Canadian diamond producer Mountain Province Diamonds has paused an expansion project and is working to meet funding obligations at its flagship Gahcho Kué mine, as prolonged weakness in the global diamond market continues to weigh on the company.

In a corporate update issued on Monday, the Toronto-listed miner said it had decided, together with joint venture (JV) partner De Beers Canada, to suspend development of the Tuzo Phase 3 project following a review of its economics under current market conditions.

The Gahcho Kué mine, located in Canada’s Northwest Territories, is operated as a JV in which De Beers holds 51% and Mountain Province 49%.

The decision to pause Tuzo Phase 3 would not affect production or sales expectations for 2026, as mining activities remain focused on the high-grade NEX pipe, Mountain Province stated.

The company would release its fourth-quarter 2025 production and sales figures, as well as its 2026 guidance, later this week.

Alongside the project delay, Mountain Province is facingfinancial pressure linked to funding obligations under its JV agreement with De Beers.

The company disclosed that it has received three in-kind election notices from De Beers, totalling about C$49.2-million, relating to unpaid cash calls under the JV.

While the notices do not immediately constitute a default, Mountain Province warned that failure to settle the amounts within 60 days could trigger a formal default under the JV agreement and lead to cross-defaults on other secured debt.

Payments of about C$38.8-million are due by March 17, with the balance payable in weekly installments thereafter. The company said it expects proceeds from scheduled diamond sales may be sufficient to meet the first payment.

Mountain Province has also received a further in-kind election notice related to alleged overdrafts used to finance previous operations. The company said it has not yet reviewed the basis or size of this claim, which it believes falls outside current arrangements with De Beers.

“The challenges currently facing the company largely reflects the prolonged weakness in the diamond sector,” acting president and CEO Jonathan Comerford said.

“In this environment, our focus remains on carefully managing costs, protecting liquidity, and making measured decisions to support the long-term sustainability of our operations.”

He added that the company was working closely with De Beers and other stakeholders to address the funding notices and secure the long-term viability of both the mine and the business.

Management changes have also been introduced as part of cost-saving efforts. Following the departure of former president and CEO Mark Wall, the board has decided not to appoint a replacement, instead naming chairperson Comerford as acting CEO.

In a further sign of financial strain, Mountain Province said it has secured an extension from lender Dunebridge Worldwide on a deadline related to a $1-million facility fee tied to a $10-million increase in its bridge loan.

The fee was due to be approved by shareholders by January 25, failing which a default would have occurred. Dunebridge has now extended the deadline to June 30, allowing the company to seek approval at its 2026 annual general meeting.