Thursday 22 February 2018

Desmond-backed diamond mine to raise over €67m

Dermot Desmond
Dermot Desmond
Sarah McCabe

Sarah McCabe

Mountain Province diamonds, the €420m valued Candian mining firm backed by billionaire Dermot Desmond is raising €67m from investors to help bring its flagship diamond mine into production..

Desmond is already the single largest shareholder in Tornoto listed Mountain Province Diamonds, with a near 23pc stake worth almost €100m. He is set to invest close to €21m in the rights offering.

Mountain Province's main interest is a joint venture with the world's largest diamond company De Beers, in the Gahcho Kue diamond mind in Canada's Northwest Territories. It owns 49pc of Gahcho Kue.

It descrbies Gahcho Kue as "the world's largest and richest new diamond development project".

By the time the mine reaches full production, it is projected that diamond prices will have risen sharply as a result of a predicted $5bn diamond supply deficit.

At the end of January the development was more than 50pc complete, the company said in a statement, and remains on schedule to achieve first production in the first half of next year.

Mountain Province has now announced plans for a €67.5m rights offering and Mr Desmond intends to fully exercise his rights under the offering.

Under the offering, common shares will be priced at US$4 a share, a 16.1pc discount on their volume-weighted average trading price on the Toronto Stock Exchange in the five days ending February 17.

For every existing common share, the owner gets one right. Every 5.69 rights will entitle the holder to purchase one new common share.

Desmond and the company have also reached a "standby agreement" whereby he will take up any rights not subscribed to by other shareholders.

This means he could potentially finance all of the $95m offering if other shareholders choose not to be involved.

As compensation for this standby agreement, the company will pay Mr Desmond a fee of 3pc of the aggregate subscription price, either in cash or shares. This should amount to around $2.9m.

Other shareholders in Mountain Province include JP Morgan, which owns 5.4pc

The rights offering is taking place to fund a US$75m overrun facility, which is required before the company can draw down a previously arranged US$370m loan.

The rights offering will begin at close of business on February 27 and expire at 5pm Toronto time on March 30, according to company filings.

It is expected to increase the number of issued and outstanding common shares in Mountain Province by 17.54pc.

The board of directors of the company has directed that any funds raised which are not ultimately needed should be used for the benefit of shareholders - which may mean returning them via a future share buyback or special dividend.

The company's chairman is Jonathan Comerford, an investment manager at Desmond's IIU investment vehicle.

Mountain Province Diamonds is not Desmond's only Canadian diamond interest. The Dublin businessman also has a stake in Kennedy Dimaonds, another Toronto-headquartered explorer whose flagship project is located beside Gahcho Kue.

Sunday Indo Business

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