UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 20-F

(Mark One)

          REGISTRATION  STATEMENT  PURSUANT  TO  SECTION  12(b)  OR  (g)  OF THE
          SECURITIES EXCHANGE ACT OF 1934

                                       OR

XX        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

                    For the fiscal year ended March 31, 2003

                                       OR

          TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
          EXCHANGE    ACT   OF   1934   For   the    transition    period   from
          ____________________ to ____________________

          Commission file number 0-27322

                         MOUNTAIN PROVINCE DIAMONDS INC.
                        ---------------------------------
             (Exact name of Registrant as specified in its charter)

                                 Not Applicable
                                ----------------
                 (Translation of Registrant's name into English)

                                British Columbia
                               -------------------
                 (Jurisdiction of incorporation or organization)

   Suite 212, 525 Seymour Street, Vancouver, British Columbia, Canada V6B 3H7
  ----------------------------------------------------------------------------
                    (Address of principal executive offices)



Securities registered or to be registered pursuant to Section 12(b) of the Act.

   Title of each class                 Name of each exchange on which registered
          None                                        Not Applicable
         ------                                      ----------------

Securities registered or to be registered pursuant to Section 12(g) of the Act.

                         Common shares without par value
                        ---------------------------------
                                (Title of Class)

                        ---------------------------------
                                (Title of Class)

Securities for which there is a reporting  obligation  pursuant to Section 15(d)
of the Act.

                                      None
                                    --------
                                (Title of Class)

Indicate the number of  outstanding  shares of each of the  issuer's  classes of
capital  or common  stock as of the close of the  period  covered  by the annual
report:                                                               66,597,766

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                                          XX  Yes             No

Indicate by check mark which financial statement item the registrant has elected
to follow.

                                                      XX Item 17         Item 18

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY  PROCEEDINGS  DURING THE PAST
FIVE YEARS)

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be filed by  Sections  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.

                                                              Yes             No

Not Applicable.



                                TABLE OF CONTENTS


                                                                                                              
GLOSSARY OF TECHNICAL TERMS.....................................................................................vii

PART i............................................................................................................1
   Item 1    Identity of Directors, Senior Management and Advisers................................................1
   Item 2    Offer Statistics and Expected Timetable..............................................................1
   Item 3    Key Information......................................................................................1
     A.      Selected financial data..............................................................................1
     B.      Capitalization and indebtedness......................................................................3
     C.      Reasons for the offer and use of proceeds............................................................3
     D.      Risk factors.........................................................................................3
   Item 4    Information on the Company..........................................................................10
     A.      History and development of the Company..............................................................10
     B.      Business Overview...................................................................................12
     C.      Organizational structure............................................................................17
     D.      Property, plants and equipment......................................................................17
   Item 5    Operating and Financial Review and Prospects........................................................33
     A.      Operating results...................................................................................33
     B.      Liquidity and capital resources.....................................................................35
   Item 6    Directors, Senior Management and Employees..........................................................37
     A.      Directors and Senior Management.....................................................................37
     B.      Compensation........................................................................................40
     C.      Board practices.....................................................................................41
     D.      Employees...........................................................................................42
     E.      Share ownership.....................................................................................42
   Item 7    Major Shareholders and Related Party Transactions...................................................45
     A.      Major shareholders..................................................................................45
     B.      Related party transactions..........................................................................46
     C.      Interests of experts and counsel....................................................................46
   Item 8    Financial Information...............................................................................46
     A.      Consolidated Statements and Other Financial Information.............................................46
     B.      Significant Changes.................................................................................46
   Item 9    The Offer and Listing...............................................................................47
   Item 10   Additional Information..............................................................................49
     A.      Share capital.......................................................................................49
     B.      Memorandum and articles of association..............................................................49
     C.      Material contracts..................................................................................51
     D.      Exchange controls...................................................................................53
     E.      Taxation............................................................................................56
     F.      Dividends and paying agents.........................................................................65
     G.      Statement by experts................................................................................65
     H.      Documents on display................................................................................65
     I.   Subsidiary Information.................................................................................66
   Item 11   Quantitative and Qualitative Disclosures About Market Risk..........................................66
   Item 12   Description of Securities Other than Equity Securities..............................................66

part ii..........................................................................................................67
   Item 13   Defaults, Dividend Arrearages and Delinquencies.....................................................67
   Item 14   Material Modifications to the Rights of Security Holders and Use of Proceeds........................67



   Item 15   Controls and Procedures.............................................................................67
   Item 16A  Audit Committee Financial Expert....................................................................67
   Item 16B  Code of Ethics......................................................................................67
   Item 16C  Principal Accountant Fees and Services..............................................................67
   Item 16D  Exemptions from the Listing Standards for Audit Committees..........................................67

PART III.........................................................................................................68
   Item 17   Financial Statements................................................................................68
   Item 18   Financial Statements................................................................................68
   Item 19   Exhibits............................................................................................68

SIGNATURES.......................................................................................................71

EXHIBIT INDEX....................................................................................................72




GLOSSARY

Affiliate  has the  meaning  given to  affiliated  bodies  corporate  under  the
Business Corporations Act;

AK Property means the claims known as the "AK claims" held by MPV;

AK-CJ  Properties  means,  collectively,  the AK Property and CJ Property Claims
held by MPV;

CJ Property  means the claims known as the "CJ  claims",  which have now lapsed,
previously held by MPV;

Arrangement  means the  arrangement  between the Company and Glenmore  which was
effected as of June 30, 2000;

Arrangement  Agreement means the Arrangement Agreement dated as of May 10, 2000,
and made between MPV and Glenmore, including the Schedules to that Agreement;

Business  Corporations  Act means the Business  Corporations  Act, S.A. 1981, c.
B-15 (Alberta), as amended from time to time;

CDNX means the Canadian  Venture  Exchange  Inc,  formerly the  Vancouver  Stock
Exchange, and now known as the TSX Venture Exchange;

Camphor means Camphor Ventures Inc.;

Canadian  National  Instrument  43-101  means  the  National  Instrument  43-101
(Standards  of  Disclosure  for  Mineral   Projects)  adopted  by  the  Canadian
Securities Administrators;

Code means the United States Internal Revenue Code of 1986, as amended;

Company, MPV or Registrant means Mountain Province Diamonds Inc.;

De Beers means De Beers Consolidated Mines Ltd.;

De Beers Canada or Monopros  means De Beers Canada  Exploration  Inc.,  formerly
known as Monopros Limited, a wholly-owned subsidiary of De Beers;

Exchange Act means the U.S. Securities Exchange Act of 1934;

Gahcho Kue Project,  located at Kennady  Lake,  is the  aboriginal  name for the
Kennady Lake Project involving the  diamondiferous  kimberlite bodies in Kennady
Lake located on the AK leased claims;

Glenmore  means  Glenmore  Highlands  Inc.,  a  company  incorporated  under the
Business Corporations Act in Alberta and which, pursuant to the Arrangement, has
amalgamated  with the Company's  wholly-owned  subsidiary,  Mountain Glen Mining
Inc., to form an amalgamated company, also known as Mountain Glen Mining Inc.;

Glenmore Shares means the common shares of Glenmore,  as the same existed before
the Arrangement took effect and "Glenmore Share" means any of them;

Glenmore Shareholder means a holder of Glenmore Shares;



Joint Information  Circular means the joint information  circular of the Company
and  Glenmore  dated May 10,  2000 for the  Extraordinary  General  Meeting  and
Special  Meeting  of the  Company  and  Glenmore  respectively  to  approve  the
Arrangement;

Monopros or De Beers  Canada means De Beers Canada  Exploration  Inc.,  formerly
known as Monopros Limited, a wholly-owned subsidiary of De Beers;

Mountain Glen means Mountain Glen Mining Inc., a wholly-owned  subsidiary of the
Company;

MPV, Company or Registrant means Mountain Province Diamonds Inc.;

MPV Shares means the common shares of MPV, and "MPV Share" means any of them;

Nasdaq means the National  Association of Securities Dealers Automatic Quotation
System;

NASD OTCBB means the National Association of Securities Dealers over-the-counter
bulletin board;

Old MPV means MPV prior to its amalgamation with 444965 B.C. Ltd.;

PFIC means Passive Foreign Investment Company under the Code;

Qualified Person as defined by Canadian National Instrument 43-101 (Standards of
Disclosure for Mineral Projects), means an individual who

     a)   is an engineer or geoscientist  with a least five years  experience in
          mineral exploration,  mine development or operation or mineral project
          assessment, or any combination of these;

     (b)  has experience  relevant to the subject matter of the mineral  project
          and the technical report; and

     (c)  is a member in good standing of a  professional  association  (as that
          term is defined in Canadian National Instrument 43-101);

Registrant, Company or MPV means Mountain Province Diamonds Inc.;

Sight means an  invitation  to purchase a certain  amount of rough  diamonds ten
times a year from the De Beers' Diamond Trading Company in London;

Sightholder  means a Diamantaire who purchases rough diamonds  directly from the
De Beers' Diamond Trading Company;

TSX means the Toronto Stock Exchange; and

VSE means the  Vancouver  Stock  Exchange,  subsequently  renamed  the  Canadian
Venture Exchange, and now known as the TSX Venture Exchange.



                           GLOSSARY OF TECHNICAL TERMS

Adit

A  horizontal  or nearly  horizontal  passage  driven  from the  surface for the
working of a mine.

Archean

The earliest eon of geological history or the corresponding system of rocks.

Area of Interest

A geographic area surrounding a specific mineral property in which more than one
party has an interest and within which new  acquisitions  must be offered to the
other party or which become subject automatically to the terms and conditions of
the existing agreement between the parties.  Typically,  the area of interest is
expressed in terms of a radius of a finite number of kilometers  from each point
on the outside boundary of the original mineral property.

Bulk Sample

Evaluation  program of a diamondiferous  kimberlite pipe in which a large amount
of kimberlite (at least 100 tonnes) is recovered from a pipe.

Carat

A unit of weight for diamonds,  pearls,  and other gems. The metric carat, equal
to 0.2 gram or 200  milligram,  is standard in the  principal  diamond-producing
countries of the world.

Caustic Fusion

An analytical  process for diamonds by which rocks are dissolved at temperatures
between  450-600(Degree)C.  Diamonds remain  undissolved by this process and are
recovered from the residue that remains.

Craton

A stable  relatively  immobile  area of the earth's crust that forms the nuclear
mass of a continent or the central basin in an ocean.

Diabase

A fine-grained rock of the composition of gabbro but with an ophitic texture.

Dyke

A body of igneous rock, tabular in form, formed through the injection of magma.

Feasibility Study

As defined by Canadian National  Instrument 43-101,  means a comprehensive study
of a deposit in which all geological, engineering, operating, economic and other
relevant  factors are considered in sufficient  detail that it could  reasonably
serve as the basis for a final  decision by a financial  institution  to finance
the development of the deposit for mineral production.

Gneiss

A banded rock  formed  during high grade  regional  metamorphism.  It includes a
number of  different  rock types  having  different  origins.  It  commonly  has
alternating bands of schistose and granulose material.

Indicator mineral

Minerals such as garnet, ilmenite,  chromite and chrome diopside, which are used
in exploration to indicate the presence of kimberlites.

Jurassic

The period of the Mesozoic era between the  Triassic and the  Cretaceous  or the
corresponding  system of rocks marked by the presence of dinosaurs and the first
appearance of birds.



Kimberlite

A  dark-colored  intrusive  biotite-peridotite  igneous  rock  that can  contain
diamonds.  It contains the diamonds known to occur in the rock matrix where they
originally formed (more than 100 km deep in the earth).

Macrodiamond

A diamond, two dimensions of which exceed 0.5 millimeters.

Microdiamond

Generally  refers  to  diamonds  smaller  than  approximately  0.5mm,  which are
recovered from acid dissolution of kimberlite rock.

Mineral Reserve

Means the economically mineable part of a Measured Mineral Resource or Indicated
Mineral Resource demonstrated by at least a Preliminary  Feasibility Study. This
study must include adequate  information on mining,  processing,  metallurgical,
economic and other relevant factors that demonstrate,  at the time of reporting,
that economic  extraction can be justified.  A Mineral Reserve includes diluting
materials and allowances for losses that may occur when the material is mined.

THE TERMS "MINERAL  RESERVE,"  "PROVEN  MINERAL  RESERVE" AND "PROBABLE  MINERAL
RESERVE" USED IN THIS REPORT ARE CANADIAN  MINING TERMS AS DEFINED IN ACCORDANCE
WITH NATIONAL  INSTRUMENT  43-101 - STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS
WHICH  INCORPORATES  THE  DEFINITIONS  AND  GUIDELINES  SET OUT IN THE  CANADIAN
INSTITUTE OF MINING,  METALLURGY AND PETROLEUM (THE "CIM")  STANDARDS ON MINERAL
RESOURCES AND MINERAL  RESERVES  DEFINITIONS  AND GUIDELINES  ADOPTED BY THE CIM
COUNCIL ON AUGUST 20, 2000. IN THE UNITED STATES,  A MINERAL  RESERVE IS DEFINED
AS A PART OF A MINERAL DEPOSIT WHICH COULD BE ECONOMICALLY AND LEGALLY EXTRACTED
OR PRODUCED AT THE TIME THE MINERAL RESERVE DETERMINATION IS MADE.

Under United States standards:

"Reserve"  means that part of a mineral  deposit which can be  economically  and
legally extracted or produced at the time of the reserve determination.

"Economically,"  as used in the definition of reserve,  implies that  profitable
extraction or production has been established or analytically demonstrated to be
viable and justifiable under reasonable investment and market assumptions.

"Legally," as used in the definition of reserve, does not imply that all permits
needed for mining and  processing  have been obtained or that other legal issues
have been completely resolved.  However, for a reserve to exist, there should be
a reasonable certainty based on applicable laws and regulations that issuance of
permits or resolution of legal issues can be accomplished in a timely manner.

Mineral  Reserves  are  categorized  as  follows  on the basis of the  degree of
confidence in the estimate of the quantity and grade of the deposit.

"Proven  Mineral   Reserve"  means,  in  accordance  with  CIM  Standards,   the



economically viable part of a Measured Mineral Resource demonstrated by at least
a Preliminary Feasibility study. This Study must include adequate information on
mining,  processing,  metallurgical,  economic,  and other relevant factors that
demonstrate at the time of reporting, that economic extraction is justified.

The definition for "proven mineral  reserves" under Canadian  standards  differs
from the standards in the United States,  where proven or measured  reserves are
defined as reserves for which (a) quantity is computed from dimensions  revealed
in  outcrops,  trenches,  workings  or drill  holes;  grade  and/or  quality are
computed from the results of detailed sampling and (b) the sites for inspection,
sampling and measurement  are spaced so closely and the geographic  character is
so well defined that size, shape, depth and mineral content of reserves are well
established.

"Probable  Mineral  Reserve"  means,  in  accordance  with  CIM  Standards,  the
economically mineable part of an Indicated, and in some circumstances a Measured
Mineral Resource demonstrated by at least a Preliminary  Feasibility Study. This
Study must include adequate  information on mining,  processing,  metallurgical,
economic and other relevant factors that demonstrate,  at the time of reporting,
that economic extraction is justified.

The definition for "probable mineral reserves" under Canadian  standards differs
from the standards in the United States,  where probable reserves are defined as
reserves  for  which  quantity  and  grade  and/or  quality  are  computed  from
information  similar to that of proven reserves (under United States standards),
but the sites for inspection, sampling, and measurement are further apart or are
otherwise less adequately spaced.  The degree of assurance,  although lower than
that for proven reserves,  is high enough to assume continuity between points of
observation.

Mineral Resource

Under CIM  Standards,  Mineral  Resource is a  concentration  or  occurrence  of
natural,  solid,  inorganic or fossilized  organic material in or on the Earth's
crust in such  form and  quantity  and of such a grade  or  quality  that it has
reasonable prospects for economic  extraction.  The location,  quantity,  grade,
geological  characteristics  and  continuity  of a Mineral  Resource  are known,
estimated or interpreted from specific geological evidence and knowledge.

THE TERMS "MINERAL  RESOURCE",  "MEASURED MINERAL RESOURCE",  "INDICATED MINERAL
RESOURCE",  "INFERRED  MINERAL RESOURCE" USED IN THIS REPORT ARE CANADIAN MINING
TERMS AS DEFINED IN ACCORDANCE WITH NATIONAL




INSTRUMENT  43-101 - STANDARDS  OF  DISCLOSURE  FOR MINERAL  PROJECTS  UNDER THE
GUIDELINES SET OUT IN THE CIM STANDARDS. THE COMPANY ADVISES U.S. INVESTORS THAT
WHILE SUCH TERMS ARE RECOGNIZED AND PERMITTED  UNDER CANADIAN  REGULATIONS,  THE
U.S.  SECURITIES AND EXCHANGE  COMMISSION DOES NOT RECOGNIZE THEM. THESE ARE NOT
DEFINED TERMS UNDER THE UNITED STATES STANDARDS AND MAY NOT GENERALLY BE USED IN
DOCUMENTS  FILED WITH THE UNITED STATES  SECURITIES  AND EXCHANGE  COMMISSION BY
U.S.  COMPANIES.  AS  SUCH,  INFORMATION  CONTAINED  IN THIS  REPORT  CONCERNING
DESCRIPTIONS  OF   MINERALIZATION   AND  RESOURCES  MAY  NOT  BE  COMPARABLE  TO
INFORMATION  MADE  PUBLIC  BY  U.S.  COMPANIES  SUBJECT  TO  THE  REPORTING  AND
DISCLOSURE REQUIREMENTS OF THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

"Inferred Mineral Resource" means,  under CIM Standards,  that part of a Mineral
Resource  for which  quantity and grade or quality can be estimated on the basis
of geological  evidence and limited  sampling and  reasonably  assumed,  but not
verified,  geological  and grade  continuity.  The  estimate is based on limited
information and sampling gathered through appropriate  techniques from locations
such as outcrops,  trenches,  pits, workings and drill holes. U.S. INVESTORS ARE
CAUTIONED NOT TO ASSUME THAT ANY PART OR ALL OF AN INFERRED  RESOURCE EXISTS, OR
IS ECONOMICALLY OR LEGALLY MINEABLE.

"Indicated Mineral Resource" means, under CIM Standards,  that part of a Mineral
Resource for which  quantity,  grade or quality,  densities,  shape and physical
characteristics, can be estimated with a level of confidence sufficient to allow
the  appropriate  application of technical and economic  parameters,  to support
mine  planning  and  evaluation  of the economic  viability of the deposit.  The
estimate is based on detailed and reliable  exploration and testing  information
gathered  through  appropriate  techniques  from  locations  such  as  outcrops,
trenches,  pits,  workings  and drill holes that are spaced  closely  enough for
geological and grade  continuity to be reasonably  assumed.  U.S.  INVESTORS ARE
CAUTIONED  NOT TO ASSUME  THAT ANY PART OR ALL OF THE  MINERAL  DEPOSITS IN THIS
CATEGORY WILL EVER BE CONVERTED INTO RESERVES.

"Measured  Mineral  Resource" means,  under CIM standards that part of a Mineral
Resource for which  quantity,  grade or quality,  densities,  shape and physical
characteristics  are  so  well  established  that  they  can be  estimated  with
confidence  sufficient  to allow the  appropriate  application  of technical and
economic  parameters,  to support  production  planning  and  evaluation  of the
economic  viability  of the  deposit.  The  estimate  is based on  detailed  and
reliable   exploration,   sampling  and  testing  information  gathered  through
appropriate techniques from locations such as outcrops, trenches, pits, workings
and drillholes  that are spaced  closely  enough to confirm both  geological and
grade  continuity.  U.S.  INVESTORS ARE CAUTIONED NOT TO ASSUME THAT ANY PART OR
ALL OF THE MINERAL DEPOSITS IN THIS CATEGORY



WILL EVER BE CONVERTED INTO RESERVES.

Operator

The party in a joint  venture  which  carries  out the  operations  of the joint
venture  subject at all times to the  direction  and  control of the  management
committee.

Ordovician

The period between the Cambrian and the Silurian or the corresponding  system of
rocks.

Overburden

A general term for any material covering or obscuring rocks from view.

Paleozoic

An era of geological  history that extends from the beginning of the Cambrian to
the close of the Permian and is marked by the  culmination of nearly all classes
of invertebrates except the insects and in the later epochs by the appearance of
terrestrial plants, amphibians, and reptiles.

Pipe

A kimberlite deposit that is usually, but not necessarily, carrot-shaped.

Preliminary Feasibility Study

Under the CIM  Standards,  means a  comprehensive  study of the  viability  of a
mineral  project  that has advanced to a stage where the mining  method,  in the
case of underground  mining,  or the pit  configuration,  in the case of an open
pit,  has been  established,  and  which,  if an  effective  method  of  mineral
processing  has  been  determined,   includes  a  financial  analysis  based  on
reasonable assumptions of technical,  engineering,  operating,  economic factors
and the  evaluation  of  other  relevant  factors  which  are  sufficient  for a
Qualified Person acting  reasonably,  to determine if all or part of the Mineral
Resource may be classified as a Mineral Reserve.

Proterozoic

The eon of geologic time or the corresponding  system of rocks that includes the
interval between the Archean and Phanerozoic eons, perhaps exceeds in length all
of  subsequent  geological  time,  and is marked by rocks that  contain  fossils
indicating the first appearance of eukaryotic organisms (as algae).

Reverse Circulation Drill

A rotary  percussion  drill in which the drilling mud and cuttings return to the
surface through the drill pipe.

Sill

Tabular intrusion which is sandwiched between layers in the host rock.

Stringers

The narrow veins or veinlets, often parallel to each other, and often found in a
shear zone.

Tertiary

The Tertiary period or system of rocks.

Till Sample

A sample of soil taken as part of a regional  exploration  program and  examined
for indicator minerals.

Xenolith

A foreign inclusion in an igneous rock.



                    NOTE REGARDING FORWARD LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of the United
States Private Securities Litigation Reform Act of 1995 concerning the Company's
exploration,   operations,   planned  acquisitions  and  other  matters.   These
statements  relate to analyses and other information that are based on forecasts
of future results,  estimates of amounts not yet determinable and assumptions of
management.

Statements   concerning  mineral  resource  estimates  may  also  be  deemed  to
constitute  forward-looking statements to the extent that they involve estimates
of the mineralization that will be encountered if the property is developed, and
based on  certain  assumptions  that the  mineral  deposit  can be  economically
exploited.  Any statements that express or involve  discussions  with respect to
predictions,  expectations, beliefs, plans, projections, objectives, assumptions
or future events or performance  (often, but not always,  using words or phrases
such as "expects" or "does not expect",  "is expected",  "anticipates"  or "does
not  anticipate",  "plans",  "estimates"  or "intends",  or stating that certain
actions, events or results "may", "could",  "would", "might" or "will" be taken,
occur  or be  achieved)  are  not  statements  of  historical  fact  and  may be
"forward-looking  statements."  Forward-looking  statements  are  subject  to  a
variety of risks and uncertainties which could cause actual events or results to
differ  from  those  reflected  in the  forward-looking  statements,  including,
without limitation:

o    risks and  uncertainties  relating to the  interpretation of drill results,
     the geology, grade and continuity of mineral deposits;
o    results of initial  feasibility,  pre-feasibility and feasibility  studies,
     and the possibility that future exploration,  development or mining results
     will not be consistent with the Company's expectations;
o    mining exploration risks,  including risks related to accidents,  equipment
     breakdowns or other  unanticipated  difficulties  with or  interruptions in
     production;
o    the potential  for delays in  exploration  activities or the  completion of
     feasibility studies;
o    risks related to the inherent uncertainty of exploration and cost estimates
     and the potential for unexpected costs and expenses;
o    risks related to commodity price fluctuations;
o    the  uncertainty  of  profitability  based  upon the  Company's  history of
     losses;
o    risks related to failure to obtain adequate financing on a timely basis and
     on acceptable terms;
o    risks related to environmental regulation and liability;
o    political and regulatory risks associated with mining and exploration; and
o    and other  risks and  uncertainties  related  to the  Company's  prospects,
     properties and business strategy.

Some of the important risks and uncertainties  that could affect forward looking
statements as are described  further in this document  under the headings  "Risk
Factors",  "History and Development of Company," "Business Overview," "Property,
plants and  equipment,"  and  "Operating  and Financial  Review and  Prospects".
Should  one or more of these  risks  and  uncertainties  materialize,  or should
underlying assumptions prove incorrect,  actual results may vary materially from
those described in  forward-looking  statements.  Forward looking statements are
made based on  management's  beliefs,  estimates  and  opinions  on the date the
statements  are  made  and  the  Company  undertakes  no  obligation  to  update
forward-looking  statements  if these  beliefs,  estimates and opinions or other
circumstances  should change.  Investors are cautioned against attributing undue
certainty to forward-looking statements.



                NOTE REGARDING FINANCIAL STATEMENTS AND EXHIBITS

The  financial  statements  and exhibits  referred to herein are filed with this
report on Form 20-F in the United States. This report is also filed in Canada as
an  Annual  Information  Form  and the  Canadian  filing  does not  include  the
financial statements and exhibits listed herein. Canadian investors should refer
to the annual  financial  statements of the Company as at March 31, 2003,  which
are incorporated by reference  herewith,  as filed with the applicable  Canadian
Securities  regulators on Sedar under  "Audited  Annual  Financial  Statements -
English".

                               METRIC EQUIVALENTS


For ease of reference,  the following factors for converting metric measurements
into imperial equivalents are provided:



                                                                      
           ---------------------------------- -------------------------------- -------------------
           To Convert From Metric             To Imperial                      Multiply by
           ---------------------------------- -------------------------------- -------------------
           Hectares                           Acres                            2.471
           Metres                             Feet (ft.)                       3.281
           Kilometres (km.)                   Miles                            0.621
           Tonnes                             Tons (2000 pounds)               1.102
           Grams/tonne                        Ounces (troy/ton)                0.029
           ---------------------------------- -------------------------------- -------------------



                                     PART I

Item 1 Identity of Directors, Senior Management and Advisers.

This Form 20-F is being  filed as an annual  report  and,  as such,  there is no
requirement to provide information under this sub-item.

Item 2 Offer Statistics and Expected Timetable.

This Form 20-F is being  filed as an annual  report  and,  as such,  there is no
requirement to provide information under this sub-item.

Item 3 Key Information.

     A.   Selected financial data.

The selected  financial data set forth below should be read in conjunction  with
Item 5 - Operating and Financial  Review and Prospects,  and in conjunction with
the  consolidated  financial  statements  and related notes of the Company.  The
Company's  consolidated  financial  statements  have been prepared in accordance
with Canadian generally accepted  accounting  principles.  Material  measurement
differences between accounting  principles  generally accepted in Canada and the
United  States,  applicable  to the  Company,  are  described  in Note 12 to the
consolidated  financial  statements.  The Company's financial statements are set
forth in Canadian dollars.

The following chart summarizes  certain selected  financial  information for the
Company as at and for its fiscal years ended March 31, 2003,  2002,  2001,  2000
and 1999.





                                                                                            
- ------------------------------------ --------------------------------------------------------------------------------

                                                                     12 Months Ended

All in CDN$1,000's except Earnings     March 31,      March 31,    March 31, 2001   March 31, 2000   March 31, 1999
  (loss) per Share and Number of         2003           2002
           Common Shares
- ------------------------------------ -------------- -------------- ---------------- ---------------- ----------------

Working Capital                              1,037          340             903          1,846               3,900

Interest Revenue                                19           18              66            144                 252

Net Loss -
     Under Canadian GAAP:                  (1,718)      (1,456)         (3,060)        (2,074)             (4,778)
     Under U.S. GAAP:                     (14,513)      (1,520)         (3,155)        (4,514)             (3,308)

Basic and diluted loss per share -
     Under Canadian GAAP:                   (0.03)       (0.03)          (0.07)         (0.05)              (0.11)
     Under U.S. GAAP:                       (0.29)       (0.03)          (0.07)         (0.11)              (0.08)

Total Assets -
     Under Canadian GAAP:                   34,418       33,947          34,433         35,301              37,172
     Under U.S. GAAP:                        1,363       13,618          14,148         15,112              19,165

Total Liabilities                              240          324             303            312                 145

Share Capital                               55,719       53,470          52,521         50,321              50,285

Shareholders' Equity -
     Under Canadian GAAP:                   34,178       33,623          34,129         34,989              37,027
     Under U.S. GAAP:                        1,055       13,294          13,845         14,801              19,021

Number of Common Shares issued          66,597,766   63,883,100      62,166,188     42,457,760          42,444,760
less shares owned by subsidiary       (16,015,696)  (16,015,696)   (16,015,696)             -                   -
                                      ------------  ------------   ------------    ------------       ------------
                                        50,582,070   47,867,404      46,150,492     42,457,760          42,444,760



No dividends have been declared in any of the years presented above.

Currency and Exchange Rates

All dollar  amounts  set forth in this report are in  Canadian  dollars,  except
where otherwise  indicated.  The following  tables set forth,  for the five most
recent  financial  years,  (i) the average rate (the "Average Rate") of exchange
for the Canadian  dollar,  expressed in U.S.  dollars,  calculated  by using the
average of the exchange  rates on the last day for which data is  available  for
each month during such  periods;  and (ii) the high and low exchange rate during
the previous six months,  in each case based on the noon buying rate in New York
City for cable transfers in Canadian  dollars as certified for customs  purposes
by the Federal Reserve Bank of New York.

The Average Rate is set out for each of the periods indicated in the table
below.



                                                                                         
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
          2003                    2002                    2001                   2000                   1999

- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------

       US$0.6474                US$0.6386              US$0.6632               US$0.6810              US$0.6630
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------


The high and low exchange rates for each month during the previous six months
are as follows:



                                                                                      
  ----------------------------------------- --------------------------------------- --------------------------------
                   Month                                     High                                 Low
  ----------------------------------------- --------------------------------------- --------------------------------

  February 2003                                         US$0.6720                           US$0.6530



  March 2003                                            US$0.6822                           US$0.6732

  April 2003                                            US$0.6975                           US$0.6737

  May 2003                                              US$0.7437                           US$0.7032

  June 2003                                             US$0.7492                           US$0.7263

  July 2003                                             US$0.7481                           US$0.7085
  ----------------------------------------- --------------------------------------- --------------------------------


On August 6, 2003,  the noon buying rate in New York City for cable  transfer in
Canadian dollars as certified for customer  purposes by the Federal Reserve Bank
of New York (the "Exchange Rate") was $1 Canadian = $0.0.7112 US.

