Technical Report on the Feasibility Study and Updated Mineral Reserve for the Star Orion South Diamond Project Fort à la Corne, Saskatchewan, Canada

Technical Report on the Feasibility Study and Updated Mineral Reserve for the Star Orion South Diamond Project Fort à la Corne, Saskatchewan, Canada Latitude 53 15 N; Longitude 104 48 W Effective Date: July 14, 2011 Signing Date: August 25, 2011 NI 43-101F1 Technical Report Mr. George Read, P. Geo. Mr. Fred H. Brown, CPG PrSciNat Dr. Wayne Ewert, P.Geo Mr. Shawn Harvey, P. Geo. Mr. Al Hayden, P. Eng. Mr. David Orava P. Eng. Mr. Eugene Puritch, P.Eng Mr. Ethan Richardson, P. Eng. Mr. Hugh Rudolf, P. Eng. Mr. Harnam Trehin, P.Eng.

TABLE OF CONTENTS 1.0 SUMMARY... I KEY CONCLUSIONS... I PROJECT TIMELINE... III MINERAL RESERVE ESTIMATE... III PROCESS PLANT... III DIAMOND PRICES... III ROYALTIES... IV OVERBURDEN STRIPPING... IV MINING... IV DEWATERING... IV ENERGY... IV TRANSPORTATION... IV ENVIRONMENT... V TECHNICAL SUMMARY... V LOCATION, ACCESS AND INFRASTRUCTURE... V TENURE AND SURFACE RIGHTS... VI GENERAL GEOLOGY... VI KIMBERLITE GEOLOGY... VI GEOLOGICAL MODELS... VII SAMPLING AND SAMPLE PROCESSING... VII UNDERGROUND SAMPLING... VII LARGE DIAMETER DRILLING... VIII DIAMOND RECOVERY... VIII DIAMOND VALUATION... VIII MINE DESIGN BASIS... IX OPTIMIZATION... IX GEOTECHNICAL AND HYDROGEOLOGICAL CONSIDERATIONS... XI MINING OPERATION... XII PHASED PIT DEVELOPMENT... XIII MINE SCHEDULE AND PRODUCTION RATE... XIV PRODUCTION SCHEDULE... XIV MINERAL RESERVE ESTIMATE AS OF JULY 14, 2011... XV ORE PROCESSING PLANT... XVII PROJECT INFRASTRUCTURE... XVII ELECTRICAL POWER SUPPLY... XVII ADMINISTRATION AND MAINTENANCE FACILITIES... XVIII WATER BALANCE AND WATER MANAGEMENT... XVIII SOCIAL AND ENVIRONMENTAL... XVIII FINANCIAL EVALUATION... XIX SUMMARY... XIX CASH FLOW MODEL... XX ECONOMIC CRITERIA AND ASSUMPTIONS... XXIV BASIS OF GROSS REVENUE ESTIMATES... XXIV DIAMOND VALUATION... XXV PRICE ESCALATION... XXV

2.0 2.1 2.2 2.3 3.0 4.0 4.1 5.0 5.1 5.2 6.0 7.0 7.1 7.2 7.3 7.4 8.0 8.1 8.2 9.0 MARKETING COST... XXV TAXES AND ROYALTIES... XXV CONTINGENCY... XXVI SENSITIVITY ANALYSIS... XXVII INTRODUCTION... 1 SITE VISITS... 2 OWNERSHIP AND JOINT VENTURE... 3 ABBREVIATIONS AND SYMBOLS... 3 RELIANCE ON OTHER EXPERTS... 11 PROPERTY DESCRIPTION AND LOCATION... 13 SHORE AND FALC-JV EXPLORATION LICENSES... 13 4.1.1 SURFACE RIGHTS AND LEASES... 21 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY... 22 PHYSIOGRAPHY AND CLIMATE... 22 LOCAL AND REGIONAL INFRASTRUCTURE... 22 5.2.1 STAR PROPERTY DESCRIPTION... 23 5.2.2 ORION SOUTH PROPERTY DESCRIPTION... 23 HISTORY... 24 GEOLOGICAL SETTING AND MINERLIZATION... 25 LOCAL GEOLOGY - FALC AREA... 28 STAR KIMBERLITE GEOLOGY AND MINERALIZATION... 29 7.2.1 CANTUAR KIMBERLITE... 30 7.2.2 PENSE KIMBERLITE... 32 7.2.3 EARLY JOLI FOU KIMBERLITE (EJF)... 32 7.2.4 MID JOLI FOU KIMBERLITE (MJF)... 34 7.2.5 LATE JOLI FOU KIMBERLITE (LJF)... 34 7.2.6 UPPER KIMBERLITIC SEDIMENTS... 34 ORION SOUTH KIMBERLITE GEOLOGY AND MINERALIZATION... 35 7.3.1 CANTUAR KIMBERLITE... 36 7.3.2 PENSE KIMBERLITE... 36 7.3.3 EARLY JOLI FOU KIMBERLITE (EJF)... 38 7.3.4 LATE JOLI FOU KIMBERLITE (LJF)... 40 7.3.5 VIKING KIMBERLITE... 40 7.3.6 UPPER KIMBERLITIC SEDIMENTS (UKS)... 41 GEOLOGICAL MODEL... 41 7.4.1 STAR GEOLOGICAL MODEL... 41 7.4.2 ORION SOUTH GEOLOGICAL MODEL... 42 DESPOSIT TYPES... 43 KIMBERLITE HOSTED DIAMOND DEPOSITS... 43 FORT À LA CORNE KIMBERLITE MODEL... 44 EXPLORATION... 45

9.1 9.2 10.0 10.1 10.2 11.0 11.1 11.2 11.3 11.4 12.0 12.1 12.2 12.3 12.4 13.0 13.1 13.2 13.3 14.0 14.1 14.2 14.3 15.0 STAR KIMBERLITE EXPLORATION... 45 ORION SOUTH EXPLORATION EXPLORATION... 46 DRILLING... 47 STAR KIMBERLITE DRILLING... 47 ORION SOUTH DRILLIING... 50 SAMPLE PREPARATION, ANALYSIS AND SECURITY... 53 DIAMOND DRILLING LOGGING AND SAMPLING PROCEDURES... 53 UNDERGROUND SAMPLING PROCEDURES AND SAMPLE SECURITY... 54 11.2.1 SHAFT AND LATERAL DRIFT SAMPLING... 54 11.2.2 UNDERGROUND BULK SAMPLING PROTOCOLS... 54 LDD (RC DRILLING) SAMPLE RECOVERY... 55 11.3.1 LDD DOWNHOLE CALIPER MEASUREMENTS... 56 SAMPLE PREPARATION, ANALYSES AND SECURITY... 56 11.4.1 INTRODUCTION - MINERAL PROCESSING AND DIAMOND RECOVERY... 56 11.4.2 PROCESS PLANT CRUSHING AND SCRUBBING CIRCUIT... 56 11.4.3 PROCESS PLANT DMS CIRCUIT... 57 11.4.4 DIAMOND RECOVERY PLANT SAMPLE HANDLING AND PROCESSING PROCEDURES... 59 11.4.5 X-RAY DIAMOND SORTER... 61 11.4.6 GREASE TABLE DIAMOND RECOVERY... 61 11.4.7 CHAIN OF CUSTODY AND SECURITY PROTOCOLS... 61 11.4.8 DIAMOND PICKING AND SORTING PROCEDURES... 62 DATA VERIFICATION... 64 INTRODUCTION... 64 QA/QC AUDITS... 64 DATA BASE VERIFICATION... 68 BULK DENSITY VALIDATION... 68 MINERAL PROCESSING AND METALLURGICAL TESTING... 69 STAR UNDERGROUND BULK SAMPLING PROGRAM... 69 ORION SOUTH UNDERGROUND BULK SAMPLING PROGRAM... 70 LDD SAMPLING PROGRAMS... 72 13.3.1 STAR LDD PROGRAM... 72 13.3.2 ORION SOUTH LDD PROGRAM... 72 MINERAL RESOURCE ESTIMATES... 74 STAR GRADE MODEL... 74 ORION SOUTH GRADE MODEL... 74 DIAMOND VALUATION... 75 MINERAL RESERVE ESTIMATES... 77

