REPORT NO. MSC13/018R

UPDATE OF THE MINERAL RESOURCE ESTIMATE FOR THE
TUZO KIMBERLITE, GAHCHO KUÉ PROJECT, NORTHWEST
TERRITORIES, CANADA: NI 43-101 TECHNICAL REPORT

Report prepared for

Mountain Province Diamonds

161 Bay Street Suite 2315

P.O. Box 216

Toronto, ON

M5J 2S1

By

Mineral Services Canada Inc.

501-88 Lonsdale Avenue

North Vancouver, B.C.

V7M 2E6

Effective date: July 2, 2013

Qualified Persons:

Tom E. Nowicki, P.Geo. (Mineral Services Canada Inc.)

Michael Makarenko, P.Eng. (JDS Energy & Mining Inc.)

TABLE OF CONTENTS

LIST OF FIGURES

LIST OF TABLES

This report has been prepared by Mineral Services Canada Inc. (MSC) on behalf of Mountain Province Diamonds Inc. (MPD) for the purpose of providing a Canadian National Instrument 43-101 (NI 43-101) compliant Technical Report documenting an updated Mineral Resource estimate for the deep portion of the Tuzo kimberlite (Tuzo Deep). The Tuzo kimberlite is part of the Gahcho Kué Project, located in the Northwest Territories (NWT) of Canada. The Gahcho Kué Project is a joint venture (Gahcho Kué Joint Venture or GKJV) between De Beers Canada Inc. (DBC) and MPD, and is operated on behalf of the joint venture by DBC.

A Mineral Resource estimate for the Tuzo kimberlite was previously undertaken by the GKJV as part of the evaluation of the Gahcho Kué Project as a whole. This estimate was documented in a NI 43-101 compliant report in 2009 (Brisebois et al., 2009) and subsequently used as a basis for a Feasibility Study undertaken in 2010 (Johnson et al., 2010). The estimate outlined an Indicated Resource from surface to a depth of 300 metres below surface (mbs), and an Inferred Resource from 300 to 354 mbs.

Subsequent to the 2009 Mineral Resource estimate, additional work, referred to here as the Tuzo Deep program, has been undertaken by the GKJV with a view to extending the resource to a depth of 564 mbs. This program, undertaken by DBC on behalf of the GKJV, was completed in early 2013 resulting in a revised Mineral Resource estimate for Tuzo Deep, extending from 300 to 564 mbs. The Tuzo Deep program did not provide any significant additional information relevant to the upper portion of the Tuzo kimberlite (0 to 300 mbs, referred to in this report as Tuzo Upper) and the Mineral Resource estimate for this portion of the deposit remains unchanged from that reported in 2009 (Brisebois et al., 2009). At the effective date of this report, the updated Mineral Resource estimate for Tuzo Deep has not been converted to a Mineral Reserve.

MSC has undertaken a detailed review of the updated Mineral Resource estimate for Tuzo Deep, as documented in this report. For the sake of completeness, the current Mineral Resource estimate for Tuzo Upper, as reported by Brisebois et al. (2009), has been restated as well. While MSC has not undertaken a full due diligence review of the Tuzo Upper Mineral Resource estimate, we have reviewed the available documentation and data, and consider it to be accurate.

The Gahcho Kué project is located at the informally-named Kennady Lake, approximately 300 km east-northeast of Yellowknife in the District of Mackenzie, Northwest Territories, Canada (Figure 1-1). It is one of several bodies comprising the Gahcho Kué Project, the others being Hearne North and South; 5034 West, Central and North-East; 5034 South Pipe; 5034 North Pipe; Wallace; Dunn Sheet and Tesla. Only the 5034, Hearne, and Tuzo pipes are adequately explored to allow estimation of Mineral Resources. The Gahcho Kué Project is a joint venture between DBC (51%) and MPD (49%), governed by an amended JV agreement that came into effect on July 3, 2009. Tenure for the project is covered by four NWT mining leases (4199, 4341, 4200 and 4201) covering a total area of 10,353 ha.

Figure 1-1: Location of Gahcho Kué Project (from Johnson et al., 2010).

The application process for the water and land use permits required to construct a diamond mine at Kennady Lake was initiated by the GKJV with the Mackenzie Valley Land and Water Board (MVLWB). An Environmental Assessment (January, 2006) and subsequent Environmental Impact Review (EIR; July, 2006) were undertaken by the Mackenzie Valley Environmental Impact Review Board (MVEIRB) leading to a requirement for an Environmental Impact Statement (EIS), the terms of reference for which were finalised in October 2007. The EIS was submitted by the GKJV in December, 2010 and was reviewed over a period of approximately 2 years, with a report on the Environmental Assessment/Impact Review (EIR) process released on 19 July 2013 by the Gahcho Kué Panel of the MVEIRB. The Panel concluded that the Project should proceed to the regulatory phase for permits and licenses, subject to the measures and follow-up programs set out in the EIR report, and on condition that the developer implements commitments made during the EIR. The Panel sent a letter on 19 July 2013 to the minister of Aboriginal Affairs and Northern Development Canada recommending, pursuant to sub-section 134(2) of the Mackenzie Valley Resource Management Act, that the proposed development be allowed to proceed subject to implementation of the measures and follow-up programs described in the report.

Following its discovery in 1997, extensive exploration, drilling and sampling has been undertaken on the Tuzo kimberlite. Key work undertaken prior to 2009 included: core drilling (total of 61 drill holes) primarily for geological delineation, microdiamond sampling and geotechnical purposes; and large diameter reverse circulation drilling (LDD; total of 38 holes) to provide bulk samples (total sample volume of 626 m³) for macrodiamond recovery. The core drilling provided the basis for detailed geological logging, bulk density sampling, measurement of dilution and comprehensive microdiamond analysis. These data were integrated with macrodiamond data from LDD bulk sampling to provide a basis for definition of the Tuzo Mineral Resource estimate in 2009 (Brisebois et al., 2009).

The Tuzo Deep program on which the Tuzo Deep Mineral Resource update is based, involved the drilling of six angled HQ (635 mm diameter) core holes in 2011 and 2012, intersecting the pipe between depths of approximately 320 and 564 mbs. Detailed geological, bulk density, dilution, geochemical and microdiamond analysis was undertaken on the resultant drill cores. The results from this work were integrated with those from the pre-2011 work to provide a basis for the updated Mineral Resource estimate for Tuzo Deep (300 to 360 mbs).

The Gahcho Kué kimberlite cluster occurs in the southeast Slave Craton, a small nucleus of Achaean rocks within the North American Craton. Basement lithologies in the area surrounding the Gahcho Kué cluster include granite, granitic gneiss, minor granodiorite, and diorite. These are covered by Quaternary deposits comprising till veneer, till blanket, and outwash sediments. The 5034, Hearne, Tuzo, and Tesla kimberlites all occur at the eastern edge of an interpreted south-closing fold-nose that has developed a radial fold-nose cleavage, and are of Cambrian age, approximately 540 million years old (Hetman et al., 2004).

The Tuzo kimberlite pipe has a circular outline in plan view, steep-sided walls and surface dimensions of ~108 m by 88 m (overall surface area of ~0.76 hectares). The pipe shape bulges with depth into an ellipsoidal outline oriented northeast to southwest, reaching a maximum surface area at a depth of ~330 mbs (~233 m by 165 m; ~3 hectares). Information obtained from the 2011/2012 Tuzo Deep drilling program enabled extension of the Tuzo pipe model from 354 mbs to 564 mbs.

The Tuzo kimberlite pipe infill is complex, and comprises five major textural sub-types of kimberlite (rock types) observed and logged in drill core. These types form a broad sequence with depth in the pipe as follows (from top to bottom): TK (tuffisitic kimberlite); TK-TKt (TK transitional to TKt); TKt (TK transitional to HK); HKt (HK transitional to TK) and HK (hypabyssal kimberlite). Additional key rock types defined and logged in Tuzo include country-rock breccia with kimberlite (CRX bx w/K) and country-rock xenoliths (CRX).

Drill core intervals coded by rock types were combined into model codes used to construct seven distinct 3D geological domains in GEMCOM GEMS^TM software. These domains were further sub-divided for the purposes of Mineral Resource estimation to reflect different depth intervals and, in one case, differences in grade based on LDD sampling information. The 3D geological modeling of Tuzo proceeded in multiple stages: 1) models from surface to 300 mbs in 2002; 2) revision of models to 354 mbs in 2007 (Seghedi and Maicher, 2007); and 3) extension and revision of models from 300 mbs to 564 mbs following additional drilling in 2011/2012 (Mann, 2013).

As part of the Tuzo Deep study, the model for Tuzo Deep Upper (TZDu; 300 to 354 mbs¹) was updated and a new model generated for Tuzo Deep Lower (TZDl; 354 to 564 mbs; Chuchra, 2013). The updated Tuzo Deep geological model includes two kimberlite domains (TKt and HK), country-rock breccia with kimberlite (CRXBX), the lower portion of a large granite block / breccia zone extending into TZDu (RAFT_TZDu), and two large isolated blocks of granite (CRX1 and CRX2). The TKt and HK domains in Tuzo Deep correspond with the TKt2 and HK domain in Tuzo Upper, respectively. The CRXBX and CRX domains in Tuzo Deep do not have any equivalent units modelled in Tuzo Upper.

The models for Tuzo Upper are unchanged from those used for the 2010 Feasibility Study (Johnson, et al., 2010).

The data and observations made from detailed logging of drill core as well as petrographic, geochemical and mineralogical analysis following the 2011/2012 drilling were used to demonstrate geological continuity of domains between Tuzo Upper and Tuzo Deep. More specifically, they indicate that the main kimberlite units are derived from magmas of very similar composition. Apparent variations in diamond grade within and between geology domains at Tuzo are likely influenced by two key geological controls, dilution and textural modification.

¹ The original modelling and estimation work undertaken on Tuzo Deep by DBC, as well as the data provided to MSC in this regard, was done on the basis of a boundary between Tuzo Deep Upper (TZDu) and Tuzo Deep Lower (TZDl) at 354 mbs. Hence the data summarised in this report is largely presented on this basis. For the purpose of the final resource statement by DBC (April 4, 2013), the lower boundary of TZDu was modified slightly to 360 mbs to ensure that the boundary corresponded with one of the mining levels and hence to simplify the mine planning process.

An updated estimate of the volume, tonnes and grade of Tuzo Deep was generated on the basis of the above-described work by DBC on behalf of the GKJV. Volume estimates are derived from the updated geological solids models for Tuzo Deep. For the upper portion of Tuzo Deep (Tuzo Deep Upper) tonnage estimates are based on revised volumes combined with local estimates of bulk density. The latter were derived from the original block model of bulk density developed for the 2009 Mineral Resource estimate (Brisebois et al., 2009), updated where necessary for blocks that were assigned to different geological domains following updates to the internal geology model. For the lower portion of Tuzo Deep (Tuzo Deep Lower) the total estimated resource volumes defined by the new geological model were converted to total tonnes based on zonal (average per geological domain) estimates of bulk density, derived by averaging the bulk density values for samples from each domain.

