Mountain Province Diamonds Inc. (MPVD) Earnings Call Transcript & Summary

Hello and welcome to the Special General Meeting of Stockholders of Mountain Province Diamonds. Please note that today's meeting is being recorded. [Operator Instructions] It is now my pleasure to turn today's meeting over to Ms. Karen Goracke. The floor is yours.

Thank you. Good afternoon, and welcome to the special meeting of the shareholders of Mountain Province Diamonds. My name is Karen Goracke, and I am an independent member of the Board of Directors. With the permission of the meeting, I will act as Chair of this meeting. With consent of this meeting, I shall ask Mr. Perry Ing, the Secretary, VP, Finance and Chief Financial Officer of the corporation, to act as secretary of this meeting. To proactively deal with the unprecedented public health impact of the coronavirus disease, also known as COVID-19, Mountain Province call today's meeting in the virtual format, in which we are currently convened. As this meeting is held virtually via live webcast, I would like to set out a few rules for the orderly conduct of the meeting. Questions in respect of motion can be submitted to our moderator by any registered shareholder or duly appointed proxy holder using the messaging service of the virtual interface. [Operator Instructions] For the purposes of the meeting today, voting on all matters will be conducted by electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote on each business item after the presentation of all business items. When you are asked to vote, you will receive a message on the virtual interface requesting you to register your vote. You will have a certain amount of time to do so when the polls are open. Before we commence, I would like to introduce the Directors and senior management of Mountain Province who are present virtually at this meeting. The Directors present other than myself; Stuart Brown; Tom Perrigo; Tom Peregoodoff; Dean Chambers; and Ken Robertson. The other members of management present are Perry Ing, VP, Finance, Chief Financial Officer and Secretary; Reid Mackie, VP, Diamond Marketing; Keyvan Salehi, VP, Corporate Development and Tech Services; Mr. Tom McCandless, VP Exploration. Before the following formalities, we will take any questions you may have. I ask that the meeting come to order in order to make best use of our time and expedite the formal portion of this meeting, we will have -- ask certain shareholders or proxy holders to move and second the formal motion. With consent of this meeting, Roxanne Parsaud of Computershare is hereby appointed as a scrutineer to report on the shareholders attending the meeting and the number of shares represented at this meeting, voted by proxy at this meeting and any adjournment hereof, and to compute the votes of any poll taken at this meeting and any adjournment hereof and to report thereon to me on these matters. The notice calling this meeting and a form proxy were mailed to all registered shareholders in accordance with the National Instrument 54-101 of the Canadian Securities Administrators. A quorum for the transaction of business at this meeting of virtual shareholders is at least 2 persons present in person or virtually, each being a shareholder entitled to vote at the meeting or a duly appointed proxy or representative for an absent shareholder so entitled. The scrutineer's report shows a quorum to be present, and I therefore declare the meeting to be regularly constituted. I direct that the report of the scrutineer be annexed to the minutes of this meeting as a schedule. I would ask our CEO, Stuart Brown, to address the meeting and briefly describe the rationale for the 2 resolutions before us today.

Thank you very much, Karen. Further to all the information contained in the management's information circular, I thought it would be a good idea to briefly outline the 2 transactions being considered. As everyone on the call knows, 2020 has turned out to be distinctly different from our original expectations. The COVID-19 pandemic has had a material impact on the diamond industry and in turn affected Mountain Province. The entry into the diamond sales agreement earlier this year with a company controlled by our largest shareholder, Mr. Dermot Desmond, allowed Mountain Province to continue selling its diamonds whilst traditional sales channels were closed or severely limited due to the pandemic. Increasing the sales capacity under the diamond sales agreement will give the company the flexibility, only should it need it, to continue selling diamonds at market rates, should traditional diamond sales channels close again due to renewed infections and/or travel restrictions being reimposed. At present, the Russian polished markets have reopened. And while not fully up to speed, we remain optimistic, having recently completed our first sale since the start of the pandemic. It is good to have the flexibility to sell our diamonds should we not be able to sell on the regular market. So the proposal is to increase the contract from $50 million to up to $100 million. With respect to the credit facility, Mountain Province explored all possible avenues to secure refinancing of its credit facility, as required by our corporate lenders, Scotia and Nedbank. In addition to the increase in the sales capacity on the diamond sales agreement, Mr. Desmond offered to replace and extend by 1 year to the 30th of September 2021, the company's USD 25 million revolving credit facility, at very competitive interest rates. After consideration of all alternatives, the independent committee recommended to the Board that both the increase in the sales under the diamond sales agreement and the loan refinancing from Mr. Desmond be approved and put to shareholders for their approval at this meeting. The finalization of these transactions will be a substantial positive step in stabilizing the company and bringing certainty to its future. I'm sure we can address any questions later in the meeting. Back to you, Karen.

