• Project Overview
• Development
• Joint Venture Agreement

Partners

Kennady Lake is a Joint Venture between Mountain Province (49%) and De Beers Canada (51%). The first joint venture agreement between Mountain Province and De Beers was entered into in 1997. This was replaced by the 2002 joint venture agreement, which, in turn, was replaced by a final revised and restated joint venture agreement entered into in July 2009.

Key terms of the 2009 joint venture agreement:

• Partners’ interest is firm at 49% Mountain Province and 51% De Beers
• Each partner markets its own share of diamond production
• All material decisions require the support of both partners
• Each partner contributes a proportionate share of the development costs
• Standard dispute resolution provisions
• Performance obligations on De Beers as the Operator

Funding

The partners funded their respective share of the joint venture costs from 1997 to March 2000. From March 2000, De Beers was solely responsible for funding of the joint venture expenditures, but could recover those costs carried on behalf of Mountain Province from the cash flow of a future mining operation. From March 2000 until December, 2008, De Beers incurred approximately $180 million in joint venture expenses. Under the 2009 joint venture agreement this amount has been reduced to $120 million.

Under the 2009 joint venture agreement each partner funds its proportionate share of the joint venture operating costs. In addition, Mountain Province has agreed to refund to De Beers 49% of $120 million, or $59 million, on an accelerated basis according the following schedule:

• $35.3 million ahead of commercial production; and
• $23.7 million following the commencement of commercial production.

The $35.3 million pre-production payment will be made on the following schedule:

• $200,000 was paid on signing of the 2009 agreement - paid
• $5.1 million will be paid to cover De Beers’ 51% share of the $10 million feasibility study - paid
• $10 million will be paid upon the successful completion of a bankable feasibility study, defined as a feasibility study indicating a minimum 15% internal rate of return - paid
• $10 million will be paid on issuance of the construction and operating permits
• $10 million will be paid on commissioning of a mine at Kennady Lake.

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