Gahcho Kué Project Definitive Feasibility Study NI Technical Report. Northwest Territories, Canada

Transcription

1 Gahcho Kué Project Definitive Feasibility Study NI Technical Report Northwest Territories, Canada December 1, 2010 Information effective as of October 15, 2010 Qualified Persons: Daniel D. Johnson, P.Eng., Project Director (JDS Energy & Mining Inc.) Mike Makarenko, P.Eng., Principal Mine Engineer (JDS Energy & Mining Inc.) Ken Meikle, P.Eng., Principal Mine Engineer (JDS Energy & Mining Inc.) Bob Prince Wright, P.Eng., Principal Engineer (JDS Energy & Mining Inc.) Jarek Jakubec, C. Eng., Principal Engineer (SRK (Canada) Consulting Inc.) Kevin Jones, P.Eng., Principal Engineer (EBA Engineering Consultants Ltd.)

2 CONTENTS SECTION 1 SUMMARY Introduction Location & Ownership Geology, Resources & Reserves Exploration Project Development Concept Conclusions & Recommendations SECTION 2 INTRODUCTION Qualified Persons & Site Visits Previous Technical Reports SECTION 3 RELIANCE ON OTHER EXPERTS Mineral Tenure Diamond Valuations Other Information SECTION 4 PROPERTY DESCRIPTION & LOCATION Location Tenure History Mineral Tenure Agreements Surface Rights Permits Exploration Programs Future Development Environment Baseline Studies Future Development Rehabilitation SECTION 5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE & PHYSIOGRAPHY Accessibility Climate Local Resources & Infrastructure Local Resources Infrastructure Physiography Flora & Fauna Seismicity December 2010 TABLE OF CONTENTS Page i

3 SECTION 6 HISTORY SECTION 7 GEOLOGICAL SETTING Summary Regional Geology Project Geology Basement Quaternary Structural Setting Kimberlite Geology Kimberlite Types Country Rocks Country Rock Xenoliths Gahcho Kué Kimberlites Hearne Kimberlite Kimberlite Tuzo Kimberlite Other Kimberlites within the AK Property Comment SECTION 8 DEPOSIT TYPES SECTION 9 MINERALIZATION Hearne Kimberlite Hearne North Hearne South Kimberlite Tuzo Kimberlite Other Kimberlites Comment SECTION 10 EXPLORATION Survey Geological Mapping Exploration Programs Canamera Geological Ltd GKJV Delineation Programs Petrography, Mineralogy & Other Studies Hydrology & Geotechnical Comment SECTION 11 DRILLING Core Drilling Canamera ( ) GKJV ( ) GKJV ( ) GKJV Advanced Evaluation ( ) December 2010 TABLE OF CONTENTS Page ii

4 GKJV 2007 Large Diameter Core Program Reverse Circulation (Mini Bulk Sample) Drilling GKJV ( ) Drilling Contractors Core & Cuttings Logging Collar Surveys Downhole Surveys Downhole Geophysics Comment SECTION 12 SAMPLING METHOD & APPROACH Small Diameter Core Sampling (Exploration, Delineation & Geotechnical Drilling) Large Diameter Core (LDC) Sampling Canamera Macro Diamond Sampling (1996) GKJV Macro Diamond Sampling (2007) Large Diameter RC Drill Sampling GKJV 1998 Mini Bulk 140 mm RC Bulk Sampling Method & Approach GKJV 1999 LDD Hole 311 mm RC Bulk Sampling Method & Approach GKJV 2001 LDD Hole 610 mm RC Bulk Sampling Method & Approach GKJV 2002 LDD Hole 610 mm RC Bulk Sampling Method & Approach GKJV 2008 Tuzo LDD Hole 610 mm RC Bulk Sampling Method & Approach Comment Density Data Methodology Comment Macro Diamond & Micro Diamond Sampling Micro Diamond Samples Macro Diamond Samples SECTION 13 SAMPLE PREPARATION, ANALYSES & SECURITY Core Sample Preparation Canamera ( ) GKJV ( ) Mini Bulk Program Sample Preparation Canamera ( ) GKJV 150 mm (5.5 inch) RC Mini Bulk Sampling Program GKJV ( ) Analyses Micro Diamond Samples Mini Bulk Samples GKJV Mini Bulk Sample Processing Grande Prairie Dense Media Separation (DMS) Circuit Program Quality Assurance/Quality Control Canamera Geological Ltd QA/QC GKJV Core Programs QA/QC GKJV Bulk and Mini Bulk Sampling Programs QA/QC GKJV QA/QC December 2010 TABLE OF CONTENTS Page iii

5 Comment Database Sample Security SECTION 14 DATA VERIFICATION Internal Reviews & Audits Canamera ( ) GKJV ( ) Desktop Study Report Data Verification Laboratory & Process Facility Inspections Internal Laboratory & Process Facility Inspections External Laboratory & Process Facility Inspections Independent Sampling Independent Reviews MRDI (1999) AMEC (2005) AMEC (2007) AMEC (2009) Comment on Database Verification Special Considerations for Diamond Resource Determination Diamond Valuations SECTION 15 ADJACENT PROPERTIES SECTION 16 MINERAL PROCESSING & METALLURGICAL TESTING SECTION 17 MINERAL RESOURCE & MINERAL RESERVE ESTIMATES Introduction Mineral Resource Estimation Geologic Models & Estimation Domains Grade Estimation 5034 West & Centre Lobes Grade Estimation 5034 North East Lobe Grade Estimation Hearne Grade Estimation Tuzo Modifying Factors for Grade & Diamond Size Distributions Mineral Resource Classification Classification Parameters Resource Classification Risk Factors Discussion Reasonable Prospects of Economic Extraction Mineral Resource Summary Mineral Reserves Open Pit Optimization Dilution Open Pit Mineral Reserves December 2010 TABLE OF CONTENTS Page iv