Diamond grade estimates for Tuzo Deep Upper (TZDu) are based on the previous local (block model) estimates for this portion of the pipe (as reported in the 2009 NI 43-101 report; Brisebois et al., 2009), but updated to reflect changes to the geological model resulting from the Tuzo Deep program. Grades for blocks that were not affected by the change in geology model were kept unchanged. Blocks affected by the adjustments to the geology model were updated as follows:

The updated block model for TZDu is considered by MSC to constrain the average zonal grade for this portion of the deposit at a confidence level appropriate for an Indicated Resource (CIM, 2010). However, due to the low density of microdiamond sampling in this portion of the Mineral Resource, as well as significant uncertainty in the geological model (in particular the size and distribution of large granite waste blocks), MSC does not consider the model to reliably represent grade variability on a local scale and suggests that no reliance should be placed on these local estimates (e.g. mining bench scale variations in grade) for mine planning purposes.

Zonal grade estimates were generated by DBC for Tuzo Deep Lower (TZDl). These are modelled grades derived using a well-constrained model of the diamond size frequency distribution (SFD) for the Tuzo body. For each of the main geological domains defined in TZDl, average grades were estimated by fitting the modelled Tuzo SFD to grade-size information from microdiamond and macrodiamond samples representing the domain. For this purpose, the data from samples of TZDl were combined with those from the equivalent domains in TZDu and Tuzo Upper. The diamond sample data used for grade modelling were adjusted to account for variations in dilution between the different resource zones (i.e. between Tuzo Upper and Tuzo Deep) as well as between the microdiamond samples and the domains that they represent (e.g. on average, microdiamond samples from Tuzo Deep were found to have less dilution than the average for the domains that they represent).

The updated Mineral Resource estimate for Tuzo Deep (300 to 564 mbs) is provided in Table 1-1 below. The estimate is stated at a 1.0 mm bottom cut-off and has been classified based on current CIM definitions standards for reporting of Mineral Resources and Reserves (CIM, 2010). Estimates exclude the granite raft (0.4 Mt) and the country-rock breccia (CRXBX; 0.3 Mt) from the TZDu estimate and the country-rock breccia (CRXBX; ~2.0 Mt) and modelled large granite blocks (CRX; < 0.05 Mt) from the TZDl estimate; these are highly diluted and regarded as avoidable waste.

In finalising the Mineral Resource statement for Tuzo Deep, DBC adjusted the lower boundary of the TZDu Mineral Resource to correspond with the nearest mining level at 360 mbs. Hence the volume, tonnage and carat estimates for TZDu and TZDl have been adjusted slightly.

Table 1-1: Summary of the Tuzo Deep Mineral Resource estimate. Grades and carats are estimated for a 1.0 mm bottom cut-off. Mm³ = millions of cubic metres; Mt = millions of tonnes; Mct = millions of carats; cpht = carats per hundred tonnes; mbs = metres below surface. Volumes, tonnes and carats are rounded to the nearest 100,000.

MSC has conducted a detailed review of the data and methods used to derive the updated Mineral Resource estimate for Tuzo Deep and verified that the estimates provided in Table 1-1 are valid and reliable within the limits of uncertainty of Indicated and Inferred Resources, respectively.

The existing Mineral Resource estimate for Tuzo Upper (0 to 300 mbs) is reproduced (from Brisebois et al., 2009) in Table 1-2 below. The estimate is stated at a 1.0 mm bottom cut-off and classification is consistent with current CIM definition standards for reporting of Mineral Resources and Reserves (CIM, 2010). The estimate excludes the modelled 0.6 Mt granite raft that occurs in the lower portion of the Tuzo Upper Mineral Resource.

Table 1-2: Summary of the Tuzo Upper Mineral Resource estimate. Grades and carats are estimated for a 1.0 mm bottom cut-off. Mm³ = millions of cubic metres; Mt = millions of tonnes; Mct = millions of carats; cpht = carats per hundred tonnes; mbs = metres below surface. Volumes, tonnes and carats are rounded to the nearest 100,000.

MSC has not conducted a detailed verification of the basis for the Tuzo Upper Mineral Resource estimate. However, based on a review of the methods and data described in Brisebois et al. (2009), as well as data and other relevant documents provided by DBC, MSC is satisfied that the methods used are appropriate and the results reliable within the levels of uncertainty of an Indicated Resource.

Recently completed evaluation work undertaken by De Beers Canada (on behalf of the Gahcho Kué Joint Venture) on the deep portion of the Tuzo kimberlite (Tuzo Deep) provides a basis for increased confidence and reclassification of the portion of the deposit between 300 and 360 mbs (Tuzo Deep Upper) as an Indicated Resource, as well as the definition of a new Inferred Resource for the portion of the deposit (Tuzo Deep Lower) between 360 and 564 mbs.

The Mineral Resource estimate for the upper portion of the Tuzo kimberlite (0 to 300 mbs; Tuzo Upper) remains unchanged from that originally reported in 2009 (Brisebois et al., 2009) and has been reproduced in this report for the sake of completeness.

Enhanced confidence in the Tuzo Deep Mineral Resource estimate can be achieved via additional core drilling and microdiamond sampling. In order to achieve this, a series of vertical HQ-sized core holes would be required to provide an approximately even spatial coverage of the pipe at depths below 300 mbs. This would allow for better constraints on the overall pipe shape and volume, more tightly defined internal geological subdivisions, a better understanding of the distribution and amount of dilution by large granite blocks, and a significant amount of additional microdiamond data to support grade estimates. It is expected that such a program would allow for local estimation of grade in Tuzo Deep Upper (using a similar approach to that used for the Tuzo Upper Mineral Resource estimate) and will significantly enhance confidence in the Mineral Resource estimate for Tuzo Deep Lower.

This report has been prepared by Mineral Services Canada Inc. (MSC) on behalf of Mountain Province Diamonds Inc. (MPD) for the purpose of providing a Canadian National Instrument 43-101 (NI 43-101) compliant Technical Report documenting an updated Mineral Resource estimate for the deep portion of the Tuzo kimberlite (Tuzo Deep), part of the Gahcho Kué Project, Northwest Territories, Canada (Figure 1-1). The Gahcho Kué Project is a joint venture (Gahcho Kué Joint Venture or GKJV) between De Beers Canada Inc. (DBC) and MPD, and is operated on behalf of the joint venture by DBC.

A Mineral Resource estimate for the Tuzo kimberlite was previously undertaken by the GKJV as part of the evaluation of the Gahcho Kué Project as a whole. This estimate was documented in a NI 43-101 compliant report in 2009 (Brisebois et al., 2009) and subsequently used as a basis for a Feasibility Study undertaken in 2010 (Johnson et al., 2010). The estimate outlined an Indicated Resource from surface to a depth of 300 metres below surface (mbs), and an Inferred Resource from 300 to 354 mbs.

Subsequent to the 2009 Mineral Resource estimate, additional work, referred to here as the Tuzo Deep program, has been undertaken by the GKJV with a view to extending the Mineral Resource to a depth of 564 mbs. This program, undertaken by DBC on behalf of the GKJV, was completed in early 2013 resulting in a revised Mineral Resource estimate for Tuzo Deep, extending from 300 to 564 mbs. The Tuzo Deep program did not provide any significant additional information relevant to the upper portion of the Tuzo kimberlite (0 to 300 mbs, referred to in this report as Tuzo Upper) and the Mineral Resource estimate for this portion of the deposit remains unchanged from that reported in 2009 (Brisebois et al., 2009). At the effective date of this report (July 2, 2013), the updated Mineral Resource estimate for Tuzo Deep has not been converted to a Mineral Reserve.

MSC has undertaken a detailed review of the updated Mineral Resource estimate for Tuzo Deep, as documented in this report. For the sake of completeness, the current Mineral Resource estimate for Tuzo Upper, as reported by Brisebois et al. (2009), has been restated as well. While MSC has not undertaken a full due diligence review of the Tuzo Upper Mineral Resource estimate, we have reviewed the available documentation and data, and believe it to be accurate.

This report has been prepared in accordance with NI 43-101 Standards for Disclosure for Mineral Projects (June 30, 2011) and includes Items 1 to 14 and Items 23 to 27 (Sections 15 to 19 of this report), as defined in Form 43-101F1. Although Gahcho Kué is an advanced project, Mineral Reserve estimates and other detailed studies relevant to advanced projects (i.e. as required for Items 15 to 22 in Form 43-101F1) have not been undertaken on Tuzo Deep, the subject of the Mineral Resource update documented herein. Thus Items 15 to 22 of Form 43-101F1 are not included in this report. Previous detailed work in support of the Feasibility Study undertaken on the Gahcho Kué Project in 2010, encompassing the previously reported Mineral Resource for the upper portion of the Tuzo kimberlite (0 to 300 mbs) has been documented in a NI 43-101 compliant technical report by Johnson et al. (2010).

Detailed review and documentation of the Tuzo Deep Mineral Resource update has been undertaken on the basis of information provided to MSC by DBC; including: project reports and other documentation; a GEMCOM GEMS^TM project; and digital data provided in the form of Excel spreadsheet files. Specific information sources are referenced in the relevant sections below.

Documentation of the Tuzo Upper Mineral Resource estimate is based entirely on previous NI 43-101 reports (Brisebois et al., 2009; Johnson et al., 2010) but has been verified based on data provided by DBC.

The Qualified Person responsible for preparation of the majority of this report (all sections excluding Sections 14.1.9 and 14.2.8) is Tom Nowicki (P.Geo.). Michael Makarenko (P.Eng.) is the Qualified Person responsible for Sections 14.1.9 and 14.2.8, relating to demonstration of reasonable prospects for economic extraction.

Tom Nowicki undertook a visit to the project site in the Northwest Territories on 11 April 2013 and to the DBC core storage facility in Sudbury, Ontario from the 6^th to 8^th of May, 2013.

The QP’s for this report are not qualified to provide an opinion on the legal status or ownership of the Tuzo Project, mineral tenure or the underlying property agreements. In summarising these aspects of the project (Sections 4.3, 4.4, 4.5, 4.6 and 4.7) the authors have relied upon information provided in previous NI 43-101 reporting on the project (Brisebois et al., 2009; Johnson et al., 2010), examination of lease documents provided by the Northwest Territories Mining Recorders office (see Section 4.3) and information provided by the website for the Mackenzie Valley Review Board.

Diamond value information has been incorporated into the assessments of reasonable prospects for economic extraction summarised in Sections 14.1.9 and 14.2.8, completed by JDS Energy and Mining Inc. (JDS). In using these values, JDS has relied on information provided by De Beers (Diamond Trading Company marketing division) and WWW International Diamond Consultants (WWW). WWW are recognised international leaders in the field of diamond valuation and the Diamond Trading Company (DTC) is the rough diamond distribution arm of the De Beers Group and the world’s largest supplier of rough diamonds. Hence the QP’s for this report believe it is reasonable to rely on diamond values provided from these sources.

This section is largely derived from Section 4 of Brisebois et al. (2009), modified slightly to reflect changes that occurred following publication of that report and to exclude content that is not relevant to the Tuzo kimberlite. MSC has reviewed the material presented herein and considers it to be accurate.