     B.   Capitalization and indebtedness.

This Form 20-F is being filed as an annual report under the Exchange Act and, as
such, there is no requirement to provide any information under this sub-item.

     C.   Reasons for the offer and use of proceeds.

This Form 20-F is being filed as an annual report under the Exchange Act and, as
such, there is no requirement to provide any information under this sub-item.

     D.   Risk factors.

Risks of Exploration and Development

The Company,  and thus the  securities  of the Company,  should be  considered a
highly speculative investment and investors should carefully consider all of the
information disclosed in this Annual Report prior to making an investment in the
Company.  In addition to the other information  presented in this Annual Report,
the following risk factors should be given special consideration when evaluating
an investment in any of the Company's securities.

     (a)  General

Resource exploration and development is a speculative business, characterized by
a number of  significant  risks  including,  among  other  things,  unprofitable
efforts  resulting  not only from the failure to discover  mineral  deposits but
from finding  mineral  deposits  which,  though  present,  are  insufficient  in
quantity and quality to return a profit from  production.  Diamonds  acquired or
discovered by the Company are required to be sold to The Diamond  Trading Co., a
wholly-owned subsidiary of De Beers, as per the Monopros Joint Venture Agreement
(see Item 4D - Property,  plant and  equipment - Principal  Properties  - The AK
Property), at a price which is reflective of the market at that time.

     (b)  Exploration and Development

All of the Company's  properties are in the exploration  and development  stage.
There is no  certainty  that the  expenditures  to be made by the Company or its
joint venture partner in the  exploration of its properties as described  herein
will  result  in  discoveries  of  diamonds  in  commercial   quantities.   Most
exploration projects do not result in the discovery of diamonds and no assurance
can be given that any  particular  level of recovery of diamonds will in fact be
realized or that any  identified  resource  will ever qualify as a  commercially
mineable (or viable) resource which can be legally and  economically  exploited.
Estimates  of  reserves,  mineral  deposits  and  production  costs  can also be
affected by such factors as environmental  permit  regulations and requirements,
weather, environmental factors, unforeseen technical



difficulties,   unusual   or   unexpected   geological   formations   and   work
interruptions.  In addition,  the grade of diamonds  ultimately  discovered  may
differ from that indicated by drilling results.

There can be no assurance  that diamonds  recovered in small scale tests will be
duplicated in large scale tests under on-site conditions or in production scale.
De Beers  Canada is now paying for all  exploration  and  development  of the AK
Property,  and, with regard to that property,  there is currently no risk to the
Company  in  respect of the  further  exploration  and  development  costs.  Any
separate and additional  exploration done by the Company on its other properties
may not result in discovery  of any  diamondiferous  kimberlite.

     (c)  History of Losses

The  Company has a history of losses and may  continue  to incur  losses for the
foreseeable  future.  The Company  incurred  losses during each of the following
periods:

o    $1.72 for the year ended March 31, 2003.
o    $1.46 million for the year ended March 31, 2002
o    $3.06 million for the year ended March 31, 2001

As of March 31, 2003, the Company had an accumulated  deficit of $21.57 million.
There can be no assurance that the Company will ever be profitable.

None of the  Company's  properties  have advanced to the  commercial  production
stage,  and the Company has no history of earnings or cash flow from  operations
and, as an exploration  Company,  has only a history of losses.  The Company has
paid no  dividends  on its shares since  incorporation  and does not  anticipate
doing so in the foreseeable future.

     (d)  Going Concern

The  auditors'  report on the  Company's  March  31,  2003  annual  consolidated
financial  statements  includes additional comments for U.S. readers that states
that the financial  statements  are affected by conditions  and events that cast
substantial doubt on the Company's  ability to continue as a going concern.  The
financial  statements do not include any adjustments  that might result from the
outcome of this  uncertainty.  The continuing  operations of the Company and the
recoverability  of  the  amounts  capitalized  for  mineral  properties  in  the
Company's  consolidated  financial  statements,   prepared  in  accordance  with
Canadian generally accepted accounting principles, is dependent upon the ability
of the  Company  to  obtain  the  necessary  financing  to  meet  the  Company's
liabilities  and commitments as they become  payable,  the Company's  ability to
complete   exploration  and   development,   if  warranted,   the  discovery  of
economically  recoverable  reserves  and upon future  profitable  production  or
proceeds from disposition of the Company's mineral  properties.  The Company may
be required to raise additional  capital through debt or equity  financing,  and
possibly through joint ventures, production sharing arrangements or other means.
Historically, the only source of funds available to the Company has been through
the sale of its equity shares.  There can be no assurance given that such source
of funds  will be  available  to the  Company  in the  future  or  available  on
favourable terms to the Company.

     (e)  Additional Funding Requirements

As of March 31, 2003, the Company had cash and cash equivalents of approximately
$1.21 million and working  capital of  approximately  $1.04 million.  During the
past three fiscal years ended March 31, 2003, the Company has used approximately
$5.48 million in cash flows in operating activities including



approximately  $1.58 million during the fiscal year ended March 31, 2003,  $1.37
million during the fiscal year ended March 31, 2002 and $2.53 million during the
fiscal year ended March 31, 2001.

The Company's administrative and other expenses are expected to be approximately
$0.7 million for the next year. The Company believes it currently has sufficient
financial  resources  for  administrative  purposes  and to  undertake  possible
exploration  programs  until the end of  calendar  year 2004,  the  Company  may
require   additional   funds  to  meet  its  working   capital  and  operational
requirements.  The Company may be required to raise  additional  capital through
equity and/or debt financings on terms that may be dilutive to its shareholders'
interests in the Company or to the value of their common shares. The Company may
consider  debt  financing,  joint  ventures,  production  sharing  arrangements,
disposing of properties or other  arrangements to meet its capital  requirements
in the  future.  Such  arrangements  may have a material  adverse  affect on the
Company's business or results of operations.

     (f)  No Proven Reserves

The properties in which the Company has an interest, or the concessions in which
the Company has the right to earn an interest,  are all in the exploratory stage
and at this point,  there are only  indicated  and  inferred  resources  in four
kimberlite bodies in Kennady Lake. See Item 4D - Property,  plants and equipment
- - Principal  Properties.  The Company has not yet determined whether its mineral
properties contain mineral reserves that are economically  recoverable.  Failure
to  discover  economically  recoverable  reserves  will  require  the Company to
write-off costs capitalized in its financial statements.

     (g)  Title Matters

While the Company has investigated  title to all of its mineral  properties and,
to the best of its  knowledge,  title to all of its properties and properties in
which it has the right to acquire or earn an interest are in good standing, this
should not be construed as a guarantee of title.  The  properties may be subject
to prior  unregistered  agreements  or  transfers  and title may be  affected by
undetected defects.

     (h)  Diamond Prices

The market for rough  diamonds is subject to strong  influence  from the world's
largest  diamond  producing  company,  De Beers,  of South Africa,  and from The
Diamond Trading Co.,  (formerly known as the Central  Selling  Organization),  a
marketing  agency  controlled by De Beers. The price of diamonds dropped sharply
after  September  11, 2001 and has now  recovered,  but future  prices cannot be
predicted.

     (i)  Compliance with Environmental and Government Regulation

The  current  and  anticipated  future  operations  of  the  Company,  including
development activities and commencement of production on its properties, require
permits from various federal, territorial and local governmental authorities and
such  operations  are and will be  governed  by laws and  regulations  governing
prospecting,  development, mining, production, exports, taxes, labour standards,
occupational health, waste disposal,  toxic substances,  land use, environmental
protection,  mine safety and other matters. Companies engaged in the development
and operation of mines and related  facilities  generally  experience  increased
costs,  and delays in production and other  schedules as a result of the need to
comply with applicable laws,  regulations and permits. The Company's exploration
activities  and its  potential  mining and  processing  operations in Canada are
subject  to  various  Federal  and  Provincial  laws  governing  land  use,  the
protection of the environment,  prospecting,  development,  production, exports,
taxes, labour standards,  occupational health, waste disposal, toxic substances,
mine safety and other matters.

Such  operations  and  exploration  activities  are also subject to  substantial
regulation  under these laws by  governmental  agencies and may require that the
Company obtain permits from various governmental



agencies. The Company believes it is in substantial compliance with all material
laws and regulations  which  currently apply to its activities.  There can be no
assurance,  however,  that  all  permits  which  the  Company  may  require  for
construction  of mining  facilities  and  conduct of mining  operations  will be
obtainable on reasonable  terms or that such laws and  regulations,  or that new
legislation or modifications to existing legislation,  would not have an adverse
effect on any exploration or mining project which the Company might undertake.

Failure to comply with applicable laws,  regulations and permit requirements may
result in enforcement actions thereunder,  including orders issued by regulatory
or judicial  authorities  causing  operations to cease or be curtailed,  and may
include  corrective  measures  requiring capital  expenditures,  installation of
additional  equipment or remedial actions.  Parties engaged in mining operations
may be required to compensate  those  suffering  loss or damage by reason of the
mining  activities and may have civil or criminal fines or penalties imposed for
violation of applicable laws or regulations.

Amendments to current laws,  regulations  and permits  governing  operations and
activities of mining companies, or more stringent  implementation thereof, could
have a material  adverse  impact on the Company and cause  increases  in capital
expenditures  or  production  costs or  reduction  in  levels of  production  at
producing  properties or require  abandonment  or delays in  development  of new
mining properties.

To the best of the Company's  knowledge,  the Company is operating in compliance
with all applicable environmental regulations.

     (j)  Climate and Transportation

The  AK  Property  and  Baffin  Island  Property  are  subject  to  climate  and
transportation risks because of their remote northern location. Such factors can
add to the cost of exploration and development and operation,  thereby affecting
costs and profitability.

     (k)  Joint Venture Partner

The Company and the success of the AK  Property  is  dependent  on the  efforts,
expertise and capital resources of joint venture partner De Beers Canada and its
parent De Beers. De Beers Canada is the project  operator and is responsible for
exploring and developing  the AK Property.  The Company is dependent on De Beers
Canada for  accurate  information  about the AK  Property  and the  progress  of
exploration  and  development.  Both De Beers  Canada and the Company  agreed on
March 8, 2000 that it was unlikely  that the agreed upon rate of return would be
achieved from mining the 5034, Hearne and Tuzo pipes using the conventional open
pit method.  As a result,  the Company and De Beers Canada  agreed that De Beers
would  conduct  a  desktop  study  examining  the  costs  of both  open-pit  and
underground mining scenarios.

The results of the desktop  study were  presented on August 4, 2000 to the board
of directors  of the  Company.  The study showed that the modeled rate of return
for the mining of the three main diamond  pipes is below the agreed upon rate of
return  needed to  proceed to the next  phase,  but  sufficiently  close to only
require an increase  in diamond  revenues  of  approximately  15% to achieve the
agreed upon rate. A management committee was constituted and it was decided that
the best  options to advance  the  project  were an  additional  bulk sample and
additional  exploration.  The  bulk  sample  was  completed  in May 2001 and the
exploration  in June 2001.  The final results were reported on December 18, 2001
and were encouraging enough for De Beers to commit to another bulk sample in the
winter of 2002.  The results of the 2002 bulk  sample  program of the Hearne and
5034 pipes were  reported in April 2003 and the results of the updated  desk top
study two weeks later.  Even though the study shows that estimated capital costs
have increased only slightly and that the estimated operating costs have dropped
significantly, the effect



of lower diamond values  (especially  for the Hearne pipe) and a lower US dollar
against the Canadian  dollar since the 2000  desktop  study,  has resulted in an
internal  rate of return  (IRR),  which is well  below the agreed  hurdle  rate.
Combined with the current geo-political environment and uncertainties,  De Beers
decided to postpone a pre-feasibility  decision until next year when the desktop
study  will be  updated  again In the  meantime,  De Beers  will  continue  with
exploration  in the  Kelvin-Faraday  area  with an  objective  of  adding to the
existing resource.

However,  at the end of July,  2003, De Beers notified the Company that they had
started  work on a detailed  cost  estimate  of a  pre-feasibility  study of the
Kennady  Lake  diamond  deposits.  They based their  decision  on the  improving
geo-political  and economic  conditions which support  confidence in longer-term
diamond price projections. If approval is given in November 2003 by the De Beers
board, a pre-feasibility study will start in early 2004.

     (l)  Operating Hazards and Risks

Diamond exploration  involves many risks which even a combination of experience,
knowledge  and careful  evaluation  may not be able to overcome.  Operations  in
which the Company has a direct or indirect  interest  will be subject to all the
hazards and risks normally incidental to exploration, development and production
of resources,  any of which could result in work  stoppages,  damage to property
and possible environmental damage.

     (m)  Competition

The resource  industry is intensely  competitive  in all of its phases,  and the
Company competes with many companies  possessing greater financial resources and
technical  facilities  than  itself.  Competition  could  adversely  affect  the
Company's  ability to acquire  suitable  producing  properties  or prospects for
exploration  in the future.  The Company is required  under the  Monopros  Joint
Venture Agreement (see Item 4B - Information on the Company - Business Overview)
to sell its rough diamonds at a price that is reflective of the market price, to
The Diamond Trading Co., a wholly-owned  subsidiary of De Beers,  which controls
approximately 70% of the diamond market.  There is therefore little  competition
in this  regard.  The Company  really only  competes in the  acquisition  of new
properties.

     (n)  Inability to Meet Cost Contribution Requirements

The Company  may, in the future,  be unable to meet its share of costs  incurred
under  agreements  to which it is a party  and the  Company  may as a result  be
subject to loss of its rights to acquire interests in the properties  subject to
such agreements.

     (o)  Financing Risks

The Company's  current  operations do not generate any cash flow. If the Company
seeks additional equity financing, the issuance of additional shares will dilute
the interests of the Company's current shareholders.  The degree of the dilution
would depend on the stock price.  Based on the Company's  requirement  for about
$0.7 million a year, if the Company is able to complete equity  financing at the
current market price of approximately  $1.40 per share,  the potential  dilution
would be by  approximately  500,000 shares a year. The Company has  successfully
raised funds in recent years  through  share and warrant  issuances.  Failure to
obtain  such   additional   financing   could  result  in  delay  or  indefinite
postponement  of new  exploration  and a reduction in  administrative  expenses.
However,  the Company does not  anticipate  having to seek new equity  financing
this year as the warrants and some options are in the money.



     (p)  Dilution from Outstanding Securities

As at August 6, 2003,  there  were  2,153,400  options  and  1,205,878  warrants
outstanding  which,  if fully  exercised,  would  increase  the number of shares
outstanding by 3,359,278.  Such options and warrants, if fully exercised,  would
constitute  approximately  4.8% or 6.3% (out of  69,990,244  shares  (66,630,966
issued and outstanding,  including Mountain Glen shares, plus total warrants and
options) or 53,974,548  shares  (50,615,270  issued and  outstanding,  excluding
Mountain  Glen shares,  plus total  warrants and options)  respectively)  of the
Company's   resulting  share  capital   (including  the  exercised  options  and
warrants). It is unlikely that options or warrants would be exercised unless the
market price of the Company's  common shares  exceeds the exercise  price at the
date of exercise.  The  exercise of such options or warrants and the  subsequent
resale of such Common  shares in the public  market could  adversely  affect the
prevailing market price and the Company's ability to raise equity capital in the
future at a time and price  which it deems  appropriate.  The  Company  may also
enter into  commitments  in the future  which  would  require  the  issuance  of
additional  common shares and the Company may grant  additional  share  purchase
warrants and stock options. Any share issuances from the Company's treasury will
result in immediate dilution to existing shareholders.

     (q)  Liquidity in Trading Market

The Company's  shares trade on the Toronto Stock Exchange ("TSX") and are quoted
on the NASD OTCBB.  The primary  market for the Company's  shares is the TSX and
the trading volume for the Company's shares at the TSX was approximately  30,000
shares per day during the fiscal year ended March 31, 2003.

     (r)  Conflicts of Interest

At the present time,  except to the extent that Jan Vandersande has a Consulting
Agreement with the Company (see Item 6C - Board Practices), none of the officers
and  directors  are in a position  of  conflict of  interest.  However,  certain
officers and directors of the Company may become  associated  with other natural
resource companies that acquire interests in mineral properties.

Such  associations may give rise to conflicts of interest from time to time. The
directors  of the Company are  required by law to act honestly and in good faith
with a view to the best  interest of the Company  and to disclose  any  interest
which they may have in any project or opportunity of the Company.  If a conflict
of interest  arises at a meeting of the board of  directors,  any  director in a
conflict will  disclose his interest and abstain from voting on such matter.  In
determining  whether  or not the  Company  will  participate  in any  project or
opportunity,  the director will  primarily  consider the degree of risk to which
the Company may be exposed and its financial position at that time.

     (s)  Dependence on Key Management Employees

The nature of the Company's  business,  its ability to continue its  exploration
and  development  activities  and to thereby  develop a competitive  edge in its
marketplace  depends,  in large part,  on its  ability to attract  and  maintain
qualified key management  personnel.  Competition for such personnel is intense,
and there can be no  assurance  that the  Company  will be able to  attract  and
retain such personnel.  The Company's  development to date has depended,  and in
the future will continue to depend, on the efforts of its key management figure,
Jan Vandersande,  who has entered into a Consulting  Agreement with the Company:
See, Item 7B -Related party transactions and Item 6C - Board Practices.  Loss of
the key person could have a material adverse effect on the Company.  The Company
does not maintain key-man life insurance on Jan Vandersande.



     (t)  Fluctuations in Company Stock Prices

Prices  for the  Company's  shares  on both the TSX and  NASD  OTCBB  have  been
extremely volatile.  The price for the Company's common shares on the TSX ranged
from $0.62 (low) and $2.26  (high)  during the fiscal year ended March 31, 2003,
and from $0.60 (low) to $1.95 (high)  during the fiscal  quarter  ended June 30,
2003.  Any  investment  in the  Company's  securities  is  therefore  subject to
considerable fluctuations in price.

     (u)  Currency Rate Fluctuations

Feasibility and other studies conducted to evaluate the Company's properties are
denominated in U.S. dollars,  and the Company conducts a significant  portion of
its  operations  and  incurs a  significant  portion of its  administrative  and
operating  costs in Canadian  dollars.  The exchange  rate for  converting  U.S.
dollars into Canadian dollars has fluctuated in recent months. Accordingly,  the
Company is subject to fluctuations in the rates of currency exchange between the
U.S.  dollar and the Canadian  dollar,  and these  fluctuations  in the rates of
currency  exchange  may  materially  affect the  Company's  financial  position,
results of operations and timing of the development of its properties.

     (v)  Penny Stock Rules

Broker-dealers  may be discouraged from effecting  transactions in the Company's
shares  because  they are  considered  penny stocks and are subject to the penny
stock rules.

Rules 15g-1  through  15g-9  promulgated  under the  Exchange  Act impose  sales
practice and disclosure  requirements on NASD  brokers-dealers who make a market
in "a penny  stock." A penny stock  generally  includes  any  non-NASDAQ  equity
security  that has a market price of less than US$5.00 per share.  The Company's
shares  are  quoted on the NASD  OTCBB and the  closing  price of the  shares on
August 5, 2003 was  US$0.99.  Purchases  and sales of the shares  are  generally
facilitated by NASD  broker-dealers who act as market makers for the shares. The
additional   sales   practice   and   disclosure   requirements   imposed   upon
brokers-dealers may discourage broker-dealers from effecting transactions in the
shares, which could severely limit the market liquidity of the shares and impede
the sale of the shares in the secondary market.

Under the penny stock regulations, a broker-dealer selling penny stock to anyone
other than an  established  customer or  "accredited  investor"  (generally,  an
individual  with  net  worth in  excess  of  US$1,000,000  or an  annual  income
exceeding US$200,000, or US$300,000 together with his or her spouse) must make a
special  suitability  determination  for the  purchaser  and  must  receive  the
purchaser's  written  consent  to the  transaction  prior  to sale,  unless  the
broker-dealer or the transaction is otherwise exempt.

In addition,  the penny stock regulations  require the broker-dealer to deliver,
prior to any transaction involving a penny stock, a disclosure schedule prepared
by the Commission  relating to the penny stock market,  unless the broker-dealer
or the  transaction is otherwise  exempt.  A  broker-dealer  is also required to
disclose   commissions   payable  to  the   broker-dealer   and  the  registered
representative   and  current   quotations  for  the  securities.   Finally,   a
broker-dealer  is required to send monthly  statements  disclosing  recent price
information  with  respect to the penny stock held in a  customer's  account and
information with respect to the limited market in penny stocks.

     (w)  De Beers Support



The exploration of the AK Property has been primarily funded by De Beers, and De
Beers Canada has made an equity investment in the Company.  However, there is no
assurance  that the level of support  provided by De Beers will  continue in the
future.

Item 4 Information on the Company.


     A.   History and development of the Company.

The Corporate Organization

The Registrant,  Mountain  Province  Diamonds Inc.,  formerly  Mountain Province
Mining  Inc.,  was  formed on  November  1, 1997 by the  amalgamation  (the "MPV
Amalgamation") of Mountain Province Mining Inc. ("Old MPV") and 444965 B.C. Ltd.
("444965")  pursuant  to  an  amalgamation   agreement  (the  "MPV  Amalgamation
Agreement") dated as of August 21, 1997.

Under the terms of the MPV Amalgamation  Agreement, as at November 1, 1997, each
Old MPV  share  was  exchanged  for one MPV  Share  and each  444965  share  was
exchanged for approximately 0.80 of one MPV Share. The conversion ratios reflect
the respective  interests of Old MPV and 444965 in the AK-CJ Properties prior to
the date of the MPV Amalgamation.

Old MPV was incorporated  under the laws of British Columbia on December 2, 1986
and was  engaged  in the  exploration  of  precious  and base  mineral  resource
properties until the date of the MPV Amalgamation.  Prior to the date of the MPV
Amalgamation, Old MPV held an undivided 50% interest in the AK-CJ Properties and
an interest in each of the other  properties which are currently held by MPV, as
described below.

444965, a wholly-owned  subsidiary of Glenmore Highlands Inc., (Glenmore being a
former  controlling  shareholder  of the Company as defined under the Securities
Act, B.C.) prior to the MPV  Amalgamation,  was  incorporated  under the laws of
British  Columbia on August 20, 1993.  Prior to the MPV  Amalgamation,  444965's
only  material  asset  consisted  of a  40%  undivided  interest  in  the  AK-CJ
Properties.

As of March 31,  2000,  the Company had one  wholly-owned  subsidiary,  Mountain
Province Mining Corp. (USA).

On April 4, 2000, the Company incorporated a wholly-owned  subsidiary,  Mountain
Glen  Mining  Inc.  in  Alberta.  Pursuant  to  an  arrangement  agreement  (the
"Arrangement  Agreement")  with  Glenmore  dated  May  10,  2000,  Glenmore  was
amalgamated  with  Mountain  Glen  effective  as of  June  30,  2000  to  form a
wholly-owned  subsidiary  (also known as  "Mountain  Glen  Mining  Inc.") of the
Company.  All Glenmore Shares were exchanged for common shares in the Company on
the basis of 0.5734401  MPV Shares to one Glenmore  Share,  and Glenmore  Shares
were  concurrently  cancelled.  All of the  assets of  Glenmore  are now held by
Mountain Glen, including  16,015,696 MPV Shares previously held by Glenmore.  It
is expected that, in due course, these MPV Shares will be cancelled.

Glenmore had two wholly-owned subsidiaries,  Baltic Minerals BV, incorporated in
the  Netherlands,  and Baltic  Minerals  Finland  OY,  incorporated  in Finland.
Pursuant to the Arrangement, these companies became wholly-owned subsidiaries of
the Company.

The Company  changed  its name from  Mountain  Province  Mining Inc. to Mountain
Province  Diamonds Inc.  effective  October 16, 2000. It commenced trading under
its new name on the TSX on October 25, 2000.



The Company is domiciled in Canada.

The names of the Company's  subsidiaries,  their dates of incorporation  and the
jurisdictions  in which they were  incorporated as at the date of filing of this
Annual Report, are as follows:



                                                                                   
- --------------------------------------------- --------------------------------- --------------------------------------

                  Name of                                 Date of                           Jurisdiction
                 Subsidiary                            Incorporation                      of Incorporation
- --------------------------------------------- --------------------------------- --------------------------------------


Mountain Province Mining Corp. (USA)                   September 18, 1987                Nevada, U.S.A.

Mountain Glen Mining Inc.                              June 30, 2000                     Alberta, Canada

Baltic Minerals BV                                     January 26, 1996                  The Netherlands

Baltic Minerals Finland OY                             May 18, 1994                      Finland
- --------------------------------------------- --------------------------------- --------------------------------------


The Subsidiaries of the Company are as follows:

            --------------------------------------------------------
            !                                                      !
            !            Mountain Province Diamonds Inc.           !
            !                 (British Columbia)                   !
            --------------------------------------------------------
                                        !
               --------------------------------------------------
               !                                                 !
  ----------------------------                     ----------------------------
  !      Mountain Glen       !                     !  Mountain Province Mining !
  !      Mining Inc.*        !                     !        Corp. (USA)        !
  !         (100%)           !                     !           (100%)          !
  ----------------------------                     ----------------------------
               !
  ----------------------------
  !                          !
  !   Baltic Minerals BV     !
  !         (100%)           !
  ----------------------------
               !
  ----------------------------
  !                          !
  !   Baltic Minerals        !
  !       Finland OY         !
  !         (100%)           !
  ----------------------------

          *    Mountain  Glen,  pursuant  to the  Arrangement,  holds a total of
               16,015,696  MPV Shares in the  Company.  It is  anticipated  that
               these shares will be cancelled in due course.

The Company's exploration office is at Suite 212, 525 Seymour Street, Vancouver,
British  Columbia V6B 3H7 (Tel: (604)  687-0122).  The Company's  registered and
records  office and  address  for  service in  British  Columbia  is care of its
solicitors,  Campney & Murphy, Suite 2100, 1111 West Georgia Street,  Vancouver,
British  Columbia,  V6E 4M3. The Company's  administrative  office is located at
Empire Towers 1, 3633 East Inland Empire Blvd., Suite 265, Ontario,  California,
USA 91764.  The telephone  number is (909) 466-1411 and the facsimile  number is
(909) 466-1409.

The Company's  initial public offering on the Vancouver  Stock Exchange  ("VSE")
was  pursuant  to a  prospectus  dated  July 28,  1988 and was only  offered  to
investors in British Columbia. The Company



listed its shares on the Toronto Stock Exchange  ("TSX")  (Trading Symbol "MPV")
on January 22, 1999 and on the Nasdaq  Smallcap  Market (Trading Symbol "MPVIF")
on May 1, 1996. Its shares were delisted from the Vancouver  Stock Exchange (now
known as the TSX Venture  Exchange and prior to that,  as the  Canadian  Venture
Exchange  ("CDNX")) on January 31, 2000 and from the Nasdaq  Smallcap  Market on
September 29, 2000.  Presently,  the Company's shares trade on the TSX under the
symbol "MPV" and also on NASD's  OTC-Bulletin Board under the symbol "MPVI". The
Company is also registered extra-provincially in Manitoba, Sasketchewan, and the
Northwest Territory, and is a reporting issuer in British Columbia,  Ontario and
Alberta.  The Company files reports in the United States  pursuant to section 13
of the Securities Exchange Act of 1934, as amended.

Principal Capital Expenditures and Divestitures

There are no  principal  capital  expenditures  and  divestitures  currently  in
progress.

Acquisitions and Dispositions

On October 10, 2002, the Company granted an option for the acquisition by Vision
Gate Ventures  Limited of a 70% interest in its Haveri Gold  Property,  which is
not  considered  to be a property  that is material to the  Company.  Other than
this,  there were no  acquisitions  and  dispositions  undertaken by the Company
during the past three fiscal years or during the period since the  completion of
the more recently completed fiscal year.

     B.   Business Overview.

Description of Business

1.1  Introduction

The Company is a natural resource property  exploration company. The Company has
interests in several  natural  resource  properties,  the most  significant  and
principal  property  being a 44.1%  interest in the AK  Property  located in the
Northwest Territories. See "Item 4D - Properties, plants and equipment".

The Company, as yet, does not have any commercially viable resource  properties.
Bulk sampling and exploration drilling continues on the AK Property.

1.2 Historical Corporate Development

In August 1992,  the Company  acquired a 100%  interest in the AK-CJ  Properties
that  encompassed  approximately  520,000 acres.  Pursuant to an agreement dated
November 18, 1993 (as amended),  the Company optioned 40% of its interest in the
AK-CJ Claims to 444965, a subsidiary of Glenmore. Pursuant to an agreement dated
August 16, 1994 (as  amended),  the Company also optioned 10% of its interest in
the AK-CJ  Claims to Camphor.  Following  the merger of the Company with 444965,
the Company held a 90% interest in the AK-CJ Claims, and Camphor,  the remaining
10%.  Exploration work in the form of soil sampling,  aerial geophysical surveys
and  geochemical and  geophysical  analysis were undertaken on these  properties
during the period from 1992 to 1995.

During Fiscal 1995, the Company  focused the majority of its attention on the AK
Property.  In February 1995, a  diamondiferous  kimberlite  was discovered  (the
"5034"  kimberlite  pipe) and a program of delineation  drilling was undertaken.
Activity  during  this  period on the  Company's  other  properties  was minimal
because of the focus on the AK Property.