15.1 16.0 16.1 16.2 16.3 16.4 16.5 16.6 16.7 16.8 16.9 INFERRED RESOURCES... 77 MINING METHODS... 79 SUMMARY... 79 16.1.1 MINE PRE-PRODUCTION DEVELOPMENT... 82 16.1.2 IN-PIT CRUSH CONVEY WASTE STRIPPING SYSTEM... 83 16.1.3 TRAFFICABILITY... 85 16.1.4 ORE PRODUCTION... 88 HYDROGEOLOGY AND PIT DEWATERING... 88 GEOTECHNICAL AND PIT SLOPES... 89 16.3.1 PIT SLOPES IN THE OVERBURDEN SOILS... 89 16.3.2 PIT SLOPES IN THE SUB-OVERBURDEN ROCK... 91 PIT DESIGN... 93 16.4.1 STAR PIT DESIGN... 95 16.4.2 ORION SOUTH PIT DESIGN... 97 PIT OPTIMIZATION... 101 16.5.1 STAR DEPOSIT PIT OPTIMIZATION... 101 16.5.2 ORION SOUTH DEPOSIT PIT OPTIMIZATION... 101 PRODUCTION SCHEDULE... 103 MINING EQUIPMENT... 104 MAINTENANCE... 105 OPERATIONS AND MAINTENANCE PERSONNEL REQUIREMENTS... 105 16.10 MINE INFRASTRUCTURE... 105 16.10.1 MINE ELECTRICAL POWER... 105 16.11 EXPLORATION POTENTIAL... 106 17.0 17.1 17.2 RECOVERY METHODS... 107 INTRODUCTION... 107 BASIS OF DESIGN... 111 17.2.1 METALLURGICAL TESTING AND ORE DRESSING STUDIES FOR STAR KIMBERLITE... 111 17.2.2 METALLURGICAL TESTING AND ORE DRESSING STUDIES FOR ORION SOUTH KIMBERLITE... 116 17.2.3 PROCESS DESIGN CRITERIA... 121 17.2.4 DESIGN PRINCIPLES... 121 17.2.5 DIAMOND DAMAGE... 121 17.2.6 BOTTOM CUT-OFF SIZE... 122 17.2.7 TOP CUT-OFF SIZE... 122 17.2.8 COMMINUTION AND DIAMOND LIBERATION... 123 17.2.9 RECRUSH ELIMINATED... 124 17.2.10 PRIMARY CRUSHING... 125 17.2.11 THICKENING... 125 17.2.12 PROCESSED KIMBERLITE CONTAINMENT FACILITY (PKCF)... 125 17.2.13 SOLIDS SURGE CAPACITY... 125 17.2.14 MASS BALANCE... 126

17.3 17.4 17.5 17.6 17.7 18.0 18.1 18.2 18.3 18.4 18.5 18.6 18.7 18.8 18.9 17.2.15 PROCESS PLANT BUILDINGS... 130 17.2.16 PROCESS PLANT PRE-COMMISSIONING, COMMISSIONING AND RAMP-UP... 130 PROCESS DESCRIPTION... 131 17.3.1 RUN OF MINE (ROM) STOCKPILE... 133 17.3.2 COMMINUTION SECTION... 133 17.3.3 DMS SECTION... 134 17.3.4 THE RECOVERY SECTION... 134 17.3.5 THE -1 MM TAILINGS... 136 17.3.6 DMS REJECTS... 137 17.3.7 RECOVERY REJECTS... 137 CONTROL AND INSTRUMENTATION... 137 PLANT LABOUR REQUIREMENTS... 137 17.5.1 OPERATIONAL LABOUR REQUIREMENTS... 137 17.5.2 MAINTENANCE LABOUR REQUIREMENTS... 138 BULK SAMPLE (AUDIT) PLANT... 140 PROCESS / RECOVERY PLANT SECURITY... 140 INFRASTRUCTURE... 142 SUMMARY... 142 SITE PREPARATION... 142 18.2.1 ORGANIC COVER REMOVAL AND STOCKPILING... 142 18.2.2 SITE ACCESS AND UTILITIES ROADWAYS... 142 18.2.3 SITE GRADING... 143 18.2.4 PIT PRE-STRIPPING... 143 18.2.5 SITE ROAD, UTILITIES, PIPELINES & CONVEYANCE WAYS... 143 18.2.6 PERIMETER BOUNDARY... 144 SITE PLAN DESCRIPTION... 144 18.3.1 GENERAL SITE PLAN... 144 PLANT SITE LOCATION... 146 ACCESS ROAD... 146 18.5.1 ROUTE SELECTION... 146 18.5.2 ACCESS ROAD DESIGN... 147 18.5.3 ACCESS CORRIDOR... 148 RAILWAY SPUR... 148 POWER SUPPLY AND DISTRIBUTION... 148 18.7.1 POWER SUPPLY OPTIONS... 148 18.7.2 POWER SUPPLY REQUIREMENTS... 151 18.7.3 SITE ELECTRICAL DISTRIBUTION... 151 NATURAL GAS AND GEOTHERMAL ENERGY SUPPLY... 152 FUEL SUPPLY AND DISTRIBUTION... 152 18.10 EXPLOSIVES SUPPLY AND DISTRIBUTION... 152 18.11 TELECOMMUNICATIONS... 152 18.12 EARTHWORKS... 153

18.13 PROCESS WATER SUPPLY... 153 18.14 POTABLE WATER... 153 18.15 WASTE POTABLE WATER AND SEWAGE... 153 18.16 COMBUSTIBLE SOLID DOMESTIC WASTE MANAGEMENT FACILITIES AND RECYCLING... 154 18.16.1 CONSTRUCTION PHASE... 154 18.16.2 OPERATIONS PHASE... 154 18.16.3 HAZARDOUS WASTE... 154 18.17 INFORMATION TECHNOLOGY... 155 19.0 19.1 19.2 20.0 20.1 20.2 20.3 20.4 20.5 20.6 21.0 21.1 MARKET STUDIES AND CONTRACTS... 156 SALES AND MARKETING... 156 CONTRACTS... 156 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT... 157 PROJECT SCOPE... 157 EXISTING ENVIRONMENT... 157 SUBMISSION OF THE DRAFT EIS, REVIEW PROCESS UNDERWAY... 158 PERMITTING... 158 COMMUNITY ENGAGEMENT... 159 POTENTIAL FOR MATERIAL ISSUES... 160 CAPITAL AND OPERATING COSTS... 162 CAPITAL COSTS... 162 21.1.1 SUMMARY... 162 21.1.2 BASIS OF ESTIMATE... 163 21.1.2.1 LABOUR WAGE RATES... 163 21.1.2.2 LABOUR EFFICIENCY FACTORS... 164 21.1.2.3 PROCESSING (MAIN PROCESS PLANT AND BULK SAMPLE PLANT)... 164 21.1.2.3.1 TAGGED PROCESS, MECHANICAL AND ELECTRICAL EQUIPMENT QUANTITIES AND COSTS... 164 21.1.2.3.2 TAGGED EQUIPMENT INSTALLATION HOURS... 165 21.1.2.4 BULK MATERIAL QUANTITIES, INSTALLATION HOURS AND COSTS... 165 21.1.2.5 INFRASTRUCTURE... 167 21.1.2.5.1 TAGGED MECHANICAL AND ELECTRICAL EQUIPMENT QUANTITIES AND COSTS... 167 21.1.2.5.2 TAGGED EQUIPMENT INSTALLATION HOURS... 168 21.1.2.5.3 BULK MATERIAL QUANTITIES, INSTALLATION HOURS AND COSTS... 168 21.1.3 MINING... 170 21.1.3.1 MINE CAPITAL COST SUMMARY... 170 21.1.3.1.1 MINE EQUIPMENT COSTS... 170 21.1.3.2 MINING PRE-PRODUCTION DEVELOPMENT COSTS... 174 21.1.3.3 MINE SUSTAINING CAPITAL... 175