The Gahcho Kué project is located at the informally-named Kennady Lake, approximately 300 km east-northeast of Yellowknife in the District of Mackenzie, Northwest Territories, Canada, at the approximate latitude of 63.26.16 and longitude 109.12.05W (Figure 1-1).

The project is located 150 km south-southeast of the Diavik and Ekati diamond mines at Lac de Gras, operated by Rio Tinto PLC and Dominion Diamonds, respectively, and 80 km east-southeast of the Snap Lake mine operated by De Beers.

The Gahcho Kué Project comprises several kimberlite pipes and dykes, including Tuzo; Hearne North and South; 5034 West, Central and North-East; 5034 South Pipe; 5034 North Pipe; Wallace; Dunn Sheet and Tesla. 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.

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. – MPD) 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 444965 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 MPD in 1997, and Camphor Venture’s interest in the AK property was acquired by MPD during 2007.

In 1997, Monopros (now De Beers Canada) joint ventured the property. The currently applicable agreements between the partners are summarized in Section 4.4.

Figure 4-1: Map showing the mining lease area for the Gahcho Kué Diamond Project. Red box outlines the GKJV mining leases. Additional sliver claims held by DeBeers / MPV / GGL Diamond Corp. are indicated in green.

Table 4-1: Summary of mining leases on the Gahcho Kué Project.

The Gahcho Kué Project comprises four mining leases, 4199, 4341, 4200 and 4201, covering a total area of 10,353 acres (Figure 4-1 and Table 4-1). The mining leases are 100% owned by DBC who holds them 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 leases (see Section 4.4). Immediately to the south, and adjoined 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 11.52 acres, and are also 100% owned by DBC who holds them on behalf of a joint venture between DBC, MPD and GGL Diamond Corp created in February 2006 (see Section 4.4). The Tuzo kimberlite is entirely within mining lease 4200.

All mining leases were legally surveyed by licensed surveyors.

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. 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 2013 totalled $10,364, and a similar amount is expected for each succeeding year.

MSC has reviewed lease documents provided at request 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.

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.), MPD, 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 2000.

An updated and expanded JV Agreement between DBC and MPD, signed on 24 October 2002, became effective on 1 January 2002. This agreement provides that DBC could earn up to a 55% interest in the project by funding and completing a positive definitive Feasibility Study. The agreement also provides that DBC could earn up to a 60% interest in the project by funding development and construction of a commercial-scale mine.

MPD acquired Camphor Ventures’ interest in the joint venture in 2007.

An updated and amended JV agreement between DBC and MPD was executed effective 3 July 2009. The JV agreement superseded the previous JV agreements and is still current. The agreement maintains the project ownership at 51% DBC and 49% MPD. Each party is responsible for funding their respective share of the project development costs from 1 January 2009 onward, and each party shall receive a proportional share of the diamond production.

The amended agreement also sets forth the amount of “allowable” expenses of exploration work between 8 March 2000 and 31 December 2008, previously funded by DBC, and sets forth a repayment schedule by MPD to DBC for their 49% share of the allowable expenses. The repayment schedule is triggered by milestone events with the final payment being made on the due date, which is defined as 15 months after the start of commercial production.

A joint venture agreement was signed between DBC, MPD and GGL Diamond Corporation on 28 February 2006, under which MPD has an interest in the three sliver claims (see Table 4-1). This agreement is still current.

Crown lands are lands owned by the federal or provincial governments. Authority for control of these public lands rests with the Crown. Crown land and Commissioner’s land are both types of public lands. The Federal Government manages and administers Crown land in Canada. In the Northwest Territories, Indian and Northern Affairs Canada (INAC) is responsible for the majority of Crown land. Commissioner’s land is managed and administered by the Government of the Northwest Territories, and specifically, by the Department of Municipal and Community Affairs (MACA).

Administration of Crown lands, including minerals for the Northwest Territories and Nunavut, is based on the Territorial Lands Act (TLA) and its regulations. The Regulations under the TLA that deals with Mineral Tenure, leasing and royalties, are the Northwest Territories and Nunavut Mining Regulations (NTNMRs), formerly known as the Canada Mining Regulations (CMRs). Under the current NTNMRs, a party may prospect for minerals and stake mineral claims on any Crown lands covered under the TLA, including lands in and around the area of the Mackenzie Valley.

A surface lease is required under the Territorial Lands Act if a project will require the use of Crown land anywhere in the NWT for longer than two years. A surface lease does not convey ownership to the minerals on or under the leased property. Those minerals require a mineral lease (refer to Section 4.3). The first step to acquire a surface lease is to submit an application for use of Crown Land. For activities taking place in the Mackenzie Valley on Crown land, applications are made to the Mackenzie Valley Land and Water Board. The Mackenzie Valley, as defined in the Mackenzie Valley Resource Management Act, includes all of the Northwest Territories, with the exception of the Inuvialuit Settlement Region and the Wood Buffalo National Park.

The Gahcho Kué Project is operated under a Class A Land Use Permit (permit number MV2008C0022 expiry date 22 April 2014) and a Class B Water License (permit number MV2003L2-0005, expiry date 22 April 2014). Amendments to the Class A Land Use Permit (MV2008C0022) were requested by DBC in August 2012 and granted by the MVLWB in September 2012. Corrections to the Class B Water License (MV2003L2-0005) were made by the MVLWB in April 2010. All water use fees and permitting fees are paid and up to date on both the Class A Land Use Permit and the Class B Water License.

Surface rights for construction of a diamond mine, including a plant, access roads, airstrip, and accommodation have not been granted. Development of such infrastructure will require the approval of a submitted Environmental Impact Review (EIR), discussed in Section 4.7 of this Report.

Exploration programs to date were conducted under the permits obtained from the appropriate authority, including:

The Gahcho Kué Project is being reviewed and permitted under the Mackenzie Valley Resource Management Act (the Mackenzie Valley Act). A list of the permits that may be required for project development as identified in Johnson et al. (2010) are presented in Table 4-2. Requests have been made by MSC to the Northern Projects Management Office (NPMO) of the Canadian Northern Economic Development Agency (CNEDA) for indications of any substantive changes to the permitting, licensing and authorizations required since 2010, and a response is pending. At present, the GKJV has a valid Class A Land Use Permit (expiry 22 April 2014), and Class B Water License (expiry 22 April 2014). No permits have been issued for the Construction/Operation/Closure Phase.

Table 4-2: Major regulatory permits, licenses and authorizations required for the Gahcho Kué Project.

Table 4-2 continued: Major regulatory permits, licenses and authorizations required for the Gahcho Kué Project.

Baseline studies were ongoing on the Property since 1995, and are summarized in Table 4-3. Study area boundaries were established for land, water, air, vegetation, wildlife, fisheries and archaeology. Archaeological sites identified will be protected; no known site is threatened by the proposed development.

Table 4-3: Baseline studies completed at the Gahcho Kué Project.

Table 4-3 continued: Baseline studies completed at the Gahcho Kué Project.

DBC, on behalf of GKJV, filed applications with the Mackenzie Valley Land and Water Board (MVLWB) in November 2005 for a Class A Water License (MV2005L20015) and a Type A Land Use Permit (MV2005C0032) to construct a diamond mine at Kennady Lake.

On 1 December 2005, the MVLWB deemed the applications complete and notified the Mackenzie Valley Environmental Impact Review Board (MVEIRB) that it had started a preliminary screening. On 22 December 2005, Environment Canada referred the proposed development to the MVEIRB for an environmental assessment (EA).

The MVEIRB initiated the EA on 4 January 2006. On 12 June 2006, the MVEIRB concluded that the proposed Project would likely cause significant public concern and ordered that the GKJV conduct an Environmental Impact Review (EIR) for the proposed development pursuant to the Act. The MVEIRB issued its “Reasons for Decision and Report of Environmental Assessment for the De Beers Gahcho Kué Diamond Mine, Kennady Lake, NWT” on 28 June 2006.

On 28 July 2006, GKJV requested that the NWT Supreme Court conduct a judicial review on the MVEIRB’s decision. The Supreme Court heard the application on 22 November 2006 and upheld the MVEIRB’s decision for an EIR process on 2 April 2007. The MVEIRB notified potential parties and the public of the continuation of the EIR process on 20 April 2007.

In May 2007, the MVEIRB released the draft Terms of Reference for the Environmental Impact Statement (EIS) and appointed the Gahcho Kué Environmental Impact Review Panel (the Gahcho Kué Panel). The Gahcho Kué Panel is an independent body consisting of seven members. It is responsible for assessing the potential impacts of the proposed Project. A final Terms of Reference for the EIS was released on 5 October 2007. The GKJV delayed final preparation and filing of the EIS to coordinate the EIS preparation and documentation with the Feasibility Study project development plans. A revised project description was completed in early 2010, and the EIS was submitted to the MVEIRB and Gahcho Kué Panel for review on 23 December 2010.

After the GKJV filed the EIS, the Gahcho Kué Panel assessed the proposed project using the EIS and other relevant information. The Gahcho Kué Panel conducted a conformity check of the EIS and, in August 2011, determined that the terms of reference were met. A technical review by the MVEIRB commenced in late 2011, during which time information requests were issued and processed, and the public registry was reviewed. Technical and public hearings were concluded in December 2012. The public record for the Gahcho Kué De Beers Canada Project was closed January 2013, and a report on the Environmental Assessment/Impact Review (EIR) was released on 19 July 2013. Key documents from the reviewing process are available at the website for the Mackenzie Valley Review Board (See: http://www.reviewboard.ca/registry/project.php?project_id=37).

In the report, the Gahcho Kué Panel found that while the Project has the potential to cause significant adverse impacts to the environment, the measures and follow-up programs the Gahcho Kué Panel has recommended will ensure that no significant adverse impacts will result from the Project. The Panel requires measures and a follow-up program to reduce potential adverse impacts to barren ground caribou so that the impacts are no longer significant. Although significant adverse impacts were not identified for water, fish, species at risk and wildlife other than caribou, aquatic life and socio-economic impact, follow-up programs are also required for these valued components because of uncertainty in the predicted impacts. The Gahcho Kué Panel concluded that the Project should proceed to the regulatory phase for permits and licenses, subject to the measures and follow-up programs set out in the EIR report, and on condition that the developer implements commitments made during the EIR.

The Gahcho Kué Panel sent a letter on 19 July 2013 to the minister of Aboriginal Affairs and Northern Development Canada recommending, pursuant to sub-section 134(2) of the Mackenzie Valley Resource Management Act, that the proposed development be allowed to proceed subject to implementation of the measures and follow-up programs described in the report. The Minister will now distribute the Gahcho Kué Panel’s report to every responsible minister for consideration. Upon consideration, the ministers may issue a decision on whether the proposed development will proceed to permitting, and if so, under what conditions.

With the Gahcho Kué Panel’s recommended approval, and pending any decisions from responsible ministers, the Project will then enter a second licensing phase. GKJV will make applications for the many licenses, permits, and authorizations that fall under federal and territorial jurisdictions (see Table 4-2). The Project will require permits for long-term land tenure through a land lease. The GKJV will return to the MVLWB to re-activate the application for the Class ‘A’ Land Use Permit and the Class ‘A’ Water License.