During 1996, the Company  completed a 104-tonne  mini-bulk  sample from the 5034
kimberlite  pipe.  The  results  indicated  an average  grade of 2.48 carats per
tonne. During 1997, the Company concluded a joint



venture  agreement (the "Monopros  Joint Venture  Agreement")  with Monopros,  a
wholly-owned  subsidiary  of De  Beers,  and now  known as De Beers  Canada,  to
develop the AK-CJ Properties. This agreement provided that De Beers Canada could
earn up to a 60%  interest in the  project by  conducting  exploration  and bulk
sampling on one or more new  kimberlite  deposits.  As well, De Beers Canada was
required to complete a feasibility  study and fund  development and construction
of a commercial-scale mine.

During  the 1997  exploration  season,  De Beers  Canada  discovered  three  new
kimberlite  pipes  on  the  AK  property:   Tesla,  Tuzo  and  Hearne.  All  are
diamondiferous.

During the spring of 1998, De Beers Canada conducted  mini-bulk  sampling on the
three new pipes as well as the 5034 kimberlite pipe, the original pipe discovery
on the AK Property. The results were positive enough for De Beers to commit to a
major bulk sample in 1999.

During  1999,  De Beers  Canada  completed a major bulk sample of the four major
pipes.  For the 5034 kimberlite pipe, a total of 1044 carats were recovered from
609 tonnes of  kimberlite.  For the  Hearne  pipe,  a total of 856  carats  were
recovered  from 469  tonnes of  kimberlite.  For the Tuzo  pipe,  a total of 533
carats were  recovered  from 523 tonnes of  kimberlite.  For the Tesla pipe,  64
carats were recovered from 184 tonnes of kimberlite.  The Tesla pipe was too low
grade to be considered as part of a mine plan.

On March 8, 2000 the Company  agreed to extend the  feasibility  study  decision
date and De Beers Canada agreed to carry all exploration,  development and other
project costs.

On August 4, 2000,  De Beers Canada  presented the desktop study to the Company.
Upon  presentation,  De Beers  Canada was deemed to earn a 51%  interest  in the
AK-CJ Properties.  Consequently, the Company was left with a 44.1% interest, and
Camphor  Ventures Inc. with a 4.9%  interest in the AK-CJ  Properties.  The main
conclusion of the desktop  study was that only a 15 percent  increase in diamond
revenues was needed for De Beers Canada to proceed to the feasibility stage.

On May 4, 2001, De Beers Canada  completed the bulk sample program of the Hearne
and 5034 pipes. A total of approximately 307 tonnes and 550 tonnes of kimberlite
were recovered from the Hearne and 5034 pipes  respectively.  The modeled values
of the  diamonds  recovered  from the Hearne and 5034  pipes  were  reported  on
December 18, 2001 and the results were encouraging enough for De Beers to commit
to  another  bulk  sample  during the winter of 2002.  The main  purpose  was to
recover  more high  quality,  top color  diamonds,  like the  9.9-carat  diamond
recovered in the 2001 program.

The CJ Property claims  substantially  lapsed in November 2001 and the remaining
CJ Property claims lapsed on August 17, 2002.

The winter 2002 bulk sample  program of the 5034 and Hearne pipes was  completed
on April 20, 2002.  The modeled  grades and values per carat for both pipes were
used to update the desktop study.  De Beers Canada's 2003 updated  desktop study
showed that, due to the decrease in diamond prices since  September 11, 2001 and
a lower U.S.  dollar against the Canadian  dollar,  the projected  return on the
project would be slightly less than that obtained previously. As a result of the
indicated Internal Rate of Return,  well below the agreed hurdle rate of 15%, De
Beers decided to postpone a  pre-feasibility  decision  until the next year when
the desktop study will be updated again.

At the end of July,  2003,  De Beers  notified the Company that they had started
work on a detailed cost estimate of a pre-feasibility  study of the Kennady Lake
diamond deposits.  They based their decision on the improving  geo-political and
economic  conditions  which  support  confidence  in  longer-term  diamond price
projections.  If  approval is given in November  2003 by the De Beers  board,  a
pre-feasibility study will start in early 2004.



For further particulars,  reference should be made to Item 4D - Property, plants
and equipment - Principal Properties - Resource Properties.

As of June 30, 2000, the Company,  through the  amalgamation of its wholly-owned
subsidiary,  Mountain Glen, with Glenmore,  acquired the principal properties of
Glenmore,  namely,  the Haveri and Sirkka gold properties,  which are located in
Finland, and indirect interests in the Telegraph and Springtime Property located
the United States.  The Sirkka,  Telegraph and  Springtime  claims all lapsed in
2002/2003.  The  Company's  interests  in the Ketza River  Property and Molanosa
Projects have also lapsed.  The Company has a 50% interest (acquired pursuant to
an  option/joint  venture  agreement with Opus Minerals Inc., now known as First
Strike  Diamonds  Inc. on July 13, 1998) in claims held by Opus Minerals Inc. in
the northern  end of the Baffin  Island.  The Company  also  acquired a group of
seven  claims in  northeastern  Manitoba  on March 20,  2001.  Five of the seven
claims  lapsed in 2003 and two remain in good  standing for about one more year.
No work is planned and the Company  plans to let the claims  lapse.  The Company
does not regard these properties as material and they are only briefly discussed
in this annual report. The Haveri property was  joint-ventured  with Vision Gate
Ventures Limited (now known as Northern Lion Gold Corp.). The Company is seeking
a joint venture partner to further pursue  opportunities  with the Baffin Island
property.  For  further  particulars,  reference  should  be  made  to Item 4D -
Property, plants and equipment - Other Properties.

Plan of Operations for Fiscal Year ending March 31, 2004

In August 2000, De Beers Canada  completed a desktop study,  which evaluated the
cost of  conventional  open pit mining of the pipes  combined  with the  modeled
revenue  estimates from the 1999 bulk sample.  The study showed that the modeled
rate of return to mine the three main  diamond  pipes is below the  agreed  upon
rate of return  needed to proceed to the next phase.  In terms of the  agreement
between  Mountain  Province  and De Beers  Canada,  a management  committee  was
constituted at that time and a strategy with two main  components to advance the
project was  decided  upon.  The first  component  was bulk  sampling to recover
additional diamonds.  The second component was an aggressive exploration program
aimed at adding to the existing resource.  Any additional kimberlite discoveries
would change the economics of the project and if of sufficient  value positively
impact the modeled rate of return.

The Hearne and 5034 pipes were bulk sampled in 2001 and 2002. The results of the
two  programs  (modeled  revenues per tonne) were used as inputs for the updated
desktop study, which was presented to the Company by De Beers on April 15, 2003.
Even though the study shows that  estimated  capital costs have  increased  only
slightly and that the estimated operating costs have dropped significantly,  the
effect of lower diamond values  (especially  for the Hearne pipe) and a lower US
dollar against the Canadian dollar since the 2000 desktop study, has resulted in
an internal rate of return (IRR)  slightly  less than that obtained  previously.
Considering  the  indicated  IRR,  which is well below the agreed  hurdle  rate,
combined with the current geo-political environment and uncertainties,  De Beers
decided to postpone a pre-feasibility  decision until next year when the desktop
study will be updated  again.  In the  meantime,  De Beers  will  continue  with
exploration  in the  Kelvin-Faraday  area  with an  objective  of  adding to the
existing resource.

At the end of July,  2003,  De Beers  notified the Company that they had started
work on a detailed cost estimate of a pre-feasibility  study of the Kennady Lake
diamond deposits.  They based their decision on the improving  geo-political and
economic  conditions  which  support  confidence  in  longer-term  diamond price
projections.  If  approval is given in November  2003 by the De Beers  board,  a
pre-feasibility study will start in early 2004.



Source of Funds for Fiscal Years Ended March 31, 2003 and 2002

During fiscal year ended March 31, 2003 ("fiscal  2003"),  the Company  received
$607,829 for issuing  544,900  shares upon  exercise of various  stock  options.
During fiscal 2003, the Copany received  $1,640,985 upon exercise of warrants to
purchase  2,169,766  shares.  During  fiscal year ended March 31, 2002  ("fiscal
2002"),  the Company  raised a net amount of $949,409 by a private  placement of
1,636,912  units to five  placees  at a price  of  $0.58  per  unit.  Each  unit
comprised one share and one 1,636,912  units to five placees at a price of $0.58
per unit. Each unit comprised one share and one non-transferable  share purchase
warrant.  Each  warrant may be  exercised  to purchase  one common  share of the
Company at a price of $0.58 per share  until  December  6, 2004.  During  fiscal
2002,  the Company  received  $18,000 for issuing 30,000 shares upon exercise of
stock options.

Use of Working Capital for Fiscal 2004

The  Company  will use its  working  capital  for  general  operating,  investor
relations  and  administrative   expenses.  The  Company  anticipates  that  its
operating and  adminstrative  budget will be  approximately  $700,000 for fiscal
2004.

Foreign Assets

Until the  Arrangement  with Glenmore  Highlands Inc., with the exception of the
Maris Project (which has been dropped because the claims have lapsed) all of the
Company's  assets were  located in Canada  (see Item 4D -  Property,  plants and
equipment - Principal  Properties).  Since the Arrangement,  the Company has not
generated any revenue from operations . Pursuant to the Arrangement,  the assets
of Glenmore,  including  properties in Finland,  were acquired by Mountain Glen.
See  Item 4A -  History  and  development  of the  Company  -  Acquisitions  and
Dispositions.

Competition

Competition  exists from other mining  exploration and development  companies in
respect of the  acquisition  of new  natural  resource  properties.  Many of the
mining  companies with which the Company  competes have operations and financial
strength many times that of the Company.  Competition could adversely affect the
Company's ability to acquire suitable properties or prospects for exploration in
the future.

The  Company  is  contractually  bound  to sell  its  diamonds  from  the  AK-CJ
Properties  to The Diamond  Trading  Co.,  pursuant to the terms of the Monopros
Joint  Venture  Agreement  (see Item 4B -  Business  Overview -  Description  of
Business - Historic Corporate Development).  The Diamond Trading Company in turn
sells its rough diamonds to their sightholders.

Government Regulation

The  current  and  anticipated  future  operations  of  the  Company,  including
development activities and commencement of production on its properties, require
permits from various federal, territorial and local governmental authorities and
such  operations  are and will be  governed  by laws and  regulations  governing
prospecting,  development, mining, production, exports, taxes, labour standards,
occupational health, waste disposal,  toxic substances,  land use, environmental
protection,  mine safety and other matters. Companies engaged in the development
and operation of mines and related  facilities  generally  experience  increased
costs,  and delays in production and other  schedules as a result of the need to
comply with applicable laws,  regulations and permits. The Company's exploration
activities  and its  potential  mining and  processing  operations in Canada are
subject to various laws governing  land use, the protection of the



environment,   prospecting,  development,  production,  exports,  taxes,  labour
standards,  occupational health, waste disposal,  toxic substances,  mine safety
and other matters.

In most jurisdictions, mining is regulated by conservation laws and regulations.
In the Northwest  Territories,  the mining  industry  operates  primarily  under
Canadian  federal law because the  ownership  of water,  fisheries,  surface and
sub-surface  rights to land are vested in the federal  government.  Accordingly,
federal legislation governs prospecting,  development, production, environmental
protection, exports, income taxes and collective bargaining. Matters of a purely
local or territorial nature, such as mine safety standards, the establishment of
a minimum  wage,  education  and  local  health  services  are  matters  for the
Territorial  government.  With respect to environmental  matters,  the Company's
properties  are  subject  to the  Canadian  Environmental  Protection  Act,  the
Fisheries Act, the Northwest  Territories  Waters Act (the "Waters Act") and the
Arctic Waters Pollution Prevention Act, which govern mine effluent, tailings and
reclamation and closure costs relating to the mine. The Water Board  established
under the Northwest Territories Waters Act has the responsibility to receive and
to process  applications  for water use  licenses.  These  licenses  outline the
volume of water the mine may use, how tailings will be treated,  the quality and
types of waste that may be deposited into the receiving  environment and how the
quality and types of waste may be monitored and contain  requirements  regarding
the restoration of the tailings disposal and other affected areas. Also included
under the Northwest  Territorial  jurisdiction are the Apprentices and Tradesmen
Regulations,  the Boiler and Pressure Vessel Regulations,  Business License Fire
Regulations,  Explosive Use  Regulations,  Fire Prevention Act, Labour Standards
Ordinance,  the Northwest  Territories  Mining Safety Act, Workers  Compensation
Act,  Public  Health  Ordinance,   Emergency   Measures  Act  and  Environmental
Protection   Ordinance.   The  Clean  Air  Act,  the  Fisheries  Act,  Northwest
Territories Waters Act, Territorial Lands Act, Transportation of Dangerous Goods
Act and the Canada Mining Regulations are federal regulations. Failure to comply
with  provincial  and/or  federal  regulations  may result in cease work  orders
and/or fines.

The  Company's  operations  and  exploration  activities  are  also  subject  to
substantial regulation under these laws by governmental agencies and may require
that the Company obtain permits from various governmental  agencies. The Company
believes it is in substantial  compliance with all material laws and regulations
which  currently apply to its  activities.  There can be no assurance,  however,
that all  permits  which the Company  may  require  for  construction  of mining
facilities  and conduct of mining  operations  will be  obtainable on reasonable
terms  or  that  such  laws  and   regulations,   or  that  new  legislation  or
modifications to existing  legislation,  would not have an adverse effect on any
exploration or mining project which the Company might undertake.

Failure to comply with applicable laws, regulations and permitting  requirements
may  result  in  enforcement  actions  thereunder,  including  orders  issued by
regulatory or judicial  authorities causing operations to cease or be curtailed,
and may include corrective measures requiring capital expenditures, installation
of  additional  equipment  or  remedial  actions.   Parties  engaged  in  mining
operations  may be  required to  compensate  those  suffering  loss or damage by
reason  of the  mining  activities  and may  have  civil  or  criminal  fines or
penalties imposed for violation of applicable laws or regulations.

Amendments to current laws,  regulations  and permits  governing  operations and
activities of mining companies, or more stringent  implementation thereof, could
have a material  adverse  impact on the Company and cause  increases  in capital
expenditures  or  production  costs or  reduction  in  levels of  production  at
producing  properties or require  abandonment  or delays in  development  of new
mining properties.

To the best of the Company's  knowledge,  the Company is operating in compliance
with all applicable environmental regulations.



     C.   Organizational structure

See  Item  4A  -  History  and  development  of  the  Company  -  The  Corporate
Organization.

     D.   Property, plants and equipment.

Principal Properties

In this section on  "Principal  Properties",  the reader  should note that where
disclosures  pertaining  to mineral  resources  are made,  these are not mineral
reserves and do not have demonstrated  economic viability.  The Company has only
one principal property, the AK Property. All the Company's properties are in the
exploration  stage and there are no reserve  estimates  at this time.  All other
estimates have been made at De Beers and De Beers Canada.

A "mineral  resource"  as defined  under the  Canadian  Institute  of Mining and
Metallurgy  Guidelines (the "CIM Guidelines"),  which are different from the SEC
guidelines  (the  "SEC  Guidelines")  set  forth  in  Guide 7 under  Item 802 of
Regulation S-K, means a concentration or occurrence of natural, solid, inorganic
or  fossilized  organic  material  in or on the  Earth's  crust in such form and
quantity and of such a grade or quality  that it has  reasonable  prospects  for
economic extraction.  The location,  quantity, grade, geological characteristics
and continuity of a Mineral  Resource are known,  estimated or interpreted  from
specific geological evidence and knowledge. See "Glossary of Technical Terms" in
this Report.

The terms "mineral  resource",  "measured mineral resource",  "indicated mineral
resource",  "inferred  mineral resource" used in this report are Canadian mining
terms as  defined in  accordance  with  Canadian  National  Instrument  43-101 -
Standards of Disclosure for Mineral Projects under the guidelines set out in the
CIM  standards.  The  following  discussion  and  tables  below  use  the  terms
"measured"  and  "indicated  resources",  and inferred  resources".  The Company
advises U.S.  investors that while such terms are recognized and permitted under
Canadian  regulations,  the U.S.  Securities  and Exchange  Commission  does not
recognize them. U.S.  INVESTORS ARE CAUTIONED NOT TO ASSUME THAT ANY PART OR ALL
OF THE MINERAL  DEPOSITS  DESCRIBED AS "MEASURED" OR "INDICATED  RESOURCES" WILL
EVER BE CONVERTED INTO RESERVES. U.S. INVESTORS ARE ALSO CAUTIONED NOT TO ASSUME
THAT ANY PART OR ALL OF AN "INFERRED  RESOURCES"  EXISTS,  OR IS ECONOMICALLY OR
LEGALLY MINEABLE.

A mineral  resource  estimate  is based on  information  on the  geology  of the
deposit and the continuity of mineralization except that assumptions  concerning
economic and operating  conditions  including cut-off grades and economic mining
widths,  based on factors typical for the type of deposit,  may be used if these
factors have not been  specifically  established  for the deposit at the time of
the mineral resource estimate.

A mineral  resource is  categorised  on the basis of the degree of confidence in
the estimate of quantity and grade or quality of the deposit, as follows:

     "Inferred Mineral Resource" means that part of a Mineral Resource for which
     quantity and grade or quality can be  estimated on the basis of  geological
     evidence and limited  sampling and  reasonably  assumed,  but not verified,
     geological  and  grade  continuity.   The  estimate  is  based  on  limited
     information  and sampling  gathered  through  appropriate  techniques  from
     locations such as outcrops, trenches, pits, workings and drill holes.

     "Indicated  Mineral  Resource"  means that part of a Mineral  Resource  for
     which   quantity,   grade  or  quality,   densities,   shape  and  physical
     characteristics,  can be estimated with a level of confidence sufficient to
     allow the appropriate application of technical and economic parameters,  to
     support mine  planning  and  evaluation  of the  economic  viability of the
     deposit.  The estimate is based on



     detailed and reliable  exploration and testing information gathered through
     appropriate  techniques  from locations such as outcrops,  trenches,  pits,
     workings and drill holes that are spaced  closely enough for geological and
     grade continuity to be reasonably assumed.

     "Measured Mineral Resource" means that part of a Mineral Resource for which
     quantity, grade or quality,  densities,  shape and physical characteristics
     are so  well  established  that  they  can  be  estimated  with  confidence
     sufficient to allow the  appropriate  application of technical and economic
     parameters,  to support production  planning and evaluation of the economic
     viability  of the  deposit.  The estimate is based on detailed and reliable
     exploration,  sampling and testing information gathered through appropriate
     from locations such as outcrops,  trenches,  pits,  workings and drillholes
     that are  spaced  closely  enough  to  confirm  both  geological  and grade
     continuity.

In this Annual  Report,  because the Company is a Canadian  company  with mining
properties in Canada,  the  definitions  and  disclosures are made in accordance
with the  Canadian  Standards  as  required by Canadian  law for  disclosure  of
material facts.

It should be noted that the SEC Guidelines  defines "reserve" to mean "that part
of a mineral  deposit  which  could be  economically  and legally  extracted  or
produced at the time of the reserve determination". No such reserves, as defined
in the SEC Guidelines or as defined in the CIM Guidelines,  have been determined
to exist at the present time.

Readers  should read the  Independent  Qualified  Person's  Review and Technical
Report dated as of June 16, 2003 (the "Technical  Report") entitled "Gahcho Kue,
Northwest Territories,  Canada" prepared for the Company by Malcolm L. Thurston,
Ph.D.,  MAusimm,  which Technical Report is incorporated  herewith by reference.
The Technical Report has been submitted to the Securities Exchange Commission in
the United States and filed with the relevant  Securities  Commissions in Canada
on SEDAR.

Description of Property

     (a)  Executive Offices

The Company's  exploration  office is located at Suite 212, 525 Seymour  Street,
Vancouver, British Columbia V68 3H7. The administrative office is located in the
United  States at Empire  Tower 1,  3633 E.  Inland  Empire  Blvd.,  Suite  465,
Ontario,  California  91764. The Company  considers these premises  suitable for
current needs.

     (b)  Mineral Properties

The AK Property

CAUTIONARY NOTE TO U.S. INVESTORS CONCERNING ESTIMATES OF MEASURED AND INDICATED
RESOURCES:  The Company  advises U.S.  investors that while the terms  "Measured
resources"  and  "Indicated  resources"  are recognized and required by Canadian
regulations,  the U.S.  Securities  and Exchange  Commission  does not recognize
them. 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.

Of the Company's properties, the AK Property is currently under the most intense
exploration because of the discovery of the Kennady Lake Kimberlite Field and is
considered to be the Company's only principal property.



Location and Access

The AK Property,  located in the Mackenzie District of the Northwest Territories
is centred near  63(degree)30'  north and  109(degree)  30' west. It is situated
between Fletcher Lake and Walmsley Lake to the east, Kirk Lake to the north, and
Margaret Lake to the west. The property lies 150 kilometers  south-southeast  of
the main Dia Met  Minerals  Ltd.  ("Dia  Met")  and BHP  Diamonds  Inc.  ("BHP")
discoveries at Lac de Gras and 275 kilometers east-northeast of Yellowknife. The
major prospects are in the area of Kennady Lake.

A multitude of lakes provide access for ski and float equipped aircraft.  A dock
is available on Kennady Lake.  The Echo Bay Mines' winter road to the Lupin mine
site runs from  Yellowknife  along  MacKay  Lake,  which is about 70  kilometers
northwest of Kennady Lake.

Topography, Vegetation and Climate

The  property  lies in the  treeless  tundra  of the  "barren  lands"  some  290
kilometers  south of the Arctic Circle,  and much of the area is lake and muskeg
covered. The climate is extreme with -45(degree)C temperatures. Winter winds can
create extreme wind chill factors and extensive drifting snow. However,  average
annual snowfall rarely exceeds one meter,  most of which falls during autumn and
spring  storms.   Ice-up  and  break-up  occupy  most  of  September  and  June,
respectively,  during  which time access to the property is via the esker runway
at Kirk Lake camp.  The ice-free  season  generally  lasts two and a half months
from early July to mid-September.  Summer temperatures rarely reach 30(degree)C;
furthermore, storms can occur at any time.

Local relief is generally  extremely flat. The elevation of rolling hills varies
between 400 meters and 550 meters above sea level.

Acquisition - Joint Venture Agreement

The AK Property,  acquired in August 1992,  consists of 132  contiguous  claims,
which total  310,175  acres,  in the  Mackenzie  Mining  District,  NWT.  The AK
Property  forms a  nearly  rectangular  block,  which  is  about  25  kilometers
north-south  by 50 kilometers  east-west.  All of the claims  comprising  the AK
Property are in good standing and have no legal impediments.

Until August 3, 2000,  the AK Property and the CJ Property  (together the "AK-CJ
Properties")  were held by the Company,  as to 90%, and by Camphor Ventures Inc.
("Camphor"),  as to 10%. In March,  1997, Old MPV, 444965 and Camphor  announced
the Monopros  Joint  Venture  Agreement  with  Monopros (now De Beers Canada) in
connection  with the AK-CJ  Properties.  Operatorship  by De Beers Canada was to
occur  immediately and  operatorship  by Canamera was effectively  terminated at
that time.

Pursuant to the Monopros Joint Venture  Agreement dated March 6, 1997,  Monopros
would  earn  up to a 60%  interest  in the  AK-CJ  Properties  in  exchange  for
conducting an exploration program on the property and a bulk sampling program on
one or more  new  kimberlites,  completing  a  feasibility  study on one or more
kimberlites,  and funding the development and construction of a commercial mine.
On completion of a bulk sampling  program,  and if De Beers Canada  committed to
proceed with a full feasibility study, De Beers Canada would earn an initial 51%
interest,  increasing  to a  56%  or  60%  interest  (depending  on  alternative
arrangements  on  financing  the  feasibility  study)  on  the  commencement  of
commercial  production.  If on completion of the full bulk-sampling  program, De
Beers Canada did not commit to  proceeding  with a feasibility  study,  De Beers
Canada would earn only a 30% interest and the Company and Camphor would continue
to control the AK-CJ Properties.

Concurrently with entering into the Monopros Joint Venture  Agreement,  De Beers
Canada  subscribed  for  209,644  units of Old MPV at a price of $4.77 per unit,
each unit  consisting  of one common  share of Old



MPV and one non-transferable  warrant to purchase one additional common share of
Old MPV at $6.36 per share exercisable before March 6, 1999.

Under the  agreement,  De Beers Canada had until  September 15, 1999 to elect to
purchase a 51% interest in a 3% gross overriding royalty against production from
the property from the Company (as to 90%) and Camphor (as to 10%). This purchase
was completed in November 1999.

Pursuant to an amending  agreement  dated  December 17, 1999,  the Joint Venture
Agreement was amended with respect to costs of Stages 1, 2, 3 and 4 of the Joint
Venture Program. Also, as of December 7, 1999, the joint venture parties entered
into an Area of Interest Agreement, in respect of acquisition from third parties
in the designated Area of Interest, being a five kilometer zone as measured from
the boundary of the claims comprising the AK-CJ Properties.

Pursuant  to an  agreement  reached at a meeting on March 8, 2000,  the  parties
agreed  to amend  the  Monopros  Joint  Venture  Agreement  to  clarify  funding
obligations  between  the  parties  and to  enable  the  parties  to  defer  the
feasibility  study  decision  date in order to give  time to De Beers  Canada to
investigate  several  conventional  and alternative  mining  scenarios to be the
subject of the desktop  study.  As a result,  De Beers Canada agreed to fund all
exploration,  development  and other  project  costs  going  forward,  effective
immediately  and would earn a 51% interest upon completion of the desktop study.
The Company had been paying 44.1% of all project costs since July 1999.

On August  4,  2000,  the  desktop  study was  presented  to the  Company.  Upon
presentation,  De Beers  Canada was deemed to earn a 51%  interest  in the AK-CJ
Properties.  Consequently,  the  Company  was left  with a 44.1%  interest,  and
Camphor  Ventures  Inc.  with a 4.9%  interest in the AK-CJ  Properties.  The CJ
Property  substantially  lapsed in November  2001 with the remaining CJ Property
claims lapsing on August 17, 2002.

In August 2002 De Beers took 30 of the AK claims to lease.  These claims contain
all the  kimberlite  discoveries  at and in  Kennady  Lake,  MZ Lake  and in the
Kelvin-Faraday area. The remaining claims were permitted to lapse.

Regional Geological Setting

The AK  Property  is located  about 75  kilometers  south of Aylmer  Lake in the
southeastern corner of the Slave Craton. The Slave Craton,  about 400 kilometers
east-west  by 750  kilometers  north  south,  is an  integral  part of the North
American  Craton.  Except for Proterozoic  rocks,  mainly along the margin,  the
Slave is composed  dominantly  of Archean rocks greater than 2.4 Ga, which makes
it the oldest of the  Canadian  Shield.  This  Archean  setting  is  significant
because most  economic  kimberlites  are  restricted to stable  Archean  cratons
within continental  shield areas. It is therefore  consistent that a significant
kimberlite  province,  which hosts more than 150 kimberlite pipes, is centred in
the heart of the Slave Craton.  The first  kimberlites  were discovered there in
1991.

Kimberlites in the Slave Craton intrude granites,  metasedimentary rocks, and in
some cases,  diabase dykes.  Preliminary  dating of these kimberlites  indicates
that their  emplacement  occurred at various  times from  Paleozoic to Tertiary.
Kimberlite  pipes are known to have been emplaced in Late  Cretaceous and Eocene
in the Lac de Gras area, in Middle Jurassic and Late Ordovician  north of Lac de
Gras,  and in the Cambrian  south of Lac de Gras in the AK Property area. It has
been noted that  corridors  between  northwest  trending  diabase dykes may mark
preferred  locations for kimberlite  emplacement  in the Lac de Gras area.  Such
parallel  corridors may represent  major crustal  fracture zones that facilitate
ascent of kimberlite magma.



Late Wisconsinan  glaciation above the Slave Structural  Province climaxed about
20,000  years  ago.  Local and  regional  ice flow  patterns  show  considerable
variation.  Glacial  dispersion trends are further  complicated by englacial and
deglacial processes.

Detailed Geological Setting

Current regional mapping  indicates that the AK Property is 90% underlain mainly
by  unsubdivided  granitic rocks that intrudes the 10%, older  metavolcanic  and
metasedimentary rocks of the Yellowknife Supergroup.

A number of diamondiferous  kimberlite intrusions have been identified on the AK
Property.  Most have been located in the Kennady Lake area. The 5034  kimberlite
has been  dated  radiometrically  by the Rb-Sr  method on  phlogopite  as Middle
Cambrian  (539  Ma).  Drilling  has  encountered  the  5034  kimberlite,  Hearne
kimberlite,   Tesla  kimberlite,   Tuzo  kimberlite,   Wallace  kimberlite,  and
5034-South  kimberlite.  The number of kimberlite bodies  encountered  indicates
that the area may  represent a kimberlite  field,  referred to in this Report as
the Kennady Lake Kimberlite Field.

Quaternary Geology

At least two glaciations  have scoured the area and deposited a superficial till
veneer  over  bedrock.  This till is  generally  one to two  meters  thick,  but
occasionally it is up to ten meters thick. The predominant  direction of glacial
transport  is almost due east to west.  All the  glacial  features  and  related
deposits  appear to be related to the last glacial event,  the Late  Wisconsinan
glaciation.  There  is no  stratigraphic  evidence  of  deposits  from  previous
glaciation.

Work History

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 the  Department  of  Indian  Affairs  and
Northern  Development  ("DIAND").  Furthermore,  there is no record  of  diamond
exploration in the AK Property area prior to its staking in 1992.

5034 Kimberlite Pipe

The 5034 kimberlite pipe was the first kimberlite  discovered on the AK Property
in 1995, and consequently,  it is the best known on the property.  It is located
near the southeast corner of the AK Property under and adjacent to Kennady Lake.
It is a  diamondiferous  kimberlite.  The pipe  has an  irregular  shape  with a
surface  dimension of about 120 meters by 180 meters.  A 35 meter wide dyke-like
body extends from the pipe some 300 meters to the north- northeast.  The overall
near surface area is about 2.15 hectares,  and the majority of it is overlain by
the shallow water of Kennady Lake.