21.2 21.1.4 21.1.5 21.1.6 21.1.7 21.1.8 PROCESS PLANT CAPITAL... 180 21.1.4.1 PROCESS EQUIPMENT... 180 INFRASTRUCTURE CAPITAL... 181 AUXILIARY EQUIPMENT... 182 CAPITAL INDIRECTS... 182 PROJECT CONTINGENCY... 184 OPERATING COSTS... 184 21.2.1 BASIS OF ESTIMATE... 184 21.2.1.1 PERSONNEL COSTS... 186 21.2.2 MINE OPERATING COSTS... 186 21.2.2.1 SAND AND CLAY PRE-STRIPPING... 189 21.2.2.2 IPCC WASTE STRIPPING... 190 21.2.2.3 ORE AND WASTE ROCK MINING... 190 21.2.2.4 MINE INDIRECT COSTS... 192 21.2.2.5 MINE POWER COSTS... 193 21.2.3 PROCESS PLANT OPERATIONAL COSTS... 193 21.2.3.1 SITE SERVICES WATER TREATMENT... 194 21.2.3.2 SOFTWARE REQUIREMENTS... 195 21.2.3.3 PERSONNEL SALARIES (OPERATIONAL)... 196 21.2.3.4 PERSONNEL SALARIES (MAINTENANCE)... 199 21.2.3.5 PROCESS PLANT POWER CONSUMPTION... 201 21.2.3.6 PROCESSING CONSUMABLES AND WEAR REPLACEMENTS... 203 21.2.3.7 PROCESSED KIMBERLITE CONTAINMENT FACILITY (PKCF) OPERATIONAL REQUIREMENTS... 210 21.2.3.8 COARSE REJECT STOCKPILES OPERATIONAL REQUIREMENTS... 212 21.2.3.9 RECOVERY REJECTS STOCKPILES OPERATIONAL REQUIREMENTS... 212 21.2.3.10 LIGHT VEHICLE REQUIREMENTS... 213 21.2.3.11 LABORATORY REQUIREMENTS... 213 21.2.3.12 SUMMARY... 214 21.2.4 GENERAL AND ADMINISTRATION... 214 21.2.4.1 FIXED G&A COMPONENTS... 217 21.2.4.1.1 LABOUR... 217 21.2.4.1.3 SITE SERVICES MOBILE EQUIPMENT... 221 21.2.4.1.4 HEALTH & SAFETY... 221 21.2.4.1.5 EMPLOYEE / PUBLIC RELATIONS... 222 21.2.4.1.6 CONSUMABLES... 222 21.2.4.1.7 JANITORIAL... 222 21.2.4.1.8 LIGHT VEHICLES... 222 21.2.4.1.8 BULK SAMPLE PLANT OPERATION... 222 21.2.4.1.9 SOFTWARE... 222 21.2.4.1.10 RECLAMATION CREDIT FACILITY... 222 21.2.4.1.11 ENVIRONMENTAL SUPPLIES AND COMPLIANCE... 222 21.2.4.1.12 LICENSES AND FEES... 223 21.2.4.1.13 COMMUNICATIONS... 223 21.2.4.1.14 LEGAL SERVICES... 223 21.2.4.1.15 WASTE MANAGEMENT... 223 21.2.4.2 VARIABLE G&A COSTS... 223

22.0 22.1 22.2 22.3 22.4 23.0 24.0 24.1 24.2 21.2.5 21.2.6 21.2.4.2.1 SURFACE LEASES... 223 21.2.4.2.2 MUNICIPAL TAXATION... 223 21.2.4.2.3 INSURANCE... 223 OFFSITE SORTHOUSE AND SITE INTERPRETIVE CENTRE OPERATIONAL COSTS... 224 21.2.5.1 SORTHOUSE... 224 21.2.5.1.1 CONSUMABLES AND WEAR REPLACEMENTS... 224 21.2.5.1.2 ELECTRONIC MAINTENANCE AND SOFTWARE REQUIREMENTS... 225 21.2.5.1.3 MANPOWER SALARIES... 226 21.2.5.1.4 BUILDING COSTS AND MUNICIPAL FEES... 227 21.2.5.1.5 TRANSPORTATION COSTS AND COMMISSIONS... 228 21.2.5.2 THE INTERPRETIVE CENTRE... 228 21.2.5.3 SUMMARY... 229 SALES AND MARKETING... 229 ECONOMIC ANALYSIS... 230 SUMMARY... 230 CASH FLOW MODEL... 232 ECONOMIC CRITERIA AND ASSUMPTIONS... 235 22.3.1 PROJECT SCOPE... 236 22.3.2 100 % BASIS... 236 22.3.3 MINERAL RESERVE... 236 22.3.4 PLANT THROUGHPUT... 236 22.3.5 EIS, PERMITTING, AND FS COSTS... 236 22.3.6 BASIS OF GROSS REVENUE ESTIMATES... 236 22.3.6.1 DIAMOND VALUATION... 237 22.3.6.2 CURRENCY EXCHANGE RATE... 237 22.3.6.3 PRICE ESCALATION... 237 22.3.7 CAPITAL COST... 237 22.3.8 OPERATING COSTS... 238 22.3.9 MARKETING COST... 238 22.3.10 INDIRECT COSTS... 238 22.3.10.1 EPCM COSTS... 238 22.3.10.2 INDIRECT COSTS DURING THE PRE-PRODUCTION PHASE... 238 22.3.10.3 G&A COSTS... 238 22.3.10.4 PIT DEWATERING AND CRANE COSTS... 239 22.3.11 WORKING CAPITAL... 239 22.3.12 MINE CLOSURE COST... 239 22.3.13 SALVAGE VALUE... 239 22.3.14 TAXES AND ROYALTIES... 239 22.3.15 CONTINGENCY... 240 SENSITIVITY ANALYSIS... 241 ADJACENT PROPERTIES... 243 OTHER RELEVANT DATA AND INFORMATION... 244 FEASIBILITY STUDY... 244 ENVIRONMENTAL IMPACT STATEMENT... 244

24.3 25.0 25.1 25.2 25.3 25.4 25.5 25.6 25.7 25.8 25.9 UPDATED DIAMOND VALUATION... 244 INTERPRETATION AND CONCLUSIONS... 246 PREVIOUS RECOMMENDATIONS... 246 MINERAL RESERVES... 247 PROCESS PLANT... 247 DIAMOND PRICES... 248 ROYALTIES... 248 OVERBURDEN STRIPPING... 248 MINING... 249 DEWATERING... 249 ENERGY... 249 25.10 TRANSPORTATION... 249 25.11 ENVIRONMENT... 250 26.0 26.1 26.2 26.3 26.4 26.5 26.6 26.7 27.0 28.0 RECOMMENDATIONS... 251 MINING... 251 GEOTECHNICAL... 252 PROCESS KIMBERLITE MANAGEMENT... 252 WATER MANAGEMENT... 253 PROCESSING... 253 INFRASTRUCTURE... 254 COSTS... 254 REFERENCES... 255 CERTIFICATES... 268 APPENDICES... 278 A.0 A.1 A.2 A.3 A.4 A.5 A.6 PROCESSED KIMBERLITE AND PROCESSED WATER MANAGEMENT... 278 INTRODUCTION... 278 MINE PLAN... 278 PROCESSED KIMBERLITE PRODUCTION... 279 KIMBERLITE GEOCHEMISTRY... 280 A.4.1 ACID ROCK GENERATION POTENTIAL... 280 A.4.2 METAL LEACHING... 281 A.4.3 ML/ARD CONSIDERATIONS... 281 SITE GEOTECHNICAL CHARACTERIZATION... 281 COARSE PK MANAGEMENT... 282 A.6.1 COARSE PK MANAGEMENT CONSIDERATIONS... 282 A.6.2 COARSE PK DESIGN CRITERIA... 282 A.6.3 COARSE PK FACILITY... 283

