KENNADY LAKE
Junior exploration company Mountain Province Diamond (TSX: MPV) have fully funded its commercial production of the Gacho Kue diamond project.

Two drills work away at the Gahcho Kue Joint Venture exploration site, located 300 kilometres northeast of Yellowknife. The joint venture partners are De Beers Canada and Mountain Province Diamonds, the latter of which just finished raising USD $370 million to fund the site's commercial production. - photo courtesy of De Beers Canada

"The financing risk is now removed," president and CEO Patrick Evans told News/North, while also acknowledging the company's successful completion of all deliveries of equipment and supplies by ice road. "Both of those are really significant milestones for the company and the shareholders."

On April 7, the company announced it had closed the previously announced $370 million (US) term loan facility with a group of lenders led by Natixis S.A., Scotiabank and Nedbank Ltd. and including ING Capital LLC, Export Development Canada and the Bank of Montreal.

Evans described the fundraising environment for his company as "not very challenging," citing the first round of $95 million rights issued that was oversubscribed by approximately 10 per cent.

"That's pure equity," he said. "What it tells us is our shareholders like their investment in the company and they were trying to buy more shares than they were entitled to."

Having the right mining project, Evans said, is key to attracting equity. When it comes to debt, he called the process "never easy," citing his company's status as the junior partner to DeBeers Canada. However, Evans said the closure of his company's term loan indicated that opportunities for investment weren't completely closed.

"The market's just become a lot more discriminating and discerning in what it will invest in," he said, "But for the right assets the market's definitely open."

Evan said ultimately, responsibility for poor investments in low-quality projects could not be blamed on the mining community and acknowledged that, despite the growing market in China, the drop in commodity prices for the stones was an eventuality. "Prices couldn't go up for forever."

In a statement, the company said the move completes anticipated funding requirements for capital required for Gahcho Kue diamond mine, in terms of construction, commission and planned commercial production. The company currently has a little more than 300 employees at the site. Evans estimated that number will grow to more than 600 in the summer, with a steady-state number of 350 in the third and fourth quarter of this year. The company does have targets in regards to Northern hiring. Evans said interested applicants can apply for openings on the DeBeers website.

Mountain Province also announced that all deliveries of equipment and supplies planned for the 2015 ice road were completed on schedule at the end of March this year, a key process needed for the completion of major construction of the Gahcho Kue diamond mine.

"As a result, the overall mine development remains on schedule and within budget with first production expected in H2 2016," the news release said.

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