Diamond recoveries by caustic fusion of drill core from the 5034-kimberlite pipe
was performed by The  Saskatchewan  Research  Council and  Canamera.  Results in
terms of "carats  per  tonne"  and  "number of macros per ten kg" are of similar
magnitude  to the results  reported by Dia Met,  Aber and Ashton from the Lac de
Gras area. The results were encouraging enough for a mini-bulk sample in 1996.

Mini-Bulk Sample of 5034 Kimberlite Pipe

A 104 tonne  "mini-bulk"  test from 42 bulk sample drill holes was  performed to
obtain macro grade estimates and to obtain a reasonable quantity of diamonds for
preliminary  valuation.  Macro  grade



estimates  from the  "mini-bulk"  test by  Canamera  on drill core from the 5034
kimberlite  pipe is reported in Table 1. Crushing for this test was performed as
follows.  The first 24.6  tonnes of the  "mini-bulk"  sample  were  crushed  and
screened at 24  millimeters,  followed by systematic step recrushing at 12, 6, 3
and 1.5 millimeters.  The second 79.0 tonne "mini-bulk" sample involved the same
crushing  stages,  except that the final crush to 1.5  millimeters  was omitted.
Diamond recovery  utilized a Sortex x-ray  fluorescence  machine,  a dense media
separation  plant,  and a grease table.  Recovery of all diamonds that would not
pass  through a 20 mesh (0.85  millimeter)  screen was  attempted.  3,895 stones
totaling 257 carats were collected.  Thus, the average stone size is about 0.065
carats.

                                     Table 1

           Diamond Recoveries by Heavy Media Plant from a "Mini-Bulk"
               Test of Drill Core Samples from the 5034 Kimberlite



                                                                                          
- --------------------------- ------------------------- ------------------------- --------------------------------------

                             Sample Weight (Tonnes)    Weight Macros >1.0 mm           Macro Carats per Tonne
Description                                                   (Carats)                       (1,000 Kg)
- --------------------------- ------------------------- ------------------------- --------------------------------------

5034Kimberlite Pipe:  Bulk Sample:  Heavy Media Separation Plant

Canamera                           24.6                        75.9                                3.09
Canamera                           79.0(1)                   181.1(1)                              2.29(1)
Summary                         3,895 Stones                257 Carats                     0.065 Carats/Stones
- --------------------------- ------------------------- ------------------------- --------------------------------------


(1)  This portion of the bulk sample did not undergo a final crush to 1.5mm.

Valuation  of the  diamonds  is  difficult  given the small  parcel of  diamonds
available. De Beers Canada released in September 1997 an estimate by De Beers of
US$55.00 per carat with a projected revenue per tonne of US$82.50. The valuation
was based on diamonds recovered from the "mini-bulk" test by Canamera (Table 1),
as well as on diamond  analysis of core  derived from a hole drilled by De Beers
Canada.  De Beers valued all diamonds  seven points and larger.  The  techniques
used in the valuation are proprietary to De Beers.

1997 Exploration Program

During  1997 the main  objective  of De Beers  Canada  was to locate  additional
kimberlite pipes and obtain sufficient samples for diamond analysis to establish
the merits of exploration on the AK Property. In particular,  an additional pipe
or pipes were sought in the immediate  vicinity of the 5034  kimberlite in order
to find  sufficient  potential  tonnage  and  diamond  content to  warrant  bulk
sampling to determine  economic viability of the AK Property.  Consequently,  De
Beers Canada  conducted the following on the AK Property:  (i) probe analyses of
indicator minerals recovered from till samples by Canamera, (ii) additional till
sampling,  (iii) a  comprehensive  airphoto  survey and  follow-up  analysis  of
surficial   geology,   (iv)  a  detailed   helicopter-borne   magnetometer   and
electromagnetic survey, and (v) a drilling program.

The 1997  drilling  program,  consisted  of land  based core holes and air drill
holes, which were targeted with the geophysical survey. Three new diamondiferous
kimberlite pipes were  discovered.  The Tesla  kimberlite,  about 1.0 kilometers
north-northwest  of the  5034  kimberlite,  was  discovered  in  May.  The  Tuzo
kimberlite and Hearne kimberlite,  about 0.6 kilometers north-northwest and 1.08
kilometers southwest of the 5034 kimberlite pipe, respectively,  were discovered
in August 1997.  The 1997  objectives  of De Beers Canada were achieved with the
discovery of the Tesla, Tuzo and Hearne kimberlite  pipes.  However,  although a
limited  amount of drilling was undertaken  outside the Kennady Lake  Kimberlite
Field, no new kimberlites were found. Thus, the exploration program for 1998 was



designed to focus on the further evaluation of the Hearne,  Tuzo, Tesla and 5034
kimberlites, as well as the discovery of the sources of the many known indicator
mineral dispersion trains.

The Hearne, Tesla and Tuzo Kimberlites

Diamond  recoveries by caustic  fusion of drill core from the Hearne,  Tesla and
Tuzo  kimberlites are in Table 2. De Beers in Kimberley,  South Africa performed
caustic fusion for De Beers Canada.

Results in terms of "number  of macros  per 10 kg" are of similar  magnitude  to
preliminary results reported in Table 2 for the 5034 kimberlite pipe.

                                     Table 2

  Diamond Recoveries by Caustic Fusion of Drill Core from the Hearne, Tesla and
          Tuzo Kimberlites, Kennady Lake Kimberlite Field, AK Property



                                                                                          
- ------------------ ---------------- -------------- --------------- ---------------- ---------------- ------------------
                    Sample Weight      No. of       Diamonds per                     No. of Macros     No. of Macros
Description             (kg)          Diamonds         10 kg       Weight (Carats)    >0.5 mm(1)         per 10 kg
- ------------------ ---------------- -------------- --------------- ---------------- ---------------- ------------------

Hearne Pipe
Hole 1                    132             324            25              0.90             33                2.5
Hole 2 & Hole 3           168             439            26              1.33             50                3.0

Tesla Pipe
Hole 1                    245             188             8              0.13             14                0.6

Tuzo Pipe
Hole 1                    124             403            33              2.09             36                2.9
Hole 2                    154             294            19              0.39             19                1.2
- ------------------ ---------------- -------------- --------------- ---------------- ---------------- ------------------


(1)      Size measured as stones not passing through a 0.5 by 0.5mm screen.

1998 Mini-Bulk Sample

During 1998, De Beers Canada  conducted a mini-bulk  sample on the four pipes in
Kennady  Lake on the AK  Property  that was  designed  to  extract,  by  reverse
circulation drill, small bulk samples from the recently  discovered Hearne, Tuzo
and  Tesla  pipes as well as the  5034  pipe.  The  object  of this  work was to
determine  if diamonds of  sufficient  quantity  and value were  indicated to be
contained in these pipes and therefore provide justification for a further large
scale bulk sampling program. In addition,  continued  exploration was undertaken
outside of the Kennady Lake Kimberlite  Field on both the AK-CJ Properties in an
effort to locate new  kimberlite  occurrences.  Table 3 lists the results of the
mini-bulk  sampling  program on the  kimberlites in the Kennady Lake  Kimberlite
Field cluster.



                                     Table 3

                  Results Of Mini-Bulk Sampling Of Kimberlites
                  In The Kennady Lake Kimberlite Field Cluster



                                                                                           
- -------------------- ------------- -------------- ------------------- --------------- ---------------- ---------------
                                                                         Best Fit                         Best Fit
                     Sample Size    Carats per     Value per Carat      Value per        Value per       Value per
Description            (Tonnes)        Tonne            (US$)          Carat ($US)      Tonne (US$)     Tonne (US$)
- -------------------- ------------- -------------- ------------------- --------------- ---------------- ---------------

Hearne Pipe                62.6          2.33          25 - 50              44          58 - 177             103

Tuzo Pipe                  48.0          2.20          51 - 108             68          112 - 238            150

Tesla Pipe                 50.0          0.37          56 - 112             96           21 - 41              36

5034 Pipe                  55.8          1.60           26 - 58             51           42 - 93              82
- -------------------- ------------- -------------- ------------------- --------------- ---------------- ---------------


In addition to the  mini-bulk  sampling  program,  core  drilling of the Hearne,
Tuzo, Tesla and 5034 pipes was conducted in order to provide a better definition
of the geological and tonnage models of each of these bodies.

1999 Bulk Sampling Program

The main  purpose  of the bulk  sampling  phase of  evaluation  was to  obtain a
sufficiently  large number of diamonds for more accurate  determination of grade
and value per carat.

The bulk sample drilling, using two 12.25-inch diameter reverse circulation (RC)
drills,  started January 16, 1999. The objective of sampling approximately 1,600
tonnes of kimberlite to recover the  anticipated  number of carats was completed
ahead of schedule on April 6, 1999.  A total of 1,666 tonnes of  kimberlite  was
extracted  from a total of 43  vertical  holes  drilled  into the four  pipes to
depths of up to 300  meters.  At the  completion  of  drilling,  575 tonnes were
extracted  from the 5034 pipe,  454 tonnes from the Hearne pipe, 460 tonnes from
the Tuzo pipe and 177 tonnes from the Tesla pipe.

The bags of kimberlite chips and diamonds were sent to the De Beers Canada Dense
Media  Separation  plant  (DMS) in  Alberta,  where the chips  were  washed in a
scrubber and the larger pieces crushed to smaller sizes and recombined  with the
sample  which  was  subsequently  fed  through  the  DMS  plant.  The  resulting
concentrate was collected in a tamper-proof cage and the concentrate  containers
sealed  prior to  shipment  to South  Africa  for final  diamond  recovery.  The
recovered  rough  diamonds  were then sent to Kimberley  for  evaluation.  These
values were passed to the De Beers  Mineral  Resource  Estimation  Department in
Johannesburg and utilized together with all other recorded data in the grade and
value  modelling.  These  modeled  values are De Beers' best  estimates  for the
revenues per tonne expected during mine production.

5034 Pipe

In December 1999, De Beers Canada advised the Company of the modeled revenue and
grade estimates for the 5034 pipe. The modeled revenue value per tonne increased
significantly  from the initial  estimate based on the previous year's mini-bulk
sample.  For the 5034 pipe a total of 1044 carats were recovered from 609 tonnes
of  kimberlite.  De Beers  valued  the  recovered  diamonds  per sieve  class in
Kimberley,  South Africa. The De Beers Mineral Resources  Estimation  Department
has used these  current  grade and diamond  values,  together with the mini-bulk
sample results and the micro- and macrodiamond results announced previously,  to
model a grade  (carats  per tonne) and a revenue  per carat for each of the four
lobes that make up the 5034 pipe. Production recovery factors,  determined by De
Beers,  were applied



and the commonly used commercial bottom cut-off recovery size of a screen with a
1.50 mm square mesh was used to determine the grades.

The 5034 pipe was subdivided on the basis of internal  geology into four lobes -
a west,  centre, and east lobe as well as a north lobe that extends to the north
under  land.  Based on the 1999 bulk  sampling  results,  the west,  central and
eastern lobes are classified in the Indicated Resource category. The north lobe,
which was not part of the 1999 bulk sampling,  remains in the Inferred  Resource
category. The modeled results for each of these parts of the pipe are summarized
in Table 4 below:

                                     Table 4

       Modeled Results for West, Centre, East and North Lobes of 5034 Pipe



                                                                                             
- --------------------------------------------------------------------------------------------------------------------
                                            Modeled Grade              Modeled Revenue          Value per tonne
             5034 Pipe                   (carats per tonne)              (US$/carat)                  US$
- --------------------------------------------------------------------------------------------------------------------
West lobe                                       1.85                         65                       120.3
Centre lobe                                     1.30                         55                        71.5
East lobe                                       1.70                         65                       110.5
North lobe                                      1.70                         65                       110.5
- --------------------------------------------------------------------------------------------------------------------


The modeled  grades  represent  grades based on the  complete  three-dimensional
model of the pipe taking into account the different  phases of  kimberlite,  low
and high grade zones,  etc.  These modeled values are thus the best estimates of
the grade and expected revenue for the pipe.

Tesla Pipe

In December  1999, De Beers Canada  notified the Company that 64 carats had been
recovered  from the  processing of 184 tonnes of kimberlite  from the Tesla pipe
for a sample  grade of 0.35 carats per tonne.  This grade  compares to a modeled
grade of 0.37  carats  per tonne  based on the  results of the  previous  year's
mini-bulk sample. The largest diamond recovered was 2.7 carats. The Tesla is the
smallest of the four pipes sampled.

Hearne Pipe

In late  January  2000,  De Beers  Canada  reported  to the  Company the modeled
revenue and grade  estimates for the Hearne  diamond pipe. The modeled value per
carat increased  significantly  (from US$44 to US$65 per carat) from the initial
estimate  based on the 1998  mini-bulk  sample while the modeled value per tonne
also increased from US$103 to US$111.

The Hearne pipe consists of two parts,  a northern and a southern  lobe. The two
lobes have been subdivided on the basis of internal geology into several phases.
Based on the 1999 bulk sampling results, all parts of the Hearne body except the
south lobe Phase E between 200 and 300 meters (called Phase E1) were  classified
in the Indicated  Resource  category.  Phase E1 remains in the Inferred Resource
category. The modeled results for each of these parts of the pipe are summarized
in Table 5 below:



                                     Table 5

            Modeled Results for North and South Lobes of Hearne Pipe



                                                                                             
- --------------------------------------------------------------------------------------------------------------------
                                       Kimberlite
                                        Resource
                                        (million       Modeled grade       Modeled Revenue      Revenue Per Tonne
             Hearne Pipe                 tonnes)     (carats per tonne)      (US$/carat)               US$
- -------------------------------------------------------------------------------------------------------------------
North Lobe Phase A                        3.08              2.05                  65                     133
North Lobe Phase B                        1.61              0.60                  65                      39
North Lobe Phase C                        0.72              2.05                  65                     133
South Lobe Phase D                        1.14              2.05                  65                     133
South Lobe Phase E1                       0.31              2.05                  65                     133
- -------------------------------------------------------------------------------------------------------------------


The  modeled  grades are based on a  three-dimensional  model of the pipe taking
into  account  the  different  phases of  kimberlite,  (e.g.  low and high grade
zones).  These modeled values are thus the best current global  estimates of the
grade, value per carat, and expected revenue per tonne for the pipe.

Tuzo Pipe

In March 2000,  De Beers Canada  advised the Company of the modeled  revenue and
grade estimates for the Tuzo diamond pipe.

The Tuzo pipe can be divided into four zones based on the internal geology.  The
top 80 meters (from 20 meters to 100 meters depth) of the pipe  consists  mainly
of Zone A and Zone B kimberlite  and is classified  as an indicated  resource of
2.6  million  tonnes.  From 100 meters  depth to 200 meters,  the pipe  consists
predominantly  of Zone Bg  kimberlite  containing  generally  greater  than  40%
granite  inclusions and some Zone B and Zone C kimberlite.  This interval of the
pipe is classified as an indicated  resource of 3.5 million tonnes. At depths of
200 meters to 300 meters,  the pipe is classified as an inferred resource of 4.1
million tonnes and consists  predominantly of Zone C kimberlite with some Zone B
and Zone Bg  kimberlite.  An additional  4.7 million tonnes of kimberlite on the
western side of the pipe (from 200 to 360 meters  depth) and in the deeper parts
of the pipe (from 300 to 360 meters depth) have not been included in the revenue
and grade  modelling.  The  modeled  results for each of these zones of the pipe
which have been sampled are summarized in Table 6 below.

The average  modeled  grade of 1.22 carats per tonne is greater than the initial
bulk  sampling  grade of 1.02 carats per tonne.  The modeled  revenue  value per
carat of $43 compares to a best-fit value of $68  determined  from the 1998 mini
bulk  sample.  The  decrease in value per carat is due to the smaller  number of
larger  diamonds and hence a higher  proportion of smaller  stones.  The modeled
grades are based on a  three-dimensional  model of the pipe taking into  account
the different zones of kimberlite,  (e.g. low and high grade zones).  Systematic
auditing of the processed  concentrates  (tailings) from the Tuzo kimberlite has
recovered an additional nineteen carats of diamonds which have been incorporated
into the modelling of the Tuzo grades.  These  modeled  values are thus the best
current global estimates of the grade, value per carat, and expected revenue per
tonne for the pipe.



                                     Table 6

              Modeled Results for Zone A, B, Bg and C of Tuzo Pipe



                                                                                            
- --------------------------------------------------------------------------------------------------------------------
                                       Kimberlite
                                        Resource
                                        (million       Modeled grade       Modeled Revenue      Revenue Per Tonne
             Tuzo Pipe                  tonnes)      (carats per tonne)      (US$/carat)               US$
- --------------------------------------------------------------------------------------------------------------------
Zone A                                    1.0                2.7                  47                    127
Zone B                                    2.4                0.94                 33                     31
Zone Bg (>40%granite)                     2.4                0.62                 33                     20
Zone C                                    4.4                1.35                 47                     63
- --------------------------------------------------------------------------------------------------------------------


Feasibility Study Decision - 2000

With these  results,  both De Beers  Canada and the  Company  agreed on March 8,
2000, that it was unlikely that the agreed upon rate of return would be achieved
from the mining of the 5034, Hearne and Tuzo pipes,  using the conventional open
pit mining method.  As a result,  the Company  agreed to extend the  feasibility
study  decision  date and De Beers  Canada has agreed to carry all  exploration,
development  and other project  costs.  Prior to March 8, 2000,  the Company had
been paying 44.1% of all project  expenses since July 1999. De Beers Canada,  in
the  meantime,  conducted a desktop  study to  investigate  several  alternative
mining  scenarios in order to minimize capital and working costs associated with
the possible mining of the Kennady Lake pipes. The results of that desktop study
were  presented  to the  Company on August 4, 2000.  The study  showed  that the
modeled rate of return for the mining of the three main diamond  pipes was below
the  agreed  upon  rate of return  needed  to  proceed  to the next  phase,  but
sufficiently   close  to  only  require  an  increase  in  diamond  revenues  of
approximately  15% to achieve the agreed upon rate. A management  committee  was
constituted and it was decided that the best options to advance the project were
an  additional  bulk  sample and  additional  exploration.  The bulk  sample was
completed in May 2001 and the exploration in June 2001.

The  modeled  values of the  diamonds  recovered  in the 2001 bulk  sample  were
reported on December  18, 2001 and the results  were  encouraging  enough for De
Beers to commit to another bulk sample during the winter 2002.  The main purpose
of the  program  was to recover  more high  quality,  top color  diamonds.  Such
diamonds  very likely would  increase the values per tonne,  which in turn could
positively impact the modeled rate of return in the desktop study.

1999 Exploration/Delineation Program

Believing there could be more kimberlite bodies in Kennady Lake, De Beers Canada
continued to undertake surface  geological  surveys in the vicinity of the known
kimberlites.  Several lake based geophysical  targets (EM highs) were identified
by these surveys.  The first to be drilled is located  approximately  300 meters
southwest  of the  southern  extremity  of 5034  pipe.  The  angled  drill  hole
intersected  36  meters  of  kimberlite  between  60 and  104  meters  giving  a
horizontal projection of 22 meters. Based on the available information, De Beers
Canada  believes  that the maximum  dimension  of this pipe,  called the Wallace
pipe, is unlikely to exceed 60 meters.

A second  geophysical  target was drilled  approximately 150 meters northeast of
the recently  discovered  Wallace pipe and approximately 150 meters southwest of
the 5034 pipe.  This  angled  drill  hole  intersected  43 meters of  kimberlite
between 56 and 99 meters giving a horizontal  projection of 31 meters.  This new
body has been called 5034-South.



In  addition,  De Beers  Canada  looked for and found  similar EM highs in other
areas of the  southern  part of the AK  Property.  One of  these,  a lake  based
geophysical target is located in the area of the head of a long, broad indicator
mineral train.  The target is  approximately 12 km northeast of Kennady Lake. An
angled drill hole  intersected 34 meters of kimberlite  between 38 and 72 meters
giving a horizontal  projection of 22 meters.  A second hole,  collared  nearby,
intersected  successive  narrow  intersections  (varying  from 2 to 7 meters) of
kimberlite. The exciting part of this discovery was that it was the first time a
substantial  intersection  of  kimberlite  had been  discovered  outside  of the
Kennady Lake cluster of pipes.  This new  kimberlite  body was named the Faraday
body.

2000/2001/2002/2003 Exploration

De Beers  Canada and the  Company  recognized  that the best way to enhance  the
potential  economic  viability  of the  project  was by  adding  quickly  to the
resource base. The results from the extensive 1999 summer sampling  program were
integrated  with the  existing  geophysical  and  sampling  databases  to define
targets that required drilling.

The 2000 spring exploration drilling program started in early March and ended in
the second week of May. A new kimberlite  body which has been named Kelvin,  was
discovered  in a lake located  approximately  nine km northeast of Kennady Lake,
which contains the Gahcho Kue diamondiferous kimberlites, and three km southwest
of the diamondiferous  Faraday body. One drill hole in the north-south direction
intersected 40 meters of kimberlite horizontally  projected,  while another hole
in  approximately  the east-west  direction  intersected 23 meters of kimberlite
horizontally projected. A third hole drilled failed to intersect kimberlite. The
shape and dimensions of the Kelvin kimberlite is difficult to determine from the
three holes  completed.  A 3.3 meter thick  kimberlite dyke (called Hobbes) at a
depth of 31 meters was discovered  approximately  200 meters south of the Kelvin
body in the same  lake.  The  Kelvin  kimberlite  is  relatively  small,  so any
additional work will concentrate on exploration in the hope of making additional
discoveries in that area.

Kimberlite  recovered  form  the  Faraday-  Kelvin  bodies  were  sent  for acid
dissolution in Kimberley,  South Africa. The micro-diamonds recovered per square
sieve size are shown in Table 7 (i.e., the number of micro-diamonds that did not
pass through each of the square mesh sieves).  The two largest  diamonds for the
Kelvin  body are 8.9 and 8.5  points  (one point is  one-hundredth  of a carat).
Diamonds   larger  than  the  0.5  x  0.5  mm  square   sieve  size  are  called
"macro-diamonds".  The number of macro and micro-diamonds recovered for both the
Faraday and Kelvin bodies and their size-frequency  distribution is very similar
to  that  for  the  5034  and  Hearne  pipes  in  Kennady  Lake  (representative
micro-diamond  results  for the  5034 and  Hearne  pipes  are also  shown in the
table). Those pipes have average grades of 1.67 carats per tonne.

      Table 7: Micro-diamonds recovered from the Faraday and Kelvin bodies
       compared to representative samples from the Hearne and 5034 pipes.



                                                                                   
- ----------------------- --------------------- -------------------- --------------------- --------------------

     Square mesh           Kelvin: 184kg         Faraday: 40kg        Hearne: 128kg          5034: 160kg
      Size (mm)          Number of diamonds   Number of diamonds    Number of diamonds   Number of diamonds
- ----------------------- --------------------- -------------------- --------------------- --------------------
          2                      5                     1                    2                     4
          1                      9                     0                    10                   10
         0.5                     11                    5                    17                   23



- ----------------------- --------------------- -------------------- --------------------- --------------------

     Square mesh           Kelvin: 184kg         Faraday: 40kg        Hearne: 128kg          5034: 160kg
      Size (mm)          Number of diamonds   Number of diamonds    Number of diamonds   Number of diamonds
- ----------------------- --------------------- -------------------- --------------------- --------------------
         0.3                     44                   11                    46                   37
        0.212                    65                   12                    77                   68
         0.15                   139                   21                    83                   138
        0.104                    73                   24                   143                   218
- ----------------------- --------------------- -------------------- --------------------- --------------------


These   results   indicated   that  both  the  Faraday  and  Kelvin  bodies  are
significantly  diamondiferous  and that more  exploration  work in that area was
needed.  De Beers  plans to  complete  additional  work in the 2003  exploration
season.

A ground gravity survey  conducted in the 2003 winter program covered the Kelvin
body and as far as a few hundred meters south of Hobbes,  and identified several
drill  targets.  A hole drilled 50 m to the west of the original 2000 drill hole
into Kelvin intersected a total of 25 m of kimberlite  horizontally projected in
two closely spaced intervals,  while a hole drilled 60 m to the east intersected
2.01 m of  kimberlite  horizontally  projected.  The Kelvin  body now appears to
extend  not  just  in the  north-south  direction,  but  also  in the  east-west
direction.

A hole  drilled  120 m south of Kelvin  along the  suspected  structure  between
Kelvin and Hobbes intersected 7.4 m of kimberlite horizontally projected,  while
a hole drilled 70 m south of Hobbes intersected two kimberlite  intersections of
2.4 m and 3.0 m horizontally projected,  respectively. It is suspected that this
Hobbes  intersection  and the Kelvin body could be  connected  with a kimberlite
bearing structure that pinches and swells.

A ground gravity survey and detailed  ground  magnetic survey was then conducted
over the Faraday body and  approximately  600 m to the south along the suspected
structure  connecting the Faraday body and the 2001 hole that  intersected  some
kimberlite. The main purpose of the survey was to identify wider areas along the
observed  dyke  structure.  Several  such areas were  identified  and two of the
better target areas were drilled.

The first target, a magnetic  anomaly,  was approximately 100 m southwest of the
Faraday body and 5.6 m of kimberlite horizontally projected was intersected. The
kimberlite  contained some country rock. The second target,  a gravity  anomaly,
was  approximately  520 m southwest of the Faraday body and  approximately  80 m
north of the 2001 drill hole.  Kimberlite  was  encountered  just below the lake
bottom and 21.5 m of kimberlite  horizontally  projected was intersected.  It is
suspected  that the  kimberlite  intersections  to the  north  and  south of the
Faraday  body are  probably  connected  to the  Faraday  body with a  kimberlite
bearing dyke structure that pinches and swell.

The recovered  kimberlite from all  intersections  will be sent for petrographic
analysis  and  micro-diamond   recovery.   Once  those  results  are  available,
additional work as appropriate will be planned.

During the 1999  winter  program  kimberlite  dykes were  discovered  in MZ Lake
located in the central part of the AK claims,  approximately  20 km northwest of
Kennady Lake. A larger number of indicator minerals,  mainly garnets,  have been
recovered  on the western  edge of the lake and as far west as the



border of the AK claims  (approximately  20 km to the west). A land based target
on the north shore of MZ Lake, was drilled with a vertical hole to a depth of 35
meters.  Five  kimberlite  stringers with the largest two having  thicknesses of
0.40  and  0.70  meters  were  intersected,  as  well  as  a  1.70  meter  thick
intersection of what is believed to be a sill (an approximately horizontal lying
kimberlite body).

This result was followed up in March and April,  2001,  by a ground  penetrating
radar (GPR) survey that covered the entire  length of the northern  shore of the
lake  (approximately 4 km) and several shallow dipping  reflectors were detected
on land along most of the area  surveyed.  De Beers  Canada  drilled five of the
seven holes in May 2001,  mainly along the  periphery of the surveyed area where
strong GPR reflector signals were recorded.  All holes were drilled  vertically,
on land and all except one were drilled to a maximum  depth of 50 m.  Kimberlite
was  intersected in five of seven drill holes on land just north of MZ Lake. The
thickest  intersection was 3.20 meters of kimberlite at a depth of 27 meters and
the  distance  between the most  easterly  and most  westerly  intersections  of
kimberlite was nearly four  kilometers.  De Beers Canada believes that there are
several sills of various lengths, widths and thicknesses north of the lake.

Most of the  recovered  kimberlite  (34 kg) was  sent to South  Africa  for both
indicator mineral and micro-diamond  recovery.  An additional 22 kg from the two
holes  drilled  into  the  MZ  kimberlite   during  1999  (MPV-99-33)  and  2000
(MPV-00-004) was also treated. A total of 40 micro-diamonds  were recovered from
four of the six holes.

The largest number of  microdiamonds  was recovered from hole MPV-01-73  (called
sill-73):  28 diamonds from 5 kg with the largest  diamond being 1mm. The second
largest number of microdiamonds  was recovered from hole MPV-01-070:  9 diamonds
from 4 kg. Four of the five sills  discovered so far have been  determined to be
diamondiferous.  Because of these  encouraging  results De Beers  decided upon a
follow-up  program  at MZ Lake  during the  spring of 2002.  A  detailed  ground
penetrating  radar (GPR) survey  using  closer line  spacing  than in 2001,  was
conducted  over a large area  encompassing  sill-73.  The results of survey were
used to  determine  drill hole  locations.  A total of 10  follow-up  holes were
drilled into sill-73 and numerous intersections of kimberlite was recovered. The
thicknesses  of the  intersections  varied  from 7cm to 2.19m  with the  largest
combined kimberlite  intersection in one drill hole being 3.49m,  between 14.66m
and 19.25m  depth.  This sill appears to extend at least one  kilometer.  The MZ
kimberlite  from sill-73 was sent to Kimberley,  South Africa for  micro-diamond
recovery.  Only fine microdiamonds were recovered. As a result, De Beers decided
to concentrate their exploration  efforts on the Kelvin-Faraday  area, which had
much more promising diamond counts.

2001/2002 Bulk Sampling

The winter 2001 bulk sample program of the Hearne and 5034 kimberlite  pipes was
completed on May 4, 2001.  De Beers Canada  recovered 751 carats from 334 tonnes
of kimberlite  from the Hearne pipe and 914 carats from 635 tonnes from the 5034
pipe.  There were three holes drilled into the  high-grade  northern part of the
Hearne pipe and four holes into the  high-grade  eastern  lobe of the 5034 pipe.
The kimberlite samples were processed in Grand Prairie,  Alberta, Canada and the
sample concentrates were subsequently shipped to South Africa where the diamonds
were recovered.