A.7 A.8 B.0 B.1 B.2 B.3 B.4 B.5 B.6 B.7 B.8 C.0 C.1 A.6.4 A.6.5 WATER MANAGEMENT FOR COARSE PK FACILITY... 285 COARSE PK RECLAMATION AND CLOSURE... 285 FINE PK MANAGEMENT... 286 A.7.1 FINE PK MANAGEMENT CONSIDERATIONS... 286 A.7.2 FINE PK FACILITY DESIGN CRITERIA... 286 A.7.3 FINE PK CONTAINMENT FACILITY... 287 A.7.4 WATER MANAGEMENT FOR FINE PK FACILITY... 288 RECOVERY TAILINGS STOCKPILES... 288 WATER MANAGEMENT... 290 INTRODUCTION... 290 REGIONAL GEOLOGY... 290 B.2.1 BEDROCK GEOLOGY... 290 B.2.1.1 SOURIS RIVER FORMATION... 290 B.2.1.2 MANNVILLE GROUP... 292 B.2.1.3 COLORADO GROUP... 292 B.2.2 OVERBURDEN GEOLOGY... 293 B.2.2.1 EMPRESS GROUP... 293 B.2.2.2 SUTHERLAND GROUP... 294 B.2.2.3 SASKATOON GROUP... 294 HYDROLOGY AND HYDROGEOLOGY... 296 B.3.2 HYDROGEOLOGY... 298 B.3.2.1 SHALLOW GROUNDWATER SYSTEM... 298 B.3.2.2 CONFINING LAYER... 299 B.3.2.3 DEEP GROUNDWATER SYSTEM... 300 WATER QUALITY... 302 B.4.1 SURFACE WATER QUALITY... 302 B.4.2 GROUNDWATER QUALITY... 306 B.4.2.1 SHALLOW GROUNDWATER SYSTEM (SURFICIAL SAND AND SILT)... 309 B.4.2.2 CONFINING LAYER... 310 B.4.2.3 DEEP GROUNDWATER SYSTEM... 311 LOCAL CLIMATIC CONDITIONS... 314 WATER MANAGEMENT INFRASTRUCTURE... 317 B.6.1 WATER MANAGEMENT... 320 ADDITIONAL WATER MANAGEMENT REQUIREMENTS... 321 B.7.1 SURFACE WATER RUNOFF MANAGEMENT... 321 B.7.2 POTABLE WATER SUPPLY... 322 B.7.3 SEWAGE HANDLING AND DISPOSAL... 322 SITE WATER BALANCE... 324 B.8.1 GROUNDWATER (DEWATERING WELLS) WATER BALANCE... 324 B.8.2 IN-PIT WATER BALANCE... 325 B.8.3 PROCESSED KIMBERLITE CONTAINMENT FACILITY (PKCF) WATER BALANCE... 326 ANCILLARY BUILDINGS AND FACILITIES... 327 SUMMARY... 327

C.2 C.3 C.4 C.5 C.6 C.7 C.8 C.9 C.10 C.11 C.12 C.13 D.0 D.1 D.2 D.3 D.4 D.5 D.6 D.7 D.8 E.0 E.1 E.2 E.3 ANCILLARY BUILDING SITE LAYOUT... 327 ADMINISTRATION AND SECURITY BUILDING... 329 INTERPRETIVE CENTRE... 329 MAINTENANCE / DRY AND TECHNICAL SERVICES BUILDING... 329 WAREHOUSE AND COLD STORAGE BUILDING... 330 BULK FUEL AND LUBRICANT SYSTEMS... 331 VEHICLE WASH FACILITY, WARM-UP SHED AND FIRE AND EMERGENCY RESPONSE BUILDING... 332 MINE YARD LAYOUT... 332 SECURITY... 332 FIRE PROTECTION SYSTEMS... 333 BULK SAMPLE PLANT (BSP)... 333 AUXILIARY FACILITIES OUTSIDE OF THE PLANT SITE... 333 C.13.1 SORTING FACILITY... 333 C.13.2 STAGING AREA... 334 WORKFORCE, HEALTH, SAFETY AND SECURITY... 335 SUMMARY... 335 MANAGEMENT ORGANIZATION... 335 WORKFORCE TRANSPORTATION AND SHIFT SCHEDULES... 335 RECRUITMENT, TRAINING AND DEVELOPMENT... 336 EMPLOYEE RELATIONS... 338 WORKFORCE SUMMARIES BY AREA... 338 OCCUPATIONAL HEALTH, SAFETY AND WELLNESS... 340 SECURITY... 342 CONSTRUCTION AND DEVELOPMENT... 345 PROJECT ORGANIZATIONAL STRUCTURE... 345 E.1.1 PROCESSING... 346 E.1.2 ACCOUNTING... 346 E.1.3 PROCUREMENT... 346 E.1.4 HUMAN RESOURCES... 347 E.1.5 HEALTH, SAFETY AND WELLNESS... 347 E.1.6 ENVIRONMENT... 347 E.1.7 CONSTRUCTION... 347 E.1.8 ENGINEERING... 348 E.1.9 SECURITY... 348 E.1.10 MINING... 348 E.1.11 MAINTENANCE... 348 E.1.12 TECHNICAL SERVICES... 349 PROJECT PLANNING AND MOBILIZATION... 351 ENGINEERING... 351

E.4 E.5 E.6 E.7 E.8 PROCUREMENT... 352 CONTRACTING PLAN... 352 CONSTRUCTION... 353 COMMISSIONING AND START-UP... 354 PROJECT IMPLEMENTATION SCHEDULE... 354

LIST OF FIGURES Figure ES.1: Sensitivity Analysis (Pre-Tax and Royalty Basis, NPV (7 %))... xxviii Figure 4.1: Location Map of the Star-Orion South Diamond Project... 13 Figure 4.2: Shore and FalC-JV Mineral Disposition Map... 14 Figure 7.1: Regional Geology of the FalC Area with the Magnetic Outlines of the FalC Kimberlites... 26 Figure 7.2: Cretaceous Stratigraphic Column of the Star Orion South Area... 27 Figure 7.3: Cross-Section across the Western Portion of the Star Kimberlite (view towards the west)... 30 Figure 7.4: Photographs of Underground Hand Samples and Core from the Star Kimberlite... 31 Figure 7.5: a). Topographic Elevation Map (lows are Blue; Highs are Magenta) of the Top Contact of the Olivine-Rich EJF. b) Three Dimensional View Looking Towards the North... 33 Figure 7.6: Isopach Map of the EJF Kimberlite Intersections (Contour Interval: 5 m)... 34 Figure 7.7: Orion South Kimberlite West To East Cross-Section Along UTM Line 5900600N 35 Figure 7.8: Example of Typical Matrix-Rich Pense Kimberlite with a More Altered (Lighter) Domain and a Less Altered (Darker) Domain (from 141-06-071C: 273.55 m) (from Harvey, 2011)... 37 Figure 7.9: Pense Kimberlite Isopach Map (Contour Interval: 10 m)... 37 Figure 7.10: EJF Kimberlite Isopach Map (Contour Interval: 10 m)... 38 Figure 7.11: Example of a Normally Graded EJF Bed with a Coarser Xenolith-Rich Base Fining-Up to a Very Fine-Grained Xenolith-Poor Top (from 140-06-058C: from 132.01 to 136.79 m) (from Harvey, 2011)... 39 Figure 7.12: Example of Pense Autoliths in the lower EJF... 40 Figure 7.13: Variably Sized EJF Autoliths within Viking Kimberlite from Hole 141-92-002C at a Depth of 190.15 m... 41 Figure 7.14: Star Kimberlite 3-D Geological Model... 42 Figure 7.15: 3D Northwest View of the Orion South Kimberlite Geological Model... 42 Figure 10.1: Surface Drill Hole Locations for the Star Kimberlite... 49 Figure 10.2: Drilling Map for the Orion South Kimberlite Deposit Including Core, Mud Rotary and Large-Diameter Drilling... 52 Figure 11.1: Example of an Underground Wall Map Showing the Contact Between the bedded EJF (shades of green) Kimberlite and the More Massive MJF Kmberlite (peach)... 55 Figure 11.2: Process Plant Flowsheet Primary Kimberlite Processing... 58 Figure 11.3: Recovery Plant Flowsheet... 60 Figure 13.1: Star Kimberlite Underground Batch and Geology Map... 69 Figure 13.2: Geological Map of the Underground Drifts on Orion South... 71 Figure 16.1: Plan View of Star Open Pit Phases 1a, 1b, 2, 3 and 4... 80 Figure 16.2: Plan View of Orion South Open Pit Phases 1a, 1b and 2... 82 Figure 16.3: Typical Pit Slope Configuration... 94 Figure 16.4: Star Pit Cross Section 514,600E Showing Surficial Sand and Clay Layers... 95 Figure 16.5: Ultimate Pit Design Star Pit Phases 1a, 1b, 2, 3 & 4... 96 Figure 16.6: Star Open Pit Phases Cross Section 514,600E... 97 Figure 16.7: Orion South Pit Cross Section 5900800N Showing Surficial Sand and Clay Layers... 98 Figure 16.8: Orion South Ultimate Pit Design Pit Phases 1 and 2... 99 Figure 16.9: Orion South Open Pit Phases Cross Section 5900800N... 100 Figure 17.1: Process Plant and Stockpile... 108 Figure 17.2: The Mechanical Configuration of the Process Plant... 110 Figure 17.3: Example EJF Kimberlite (PK) from the Star Diamond Deposit... 123

