Fitch rates Mountain Province, notes, revolver

Fitch Ratings said it assigned Mountain Province Diamonds Inc. a long-term issuer default rating of B, a BB-/RR2 to its new $350 million senior secured second-lien notes due 2022 and a BB/RR1 to its $50 million senior secured first-lien revolving credit facility.

The outlook is stable.

Note proceeds will be used together with cash on hand to repay amounts due under the project finance loan facility and amounts payable to De Beers Canada Inc. (DBC) in connection with sunk costs.

“The ratings reflect the issuer's small size, concentrated operations, cash flow tail dependent on recovery in the rough diamond market, development or mine life extension, industry concentration, low financial leverage, strong margins, negligible country risk, and expectations for positive free cash flow over the tenor of the notes,” Fitch said in a news release.

The stable outlook reflects the agency’s view that Mountain Province will accumulate sufficient FCF to repay the notes.

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