TORONTO (miningweekly.com) – Junior project developer Mountain Province Diamonds (MPD) will undertake a C$95-million rights offering to fund a cost overrun facility, the arrangement for which is a condition precedent to drawing down its $370-million term loan facility.

The TSX-V-listed firm, which is developing the Gahcho Kué project, located in Canada’s Northwest Territories, with precious gems giant partner De Beers Canada, on Wednesday said the company’s significant shareholder, Dermot Desmond, intended to fully exercise his rights under the offering.

MPD had also entered into a standby agreement with Desmond under which he had undertaken to fully subscribe for those rights, not otherwise subscribed for under the offering.

Under the terms of the offering, which would start at the end of business next Friday, every 5.69 rights would entitle the holder to buy one common share at a subscription price of $4 each. Shareholders who fully exercised their rights could subscribe pro rata for any additional common shares not otherwise subscribed to before the March 30 expiry date.

The subscription price entailed a discount of about 16% from the volume-weighted average trading price of common shares on the TSX for the five-day period ending Wednesday.

The rights were expected to be listed and posted for trading on the TSX under the symbol ‘MPV.RT’ starting February 25 and ending on the expiry date. Rights not exercised would be void.

Desmond had committed to subscribe for any common shares not otherwise subscribed for by rights holders under the offering. As compensation for performing his obligations under the standby agreement, MPD would pay Desmond 3% of the total subscription price to be paid for the 23.76-million common shares to be issued.

Subject to regulatory approval, the offering was expected to increase the number of issued and outstanding common shares by about 17.5%.