Figure 17.4: Example of EJF Kimberlite (KB) from the Orion South Diamond Deposit... 124 Figure 17.5: The Flowsheet for the Recovery Section... 129 Figure 17.6: Block Flowsheet of the Process Plant... 132 Figure 17.7: The Three Methods Used to Recover Diamonds in the Recovery Section... 136 Figure 17.8: Operational Labour Requirements Org Chart... 138 Figure 17.9: Plant Maintenance Personnel Org Chart (Note: D = Day Shift; R = Rotational Shift)... 139 Figure 18.1: General Site Plan (1 km grid)... 145 Figure 18.2: Star Diamond Project Access Road Options... 147 Figure 18.3: Power Transmission Line and Natural Gas Pipeline Options... 150 Figure 21.1: Site Layout with Electrical Distribution Network... 173 Figure 21.2: Operational Personnel... 196 Figure 21.3: Maintenance Personnel... 200 Figure 21.4: A Schematic of the Stockpile and the Process Plant with the Walls Removed... 202 Figure 21.5: A Photograph of a typical Glove Box for Sorting Diamonds Fitted with Gloves and the Secure Matlock Canister Above.... 210 Figure 21.6: Sorthouse Personnel... 226 Figure 22.1: Sensitivity Analysis (Pre-Tax and Royalty Basis, NPV (7 %))... 242 Figure A.1: General Site Plan (1 km grid) with Coarse PK Pile and PKCF... 284 Figure A.2: Proposed Layout of the Process Plant, Stockpile and Recovery Tailings Stockpile... 289 Figure B.1: Schematic Stratigraphic Column for the Fort à la Corne Area... 291 Figure B.2: Project Area Watercourses (from Shore and AMEC, 2010)... 297 Figure B.3: Groundwater Testing and Monitoring Network... 301 Figure B.4: Project Area Wind Rose... 315 Figure B.5: Wind Class Frequency Distribution... 316 Figure B.6: Site Water Management Schematic... 319 Figure B.7: Seepage Rate into Star Pit vs. Pit Lake Elevation... 325 Figure B.8: PKCF Pond Water Volume vs. Surface Area Relationship... 326 Figure C.1: General Plant Site Layout (1 km grid)... 328 Figure E.1: Construction and Development Organization Chart... 350 Figure E.2: Feasibility Summary Schedule... 357

LIST OF TABLES Table ES.1: Pre-Tax and Royalty Results of the Cash Flow Analysis... ii Table ES.2: After-Tax and Royalty Results of the Cash Flow Analysis... ii Table ES.3: Star Orion South Diamond Project Mineral Reserve as of July 14, 2011... iii Table ES.4: The Parcel and Model Price Details for the Star and Orion South Kimberlites (February, 2011 pricebook)... ix Table ES.5: Weighted Average Model and High Diamond Prices for the Star and Orion South Kimberlites... ix Table ES.6: Summary of Star pit optimization inputs... x Table ES.7: Summary of Orion South pit optimization inputs... xi Table ES.8: Star Open Pit Development Phases... xiii Table ES.9: Orion South Open Pit Development Phases... xiii Table ES.10: LOM Open Pit Production Schedule... xv Table ES.11: Mineral Reserve Estimate Kimberlite Unit Detail for Star Orion South Diamond Project, effective July 14, 2011... xvi Table ES.12: Inferred Mineral Resource Estimate for the Star Orion South Kimberlite Units, effective July 14, 2011... xvii Table ES.13: Pre-Tax and Royalty Results of the Cash Flow Analysis... xx Table ES.14: After-Tax and Royalty Results of the Cash Flow Analysis... xx Table ES.15: Base Case Cash Flow (Model Price + 15 %)... xxii Table ES.16: Case 1 (High Model Price)... xxiii Table ES.17: Economic Criteria Utilized in the Cash Flow Models... xxiv Table ES.18: Summary of Contingency included in Base Case and Case 1 pre-production capital (years 2012 2016)... xxvii Table ES.19: Summary of Contingency included in Base Case and Case 1 during production (years 2017-2036)... xxvii Table ES.20: Sensitivity Analysis Results (Pre-Tax and Royalty Basis, NPV (7 %))... xxvii Table 4.1: Tenure Summary of Shore 100 % Held Property, Effective July 7, 2011... 15 Table 4.2: Tenure Summary of the FalC-JV Property, Effective July 7, 2011... 18 Table 4.3: Summary of Surface Leases Granted to Shore and the FalC-JV... 21 Table 7.1: Average Depth (and Elevation) to Major Stratigraphic Units... 25 Table 7.2: Average Thickness of Major Stratigraphic Units... 25 Table 9.1: Summary of Exploration Activities on the Star Kimberlite Deposit, 1996-2010... 45 Table 9.2: Summary of Exploration Activities on the Orion South Kimberlite Deposit, 1988-2010... 46 Table 10.1: Summary of Surface and Underground Drilling on the Star Kimberlite Deposit 1995-2010... 47 Table 10.2: Summary of Drilling on the Orion South Kimberlite Deposit, 1992-2010... 50 Table 13.1: Summary of Combined Production and Sample Results (Underground, RE, Geotech and Clean-Up) for Star Kimberlite (including Star West)... 70 Table 13.2: Summary of Underground ROM Diamond Grades from the Various Star Kimberlite Units... 70 Table 13.3: Underground Bulk Sampling Results on a Per Kimberlite Unit Basis FalC-JV Orion South Kimberlite... 72 Table 13.4: Summary of Star Kimberlite LDD Processing and Total Carat Recovery on a Per Kimberlite Unit Basis... 72 Table 13.5: Diamond Results from Orion South LDD Mini-bulk Samples on a Per Unit Basis. 73 Table 14.1: The Parcel and Model Price Details for the Star and Orion South Kimberlites (February, 2011 pricebook)... 76

