Mountain Province Diamonds Inc and Kennady Diamonds Inc have jointly announced an agreement under which the former will acquire all the shares of the latter. On the completion of this transaction, the combined company will be owned approximately 76% by Mountain Province shareholders and 24% by Kennady shareholders.

Announcing the signing of a “definitive arrangement agreement”, the two said that Kennady shareholders will receive 0.975 of a Mountain Province common share for each Kennady common share, representing the equivalent of C$3.46 per Kennady share. The implied equity value for Kennady based on this is approximately C$176 million.

The two companies also said that Mountain Province will provide financing to Kennady of up to C$10 million via an equity private placement at C$2.50 per share in multiple tranches designed to coincide with Kennady’s budget for the current work programme. This agreement is not conditional on the completion of the acquisition deal, they said.

The Boards of both the companies have unanimously approved the proposal, and subject to shareholder approval, court approval, and acceptance of the applicable stock exchanges, the transaction is expected to close in April 2018.

David E. Whittle, Interim President and CEO of Mountain Province, stated: “The Kennady assets are a strong complement to Mountain Province’s interest in the Gahcho Kué project, significantly adding to our attributed resource base. Kennady’s exploration efforts have been very successful and we have high confidence in our ability to continue that success, not only through expanding the existing resources at Kelvin and Faraday but through the potential for further discoveries, not just in the Kelvin-Faraday corridor but elsewhere across the property.”

Dr. Rory O. Moore, President and CEO of Kennady, stated: “We are excited that our shareholders have the opportunity to benefit from the near-term cash flow of the world-class Gahcho Kué mine while retaining exposure to the significant exploration upside on the current Kennady assets.”