The 1,665 carats that were  recovered from both pipes (to a 1.5mm lower cut-off)
plus the diamonds recovered from the 1999 bulk sample were all valued,  based on
August 2001 diamond prices, at The Diamond Trading Company (DTC) in London.  The
De Beers Mineral Resources Estimation  Department in Johannesburg has used these
values for both bulk  samples to update the  modeled  revenue per carat for each
pipe. Production recovery factors, determined by De Beers, have been applied and
that the commonly used  commercial  bottom  cut-off  recovery size screen with a
1.50mm square mesh has been used. De Beers has recently  changed the way diamond
values  are  reported  to the  Company  to make them  comparable  to the  values
reported by other Canadian diamond mining companies. To compare the 1999



and the  current  values,  10% has to be added to the 1999  values.  The average
revenue per carat for the 5034 pipe based on August 2001 values is US $65.50 for
the combined 1999 and 2001 parcels, compared to the adjusted US $69.30 value for
the 1999 bulk  sample.  Similarly  the average  revenue per carat for the Hearne
pipe is US $63.30  compared to the  adjusted  US $71.50  value for the 1999 bulk
sample. According to analysts and industry sources, the prices of rough diamonds
have fallen by an average of around 20% during the recession of 2000-2001 and at
least 10% since late 1999. The decreases in value for the diamonds from the 5034
and Hearne pipes are thus  consistent  with or less than the large drop in rough
diamond market values.

A  9.9-carat  diamond  recovered  from the 5034 pipe is of high  quality and top
color and was  valued by the DTC at  approximately  US  $60,000.  The  Company's
consultant,  Overseas Diamonds N.V. from Antwerp, Belgium, valued representative
parcels of the  diamonds  at the DTC in  November.  Their  values  for  selected
parcels  were  within  several  percent  of the De Beers'  values for those same
parcels.  It was observed at the DTC that a population of high quality  diamonds
(such as that of the 9.9 carat diamond) exists amongst the diamonds recovered to
date from the Hearne and 5034 pipes.  This observation and additional  follow-up
analysis  of these  diamonds  has led De Beers to the  decision  that  more bulk
sampling of the Hearne and 5034 pipes was  needed.  More high  quality  diamonds
need to be recovered so that their size frequency distribution can be determined
more  accurately.  High quality  diamonds  have a large impact,  especially  the
larger  ones,  on the  revenue  per  tonne so the  more  accurately  their  size
frequency  distribution is known, the greater the confidence in and the accuracy
of the revenue  modeling.  High quality  diamonds also offer upside potential to
the  values  per  carat.  The  occurrence  of  the  9.9-carat  stone  poses  the
possibility  that  these  stones  could  occur  regularly   during   production.
Consequently, De Beers Canada decided to do more bulk sampling of the Hearne and
5034 pipes in 2002.

The 2002 bulk sample  program of the 5034 and Hearne  diamond  pipes  started on
February 13, 2002 and ended April 20, 2002. A total of six large  diameter holes
were drilled  into the 5034 pipe and five into the Hearne  pipe.  The same drill
(24 inch  diameter)  and same drill method (a "diamond  friendly"  flood reverse
system)  that  was used in 2001 was  used  again  in  2002.  De Beers  recovered
approximately  684 tonnes of kimberlite  from the Hearne pipe and  approximately
837 tonnes of kimberlite from the 5034 pipe for a total of 1,521 tonnes.

The 1,215 carats  recovered  from the 5034 pipe and the 1,174  carats  recovered
from the Hearne pipe as well as the  diamonds  recovered  from the 1999 and 2001
bulk  samples  (all to a 1.5 mm lower  cut-off)  were all  valued,  based on the
January 2003 diamond prices, at the Diamond Trading Company (DTC) in London. The
De Beers Mineral  Resource  Department in Johannesburg has used these values for
all three  (1999,  2001,  2002) bulk  samples to update the modeled  revenue per
carat for each pipe.  Production recovery factors,  determined by De Beers, have
been applied and the commonly  used  commercial  bottom  cut-off  recovery  size
screen with a 1.50 mm square mesh has been used.  These diamond values were then
combined with the updated grade  information  to give modeled  revenue per tonne
values.

Table 8 shows the weighted average modeled grades, values per carat and revenues
per tonne for the four lobes in the 5034 pipe and the various  geologic zones in
the Hearne pipe.  The 5034 pipe has an indicated  resource of 8.6 million tonnes
and an inferred  resource of 4.5 million  tonnes,  while Hearne has an indicated
resource  size of 5.5  million  tonnes and an  inferred  resource of 1.6 million
tonnes, all to a depth of 290 m below lake surface.



                                     Table 8



                                                                                        
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
             Pipe                      Modeled Grade               Modeled Values              Revenue per tonne
                                    (Carats per tonne)               (US$ Carat)                     (US$)
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
             5034                          1.67                         62.70                       104.70
            Hearne                         1.67                         50.00                        83.50
- ------------------------------- ---------------------------- ---------------------------- ----------------------------


The previous  valuation of the diamonds  from the 1999 and 2001 bulk samples was
in August 2001.  After September 11, 2001,  diamond prices decreased in value by
an average of around 20% with more severe  decreases  in certain  categories  of
diamonds  according  to industry  sources.  Since then,  De Beers has  increased
diamond  prices  twice and on average  diamond  prices  are now  nearly  back to
pre-September 11, 2001 levels. Specifically,  the January 2003 valuations of the
1999 and 2001 bulk  sample  diamonds  were on average  5-6% less than the August
2001 valuations for the same diamonds.

The average  modeled  value per carat of US $62.70 for the 5034 pipe compares to
the average value of US $65.50 based on the August 2001 price book,  reported in
December 2001. The drop is slightly less than the average drop in diamond values
since then.  The weighted  average  modeled grade for the 5034 pipe increased to
1.67 carats per tonne from 1.64  carats per tonne as reported in December  1999.
The upper and lower limits for the value per carat modeling are 18% - 20%.

The average modeled value per carat of US $50.00 for the Hearne pipe compares to
a value of US $63.30  based on the August  2001  values.  The  weighted  average
modeled  grade for the Hearne pipe  decreased to 1.67 carats per tonne from 1.71
carats per tonne as reported in December  1999.  The upper and lower  limits for
the value per carat modelling are 18% and 16% respectively.

De Beers and the Company's  consultant,  Overseas  Diamonds N.V., have confirmed
that a  sub-population  of high quality,  top color diamonds  exists in both the
5034 and Hearne  pipes.  A 3.4 carat diamond  recovered  from the Hearne pipe is
such a diamond  and has been  valued at US $7,140.  These  diamonds  represent a
significant  part of the  total  value of the  diamonds  even  though  they only
represent a small fraction of the total number of diamonds.

In 2003, De Beers used a De Beers group  composite of a year's  production  from
kimberlite  mines with wide ranges of  production  but similar  dollar per carat
values,  in the value per carat modelling in the over two carat size range.  The
reason for this is that  relatively  speaking,  only a small  number of over two
carat  diamonds were recovered from the Hearne and 5035 pipes and these diamonds
have a wide range of values.  This modelling  technique  models the shape of the
revenue  curves  for the Hearne and 5034 pipes to be similar to the shape of the
curves  for a  composite  of  producers  above the two carat  size  range.  This
technique is slightly more  conservative  than the technique used previously but
is more representative of an actual production scenario.

Feasibility Study Decision - 2003

The  results of the 2002 bulk  sample  program of the Hearne and 5034 pipes were
reported in April 2003 and the  results of the updated  desk top study two weeks
later.  Even though the study shows that estimated  capital costs have increased
only slightly and that the estimated operating costs have dropped significantly,
the effect of lower diamond values  (especially for the Hearne pipe) and a lower
US dollar against the Canadian dollar since the 2000 desktop study, has resulted
in an internal rate of return (IRR) slightly less than that obtained previously.
Considering  the  indicated  IRR,  which is well below the agreed



hurdle  rate,   combined  with  the  current   geo-political   environment   and
uncertainties,  De Beers decided to postpone a  pre-feasibility  decision  until
next year when the desktop  study will be updated  again.  In the  meantime,  De
Beers  will  continue  with  exploration  in the  Kelvin-Faraday  area  with  an
objective of adding to the existing resource.

At the end of July,  2003,  De Beers  notified the Company that they had started
work on a detailed cost estimate of a pre-feasibility  study of the Kennady Lake
diamond deposits.  They based their decision on the improving  geo-political and
economic  conditions  which  support  confidence  in  longer-term  diamond price
projections.  If  approval is given in November  2003 by the De Beers  board,  a
pre-feasibility study will start in early 2004.

Other Properties

The Company  does not regard its other  properties,  listed  below,  as material
properties of the Company. The Company is seeking to sell or joint-venture these
properties.

Baffin Island Joint Venture

No work was done  during the 2001 and 2002  summer  season.  The  companies  are
looking for a joint venture partner to continue the work.

Finland Properties

Pursuant  to the  amalgamation  of Mountain  Glen and  Glenmore,  the  Company's
wholly-owned subsidiary, Mountain Glen, acquired mineral properties in Finland.

There were two gold properties in Finland - the Haveri and Sirkka Properties. An
option was granted on October 10, 2002 to Vision Gate  Ventures  Limited for the
acquisition  of a 70%  interest in the Haveri  Properties.  The Sirkka  property
claims have lapsed.


Item 5 Operating and Financial Review and Prospects.

     A.   Operating results.

The following discussion of the financial condition and operating results of the
Company should be read in conjunction with the consolidated financial statements
and  related  notes to the  financial  statements  which have been  prepared  in
accordance with Canadian  generally  accepted  accounting  principles  ("GAAP").
Discussion  and analysis set forth below covers the results  obtained under GAAP
in Canada. A significant  difference  between Canadian and U.S. GAAP exists with
respect to accounting for mineral  property  acquisition and  exploration  costs
which have been capitalized under Canadian GAAP but generally are required to be
expensed under U.S. GAAP when incurred until such time as commercially  mineable
deposits  are  determined  to  exist  within  a  particular  property.  Material
measurement  differences  between  accounting  principles  generally accepted in
Canada and the United States,  applicable to the Company,  are described in Note
12 to the  consolidated  financial  statements.  The discussion below summarizes
results of operations in accordance with Canadian GAAP.



Fiscal Year ended March 31, 2003 compared to Fiscal Year ended March 31, 2002

The  Company's  loss for the fiscal year ended March 31,  2003  ("fiscal  2003")
totaled  $1,718,342 or $0.03 per share compared to $1,455,881 or $0.03 per share
for the fiscal year ended March 31, 2002 ("fiscal  2002").  These losses include
the loss of the  Company's  wholly owned  subsidiary  Mountain  Glen Mining Inc.
(MGM).  MGM's loss for fiscal  2003 was  $76,836  compared to a loss of $130,583
during fiscal 2002.

During fiscal 2003, operating expenses were $1,566,498 compared to $1,456,698 in
fiscal  2002.  The  operating  expenses  for  fiscal  2003  included  a one-time
severance  payment  of  $331,500  to a  director  of the  Company  and a $24,419
stock-based  compensation  expense  for  the  granting  of  stock  options  to a
consultant for services  rendered.  These two expenses  accounted for 23% of the
operating  expenses in fiscal 2003 and no  comparable  expenses were incurred in
fiscal 2002.  Excluding  the severance and  stock-based  compensation  expenses,
operating  expenses  were reduced in fiscal 2003 as compared to fiscal 2002 as a
result of the  following  cost cutting  measures:  (i) reduced rent  ($37,095 in
fiscal 2003 and  $126,356  in fiscal  2002)  resulting  from the move to smaller
offices in both the United States and Canada,  (ii) decreased salary and benefit
costs  ($166,550  in fiscal 2003 and $231,984 in fiscal 2002) due to a reduction
in the number of employees and reduced wages, and (iii) reductions in management
fees  ($45,000,  excluding the $331,500  severance  payment,  in fiscal 2003 and
$96,000 in fiscal  2002),  and  consulting  expenses  ($165,055,  excluding  the
$24,419 stock-based  compensation expense, in fiscal 2003 and $227,023 in fiscal
2002) as a result of top  management  accepting  lower fees for their  services.
Other cost savings were realized with respect to lower  insurance,  office,  and
travel   expenses.   These   reductions  were  partially   offset  by  increased
professional  fees ($240,203 in fiscal 2003 and $167,444 in fiscal 2002), due in
part  to  the  extra  work  required  as a  result  of the  introduction  of the
Sarbanes-Oxley Act.

During fiscal 2003 the Company's interest income was $19,034 compared to $17,901
a year earlier.

The fiscal 2003 expenses include a write-down of $120,435 of mineral  properties
and deferred  exploration  costs,  relating  mostly to the Rabbit Tracks Diamond
Project in Manitoba.  There was no write-down of mineral  property during fiscal
2002.

Fiscal Year ended March 31, 2002 compared to Fiscal Year ended March 31, 2001

The  Company's  loss for the fiscal year ended March 31,  2002  ("fiscal  2002")
totaled  $1,455,881 or $0.03 per share compared to $3,060,072 or $0.07 per share
for the fiscal year ended March 31, 2001 ("fiscal  2001").  These losses include
the losses of the Company's  wholly owned  subsidiary  Mountain  Glen.  Mountain
Glen's loss for fiscal 2002 was  $130,583.  During  fiscal  2001  Mountain  Glen
incurred a loss of  $1,333,210  which  included a write-down  of  $1,220,211  of
various assets, including loans receivables,  non-diamond mineral properties and
related capital assets acquired by Mountain Glen from Glenmore upon amalgamation
with Glenmore.

During  fiscal  2002,  the  Company's  interest  income was $17,901  compared to
$65,826  a year  earlier.  The  decrease  was  because  of lower  cash  balances
available for investment, and lower interest rates.

During  fiscal  2002,  operating  expenses  were  $1,456,698,  down  23.2%  from
$1,897,772 in fiscal 2001.  The main reasons for reduction in expenses were: (i)
the decreased  level of promotions  and investor  relations  ($193,010 in fiscal
2002 and  $369,434  in fiscal  2001) and  travel,  ($83,114  for fiscal 2002 and
$140,347 for fiscal 2001), (ii) the top management accepted  significantly lower
management  fees  ($96,000  in fiscal  2002 and  $171,000  in  fiscal  2001) and
consulting  fees ($227,023 in fiscal 2002 and $262,500 in fiscal 2001) for their
services,  and (iii)  professional fees ($167,444 in fiscal 2002 and $275,460 in
fiscal 2001).  Also,  various other cost cutting measures were implemented which
resulted in lower wages,  insurance and rent  expenses.  During fiscal 2001, the
losses from the write-down of former



Glenmore's  loans  receivables,   non-diamond  mineral  properties  and  related
deferred exploration and capital assets were $1,220,211. There was no write-down
of any mineral property during fiscal 2002.

For the  Rabbit  Tracks  Diamond  property  in  Manitoba  the  Company  incurred
acquisition  costs of $29,000 during fiscal 2002 and $20,000 during fiscal 2001.
No other property acquisitions were made during fiscal 2002.

During fiscal 2002 the Company spent $53,077 on  exploration  work in respect of
the Rabbit  Tracks  Diamond  project in  Manitoba.  However,  since the Manitoba
government  reimbursed $11,597, the net cost to the Company was $41,480.  During
fiscal  2001 the  exploration  costs in  respect of the  Rabbit  Tracks  Diamond
Project in  Manitoba  amounted to $29,953.  During  fiscal 2002 the  exploration
costs in  respect of Baffin  Island  property  amounted  to $2,976  compared  to
$65,115  during  fiscal  2001.  De Beers  Canada  paid all costs for work on and
related to the AK-CJ Properties during fiscal 2002 and fiscal 2001.

     B.   Liquidity and capital resources.

Since inception,  the Company's capital resources have been limited. The Company
has  had  to  rely  upon  the  sale  of  equity   securities  to  fund  property
acquisitions,  exploration,  capital  improvements and administrative  expenses,
among other things.

At March 31,  2003,  the Company had  $1,210,076  in cash and cash  equivalents,
compared  with  $585,879 a year  earlier.  At March 31,  2003 the  Company had a
working capital position of $1,037,460 compared to $339,897 a year earlier.  The
Company  had no  long-term  debt at  March  31,  2003 or  March  31,  2002.  All
exploration  expenditures  in respect of the AK  property,  the  Company's  most
significant  property,  are the responsibility of De Beers Canada, the 51% owner
of the property.

During fiscal 2003 the Company received  $607,829 by issuing 544,900 shares upon
exercise of various  stock  options.  During fiscal 2003,  the Company  received
$1,640,985 upon exercise of warrants to purchase 2,169,766 shares. During fiscal
2002 the Company  raised  gross  proceeds of $949,409 by a private  placement of
1,636,912  units to five  placees  at a price  of  $0.58  per  unit.  Each  unit
comprised  one share  and one  non-transferable  share  purchase  warrant.  Each
warrant may be  exercised to purchase one common share of the Company at a price
of $0.58 per share  until  December  6, 2004.  During  fiscal  2002 the  Company
received $18,000 for issuing 30,000 shares upon exercise of a stock option.

The  Company  expects to  continue  incurring  annual  losses  until it receives
revenue from  production on the Gahcho Kue Project,  if placed into  production.
There is no  assurance  that the  property  will be  developed  or  placed  into
production.  In April 2003,  De Beers  updated the original  August 2000 desktop
study,  which evaluated the costs of  conventional  open pit mining of the pipes
combined  with the modeled  revenue  estimates  from the 1999 bulk sample.  Even
though the updated study shows that estimated  capital costs have increased only
slightly and that the  estimated  operating  costs have  dropped,  the effect of
lower  diamond  values  (especially  for the Hearne  pipe) and a lower US dollar
against the Canadian  dollar since the 2000  desktop  study,  has resulted in an
internal rate of return slightly less than that obtained previously. Considering
the  indicated  internal  rate of return  which is well below the agreed  hurdle
rate,  combined  with  the  current   geo-political   environment  and  economic
uncertainties,  De Beers decided to postpone a  pre-feasibility  decision  until
next year  when the  desktop  study is  expected  to be  updated  again.  In the
meantime,   De  Beers  is  expected  to  continue   with   exploration   in  the
Kelvin-Faraday area with an objective to adding to the existing resource.

At the end of July,  2003,  De Beers  notified the Company that they had started
work on a detailed cost estimate of a pre-feasibility  study of the Kennady Lake
diamond deposits.  They based their decision on the improving  geo-political and
economic  conditions  which  support  confidence  in  longer-term  diamond



price projections.  If approval is given in November 2003 by the De Beers board,
a pre-feasibility study will start in early 2004.

It is anticipated  that the cash and cash  equivalents on March 31, 2003 provide
the Company with sufficient  funds until  approximately  late calendar 2004. The
exercise of some outstanding warrants and/or options, which are currently in the
money,  could extend that date into 2005.  However,  there is no assurance  that
such stock  options or warrants will be exercised in which case the Company will
consider  undertaking  an equity  financing.  It  follows  that  there can be no
assurance that  financing,  whether debt or equity,  will always be available to
the Company in the amount  required at any particular time or for any particular
period or, if available,  that it can be obtained on terms  satisfactory  to the
Company.  If the  Company  is unable to receive  additional  funds  through  the
issuance of its shares, it will be required to reduce operations.

As at July 24, 2003 the Company has 2,170,000  stock options  outstanding  which
are exercisable at prices between $0.60 and $2.25 per share. If all of the stock
options were exercised,  the Company would receive  proceeds of $3,191,050.  The
Company  also has  1,205,878  warrants  outstanding  exercisable  at $0.58 until
December 6, 2004. If all the warrants were exercised,  the Company would receive
proceeds of $699,409.  If all of the options and  warrants  were  exercised,  to
which no assurance can be given that all or any will be  exercised,  these funds
would be available to the Company as working capital.

Trends

There are no major trends which are anticipated to have a material effect on the
Company's  financial condition and results of operations in the near future. The
reduction of expenses is expected to continue, especially in the areas of office
expenses and investor relations.

Critical Accounting Policies

The preparation of financial  statements in conformity  with Canadian  generally
accepted  accounting  principles  requires  the  Company to make  estimates  and
assumptions  that affect the reported  amounts of assets and  liabilities at the
date of the  financial  statements  and the  reported  amounts of  revenues  and
expenses during the reporting periods. As described below, significant estimates
and  assumptions  are used in determining  the  application of the going concern
concept and the deferral of costs  incurred for mineral  properties and deferred
exploration.  The Company  evaluates its estimates on an ongoing basis and bases
them on  various  assumptions  that are  believed  to be  reasonable  under  the
circumstances. The Company's estimates form the basis for making judgments about
the carrying value of assets and liabilities  that are not readily apparent from
other sources.  Actual results may differ from these  estimates  under different
assumptions or conditions.

The Company  believes the policies for going  concern,  mineral  properties  and
deferred   exploration  are  critical   accounting   policies  that  affect  the
significant  judgments and estimates  used in the  preparation  of the Company's
financial statements.

The Company considers that its mineral  properties have the  characteristics  of
property,   plant  and  equipment,   and,  accordingly  defers  acquisition  and
exploration costs under Canadian generally accepted accounting  principles.  The
recoverability  of  mineral  property   acquisition  and  deferred   exploration
expenditures  is  dependent  upon  the  discovery  of  economically  recoverable
reserves and on the future profitable production,  or proceeds from disposition,
of the Company's properties.

Changes  in  circumstances  in  the  future,   many  of  which  are  outside  of
management's   control,  will  impact  on  the  Company's  estimates  of  future
recoverability  of net amounts to be realized  from their  assets.  Such factors
include,   but  are  not  limited  to,  the   availability  of  financing,   the
identification of economically



recoverable reserves,  co-venturer decisions and developments,  market prices of
minerals,  the  Company's  plans and  intentions  with respect to its assets and
other industry and competitor developments.

The  consolidated  financial  statements  have been  prepared on a going concern
basis in accordance  with Canadian  generally  accepted  accounting  principles,
which assumes that the Company will  continue in operation  for the  foreseeable
future and be able to  realize  its assets and  discharge  its  liabilities  and
commitments in the normal course of business.

The ability of the Company to continue as a going concern and the recoverability
of amounts shown in the consolidated financial statements for mineral properties
and  deferred  exploration  is dependent on the ability of the Company to obtain
the necessary  financing to meet the Company's  commitments  and  liabilities as
they become payable, to discover  economically  recoverable  reserves and on the
future profitable  production,  or proceeds from  disposition,  of the Company's
mineral  properties.  The  Company is in the  process of  exploring  its mineral
properties and has not yet determined  whether the  properties  contain  mineral
reserves that are economically recoverable. Development of any property may take
years to complete  and the amount of resulting  income,  if any, is difficult to
determine with any certainty.  The sales value of any mineralization  discovered
by the Company is largely  dependent upon factors beyond the Company's  control,
such as the market value of the diamonds recovered.

The Company  believes that it has the ability to obtain the necessary  financing
to meet commitments and liabilities as they become payable and that economically
recoverable reserves will be discovered. The costs of further exploration of the
AK claims are being borne by De Beers Canada.

The financial  statements do not reflect  adjustments that would be necessary if
the  Company is unable to  continue  as a going  concern.  If the going  concern
assumption is not appropriate  for the financial  statements,  then  adjustments
would be necessary in the carrying value of assets and liabilities, the reported
net losses, and the balance sheet classifications used.

While the  Company  believes  that  economically  recoverable  reserves  will be
identified,  there is no  assurance  that this will  occur.  Failure to discover
economically  recoverable  reserves will require the Company to write-off  costs
capitalized to date and will result in further reported losses.

Effect of Inflation

In the Company's view, at no time during any of the last three fiscal years have
inflation  or  changing  prices had a material  impact on the  Company's  sales,
earnings or losses from operations, or net earnings.

U.S. Generally Accepted Accounting Principles

U.S.  GAAP  differs  in some  respects  from  Canadian  GAAP,  as applied to the
Company. Reference should be made to Item 3A - Selected Financial Data, and Note
12 to the Consolidated Financial Statements of the Company for a description and
quantification  of material  measurement  differences  between Canadian GAAP and
U.S. GAAP.

Item 6 Directors, Senior Management and Employees.

     A.   Directors and Senior Management.

The following  table lists, as of March 31, 2003, the names of the directors and
senior  management  of the Company.  The directors  and senior  management  have
served in their respective  capacities  since their election and/or  appointment
and will serve until the next Annual General  Meeting of Shareholders or until



a successor is duly elected, unless the office is vacated in accordance with the
Company's Articles or unless there is a prior resignation or termination.



                                                                                                       
- ------------------------------- ---------------------------------------- ----------------------------------- ---------

             Name                        Position with Company               Date of First Appointment         Age
- ------------------------------- ---------------------------------------- ----------------------------------- ---------

Jan W. Vandersande              President and Director                   A director  and President of Old       57
                                                                         MPV since May 22, 1996.President
                                                                         and Director of the Company since
                                                                         November 1, 1997.

- ------------------------------- ---------------------------------------- ----------------------------------- ---------

Jesus R. Martinez               Corporate Secretary and Director         Secretary of Old MPV since             65
                                                                         September 9, 1991 and Director of
                                                                         Old MPV since November 22, 1989.
                                                                         Secretary of the Company since
                                                                         April 30, 1998, and Director of
                                                                         the Company since November 1,
                                                                         1997.
- ------------------------------- ---------------------------------------- ----------------------------------- ---------

Carl Verley                     Director(2)(3)(4)                        Director of Old MPV since              53
                                                                         December 2, 1986 and Director of
                                                                         the Company since November 1,
                                                                         1997.
- ------------------------------- ---------------------------------------- ----------------------------------- ---------

David E. Whittle                Director(2)(3)(4)                        November 1, 1997                       39
- ------------------------------- ---------------------------------------- ----------------------------------- ---------

D. Harry W. Dobson              Director                                 November 1, 1997                       55
- ------------------------------- ---------------------------------------- ----------------------------------- ---------

Elizabeth J. Kirkwood           Director and Chairman(2)(3)(4)           Director since September 21, 2001      53
                                                                         and Chairman since January 3,
                                                                         2003.
- ------------------------------- ---------------------------------------- ----------------------------------- ---------

Jonathan Comerford              Director(2)(3)(4)                        September 21, 2001                     31
- ------------------------------- ---------------------------------------- ----------------------------------- ---------

Pradeep Varshney                Chief Financial Officer                  July 23, 1998                          47
- ------------------------------- ---------------------------------------- ----------------------------------- ---------


(1)  The  information as to country of residence and the details listed below as
     to the principal  occupation of the directors and executive officers is not
     within the knowledge of the management of the Company and has been provided
     by the respective directors and executive officers.

(2)  Member of the Company's Corporate Governance Committee.

(3)  Member of the Company's Audit Committee.

(4)  Member of the Company's Compensation Committee.

Resumes

The following is a description of the Company's directors and senior management.

Jan W. Vandersande, Ph.D.

A  director  and  President  of Old MPV since  May 22,  1996.  President,  and a
director of the Company since November,  1997. He is a U.S. citizen and has a BA
from Swarthmore  College, a M.Sc.  (Physics) from Cornell University and a Ph.D.
(Solid State  Physics) from the University of the  Witwatersrand,  South Africa.
His thesis was on the properties of natural diamonds.  While in South Africa, he
worked  closely  with De  Beers  Diamond  Research  Laboratory.  He is a  former
Associate  Professor of Physics at Cornell  University and the University of the
Witwatersrand  where he performed research relating to the conductivity of rocks
and  minerals,  including  diamonds.  He is the  author  of  over  30  published
articles,



including book contributions,  on the properties of natural diamonds and diamond
films. He is a former financial and scientific consultant and mining analyst. He
has provided  financial  advice to brokerage  firms,  money managers and private
clients  on  natural  resource  companies  and  commodities.  Dr.  Vandersande's
responsibilities  include  overseeing the Company's day to day  operations,  the
development  of  the  diamondiferous  kimberlites,  and  the  Company's  mineral
exploration programs.

Jesus R. Martinez, M.Sc., P.Eng.

Secretary  of Old MPV since  September  9, 1991 abd a director  of Old MPV since
November 22, 1989. Secretary of the Company since April 30, 1998, and a Director
of the  Company  since  November  1997.  He is a resident  of British  Columbia,
Canada. He received a Bachelor of Science Degree in Mining  Engineering from the
Mapua Institute of Technology in the Philippines in 1961. He received a Bachelor
of Science Degree in Geology from the University of the  Philippines in 1963. He
received a Master of Science Degree in Mining Engineering from McGill University
in  1971.   Mr.   Martinez  holds  the  following   professional   designations:
Professional  Engineer  granted by the Association of Professional  Engineers of
British  Columbia  and  Professional  Engineer  granted  by the  Association  of
Professional Engineers and Geophysicists of Alberta. From November of 1986 until
November of 1990, he was the Secretary and a member of the Board of Directors of
Pacific  Falkon  Resources  Corp. He served as the President and a member of the
Board of  Directors  of Valpar  Resources,  Inc.  from March of 1987 to February
1993.  From March of 1987  until  October of 1992,  he was the  Secretary  and a
member of the Board of Directors of Excellon  Resources  Inc. and, from April of
1987 to April 1998, he was the President and member of the Board of Directors of
Gee-Ten Ventures Inc. Since April 1998, he has been the Secretary and a Director
of Gee Ten  Ventures  Inc.  From  December  1995 to  February  2003,  he was the
Secretary and a director of Golden Fortune  Investments Inc. From February 2003,
he became President and remains a director of Golden Fortune Investments Inc.

Carl G. Verley, B.Sc., P. Geol.

A director of Old MPV since  December  1986 and a director of the Company  since
November  1997. He is a resident of British  Columbia,  Canada.  Mr. Verley is a
graduate of the University of British Columbia where he received his Bachelor of
Science  Degree in May of 1974.  From  August of 1990 to  January  2002,  he has
served on the Board of Directors of Gee-Ten  Ventures Inc. In August of 1991 the
Association of  Professional  Engineers and  Geoscientists  of British  Columbia
awarded him the professional  designation of Professional Geologist. He has been
a self-employed geologist since 1982. Since July 2003, he has been a director of
La Plata Gold Corporation.

David E. Whittle, B.Com., C.A.

