TSX and OTCQX: MPVD
TORONTO and NEW YORK, Aug. 18,
2020 /CNW/ - Mountain Province Diamonds Inc. ("Mountain
Province" or the "Company") (TSX: MPVD) (OTCQX: MPVD) today
announces that it intends to hold a special meeting of shareholders
(the "Special Meeting") on September 29,
2020. The record date for shareholders entitled to receive
notice and vote at the Special Meeting has been set as August 26, 2020.
The Special Meeting is being called to enable the Company's
shareholders to approve two related party transactions that will
significantly strengthen the Company's financial position as it
responds to the challenges posed by the COVID-19 pandemic. An
information circular with detailed information about the Special
Meeting will be mailed to shareholders.
At the Special Meeting, the Company will seek approval for the
assignment (the "Assignment") from the existing lenders to
Dermot Desmond, or a related
company, of the Company's indebtedness of US$25,000,000 under its senior secured revolving
credit facility (the "Existing Credit Facility").
In connection with the Assignment, certain amendments will be
made to the Existing Credit Facility, including, among other
things, adjusting the interest rate to a fixed 5% per annum,
payable monthly, and removing certain financial maintenance
covenants under a one-year term. The effect of the Assignment
is that Mr. Desmond will provide a refinancing and extension of the
existing US$25,000,000 credit
facility.
The Company will also seek approval at the Special Meeting for
an increase from US$50,000,000 to
US$100,000,000 in the sales capacity
under the previously announced diamond sales agreement between the
Company, certain of its subsidiaries and Dunebridge Worldwide Ltd.
(the "Sales Capacity Increase"). This will allow the Company
to continue selling its run of mine diamonds (below 10.8 carats) at
the prevailing market price, and potentially share in the future
upside should the traditional sales channels for rough diamonds
remain closed or subdued.
Dunebridge is controlled by Dermot
Desmond, an insider and related party of Mountain
Province. The Sales Capacity Increase and the Assignment
(together 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"). Mountain
Province is relying on the exemption from the formal
valuation requirement of MI 61-101 contained in Section 5.5(g) on
the basis of financial hardship. The terms of the Transactions were
unanimously approved by the independent members of Mountain Province's board of directors.
An ad hoc committee of independent directors of Mountain Province, all of whom are independent
of management and Mr. Desmond, the major shareholder of
Mountain Province (the
"Independent Committee"), undertook a deliberate and full
consideration of the Transactions and various alternatives and
financing options available to Mountain
Province and concluded that the Transactions are reasonable
and represent the best options for Mountain Province in the circumstances, having
regard to the best interests of Mountain
Province and its stakeholders. The Independent Committee
unanimously recommended the Transactions to the board of directors
of the Company (the "Board"). The Board has received the
recommendations and findings of the Independent Committee, and Mr.
Jonathan Comerford and Mr.
Brett Desmond having declared
conflicts of interest and not attending any part of any meeting
where the Transactions were discussed and not voting on the
Transactions, has unanimously found that the Company is in serious
financial difficulty, that the Transactions designed to improve the
financial position of the issuer, that Section 5.5(f) of National
Instrument 61-101 is not applicable, and approved the
Transactions.
In addition to shareholder approval, the Transactions are
subject to approval by the Toronto Stock Exchange.
Stuart Brown, the Company's
President and CEO, commented:
"The impact of the COVID-19 pandemic on the diamond industry and
in turn the Company has been profound. The support shown by Mr.
Desmond and the subsequent finalisation of the Transactions will be
a substantial positive step in stabilising the Company and brings
more certainty to its future. In particular, the US$50,000,000 increase of the sales agreement
allows the Company the flexibility to sell its diamonds under the
agreement or through the traditional sales channels as they begin
to open after the summer holidays."
"As previously announced, the Company is planning to hold its
first sale since the start of the pandemic in September."
****
About Mountain Province Diamonds Inc.
Mountain Province Diamonds is a 49% participant with
De Beers Group 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 106,202 hectares of highly prospective
mineral claims and leases that surround the Gahcho Kué Joint
Venture property that include an indicated mineral resource for the
Kelvin kimberlite and inferred mineral resources for the Faraday
kimberlites.
