PR Newswire | Dec 29, 2021 07:30PM EST

12/29 18:30 CST

Mountain Province Diamonds Announces Planned Balance Sheet Strengthening TORONTO and NEW YORK, Dec. 29, 2021

TORONTO and NEW YORK, Dec. 29, 2021 /PRNewswire/ -Mountain Province Diamonds Inc. ("Mountain Province" or the "Company") (TSX: MPVD) (OTCQX: MPVD) today announces that it has executed a non-binding term sheet with its largest shareholder, Mr. Dermot Desmond, for a proposed balance sheet strengthening package to provide increased financial flexibility to the Company (the "Proposed Arrangement"). While the arrangements are non-binding, Mountain Province is working with Mr. Desmond in an effort to reach binding agreements early in 2022. The Proposed Arrangement is subject to, among other things, finalization of the specific terms thereof, the negotiation and execution of definitive documentation, as well as shareholder and regulatory approval.

The Proposed Arrangement is subject to the requirements imposed on related party transactions under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Proposed Arrangement is also subject to the approval of the Toronto Stock Exchange (the "TSX") and the approval of the Company's disinterested shareholders in accordance with MI 61-101 and the rules of the TSX.

On November 9, 2021, the board of directors of the Company (the "Board") formed a special committee (the "Special Committee") in connection with the consideration and oversight of the Proposed Arrangement as well as any other potential alternative transactions intended to improve the Company's short and long-term financial liquidity needs. The Special Committee consists of independent directors who have no direct or indirect interest in the Proposed Arrangement. Following its review process, the Special Committee recommended that the Board approve the execution of the term sheet setting out the terms of the Proposed Arrangement.

The Proposed Arrangement is currently expected to include the issuance of approximately US$50M of new debt to an entity controlled by Mr. Desmond that is secured on a subordinate basis to the Company's existing debt (the "New Notes"), together with an equity component. The New Notes are contemplated to mature in late 2027. The Company expects to use a portion of the proceeds of the New Notes to repay the US$25M first lien revolving credit facility provided by Dunebridge Worldwide Ltd., an entity controlled by Mr. Desmond, which matures on March 31, 2022.

When implemented, the Proposed Arrangement would provide the Company with increased financial flexibility, and offer an increase in working capital, the potential for acceleration of existing note repurchases, and/or enhanced exploration activities at its 100% owned Kennady North Project.

The Proposed Arrangement is subject to the execution of definitive documentation and the approvals described above. There can be no assurance that the Proposed Arrangement will be completed on the terms described herein or at all.

Mark Wall, the Company's President and Chief Executive Officer, commented:

"This planned investment by our largest shareholder and significant debt holder, Mr. Dermot Desmond, further demonstrates his confidence in Mountain Province Diamonds, and the strong macro-environment for our diamonds. Additionally, this planned investment strengthens my own optimism as we look towards a broader capital structure optimization in 2022."

About the Company

Mountain Province Diamondsis a 49% participant with De Beers Canada in the Gahcho Ku diamond mine located in Canada'sNorthwest Territories. The Gahcho Ku Joint Venture property consists of several kimberlites that are actively being mined, developed, and explored for future development. The Company also controls 107,373 hectares of highly prospective mineral claims and leases surrounding the Gahcho Ku Mine that include an Indicated mineral resource for the Kelvin kimberlite and Inferred mineral resources for the Faraday kimberlites. Kelvin is estimated to contain 13.62 million carats (Mct) in 8.50 million tonnes (Mt) at a grade of 1.60 carats/tonne and value of US$63/carat. Faraday 2 is estimated to contain 5.45Mct in 2.07Mt at a grade of 2.63 carats/tonne and value of US$140/ct. Faraday 1-3 is estimated to contain 1.90Mct in 1.87Mt at a grade of 1.04 carats/tonne and value of US$75/carat. All resource estimations are based on a 1mm diamond size bottom cut-off.

For further information on Mountain Province Diamonds and to receive news releases by email, visit the Company's website at www.mountainprovince.com.

Qualified Person

The disclosure in this news release of scientific and technical information regarding Mountain Province's mineral properties has been reviewed and approved by Tom E. McCandless, Ph.D., P.Geo., and Matthew MacPhail, P.Eng, MBA, both employees of Mountain Province Diamonds and Qualified Persons as defined by National Instrument 43-101 Standards of Disclosure for Mineral Projects.