A director  of the  Company  since  November  1997.  He is a resident of British
Columbia,  Canada.  A Chartered  Accountant,  Mr.  Whittle was  associated  with
Coopers & Lybrand,  Chartered  Accountants,  from 1987 to 1992.  Since 1992, Mr.
Whittle  has  served as  operator  or  partner  of a  financial  consulting  and
chartered accounting practice. From 1993 to June 2000, Mr. Whittle was President
and director of Glenmore  Highlands  Inc. and  President  and director of 444965
B.C. Ltd. From November 1997 to April 1998,  Mr.  Whittle served as Secretary of
the Company.  From 1994 to January 1998,  Mr.  Whittle was CFO and a director of
Lytton  Minerals  Limited.  From 1993 to  January  1998,  Mr.  Whittle  was CFO,
Corporate Secretary and a director of New Indigo Resources Inc.

D. Harry W. Dobson

A director of the Company since November 1997. He is a resident of Scotland. Mr.
Dobson was the founder and chairman of American  Pacific Mining Company Inc. and
a director



of Breakwater  Resources Ltd. until 1991.  Subsequent to 1991, Mr. Dobson served
as Deputy Chairman of the Board and a director of Lytton Minerals Limited. He is
a former  officer and director of 444965 B.C. Ltd.; and served as a director and
Chairman of Glenmore  Highlands  Inc. Since October 2001, he has been a director
and officer of Kirkwood Lake Gold Inc.

Elizabeth J. Kirkwood

Ms.  Elizabeth J. Kirkwood has been a director of the Company  since  September,
2001 and  Chairman  of the  Board of the  Company  since  January  2003.  She is
resident in Ontario,  Canada,  and a member of the  Prospectors  and  Developers
Association of Canada. Ms. Kirkwood is President of Kirkwood Resource Developers
Ltd (since February 1989), Oil Springs Energy Corp. (since July,  1973),  Cogent
Capital Corp. (since February,  1990), First Strike Diamonds Inc. (since October
1995).  She is also a director of Intrepid  Minerals  Corporation  (since  April
1999). She has been a past director of Investor Links.com (March 1993-May 2001),
Canada's  Choice Spring Water (July  1996-August  1999),  Stroud  Resources Ltd.
(August,  2000 - March 2002) and a past  director  and  officer of Hucamp  Mines
Limited (May, 2001-May 2002).

Jonathan Christopher James Comerford, B.A. (Econ.), M.B.S. (Finance)

A director of the Company since  September,  2001. Mr.  Comerford is resident in
Dublin, Ireland. Mr. Comerford obtained his Masters in Business from the Michael
Smurfit  Business  School in 1993 and his Bachelor of Economics from  University
College,  Dublin,  in 1992. Mr.  Comerford is Investment  Manager at IIU Limited
(since  August,  1995) and was a Researcher  at McKinsey  Pacific Rim (from July
1993  to  May,  1994).  Jonathan  Comerford  represents  the  Company's  largest
shareholder, Bottin (International) Investments Ltd. on the Company's board.

Pradeep Varshney, M.S., M.B.A.

He has been the Chief  Financial  Officer of the  Company  since July 23,  1998.
Prior to that he was the  Controller  of the  Company  since  August  1994.  Mr.
Varshney  received  a  Master  of  Science  in  Chemical  Engineering  from  the
University  of New  Hampshire,  USA in 1981.  He  received a Master of  Business
Administration from the University of Western Ontario, Canada in 1986.

     B.   Compensation.

The  Company  has  three  executive  officers:  , Jan W.  Vandersande,  Jesus R.
Martinez  and  Pradeep  Varshney  and one  Chairman of the Board,  Elizabeth  J.
Kirkwood. For particulars on these executive officers,  reference should be made
to Item 6A - Directors and Senior Management - Resumes.

The  compensation  paid to the  executive  officers  and  details of  management
contracts  and  incentive  options  granted to the four highest  paid  executive
officers  of the Company is detailed  in the  Company's  Management  Information
Circular under the section entitled  "Executive  Compensation"  prepared for the
2003  Annual  General  Meeting  to be held  on  September  16,  2003,  which  is
incorporated herein by reference.

Compensation  of directors for their  services as directors and on Committees of
the board are detailed in the Company's  Management  Information  Circular under
the  section  entitled  "Executive  Compensation   -Compensation  of  Directors"
prepared for the 2003 Annual General  Meeting,  which is incorporated  herein by
reference.



In addition to the foregoing,  all of the executive  officers of the Company are
also entitled to medical and dental  benefits,  reimbursement  of all reasonable
business expenses and, from time to time, the grant of stock options.

No plan  exists,  and no amount has been set aside or accrued by the  Company or
any of its subsidiaries,  to provide pension, retirement or similar benefits for
directors and officers of the Company, or any of its subsidiaries.

     C.   Board practices.

The directors of the Company are elected annually and hold office until the next
annual general  meeting of the members of the Company or until their  successors
in office are duly elected or appointed.  The Company does not have an executive
committee.  All directors are elected for a one-year term. All officers serve at
the pleasure of the Board.  The next Annual General Meeting of the  shareholders
of the Company has been scheduled for September 16, 2003.

The  Board  has  adopted a Charter  under  which it and the  Board's  committees
operate.  The  Company's  board of  directors  has three  committees-  the Audit
Committee,  the  Nominating/Corporate  Governance Committee and the Compensation
Committee.

Audit Committee

The members of the Audit  Committee do not have any fixed term for holding their
positions  and are appointed and replaced from time to time by resolution of the
board of directors. It is composed of at least three directors, all of whom have
the ability to read and  understand a balance sheet,  an income  statement and a
cash flow statement.

The current  members of the Audit  Committee  are Elizabeth  Kirkwood,  Jonathan
Comerford, Carl Verley and David Whittle. The Audit Committee members receive no
separate  remuneration for acting as such and their appointments are not for any
fixed term.

The Audit  Committee is appointed by the Board to assist the Board in fulfilling
its oversight responsibilities. It's primary duties and responsibilities are to:

(a)  identify  and  monitor the  management  of the  principal  risks that could
     impact the financial reporting of the Company;

(b)  monitor the  integrity of the  Company's  financial  reporting  process and
     system of internal controls  regarding  financial  reporting and accounting
     compliance;

(c)  make  recommendations  regarding the  selection of the  Company's  external
     auditors (by shareholders) and monitor their independence and performance;

(d)  provide an avenue of communication among the external auditors,  management
     and the Board;

(e)  handle complaints regarding the Company's accounting practices; and

(f)  administer and monitor compliance with the Company's Ethics and Conflict of
     Interest Policy.

Nominating/Corporate Governance Committee



The Corporate  Governance Committee is composed exclusively of directors who are
not members of  management,  a majority of whom are  unrelated.  Its members are
Elizabeth Kirkwood, Jonathan Comerford, David Whittle and Carl Verley.

The Corporate  Governance Committee is responsible for assessing directors on an
ongoing basis and for developing the Company's approach to governance issues and
for the Company's  response to the Sarbanes-Oxley Act of 2002, as implemented by
the U.S.  Securities and Exchange  Commission,  and the Toronto Stock Exchange's
governance guidelines.

Compensation Committee

The  Compensation  Committee is composed  exclusively  of directors  who are not
members of management,  a majority of whom are unrelated.  The Committee members
are Carl Verley, David Whittle,  Elizabeth Kirkwood and Jonathan Comerford.  The
Committee,  in  consultation  with the Chairman  and CEO of the  Company,  makes
recommendations   to  the  Board  on  the   Company's   framework  of  executive
remuneration and its cost and on specific  remuneration packages for each of the
executives.  The  remuneration  of  non-executives,  including  members  of  the
Compensation Committee, is determined by the Board.

One  of the  directors,  Jan  W.  Vandersande,  has  entered  into a  Consulting
Agreement with the Company. Under the Consulting Agreement dated June 1, 1997 as
amended on January 1, 2001 and January 1, 2002,  Jan W.  Vandersande  was paid a
remuneration  of US$12,000  per month from  January 31, 2001 until  December 31,
2001,  and  US$8,000 per month for a period of 12 months  commencing  January 1,
2002 and ending on December  31,  2002,  following  which the  original  monthly
remuneration rate of US$14,000 will resume.  Until Dr. Paul Shatzko ceased to be
a Chairman  and a director of the Company on January 3, 2003,  the Company  also
had a Management Services Agreement with Dr. Shatzko.

The  Consulting  Agreement (as amended)  provides for  severance  amounts of the
greater  of three  times the amount of Dr.  Vandersande's  salary at the date of
termination or US$504,000, in the event of termination without cause, in certain
change of control  conditions of the Company or if the respective officer ceases
to be a director of the Company for any reason  provided  there is an absence of
just cause.

     D.   Employees.

As at the end of March  31,  2003,  the  Company  had a total  of two  full-time
employees (not including the President, Jan W. Vandersande). All employees serve
in a management and administration  capacity. These employees operate out of the
following offices of the Company:



                                                                     
- -------------------------- --------------------------------------- -------------------

     Office Location            Management & Administration              Total
- -------------------------- --------------------------------------- -------------------
Vancouver, B.C.                              1                             1
Ontario, CA, USA                             1                             1
- -------------------------- --------------------------------------- -------------------
Totals                                       2                             2
- -------------------------- --------------------------------------- -------------------


De Beers Canada employs personnel who conduct the exploration  activities on the
AK Property.

     E.   Share ownership.

The  following  table  sets  forth,  as of August  6,  2003,  the  number of the
Company's common shares  beneficially  owned by (a) the directors and members of
senior  management  of the Company,  individually,



and as a group,  and (b) the  percentage  ownership  of the  outstanding  common
shares  represented by such shares. The security holders listed below are deemed
to be the  beneficial  owners of common shares  underlying  options and warrants
which are exercisable within 60 days from the above date.



                                                                                              
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
                                                                                                Percentage(11)
                                                                                                  of Class
                                                                                         ([No. of shares, options +
                                                                                            warrants held by owner]
                                                                                           divided by [total issued
                                                                                           and outstanding(10) plus
                                                                                              no. of options and
            Title                   Name and Address of                Amount               warrants held by owner]
           of Class                  Beneficial Owner                and Nature               multiplied by 100)
- ------------------------------- ---------------------------- ---------------------------- ----------------------------

Common                          Jan W. Vandersande                    348,000(1)                       0.52%
                                1777 Maywood Avenue
                                Upland, California
                                U.S.A. 91784
- ------------------------------- ---------------------------- ---------------------------- ----------------------------

Common                          Jesus R. Martinez                     512,550(2)                       0.76%
                                7645 Kilrea Crescent
                                Burnaby, B.C. V5A 3N8

- ------------------------------- ---------------------------- ---------------------------- ----------------------------

Common                          Carl Verley                           292,950(3)                       0.44%
                                5895 Wiltshire Street
                                Vancouver, B.C. V6M 3L7
- ------------------------------- ---------------------------- ---------------------------- ----------------------------

Common                          David E. Whittle                      339,034(4)                       0.51%
                                1767 Coldwell Road
                                North Vancouver, B.C. V7G
                                1P3
- ------------------------------- ---------------------------- ---------------------------- ----------------------------

Common                          D. Harry W. Dobson                  1,670,636(5)                       2.45%
                                Lylestane Farm, Lauder
                                Berwickshire, Scotland T2D
                                6QY
- ------------------------------- ---------------------------- ---------------------------- ----------------------------

Common                          Elizabeth Kirkwood                     102,000(6)                      0.15%
                                21 Nesbitt Drive, Toronto
                                Ontario M4W 2G2
- ------------------------------- ---------------------------- ---------------------------- ----------------------------

Common                          Jonathan Comerford                            0(7)                     0%
                                12 Obelisk Rise, Blackrock
                                Co. Dublin, Ireland

- ------------------------------- ---------------------------- ---------------------------- ----------------------------

Common                          Pradeep Varshney                      111,200(8)                       0.17%
                                6435 Cypress Street
                                Vancouver, B.C.
                                V6M 3S4
- ------------------------------- ---------------------------- ---------------------------- ----------------------------

Common                          Officers and Directors as           3,376,370(9)                       4.82%



- ------------------------------- ---------------------------- ---------------------------- ----------------------------
                                                                                                Percentage(11)
                                                                                                  of Class
                                                                                         ([No. of shares, options +
                                                                                            warrants held by owner]
                                                                                           divided by [total issued
                                                                                           and outstanding(10) plus
                                                                                              no. of options and
            Title                   Name and Address of                Amount               warrants held by owner]
           of Class                  Beneficial Owner                and Nature               multiplied by 100)
- ------------------------------- ---------------------------- ---------------------------- ----------------------------

                                a Group
- ------------------------------- ---------------------------- ---------------------------- ----------------------------


(1)  Includes 42,000 shares and nil warrants (exercisable presently or within 60
     days)  and  306,000  options  (exercisable  presently  or  within 60 days).
     100,000 options are exercisable at a price of $2.25 per share and expire on
     February 1, 2004.  100,000  options are exercisable at a price of $1.25 per
     share and expire on May 11,  2006.  100,000  options are  exercisable  at a
     price of $1.50 per share and  expire on May 11,  2006.  6,000  options  are
     exercisable  within 60 days at a price of $1.71 per  share,  3,000 of which
     expire on  September  30,  2003,  and 3,000 of which  expire on October 30,
     2003.

(2)  Includes 315,850 shares and nil warrants  (exercisable  presently or within
     60  days)  and  196,700  options   (exercisable   presently  or  within  60
     days).6,700  options  are  exercisable  at a price of $2.25  per  share and
     expire on February 1, 2004.  90,000  options are  exercisable at a price of
     $1.25 per share and expire on May 11, 2006. 100,000 options are exercisable
     at a price of $1.50 per share and expire on May 11, 2006.

(3)  Includes 126,250 shares and nil warrants  (exercisable  presently or within
     60  days)  and  166,700  options   (exercisable   presently  or  within  60
     days).6,700  options  are  exercisable  at a price of $2.25  per  share and
     expire on February 1, 2004.  60,000  options are  exercisable at a price of
     $1.25 per share and expire on May 11, 2006. 100,000 options are exercisable
     at a price of $1.50 per share and expire on May 11, 2006.

(4)  Includes 5,734 shares and nil warrants (exercisable  presently or within 60
     days)  and  333,300  options  (exercisable  presently  or  within 60 days).
     133,300 options are exercisable at a price of $2.25 per share and expire on
     February 1, 2004.  100,000  options are exercisable at a price of $1.25 per
     share and expire on May 11,  2006.  100,000  options are  exercisable  at a
     price of $1.50 per share and expire on May 11, 2006.

(5)  Includes  1,164,923 shares and 172,413 warrants  (exercisable  presently or
     within 60 days) and 333,300  options  (exercisable  presently  or within 60
     days).  133,300  options are  exercisable at a price of $2.25 per share and
     expire on February 1, 2004.  100,000  options are exercisable at a price of
     $1.25 per share and expire on May 11, 2006. 100,000 options are exercisable
     at a price of $1.50 per share and expire on May 11, 2006.

(6)  Includes 6,000 shares and nil warrants (exercisable  presently or within 60
     days) and 96,000 options (exercisable  presently or within 60 days). 40,000
     options  are  exercisable  at a price of $0.67  per  share  and  expire  on
     December 21, 2006.  50,000 options are  exercisable at a price of $1.36 per
     share and expire on October 21, 2007. 6,000 options are exercisable  within
     60 days at a price of $1.71 per share,  2,000 of which expire on August 30,
     2003,  a  further  2,000 of which  expire  on  September  30,  2003 and the
     remaining 2,000 of which expire on October 30, 2003.

(7)  Includes  nil shares and nil warrants  (exercisable  presently or within 60
     days) and nil options (exercisable presently or within 60 days).

(8)  Includes 1,600 shares and nil warrants (exercisable  presently or within 60
     days) and 109,600 options (exercisable  presently or within 60 days). 8,000
     options are  exercisable at a price of $1.01 per share and expire on May 7,
     2006.  50,000  options  are  exercisable  at a price of $1.25 per share and
     expire on May 11, 2006.  50,000 options are exercisable at a price of $1.50
     per share and expire on May 11, 2006. 1,600 options are exercisable  within
     60 days at a price of $1.71 per share, 800 of which expire on September 30,
     2003 and 800 of which expire on October 30, 2003.

(9)  Includes  1,662,357 shares and 172,413 warrants  (exercisable  presently or
     within 60 days) and 1,541,600 options  (exercisable  presently or within 60
     days).

(10) Includes shares of the Company held by Mountain Glen.

(11) The  calculation  does not include stock  options that are not  exercisable
     presently or within 60 days.



The Company  has a Stock  Option  Plan  pursuant  to which stock  options may be
granted to its directors,  officer and  employees.  Stock options are awarded by
resolution of the board of directors.

Item 7 Major Shareholders and Related Party Transactions.

     A.   Major shareholders.

A major shareholder is a shareholder  owning directly or indirectly more than 5%
of the issued shares of the Company.

As at August 6, 2003, the Company's issued and outstanding capital is 66,630,966
shares  which  includes  the  16,015,696  shares  acquired  by its  wholly-owned
subsidiary,  Mountain Glen, as a result of the  arrangement  between the Company
and Glenmore  effected as of June 2000. These 16,015,696  shares are anticipated
to be  cancelled in due course and are required by law to be disposed of by June
30, 2005. If these shares are cancelled,  the issued and outstanding  capital of
the Company as at August 6, 2003 would be 50,615,270 shares.

The Company is a publicly-owned corporation the majority of the common shares of
which are owned by persons  resident  outside the United States.  To the best of
the  Company's  knowledge,  the Company is not directly  owned or  controlled by
another corporation or any foreign government.  As at July 31, 2003, the Company
believes  that  approximately  12,589,129 of the issued and  outstanding  common
shares were held by 114  shareholders  with  addresses in the United  States.  A
number of these shares are held in "street" name and may, therefore,  be held by
several beneficial owners.

The following table shows, to the best knowledge of the Company, the number ( as
at August 6, 2003) and  percentage  of shares,  warrants and options held by the
Company's major  shareholders,  which percentages are calculated by reference to
the 66,630,966 shares and 50,615,270 shares  respectively on a partially diluted
basis.



                                                                                              
- ------------------------------------------ ----------------------------- ---------------------- ----------------------
                                                                           Percentage out of      Percentage out of
                                                                           66,630,966 issued      50,615,270 issued
                                                                            and outstanding        and outstanding
           Name of Shareholder                  No. of Shares Held           share capital          share capital
- ------------------------------------------ ----------------------------- ---------------------- ----------------------
Bottin (International) Investments Ltd.      12,822,396 shares, and             19.89%                 26.18%
(controlled by Dermot Desmond)               431,034 warrants
- ------------------------------------------ ----------------------------- ---------------------- ----------------------

De Beers Canada Exploration Ltd.             3,160,643 shares                   4.74%                  6.24%
(formerly Monopros Limited)
- ------------------------------------------ ----------------------------- ---------------------- ----------------------

Mountain Glen                                16,015,696 (1)                     24.04%                    -
- ------------------------------------------ ----------------------------- ---------------------- ----------------------


(1)  Mountain Glen is prohibited from voting these shares both under section 159
     of the  British  Columbia  Company  Act and  section  31(3) of the  Alberta
     Business  Corporations Act. It is anticipated that the Company and Mountain
     Glen will  effect a further  reorganization  in due course to cancel  these
     shares.  Under the  Alberta  Business  Corporations  Act,  the  Company  is
     required  to cause  Mountain  Glen to dispose  of those  shares by June 30,
     2005.

Major shareholders of the Company do not have any special voting rights.

Of the major  shareholders,  De Beers Canada  increased its  shareholdings  from
209,644 shares and 209,644  warrants to 3,160,643 shares and nil warrants in the
last three years.  Bottin  (International)  Investments



Ltd. and Mountain  Glen became  shareholders  of the Company  subsequent  to the
Arrangement  with  Glenmore  effected on June 30, 2000 and held no securities in
the Company prior to that date. Their current  securities  holdings are as shown
in the above table.

     B.   Related party transactions.

The Company is not directly or indirectly  controlled by any enterprise and does
not  control,  directly  or  indirectly,  any other  enterprises  other than its
subsidiaries  listed under Item 4A.  Bottin  (International)  Investments  Ltd.,
which is  controlled  by Dermot  Desmond,  has  significant  influence  over the
Company as its largest  single  shareholder:  see Item 7A - Major  shareholders,
above.

Key  personnel  of the  Company are  Elizabeth  Kirkwood,  who is  non-executive
Chairman of the Board, and key management personnel are Jan Vandersande,  who is
President,  Jesus R. Martinez,  who is Secretary,  and Pradeep Varshney,  who is
Chief Financial Officer,  of the Company.  Jan Vandersande and Jesus R. Martinez
are also directors of the Company. See Item 6B - Compensation.

Of such key  management  personnel,  only Jan W.  Vandersande  has a  Consulting
Agreement  with the  Company.  See Item 10C - Material  Contracts  and Item 6C -
Board Practices.

Included in the management  fees during the year ended March 31, 2003 is $45,000
for management services to Paul Shatzko and a $331,500 severance payment to him.
The Company also paid $193,301 for consulting,  management,  property evaluation
and  administration  services  to a director  and to  companies  in which  other
directors  have an interest.  During the year ended March 31, 2003,  the Company
paid  $20,340 for  secretarial  and public  relations  services  to  individuals
related to a director of the Company.

There  are  no  debts  owing  directly  or  indirectly  to  the  Company  or its
subsidiaries by any director or officer of the Company.

As of March 31, 2003,  the Company owed $3,000 to David  Whittle,  a director of
the Company.

For  further  particulars  on  related  party  transactions,  see note 10 to the
Company's  Consolidated Financial Statements for the years ended March 31, 2003,
2002 and 2001, which are incorporated by reference.

     C.   Interests of experts and counsel.

This Form 20-F is being filed as an annual report under the Exchange Act and, as
such, there is no requirement to provide any information under this sub-item.

Item 8 Financial Information.

     A.   Consolidated Statements and Other Financial Information.

Listed in Item 19 hereto are audited  consolidated  financial statements audited
by an  independent  auditor  accompanied by an audit report as at March 31, 2003
and 2002 and for the fiscal years ended March 31, 2003, 2002 and 2001.

There are no legal proceedings currently pending.

The  Company  has not paid  dividends  in the past  and does not  expect  to pay
dividends in the near future.

     B.   Significant Changes.

There have been no  significant  changes since the date of the Company's  annual
financial statements.



Item 9 The Offer and Listing.

     A.   Offer and Listing Details

The common  shares of the  Company  were  listed  and posted for  trading on The
Toronto  Stock  Exchange (the "TSX") on January 22, 1999.  The Company's  shares
were delisted from the Vancouver  Stock  Exchange  ("VSE",  now known as the TSX
Venture  Exchange and before that, the Canadian  Venture  Exchange  ("CDNX")) on
January 31, 2000 and from the Nasdaq  Smallcap Market on September 29, 2000. The
Company's  shares also trade on the NASD's  OTC-Bulletin  Board  ("NASD  OTCBB")
under the symbol "MPVI".

The  following  tables  set forth the  reported  high and low  prices on the TSX
and/or the VSE (combined for the periods when the Company was listed on both the
TSX and the VSE), and for Nasdaq, for (a) the five most recent fiscal years; (b)
each quarterly period for the past two fiscal years and for the first quarter of
2003, and for the most recent six months.



                                                                                           
- ----------------------------------------------------------------------------------------------------------------------
                              High and Low Prices for the Five Most Recent Fiscal Years
- ----------------------------------------------------------------------------------------------------------------------
  Fiscal Year ended                       TSX/VSE (1)                               NASDAQ (2) / NASD OTCBB
- ---------------------- -------------------------------------------------- --------------------------------------------
                             High (CDN$)               Low (CDN$)             High (US$)             Low (US$)
- ---------------------- ------------------------ ------------------------- -------------------- -----------------------
March 31, 2003                  $2.26                    $0.62                   $1.55                 $0.39
March 31, 2002                  $1.50                    $0.44                   $1.08                 $0.27
March 31, 2001                  $1.21                    $0.37                   $1.34                 $0.22
March 31, 2000                  $4.20                    $1.15                   $2.81                 $0.75
March 31, 1999                  $5.60                    $1.30                   $3.89                 $0.81
- ---------------------- ------------------------ ------------------------- -------------------- -----------------------


(1)  The Company  delisted  from the VSE (now known as the TSX Venture  Exchange
     and prior to that,  as the CDNX)  effective  January 31, 2000.  The Company
     listed its shares on the TSX on January 22, 1999. The Company was listed on
     both the TSX and the VSE for the period  January  22,  1999 to January  31,
     2000.

(2)  Until  September  29, 2000 only.  The  Company's  shares were listed on the
     Nasdaq Smallcap Market on May 1, 1996 and delisted from the Nasdaq Smallcap
     Market on September 29, 2000, at which time they  commenced  trading on the
     NASD OTCBB.

              High and Low Prices for Each Quarterly Period for the
             Past Two Fiscal Years and For the first Quarter of 2003



                                                                                           
- ---------------------------------------------------------------------------------------------------------------------
                                         TSX/VSE (1)                              NASDAQ (2) / NASD OTCBB
- ---------------------------------------------------------------------------------------------------------------------

Period Ended:                High (CDN$)              Low (CDN$)              High (US$)             Low (US$)
- ---------------------------------------------------------------------------------------------------------------------

June 30, 2003                   $1.95                   $0.60                   $1.30                  $0.37
March 31, 2003                  $2.26                   $1.40                   $1.55                  $0.91
Dec. 31, 2002                   $1.78                   $1.02                   $1.14                  $0.64
Sept. 30, 2002                  $1.55                   $0.62                   $0.99                  $0.39
June 30, 2002                   $0.87                   $0.69                   $0.58                  $0.45
March 31, 2002                  $0.94                   $0.65                   $0.61                  $0.41
Dec. 31, 2001                   $0.80                   $0.44                   $0.51                  $0.27



- ---------------------------------------------------------------------------------------------------------------------
                                         TSX/VSE (1)                              NASDAQ (2) / NASD OTCBB
- ---------------------------------------------------------------------------------------------------------------------

Period Ended:                High (CDN$)              Low (CDN$)              High (US$)             Low (US$)
- ---------------------------------------------------------------------------------------------------------------------

Sept. 30, 2001                  $1.50                   $0.58                   $0.95                  $0.38
June 30, 2001                   $1.80                   $0.60                   $1.08                  $0.36
- ---------------------------------------------------------------------------------------------------------------------


(1)  The Company  delisted from the CDNX (formerly  VSE)  effective  January 31,
     2000.  The Company  listed its shares on the TSX on January 22,  1999.  The
     Company  was listed on both the TSX and the VSE for the period  January 22,
     1999 to January 31, 2000.

(2)  Until  September  29, 2000 only.  The  Company's  shares were listed on the
     Nasdaq Smallcap Market on May 1, 1996 and delisted from the Nasdaq Smallcap
     Market on September 29, 2000, at which time they  commenced  trading on the
     NASD OTCBB.

               High and Low Prices for the Most Recent Six Months



                                                                                             
- ----------------------------------------------------------------------------------------------------------------------
                                                TSX (CDN$)                               NASD OTCBB (US$)
- ------------------------------ --------------------------------------------- -----------------------------------------
Month Ended                            High                    Low                  High                  Low
- ------------------------------ ---------------------- ---------------------- -------------------- --------------------
February 28, 2003                      $2.14                  $1.55                 $1.46                $1.03
March 31, 2003                         $2.26                  $1.80                 $1.55                $1.21
April 30, 2003                         $1.95                  $0.63                 $1.30                $0.37
May 31, 2003                           $0.77                  $0.60                 $0.55                $0.50
June 30, 2003                          $0.76                  $0.68                 $0.58                $0.49
July 31, 2003                          $1.70                  $0.72                 $1.15                $0.48
- ------------------------------ ---------------------- ---------------------- -------------------- --------------------


On March 31,  2003  (being the last  trading  day for the year  ended  March 31,
2003), the closing price of the Common Shares on the TSX was $1.84 per share and
on August 7, 2003,  the closing  price of the Common Shares on the TSX was $1.39
per share. The closing price on August 7, 2003 on the NASD OTCBB was US$0.99 per
share.

     B.   Plan of Disribution

Not Applicable.

     C.   Markets

The Company's  shares are listed on the Toronto Stock  Exchange under the symbol
"MPV.TO"  and are also  quoted  on the  over-the-counter  (OTC)  Bulletin  Board
pursuant to Rule 6530(a) of the NASD's OTC Bulletin Board Rules under the symbol
"MPVI.OB". The Common Shares are not registered to trade in the United States in
the form of American Depository Receipts or similar certificates.

     D.   Selling Shareholders



Not Applicable.

     E.   Dilution

Not Applicable.

     F.   Expenses of the Issuer

Not Applicable.

Item 10 Additional Information.

     A.   Share capital.

This Form 20-F is being  filed as an annual  report  and,  as such,  there is no
requirement to provide information under this sub-item.

     B.   Memorandum and articles of association.

Incorporation

The Company was  amalgamated  in British  Columbia  under  incorporation  number
553442 on November 1, 1997 under the name of Mountain  Province  Mining Inc. The
Company changed its name to Mountain Province Diamonds Inc. on October 16, 2000.

The  Company  is also  registered  as an  extra-territorial  corporation  in the
following   provinces   or   territories   of  Canada:   Northwest   Territories
(Registration no. E 6486, on February 25, 1998, amended October 16, 2000 for the
name  change),  Saskatchewan  (Corporation  no.  621496,  on February  18, 1998,
amended  October 25, 2000 for the name change),  and Manitoba  (Corporation  no.
4423330, on August 9, 2001).

The Company  does not have any stated  "objects" or  "purposes"  as such are not
required by the corporate laws of the Province of British Columbia.  Rather, the
Company  is,  by such  corporate  laws,  entitled  to  carry  on any  activities
whatsoever,  which are not specifically  precluded by other statutory provisions
of the Province of British Columbia.