For further information on Mountain Province Diamonds and to
receive news releases by email, visit the Company's website at
www.mountainprovince.com
Caution Regarding Forward Looking
Information
This news release contains certain
"forward-looking statements" and "forward-looking information"
under applicable Canadian and United
States securities laws concerning the business, operations
and financial performance and condition of Mountain Province
Diamonds Inc. Forward-looking statements and forward-looking
information include, but are not limited to, statements with
respect to estimated production and mine life of the project of
Mountain Province; the realization
of mineral reserve estimates; the timing and amount of estimated
future production; costs of production; the future price of
diamonds; the estimation of mineral reserves and resources; the
ability to manage debt; capital expenditures; the ability to obtain
permits for operations; liquidity; tax rates; and currency exchange
rate fluctuations. Except for statements of historical fact
relating to Mountain Province,
certain information contained herein constitutes forward-looking
statements. Forward-looking statements are frequently
characterized by words such as "anticipates," "may," "can,"
"plans," "believes," "estimates," "expects," "projects," "targets,"
"intends," "likely," "will," "should," "to be", "potential" and
other similar words, or statements that certain events or
conditions "may", "should" or "will" occur. Forward-looking
statements are based on the opinions and estimates of management at
the date the statements are made, and are based on a number of
assumptions and subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ
materially from those projected in the forward-looking
statements. Many of these assumptions are based on factors
and events that are not within the control of Mountain Province and there is no assurance
they will prove to be correct.
Factors that could cause actual results to vary materially
from results anticipated by such forward-looking statements include
variations in ore grade or recovery rates, changes in market
conditions, changes in project parameters, mine sequencing;
production rates; cash flow; risks relating to the availability and
timeliness of permitting and governmental approvals; supply of, and
demand for, diamonds; fluctuating commodity prices and currency
exchange rates, the possibility of project cost overruns or
unanticipated costs and expenses, labour disputes and other risks
of the mining industry, failure of plant, equipment or processes to
operate as anticipated.
These factors are discussed in greater detail in Mountain Province's most recent Annual
Information Form and in the most recent MD&A filed on SEDAR,
which also provide additional general assumptions in connection
with these statements. Mountain
Province cautions that the foregoing list of important
factors is not exhaustive. Investors and others who base
themselves on forward-looking statements should carefully consider
the above factors as well as the uncertainties they represent and
the risk they entail. Mountain
Province believes that the expectations reflected in those
forward-looking statements are reasonable, but no assurance can be
given that these expectations will prove to be correct and such
forward-looking statements included in this news release should not
be unduly relied upon. These statements speak only as of the
date of this news release.
Although Mountain Province
has attempted to identify important factors that could cause actual
actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors
that cause actions, events or results not to be anticipated,
estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Mountain Province undertakes no obligation to
update forward-looking statements if circumstances or management's
estimates or opinions should change except as required by
applicable securities laws. The reader is cautioned not to
place undue reliance on forward-looking statements.
Statements concerning mineral reserve and resource estimates may
also be deemed to constitute forward-looking statements to the
extent they involve estimates of the mineralization that will be
encountered as the property is developed.
Further, Mountain Province
may make changes to its business plans that could affect its
results. The principal assets of Mountain Province are administered pursuant to
a joint venture under which Mountain
Province is not the operator. Mountain Province is exposed to actions taken
or omissions made by the operator within its prerogative and/or
determinations made by the joint venture under its terms.
Such actions or omissions may impact the future performance of
Mountain Province. Under its current note and revolving
credit facilities Mountain
Province is subject to certain limitations on its ability to
pay dividends on common stock. The declaration of dividends
is at the discretion of Mountain
Province's Board of Directors, subject to the limitations
under the Company's debt facilities, and will depend on
Mountain Province's financial
results, cash requirements, future prospects, and other factors
deemed relevant by the Board.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/mountain-province-diamonds-announces-a-special-meeting-of-shareholders-to-seek-approval-for-proposed-financing-solutions-301114245.html
SOURCE Mountain Province Diamonds Inc.