Previous technical reports indicate that GKJV estimated rehabilitation costs associated with dismantling the current camp infrastructure, remediation of waste and drill cutting and containment bonds, and areas that were subject to exploration and drilling programs, to be approximately $12 M. A detailed cost-estimate for mine closure and reclamation presented in the Feasibility Study conducted by JDS Mining and Energy (Johnson et al., 2010) indicate total costs of approximately $19.1 M. No revised estimates have been provided by the GKJV for the present Report and MSC has not done any work to verify the estimates summarised above.

This section is largely derived from Section 5 of Brisebois et al. (2009) and modified slightly to reflect changes that occurred following publication of that report and to exclude content that is not relevant to the Tuzo kimberlite. MSC has reviewed the material presented herein and considers it to be accurate.

The Gahcho Kué Project occurs at the informally-named Kennady Lake (NTS map sheet 75N/6), 20 km north of the tree line with no permanent road access. A multitude of lakes provides access to the project by float-equipped planes during summer months and ski- or wheel-equipped aircraft in the winter. During winter, larger aircraft such as the Dash-7 and Super Hercules L100 Transport can operate from an artificially thickened ice landing strip on Kennady Lake.

Helicopter pads are located within the base camp to support drilling and logistical operations. During the short ‘shoulder seasons’, access to the property is via a 1,000 foot long runway established on an esker at Kirk Lake Camp located approximately 26 km north of Gahcho Kué; passengers and supplies are transferred to the site by helicopter.

During winter, a permitted 120 km winter ice road connecting the Project with the main Tibbitt Lake to Contwoyto Lake winter road is built, if required. The winter ice road supports shipment of fuel, heavy equipment, construction materials and bulk samples. The main winter road connects Yellowknife to the Ekati, Snap Lake and Diavik mines during February and March each year to the extent that weather allows. The road is operated under a Licence of Occupation by the Joint Venture Partners who operate the Ekati, Diavik, and Snap Lake mines.

As the Gahcho Kué Project is located 230 km south of the Arctic Circle, the climate is extreme and semi-arid. Temperatures range from -45˚C to +25˚C over a 12-month period. Winter normally lasts from November to May and has average temperatures of about -20˚C. Summer temperatures prevail from July to mid-September, and average about 18˚C. Freeze-up and ice break-up occur in November and June, respectively. Table 5-1 summarizes key climate data reported from site. Activities are possible on-site year round. Daylight hours range from near zero in mid-winter (winter solstice) to effectively 24 hours (summer solstice). The spring and fall equinox occur in March and September respectively, marking the period when length of daylight and darkness are equal.

Table 5-1: Key climate data for the Gahcho Kué Project.

Social and economic baseline studies were conducted. A workforce under the proposed Project budget would be sourced from the local area and from NWT regional centres.

Camp – A 100-person exploration camp was erected on the shores of Kennady Lake near the southeast edge of the postulated future limits of the 5034 pit. Living quarters are a mixture of four-person soft-shell cabins and skid-mounted dorm units, clustered with other detached buildings, including kitchen and dining room; recreation building; office building; core storage; men’s and women’s dry; waterless toilet system; fuel storage; shops; and warehouses.

Transport – Regular shipments of consumables and materials can occur over an annual winter road and, for year-round access and deliveries, by aircraft.

Power – There is currently no electrical grid or power plant for power supply to site. Power generation for any planned mining operation is likely to be produced by an on-site diesel generation plant.

Communications – Current site communications comprise a satellite phone and internet connection.

Water – Process water for any planned mining operation may be obtained from open-pit water collection, recycling of process water, water management ponds and from re-treatment of water form waste piles. Kennady Lake is the current source of the potable water.

The Gahcho Kué project lies on the edge of the continuous permafrost zone in an area known as the “barren lands”, which are characterized by heath and tundra, with occasional knolls, bedrock outcrops, and localized surface depressions interspersed with lakes. Local relief is generally extremely flat. The elevation of rolling hills varies between 400 and 550 metres above sea level (masl). A thin and discontinuous cover of organic and mineral soil and glacial till deposits overlie bedrock, which is typically a few metres below surface. Some small stands of stunted spruce occur in the area. There are myriad lakes in the area. Kennady Lake, under which the kimberlite pipes lie, is a local headwater lake with a minimal catchment area, very pure water, and relatively low potential for aquatic life.

Baseline studies of fisheries and aquatic resources of the Gahcho Kué/Kennady Lake area were conducted between 1996 and 2007. These included bathymetric surveys, shoreline, shoal, and tributary habitat assessments, sediment toxicity sampling, and limnology surveys, as well as studies to characterize the periphyton, phytoplankton, zooplankton, benthic invertebrates, and fish communities in the Kennady Lake area.

Systematic wildlife field studies were conducted for the Gahcho Kué project from 1999 to 2007. Habitat in the Gahcho Kué area represents a transition between the taiga coniferous forest and the treeless landscape of the tundra. Fauna includes red fox, arctic fox, grizzly bear, wolf and caribou (during annual migration), ptarmigan, abundant migratory bird life in summer, and clouds of mosquitoes and black flies during the height of the summer months (mid-June to mid-August).

Vegetation in the area is characteristic of low arctic tundra. Shrubs of willow and birch occur in drainages, and in some areas may reach over 2 m in height. Heath tundra covers most of the upland areas. Conifer stands occur in patchy distribution north of the tree line in lowland, sheltered areas, and riparian habitats, and are found as far north as Kirk Lake.

A seismic hazard evaluation of the Project area was performed to determine the potential effects of seismic loading on the dyke and plant facilities. No major earthquake is known to have occurred in the past century in the vicinity of the Project. The largest in magnitude, and the closest-known earthquake event, occurred more than 1,000 km west of the site. There was no significant seismic activity recorded within 500 km radius of the site.

This section summarises key historical information reported by Brisebois et al. (2009) as well as exploration and development work that has occurred since 2009. MSC has reviewed the previously reported material presented herein and considers it to be accurate.

Historically, mineral exploration in the southeastern Slave Craton focused on gold and, later, base metals within the Yellowknife Supergroup metavolcanic and metasedimentary rocks in the Walmsley Lake area. However, no previous exploration for base or precious metals within what is now the AK Property is recorded in the assessment files of DIAND. Furthermore, there is no record of diamond exploration in the AK Property area prior to its staking in 1992.

Inukshuk Capital Corp. (Inukshuk) staked the property in 1992, and Mountain Province Mining Inc. (MPD) joint ventured into the area later that year. Exploration carried out by Mountain Province Mining Inc., as operator, and Canamera Geological Ltd. (Canamera) during 1992-1993 consisted of an airborne geophysical survey and sediment sampling. The 5034 kimberlite was discovered in 1995 in the southern portion of the AK6 property.

In 1997, following a due diligence assessment, Monopros Ltd (now De Beers Canada Inc.) entered into a joint venture in the project and all subsequent work was undertaken by GKJV, the current project operator. Three additional kimberlites were discovered during the 1997 exploration period: Tesla (May 1997), Tuzo (August 1997) and Hearne (August 1997). Tesla, Tuzo, Hearne, and 5034 form the main Gahcho Kué kimberlite cluster. The Kelvin and Faraday kimberlites, located about 7 km to 12 km northeast of the Gahcho Kué cluster, the Dunn Sheet anomaly, 250 m west of 5034 and Tuzo kimberlites, and Wallace, 200 m south of 5034, were subsequently identified and outlined as a series of narrow kimberlite dykes and stringers.

In July 2012, Mountain Province Diamonds completed a plan of arrangement whereby the Kennady North project, bounding the Gahcho Kué Project to the north and east, and containing the Kelvin and Faraday kimberlites previously discovered in the AK Property area, was transferred in full to the newly-created Kennady Diamonds. There is no overlap between the Gahcho Kué Project and the Kennady Diamonds Project.

Exploration and development work undertaken by the GKJV on the Gahcho Kué project from 1997 to 2008 included the following:

This work provided the basis for delineation and Mineral Resource estimation of the Tuzo, 5034 and Hearne kimberlites as well as the information required for conceptual mining studies and ultimately a Feasibility Study, completed in 2010 (see Section 6.3.3 below). Desktop studies undertaken between 2003 and 2008 that provided the basis for the 2010 Feasibility Study are summarised by Johnson et al. (2010).

Additional work completed by the GKJV since 2010 includes:

Mountain Province Diamonds Inc. (MPD) engaged AMEC E&C Services Ltd. (AMEC) to provide an independent Qualified Person’s review of the 2003 Mineral Resource estimate and preliminary assessment of the GKJV Project. An initial Mineral Resource estimate was completed as a part of this review to support a conceptual desktop study of the potential of these pipes. Detailed descriptions of various work projects undertaken from 1992 to 2002 are available in the report (Thurston, 2003), including the nature and results of exploration and development by the GKJV and work undertaken by previous owners/operators of the project.

The 2003 study defined Inferred Mineral Resources considered too uncertain to have economic considerations applied to them (Table 6-1). Nonetheless, a conceptual open pit mining operation, using conventional truck and shovel equipment, was outlined. A diamond recovery plant with a diamond recovery efficiency of not less than 98% by weight of free diamonds larger than the bottom cut-off size of 1.5 mm was designed, using established De Beers diamond value management principles. The conceptual study indicated that the net present value and internal rate of return were likely to be positive and supported continuing exploration and evaluation work.

Table 6-1: Gahcho Kué Project Mineral Resources Summary (1.5 mm bottom cut-off) – Thurston (2003)¹. M = million; cpht = carats per hundred tonnes; ct = carat.

¹ The mine plan presented in the 2003 technical report indicated removal of 65% of these Mineral Resources

AMEC was commissioned by MPD in 2009 to provide an independent Qualified Person’s Review and Canadian National Instrument 43-101 (NI 43-101) compliant Technical Report of the Gahcho Kué Kimberlite Project (Brisebois et al., 2009). The report documents an updated Mineral Resource estimate on the GKJV Project (Table 6-2) that incorporated new information from geological updates, drilling and sampling, conceptual open pit and underground design work, supplementary metallurgical testing and optimization studies, and diamond revenue data completed for the GKJV Project since the previous technical report by AMEC in 2003. The report deemed that the quality and level of detail in the scientific and technical data on the GKJV Project was sufficient to support a Feasibility Study and recommended that the GKJV monitor market conditions to determine when such a decision would be appropriate.

Table 6-2: Gahcho Kué 2009 Mineral Resources summary (1.0 mm bottom cut-off; effective date: April 20, 2009) – Brisebois et al. (2009). Mm³ = million cubic metres; Mt = million tonnes; Mct = million carats; cpht = carats per hundred tonnes.

Notes:

1) Mineral Resources are reported at a bottom cut-off of 1.0 mm; cpht = carats per hundred tonnes.

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 volumes 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 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.