Table 14.2: Weighted Average Model and High Diamond Prices for the Star and Orion South Kimberlites... 76 Table 15.1: Probable Mineral Reserve Estimate Kimberlite Unit Detail for Star Orion South Diamond Project, effective July 14, 2011... 77 Table 15.2: In Pit Inferred Mineral Resource Estimate for the Star Orion South Kimberlite Units, effective July 14, 2011... 78 Table 16.1: Star Open Pit Development Phases... 79 Table 16.2: Orion South Open Pit Development Phases... 81 Table 16.3: Projected Tonnages of Material to be Stripped by The IPCC System in Each Pit Phase... 84 Table 16.4: Projected tonnages of material to be stripped by the IPCC system per year... 85 Table 16.5: Estimated Average Trafficability of Star and Orion South Overburden... 87 Table 16.6: Trafficability summary for sub-overburden domains... 88 Table 16.7: Ground pressure assessment... 88 Table 16.8: Shear Strength Parameters Used in Star and Orion South Stability Analyses... 90 Table 16.9: Star Pit Wall Zonation and Pit Wall Slope Angles... 90 Table 16.10: Orion South Pit Wall Zonation and Pit Wall Slope Angles... 91 Table 16.11: Material and Hydrogeological Properties per Geotechnical Domain... 92 Table 16.12: Slope Configuration per Geotechnical Domain... 93 Table 16.13: Summary of Star pit optimization inputs... 101 Table 16.14: Summary of Orion South pit optimization inputs... 102 Table 16.15: LOM Open Pit Production Schedule... 103 Table 16.16: Projected Electrical Loads... 106 Table 17.1: Star Axb Breakage Index Classification... 112 Table 17.2: Star Ta Abrasion Index Classification... 112 Table 17.3: Star Diamond Breakage Results... 114 Table 17.4: Summary of the Metallurgical Test Work Conducted on the Star Kimberlite... 115 Table 17.5: Orion South Axb Breakage Index Classification... 117 Table 17.6: Orion South Ta Abrasion Index Classification... 117 Table 17.7: Summary of the Test Work Conducted on the Orion South Kimberlite... 120 Table 17.8: Predicted Longest Occurrence of a 45 mm Diamond for each of the Three Main Kimberlite Lithologies for the Star Kimberlite... 122 Table 17.9: Predicted Occurrence of Large Diamonds and their Associated Period of Occurrence for the Orion South Kimberlite... 123 Table 17.10: Mass Balance Summary 45,000 tpd Operation (45 mm Top Size and 1 mm Bottom Size)... 126 Table 17.11: Water Balance Summary 45,000 tpd Operation (45 mm Top Size and 1 mm Bottom Size)... 127 Table 17.12: Mass Balance Summary for the Recovery Section (30 t/h Operation)... 128 Table 17.13: The Various Sections of the Process Plant and their Corresponding Dimensions 130 Table 17.14: Process Plant Building Size Comparison... 130 Table 17.15: Summary of Plant Operating Personnel... 138 Table 17.16: Summary of Plant Maintenance Personnel... 139 Table 18.1: Estimated Demand and Load Profile for the Project Site... 151 Table 21.1: Pre-Production Capital Cost Summary... 162 Table 21.2: Life of Mine Capital Costs Including Contingency... 162 Table 21.3: Mine Capital Cost Summary... 170 Table 21.4: Mine Capital Equipment Cost... 171 Table 21.5: Timing of Mining Equipment Capital Expenditures... 172 Table 21.6: Pre-Production Development Costs Summary (X $1,000)... 174 Table 21.7: Timing of Mine Sustaining Capital Expenditures over the LOM... 176

Table 21.8: Mine Sustaining Capital (with contingency) Costs (x1,000) through LOM... 179 Table 21.9: Summary of Process Plant and BSP Capital Costs... 181 Table 21.10: Summary of Infrastructure Capital Costs... 182 Table 21.11: Summary of Indirect Capital Costs... 183 Table 21.12: Key Parameters Used in Developing the Operating Costs... 185 Table 21.13: Life of Mine Material Production Direct Costs... 187 Table 21.14: Life of Mine Indirect Costs... 187 Table 21.15: Life of Mine Total Costs... 188 Table 21.16: Sand and Clay Pre-strip Equipment and Labour Requirements in Year 2020... 189 Table 21.17: IPCC Operating Costs in Year 2020 (Production year 4)... 190 Table 21.18: Ore Mining Operating Cost in Year 2020... 191 Table 21.19: Waste Rock Mining Cost in Year 2020... 192 Table 21.20: Mine indirect operating costs for year 2020... 192 Table 21.21: Annual Mine Power Costs... 193 Table 21.22: Pump Operational Costs... 194 Table 21.23: Water Purification and Treatment Costs... 195 Table 21.24: Processing Software Costs... 196 Table 21.25: Operations Personnel Summary Information and Costs... 199 Table 21.26: Maintenance Personnel Summary Information and Costs... 201 Table 21.27: The Expected Annual Power Consumption of the Equipment Categories in the Process Plant... 203 Table 21.28: Estimated Annual Consumption of FeSi and the Associated Costs... 205 Table 21.29: Estimated Annual Cost of Grease... 206 Table 21.30: Estimated Annual Cost for Ortanol 90... 206 Table 21.31: The Number of PMTs Required for the Recovery Section... 207 Table 21.32: Annual cost of PTMs... 207 Table 21.33: Annual Costs of X-ray tubes... 207 Table 21.34: Annual Costs of Lasers... 207 Table 21.35: Annual Costs of Screen Media... 208 Table 21.36: Annual Operating Cost of Conveyers & Flexowell... 208 Table 21.37: Tracer Consumption and Costs... 209 Table 21.38: Annual Operating Costs for the Pumps Associated with Maintaining the PKCF 211 Table 21.39: Annual Costs for general Maintenance on the PKCF... 212 Table 21.40: Annual Costs Associated with Maintaining the Coarse Reject Stockpiles... 212 Table 21.41: Annual Costs Associated with Maintaining the Recovery Reject Stockpiles... 213 Table 21.42: Annual Maintenance Costs for Plant Vehicles... 213 Table 21.43: Summary of Annual Processing Operation Costs... 214 Table 21.44: General and Administration Costs... 215 Table 21.45: General and administration Cost Estimate by Year... 216 Table 21.46: Estimated G&A Labour Cost... 218 Table 21.47: Site Services Mobile Equipment... 221 Table 21.48: Operating Costs Associated with Expenditures on Consumables and General Wear Items... 225 Table 21.49: Annual Operating Costs Associated with the Maintenance of the Electronic Scanners, Surveillance Equipment and Software... 225 Table 21.50: Sorthouse Roles, Shifts, Annual Compensation, Including Bonuses and Perquisites... 227 Table 21.51: Building Costs and Municipal Fees... 228 Table 21.52: Transportation Costs and Commission on Sales... 228 Table 21.53: Interpretive Centre Costs... 229 Table 21.54: Summary of Sorthouse and Interpretive Centre Costs... 229

Table 22.1: Pre-Tax and Royalty Results of the Cash Flow Analysis... 230 Table 22.2: After-Tax and Royalty Results of the Cash Flow Analysis... 231 Table 22.3: Economic Analysis Results of Discounted Cash Flow Model for the Base Case.. 231 Table 22.4: Base Case Cash Flow (Model Price + 15 %)... 233 Table 22.5: Case 1 (High Model Price)... 234 Table 22.6: Economic Criteria Utilized in the Cash Flow Models... 235 Table 22.7: WWW Modeled Diamond Price by Kimberlite Unit... 237 Table 22.8: Summary of Contingency included in Base Case and Case 1 pre-production capital (years 2012 2016)... 240 Table 22.9: Summary of Contingency included in Base Case and Case 1 during production (years 2017-2036)... 240 Table 22.10: Sensitivity Analysis Results (Pre-Tax and Royalty Basis, NPV (7 %))... 241 Table 24.1: The Parcel and Model Price Details for the Star Kimberlite units (July 18, 2011 pricebook)... 245 Table 24.2: The Parcel and Model Price Details for the Orion South Kimberlite units (July, 2011 pricebook)... 245 Table 25.1: Summary and Status Update of Recommendations Presented in the Star Orion South Diamond Project PFS (Orava et al., 2010)... 246 Table A.1: Phased Pit Production... 278 Table A.2: Star Tailings Split Percentages... 280 Table A.3: Orion South Tailings Split Percentages... 280 Table A.4: Coarse PK Design Criteria... 283 Table A.5: Coarse PK Pile Design Characteristics... 285 Table A.6: Calculated Design Parameters for the PKCF... 287 Table B.1: Summary of Exceedances of SSWQO 1 and/or CWQG 2 Guidelines for Surface Water Quality Samples in Streams within LSA, 2006 to 2009... 303 Table B.2: Summary of the Groundwater Monitoring Network... 307 Table B.3: Saskatchewan Environment Water Quality Guideline and MIEPR Exceedances, Groundwater... 310 Table B.4. Representative Mannville Water Chemistry from the 2010 Prototype Dewatering Well Pump Test... 312 Table B.5: Annual Meteorological Parameters at Fort à la Corne Weather Station... 314 Table B.6: Climate Normals for the Prince Albert SK Area for the 1971-2000 Period... 317 Table B.7: Daily Dewatering Values by Year... 324 Table C.1: Proposed Ancillary Buildings... 327 Table C.2: Site Security Zoning... 332 Table D.1: Project Workforce by Area (2020)... 339 Table E.1: Project Development and Organization... 345 Table E.2: Contractor Work Components... 353 Table E.3: Commissioning Component Completion Targets... 354 Table E.4: Key Tasks and Milestones... 356

