28 March 2022
TSX and OTCQX: MPVD
TORONTO and NEW YORK, March 28, 2022 /CNW/ - Mountain Province Diamonds Inc. ("Mountain Province" or the "Company") (TSX: MPVD) (OTCQX: MPVD) provides the details of its Q4 and Full Year 2021 earnings release and conference call, and announces that it has closed its previously announced transactions (the "Transactions"), consisting of: (i) the entry into a new US$50 million junior secured term loan credit facility (the "Loan Agreement") with an entity (the "Lender") ultimately beneficially owned by Dermot Desmond, and (ii) the issuance to the Lender of warrants (the "Warrants") to purchase up to 41,000,000 common shares of the Company for an aggregate exercise price of approximately US$25,000,000. The Warrants are exercisable in whole or in part at any time up to the Maturity Date (as defined below) at an exercise price of US$0.60975 per common share. The Warrants, and any common shares issuable upon exercise thereof, are subject to a statutory four-month hold period under Canadian securities laws that will expire on July 29, 2022.
The Loan Agreement matures on December 15, 2027 (the "Maturity Date") and is secured by substantially all of the properties and assets of the Company and its subsidiaries on a junior basis to the Company's existing second lien notes. The Loan Agreement bears 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, payable on a semi-annual basis. The Company is entitled to prepay the Loan Agreement at any time prior to the Maturity Date without penalty.
The Company issued the Warrants, as described above, as partial consideration for the extension of credit under the Loan Agreement. The exercise price and number of common shares underlying the Warrants are each subject to customary anti-dilution adjustments.
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 Multilateral Instrument 61-101 Protection of Minority Shareholders in Special Transactions ("MI 61-101").
In accordance with MI 61-101 and the rules of the Toronto Stock Exchange (the "TSX"), the disinterest shareholders of the Company approved the Transactions at a special meeting of shareholders held on February 28, 2022.
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 is also not required.
On November 9, 2021, the board of directors of the Company established a special committee of independent directors (the "Special Committee") in connection with the consideration and oversight of options to improve the Company's capital structure and its short and long-term liquidity, including by way of a restructuring or refinancing of its outstanding indebtedness.
The review, direction and supervision of the Transactions fell within the mandate of the Special Committee. Each member of the Special Committee was independent of the Company's management and the Lender and unrelated to the Transactions. The Special Committee was advised by independent legal counsel and an independent financial advisor, Eight Capital, in connection with the Transactions.
The Special Committee reviewed and considered the Transactions and, giving due consideration to the best interests of the Company and the impact on shareholders and the Company's other stakeholders, unanimously concluded that the Transactions were in the best interests of the Company and that the terms of the Transactions are reasonable in the circumstances of the Company.
Mountain Province Diamonds is a 49% participant with De Beers Canada in the Gahcho Kué diamond mine located in Canada's Northwest Territories. The Gahcho Kué Joint Venture property consists of several kimberlites that are actively being mined, developed, and explored for future development. The Company also controls 107,373 hectares of highly prospective mineral claims and leases surrounding the Gahcho Kué Mine that include an Indicated mineral resource for the Kelvin kimberlite and Inferred mineral resources for the Faraday kimberlites. Kelvin is estimated to contain 13.62 million carats (Mct) in 8.50 million tonnes (Mt) at a grade of 1.60 carats/tonne and value of US$63/carat. Faraday 2 is estimated to contain 5.45Mct in 2.07Mt at a grade of 2.63 carats/tonne and value of US$140/ct. Faraday 1-3 is estimated to contain 1.90Mct in 1.87Mt at a grade of 1.04 carats/tonne and value of US$75/carat. All resource estimations are based on a 1mm diamond size bottom cut-off.