6 Resource to Reserve Reconciliation Comparison to Whittle Pits SECTION 18 OTHER RELEVANT DATA & INFORMATION SECTION 19 INTERPRETATION & CONCLUSIONS Interpretation Conclusions SECTION 20 RECOMMENDATIONS Recommended Work Programs Metallurgy FEED Program Permitting Estimate and Schedule Updating Costs SECTION 21 REFERENCES SECTION 22 DATE & SIGNATURE PAGE SECTION 23 ADDITIONAL REQUIREMENTS Mining Operations Introduction Mine Planning & Design Criteria Geotechnical Criteria Open Pit Optimization Open Pit Design Mine Production Plan Mine Equipment Explosives Mine Personnel Process Plant Design Site & Infrastructure Water Management Initial Lake Dewatering Stages Water Management Stages during Operations Mineral Waste Management Environmental Considerations Environmental Impact Review Process Biophysical Environment Socioeconomic Considerations Mine Closure Project Execution Capital Cost Estimate Mine Closure & Reclamation Operating Cost Estimate Mine Operating Costs Processing Operating Costs December 2010 TABLE OF CONTENTS Page v

7 Power Plant Operating Costs G&A Operating Costs Freight Operating Costs Contingency Economic Analysis Summary Assumptions & Evaluation Methodology Sunk Costs Revenue Total Construction Capital Estimate Operating Costs Fiscal Parameters & Taxes Net Present Value Summary Sensitivity Base Case Performance Cautions Regarding Forward Looking Information Payback Mine Life Risk Analysis SECTION 24 QUALIFIED PERSONS CERTIFICATES LIST OF TABLES Table 1.1: Mineral Resource Summary Table 1.2: Mineral Reserve Estimate Table 2.1: Areas of Responsibility Table 4.1: Mineral Tenure Summary Table 4.2: Major Regulatory Permits, Licences & Authorizations Required for the Gahcho Kué Diamond Project Table 4.3: Baseline Studies Completed at Gahcho Kué Table 5.1: Key Climate Data Table 7.1: Characteristics of Gahcho Kué Kimberlites Table 11.1: Gahcho Kué Resource Drill Hole Summary (all mini bulk programs were to recover macrodiamonds; micro diamonds were recovered from most exploration and delineation programs, although not all holes were sampled) Table 11.2: Mini Bulk Sampling Program Summary (in the following tables DMS Yield of Caliper Mass is the percentage of the total mass (Caliper (t)) represented by the mass of the DMS Concentrate (DMS Conc. (kg)) Table 11.3: 1999 Mini Bulk Sampling Program Summary Table 11.4: 2001 Mini Bulk Sampling Program Summary Table 11.5: 2002 Mini Bulk Sampling Program Summary Table 11.6: 2008 Mini Bulk Sampling Program Summary Table 11.7: Drilling Contractors at Gahcho Kué Table 12.1: Summary of Micro Diamond Programs by Area and Year Table 12.2: Summary of Macro Diamond Programs by Area and Year Table 16.1: Mineralization Characteristics 2000 (Summary) Table 16.2: Mineralization Characteristics 2001 & 2002 (Summary) Table 16.3: Diamond Recovery Characteristics (Evaluation Programs) Table 16.4: Testwork Summary December 2010 TABLE OF CONTENTS Page vi

8 Table 17.1: 5034 West & Centre Raw LDD Data Table 17.2: Raw Sample Data Statistics Table 17.3: 5034 Composite Statistics by Rock Type Table 17.4: Comparing Kriged & NN Estimates by Rock Type Table 17.5: Calculated Dry Density by Rock Type Table 17.6: Core Holes for Macro diamonds from 5034 North & East Lobes Table 17.7: 5034 North & East Lobe Micro diamond Sampling Results per Litho facies Table 17.8: Zonal Diamond Content for 5034 North East Lobe Table 17.9: Estimated Zonal Grades for Gahcho Kué 5034 North & East Lobes Table 17.10: Sampled & Estimated Dry Density for Gahcho Kué 5034 North & East Lobes Table 17.11: Hearne Raw LDDH Data Table 17.12: Hearne Composite Statistics by Rock Type Table 17.13: Hearne Kriged & NN Estimate Comparison by Rock Type Table 17.14: Hearne Kriged & NN Estimate Comparison by Rock Group Table 17.15: Tuzo Micro diamond Recoveries Table 17.16: Tuzo Results from GKJV LDD Sampling Carried Out in 1999 & Table 17.17: Results from GKJV Micro Diamond Sampling Table 17.18: Tuzo Zonal Grade Comparison Table 17.19: Tuzo Sampled & Kriged Kimberlite Dry Density per Litho facies Table 17.20: Final Diamond Size Distributions for 5034 West Lobe, 5034 Centre Lobe & Hearne Pipe Table 17.21: Final Diamond Size Distribution for 5034 North East Lobe Table 17.22: Final Diamond Size Distribution for Tuzo Pipe Table 17.23: Qualitative Levels of Confidence in the Mineral Resource Estimate Table 17.24: Average Pricing Comparison for the Purposes of Declaration of Mineral Resources Table 17.25: Whittle Input Parameters Table 17.26: Mineral Resource Summary Table 17.27: Initial Optimization Results Table 17.28: Optimized Shells used for Detailed Pit Design Table 17.29: Mineral Reserve Estimate Table 17.30: Resource to Reserve Reconciliation Table 17.31: Feasibility Study Optimization Parameters Table 17.32: Feasibility Study Parameter Pit Optimization Table 17.33: Mine Design Shell Optimization vs. Feasibility Study Optimization Table 23.1: Mine Planning Criteria Table 23.2: Drill & Blast Design Parameters Table 23.3: Annual Predicted Passive Inflows Table 23.4: Annual Pit Dewatering Design Inflows Table 23.5: Recommended Base Case Inter ramp Pit Slope Angles Table 23.6: Initial Pit Optimization Parameters Table 23.7: Initial Optimization Results Table 23.8: Optimized Shells used for Detailed Pit Design Table 23.9: Comparison of Optimized Whittle Shells & Final Pit Designs Table 23.10: Gahcho Kué Mine Production Plan Table 23.11: Major Mining Equipment Requirements Table 23.12: Loading Equipment Productivities Table 23.13: Drilling Equipment Productivities Table 23.14: Mine Operations Personnel Table 23.15: Site Services Personnel Table 23.16: Technical Services Personnel Table Primary Crushing Plant Operating Parameters Table 23.18: Main Plant Operating Parameters December 2010 TABLE OF CONTENTS Page vii