1.0 SUMMARY Shore Gold Inc. (Shore) prepared this NI 43-101 compliant Technical Report (the Report) on the Feasibility Study (FS) for the Star Orion South Diamond Project (the Project) situated in the Fort à la Corne (FalC) Provincial Forest, Saskatchewan, Canada. In addition, P&E Mining Consultants Inc. (P&E) and AECOM were retained and have prepared or contributed to sections of this Report. WWW International Diamond Consultants Ltd. (WWW) of Antwerp, Belgium provided the diamond pricing estimates utilized in the FS. This Report documents the Mineral Reserve Estimate as of July 14, 2011 for the Star Orion South Diamond Project and the results of a FS for the potential Star Orion South Diamond Project open pit mining and on-site processing operation. The Star Kimberlite deposit straddles a mineral disposition boundary between property that is held 100 % by Shore (Star Property), and property that is held by the FalC Joint Venture (FalC-JV), between Kensington Resources Ltd. (Kensington), a wholly-owned subsidiary of Shore (66 %) and Newmont Mining Corporation of Canada Limited (Newmont) (34 %) (the Star West Property). The Orion South Kimberlite deposit is held by the FalC-JV. Both the Star Diamond Project and the Orion South Diamond Project are operated by Shore and are being developed as a single entity as the Star Orion South Diamond Project. The financial evaluation in the FS is done on a 100 % combined ownership basis and does not separate the cash flows of the joint venture partners. The FS assessed the viability of developing and operating the Project as open pits with onsite ore processing based on the proposed mining method, ore processing methodology, stated assumptions of technical, engineering, legal, operating, economic, social and environmental factors and other relevant factors with projected gross revenues from rough diamond sales. Costs are reported in Q2, 2011 Canadian dollars unless otherwise stated, and all projected revenues are reported in Canadian dollars. KEY CONCLUSIONS The Base Case presented herein considers the February 2011 price book Model diamond prices plus 15 percent; Case 1 utilizes the February 2011 price book High Model diamond prices. The pre-tax and royalty results of the cash flow analysis for the Base Case and Case 1 are summarized in Table ES.1. The after-tax and royalty results of the cash flow analysis for the Base Case and Case 1 are summarized in Table ES.2. The FS has demonstrated the potential of the Project to become a significant diamond producer. As such, and assuming both a positive production decision by the Company s board of directors and the FalC-JV, and the securing of financing, it is the opinion of the Company that the Project warrants being advanced to the detailed design phase, which will support the necessary construction permits to allow for the construction of a mine and process facility at FalC. It is recommended that the permitting applications adhere to the engineering plans developed as part of the FS. This Report has been prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects and Form 43-101 F1 Technical Report. The terms Mineral Resource, Measured Mineral Resource, Indicated Mineral Resource, Inferred Mineral Resource, Mineral Reserve, and Probable Mineral Reserve have the meanings ascribed to those terms by the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), as the i

CIM Definition Standards on Mineral Resources and Mineral Reserves adopted by CIM Council on December 11, 2005. Table ES.1: Pre-Tax and Royalty Results of the Cash Flow Analysis Case 1 Base Case (High Model Item (Model Price + 15 %) 1,2,3,4,5 Price) 1,2,3,4,5 Pre-tax & royalty IRR 16.4 % 19.3 % Pre-tax & royalty undiscounted $8,307 M $10,737 M total cash flow Pre-tax & royalty NPV (5%) $3,199 M $4,377 M Pre-tax & royalty NPV (7%) $2,136 M $3,041 M 1 The Project schedule includes an estimated 5 year pre-production period and a 20 year long mine production phase followed by mine closure. 2 The projected gross annual revenues from rough diamond sales have been estimated taking into consideration the mining and processing schedule; Model diamond parcel values by kimberlite unit presented in the WWW February 2011 re-pricing of samples of Star and Orion South diamonds; a US$0.945=CAD$1.00 exchange rate; and Shore s current perception of the future diamond market. 3 The cash flow model for the Project estimates future federal, provincial and local government taxes. 4 The estimated capital and operating costs (± 15 % estimation) were derived from first principles and supported by budget quotations and/or cost information derived from relevant cost databases and/or contractor quotations, and assumptions. The models include $253 million of contingency estimates on both capital and operating costs. 5 The results of the FS presented in this Report assess the economic viability of the following mining sequence: Star Pit - Phases 1 to 4, followed by Orion South Pit - Phases 1 and 2. Table ES.2: After-Tax and Royalty Results of the Cash Flow Analysis Base Case (Model Price + 15 Case 1 Item % ) 1,2,3,4,5 (High Model Price) 1,2,3,4,5 After-tax & royalty IRR 13.7 % 16.3 % After-tax & royalty undiscounted $5,558M $7,141 M total cash flow After-tax & royalty NPV (5%) $2,014 M $2,796 M After-tax & royalty NPV (7%) $1,272 M $1,879 M Payback 5.3 years 3.9 years 1 The Project schedule includes an estimated 5 year pre-production period and a 20 year long mine production phase followed by mine closure. 2 The projected gross annual revenues from rough diamond sales have been estimated taking into consideration the mining and processing schedule; Model diamond parcel values by kimberlite unit presented in the WWW February re-pricing of samples of Star and Orion South diamonds; a US$0.945=CAD$1.00 exchange rate; and Shore s current perception of the future diamond market. 3 The cash flow model for the Project estimates future federal, provincial and local government taxes. 4 The estimated capital and operating costs (± 15 % estimation) were derived from first principles and supported by budget quotations and/or cost information derived from relevant cost databases and/or contractor quotations, and assumptions. The models include $253 million of contingency estimates on both capital and operating costs. 5 The results of the FS presented in this Report assess the economic viability of the following mining sequence: Star Pit - Phases 1 to 4, followed by Orion South Pit - Phases 1 and 2. ii