JDS Mining and Energy (JDS) was commissioned by MPD and DBC in 2009 to complete a Feasibility Study on the Gahcho Kué Diamond Project. A NI 43-101 compliant Technical Report documenting the Feasibility Study was completed in October 2010 (Johnson et al., 2010). The report outlined a mine development plan that was deemed to be economically robust. In the Feasibility Study report, the Mineral Resource estimations defined in the 2009 NI 43-101 Technical Report (Brisebois et al., 2009) were converted to Mineral Reserves through integration of the pit design, mine planning process and economic evaluation. The Mineral Reserves presented in the report (Table 6-3) were deemed by JDS to justify economic extraction using the diamond prices and prevailing long-term price estimates at the time. The Feasibility Study further outlined a plan that exceeded the hurdle rate required by the GKJV at the time to proceed with mine development.

Table 6-3: Mineral Reserve Estimate (effective date: October 15, 2010) – Johnson et al. (2010). Mt = million tonnes; Mct = million carats; cpht = carats per hundred tonnes.

No mining has been undertaken to date on the Gahcho Kué Project site.

The regional geology section and much of the project geology have been extracted and summarized from three sources: 1) Brisebois et al., 2009; 2) Seghedi and Maicher, 2007; and 3) Mann, 2013. The descriptions and findings from these reports have been modified in part as required to suit the structure, numbering and content of this report.

The Gahcho Kué kimberlite cluster occurs in the southeast Slave Craton, a small Achaean nucleus within the North American Craton (Figure 7-1), which contains rocks ranging in age from 4.05 billion years old (Ga) to 2.55 Ga (Bleeker et al., 1999). The oldest rocks of the Slave Craton are small remnants of felsic granites and gneisses (2.8 Ga to 3.2 Ga; Beals, 1994), and the Acasta Gneisses (3.6 to 4.0 Ga; Bowring et al., 1989) located in the western part of the craton. Several supracrustal series (metasedimentary rocks with less common metavolcanic rocks) crop out in the central and eastern parts of the Slave Craton, forming the Yellowknife Supergroup (circa 2.7 Ga). The Yellowknife Supergroup is intruded by an extensive series of pre- to post-deformational (2.69 to 2.60 Ga) felsic plutons.

The eastern portions of the Slave Craton are interpreted to comprise Late Achaean island arc complexes (magmatic arcs and accretionary prisms) accreted to the margin of an older continental fragment to the west (Griffin et al., 1999).

Figure 7-1: Regional Setting, Gahcho Kué Kimberlite Cluster. Red diamonds on the inset map of Canada in the upper right represent a number of other kimberlite occurrences in Canada. The inset shows the relationship between the individual kimberlites that comprise the Gahcho Kué cluster; Dun = Dunn in this Report. Figure is duplicated from Brisebois et al. (2009).

Several swarms of Early-Mid Proterozoic (2.0-2.3 Ga; see LeCheminant et al., 1995) basaltic dykes occur in the Lac de Gras area. A suggested source for the Lac de Gras dyke swarm is beneath the Kilohigok Basin. The north–northwest trending Mackenzie dyke swarm (1.27 Ga; LeCheminant and Heaman, 1989) extends over 2,300 km from a focus, interpreted as a plume head (Fahrig, 1987), and located west of Victoria Island.

The kimberlite intrusions are of Cambrian age, approximately 540 million years old (Hetman et al., 2004).

Basement lithologies mapped from limited areas of outcrop in a 16 km² area surrounding the Gahcho Kué cluster include granite, granitic gneiss, minor granodiorite, and diorite that have undergone regional amphibolite-facies metamorphism retrograded to greenschist facies (Baker, 1998). The most common rock type, granite, varies from a medium-coarse grained, equigranular facies to highly foliated granitic gneiss. Granitic pegmatite dykes intrude all of the identified rock types.

Two distinct northwest to north–northwest-trending, linear, magnetic highs in the eastern quadrant are interpreted to be part of the regional Mackenzie diabase dyke swarm. Two east-northeast trending diabase dykes were identified from linear aerial photo features occurring south of Kennady Lake and proximal to the Tesla kimberlite. These dykes can be traced in outcrop but do not have strong magnetic expression. They are considered to belong to the Mallay dyke swarm by Baker (1998) and to predate the interpreted Mackenzie dykes.

The Gahcho Kué area was glaciated repeatedly during the Pleistocene Epoch, most recently by the Laurentian ice sheet. The Laurentian ice sheet began to recede 18,000 years ago, and the ice front retreated past the Gahcho Kué project area between 9,000 and 9,500 years ago (Dyke and Prest, 1987). However, there is no stratigraphic evidence that represents deposits from previous glaciations; the Quaternary geology of the Gahcho Kué area appears to be related only to the last glacial event, the Wisconsinian glaciation (Hardy, 1997). Glacial-related sedimentation is quite thin, with only scarce patches of till blanket and large fluvioglacial outwash fans (Hardy, 1997). Till veneer, till blanket, and outwash sediments characterize the Quaternary deposits in the Gahcho Kué area. The areas of till blanket contain abundant mud boils and no bedrock exposure. Areas of level sands and reworked till are classified as outwash sediments. Till veneer and till blanket cover most of the area except for small areas to the east of the campsite; outwash sediments occur west of Kennady Lake. Outwash sediments and a large esker that extends along a portion of the southern edge of the mapped area dominate the area south of Kennady Lake.

The stratigraphic record overlying the till is younger than the last glaciation and is composed mainly of pro-glacial sediments (glaciofluvial and glaciolacustrine deposits). As the Gahcho Kué area occurs over a relatively flat terrain, many swamps, ponds, and peat deposits are present (Hardy, 1997).

Granite–gneiss terrane intruded by a series of dykes characterizes the Gahcho Kué area (Figure 7-2). There are several granitic intrusions surrounded predominantly by gneisses; the gneisses display a clear structural pattern of being metamorphosed by the granitic intrusions.

Along the eastern edge of the area, a marked geological boundary is interpreted to represent contact with meta-sediments that extend eastwards. The central portion is a structurally complex zone of folding and possible shears.

There are several groups of demagnetized lineaments with weak, negative magnetic expression; these demagnetized lineaments could be dykes or demagnetized country rock resulting from dyke intrusion or faulting. They are grouped as:

Figure 7-2: Litho-structural interpretation of the Gahcho Kué Area. Major first-order structures are interpreted to trend northeast-southwest, and are parallel to the approximately 2.0 Ga to 1.8 Ga Great Slave Shear Zone; second order (often younger) structures trend primarily northwest-southeast. Figure from SRK (2004).

The 5034, Hearne, Tuzo, and Tesla kimberlites all occur at the eastern edge of an interpreted south-closing fold-nose that has developed a radial fold-nose cleavage. The apparent south-closing fold is interpreted to open to the north–northeast; the dip direction is not known. The core of the fold is composed of granite and minor granodiorite. Northeast-trending axial-planar foliation associated with the fold is developed in gneiss.

The general rock types and geology of each of the Gahcho Kué kimberlites are summarized in Brisebois et al. (2009), and the geology of Gahcho Kué is more generally described in the context of other diamond-bearing kimberlite deposits of the world in Section 8.

In the section below, the key findings from two studies (Seghedi and Maicher, 2007; Mann, 2013) conducted on the geology of Tuzo by the DBC Kimberlite Petrology Unit (KPU) on behalf of the GKJV are summarized for the purposes of this report. More detailed descriptions and presentations of data on the geology of Tuzo are available in these reports. All depth measurements are presented in units of metres below surface (mbs). Surface elevation for the Tuzo kimberlite is approximately 421 metres above sea level.

The Tuzo kimberlite pipe has a circular outline in plan view, with steep-sided walls in the south and rounding towards the North, East and West (Figure 7-3). The surface dimensions are ~108 m by 88 m, and the overall surface area of the pipe is ~0.76 hectares (ha). The top of the pipe is covered by variable thicknesses of water (average of ~8.4 m for drill cores collared on lake ice), and overburden (e.g. lake-bottom sediment and glacial till; average of ~8 m). The pipe shape bulges with depth towards the North and West into an ellipsoidal outline oriented northeast to southwest, reaching a maximum surface area at a depth of ~330 mbs that is approximately four times that at surface (~233 m by 165 m; ~3 ha).

Information obtained from the 2011/2012 Tuzo Deep program enabled extension of the Tuzo pipe model from 354 mbs to 564 mbs, establishing that below 330 mbs, the pipe maintains an ellipsoidal outline oriented northeast to southwest, but that the pipe dimensions gradually narrow with depth. The surface area of the pipe at the base of the model is approximately 1.3 ha (~175 m by 115 m). The 2013 update to the 2009 Tuzo pipe model is illustrated in Figure 7-3.

The Tuzo kimberlite pipe infill is complex, and comprises: 1) crystallized kimberlite magma referred to as hypabyssal kimberlite (HK); 2) a texturally-distinct variety of volcaniclastic kimberlite termed tuffisitic kimberlite (TK); 3) transitional rock types representing textural gradations between HK and TK; and 4) abundant inclusions of variably-sized country-rock fragments (primarily granite with lesser diabase and metasediment) referred to as xenoliths. In general, internal contacts between the rock types at Tuzo are not sharp, but gradational over decimeter- to metre-long intersections or distinguished due to major internal country-rock intersections interpreted to be xenoliths or “rafts”. The indicator mineral abundances in Tuzo are generally unusually low for diamond bearing kimberlite, and mantle xenoliths (e.g. eclogites, peridotites) are rarely observed in drill core.

Figure 7-3: Profile view of 3D geological pipe shell models from 2009 (left) and 2013 (right) showing extension of pipe to depth and minor adjustments to existing model following the Tuzo Deep program. Red lines indicated depths corresponding to sub-divisions of the Tuzo kimberlite pipe into Tuzo Upper (TZU; 0 to 300 mbs), Tuzo Deep Upper (TZDu; 300 to 354 mbs), and Tuzo Deep Lower (TZDl; 354 to 564 mbs) for the purposes of Mineral Resource classification (see Section 14).

Five major textural sub-types of kimberlite (rock types) have been observed and logged in drill core from Tuzo. These types form a broad sequence with depth in the pipe as follows (from top to bottom): TK (tuffisitic kimberlite); TK-TKt (TK transitional to TKt); TKt (TK transitional to HK); HKt (HK transitional to TK) and HK (hypabyssal kimberlite). Additional rock types defined and logged in Tuzo include country-rock breccia with kimberlite (CRX bx w/K); country-rock xenoliths (CRX) and an Epiclastic Unit (EU). The latter comprises short intersections too widely distributed for it to have a significant impact on the Resource Classification and, as part of the Tuzo Deep geology model update, has been incorporated into the modelled country-rock breccia unit (Mann, 2013). The key features and spatial distributions of each key rock type at Tuzo are summarized in Table 7-1 and described in Sections 7.3.2.1 to 7.3.2.8 below.

The terms used in the descriptions below are defined by De Beers in previous reports, and are briefly defined below to assist the reader who is not familiar with kimberlites:

Pelletal clasts: Clasts consisting of olivine and/or country-rock xenoliths surrounded by conspicuous rims of less than 0.2 mm thickness, comprising dense aphanitic or fibrous mineral phases.

