar ground here. So if I could take one more. Otherwise, we'd like to sign off now, please.
Yes. We have one last question for you here. This question comes from Paul Zimnisky of PZDA.
I think you're breaking a new record for Q&A participants here. But just one question looking back at the Q1 average price per carat of USD 75. I think in the MD&A, you said the year-over-year increase is mainly due to a better mix sold. Does that mean that more fancies and specials were included in the sales? Or is it that the mine's overall mix improved due to the plant recovery adjustments you made last year? Or was it related to a portion of the ore body that was mined towards the end of last year?
So 3 -- thanks, Paul. Good question. Three things that affected us and you've answered all of them. So we did have a better population of fancies and specials, and more of our sales were included in that. So that helped. Also some better quality goods, definitely the bottom cutoff that we put in late last year with the changeover and that [ stock ] coming through. So we got less [ fine ] goods, which has helped up the average. And in general, the quality was a little bit, as we say, in the -- our part of the world, a bit coarser so [ it means the goods were ] slightly larger. So that definitely helped. And then we did see some, unbelievably, price increases in the first sale were pretty good in certain of the categories that we have quite a lot of popularity in. So yes, heading into the crisis, we were doing well. We had better production mix, better quality and better price. [ That ] where we are now. So thanks for that. All right. Thanks very much to everyone. Hopefully, that's been beneficial. I think we've divulged quite a lot, and a lot of hope for the future. And I think all of us need to be on that page, and we look forward to speaking to you again in the future. Thank you.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Thank you.