9 Table 23.19: Waste Rock Disposal Locations & Yearly Quantities Placed Table 23.20: Fine PK Management Plan Table 23.21: Coarse PK Management Plan Table 23.22: Key Project Components & Effects Pathways for the Terrestrial Environment Table 23.23: Key Project Components & Effects Pathways for the Aquatic Environment Table 23.24: Project Components, Effects Pathways, Mitigation & Regulatory Risks Associated with the Terrestrial Environment Table 23.25: Project Components, Effects Pathways, Mitigation & Regulatory Risks Associated with the Aquatic Environment Table 23.26: Initial Capital Cost Estimate (CDN$) Table 23.27: Foreign Currency Exchange Rates Table 23.28: Exposure to Foreign Currency Exchange Rates Table 23.29: Level 4 Estimate by WBS Area Table 23.30: Summary of Basis of Estimate Table 23.31: Summary List of Contractor Grouping for Manhours & Resource Types Table 23.32: Summary List of Trade Grouping for Manhours & Resource Types Table 23.33: Mining Equipment Table 23.34: Sustaining Capital Cost Summary Base Case Mine Plan Table 23.35: Progressive Reclamation Cost Summary Base Case Mine Plan Table 23.36: Reclamation & Closure Costs Table 23.37: Average Annual Operating Cost Estimate Table 23.38: Summary of Costs by Year Table 23.39: Planned Operations Workforce Table 23.40: Process Plant Operating Unit Costs Table 23.41: G&A Annual Operating Costs Table 23.42: Summary Annual Operating Costs Table 23.43: Mining Annual Operating Costs Table 23.44: Processing Plant Annual Operating Costs Table 23.45: Power Plant Annual Operating Costs Table 23.46: G&A Annual Operating Costs Table 23.47: Financial Model Inputs & Results Table 23.48: Basis for Five year CPI Table 23.49: Valuation Input Assumptions (3.0 Mt/a Base Case) Table 23.50: DTC & WWW Valuations Table 23.51: Diamond Value by Pit Table 23.52: Capital Expenditure Flow Table 23.53: Sustaining & Mine Closure Capital Table 23.54: Operating Costs by Area over Life of Mine Table 23.55: Net Present Value Summary (Sunk Costs Included) Table 23.56: Net Present Value Summary (Base Case Comparing Without Sunk Costs) Table 23.57: Net Present Value for Various Discount Rates (Base Case) Table 23.58: Project Scenarios (3.0 Mt/a Case) Table 23.59: Risk by Category LIST OF FIGURES Figure 1 1: Location of Gahcho Kué Figure 1 2: Lease Boundary Map Figure 4 1: Gahcho Kué Project Mining Lease Land Holdings Figure 7 1: Regional Setting, Gahcho Kué Kimberlite Cluster December 2010 TABLE OF CONTENTS Page viii

10 Figure 7 2: Litho structural Interpretation of the Gahcho Kué Area Figure 7 3: 3D View of Gahcho Kué Kimberlite Bodies Looking Northwest Figure 7 4: Section View of Hearne Looking Northwest Figure 7 5: 3D View of 5034 Looking Northwest Figure 7 6: Section View of Tuzo Looking Southeast Figure 8 1: Composite Geological Model of Eroded Gahcho Kué Kimberlites Figure 11 1: Drill Hole Location Plan June 2008 (554 drill collars within and surrounding the Gahcho Kué Kimberlite cluster; does not include outlying exploration holes) Figure 13 1: Generic Micro Diamond Recovery Flow Sheet Figure 17 1: Granite Dilution Comparison Bench Averaged Kriged vs. Bench Averaged Lithology Data Figure 17 2: Estimated Carats Contained Within Resource Shells vs. Shell Revenue Factor Figure 17 3: Resource Tonnage Contained Within Resource Shells vs. Shell Revenue Factor Figure 17 4: Perspective of Whittle Pit Shell Used for Mineral Resource Estimate Figure 23 1: End of Mining Predicted Drawdown Figure 23 2: Pit Design Sectors Plan View Figure 23 3: Slope Angle Geometries for Granite Country Rock Figure 23 4: Slope Angle Geometries for Contact Zones & Kimberlites Figure 23 5: Comparison of Achieved Open Pit Slopes of Other Arctic Mines with Proposed GK Interramp Slope Angles Figure 23 6: 5034 Pit Design Figure 23 7: Hearne Pit Design Figure 23 8: Tuzo Pit Design Figure 23 9: Annual Tonnes Mined & Ore Grade Figure 23 10: Tonnes Mined by Pit & Ore Grade Figure 23 11: Annual Carats Mined & Ore Grade Figure 23 12: Annual Waste Mined & Waste to Ore Ratio Figure 23 13: Haul Truck Operating Hour Requirements Figure 23 14: Loading Equipment Operating Hour Requirements Figure 23 15: Drilling Equipment Operating Hour Requirements Figure 23 16: Overall Site Plan Figure 23 17: Plant Site Layout Figure 23 18: Pre disturbance Site Plan Figure 23 19: Local Study Area for Aquatic Components Figure 23 20: Local & Regional Study Areas for Wildlife Figure 23 21: Summary Schedule Figure 23 22: Summary of Operating Costs by Year Figure 23 23: Mine Operating Cost Breakdown by Functional Area Figure 23 24: Process Plant Operating Costs Figure 23 25: Tax Sharing (3.0 Mt/a Case) Figure 23 26: IRR Variation 3.0 Mt/a Case (sunk costs included) Figure 23 27: NPV Variation 3.0 Mt/a Case (sunk costs included) Figure 23 28: Annual Cash Flow (Cdn$000 De escalated) Figure 23 29: Cumulative Annual Cash Flow (Cdn$000 de escalated) Figure 23 30: Risk Profile, Inherent Risk Figure 23 31: Risk Likelihood Impact Distribution December 2010 TABLE OF CONTENTS Page ix