Caution Regarding Forward Looking Information

This news release contains certain "forward-looking statements" and"forward-looking information" under applicable Canadian and United Statessecurities laws concerning the business, operations and financial performanceand condition of Mountain Province Diamonds Inc. Forward-looking statements andforward-looking information include, but are not limited to, statements withrespect to the ability to negotiate and enter into binding documentation, theability to obtain approval of the parties, regulators and shareholders on termsacceptable to Mountain Province, operational hazards, including possibledisruption due to pandemic such as COVID-19, its impact on travel,self-isolation protocols and business and operations, estimated production andmine life of the project of Mountain Province; the realization of mineralreserve estimates; the timing and amount of estimated future production; costsof production; the future price of diamonds; the estimation of mineral reservesand resources; the ability to manage debt; capital expenditures; the ability toobtain permits for operations; liquidity; tax rates; and currency exchange ratefluctuations. Except for statements of historical fact relating to MountainProvince, certain information contained herein constitutes forward-lookingstatements. Forward-looking statements are frequently characterized by wordssuch as "anticipates," "may," "can," "plans," "believes," "estimates,""expects," "projects," "targets," "intends," "likely," "will," "should," "tobe", "potential" and other similar words, or statements that certain events orconditions "may", "should" or "will" occur. Forward-looking statements arebased on the opinions and estimates of management at the date the statementsare made, and are based on a number of assumptions and subject to a variety ofrisks and uncertainties and other factors that could cause actual events orresults to differ materially from those projected in the forward-lookingstatements. Many of these assumptions are based on factors and events that arenot within the control of Mountain Province and there is no assurance they willprove to be correct.

Factors that could cause actual results to vary materially from resultsanticipated by such forward-looking statements include the negotiating stancestaking by the parties, the ability to obtain approval of regulators, partiesand shareholders, as may be required, on conditions acceptable to the parties,the development of operation hazards which could arise in relation to COVID-19,including, but not limited to protocols which may be adopted to reduce thespread of COVID-19 and any impact of such protocols on Mountain Province'sbusiness and operations, variations in ore grade or recovery rates, changes inmarket conditions, changes in project parameters, mine sequencing; productionrates; cash flow; risks relating to the availability and timeliness ofpermitting and governmental approvals; supply of, and demand for, diamonds;fluctuating commodity prices and currency exchange rates, the possibility ofproject cost overruns or unanticipated costs and expenses, labour disputes andother risks of the mining industry, failure of plant, equipment or processes tooperate as anticipated.

These factors are discussed in greater detail in Mountain Province's mostrecent Annual Information Form and in the most recent MD&A filed on SEDAR,which also provide additional general assumptions in connection with thesestatements. Mountain Province cautions that the foregoing list of importantfactors is not exhaustive. Investors and others who base themselves onforward-looking statements should carefully consider the above factors as wellas the uncertainties they represent and the risk they entail. Mountain Provincebelieves that the expectations reflected in those forward-looking statementsare reasonable, but no assurance can be given that these expectations willprove to be correct and such forward-looking statements included in this newsrelease should not be unduly relied upon. These statements speak only as of thedate of this news release.

Although Mountain Province has attempted to identify important factors thatcould cause actual actions, events or results to differ materially from thosedescribed in forward-looking statements, there may be other factors that causeactions, events or results not to be anticipated, estimated or intended. Therecan be no assurance that forward-looking statements will prove to be accurate,as actual results and future events could differ materially from thoseanticipated in such statements. Mountain Province undertakes no obligation toupdate forward-looking statements if circumstances or management's estimates oropinions should change except as required by applicable securities laws. Thereader is cautioned not to place undue reliance on forward-looking statements.Statements concerning mineral reserve and resource estimates may also be deemedto constitute forward-looking statements to the extent they involve estimatesof the mineralization that will be encountered as the property is developed.Mineral resources are not mineral reserves and do not have demonstratedeconomic viability.

Further, Mountain Province may make changes to its business plans that couldaffect its results. The principal assets of Mountain Province are administeredpursuant to a joint venture under which Mountain Province is not the operator.Mountain Province is exposed to actions taken or omissions made by the operatorwithin its prerogative and/or determinations made by the joint venture underits terms. Such actions or omissions may impact the future performance ofMountain Province. Under its current note and revolving credit facilitiesMountain Province is subject to certain limitations on its ability to paydividends on common stock. The declaration of dividends is at the discretion ofMountain Province's Board of Directors, subject to the limitations under theCompany's debt facilities, and will depend on Mountain Province's financialresults, cash requirements, future prospects, and other factors deemed relevantby the Board

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SOURCE Mountain Province Diamonds Inc.