28 February 2022
TSX and OTCQX: MPVD
TORONTO and NEW YORK, Feb. 28, 2022 /CNW/ - Mountain Province Diamonds Inc. ("Mountain Province" or the "Company") (TSX: MPVD) and (OTCQX: MPVD) is pleased to announce that at its special meeting of shareholders held on February 28, 2022 (the "Special Meeting") 87% of the votes held by disinterested shareholders were cast in favour the previously announced debt financing transaction that significantly strengthens the Company's financial position ahead of a broader refinancing of the Company's indebtedness later in 2022. The Company is also pleased to announce that a new, discovery-focused, 6,000 metre drill and geophysics program has been initiated on the Company's 100% owned Kennady North Project.
At the Special Meeting, the Company's disinterested shareholders approved: (i) the entry into a US$50 million junior secured term loan credit facility (the "Loan Agreement") with an entity (the "Lender") ultimately beneficially owned by Mr. Dermot Desmond, and (ii) the issuance to the Lender or another entity ultimately beneficially owned by Mr. Desmond of warrants (the "Warrants" and together with the Loan Agreement, the "Transactions") to purchase up to 41,000,000 common shares of the Company for an aggregate exercise price of approximately US$25,000,000. The Loan Agreement will bear interest at a rate of 8% per annum until December 15, 2022, after which the interest rate will be 2% per annum greater than the interest rate on the debt that replaces or refinances the Company's existing second lien notes. The Warrants will be exercisable in whole or in part at any time up to the December 15, 2027, the Maturity Date of the Loan Agreement, by paying US$0.60975 per common share. The Warrants will be subject to customary anti-dilution adjustments.
Full results of the motion put before shareholders can be seen in the table below (excluding any votes cast by "interested parties" as defined in Multilateral Instrument 61-101 Protection of Minority Shareholders in Special Transactions ("MI 61-101")).
|
MOTION AND |
NUMBER OF SHARES |
% OF VOTES CAST |
||||||
|
FOR |
AGAINST |
WITHHELD/ |
RESTRICTED |
NON-VOTE |
FOR |
AGAINST |
WITHHELD/ |
|
|
ABSTAIN |
ABSTAIN |
|||||||
|
US$50M Loan Agreement |
42,853,146 |
6,414,672 |
0 |
70,115,071 |
0 |
86.98% |
13.02% |
0.00% |
The Company expects to complete the Transactions on or before March 31, 2022.
In addition to the results of the Special Meeting, the Company is pleased to announce the initiation of a 6,000 metre, discovery-focused drill program taking place at the Kennady North Project during the winter 2022 drill season. A second drill has been transported on the ice road and one drill at site is set to commence drilling imminently. This program represents the first time in several years that drilling is 100% focused on new discoveries, rather than delineation of the currently identified Kelvin and Faraday kimberlites.
The Company is also pleased to announce that a second Minerals Incentive Program (MIP) award was received from the Government of Northwest Territories to help offset the costs of drilling of high priority targets near the Faraday kimberlites.
"On the back of an improving rough diamond market, the shareholder's approval of this US$50M Loan Agreement represents a very positive step forward as we move towards the refinancing of our bonds coming due at the end of this year. With this loan in place, along with the promising rough diamond market and our exciting 6,000 metre, discovery-focused drill and geophysics program, we are on track to unlock shareholder value throughout 2022 and beyond."
A special committee of independent directors of Mountain Province, all of whom are independent of management and Mr. Desmond (the "Special Committee"), undertook a deliberate and full consideration of the Transaction and alternative financing options available to Mountain Province. The Special Committee concluded that the Transaction is reasonable and represents the best option for Mountain Province, having regard to the best interests of Mountain Province and its stakeholders. The Special Committee unanimously recommended the Transaction to the board of directors of the Company (the "Board"). The Board received the recommendations and findings of the Special Committee and, Mr. Jonathan Comerford and Mr. Brett Desmond having declared conflicts of interest and not attending any part of any meeting where the Transaction was discussed and not voting on the Transaction, unanimously approved the Transaction.
Mr. Dermot Desmond is an insider and a related party of Mountain Province. The Transactions therefore each constitute a "related party transaction" within the meaning of MI 61-101.
The Loan Agreement constitutes the borrowing of money from, or the entering into of, a credit facility with a related party. Accordingly, pursuant to Section 5.4(1) of MI 61-101, a formal valuation in respect of the Loan Agreement was not required.
In respect of the Warrants, Section 6.3(1) of MI 61-101 provides the subject matter of a formal valuation are the non-cash assets involved in a related party transaction. Pursuant to Section 6.3(2) of MI 61-101, because the non-cash assets, being the Warrants, are securities of a reporting issuer, a formal valuation in respect of the Warrants was not required.