11 IMPORTANT NOTICE This report was prepared as a National Instrument Technical Report for Mountain Province Diamonds Inc. (MPV) and De Beers Canada Inc (DBCI) by JDS Mining & Energy Inc (JDS). The quality of information, conclusions, and estimates contained herein is consistent with the level of effort involved in the Authors services, based upon: (i) information available at the time of preparation, (ii) data supplied by outside sources, and (iii) the assumptions conditions, and qualifications set for the in this report. This report is intended to be used by Mountain Province Diamonds Inc. and De Beers Canada Inc subject to the terms and conditions of its contracts with the Authors. These contracts permit Mountain Province Diamonds Inc. and De Beers Canada Inc to file this report as a Technical Report with Canadian Securities Regulatory Authorities pursuant to provincial securities legislation. Except for the purposes legislated under provincial securities laws, any other use of this report by any third party is at that party s sole risk.

12 Section 1 Summary 1.1 INTRODUCTION JDS Mining & Energy Inc (JDS) was commissioned by Mountain Province Diamonds Inc. (MPV) and De Beers Canada Inc (DBCI or De Beers) to prepare an independent Canadian National Instrument (NI ) compliant Technical Report for the Gahcho Kué Diamond Project Feasibility Study (GK, Gahcho Kué or Project) located in Northwest Territories, Canada. The Project is a joint venture between De Beers and MPV. De Beers hold 51% of the Project and is the operator. For purposes of this Report, the name Gahcho Kué Joint Venture (GKJV or JV) is used for the joint venture vehicle. This Report details the results of the Feasibility Study and is intended for the use of the JV partners to further advance the project. The Feasibility Study Report includes mineral reserve estimates and represents an economically viable, technically credible and environmentally sound development plan for the Project. The Feasibility Study indicates a robust project and JDS recommends that Project advance to the permitting and FEED engineering program stages in support of the detail design and construction of a mine and process facility at Gahcho Kué. 1.2 LOCATION & OWNERSHIP The Gahcho Kué resource is approximately 300 km east northeast of Yellowknife and 80 km east southeast of Snap Lake, in the District of Mackenzie, NWT, Canada (see Figure 1.1). Project claims and leases near Gahcho Kué are shown in Figure 1.2. The Gahcho Kué project is a joint venture of De Beers Canada Inc. (DBCI) and Mountain Province Diamonds Inc. (MPD), with ownerships of 51% and 49%, respectively. 1.3 GEOLOGY, RESOURCES & RESERVES The Gahcho Kué kimberlite cluster occurs in the southeast Slave Craton. Several kimberlite bodies were discovered and delineated by drilling. The 5034, Hearne North, Hearne South, and Tuzo pipes have the most attractive grades and tonnages delineated to date. Of the larger kimberlites on the property, the 5034 kimberlite is interpreted as forming an irregular hypabyssal root zone, Hearne and Tesla as transitional diatreme to root zones and Tuzo as the deeper part of a diatreme zone (Tesla is not included in the Gahcho Kué Mineral Resource, because of its small size (0.4 ha) and relatively low grade). 1 December 2010 SUMMARY Page 1 1