Powers, functions and qualifications of Directors

The powers and functions of the directors are set forth in the British  Columbia
Company  Act and in the  Articles  of the  Company.  With  respect to the voting
powers of  directors,  the Articles  provide  that, in respect of an existing or
proposed  contract or  transaction  with the  Company,  where a duty or interest
might be created to conflict  with a director's  duty or interest as a director,
the director  shall  declare the nature and extent of his interest in accordance
with the  provisions  of the British  Columbia  Company Act.  The Articles  also
provide that a director shall not vote in respect of any contract or transaction
with the  Company in which he is  interested  and if shall do so, his vote shall
not be counted, but this prohibition does not apply to:

          (i)  any  contract  or  transaction  relating to a loan to the Company
               guaranteed by the director of entity in which he has an interest;

          (ii) any contract or transaction  made with a corporation of which the
               director is a director;



          (iii)any contract by a director to subscribe for or underwrite  shares
               or  debentures  of  the  Company  or  its  subsidiaries,  or  any
               contract,  arrangement  or  transaction  in which a director  is,
               directly or indirectly, interested if all the other directors are
               also,  directly  or  indirectly   interested  in  such  contract,
               arrangement or transaction;

          (iv) determining the remuneration of the directors;

          (v)  purchasing and maintaining  insurance to cover directors  against
               liability incurred by them as directors; or

          (vi) the indemnification of any director or officer by the Company.

The  circumstance  that a  director  is,  in any way,  directly  or  indirectly,
interested in a proposed contract or transaction,  or a contract or transaction,
with the  Company  does not  invalidate  the  contract  or  transaction,  but on
application  of the Company or any interested  person,  the court may enjoin the
Company from entering into the proposed  contract or  transaction,  or set aside
the  contract or  transaction  or make any other order that the court  considers
appropriate.

The  Company  Act also  provides  that a director  is liable to account  for any
profit made from the transaction unless disclosure of his interest had been made
and the director abstained from voting on the approval of the transaction.

     (a)  Subject to the  provisions  of the Company Act, the directors may vote
          compensation to themselves or any members of their body.

     (b)  There are no  limitations on the exercise by the board of directors of
          its borrowing powers on the credit or on behalf of the Company.

     (c)  There  are no  provisions  for the  retirement  or  non-retirement  of
          directors under an age limit.

     (d)  There is no  requirement  for any  director  to hold any shares in the
          Company.

Rights and Restrictions attached to Shares

As all of the Company's authorized and issued shares are of one class, there are
no special rights or  restrictions  of any nature or kind attached to any of the
shares.  All  authorized  and  issued  shares  rank  equally  in  respect of the
declaration  and  receipt of  dividends,  the rights to share in any  profits or
surplus on liquidation, dissolution or winding up of the Company. Each share has
attached  to it one  non-cumulative  vote.  However,  it should  be noted  that,
pursuant to the amalgamation  with Glenmore,  Mountain Glen acquired  16,015,696
MPV Shares.  Because Mountain Glen is a wholly-owned  subsidiary of the Company,
it is  prohibited  from  voting  these  shares  both  by  the  Alberta  Business
Corporations Act and the British Columbia Companies Act. It is expected that the
shares held by Mountain  Glen in the Company  will be  cancelled  in due course,
pursuant to a further  re-organization  between the Company and  Mountain  Glen.
Under the Alberta  Business  Corporations  Act, the Company is required to cause
Mountain Glen to dispose of those shares by June 30, 2005.

Alteration of Share Rights

To alter the rights of holders of issued shares of the Company,  such alteration
must be approved by the  majority  vote of not less than  three-quarters  of the
votes  cast by  shareholders  voting in  person or by proxy at a meeting  of the
shareholders of the Company.



Annual General Meetings

Annual  General  Meetings are called and scheduled upon decision by the Board of
Directors.  The directors may also convene a general  meeting of shareholders at
any  time.   There  are  no  provisions  in  the  Company's   Articles  for  the
requisitioning  of  special  meetings  by  shareholders.  However,  the  British
Columbia Company Act provides that the holders of not less than 5% of the issued
shares of the Company may requisition the directors to call a general meeting of
the shareholders for the purposes stated in the requisition. All meetings of the
shareholders  may be attended  by  registered  shareholders  or persons who hold
powers of attorney or proxies given to them by registered shareholders.

Foreign Ownership Limitations

There  are no  limitations  prohibiting  shares  being  held  by  non-residents,
foreigners or any other group.

Change of Control

There are no provisions in the Company's  Articles that would have the effect of
delaying,  deferring or  preventing  a change in the control of the Company,  or
that would operate with respect to any proposed merger, acquisition or corporate
re-structuring of the Company.

Share Ownership Reporting Obligations

There are no provisions in the Company's  articles  requiring share ownership to
be disclosed.  The securities laws of the Province of British Columbia and other
provinces in Canada having  jurisdiction over the Company require  disclosure of
shareholdings by:

     (a)  insiders who are directors or senior officers of the Company; and

     (b)  a person who has direct or indirect  beneficial  ownership of, control
          or direction  over, or a combination of direct or indirect  beneficial
          ownership  of and of  control  or  direction  over  securities  of the
          Company  carrying more than 10% of the voting  rights  attached to all
          the Company's outstanding voting securities.

The threshold of share ownership percentage requiring disclosure of ownership is
higher in the home  jurisdiction  of British  Columbia than in the United States
where United States law prescribes a 5% threshold for ownership disclosure.

     C.   Material contracts.

The following is a list of material contracts, other than contracts entered into
in the ordinary  course of  business,  to which the Company or any member of the
group is a party,  for the two years  immediately  preceding  publication of the
document,  including dates, parties, general nature of the contracts,  terms and
conditions,  and amount of any  consideration  passing to or from the company or
any other member of the group.

          1.   Subscription   Agreements   relating   to  a  private   placement
               (announced November 12, 2001) for a total of 1,636,912 units at a
               price of $0.58 per unit which  raised  total  gross  proceeds  of
               $949,408.  Each unit comprised one share and one non-transferable
               share purchase  warrant  exercisable to purchase one common share
               of the Company at a price of $0.58 for a period of three years.


          2.   Second  Amendment  Agreement  dated  January 1, 2002  between the
               Company  and  Paul  Shatzko  pursuant  to  which  the  Management
               Services  Agreement  dated



               June 1, 1997 and the first  Amendment  Agreement dated January 1,
               2001  between  the same  parties  were  amended.  The  amendments
               provide  for the  Company  to grant  Dr.  Shatzko  an  option  to
               purchase  up to 25,000  shares of the  Company for a term of five
               years at a price to be determined by the Board.  The remuneration
               of Dr.  Shatzko  was also  amended so that Dr.  Shatzko  would be
               paid:

               (a)  at the rate of  $14,000  per month for a period of 45 months
                    commencing  on the  Effective  Date and ending  February 28,
                    2001;

               (b)  at the rate of  $9,000  per  month for a period of 10 months
                    commencing on March 1, 2001 and ending on December 31, 2001;

               (c)  at the rate of  $5,000  per  month for a period of 12 months
                    commencing  on January 1, 2002 and  ending on  December  31,
                    2002; and

               (d)  thereafter  at the rate of $14,000  commencing on January 1,
                    2003.

               The  severance  amount  payable was amended to an amount equal to
               the greater of:

               (a)  three times the amount of Dr. Shatzko's annual salary at the
                    date of termination, and

               (b)  $504,000.

          3.   Second  Amendment  Agreement  dated January 1, 2002,  between the
               Company and Jan W.  Vandersande  pursuant to which the Consulting
               Agreement  dated June 1, 1997 and the first  Amendment  Agreement
               dated January 1, 2001 between the same parties were amended.  The
               amendments  provide for the Company to grant Dr.  Vandersande  an
               option to purchase up to 25,000  shares of the Company for a term
               of five  years  at a price to be  determined  by the  Board.  The
               remuneration  of Dr.  Vandersande  was also  amended  so that Dr.
               Vandersande would be paid:

               (a)  at the rate of US  $14,000  per  month  for a  period  of 43
                    months  commencing  on the  Effective  Date  and  ending  on
                    December 31, 2000;

               (b)  at the rate of US  $12,000  per  month  for a  period  of 12
                    months  commencing on January 1, 2001 and ending on December
                    31, 2001;

               (c)  at the rate of US $8,000 per month for a period of 12 months
                    commencing  on January 1, 2002 and  ending on  December  31,
                    2002; and

               (d)  thereafter at the rate of US $14,000,  commencing on January
                    1, 2003.

               The  severance  amount  payable was amended to an amount equal to
               the greater of:

               (a)  three times the amount of Dr. Vandersande's annual salary at
                    the date of termination, and

               (b)  US $504,000.



          4.   De Beers updated and expanded Joint-Venture Agreement dated as of
               January 1, 2002. The  joint-venture  agreement  between  Monopros
               Ltd. (now De Beers Canada Exploration Inc.) and the Company dated
               March 6, 1997 was  updated  to  include  the  several  additional
               amendments  entered  into  since  the  original  agreement.   The
               amendments  were date  November 24,  1999,  December 17, 1999 and
               March 8, 2000. The agreement was also expanded to include diamond
               deposits  outside of the Kennady Lake area  since,in the original
               agreement, only deposits in Kennady Lake were considered.

          5.   Third  Amendment  Agreement  dated  December 13, 2002 between the
               Company and Jan W. Vandersande  amending the Consulting Agreement
               dated June 1, 1997, as amended by the Amendment  Agreement  dated
               January 1, 2001 and a Second Amendment Agreement dated January 1,
               2002, pursuant to which the Company agreed to pay Dr. Vandersande
               a bonus of CDN$61,560 in 12 equal  instalments of CDN$5,130 each,
               provided Dr. Vandersande  applies the proceeds of each instalment
               to the exercise of incentive  stock options in the Company within
               30 days of receipt,  in consideration  of continued  reduction in
               remuneration.  Dr. Vandersande  agreed to a reduced  remuneration
               (excluding  the  bonus)  of a base  rate of  US$8,000  per  month
               commencing  January  1, 2003 and  ending on  December  31,  2003.
               Commencing  January  1, 2004 and  thereafter,  Dr.  Vandersande's
               remuneration would be at a base rate of US$14,000 per month.

          6.   Letter  Agreement  between the Company and Pradeep Varshney dated
               December  13,  2002  amending  Mr.  Varshney's  base  salary.  In
               consideration  of Mr. Varshney  agreeing to accept a reduced base
               salary of $4,000 per month from  January 1, 2003 to December  31,
               2003 and for the base  salary  to  revert  to  $6,000  per  month
               thereafter, the Company agreed to make a bonus payment of $13,680
               in 10 equal instalments of $1,368 each,  provided the proceeds of
               each  instalment  are applied to the exercise of incentive  stock
               options within 30 days of its receipt.

          7.   Letter  agreement dated December 13, 2002 between the Company and
               Elizabeth  Kirkwood pursuant to which Elizabeth Kirkwood would be
               paid an honorarium of $34,200 in 10 equal instalments  commencing
               January 31, 2003 and ending on October 31, 2003, in consideration
               of her  acceptance  of the  position of Chairman of the  Company,
               provided  that the  proceeds  of each  instalment  are applied to
               exercise incentive stock options in the Company within 30 days of
               its receipt. with no entitlement to receive any instalments after
               the date of any Termination Event as defined therein.

     D.   Exchange controls.

Exchange Controls and Investment Canada Act

Canada has no system of exchange controls. There are no exchange restrictions on
borrowing from foreign  countries or on the  remittance of dividends,  interest,
royalties and similar payments, management fees, loan repayments,  settlement of
trade debts,  or the  repatriation  of capital.  Any such  remittances to United
States residents,  however,  may be subject to a withholding tax pursuant to the
Canadian  Income Tax Act as modified by the reciprocal tax treaty between Canada
and the United States. See "Item 10E., Taxation".

The Investment Canada Act (the "Act"),  enacted on June 20, 1985, requires prior
notification  to the  Government  of Canada on the  "acquisition  of control" of
Canadian   businesses  by   non-Canadians,   as



defined in the Act.  Certain  acquisitions  of  control,  discussed  below,  are
reviewed  by the  Government  of Canada.  The term  "acquisition  of control" is
defined as any one or more  non-Canadian  persons acquiring all or substantially
all of the assets  used in the  Canadian  business,  or the  acquisition  of the
voting shares of a Canadian corporation carrying on the Canadian business or the
acquisition of the voting interests of an entity  controlling or carrying on the
Canadian business.  The acquisition of the majority of the outstanding shares is
deemed to be an  "acquisition  of control" of a corporation.  The acquisition of
less  than a  majority,  but  one-third  or  more,  of the  voting  shares  of a
corporation  is presumed  to be an  "acquisition  of  control" of a  corporation
unless  it  can  be  established   that  the  purchaser  will  not  control  the
corporation.

Investments  requiring  notification  and review are all direct  acquisitions of
Canadian  businesses  with assets of $5,000,000 or more (subject to the comments
below on WTO investors),  and all indirect  acquisitions of Canadian  businesses
(subject  to the  comments  below on WTO  investors)  with  assets  of more than
$50,000,000 or with assets of between $5,000,000 and $50,000,000 which represent
more than 50% of the value of the total international transaction.  In addition,
specific  acquisitions  or  new  businesses  in  designated  types  of  business
activities  related to Canada's  cultural heritage or national identity could be
reviewed if the Government of Canada considers that it is in the public interest
to do so.

The Act was amended with the  implementation  of the Agreement  establishing the
World Trade  Organization  ("WTO") to provide for special review  thresholds for
"WTO  investors",  as defined in the Act. "WTO investor"  generally means (i) an
individual,  other than a Canadian,  who is a national of a WTO member (such as,
for example,  the United States), or who has the right of permanent residence in
relation to that WTO member, (ii) governments of WTO members, and (iii) entities
that are not  Canadian  controlled,  but which are WTO investor  controlled,  as
determined by rules specified in the Act. The special review  thresholds for WTO
investors do not apply,  and the general rules  described above do apply, to the
acquisition  of control of certain  types of  businesses  specified  in the Act,
including a business that is a "cultural  business".  If the WTO investor  rules
apply, an investment in the shares of the Company by or from a WTO investor will
be reviewable  only if it is an investment to acquire control of the Company and
the value of the assets of the  Company is equal to or greater  than a specified
amount  (the "WTO  Review  Threshold").  The WTO Review  Threshold  is  adjusted
annually  by a formula  relating to  increases  in the  nominal  gross  domestic
product of Canada. The 2002 WTO Review Threshold is $223,000,000.

If any  non-Canadian,  whether or not a WTO  investor,  acquires  control of the
Company by the  acquisition of shares,  but the transaction is not reviewable as
described above, the non-Canadian is required to notify the Canadian  government
and  to  provide  certain  basic  information  relating  to  the  investment.  A
non-Canadian,  whether  or not a WTO  investor,  is also  required  to provide a
notice to the government on the establishment of a new Canadian business. If the
business of the Company is then a prescribed type of business  activity  related
to  Canada's  cultural  heritage  or  national  identity,  and if  the  Canadian
government considers it to be in the public interest to do so, then the Canadian
government may give notice in writing within 21 days requiring the investment to
be reviewed.

For  non-Canadians  (other  than WTO  investors),  an  indirect  acquisition  of
control,  by the  acquisition of voting  interests of an entity that directly or
indirectly controls the Company, is reviewable if the value of the assets of the
Company is then $50,000,000 or more. If the WTO investor rules apply,  then this
requirement  does not  apply to a WTO  investor,  or to a person  acquiring  the
entity from a WTO  investor.  Special  rules  specified  in the Act apply if the
value of the  assets of the  Company is more than 50% of the value of the entity
so acquired.  By these special rules, if the non-Canadian  (whether or not a WTO
investor) is acquiring control of an entity that directly or indirectly controls
the company,  and the value of the assets of the Company and all other  entities
carrying on business in Canada, calculated in the manner provided in the Act and
the regulations under the Act, is more than 50% of the value,  calculated in the
manner provided in the Act and the  regulations  under the Act, of the assets of
all entities, the control of



which is  acquired,  directly  or  indirectly,  in the  transition  of which the
acquisition  of control of the Company forms a part,  then the  thresholds for a
direct  acquisition  of control as  discussed  above will apply,  that is, a WTO
Review  Threshold of $223,000,000 (in 2003) for a WTO investor or a threshold of
$5,000,000  for a non-Canadian  other than a WTO investor.  If the value exceeds
that level, then the transaction must be reviewed in the same manner as a direct
acquisition of control by the purchase of shares of the Company.

If an investment is reviewable, an application for review in the form prescribed
by the regulations is normally required to be filed with the Director  appointed
under the Act (the  "Director")  prior to the  investment  taking  place and the
investment may not be  consummated  until the review has been  completed.  There
are, however, certain exceptions.  Applications concerning indirect acquisitions
may be filed up to 30 days after the investment is consummated and  applications
concerning reviewable investments in culture-sensitive sectors are required upon
receipt of a notice for review.  In addition,  the Minister (a person designated
as such  under the Act) may  permit an  investment  to be  consummated  prior to
completion  of the  review,  if he is  satisfied  that delay  would  cause undue
hardship to the acquiror or jeopardize the  operations of the Canadian  business
that is  being  acquired.  The  Director  will  submit  the  application  to the
Minister,  together with any other information or written  undertakings given by
the acquiror and any representation submitted to the Director by a province that
is likely to be significantly affected by the investment.

The Minister will then  determine  whether the investment is likely to be of net
benefit to Canada,  taking into  account  the  information  provided  and having
regard to certain  factors of assessment  where they are  relevant.  Some of the
factors to be considered  are (i) the effect of the  investment on the level and
nature of economic  activity in Canada,  including the effect on employment,  on
resource  processing,  and on the utilization of parts,  components and services
produced in Canada;  (ii) the effect of the  investment  on exports from Canada;
(iii) the degree and  significance of participation by Canadians in the Canadian
business and in any industry in Canada of which it forms a part; (iv) the effect
of  the  investment  on  productivity,   industrial  efficiency,   technological
development, product innovation and product variety in Canada; (v) the effect of
the investment on competition within any industry or industries in Canada;  (vi)
the  compatibility  of the  investment  with national  industrial,  economic and
cultural policies taking into  consideration  industrial,  economic and cultural
objectives enunciated by the government or legislature of any province likely to
be significantly  affected by the investment;  and (vii) the contribution of the
investment to Canada's ability to compete in world markets.

The Act sets certain time limits for the  Director and the  Minister.  Within 45
days after a completed  application has been received,  the Minister must notify
the acquiror that (a) he is satisfied that the investment is likely to be of net
benefit to Canada,  or (b) he is unable to complete his review, in which case he
shall have 30 additional days to complete his review (unless the acquiror agrees
to a longer period), or (c) he is not satisfied that the investment is likely to
be of net benefit to Canada.

Where the Minister has advised the acquiror  that he is not  satisfied  that the
investment is likely to be of net benefit to Canada,  the acquiror has the right
to make  representations  and submit  undertakings within 30 days of the date of
the notice (or any further  period that is agreed upon  between the acquiror and
the Minister). On the expiration of the 30 day period (or the agreed extension),
the Minister must quickly  notify the acquiror (i) that he is now satisfied that
the  investment  is likely to be of net benefit to Canada or (ii) that he is not
satisfied that the  investment is likely to be of net benefit to Canada.  In the
latter  case,  the  acquiror  may not  proceed  with the  investment  or, if the
investment  has already been  consummated,  must divest itself of control of the
Canadian business.

The Act provides civil remedies for non-compliance with any provision. There are
also  criminal  penalties  for  breach of  confidentiality  or  providing  false
information.



     E.   Taxation

A brief  description of certain  provisions of the tax treaty between Canada and
the United  States is included  below,  together with a brief outline of certain
taxes, including withholding provisions, to which United States security holders
are subject under existing laws and regulations of Canada. The consequences,  if
any, of provincial, state and local taxes are not considered.

The following information is general and security holders should seek the advice
of their own tax  advisors,  tax  counsel  or  accountants  with  respect to the
applicability  or effect on their own  individual  circumstances  of the matters
referred to herein and of any provincial, state or local taxes.

Certain Canadian Federal Income Tax Consequences

The  discussion  under this heading  summarizes the principal  Canadian  federal
income tax consequences of acquiring,  holding and disposing of shares of common
stock of the Company for a  shareholder  of the Company who is not a resident of
Canada but is a  resident  of the United  States and who will  acquire  and hold
shares of common  stock of the Company as capital  property  for the purposes of
the Income Tax Act  (Canada)  (the  "Canadian  Tax Act").  This summary does not
apply to a  shareholder  who carries on business in Canada  through a "permanent
establishment"  situated in Canada or performs  independent personal services in
Canada  through  a fixed  base in  Canada if the  shareholder's  holding  in the
Company is  effectively  connected with such  permanent  establishment  or fixed
base.  This summary is based on the  provisions  of the Canadian Tax Act and the
regulations  thereunder and on an understanding of the administrative  practices
of Canada  Customs  and Revenue  Agency,  and takes into  account  all  specific
proposals to amend the Canadian Tax Act or  regulations  made by the Minister of
Finance of Canada as of the date hereof.  It has been assumed that there will be
no other  relevant  amendment of any  governing law although no assurance can be
given in this respect.  This  discussion is general only and is not a substitute
for independent advice from a shareholder's own Canadian and U.S. tax advisors.

The  provisions  of the  Canadian  Tax Act are subject to income tax treaties to
which  Canada  is  a  party,  including  the  Canada-United  States  Income  Tax
Convention (1980), as amended (the "Convention").

Dividends on Common Shares and Other Income

Under the Canadian  Tax Act, a  non-resident  of Canada is generally  subject to
Canadian  withholding  tax at the rate of 25 percent on dividends paid or deemed
to have  been  paid  to him or her by a  corporation  resident  in  Canada.  The
Convention limits the rate to 15 percent if the shareholder is a resident of the
United  States  and the  dividends  are  beneficially  owned by and paid to such
shareholder,  and to 5 percent if the  shareholder  is also a  corporation  that
beneficially  owns  at  least  10  percent  of the  voting  stock  of the  payor
corporation.

The amount of a stock  dividend (for tax purposes)  would  generally be equal to
the amount by which the paid up or stated  capital of the Company had  increased
by  reason  of the  payment  of such  dividend.  The  Corporation  will  furnish
additional tax information to shareholders in the event of such a dividend.

The Convention  generally  exempts from Canadian  income tax dividends paid to a
religious, scientific, literary, educational or charitable organization or to an
organization  constituted  and  operated  exclusively  to  administer a pension,
retirement or employee  benefit fund or plan, if the  organization is a resident
of the United  States and is exempt from income tax under the laws of the United
States.

The tax  payable on  dividends  is to be  withheld  at source by the  Company or
people  acting on its  behalf.  The Company is liable for the amount of the tax,
penalties and interest if it fails to so withhold. The taxpayer is liable in any
event if the Company fails to withhold.



Dispositions of Common Shares

Under the  Canadian  Tax Act, a  taxpayer's  capital gain or capital loss from a
disposition of a share of common stock of the Company is the amount,  if any, by
which  his  or  her  proceeds  of  disposition   exceed  (or  are  exceeded  by,
respectively)  the  aggregate of his or her adjusted  cost base of the share and
reasonable expenses of disposition. The capital gain or loss must be computed in
Canadian  currency  using a weighted  average  adjusted  cost base for identical
properties.  Fifty percent of a capital gain are included in income and taxed at
ordinary  progressive  rates.  The amount by which a shareholder's  capital loss
exceeds the capital gain in a year may be deducted  from a capital gain realized
by the shareholder in the three previous years or any subsequent  year,  subject
to certain restrictions in the case of a corporate shareholder.

Under the Canadian Tax Act, a non-resident  of Canada is subject to Canadian tax
on taxable capital gains, and may deduct allowable capital losses, realized on a
disposition  of  "taxable  Canadian  property."  Shares of  common  stock of the
Company  will  constitute  taxable  Canadian  property  of  a  shareholder  at a
particular  time if the  shareholder  used the shares in carrying on business in
Canada,  or if  at  any  time  in  the  five  years  immediately  preceding  the
disposition  25% or more of the  issued  shares  of any  class or  series in the
capital  stock  of the  Company  belonged  to one or  more  persons  in a  group
comprising the  shareholder  and persons with whom the  shareholder  and persons
with whom the  shareholder  did not deal at arm's  length and in  certain  other
circumstances.

The Convention  relieves United States residents from liability for Canadian tax
on capital gains derived on a disposition of shares unless

(a)  the  value of the  shares  is  derived  principally  from  "real  property"
     situated in Canada,  including the right to explore for or exploit  natural
     resources and rights to amounts computed by reference to production,

(b)  the  shareholder was resident in Canada for 120 months during any period of
     20  consecutive  years  preceding,  and at any  time  during  the 10  years
     immediately  preceding,  the  disposition  and the shares were owned by him
     when he or she ceased to be resident in Canada, or

(c)  the  shares   formed  part  of  the  business   property  of  a  "permanent
     establishment"  that the holder  has or had in Canada  within the 12 months
     preceding the disposition.

U.S. Federal Income Tax Consequences

The following is a general  discussion of certain  possible U.S.  federal income
tax consequences,  under current law, generally  applicable to a U.S. Holder (as
hereinafter  defined) of common shares of the Company.  This  discussion is of a
general  nature  only and does not take into  account the  particular  facts and
circumstances, with respect to U.S. federal income tax issues, of any particular
U.S.  Holder.  In addition,  this discussion does not cover any state,  local or
foreign  tax   consequences.   (See   "Taxation--Canadian   Federal  Income  Tax
Consequences" above).

The following discussion is based upon the sections of the Internal Revenue Code
of 1986,  as amended (the  "Code"),  Treasury  Regulations,  published  Internal
Revenue Service ("IRS") rulings,  published  administrative positions of the IRS
and court decisions that are currently applicable,  any or all of which could be
materially and adversely  changed,  possibly on a retroactive basis, at any time
and which are subject to differing  interpretations.  This  discussion  does not
consider the potential  effects,  both adverse and  beneficial,  of any proposed
legislation  which,  if  enacted,  could be applied,  possibly on a  retroactive
basis, at any time.



This  discussion is for general  information  only and it is not intended to be,
nor should it be  construed  to be,  legal or tax  advice to any U.S.  Holder or
prospective  U.S.  Holder of common  shares of the  Company,  and no  opinion or
representation  with respect to the U.S.  federal income tax consequences to any
such U.S. Holder or prospective U.S. Holder is made.  Accordingly,  U.S. Holders
and  prospective  U.S.  Holders of common shares of the Company  should  consult
their own financial  advisor,  legal  counsel or  accountant  regarding the U.S.
federal,  state,  local and foreign tax  consequences of purchasing,  owning and
disposing of common shares of the Company.

U.S. Holders

As used herein,  a "U.S.  Holder" means a holder of common shares of the Company
who is (i) a citizen or  individual  resident  of the U.S.,  (ii) a  corporation
created  or  organized  in or under  the laws of the  U.S.  or of any  political
subdivision  thereof,  (iii) an  estate  whose  income  is  taxable  in the U.S.
irrespective  of source or (iv) a trust subject to the primary  supervision of a
court  within the U.S.  and control of a U.S.  fiduciary  as  described  Section
7701(a)(30) of the Code. If a partnership or other "pass-through" entity treated
as a partnership for U.S. federal income tax purposes holds common shares of the
Company, the U.S. federal income tax treatment of the partners or owners of such
partnership or other pass-through  entity generally will depend on the status of
such partners or owners and the activities of such  partnership or  pass-through
entity.

Persons Not Covered

This  summary  does not  address the U.S.  federal  income tax  consequences  to
persons  (including  persons who are U.S. Holders) subject to special provisions
of U.S.  federal  income  tax law,  including  (i)  persons  who are  tax-exempt
organizations,  qualified retirement plans,  individual  retirement accounts and
other tax-deferred accounts,  financial institutions,  insurance companies, real
estate investment trusts, regulated investment companies, or brokers, dealers or
traders in securities,  (ii) persons who have a "functional currency" other than
the U.S.  dollar,  (iii) persons  subject to the  alternative  minimum tax, (xi)
persons  who own their  common  shares  of the  Company  as part of a  straddle,
hedging,   conversion  transaction,   constructive  sale  or  other  arrangement
involving more than one position,  (iv) persons who acquired their common shares
of the Company  through the exercise of employee  stock  options or otherwise as
compensation  for  services,  (v) persons that own an interest in an entity that
owns common shares of the Company,  (vi) persons who own, exercise or dispose of
any options,  warrants or other rights to acquire  common shares of the Company,
(vii) persons who are partners or owners of partnerships  or other  pass-through
entities or (viii) persons who own their common shares of the Company other than
as a capital asset within the meaning of Section 1221 of the Code.

Distribution on Common Shares of the Company

U.S. Holders receiving distributions (including constructive distributions) with
respect to common  shares of the Company are required to include in gross income
as a dividend  for U.S.  federal  income tax  purposes  the gross amount of such
distributions  (without reduction for any Canadian income tax withheld from such
distributions), equal to the U.S. dollar value of such distributions on the date
of receipt  (based on the  exchange  rate on such date),  to the extent that the
Company has current or  accumulated  earnings  and  profits.  For taxable  years
beginning after December 31, 2002 and before January 1, 2009, dividends received
by U.S. Holders that are individuals,  estates or trusts from "qualified foreign
corporations,"  as defined in Section 1(h)(11) of the Code,  generally are taxed
at the same  preferential  tax rates  applicable  to  long-term  capital  gains.
Although  not free  from  doubt,  it  appears  that the  Company  constitutes  a
"qualified  foreign  corporation,"  as defined in Section  1(h)(11) of the Code.
However,  if the Company  qualifies as a "Foreign  Personal Holding  Company,  a
"Foreign Investment Company" or a "Passive Foreign Investment  Company," each as
defined below, for its taxable year during which it pays a dividend,  or for its
immediately preceding taxable year, the Company generally will not be treated as
a



"qualifying foreign corporation" and dividends received by U.S. Holders that are
individuals,  estates or trusts generally will be subject to U.S. federal income
tax at  ordinary  income  tax  rates  (and  not at the  preferential  tax  rates
applicable to long-term  capital gains). To the extent that  distributions  from
the Company exceed  current or accumulated  earnings and profits of the Company,
such distributions  will be treated first as a return of capital,  to the extent
of the U.S. Holder's adjusted basis in the common shares, and thereafter as gain
from the sale or  exchange  of the  common  shares  of the  Company.  (See  more
detailed discussion at "Disposition of Common Shares of the Company" below). Any
Canadian  tax  withheld  from a  distribution  by the Company  may be  credited,
subject to certain  limitations,  against the U.S.  Holder's U.S. federal income
tax liability or, alternatively,  may be deducted in computing the U.S. Holder's
U.S. federal taxable income by those who itemize deductions.  (See more detailed
discussion at "Foreign Tax Credit" below).

