Mountain Province Delists from Exchange in Preparation for Possible Sale

Mountain Province Diamonds is making plans to delist from the Toronto Stock Exchange (TSX) to allow it more flexibility for a potential restructuring or sale.

This “could represent a viable path forward for the corporation given its constrained liquidity position, substantial debt obligations, and the limited strategic alternatives available,” Mountain Province said Tuesday. “The delisting…would enable the corporation to pursue and complete such a transaction with reduced structural and regulatory constraints.”

The company, which operates the Gahcho Kué diamond mine in Canada’s Northwest Territories, believes the move will enable it to set a future course without having to seek approval for any decisions regarding the future of its business. It is considering various methods of restructuring amid the ongoing weakness for rough diamonds, including share consolidation that could lead to selling the company.

“Mountain Province has experienced, and continues to experience, serious financial difficulties that have…required the corporation to take various actions to manage its liquidity, service its debt obligations, and attempt to restore its long-term stability,” it explained. “The corporation’s outstanding indebtedness is substantial.”

As of March 31, the miner had approximately CAD 219,000 ($158,419) cash on hand, while it owed about $290.6 million, it said. Part of that debt belongs to De Beers, its joint-venture partner in the deposit. By June 15, Mountain Province will owe De Beers $26.2 million in deferred interest payments, and another CAD 33 million ($23.9 million) is due June 30 for the mine’s operation.

Mountain Province’s financial issues persist, even after its major shareholder, Dermot Desmond’s business, Dunebridge Worldwide, bailed it out. Desmond has agreed to extend the miner further credit in the form of a $10 million bridge facility, a loan used to help a company pay bills on an interim basis and enable it to get back on its feet, it added.

Image: A rough diamond. (Mountain Province Diamonds)