13 GAHCHO KUÉ PROJECT NI TECHNICAL REPORT Figure 1 1: Location of Gahcho Kué 1 December 2010 SUMMARY Page 1 2

14 Figure 1 2: Lease Boundary Map 1 December 2010 SUMMARY Page 1 3

15 The 5034, Hearne, and Tuzo kimberlites have contrasting pipe shapes. The West Lobe, Centre Lobe, and eastern portion of the North East Lobe of the 5034 kimberlite sub crop below lake bottom sediments; the northern portion of the 5034 North East Lobe (referred to as the North Lobe) is a blind lobe overlain by approximately 80 m of in situ country rock. The 5034 pipe is dominantly infilled with hypabyssal kimberlite (HK). Hearne South is a roughly circular pipe and smaller than Hearne North, which is a narrow elongated pipe. Hearne South is infilled predominantly with tuffisitic kimberlite breccia (TK); Hearne North is infilled with approximately equal amounts of HK and TK. Tuzo is characterized by smooth, steepsided pipe walls and is predominantly infilled with TK with HK at depth. In most cases, the top of the kimberlites occur between 380 and 390 masl. Except for the 5034 North Lobe, this intrudes 70 to 80 m below a peninsula, the kimberlites subcrop at the bottom of Kennady Lake, covered by 10 to 15 m of water and between 5 to 15 m of glacial lake sediments. The kimberlites are surrounded laterally by granite and granite gneiss country rock. The geological understanding of the deposit setting, lithologies, and kimberlite type distributions is adequate to support Mineral Resource estimation. The estimation and classification of the mineral resources was completed by AMEC and are summarized in Table 1.1. Table 1.1: Mineral Resource Summary Resource Classification Volume (Mm 3 ) Tonnes (Mt) Carats (Mct) Grade (cpht) 5034 Indicated Inferred Hearne Indicated Inferred Tuzo Indicated Inferred Summary Indicated Inferred Notes: (1) Mineral Resources are reported at a bottom cut off of 1.0 mm; (2) Mineral Resources are not mineral reserves and do not have demonstrated economic viability; (3) Volume, tonnes and carats are rounded to the nearest 100,000; (4) Tuzo volume and tonnes exclude 0.6 Mt of a granite raft; (5) Diamond price assumptions used to assess reasonable prospects of economic extraction reflect mid 2008; (6) pricebooks with a 20% increase factor. The prices assumed, on a per pipe basis (in US$), equate to $113/ct for 5034, $76/ct for Hearne and $70/ct for Tuzo. The resources summarized in Table 1.1 were converted to reserves through the pit design and mine planning process and economic evaluation described in this Feasibility Study report. The detailed pit designs and mine plan determined the mineral reserve estimate for each pipe as summarized in Table December 2010 SUMMARY Page 1 4

16 Table 1.2: Mineral Reserve Estimate Pipe Classification Tonnes (Mt) Carats (Mct) 5034 Probable Hearne Probable Tuzo Probable Total Probable Grade (cpt) The mineral reserves identified in Table 1.2 comply with CIM definitions and standards for a National Instrument (NI) Technical Report. Detailed information on mining, processing, metallurgical, and other relevant factors are contained in the followings sections of this report and demonstrate, at the time of this report, that economic extraction is justified. The economic viability of the project is presented in Item 25, and confirms that the probable reserve estimates meet and comply with CIM definitions and NI standards. At the time of this report, the project is economically viable using current diamond prices and prevailing long term price estimates. This study did not identify any mining, metallurgical, infrastructure or other relevant factors that may materially affect the estimates of the mineral reserves or potential production. 1.4 EXPLORATION Exploration activities on the Gahcho Kué project have included geological mapping, geochemical sampling, and drilling by multiple operators. Exploration activities and results are discussed in Sections 10 and 11. Activities were conducted either by De Beers personnel on behalf of, and as directed by, the GKJV, or by consultants and contractors appointed by the GKJV and supervised by De Beers as project operator. Exploration to date at Gahcho Kué is consistent with industry standard practices and is appropriate for the type of mineralization. Exploration is adequate to support mineral resource estimation. 1.5 PROJECT DEVELOPMENT CONCEPT The project development concept utilizes designs and practices that are proven in the Canadian diamond industry. The project design is based on the open pit mining of the 5034, Hearne, and Tuzo deposits in a sequential fashion. Mine plans call for the extraction of Mt of waste and 31.3 Mt of ore over a 13 year period utilizing standard drill/blast truck/shovel equipment and pit designs that are similar to the other open pit diamond mines operating in the area. Ore will be fed to a 3.0 Mt/a processing plant with three stages of crushing, DMS, and X ray/grease diamond recovery circuits. Process plant designs and equipment selections are based on experience from other operations and utilize proven suppliers. Security designs are based on De Beers' standards and practices. Supporting infrastructure includes a 14.1 MW packaged diesel power plant, 1,350 m gravel airstrip, fivebay truckshop, emulsion plant, 40 ML of fuel storage, and a 432 bed accommodation/office complex. The 1 December 2010 SUMMARY Page 1 5

17 primary facilities are interconnected by utilidors providing interior access for personnel. These basic, fitfor purpose designs and plans are prepared by study personnel that have designed, constructed, and operated similar facilities at other diamond mines. Likewise, the suppliers, contractors and service providers nominated in the feasibility study are providing similar services for other mines in the north. Cost estimates are built up from first principles and are benchmarked against relevant operations. Appropriate contingencies have been applied. De Beers operates the Snap Lake mine in the NWT and has provided estimates of general and administrative costs, payroll costs, licenses and fee. De Beers has a trained workforce that can assist in the design, commissioning, training and operation of the Gahcho Kué mine. The project is environmentally sound, utilizing simple and proven management plans. Water management plans are adaptations of plans used successfully at other diamond mines. At Gahcho Kué, all potentially contaminated water is kept within a controlled management basin formed by natural drainage patterns. Excess storage capacity allowances provide for operational flexibility and contingencies. Normal mine operations incorporate a program of progressive reclamation that minimizes costs and allows timely monitoring of performance. The mined out 5034 and Hearne pits are used for waste storage during the later years of the mine life providing ample time for completion of reclamation of waste storage areas used during earlier years. A viable plan for fish habitat compensation has been developed and provides for no net loss of habitat. New lake areas for habitat replacement are created at the beginning of operations, providing ample time to monitor and measure effectiveness during the mine operation period. The project provides socioeconomic benefits. The mine will create close to 1,000 jobs during the twoyear construction phase and some 400 permanent jobs during the 11 year operational phase. Additional employment will be created by service providers to operations. Territorial and Federal taxes and royalties are estimated to be close to $800 M. In addition, property and payroll taxes will add significant tax revenues to the local municipality. IBAs are planned for the First Nation groups in the vicinity. Risks for the project are identified and considered reasonable. The greatest economic risk/opportunity is related to diamond values. Over the past two years, rough diamond demand/prices/sales have experienced unprecedented volatility as a result of the world economic crisis. The project JV partners forecast a 1% real growth in diamond prices. The project also faces environmental and regulatory risk, as the project must proceed through the MVEIRB environmental screening process. There are risks that this process might take longer than the scheduled 24 to 27 months, causing delays in construction start up and/or the regulatory authorities requiring that significant modifications be made to the plans impacting designs and costs. In this event, a determination might even be made that the project should not proceed. 1.6 CONCLUSIONS & RECOMMENDATIONS The Feasibility Study represents an economically viable, technically credible, and environmentally sound mine development plan for the Gahcho Kué Project. The Project is economically viable, generating CAD$4,143.4M in RV (realized value) revenues over an 11 year mine life resulting in a 20.7% IRR (internal rate of return) and a $135.9 M NPV (net present value) at 15%. Excluding sunk costs, the Project yields a 33.9% IRR and a $277.4 NPV. Diamond values 1 December 2010 SUMMARY Page 1 6

