News

Mountain Province Gains Control over Share of Marketing Rights

    Shares Issued and Outstanding: 60,097,746
    TSX: MPV
    AMEX: MDMTORONTO and NEW YORK, July 6 /CNW/ - Mountain Province Diamonds Inc.
("Mountain Province" or the "Company") (TSX: MPV, AMEX: MDM) today announced
that the Company has entered into an amended and restated joint venture
agreement (the "2009 Agreement") with De Beers Canada Inc. ("De Beers")
(jointly, "the Participants") in respect of the Gahcho Kué diamond project
located in Canada's Northwest Territories. The 2009 Agreement replaces the
Joint Venture Agreement entered into by the Participants in 2002 (the "2002
Agreement").Key terms of the 2009 Agreement include:

    1.  The Participants' continuing interests in the Gahcho Kué project will
        be Mountain Province 49% and De Beers 51%, with Mountain Province's
        interest no longer subject to the dilution provisions in the 2002
        Agreement except for normal dilution provisions which are applicable
        to both Participants.
    2.  Each Participant will market their own proportionate share of diamond
        production in accordance with their participating interest.
    3.  Each Participant will contribute their proportionate share to the
        future project development costs.
    4.  Material strategic and operating decisions will be made by consensus
        of the Participants for so long as each Participant has a
        participating interest of 40% or more.
    5.  The Participants have agreed that the sunk historic costs to the
        period ending on December 31, 2008 will be reduced and limited to
        C$120M.
    6.  Mountain Province will repay De Beers C$59M (representing 49% of an
        agreed sum of C$120M) in settlement of the Company's share of the
        agreed historic sunk costs on the following schedule:
           -  C$200,000 on execution of the 2009 Agreement (Mountain
              Province's contribution to the 2009 Joint Venture expenses to
              date of execution of the 2009 Agreement);
           -  Up to C$5.1M in respect of De Beers' share of the costs of the
              2009 feasibility study discussed below;
           -  C$10M upon the earlier of the completion of a feasibility study
              with a 15% IRR and/or a decision to build;
           -  C$10M following the issuance of the construction and operating
              permits;
           -  C$10M following the commencement of commercial production; and
           -  The balance within 18 months following commencement of
              commercial production.
    7.  MPV has granted De Beers certain security for the repayment of the
        above amounts.Under the terms of the 2009 Agreement, the Participants have undertaken
to cause a feasibility study on the Gahcho Kué project to be commissioned as
soon as possible. To this end, the Joint Venture has received a feasibility
study proposal from JDS Energy and Mining, which is currently under
consideration. The Company expects to make a further announcement in this
regard in the near future. MPV will pay 100% of the costs of this feasibility
study.
    Commenting, Mountain Province President and CEO, Patrick Evans, said:
"Conclusion of the 2009 Agreement represents a key milestone in the
development of the Gahcho Kué project. Mountain Province and De Beers are
jointly committed to advancing the development of the Gahcho Kué project as
expeditiously as possible. The 2009 Agreement provides a solid foundation for
our renewed joint venture".
    In parallel with the planned feasibility study, the Joint Venture is
continuing to develop an Environmental Impact Statement ("EIS") suitable for
submission to the Mackenzie Valley Environmental Impact Review Board ("Review
Board"). Substantive progress has been made on the EIS. Key to the completion
of the EIS is a final project description which is expected to emerge during
the course of the planned feasibility study.
    Execution of the 2009 Agreement brings to an end the strategic review
announced by Mountain Province on June 4, 2008. During the strategic review,
Mountain Province explored a number of value-enhancing alternatives and
concluded that the interests of Mountain Province shareholders would be best
served by entering into the 2009 Agreement.(xxxx)Located in Canada's Northwest Territories, Gahcho Kué is one of the
largest new diamond projects under development globally. The project consists
of a cluster of kimberlites, three of which have an indicated resource of
approximately 30.2 million tonnes grading at 1.67 carats per tonne
(approximately 50.5 million carats) and an inferred resource of approximately
6 million tonnes grading at 1.73 carats per tonne (approximately 10.3 million
carats). Mineral resources that are not mineral reserves do not have
demonstrated economic viability.

    Qualified Person

    This news release has been reviewed by Carl G. Verley, P.Geo., who serves
as a qualified person under National Instrument 43-101.

    Note to U.S. Investors

    This press release describes minerals which have been classified as
"indicated resources" and "inferred resources" under Canadian National
Instrument 43-101. We advise U.S. investors that while those terms are
recognized and required by Canadian regulations, the U.S. Securities and
Exchange Commission do not recognize them. "Inferred resources" have a great
amount of uncertainty as to their existence, and great uncertainty as to their
economic and legal feasibility. It cannot be assumed that all or any part of
an inferred mineral resource as defined under Canadian National Instrument
43-101 will ever be upgraded to a higher category. Under Canadian rules,
estimates of inferred mineral resources may not form the basis of feasibility
or pre-feasibility studies, except in rare cases. U.S. investors are cautioned
not to assume that any part or all of mineral deposits in these categories
will ever be converted into reserves nor that part or all of an inferred
resource exists, or is economically or legally minable.

    Forward-Looking Statements

    This news release may contain forward-looking statements, within the
meaning of the "safe-harbor" provision of the Private Securities Litigation
Reform Act of 1995, regarding the Company's business or financial condition.
Actual results could differ materially from those described in this news
release as a result of numerous factors, some of which are outside the control
of the Company.

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