PROJECT TIMELINE The FS assumes the following Project timelines: Detailed design planned to commence in second half of 2011; Permitting activities to support a Q3, 2012 construction start; SaskPower supply to site Q4, 2013; and Processing plant commissioning approximately 4 years after acquiring the necessary permits to proceed with construction. MINERAL RESERVE ESTIMATE The Star Orion South Diamond Project updated Mineral Reserve Estimate was derived from the recent Mineral Resource dollar value per tonne block models created for the Star and Orion South Kimberlite deposits. Utilizing feasibility-level operating costs for mining, processing and G&A, along with engineered pit slopes, pit optimizations were undertaken to derive pit shells for design purposes for each deposit. The phased pit designs developed include allowance for vehicle access ramps, conveyor ramps, and berms. The resulting open pit design surfaces for Star and Orion South were subsequently utilized to determine the mineralization contained within the resource models that was amenable for conversion to Mineral Reserves by dollar value-cut-off. Only material in the measured and indicated resource categories were converted with dilution and losses applied to determine the Reserve. A summary of the Mineral Reserve for the Star Orion South Diamond Project is shown in Table ES.3. Table ES.3: Star Orion South Diamond Project Mineral Reserve as of July 14, 2011 Deposit Category Ore (mt) Ore Grade (cpht) Carats (m) Star Probable 165.890 12.3 20.386 Orion South Probable 113.090 12.4 13.994 Total Probable 278.980 12.3 34,380 Note: The Mineral Reserves have a 1 mm bottom screen size cut-off. PROCESS PLANT The FS estimates that the plant will process 14.3 Mtpa ore, which is equivalent to 87 % of the 16.4 Mtpa plant s nameplate capacity. The plant design is substantially based on the Star Kimberlite deposit, which contains significantly harder rock and generates, on average, higher Dense Media Separation (DMS) mass yields than the Orion South Kimberlite deposit. DIAMOND PRICES The diamond prices used in the cash flow model for the Star Orion South Diamond Project are based on valuations by WWW using their February 2011 price book. Expectations are iii

that Shore will sell its rough diamonds through a sales arrangement (e.g. in Antwerp) at an estimated marketing cost of 2.0 % of gross value. ROYALTIES The Government of Saskatchewan has developed its diamond royalty structure, and, as such, the financial analysis in the FS utilizes this structure. The government of Saskatchewan s diamond royalty regime features: a one percent base royalty on the value of mine production, with an initial five-year holiday; a stepped royalty rate on profits to a maximum of 10 % once capital investment is fully recovered; and, full-cost recognition including a 100 % depreciation rate of capital costs and a processing allowance. OVERBURDEN STRIPPING The FS includes a 20,000 tph capacity in-pit crush and convey (IPCC) system to strip overburden and waste rock which will be transported to a designated overburden and waste rock pile (overburden pile). The pre-strip of the sand and clay will be completed by truck and shovel fleet operated by Shore personnel. MINING The proposed Star and Orion South open pits will be conventional open pit mining operations. Shore will operate and maintain the waste stripping IPCC system, and mine the kimberlite ore using its own equipment and labour force. DEWATERING The open pits will be dewatered using deep dewatering wells and in-pit sumps and pumps. Hydrogeological modeling indicates that the pit dewatering systems will produce sufficient water to meet the plant s process water requirements. ENERGY Electrical power will be obtained from the provincial electrical utility SaskPower. The incoming electrical supply will be via overhead lines and, thus, will not require extensive groundwork. During the initiation of the construction phase, however, diesel generators will be required to supply electricity to the temporary camp, site based office trailers and surface waste stripping operations. TRANSPORTATION During construction, a new road will be built to accommodate the large loads and heavy traffic that will travel to the Project location. The road would be constructed along existing rural municipality rights of way, with approximately 9 km built over existing provincial grid roads, and 20.9 km built through the FalC forest. Through the FalC forest, the road would iv

generally follow the existing forestry roads, which would marginally reduce construction costs and the environmental impact associated with new road development. There is an opportunity to provide a rail spur to the site, although for the FS, no extension of the current line from Choiceland to site was utilized. ENVIRONMENT The draft Environmental Impact Statement (EIS) process for the Project was submitted in December 2010 to the Saskatchewan MOE and federal agencies for the Star Orion South Diamond Project in consideration of the potential for a combined mining and processing project. The EIS is currently in the technical review phase. Comments from regulators and other reviewers have been considered in the FS relating to baseline studies, community engagement activities, potential impacts of the proposed Project, plans for the progressive reclamation and closure of the Project and the cumulative effects assessment. The EIA for the Project is being carried out under the terms of the Saskatchewan Canada Harmonization Agreement where projects that require an environmental assessment by both the federal and provincial governments undergo a single assessment, administered cooperatively by both governments. The EIA will follow the process for a comprehensive study under the Canadian Environmental Assessment Act (CEAA). The government agencies with interest in the EIA for the Project include the Saskatchewan MOE, the Canadian Environmental Assessment Agency, Fisheries and Oceans Canada, Natural Resources Canada, Environment Canada and Transport Canada. The EIA for the Project is a rigorous assessment with a high level of technical and regulatory scrutiny and will include public consultation and opportunities for feedback. Based on technical feedback on the EIS from reviewers, and incorporation of comments received into the feasibility design, including alternatives, Shore is not aware of any material environmental issues that would prevent the Project from proceeding. TECHNICAL SUMMARY LOCATION, ACCESS AND INFRASTRUCTURE The Star Orion South Diamond Project is located in the FalC Provincial Forest, situated some 60 km east of Prince Albert, Saskatchewan. Good access is provided by paved highways, a grid gravel road system and an extensive network of forestry roads, passable by four-wheel drive and high clearance two-wheel drive vehicles all year round. The Project is situated on the north side of the Saskatchewan River, which can be crossed by bridge at either Prince Albert, to access the area from the west, or at Wapiti, north of Melfort, to access the area from the east. A 230 kv power line runs 9.6 km south of the area, and a large capacity 230 kv power line is located 21 km to the east. A pool of personnel is available from the many communities in the area. The climate in this region of Saskatchewan ranges from warm, dry summers with temperatures typically averaging 23 C to cold, dry winters with temperatures averaging - 11 C. Precipitation averages 323 mm annually. v

TENURE AND SURFACE RIGHTS The Star Kimberlite deposit and associated infrastructure are located within mineral disposition S-132039 in Section 18 of Township 49, Range 19, west of the 2nd Meridian. Township 49 is located within the Rural Municipality of Torch River. This mineral disposition is part of a larger group of 23 contiguous mineral dispositions totalling 9,280 ha. Shore owns a 100 % working interest in these claims. Mineral dispositions have been legally surveyed in accordance with the Saskatchewan Mineral Disposition Regulations of 1986, Part IV, Article 30(1)(d), and the boundaries coincide with the boundaries of the land survey system pursuant to the Saskatchewan Land Surveys Act and with the boundaries of existing surveyed land parcels. Shore holds a 100 % interest in an additional 93 claims in the immediate area, for a total of 116 claims covering 38,830 ha as of July 7, 2011. Shore also holds an interest in the FalC-JV, which is partially contiguous with the Star Diamond Project. Two of the mineral dispositions within the FalC-JV are considered to be part of the Star Diamond Project, namely S-127109 and S-127186. The Orion South Diamond Project is situated entirely within FalC-JV claims. The FalC-JV holds 121 claims totalling 22,544 ha as of July 7, 2011. GENERAL GEOLOGY The Project lies near the northeastern edge of the Phanerozoic Interior Platform, which extends from the Rocky Mountains in the west, to the Precambrian Canadian Shield in the northeast. The Interior Platform sediments exceed 600 m in thickness. The unmetamorphosed sedimentary rocks of the Interior Platform unconformably overlie metamorphosed basement rocks. These Proterozoic basement rocks have been interpreted to form part of the Glennie Domain which has been tectonically emplaced overtop of the Archean Sask craton. In the Star and Orion South area, the Precambrian is estimated to be at a depth of 730 m. KIMBERLITE GEOLOGY Based on surface and underground core drilling and underground mapping data the Star and Orion South Kimberlite deposits contain two distinct types of kimberlite: 1) eruptive kimberlite phases; and, 2) kimberlitic sedimentary rocks. The eruptive kimberlites of the Star Kimberlite are sub-divided into five main phases: Cantuar Kimberlite, Pense Kimberlite, Early Joli Fou Kimberlite (EJF), Mid Joli Fou Kimberlite (MJF) and Late Joli Fou Kimberlite (LJF). The eruptive kimberlites of the Orion South Kimberlite are sub-divided into five main phases: Cantuar Kimberlite, Pense Kimberlite, EJF, LJF and Viking Kimberlite. Each phase has distinct physical and chemical properties that enable their mapping and stratigraphic correlation in three dimensions within each kimberlite. It is important to note, however, that two stratigraphically equivalent kimberlite packages (e.g. Pense Kimberlite on Star and Orion South) may not have any genetic relationship and each may have very different diamond grade and carat value characteristics. Some of the stratigraphically equivalent kimberlite units (e.g. EJF on Star and Orion South) do, however, have similarities vi