18 averaged $74.52/ct over the life of the mine. Total life or mine (LOM) capital costs are estimated at $776.5 M consisting of $141.5 M in sunk costs; $549.5 M initial capital; $49.4 M in working capital; and $36.1 M in sustaining and closure costs. Total LOM pre tax cash operating costs are estimated at $1,522.0 M, which equates to $48.68/t processed or $31.04/ct recovered. The project is technically credible, utilizing designs and practices that are proven in the Canadian diamond industry. Similar scale open pit mining and diamond processing operations have been operating in Canada starting in A skilled and trained workforce is available for the construction and operations phases of the project. A service industry including such things as: engineering and design; specialized construction; trucking; air transport; mine support; explosives supply; equipment servicing; winter road construction and operation; catering; and numerous other mine related services has evolved greatly over the past years to service the diamond mines in arctic Canada. The project is environmentally sound, utilizing simple and proven management plans. Water management plans are adaptations of plans used successfully at other diamond mines. Risks for the project have been identified and are considered reasonable. The Feasibility Study indicates a robust project and concludes that the project will exceed the minimum 15% IRR threshold set forth by the JV Agreement. JDS recommends that: The Feasibility Study be used as the project description for the MVEIRB permitting process to be reinitiated over the following year. The project be approved in stages, dependent upon and contingent upon the satisfactory permitting progress. The project advance to the front end engineering design (FEED) phase in 2011 to revise and further advance. Concurrent with the FEED program, further expand and detail the Project Execution Plan (PEP) cognizant of, and adjusted to, the latest the expected environmental permitting conditions and timelines. 1 December 2010 SUMMARY Page 1 7

19 Section 2 Introduction JDS Energy and Mining Inc (JDS) was commissioned by Mountain Province Diamonds Inc (MPV) and De Beers Canada Inc (DBCI or De Beers) to provide a compliant Technical Report (the Report) on the Gahcho Kué Diamond Project Feasibility Study (the Project), located in Northwest Territories, Canada. This document provides a Technical Report of the Project, prepared in compliance with National Instrument , Standards of Disclosure for Mineral Projects (43 101). The Report details the results of the Feasibility Study and is intended for the use by MPV and De Beers for the further development and advancement of the project. Information used to support the report was derived from the April 2009 Technical Report on the project and from reports and documents listed in the references section of this report. Sections 7 through 16 from the AMEC 2009 Technical Report have been repeated in this report for completeness. JDS has reviewed the previous report and believes the information contained in these sections is accurate. The 2009 Technical Report provided mineral resource estimates. No changes have been made to the mineral resource estimates since the 2009 Technical Report. The Feasibility Study environmental and socioeconomic sections were prepared by Golder under contract to De Beers Canada Inc. Detailed summaries of these sections have been included in this Technical Report as Sections 23.6 and Golder is a leading environmental engineering company and is currently responsible for preparing the EIS (Environmental Impact Statement) for the Gahcho Kue project on behalf of De Beers. The authors believe the information contained in the environmental and socioeconomic sections are accurate. 2.1 QUALIFIED PERSONS & SITE VISITS There are six Qualified Persons (QPs), as defined in NI , responsible for the preparation of this Technical Report. These individuals and their site visits are listed below: Daniel D. Johnson, P.Eng., Project Director (JDS). One site visit on 18 September Mike Makarenko, P.Eng., Principal Mine Engineer (JDS). No site visit. Kenneth Meikle, P.Eng., Principal Mine Engineer (JDS). No site visit. Bob Prince Wright, P.Eng., Principal Engineer (JDS). No site visit. Kevin Jones, P.Eng., Principal Engineer (EBA). Several site visits; most recently Aug 11 12, Jarek Jakubec, C. Eng., Principal Engineer (SRK). Site visits on Dec 10 13, 1998; Jan 12 16, 1999; and Mar 24 25, December 2010 INTRODUCTION Page 2 1

