Mountain Province Diamonds proposes $50 million note, warrants

By Rebecca Melvin

Concord, N.H., Dec. 31 – Mountain Province Diamonds Inc. announced on Friday further details of its proposed $50 million notes and share warrants to be issued to an entity controlled by the company’s largest shareholder, Dermot Desmond.

The debt would have a Dec. 15, 2027 maturity date and would bear interest at 8% until Dec. 15, 2022 and thereafter at 200 basis points above the second-lien notes then outstanding, according to a company press release.

The notes would be secured on a subordinate basis to the company’s existing debt.

As part of the new financing package, Desmond would receive 41 million share warrants exercisable at C$0.78 per common share, with the exercise price representing a 13% premium to the five-day volume weighted average price prior to execution of the term sheet for the proposed arrangement. The warrants would expire on Dec. 15, 2027.

The proposed securities, which are expected to close in early 2022, are subject to regulatory approval.

The company said its existing $25 million first-lien revolving facility that matures on March 31, 2022 is currently undrawn but is expected to be utilized in the upcoming weeks as the 2022 winter ice road to resupply the Gahcho Kue mine gets underway.

Operating in Canada’s far north requires that all major supplies for the year are moved via an ice road; this results in higher working capital requirements in the first half of the year and lower requirements in the second half. Given this, by the end of 2022 the company currently expects to have an additional $50 million in cash flow to assist in its broader debt restructure.

The mining company is based in Toronto.

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