Mountain Province Diamonds Announces Planned Balance Sheet Strengthening

30 December 2021

TORONTO and NEW YORK, Dec. 29, 2021 /CNW/ - Mountain Province Diamonds Inc. ("Mountain Province" or the "Company") (TSX: MPVD) (OTCQX: MPVD) today announces that it has executed a non-binding term sheet with its largest shareholder, Mr. Dermot Desmond, for a proposed balance sheet strengthening package to provide increased financial flexibility to the Company (the "Proposed Arrangement"). While the arrangements are non-binding, Mountain Province is working with Mr. Desmond in an effort to reach binding agreements early in 2022. The Proposed Arrangement is subject to, among other things, finalization of the specific terms thereof, the negotiation and execution of definitive documentation, as well as shareholder and regulatory approval.

The Proposed Arrangement is subject to the requirements imposed on related party transactions under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Proposed Arrangement is also subject to the approval of the Toronto Stock Exchange (the "TSX") and the approval of the Company's disinterested shareholders in accordance with MI 61-101 and the rules of the TSX.

On November 9, 2021, the board of directors of the Company (the "Board") formed a special committee (the "Special Committee") in connection with the consideration and oversight of the Proposed Arrangement as well as any other potential alternative transactions intended to improve the Company's short and long-term financial liquidity needs. The Special Committee consists of independent directors who have no direct or indirect interest in the Proposed Arrangement. Following its review process, the Special Committee recommended that the Board approve the execution of the term sheet setting out the terms of the Proposed Arrangement.

The Proposed Arrangement is currently expected to include the issuance of approximately US$50M of new debt to an entity controlled by Mr. Desmond that is secured on a subordinate basis to the Company's existing debt (the "New Notes"), together with an equity component. The New Notes are contemplated to mature in late 2027. The Company expects to use a portion of the proceeds of the New Notes to repay the US$25M first lien revolving credit facility provided by Dunebridge Worldwide Ltd., an entity controlled by Mr. Desmond, which matures on March 31, 2022.

When implemented, the Proposed Arrangement would provide the Company with increased financial flexibility, and offer an increase in working capital, the potential for acceleration of existing note repurchases, and/or enhanced exploration activities at its 100% owned Kennady North Project.

The Proposed Arrangement is subject to the execution of definitive documentation and the approvals described above. There can be no assurance that the Proposed Arrangement will be completed on the terms described herein or at all.

Mark Wall, the Company's President and Chief Executive Officer, commented:

"This planned investment by our largest shareholder and significant debt holder, Mr. Dermot Desmond, further demonstrates his confidence in Mountain Province Diamonds, and the strong macro-environment for our diamonds. Additionally, this planned investment strengthens my own optimism as we look towards a broader capital structure optimization in 2022."