20 The attributable report sections for the QPs contributing to this report are listed in Table 2.1 below. Table 2.1: Areas of Responsibility Name Company Responsibility QP Sections Daniel Johnson, P.Eng. JDS Energy & Mining Inc. Project Director Overall Report Summary Project Setting & History Review of AMEC Report Mine Closure Project Execution Risk Management Mike Makarenko, P.Eng. JDS Energy & Mining Inc. Mine Planning Mineral Reserves Mining Kenneth Meikle, P.Eng. JDS Energy & Mining Inc. Cost Estimating Financial Analysis Bob Prince Wright, P.Eng. JDS Energy & Mining Inc. Process Plant Site Infrastructure Design Jarek Jakubec, C.Eng. SRK Consulting Inc. Mine Geotechnical Pit Slope Stability Kevin Jones, P.Eng. EBA Engineering Consultants Ltd. Waste and Water Management Sections 1 6, overall review of AMEC Sections 7 through 17.4; Sections 18, 19, 20, 21, 23.6, 23.7, 23.8, 23.9, Section 17.5 Section 23.1 (except ) Sections 23.10, 23.11, 23.12,23.13,23.14,23.15 Sections 23.2, 23.3 Section Sections 23.4, 23.5 The effective date for this Technical report is 15 October 2010, which is the date of the Definite Feasibility Study submittal and Mineral Reserve Estimates. 2.2 PREVIOUS TECHNICAL REPORTS Thurston, M., (2003): Gahcho Kué, Northwest Territories, Canada, Independent Qualified Person s Review and Technical Report, Effective Date 16 June, 2003 : Technical Report prepared by AMEC E&C Services Limited for Mountain Province Diamonds Inc. Brisebois, K., Eggleston, T., and Kozak, A., (2009) Gahcho Kué Kimberlite Project, Northwest Territories, Canada NI Technical Report, Effective Date 20 April 2009 : Technical Report prepared by AMEC Americas Limited (AMEC) for Mountain Province Diamonds Inc. The 2009 AMEC Technical Report updates and supersedes the 2003 AMEC Technical Report. 1 December 2010 INTRODUCTION Page 2 2

21 Section 3 Reliance on other Experts The QPs, authors of this report, state that they are Qualified Persons for those areas as identified in the appropriate certificates of Qualified Persons. The authors have relied upon information derived from previous reports pertaining to mineral rights, surface rights and permitting issues. 3.1 MINERAL TENURE JDS QPs have not independently verified the legal status or ownership of the Project area, the mineral tenure, or underlying property agreements. JDS has relied upon internal company documents from De Beers Canada for information on the mineral tenure, surface rights and property agreements. JDS has reviewed the Amended and Restated Joint Venture Agreement dated July 2009 between De Beers Canada, Mountain Province Diamonds, and Camphor Ventures and was found to accurately reflect the participating interests of the joint venture partners as of the effective date of this Report. 3.2 DIAMOND VALUATIONS JDS has relied on WWW International Diamond Consultants (WWW) for diamond valuation. WWW are recognized international leaders in this field, and are the valuers to the Federal Government of Canada for the Canadian diamond mines in the Northwest Territories. This information was used in support of Section (reserves and economic analysis) JDS has also relied on De Beers (DTC marketing division) for diamond valuation in support of the same sections. The QPs believe it is reasonable to rely on De Beers valuations, as the Diamond Trading Company (DTC) is the rough diamond distribution arm of the De Beers Companies and is the world s largest supplier of rough diamonds. Similarly JDS has relied on De Beers and MPV for the diamond price escalation estimate. De Beers and MPV conducted their own market analysis and determined that a 1% real growth rate in US$ diamond prices be used in the financial analysis 3.3 OTHER INFORMATION In preparing this report, JDS has relied on input from De Beers, Mountain Province and a number of wellqualified independent consulting groups (see below), particularly regarding hydrological/hydrogeological and geotechnical investigations; socioeconomic and environmental issues; and legal matters. Supporting Consulting Groups Major area(s) of Input Clark Builders... Infrastructure Design, Cost Estimates Golder Associates LLC... Environmental and Socioeconomic* DeBeers Canada Inc... Operating Cost Estimates, Security, Legal HCI Hydrological Consultants... Groundwater Hydrology 1 December 2010 RELIANCE ON OTHER EXPERTS Page 3 1

22 EBA Engineering... Waste and Water Management, Site Geotechnical Hatch Ltd... Process Plant, Infrastructure, Estimating SRK Consulting (Canada) Ltd.... Mine Planning, Mine Geotechnical *The Feasibility Study environmental and socioeconomic sections were prepared by Golder under contract to De Beers Canada Inc. Detailed summaries of these sections have been included in the Technical Report. Golder is a leading environmental engineering company and is currently responsible for preparing the EIS (Environmental Impact Statement) for the Gahcho Kue project on behalf of De Beers. The authors believe the information contained in the environmental and socioeconomic sections are accurate. 1 December 2010 RELIANCE ON OTHER EXPERTS Page 3 2

23 Section 4 Property Description & Location 4.1 LOCATION The Gahcho Kué Project is located at the informally named Kennady Lake, approximately 300 km eastnortheast of Yellowknife in the District of Mackenzie, Northwest Territories, Canada, at the approximate latitude N and longitude W (NAD83 Zone 12 coordinates N, E. The Project is located 150 km south southeast of the Diavik and Ekati diamond mines operated by DiaMet Minerals Ltd. and BHP Diamonds Inc. at Lac de Gras, and 80 km east southeast of the De Beers Snap Lake mine. The Gahcho Kué Project consists Hearne North and South; 5034 West, Central and North East; 5034 South Pipe; 5034 North Pipe; Wallace; Dunn Sheet and Tesla diamondiferous kimberlite pipes, sheets and dykes. Except for the northernmost part of 5034, the main kimberlite pipes all lie beneath Kennady Lake. Only the 5034, Hearne, and Tuzo pipes are adequately explored to allow estimation of Mineral Resources. A number of other kimberlite occurrences including Dunn Sheet and Wallace were explored, but currently have insufficient data to support Mineral Resource estimation. 4.2 TENURE HISTORY The Gahcho Kué Project was part of a larger group of mining claims, known as the AK Property, which currently consists of four remaining mining leases (Figure 4 1 and Table 4.1). The AK Property was initially staked in 1992 by Inukshuk Capital Corp., and optioned to Mountain Province Mining, Inc. (now Mountain Province Diamonds, Inc MPV) later the same year. On staking, the project covered about 520,000 ha, and included the AK and CJ claims. The CJ claims substantially lapsed in November 2001, and the remaining CJ claims lapsed on August 17, 2002, leaving only the AK claims as current. Additional partners in the AK Property included Camphor Ventures Inc. (Camphor Ventures), and B.C. Ltd, a subsidiary company of Glenmore Highlands Inc. (Glenmore Highlands). At the time, Glenmore Highlands was a controlling shareholder of Mountain Province Mining Inc. as defined under the Securities Act of British Columbia. The Glenmore Highlands subsidiary amalgamated with MPV in 1997, and Camphor Venture s interest in the AK Property was acquired by MPV during December 2010 PROPERTY DESCRIPTION & LOCATION Page 4 1

