Mountain Province Diamonds announces that it entered into (i) a payment and security agreement with De Beers Canada Inc and 2435386 Ontario Inc, an indirect wholly-owned subsidiary of the Company, to recalibrate the obligations of De Beers and the Company for the decommissioning costs of the GK Mine and the grant of additional security to De Beers for the Company’s obligations thereunder.
(ii) a bridge credit facility agreement with Dunebridge Worldwide Ltd as administrative agent, security trustee and lender, and the guarantors named therein, for a term loan of up to USD$40 million term loan.
The GK Mine is located in the Northwest Territories of Canada and is operated as a joint venture between the Company and De Beers. The Company, through JV Company, holds a 49% interest in the GK Mine. De Beers holds the remaining 51% interest and is the operator of the GK Mine.
The Payment Agreement and new Term Loan Agreement are part of a series of transactions consisting of (i) the Decommissioning Recalibration; (ii) the Term Loan; and (iii) an amended and restated indenture to be entered into among the Company, the guarantors named therein and Computershare Trust Company N A, as trustee and collateral agent, in respect of the Company’s 9.00% senior secured notes due December 15, 2025, of which USD$177 million aggregate principal amount is outstanding, extending the maturity of the Second Lien Notes to December 15, 2027 and amending certain terms of the Second Lien Notes, including an option to pay scheduled coupon payments on the Second Lien Notes in June and December of 2025 in kind at the PIK Interest Rate.
The Company expects 2025 to be a particularly challenging year for the production and sale of rough diamonds from the Gahcho Kué diamond mine (the “GK Mine”). The Refinancing Transactions are designed to support the Company in meeting those challenges until mid Q2 2025, during which period the operating costs of the GK Mine are typically higher in the first half of the year due to the costs associated with the winter road.
To manage its working capital requirements and cash flow fluctuations for the balance of 2025, the Company is seeking, and the definitive documentation for the Refinancing Transactions contemplates, a revolving capital facility of up to CAD$33 million. The Company has had preliminary discussions with a potential lender that it intends to pursue upon completion of the Refinancing Transactions.
As discussed in detail below, the completion of the Refinancing Transactions is subject to receipt of Noteholder Consent and regulatory approvals, including certain approvals and exemptions from the Toronto Stock Exchange under the TSX Company Manual. Each of the Decommissioning Recalibration, Note Amendments and Term Loan are cross conditional. The Refinancing Transactions are expected to close as soon as practicable upon satisfaction of all such conditions precedent.
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