Coherent magmatic particles: Small (i.e. mm- to dm-sized) pieces or clasts of crystallized or quenched kimberlite magma, ranging from irregular to amoeboid in shape. The rims of the cored particles, generally >0.2 mm in thickness, consist of typical kimberlite groundmass and contain olivine grains (unlike rims on pelletal clasts which are devoid of any crystals). Cores generally consist of olivine and highly altered country-rock xenoliths.

Tuffisitic kimberlite: A texturally-distinct variety of volcaniclastic kimberlite characterized by a massive, unsorted, matrix- and clast-supported rock fabric containing abundant country-rock xenoliths, olivine grains, minor amounts of other mantle xenocrysts (e.g. garnet), abundant pelletal clasts (see above), and a fine-grained interclast matrix with a distinctive microlitic component. Tuffisitic kimberlite is observed as the dominant infill of some kimberlites and is best known from its occurrence in many South African kimberlite pipes.

Table 7-1: Summary of diagnostic features and attributes of key textural kimberlite sub-types at Tuzo.

OL = olivine; CRX = country-rock

Table 7-1 continued: Summary of diagnostic features and attributes of key textural kimberlite sub-types at Tuzo.

CRX country-rock xenoliths; phl = phlogopite; mont = monticellite; pvk = perovskite; serp = serpentine; car carbonate; sp spinel; deut = deuteric

Macroscopic and microscopic features

Hypabyssal kimberlite (HK) is a massive, dark green, dark grey to black coherent kimberlite which has a typically low amount of country-rock dilution (0 to 15%). Different sub-types of HK were identified by Seghedi and Maicher (“Type A” and “Type B”; 2007) and Mann (“HK1” and “HK2”; 2013) on the basis of the modal abundance of olivine and poikilitic phlogopite, respectively. These sub-types were combined for the purposes of 3D modelling as “HK”. As a group, the HK comprises poorly-sorted olivine grains that are entirely altered to light or dark green serpentine (<10 to 55%; 0.2 to 10 mm in size), minor garnet, chrome diopside and ilmenite macrocrysts, minor and relatively low amounts of country-rock xenoliths (0 to 15%) set in a uniformly crystalline groundmass comprising monticellite, phlogopite, spinel, calcite and serpentine. The diagnostic features of HK are: 1) massive, coherent texture; 2) the relative paucity of country-rock fragments; 3) uniformly crystalline groundmass.

Distribution

HK is present in 43 out of 65 drill cores, occurs mainly in the deep and marginal parts of the Tuzo pipe, and is commonly in contact with HKt. The length of the HK intersections range from <1 m to 31 m, but are typically <10 m as measured down drill core. HK intervals <1 m commonly intrude TKt, and were noted but not recorded as separate intervals during logging. The contacts of HK with the country-rock breccia and TKt are sharp, but the contact with HKt is gradational and can be very difficult to define. In some instances, HK intervals mark the boundary between different units of volcaniclastic kimberlites (TK or TKt).

Macroscopic and microscopic features

Tuffisitic kimberlite (TK) is a massive, pale olive green volcaniclastic kimberlite, which has a variable but generally large amount of country-rock dilution (50 to 99%). The rock comprises serpentine- and clay-pseudomorphed olivine grains (12 to 20%; 0.1 to 6 mm in size), common thin-rimmed “pelletal” clasts, rare coherent magmatic particles, and country-rock xenoliths (5 to 74%; <1 mm to several decimeters) set in an inhomogeneous grey-brown to dusty matrix consisting of very fine grained unknown phases, opaques (spinel, perovskite), serpentine and small carbonate patches. The diagnostic features of TK are: 1) dominantly close-packed rock fabric; 2) the rarity of coherent magmatic particles; 3) thin rims of crystallized or quenched kimberlite melt around granitic clasts; 4) equant shapes of small granite clasts; and 5) clay alteration of serpentinized olivine pseudomorphs.

Distribution

TK is present in 62 out of 65 drill cores for a total of 6,638 m and occurs mainly in the upper part of the pipe, either directly below the overburden (lake bottom sediments) or below the granite roof towards the southwest part of the pipe. The lowermost extent of modelled TK is approximately 150 mbs.

Macroscopic and microscopic features

Tuffisitic kimberlite transitional (TKt) is a massive, brown volcaniclastic kimberlite which demonstrates transitional features towards quasi-coherent or coherent kimberlite. The rock comprises serpentine-pseudomorphed olivine grains (25 to 35%; 0.1 to 10 mm in size), coherent magmatic particles, thin pelletal clasts, and country-rock xenoliths (5 to 74%; <1 mm to decimeters) set in a dull brownish/grey/green matrix. The diagnostic features of TKt are: 1) a brown serpentinized kimberlite; 2) distinct coherent magmatic particles, but with a greater abundance of pelletal clasts relative to coherent magmatic particles; 3) a higher total abundance of olivine than in other volcaniclastic kimberlites in Tuzo; 4) country-rock xenoliths with reaction rim halos with a bleached appearance; 5) sub-mm to mm-sized, splinter-shaped granite fragments and single grains of feldspar dispersed throughout the unit; and 6) a relatively less closely packed texture compared to that of TK.

Distribution

TKt is present in 38 out of 65 drill cores for a total of 2,927 m, and is volumetrically the most significant rock type observed in drill core at depths >300 mbs. Beginning at the base of the geological model, the TKt forms an apparent vertical column in the eastern portion of the pipe, enlarging at approximately 320 mbs, before constricting towards the surface. Contacts with HKt are usually gradational and difficult to define.

Macroscopic and microscopic features

The TK-TKt rock type is a massive, olive green to dark green volcaniclastic kimberlite with characteristic features intermediate between the two end-members TK and TKt (see Table 7-1). The rock comprises similar components to those observed in TK and TKt, and is characterized by the following textural gradations between TK to TKt: 1) a decrease in the proportion of pelletal structures and pelletal rim thicknesses; 2) a general decrease in the abundance of country-rock xenoliths; 3) an increase in matrix crystallinity; and 4) an increase in apparent country-rock xenolith alteration/digestion. Distinct features of TK-TKt include: 1) occurrence of both fresh (large) and altered (small) country-rock fragments; 2) transitional character between that of TK and TKt.

Distribution

TK-TKt is present in 18 of 65 drill holes for a total of 1,178 m, and occurs most commonly interlayered with TKt, or within TK, and less commonly within a clear transitional sequence from TK to TKt. Intersections of TK-TKt are observed throughout the Tuzo pipe at depths >200 mbs, with the exception of the northwest side of the pipe. Modelled units of TK-TKt occur exclusively in the upper portion of Tuzo (above 300 mbs). Contacts with TKt and TK are gradational.

Macroscopic and microscopic features

Hypabyssal kimberlite transitional (HKt) is a massive, reddish-brown to dark green-grey coherent kimberlite which resembles HK but has some features that are not observed in HK and are more typical for volcaniclastic kimberlites (TK or TKt). The rock comprises unevenly distributed olivine grains that are commonly altered to light- or dark-green serpentine (17 to 60%; <0.2 to 10 mm in size), minor garnet and chrome diopside macrocrysts (up to 3 mm in size), and irregularly-distributed and strongly-altered (dark-green to bluish colour) country-rock xenoliths (up to 25%; <1 cm to 6cm) set in an heterogeneous fine- to coarsely-crystalline groundmass. The diagnostic features of HKt are: 1) a higher percentage of country-rock dilution relative to HK; and 2) the presence of pelletal clasts coupled with the interstitial material (i.e. between and around olivine grains and country-rock fragments) that is compositionally and texturally more similar to coherent kimberlite.

Distribution

HKt is present in 15 out of 65 drill cores, is most apparent in the north to northwest and northeast sections of the pipe, and occurs as the following: 1) in multiple intervals within one drill core; 2) between intervals of country-rock breccia; 3) intruding into the TKt; and 4) in contact with HK. The intersection thicknesses range from 3 to 23 m as measured down the drill core. HKt shows sharp contacts with country-rock breccia (CRX bx w/K), but contacts with TK and HK are gradational.

Macroscopic and microscopic features

The country-rock breccia with kimberlite (CRX bx w/K) is a poorly-sorted and poorly-packed, clast-supported, reddish grey to olive-coloured volcaniclastic breccia comprising dominantly subangular to subround, altered country-rock fragments (85 to 99%) with minor interstitial volcaniclastic kimberlite represented by relict olivine grains (0 to 8%; 0.1 to 3 mm in size), abundant coherent magmatic particles and serpentine and carbonate matrix/cement. The distinct features of CRX bx w/K are: 1) high modal country-rock abundance (85 to 99%); 2) subangular to subround country-rock clast shapes; and 3) jigsaw-fit breccia textures. This rock type was previously described by Seghedi and Maicher (2007) as an unspecified “Fragmental” kimberlite (FK), due to pronounced weathering in the drill core and samples available at the time which made textural classification impossible.

Distribution

CRX bx w/K is logged in 29 of the 65 drill cores for a total of 687 m, with intersection thicknesses ranging from 0.3 m to 39 m as measured down hole. This rock type is observed interspersed within TKt, hosts solid granite intersections up to and exceeding 1 m in length, and occurs at depth (> 300 mbs) along the western to south-west portion of the pipe margin in contact with TKt, HK and the surrounding country rock.

Macroscopic and microscopic features

Abundant country-rock xenoliths, ranging from a few mm in size up to blocks tens of metres in size, are hosted within the pipe, and are readily observed in drill core throughout all volcaniclastic or pseudo-volcaniclastic kimberlite varieties in Tuzo (TK, TKt, HKt). The country-rock intersections are dominantly granite with minor amounts of diabase and metasediment present, and range in down hole thickness from a few mm up to 50 m. The degree of alteration is variable, depending on the nature of the host rock.

Distribution

Granite, diabase and metasediment country-rock xenoliths occur in all drill holes in all rock types at all depths. High degrees of country-rock dilution are concentrated in a zone extending across the pipe at around 120 mbs, as well as along the pipe margins on the north side of the pipe at depth (e.g. CRX-bx w/K). Dilution in TKt is variable but appears broadly consistent in modal percentage and size distribution above and below 300 mbs (see Section 7.4). Thick country-rock intersections (~20 to 45 m down hole thickness) are observed in the west and central parts of Tuzo between approximately 250 to 330 mbs, and have been modelled by the GKJV as a single large “raft” or xenolith of country rock. Other thick intersections of country rock interpreted as xenoliths (~25 to 50 m down hole thickness) occur within TKt at depths below 354 mbs and have been modelled in 3D (see Section 7.3.3).

Three-dimensional (3D) geological modeling of Tuzo proceeded in multiple stages based on the availability of drilling and/or sampling data: 1) models from surface to 300 mbs in 2002; 2) revision of models to 354 mbs in 2007 (Seghedi and Maicher, 2007); and 3) extension of model to 564 mbs and revision of model from 300 mbs to 354 mbs following additional drilling in 2012 (Mann, 2013).