24 Figure 4 1: Gahcho Kué Project Mining Lease Land Holdings Gahcho Kue kimberlite cluster Note: Mining lease boundaries for 4732, 4730, and 4731 are approximate at this scale. 1 December 2010 PROPERTY DESCRIPTION & LOCATION Page 4 2

25 Table 4.1: Mineral Tenure Summary Number Tenure Type Area (acres) Date Granted Expiry Date Holders and Ownership Percentages Gahcho Kué Project 4199 Lease 2, Jul Jul 23 De Beers Canada Inc. on behalf of the GKJV. The participating interest of each of the GKJV parties is governed by the 2002 Joint Venture Agreement which is registered against the mineral claims. Interests in the GKJV are De Beers Canada Inc (51%), Mountain Province Diamonds (49%) 4200 Lease 2, Jul Jul 23 De Beers Canada Inc. on behalf of the GKJV. The participating interest of each of the GKJV parties is governed by the 2002 Joint Venture Agreement which is registered against the mineral claims. Interests in the GKJV are De Beers Canada Inc (51%), Mountain Province Diamonds (49%) 4201 Lease 2, Jul Jul 23 De Beers Canada Inc. on behalf of the GKJV. The participating interest of each of the GKJV parties is governed by the 2002 Joint Venture Agreement which is registered against the mineral claims. Interests in the GKJV are De Beers Canada Inc (51%), Mountain Province Diamonds (49%) 4341 Lease 2, Jul Jul 23 De Beers Canada Inc. on behalf of the GKJV. The participating interest of each of the GKJV parties is governed by the 2002 Joint Venture Agreement which is registered against the mineral claims. Interests in the GKJV are De Beers Canada Inc (51%), Mountain Province Diamonds (49%) Total 10,353 Sliver Claims 4730 Lease Apr 05 1 Apr 26 De Beers Canada Inc (55.5%), Mountain Province Diamonds (24.5%) and GGL Diamond Corp (20%) 4731 Lease Apr 05 1 Apr 26 De Beers Canada Inc (55.5%), Mountain Province Diamonds (24.5%) and GGL Diamond Corp (20%) 4732 Lease Apr 05 1 Apr 26 De Beers Canada Inc (55.5%), Mountain Province Diamonds (24.5%) and GGL Diamond Corp (20%) Total December 2010 PROPERTY DESCRIPTION & LOCATION Page 4 3

26 In 1997, Monopros (now De Beers Canada) joint ventured the property. The currently applicable agreements between the partners are summarized in Section MINERAL TENURE The Gahcho Kué Project comprises four mining leases, 4199, 4341, 4200, and 4201, covering a total area of 10,353 ha (Figure 4 1 and Table 4.1). The mining leases are 100% owned by De Beers Canada Inc. who holds them on behalf of the GKJV. The participating interest of each of the GK joint venture parties is governed by the 2002 joint venture agreement, which is registered against the mineral leases (see Section 4.4). Annual lease payments, payable to the Receiver General Canada (Northwest Territories, c/o Mining Recorders Office), comprise $1.00 per acre for the duration of the 21 year lease period (note that fees are payable on acres, not hectares, in the NWT and Nunavut). Payments increase to $2.00 per acre if a second 21 year term is granted after application to the Northwest Territories Mining Recorder for the extension. Payments for the leases for 2007 totalled $10,353, and a similar amount is expected for each succeeding year. All mining leases were legally surveyed by licensed surveyors. AMEC has reviewed lease documents provided, at cost, by the Northwest Territories Mining Recorders office. Those documents indicate that all of the leases are valid at the effective date of this report and that the expiry dates for the leases are as presented in Table 4.1. AMEC concludes that the leases are valid until the expiry dates in Table 4.1. Immediately to the south, and contiguous with the Project mining leases are three sliver claims, mining leases 4732, 4730 and 4731 (Figure 4 1). The leases have a total area of acres, and are held in the names of De Beers Canada Inc. (55.5%), Mountain Province Diamonds Inc. (24.5%) and GGL Diamond Corp. (20%). 4.4 AGREEMENTS The Monopros Ltd. Joint Venture Agreement, dated 6 March 1997, was entered into between Monopros Ltd. (Monopros; a wholly owned Canadian subsidiary of De Beers Consolidated Mines and now known as De Beers Canada Inc.), MPV, and Camphor Ventures. The parties amended the Monopros Ltd. Joint Venture Agreement in 2000, as a result of agreements reached at a meeting on 8 March An updated and expanded JV Agreement between De Beers and MPV became effective on 1 January 2002, was signed 24 October This agreement provides that De Beers Canada could earn up to a 55% interest in the project by funding and completing a positive definitive feasibility study. The agreement also provides that De Beers Canada could earn up to a 60% interest in the project by funding development and construction of a commercial scale mine. MPV acquired Camphor Ventures interest in the joint venture in An updated and amended JV agreement between De Beers and MPV was executed effective 3 July The JV agreement superseded the previous JV agreements. The agreement maintains the project 1 December 2010 PROPERTY DESCRIPTION & LOCATION Page 4 4