Thank you, Stuart. This takes us to the next item. The first item of business is an approval of an increase in the value of diamonds to be sold under the existing diamond sales agreement to USD 100 million from USD 50 million. May I have a motion to approve the diamond sales agreement resolution set out in schedule A to the management information circular?

Madam Chair, it's Stuart. I move that the diamond sales agreement resolution is set out in schedule A to the management information circular be approved.

Do I have a seconder for this motion?

Madam Chair, it's Perry Ing. I second the motion.

I will now move to the next item of business. The next item of business is entry into a loan agreement with Dermot Desmond and/or related company for USD 25 million by way of assigning and amending the existing credit facility. I will now ask someone to make and someone to second a motion to approve the loan agreement resolution as set out in schedule b of the management information circular.

Madam Chair, it's Stuart again. I move that the loan agreement resolution as set forth in schedule b of the management information circular be approved.

Do I have a seconder for this motion?

Madam Chair, I second the motion.

As we mentioned, voting today will be conducted by electronic ballot. I will now take a moment to ask that the balloting be open to registered holders and appointed proxy holders.

I understand, Karen. And now we have a bit of a pause while we wait for the people who are able to vote.

Yes.

Okay.

It's saying 5 minutes.

Yes.

Okay. [Voting]

Stuart?

Yes. I think we're there on the 5 minutes.

Yes. That's what I thought, too.

Yes. Okay. Do you want to carry on?

Okay. The polls are now open, and at this point, all registered holders and proxy holders who have properly logged in with their control numbers or user name and wish to vote will be able to see on the screen all motions being brought forth at this meeting. At this point, shareholders and duly appointed proxies or anyone logged in with a control number or user name will see their screen change accordingly to show their proposals, and they cast their votes accordingly. Please register your vote by accessing the voting page and selecting the for and against buttons next to the motion to approve an increase in the sales capacity under the diamond sales agreement. For or against buttons next to the resolution to approve the loan agreement. We will provide registered shareholders and duly appointed proxy holders approximately 1 more minute to complete the electronic ballots. [Voting]

Okay. So start again.

Yes.

Once the electronic balloting closes, the voting page will disappear and your vote will be automatically submitted. I have been advised by the scrutineers that the ballots and proxies deposited for the meeting have been voted in favor of the resolutions presented. The increase in sales capacity under the diamond sale agreement has been approved. The entry into the loan agreement has been approved. I direct that the final results of the poll be included with the minutes of the meeting and the results of the voting will be announced in the press release in accordance with the policies of the TSX. The formal items of business as set out in the notice of meeting have now been dealt with, and I move and second that the meeting now terminate. As there is no further business to come before the meeting, I will declare the formal part of the meeting be concluded. We will now take any questions that shareholders may have.

Thank you, Karen. Keyvan, would you be able to confirm if we do have any questions?

Stuart, yes, I don't see any questions posted yet.

Okay. Well, let's just give that 1 more minute. More than happy to answer any questions that shareholders may have, but I think we've largely concluded the purpose of today's special general meeting. Let's give that another 30 seconds, Keyvan, and confirm there's no more questions. Anything else, Keyvan?

No questions, Stuart.

Okay. Therefore, I think we've reached the end of the meeting, if there's no questions from management side. Thank you very much. Back to you, Karen. I think we can conclude. I think we've lost my Chair lady. But I think we've now reached the end of the part. The meeting has closed. There were no questions. So thank you very much for everyone who dialed in or logged on. Thanks very much.

This concludes the meeting. You may now disconnect.