Drill core intervals coded by rock types were combined into model codes used to construct seven distinct geological domains: five main kimberlite domains (HK, TK, TKt, TK-TKt1; TK-TKt2); a country-rock breccia +/- kimberlite domain (CRXBX); and large blocks or “rafts” of country rock enclosed within kimberlite domains (CRX; RAFT). The term “domain” is used in this report to represent a modelled portion of the deposit with distinctive geological and, in some cases, grade characteristics, that can be defined based on the available drilling data, and that is meaningful from a Mineral Resource estimation point of view. The main geological domains were further subdivided for the purposes of Mineral Resource estimation and classification (Table 7-2) to reflect spatially-separate occurrences of the same material (e.g. TKt2 and TKt2a), different depth intervals relevant to the Mineral Resource estimate (e.g. HK_TZU and HK_TZD), and differences in grade based on LDD drill sampling information (i.e. TKTKT1H and TKTKT1L). Three of the main domains (HK, TK, and TKt) occur in 40 or more of the 65 drill cores examined; a fourth (TKTKT1L) occurs in 18 drill holes.

The geological domains have been modeled in 3D and are illustrated in Figures 7-4 and 7-5. Modelling was undertaken by DBC using GEMCOM GEMS^TM software to generate triangulated “solids” built on the basis of the logged drill core model codes and in such a way as to reflect a reasonable interpretation of the overall geology and emplacement history of the Tuzo kimberlite (Mann, 2013; Chuchra, 2013).

Table 7-2: Summary of modelled geology domains. Model volumes are expressed as millions of cubic metres (Mm³). Depth zone is expressed as metres below surface (mbs), and corresponds to the resource zones described in Section 14: Tuzo Upper (TZU; 0 to 300 mbs); Tuzo Deep Upper (TZDu; 300 to 354 mbs); Tuzo Deep Lower (TZDl; 354 to 564 mbs).

Figure 7-4: 3D geological domains modelled for Tuzo. Red lines indicate 300 and 354 mbs depths, respectively, sub-dividing the pipe into Tuzo Upper (TZU; 0 to 300 mbs), Tuzo Deep Upper (TZDu; 300 to 354 mbs) and Tuzo Deep Lower (TZDl; 354 to 564 mbs).

The models for Tuzo Upper are unchanged from those used for the 2010 Feasibility Study (Johnson, et al., 2010). As part of the Tuzo Deep study, the model for upper portion of Tuzo Deep (Tuzo Deep Upper; 300 to 354 mbs) was updated and a new model generated for lower portion of Tuzo Deep (Tuzo Deep Lower; 354 to 564 mbs)(Chuchra, 2013). The updated Tuzo Deep geological model includes two kimberlite domains (TKt and HK), country-rock breccia with minor kimberlite (CRXBX), the extension of the granite raft into Tuzo Deep Upper (RAFT_TZDu), and two large isolated blocks of granite (CRX1 and CRX2). The TKt and HK domains in Tuzo Deep correspond with the TKt2 and HK domain in Tuzo Upper, respectively. The CRXBX and CRX domains in Tuzo Deep do not have any equivalent units in Tuzo Upper.

Figure 7-5: Distribution of minor 3D geological domains for depths >300 mbs in Tuzo. Significant country-rock intersections were modelled by DBC as RAFT, CRX1 and CRX2. Depths sub-dividing TZU, TZDu, and TZDl are shown with solid and dashed red lines. Modelled domains for TK, TKt and TKTKt have been hidden from view.

Rock types identified in the Tuzo Deep study from logging and petrography of drill cores at depths below 300 mbs demonstrate similar components, textures and relationships to the rock types classified by Seghedi and Maicher (2007) for drill cores above 300 mbs, and suggest continuity of the key textural sub-types and main geological model codes between Tuzo Upper (0 to 300 mbs) and Tuzo Deep (300 to 564 mbs; Mann, 2013). Detailed studies examining dilution, whole rock geochemistry and spinel mineral chemistry were completed by DBC (Mann, 2013) with the intent of confirming observations of continuity made from drill core logging and petrography and to support interpretations made during development of 3D geological models. The results of these studies are summarized below:

Country rock: Dilution factors for all drill core intervals were determined by measuring each country-rock xenolith clast larger than 1 cm down hole along the vertical core axis, and then calculating the proportion of country-rock (% dilution) for each metre of core. Calculated dilution percentages in fixed drill core lengths of TKt intersections from above and below 300 mbs show very similar ranges in dilution (range of 5 to 74%; averages of 20 to 30%). The limited number of intersections of HK and HKt in the study did not allow for a statistically reliable comparison of the percentage of country-rock xenoliths above and below 300 mbs, but the data do suggest higher country-rock dilution below 300 mbs than above.

Whole-rock geochemistry: Whole-rock geochemistry studies were conducted using XRF and ICP-MS analysis on samples of all rock types at Tuzo. The findings of this study indicate that each of the volumetrically-significant rock types (TKt, HK) demonstrate similar average compositions and compositional variability above and below 300 mbs. The composition of the vast majority of samples (of both HK and TKt) can be accounted for as a mixture of a kimberlite component with a very restricted compositional range and varying amounts of granite. This supports the likelihood that all of the examined units within Tuzo are derived from kimberlite magma of the same chemical composition, with textural and compositional modifications during emplacement due to varying degrees of fragmentation and incorporation of country-rock (granite) material. The concentration of certain major (SiO₂, Al₂SiO₃ and K₂O) and trace (Hf and Zr) elements, combined with a geochemical contamination index (C.I. = (SiO₂ + Al₂SiO₃ + Na₂O)/(MgO + K₂O)), can be used to indicate the degree of contamination by granite. The results are consistent with logging and petrographic observations indicating that of the kimberlite types occurring in Tuzo Deep, TKt is most contaminated, followed by HKt and HK.

Spinel Chemistry: Analyzed groundmass spinel grains from TKt above and below 300 mbs show a significant amount of compositional overlap, and provide reasonable confirmation that the TKt material above and below 300 mbs are derived from magmas with the same composition. Groundmass spinel grains from HK samples from below 300 mbs indicate two compositionally-distinct populations (Group 1 and Group 2), that correlate well with petrographically-distinct sub-types of HK (see Section 7.3.2.2).

However, the samples yielding Group 2 spinel compositions are located in poorly-drilled but volumetrically-significant parts of the HK model. Furthermore, no HK or HKt samples from depths above 300 mbs were analyzed. Combined with the potential for highly unpredictable geometry among discrete intrusions or emplacements of coherent kimberlite within kimberlite pipes, these factors suggest the following: 1) it is possible there is much more HK with Group 2 spinel compositions within the HK model than is represented in the study sample set; and, thus 2) the relative contribution of Group 1 and Group 2 kimberlite magma batches to the HK model is poorly-understood. These factors preclude the use of the currently available spinel data to effectively evaluate continuity throughout the modeled HK domain.

Notwithstanding these limitations with respect to the spinel data for HK, in MSC’s view, the data and observations summarised above provide a reasonable basis for broad confirmation of geological continuity of units between Tuzo Upper and Tuzo Deep. More specifically, they indicate that the main kimberlite units are derived from magmas of very similar composition.

The apparent variations in diamond grade within and between geology domains at Tuzo (see Section 14) are likely influenced by two key geological controls, dilution and textural modification. Variations in dilution measured from drill cores within and between the key geology domains at Tuzo combined with evidence from whole rock geochemistry suggest that dilution: 1) created a spectrum of textural sub-types at Tuzo from a possibly limited number of discrete magma sources; and 2) likely plays a dominant role in determining the local and/or global diamond grade of a given geology domain. The key geological domains in Tuzo also show variations in the degree of textural modification, reflected in the distribution of coarse components (primarily olivine and xenoliths) and the proportion solidified melt products (i.e. crystalline groundmass in HK and coherent magmatic particles in TK and transitional rock types). The loss of the melt component (e.g. by elutriation or winnowing of volcanic ash) can result in a concentration of coarser and denser components of the kimberlite, including diamond, and in certain deposit types, mechanical sorting can dramatically affect diamond concentration and size. However, in the case of Tuzo, the volcaniclastic rock types (TK, TKt) are massive and poorly sorted with limited evidence for significant loss of fines. This suggests limited potential for systematic sorting of diamonds.

The primary source rocks for diamonds that are presently being mined worldwide are kimberlites, orangeites, and lamproites. Kimberlite, orangeite and lamproite are all varieties of potassic, ultramafic (i.e. Fe and Mg-rich, Si-poor) volcanic rock defined by different characteristic sets of minerals. Of these rocks, kimberlites represent the vast majority of primary diamond deposits that are presently being mined.

Kimberlites are mantle-derived, volatile-rich (H₂O and CO₂) ultramafic magmas that transport diamonds together with fragments of rocks from which the diamonds are directly derived (primarily peridotite and eclogite) to the earth’s surface from great depths (>150 km depth). They are considered to be hybrid magmas comprising a mixture of incompatible-element enriched melt (probably of carbonatitic composition) and ultramafic material from the lower lithosphere that is incorporated and partly assimilated into the magma.

Coherent or magmatic kimberlite rocks are the products of direct crystallisation of kimberlite magma, and are typically dominated by olivine set in a fine-grained matrix commonly rich in serpentine and/or carbonate as well as varying amounts of phlogopite, monticellite, melilite, perovskite and spinel (chromite to titanomagnetite) and a range of accessory minerals. While some olivine crystallizes directly from the kimberlite magma on emplacement (to form phenocrysts), kimberlites generally include a significant mantle-derived (xenocrystic) olivine component that typically manifest as large (>1 mm) rounded crystals. In addition to mantle-derived olivine, kimberlites also commonly contain significant quantities of other mantle derived minerals, the most common and important being garnet, Cr-diopside, chromite and ilmenite. These minerals, commonly referred to as indicator minerals, are important for kimberlite exploration and evaluation as they can be used both to find kimberlites (by tracing indicator minerals in surface samples) and to provide early indications of their potential to contain diamonds.

The texture and components observed in coherent kimberlites can be substantially modified by dilution with country rocks or surface sediments, as well as by fragmentation, sorting and elutriation (removal of fines) processes occurring in volcanic environments, leading to significant variability in compositional and textural characteristics among known kimberlite occurrences.

The emplacement of kimberlite at or just below the surface of the crust is influenced by many factors which include the following:

Kimberlites at surface are manifested as either sheet-like intrusions (dykes or sills) or irregular shaped intrusions and volcanic pipes. The sheets and irregular intrusions are typically emplaced along pre-existing planes of weakness in the country rock. Their emplacement does not involve explosive volcanic activity, and thus they are largely infilled by texturally-unmodified coherent kimberlite. The pipes are generated by explosive volcanic activity related to the degassing of magma, or the interaction of magma and water, or a combination of both these processes. This explosive volcanic activity typically produces pieces or clasts of the kimberlite magma (and all the enclosed rock and mineral grains and fragments therein), as well as pieces of the country rock in which it was emplaced. Deposits deriving directly or indirectly from explosive processes which texturally-modify the primary components of kimberlite magma are considered volcaniclastic kimberlite.

