RAPAPORT… Mountain Province is working on an agreement with its largest shareholder for a $50 million loan that will enable it to pay back existing debt and further its Kennady North exploration project.
The miner has already reached a non-binding contract for funding with Dermot Desmond, who owns just over 32% of the company’s stock, Mountain Province said Thursday. It hopes to secure a binding commitment in early 2022.
The proposed agreement will see Mountain Province take ownership of $50 million in debt tied to a subsidiary belonging to Desmond, which will be due at the end of 2027. In turn, the investor will obtain further equity in the Canadian mining company. Mountain Province will use a portion of the money to pay off an existing $25 million loan and revolving credit facility from Dunebridge Worldwide — one of the investor’s companies. It will also use the funds to meet its short- and long-term financial-liquidity needs, Mountain Province said.
In October 2020, the miner brokered a deal with Dunebridge for a $25 million secured loan to pay off its older credit facility. In August of that year, the company agreed to buy up to $100 million of Mountain Province’s run-of-mine goods amid Covid-19-related struggles.
“This planned investment by our largest shareholder and significant debt holder, Mr. Dermot Desmond, further demonstrates his confidence in Mountain Province, and the strong macro-environment for our diamonds,” said Mountain Province CEO Mark Wall. “Additionally, this planned investment strengthens my own optimism as we look towards a broader capital structure optimization in 2022.”
The new deal is subject to approval by the company’s shareholders and the Toronto Stock Exchange (TSX).
Meanwhile, Mountain Province is also facing a Covid-19 outbreak at its Gahcho Kué deposit in Canada, it said earlier this week. Currently, four workers have tested positive, with eight others in quarantine. All employees are vaccinated, and the outbreak is not expected to affect production or mining operations, Mountain Province added.
Image: A large-haul truck at the Gahcho Kué mine. (Mountain Province)
Mountain Province to Borrow $50M from Investor
The Bottom Line
- Mountain Province is negotiating a $50 million loan from Dermot Desmond, its largest shareholder with over 32% ownership, to repay existing debt and fund exploration.
- The loan will convert $50 million in debt tied to a Desmond subsidiary, due in 2027, into equity for the investor, while Mountain Province will use part of the funds to pay off a $25 million loan from Dunebridge Worldwide.
- The company faces a Covid-19 outbreak at its Gahcho Kué mine but reports no expected impact on production; the loan deal requires shareholder and TSX approval.
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