Due to the wide range of settings for kimberlite emplacement, as well as varying properties of the kimberlite magma itself (most notably volatile content), kimberlite volcanoes can take a wide range of forms and be infilled by a variety of deposit types. This range is illustrated schematically in Figure 8-1. Volcanic kimberlite bodies range in shape from steep-sided, carrot-shaped pipes (diatremes) to flared champagne-glass or even “pancake” like crater structures. While diatremes are often interpreted to generally be overlain by a flared crater zone, there are few instances where both diatreme and crater zones are preserved (e.g. the Orapa kimberlite in Botswana; Fox kimberlite at Ekati). These volcanic structures are typically infilled by a very wide range of volcaniclastic kimberlite types, ranging from massive, minimally-modified (texturally) pyroclastic kimberlite, to highly modified pyroclastic and resedimented volcaniclastic deposits that have been variably affected by dilution, sorting, and removal of fines.

The Gahcho Kué kimberlites, including Tuzo, are primarily steep-sided volcanic pipes that are mostly filled with varieties of massive volcaniclastic and coherent kimberlite, as well as ‘transitional’ rocks that represent the full textural spectrum between these two end-members. No resedimented volcaniclastic kimberlite is apparent in Tuzo or any other bodies at Gahcho Kué. The composite geological model of the Gahcho Kué kimberlite pipes (Figure 8-2), as well as the shape and infill of the individual kimberlite pipes, is similar to that of the kimberlites in the Kimberley area of South Africa, but are significantly different from many other Canadian kimberlites such as those found at Fort à la Corne, Attawapiskat, and Lac de Gras (Field and Scott Smith, 1999).

Diamonds represent a xenocryst mineral within kimberlite as they are primarily formed and preserved in the deep lithospheric mantle (depths > ~150 km), generally hundreds of millions to billions of years before the emplacement of their kimberlite hosts. The diamonds are “sampled” by the kimberlite magma and transported to surface together with the other mantle-derived minerals described above. Diamonds themselves occur in such low concentrations (even in economic kimberlites) that they are rarely useful for locating kimberlites and, following discovery, large samples are required in order to directly assess the diamond grade potential of a kimberlite.

In general, diamonds can vary significantly within and between different kimberlite deposits in terms of total concentration (commonly expressed as carats per tonne or carats per hundred tonnes), particle size distribution and physical characteristics (e.g. colour, shape, clarity and surface features). The value of each diamond, and hence the overall average value of any given diamond population, is governed by the size and physical characteristics of the stones.

Figure 8-1: Schematic illustrations of common shapes for kimberlite volcanic bodies based on observations from around the world. The three classes (I, II and III) represent broad groupings with shared attributes of geometry, size, and infill.

The overall concentration of diamonds in a kimberlite unit or domain is dependent on several factors, including:

Figure 8-2: Generalised schematic illustration (from Hetman, 2006) highlighting the key geological features of kimberlites in the Gahcho Kué kimberlite cluster. The white arrows and dashed black lines on the right side indicate approximate depth ranges of the different kimberlite pipes at Gahcho Kué relative to an idealized kimberlite pipe. TKt is interpreted to represent a gradual textural transition zone between coherent or hypabyssal kimberlite (HK) at depth and overlying volcaniclastic rock types (e.g. TKB).

The diamond size distribution characteristics are inherited from the original population of diamonds sampled from the mantle but can be affected by a number of secondary processes, including resorption and sorting during eruption and deposition of volcaniclastic kimberlite deposits.

The physical characteristics of the diamonds are largely inherited from the primary characteristics of the diamonds in their original mangle source rocks but can be affected by processes associated with kimberlite emplacement and eruption. Most notable of these are:

At Gahcho Kué, the extent of mantle sampling, the degree of dilution by country-rock and surface sediments and volcanic sorting processes are considered to be the main factors controlling variation in total diamond grade.

With reference to the above generalized deposit model and characteristics of the mineralization, the goal of the exploration and evaluation work documented in this report is to: 1) understand and reconstruct the external and internal geology of the deposits so that 3D models can be produced which reliably represent each body; and 2) sample and recover sufficient diamonds in a representative fashion such that the grade and average diamond value of the main geological domains can be estimated.

With the exception of certain recent geotechnical work described in Section 9.4, this section is based on the Gahcho Kué 2009 NI 43-101 Technical Report (Brisebois et al. 2009). Details of exploration activities undertaken on the Tuzo kimberlite have been extracted from this report and summarised. Exploration at Tuzo has included surveying, geological mapping, geophysical surveying, geochemical sampling and hydrological / geotechnical work. All exploration was either implemented directly by DBC or was subcontracted out under direct supervision of DBC as the project operator. Exploration / delineation drilling, as well as all related sampling and processing of drill material is described in Section 10 below.

The Gahcho Kué site was surveyed by the GKJV in 1998 using the North American Datum (NAD) 27 coordinate system. Elevations were recorded in Height Above Ellipsoid (HAE) units, which measure elevation above an average whole earth ellipsoid.

Drill collar surveys prior to 2004 used the UTM NAD 27 Datum in Zone 12. Pre-existing survey control for the Base Station at the site references a First Order Geodetic Monument. This coordinate was established by a global positioning system (GPS) survey undertaken between 1996 and 1998 by the GKJV. Surface survey grids were carried out between 1997 and 1998 in this UTM system over each of the kimberlites on the project. Permanent reference points within each of these grids were established using a Trimble 4800 series GPS. These references points were re-occupied by the GKJV in 1998 with a Trimble 4800 series GPS, confirming the accuracy of the original locations (Hodgkinson, 1998). SRK conducted three QA/QC exercises during the period from 1998 to 1999 that included verification of drill hole collar locations (Eichenberg, 1999).

From November 2003 to January 2004, GPS determination of Canadian Active Control Network (CACS) NAD 83 coordinate values with elevations in masl for the GPS Base Station of Gahcho Kué was performed using two independent methods (processing of CACS / satellite data collected at the base station and processing of single point positions collected at the base station) as described by Hewlko (2004). Collar positions for drill holes undertaken between 2004 and 2008 were obtained using real time GPS CACS NAD 83 coordinates.

Unless otherwise noted, drawings and coordinates are based on the NAD83 coordinate system with elevations in metres above sea level (masl), referenced to the CACS benchmark located in Yellowknife. Shifts of +221.691 m north, -64.211 m east and +16.917 m elevation were used to convert the NAD27 HAE system to the CACS NAD83 masl system. These shifts differ from the expected theoretical shifts due to the enhanced survey accuracy achieved by tying into a CACS benchmark.

A 16 km² area near Kennady Lake underwent geological mapping at a scale of 1:2,000 in 1998. Mapping was carried out on the basis of aerial photographs with the objective of delineating bedrock geology, structure, overburden distribution and drainage within the area.

No exploration work was carried out by the original claim staking company (Inukshuk). Exploration work during the period from 1992 to 1996 was carried out by Canamera Geological Ltd. (Canamera) as the operator for MPD and its predecessor company Mountain Province Mining Inc. (MPM). Exploration work from 1997 onwards was carried out on behalf of the GKJV by or under direct supervision of DBC as the project operator.

Canamera acted as the project operator for MPM prior to establishment of the GKJV in 1997. Exploration work carried out during the period 1992 to 1996 included collection of 2,835 reconnaissance and follow-up till / sediment samples, airborne and ground geophysical surveying and geological mapping. This work resulted in the discovery of the 5034 kimberlite.

Initial exploration work by the GKJV in 1997 included low-level airborne magnetic and five-frequency electromagnetic surveying over the property. Targets generated from these surveys were followed up with 2,211 sediment samples and exploratory core and reverse circulation drill testing. The Tuzo kimberlite was discovered in August 1997. Ongoing exploration work on the project since then has included collection of 2,708 geochemical and indicator mineral sediment samples, implementation of detailed electromagnetic and ground gravity surveys as well as additional exploration drilling.

A geotechnical study was performed by Golder Associates (Golder) in 1999 (Eichenberg, 1999). The Laubscher rock mass classification system was used to assess geotechnical data collected by GKJV personnel trained in geotechnical aspects of core logging by Golder. Geotechnical units identified were based on fracture frequency, rock strength and joint conditions in both country rock and kimberlite. Work included measurement of core orientation, fracture frequency, rock strength and observation of joint conditions. Rock mass rating and rock mass strength were calculated for each unit on the basis of these measurements.

Point load testing was performed on HQ core specimens of kimberlite and country xenoliths from Tuzo (Charlebois, 2003) to obtain fresh point load strength index data for comparison against possible future rock strength classifications by ore dressing studies.

Two geotechnical HQ diameter core holes were drilled at Tuzo in 2004. Geotechnical and geohydrology consultants were employed on site during this drilling for detailed logging. This program was supervised by SRK and all data (geotechnical logs, field geological logs, density sample results and down hole survey measurements) were captured according to logging templates developed by SRK.

An assessment of uniaxial compressive strength and elasticity of 66 kimberlite and country-rock samples collected from the 2011/2012 core drilling campaign was carried out by Mirarco (Suorineni, 2012). Instrumented unconfined compressive strength testing was carried out on all intact core specimens.

Hydrology and geothermal drilling programs, supervised by HCL Hydrologic Consultants of Colorado, USA, were completed on the project area in 2004, although no holes were drilled on or around the Tuzo body, specifically. Work comprised hydro-structural drilling of faults and potential lake dewatering dykes. Hydrological data for hydrological modelling were tied into environmental baseline studies. Packer testing, sub-permafrost sampling, water sampling and installation of thermistors were carried out for incorporation in environmental baseline studies.

Exploration work undertaken to date on the Gahcho Kué Project is consistent with industry-standard practices and is appropriate for the mineralisation type. Work is considered adequate to support Mineral Resource estimation.

Data pertaining to core and LDD drill hole locations, survey and geological logs have been provided to MSC by DBC and have been incorporated into this section. Unless otherwise stated, details of methodologies and processes employed have been extracted and summarised from Brisebois et al. (2009).

All core drilling of the Tuzo body has been carried out during and subsequent to 1997 with the GKJV as the project operator. Initial discovery and delineation of the Tuzo kimberlite occurred in August 1997, and a total of 61 core holes (17,829 m) were drilled on this body between 1997 and 2007. This work included 52 delineation drill holes (15,008 m), 7 geotechnical drill holes (2,118 m) and 2 pilot holes (702 m) for subsequent large diameter reverse circulation drilling. A summary of core drilling activities at Tuzo prior to 2011 is provided in Table 10-1 below and the distribution of holes in relation to the 2009 pipe model is shown in Figure 10-1.

Table 10-1: Summary of core drilling undertaken prior to 2011 on the Tuzo kimberlite.

Figure 10-1: 3D image of the 2009 Tuzo kimberlite pipe model showing traces of all core holes (n = 61) drilled prior to 2011.

An additional 6 HQ diameter core drill holes (4,126.62 m) were drilled in 2011/2012 with the purpose of further delineating the deep (354 – 564 mbs) portion of the Tuzo kimberlite and obtaining material for microdiamond sampling. Previous evaluation work had not adequately represented this zone. Details of the holes drilled are provided in Table 10-2 and the distribution of holes is illustrated in Figure 10-2.

Table 10-2: Details of 2011/2012 delineation core drilling of Tuzo Deep (300 to 564 mbs).