In the case of foreign currency received as a distribution that is not converted
by the recipient into U.S.  dollars on the date of receipt,  a U.S.  Holder will
have a tax basis in the foreign  currency equal to its U.S.  dollar value on the
date of receipt. Generally any gain or loss recognized upon a subsequent sale or
other  disposition  of the foreign  currency,  including  the  exchange for U.S.
dollars,  will be ordinary income or loss. However, an individual whose realized
gain does not exceed $200 will not recognize that gain, to the extent that there
are no expenses  associated with the transaction  that meet the requirements for
deductibility  as a trade or business  expense  (other  than travel  expenses in
connection with a business trip) or as an expense for the production of income.

Dividends  paid on the  common  shares  of the  Company  generally  will  not be
eligible  for  the   "dividends   received   deduction"   allowed  to  corporate
shareholders receiving dividends from certain U.S.  corporations.  Under certain
circumstances,  a U.S.  Holder  that  is a  corporation  and  that  owns  shares
representing  at least 10% of the total  voting power and the total value of the
Company's  outstanding  shares may be entitled to a 70%  deduction  of the "U.S.
source"  portion of  dividends  received  from the  Company  (unless the Company
qualifies  as  a  "Foreign  Personal  Holding  Company"  or a  "Passive  Foreign
Investment  Company"  as  defined  below).  The  availability  of the  dividends
received  deduction is subject to several complex  limitations  which are beyond
the scope of this  discussion,  and U.S. Holders of common shares of the Company
should  consult  their  own  financial  advisor,  legal  counsel  or  accountant
regarding the dividends received deduction.

Information Reporting; Backup Withholding

Certain  information  reporting  and  backup  withholding  rules may apply  with
respect  to  certain  payments  related  to  the  Company's  common  shares.  In
particular,  a payor or middleman  within the U.S.,  or in certain cases outside
the U.S., will be required to withhold 28% (which rate is scheduled for periodic
adjustment) of any payments to a U.S.  Holder of the Company's  common shares of
dividends  on, or proceeds from the sale of, such common shares within the U.S.,
if a U.S.  Holder fails to furnish its correct  taxpayer  identification  number
(generally  on Form W-9) or  otherwise  fails to comply  with,  or  establish an
exemption from, the backup  withholding tax  requirements.  Any amounts withheld
under the U.S.  backup  withholding  tax rules  will be allowed as a refund or a
credit against the U.S. Holder's U.S. federal income tax liability, provided the
required  information is furnished to the IRS. U.S. Holders should consult their
own financial  advisor,  legal counsel or accountant  regarding the  information
reporting  and backup  withholding  rules  applicable  to the  Company's  common
shares.

Foreign Tax Credit

A U.S.  Holder who pays (or has withheld from  distributions)  Canadian or other
foreign income tax with respect to the ownership of common shares of the Company
may be entitled, at the option of the U.S. Holder, to either receive a deduction
or a tax  credit  for U.S.  federal  income tax  purposes  with  respect to such
foreign tax paid or withheld. Generally, it will be more advantageous to claim a
credit because a



credit reduces U.S. federal income taxes on a  dollar-for-dollar  basis, while a
deduction  merely reduces the taxpayer's  income subject to U.S.  federal income
tax.  This election is made on a  year-by-year  basis and applies to all foreign
taxes paid by (or withheld from  distributions  to) the U.S.  Holder during that
year.

There are  significant  and  complex  limitations  that apply to the foreign tax
credit,  among which is the general limitation that the credit cannot exceed the
proportionate share of the U.S. Holder's U.S. income tax liability that the U.S.
Holder's  "foreign source" income bears to his or its worldwide  taxable income.
In applying this  limitation,  the various items of income and deduction must be
classified as either  "foreign  source" or "U.S.  source."  Complex rules govern
this  classification   process.  In  addition,  this  limitation  is  calculated
separately with respect to specific classes of income such as "passive  income,"
"high withholding tax interest," "financial services income," "shipping income,"
and  certain  other  classifications  of income.  Dividends  distributed  by the
Company  will  generally   constitute  "foreign  source"  income,  and  will  be
classified  as  "passive  income"  or,  in the  case of  certain  U.S.  Holders,
"financial services income" for these purposes.

In addition,  U.S. Holders that are corporations and that own 10% or more of the
voting stock of the Company may be entitled to an "indirect"  foreign tax credit
under  Section 902 of the Code with  respect to the payment of  dividends by the
Company   under  certain   circumstances   and  subject  to  complex  rules  and
limitations.  The  availability of the foreign tax credit and the application of
the  limitations  with respect to the foreign tax credit are fact specific,  and
each U.S.  Holder  of common  shares of the  Company  should  consult  their own
financial advisor,  legal counsel or accountant regarding the foreign tax credit
rules.

Disposition of Common Shares of the Company

A U.S.  Holder  will  recognize  gain or loss  upon the  sale or  other  taxable
disposition  of common  shares of the Company equal to the  difference,  if any,
between  (i) the  amount  of cash  plus the fair  market  value of any  property
received,  and (ii) the  shareholder's  tax  basis in the  common  shares of the
Company. This gain or loss will be capital gain or loss if the common shares are
a capital asset in the hands of the U.S. Holder, which will be long-term capital
gain or loss if the  common  shares  of the  Company  are held for more than one
year.

Preferential tax rates apply to long-term capital gains of U.S. Holders that are
individuals,  estates or trusts.  There are currently no preferential  tax rates
for long-term capital gains for a U.S. Holder that is a corporation  (other than
a corporation  subject to Subchapter S of the Code).  Deductions for net capital
losses are subject to  significant  limitations.  For U.S.  Holders that are not
corporations, any unused portion of such net capital loss may be carried over to
be used in later tax years until such net capital loss is thereby exhausted. For
U.S.  Holders  that  are  corporations  (other  than  corporations   subject  to
Subchapter S of the Code),  an unused net capital loss may be carried back three
years and  carried  forward  five years from the loss year to be offset  against
capital gains until such net capital loss is thereby exhausted.

Other Considerations for U.S. Holders

In the following  circumstances,  the above sections of this  discussion may not
describe the U.S. federal income tax consequences to U.S. Holders resulting from
the ownership and disposition of common shares of the Company:

Foreign Personal Holding Company

If at any time during a taxable year (a) more than 50% of the total voting power
or the total value of the  Company's  outstanding  shares is owned,  directly or
indirectly,  by five or fewer  individuals  who are



citizens or residents of the U.S. and (b) 60% (or 50% in certain  cases) or more
of the Company's gross income for such year is "foreign personal holding company
income"  as  defined  in Section  553 of the Code  (e.g.,  dividends,  interest,
royalties,  certain  gains from the sale of stock and  securities,  and  certain
gains from commodities  transactions),  the Company may be treated as a "Foreign
Personal Holding Company"  ("FPHC") In that event, U.S. Holders of common shares
of the Company  would be required to include in gross income for such year their
allocable  portions of such "foreign  personal  holding  company  income" to the
extent the Company does not actually distribute such income.

The Company  does not believe that it  currently  qualifies as a FPHC.  However,
there can be no assurance that the Company will not be considered a FPHC for the
current or any future taxable year.

Foreign Investment Company

If (a) 50% or more of the total voting power or the total value of the Company's
outstanding shares is owned, directly or indirectly, by citizens or residents of
the U.S.,  U.S.  partnerships  or  corporations,  or U.S.  estates or trusts (as
defined by the Code  Section  7701(a)(30)),  and (b) the  Company is found to be
engaged  primarily  in the  business of  investing,  reinvesting,  or trading in
securities,  commodities, or any interest therein, the Company may be treated as
a "Foreign  Investment  Company" ("FIC") as defined in Section 1246 of the Code,
causing all or part of any gain realized by a U.S.  Holder selling or exchanging
common  shares of the  Company to be  treated as  ordinary  income  rather  than
capital gain.

The Company  does not believe that it  currently  qualifies  as a FIC.  However,
there can be no assurance  that the Company will not be considered a FIC for the
current or any future taxable year.

Controlled Foreign Corporation

If more than 50% of the total voting  power or the total value of the  Company's
outstanding shares is owned, directly or indirectly, by citizens or residents of
the U.S.,  U.S.  partnerships  or  corporations,  or U.S.  estates or trusts (as
defined  by the Code  Section  7701(a)(30)),  each of  which  own,  directly  or
indirectly,  10% or more of the total voting power of the Company's  outstanding
shares (each a "10% Shareholder"), the Company could be treated as a "Controlled
Foreign Corporation" ("CFC") under Section 957 of the Code.

The  classification  of the Company as a CFC would effect many complex  results,
including that 10% Shareholders of the Company would generally (i) be treated as
having received a current  distribution of the Company's  "Subpart F income" and
(ii) would also be subject to current U.S.  federal income tax on their pro rata
shares of the Company's  earnings  invested in "U.S.  property." The foreign tax
credit may  reduce the U.S.  federal  income tax on these  amounts  for such 10%
Shareholders  (See more detailed  discussion at "Foreign Tax Credit" above).  In
addition,  under  Section 1248 of the Code,  gain from the sale or other taxable
disposition  of common  shares of the Company by a U.S.  Holder that is or was a
10% Shareholder at any time during the five-year  period ending with the sale is
treated  as a dividend  to the extent of  earnings  and  profits of the  Company
attributable to the common shares sold or exchanged.

If the Company is classified  as both a Passive  Foreign  Investment  Company as
described  below and a CFC,  the  Company  generally  will not be  treated  as a
Passive Foreign Investment  Company with respect to 10% Shareholders.  This rule
generally  will be effective  for taxable  years of 10%  Shareholders  beginning
after 1997 and for  taxable  years of the  Company  ending  with or within  such
taxable years of 10% Shareholders.

The Company  does not believe that it  currently  qualifies  as a CFC.  However,
there can be no assurance  that the Company will not be considered a CFC for the
current or any future taxable year. The CFC rules are very complicated, and U.S.
Holders should consult their own financial advisor,  legal



counsel or  accountant  regarding  the CFC rules and how these  rules may impact
their U.S. federal income tax situation.

Passive Foreign Investment Company

Certain U.S. income tax legislation  contains rules governing  "Passive  Foreign
Investment  Companies"  ("PFIC") which can have  significant tax effects on U.S.
Holders of foreign  corporations.  Section  1297 of the Code defines a PFIC as a
corporation that is not formed in the U.S. and, for any taxable year, either (a)
75% or  more  of its  gross  income  is  "passive  income"  or (b)  the  average
percentage,  by fair market value (or, if the corporation is not publicly traded
and either is a controlled foreign corporation or makes an election, by adjusted
tax  basis),  of its  assets  that  produce  or are held for the  production  of
"passive  income"  is 50% or  more.  "Passive  income"  includes,  for  example,
dividends, interest, certain rents and royalties, certain gains from the sale of
stock and securities, and certain gains from commodities transactions.  However,
gains resulting from commodities  transactions  are generally  excluded from the
definition of passive income if "substantially all" of a merchant's,  producer's
or  handler's  business  is as an active  merchant,  producer or handler of such
commodities.

For  purposes  of the  PFIC  income  test  and the  assets  test,  if a  foreign
corporation  owns (directly or indirectly) at least 25% by value of the stock of
another corporation, such foreign corporation shall be treated as if it (a) held
a proportionate share of the assets of such other corporation,  and (b) received
directly its proportionate share of the income of such other corporation.  Also,
for purposes of such PFIC tests,  passive  income does not include any interest,
dividends,  rents or  royalties  that are  received or accrued  from a "related"
person to the extent  such amount is  properly  allocable  to the income of such
related  person which is not passive  income.  For these  purposes,  a person is
related  with respect to a foreign  corporation  if such person  "controls"  the
foreign  corporation or is controlled by the foreign  corporation or by the same
persons  that control the foreign  corporation.  For these  purposes,  "control"
means  ownership,  directly or indirectly,  of stock possessing more than 50% of
the total voting power of all classes of stock  entitled to vote or of the total
value of stock of a corporation.

The Company believes that it qualified as a PFIC for the fiscal year ended March
31, 2003,  may have qualified as a PFIC in prior years and may qualify as a PFIC
in subsequent years. There can be no assurance that the Company's  determination
concerning  its PFIC  status will not be  challenged  or that it will be able to
satisfy record keeping requirements that will be imposed on a qualified electing
fund ("QEF").

A U.S. Holder who holds stock in a foreign  corporation during any year in which
such corporation  qualifies as a PFIC is subject to U.S. federal income taxation
under one of three  alternative  tax  regimes at the  election of each such U.S.
Holder.  The  following is a discussion  of such three  alternative  tax regimes
applied to such U.S. Holders of the Company. In addition, special rules apply if
a  foreign  corporation  qualifies  as  both a PFIC  and a  "controlled  foreign
corporation"   (as  defined  below)  and  a  U.S.   Holder  owns,   actually  or
constructively,  10 % or more of the total combined  voting power of all classes
of  stock  entitled  to vote of such  foreign  corporation  (See  more  detailed
discussion at "Controlled Foreign Corporation" below).

QEF Election

A U.S.  Holder who elects in a timely  manner to treat the  Company as a QEF (an
"Electing  U.S.  Holder")  will be subject,  under  Section 1293 of the Code, to
current  U.S.  federal  income  tax for any  taxable  year in which the  Company
qualifies  as a PFIC on his pro rata  share of the  Company's  (i) "net  capital
gain" (the excess of net  long-term  capital  gain over net  short-term  capital
loss), which will be taxed as long-term capital gain to the Electing U.S. Holder
and (ii)  "ordinary  earnings"  (the  excess of earnings  and  profits  over net
capital  gain),  which will be taxed as  ordinary  income to the  Electing  U.S.
Holder,  in each  case,



for the  shareholder's  taxable  year in which  (or with  which)  the  Company's
taxable year ends, regardless of whether such amounts are actually distributed.

The effective QEF election also allows the Electing U.S. Holder to (i) generally
treat any gain  realized on the  disposition  of his Company  common  shares (or
deemed to be realized on the pledge of his shares) as capital  gain;  (ii) treat
his share of the Company's  net capital gain, if any, as long-term  capital gain
instead of ordinary income;  and (iii) either avoid interest  charges  resulting
from PFIC  status  altogether,  or make an annual  election,  subject to certain
limitations,  to defer  payment of current  taxes on his share of the  Company's
annual realized net capital gain and ordinary earnings subject,  however,  to an
interest  charge.  If the Electing  U.S.  Holder is not a  corporation,  such an
interest charge would be treated as "personal interest" that is not deductible.

The  procedure  a U.S.  Holder  must  comply  with in  making an  effective  QEF
election, and the U.S. federal income tax consequences of the QEF election, will
depend  on  whether  the  year of the  election  is the  first  year in the U.S.
Holder's holding period in which the Company is a PFIC. If the U.S. Holder makes
a QEF election in such first year,  i.e., a timely QEF  election,  then the U.S.
Holder may make the QEF election by simply filing the  appropriate  QEF election
documents at the time the U.S.  Holder files his tax return for such first year.
However, if the Company qualified as a PFIC in a prior year, then in addition to
filing the QEF election  documents,  the U.S. Holder must elect to recognize (i)
under the rules of Section 1291 of the Code (discussed herein), any gain that he
would otherwise recognize if the U.S. Holder sold his stock on the qualification
date or (ii) if the  Company  is a  controlled  foreign  corporation,  the  U.S.
Holder's pro rata share of the  Company's  post-1986  earnings and profits as of
the qualification date. The qualification date is the first day of the Company's
first tax year in which the Company qualified as a QEF with respect to such U.S.
Holder. The elections to recognize such gain or earnings and profits can only be
made if such U.S.  Holder's  holding period for the common shares of the Company
includes the qualification  date. By electing to recognize such gain or earnings
and profits,  the U.S. Holder will be deemed to have made a timely QEF election.
A U.S. Holder who made elections to recognize gain or earnings and profits after
May 1, 1992 and before January 27, 1997 may, under certain circumstances,  elect
to change such U.S.  Holder's  qualification  date to the first day of the first
QEF  year.  U.S.  Holders  are  urged to  consult a tax  advisor  regarding  the
availability  of and  procedure  for electing to recognize  gain or earnings and
profits under the foregoing  rules.  In addition to the above rules,  under very
limited circumstances, a U.S. Holder may make a retroactive QEF election if such
U.S. Holder failed to file the QEF election documents in a timely manner.

A QEF election,  once made with respect to the Company,  applies to the tax year
for which it was made and to all  subsequent  tax years,  unless the election is
invalidated or terminated, or the IRS consents to revocation of the election. If
a QEF election is made by a U.S.  Holder and the Company  ceases to qualify as a
PFIC in a subsequent tax year, the QEF election will remain in effect,  although
not applicable,  during those tax years in which the Company does not qualify as
a PFIC. Therefore,  if the Company again qualifies as a PFIC in a subsequent tax
year, the QEF election will be effective and the U.S.  Holder will be subject to
the rules  described  above for Electing  U.S.  Holders in such tax year and any
subsequent tax years in which the Company qualifies as a PFIC. In addition,  the
QEF  election  remains in effect,  although not  applicable,  with respect to an
Electing U.S.  Holder even after such U.S.  Holder disposes of all of his or its
direct and indirect  interest in the shares of the Company.  Therefore,  if such
U.S.  Holder  reacquires  an interest in the Company,  that U.S.  Holder will be
subject to the rules described above for Electing U.S. Holders for each tax year
in which the Company qualifies as a PFIC.

Section 1291 Rules

If a U.S.  Holder does not make a timely QEF election  during a year in which it
holds (or is deemed to have held) the common  shares in question and the Company
is a PFIC (a  "Non-Electing  U.S.  Holder"),  then special  taxation rules under
Section 1291 of the Code will apply to (i) gains realized on the



disposition  (or deemed to be  realized  by reasons of a pledge) of his  Company
common shares and (ii) certain "excess distributions" (generally,  distributions
received in the current  taxable  year that are in excess of 125% of the average
distributions received during the three preceding years or, if shorter, the U.S.
Holder's holding period) by the Company.

A Non-Electing  U.S.  Holder  generally  would be required to pro rate all gains
realized  on the  disposition  of his  Company  common  shares  and  all  excess
distributions  on his Company  common shares over the entire  holding period for
the common shares. All gains or excess distributions allocated to prior years of
the U.S. Holder (other than years prior to the first taxable year of the Company
during such U.S. Holder's holding period and beginning after January 1, 1987 for
which it was a PFIC)  would be taxed at the highest tax rate for each such prior
year applicable to ordinary income.  The Non-Electing  U.S. Holder also would be
liable for  interest on the  foregoing  tax  liability  for each such prior year
calculated  as if such  liability  had been due with  respect to each such prior
year.  A  Non-Electing  U.S.  Holder that is not a  corporation  must treat this
interest  charge as "personal  interest"  which,  as discussed  above, is wholly
nondeductible.  The  balance  of the  gain or the  excess  distribution  will be
treated as ordinary income in the year of the disposition or  distribution,  and
no interest charge will be incurred with respect to such balance.

If the Company is a PFIC for any taxable year during which a  Non-Electing  U.S.
Holder holds Company common shares, then the Company will continue to be treated
as a PFIC with respect to such Company  common  shares,  even if it is no longer
definitionally a PFIC. A Non-Electing U.S. Holder may terminate this deemed PFIC
status by  electing  to  recognize  gain  (which  will be taxed  under the rules
discussed above for Non-Electing  U.S. Holders) as if such Company common shares
had been sold on the last day of the last taxable year for which it was a PFIC.

Mark-to-Market Election

Effective for tax years of U.S. Holders  beginning after December 31, 1997, U.S.
Holders who hold, actually or constructively,  marketable stock (as specifically
defined in the Treasury  Regulations) of a foreign corporation that qualifies as
a PFIC may  annually  elect to mark such stock to the market (a  "mark-to-market
election").  If such an election is made, such U.S. Holder will generally not be
subject to the special taxation rules of Section 1291 discussed above.  However,
if the  mark-to-market  election is made by a Non-Electing U.S. Holder after the
beginning of the holding period for the PFIC stock,  then the Section 1291 rules
will  apply to  certain  dispositions  of,  distributions  on and other  amounts
taxable with respect to the Company common shares.  A U.S.  Holder who makes the
mark-to  market  election  will include in income for the taxable year for which
the election was made an amount equal to the excess,  if any, of the fair market
value of the common  shares of the Company as of the close of such tax year over
such U.S. Holder's  adjusted basis in such common shares. In addition,  the U.S.
Holder is allowed a deduction for the lesser of (i) the excess,  if any, of such
U.S. Holder's adjusted tax basis in the common shares over the fair market value
of such shares as of the close of the tax year,  or (ii) the excess,  if any, of
(A) the  mark-to-market  gains for the common shares in the Company  included by
such U.S. Holder for prior tax years, including any amount which would have been
included  for any  prior  tax  year but for the  Section  1291  interest  on tax
deferral rules discussed above with respect to Non-Electing U.S.  Holders,  over
(B) the  mark-to-market  losses for shares that were allowed as  deductions  for
prior tax years. A U.S.  Holder's adjusted tax basis in the common shares of the
Company  will be  adjusted to reflect  the amount  included in or deducted  from
income as a result  of a  mark-to-market  election.  A  mark-to-market  election
applies to the taxable year in which the election is made and to each subsequent
taxable  year,  unless the Company  common  shares  cease to be  marketable,  as
specifically defined, or the IRS consents to revocation of the election.

Other PFIC Rules



Under  Section  1291(f)  of the  Code,  the IRS  has  issued  Proposed  Treasury
Regulations that, subject to certain exceptions,  would treat as taxable certain
transfers of PFIC stock by  Non-Electing  U.S.  Holders that are  generally  not
otherwise taxed, such as gifts, exchanges pursuant to corporate reorganizations,
and transfers at death. Generally, in such cases the basis of the Company common
shares in the hands of the transferee and the basis of any property  received in
the exchange  for those  common  shares would be increased by the amount of gain
recognized.  However,  the specific U.S.  federal income tax consequences to the
U.S.  Holder and the transferee may vary based on the manner in which the common
shares are transferred.

Certain  special,  generally  adverse,  rules will apply with respect to Company
common shares while the Company is a PFIC whether or not it is treated as a QEF.
For example  under Section  1298(b)(6) of the Code, a U.S.  Holder who uses PFIC
stock as security for a loan  (including  a margin loan) will,  except as may be
provided in regulations, be treated as having made a taxable disposition of such
shares.

The PFIC rules are very  complicated,  and U.S. Holders should consult their own
financial  advisor,  legal  counsel  or  accountant  regarding  the PFIC  rules,
including  the  advisability  of and  procedure  for making a QEF  election or a
mark-to-mark  election, and how these rules may impact their U.S. federal income
tax situation.

     F.   Dividends and paying agents.

This Form 20-F is being  filed as an annual  report  and,  as such,  there is no
requirement to provide information under this sub-item.

     G.   Statement by experts.

This Form 20-F is being  filed as an annual  report  and,  as such,  there is no
requirement to provide information under this sub-item.

     H.   Documents on display.

Any  statement  in this Annual  Report about any of the  Company's  contracts or
other  documents  is not  necessarily  complete.  If the contract or document is
filed as an exhibit to this Annual Report, the contract or document is deemed to
modify the description contained in this Annual Report.  Readers must review the
exhibits themselves for a complete description of the contract or document.

Readers may review a copy of the Company's filings with the U.S.  Securities and
Exchange  Commission ("the "SEC"),  including  exhibits and schedules filed with
it, at the SEC's public reference  facilities in Room 1024, Judiciary Plaza, 450
Fifth Street,  N.W.,  Washington,  D.C. 20549. Readers may also obtain copies of
such  materials  from  the  Public  Reference  Section  of the SEC,  Room  1024,
Judiciary Plaza, 450 Fifth Street, N.W.,  Washington,  D.C. 20549, at prescribed
rates. Readers may call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. The SEC maintains a Web site  (http://www.sec.gov)  that
contains reports,  submissions and other information  regarding registrants that
file  electronically  with the SEC. The Company has only recently become subject
to the requirement to file  electronically  through the EDGAR system most of its
securities documents, including registration statements under the Securities Act
of 1933, as amended and  registration  statements,  reports and other  documents
under the Securities Exchange Act of 1934, as amended.

Readers may read and copy any reports,  statements or other information that the
Company  files with the SEC at the address  indicated  above and may also access
them  electronically at the Web site set forth above. These SEC filings are also
available to the public from commercial document retrieval services.



The Company is required to file reports and other information with the SEC under
the Securities  Exchange Act of 1934, as amended.  Reports and other information
filed by the  Company  with the SEC may be  inspected  and  copied  at the SEC's
public reference  facilities  described above. As a foreign private issuer,  the
Company is exempt from the rules under the  Securities  Exchange Act of 1934, as
amended  prescribing  the  furnishing  and content of proxy  statements  and the
Company's  officers,  directors and principal  shareholders  are exempt from the
reporting and short-swing profit recovery provisions  contained in section 16 of
the Securities  Exchange Act of 1934, as amended.  Under the Securities Exchange
Act of 1934,  as  amended,  as a foreign  private  issuer,  the  Company  is not
required to publish financial  statements as frequently or as promptly as United
States companies.

Any of the documents  referred to above can also be viewed at the offices of the
Company's solicitors, Campney & Murphy, at Suite 2100, 1111 West Georgia Street,
Vancouver,  British Columbia,  Canada V6E 4M3. All of the documents  referred to
above are in English.

     I.   Subsidiary Information.

Not applicable.

Item 11 Quantitative and Qualitative Disclosures About Market Risk.

The Company owns shares of other listed companies. These shares are listed under
current  assets  on  the  Company's  balance  sheet  as at  March  31,  2002  as
"Marketable Securities" at an amount of $32,392. However, the quote market value
of these shares at March 31, 2003 was $100,178.

Market risk represents the risk of loss that may impact the financial  position,
results of  operations,  or cash flows of the Company due to adverse  changes in
financial market prices, including interest rate risk, foreign currency exchange
rate risk, commodity price risk, and other relevant market or price risks.

As the Company is in the  exploration  stage,  it  presently  has no  activities
related to derivative financial instruments or derivative commodity instruments.

The financial  results are  quantified  in Canadian  dollars.  In the past,  the
Company has raised equity funding through the sale of securities  denominated in
Canadian  dollars,  and the Company may in the future  raise  additional  equity
funding or financing denominated in Canadian dollars. The Company currently does
not believe it currently has any materially significant market risks relating to
operations resulting from foreign exchange rates. However, if the Company enters
into financing or other business arrangements denominated in currency other than
the Canadian or United States  dollar,  variations in the exchange rate may give
rise to foreign exchange gains or losses that may be significant.

The Company  currently has no long-term debt  obligations.  The Company does not
use  financial  instruments  for  trading  purposes  and is not a  party  to any
leverage derivatives. In the event the Company experiences substantial growth in
the future,  the Company's  business and results of operations may be materially
affected by changes in interest  rates and certain other credit risk  associated
with the Company's operations.

Item 12 Description of Securities Other than Equity Securities.

This Form 20-F is being  filed as an annual  report  and,  as such,  there is no
requirement to provide information under this sub-item.



                                     PART II

Item 13 Defaults, Dividend Arrearages and Delinquencies.

There are none.

Item 14  Material  Modifications  to the Rights of  Security  Holders and Use of
     Proceeds.

Not Applicable.

Item 15 Controls and Procedures

     (a)  Evaluation of Disclosure Controls and Procedures.  The Company's Chief
          Executive  Officer and Chief  Financial  Officer  have  evaluated  the
          effectiveness of the Company's  disclosure controls and procedures (as
          such term is defined in Rules 13a-15 and 15d-15  under the  Securities
          Exchange Act of 1934, as amended (the  "Exchange  Act")) as of the end
          of the period covered by this annual report (the  "Evaluation  Date").
          Based on such evaluation, such officers have concluded that, as of the
          Evaluation Date, the Company's  disclosure controls and procedures are
          effective in alerting  them on a timely basis to material  information
          relating to the Company  required to be included in our reports  filed
          or submitted under the Exchange Act.

     (b)  Changes in Internal Controls over Financial Reporting. During the most
          recent fiscal quarter,  there have not been any significant changes in
          the Company's  internal controls over financial  reporting or in other
          factors that have  materially  affected,  or are reasonably  likely to
          materially affect, our internal controls over financial reporting.

Item 16A Audit Committee Financial Expert

There is no  requirement to provide  information  under this item at the present
time.

Item 16B Code of Ethics

There is no  requirement to provide  information  under this item at the present
time.

Item 16C Principal Accountant Fees and Services

There is no  requirement to provide  information  under this item at the present
time.

Item 16D Exemptions from the Listing Standards for Audit Committees

There is no  requirement to provide  information  under this item at the present
time.



                                    PART III

Item 17 Financial Statements.

The Company's  consolidated  financial statements are stated in Canadian dollars
(CDN$)  and  are  prepared  in  accordance  with  Canadian   Generally  Accepted
Accounting Principles (GAAP).  Material measurement  differences between GAAP in
Canada and GAAP in the United States applicable to the Company, are described in
Note 12 to the Consolidated Financial Statements.

The  financial  statements  and notes  thereto  as  required  under  Item 17 are
attached hereto and filed as part of this Annual Report, are individually listed
under  Item 19,  and are found  immediately  following  the text of this  Annual
Report. The audit report of KPMG LLP, Chartered Accountants,  is included herein
immediately preceding the financial statements.

For audited  financial  statements for Fiscal 2003, Fiscal 2002 and Fiscal 2001,
please see Item 19 below.

Item 18 Financial Statements.

Not Applicable.

Item 19 Exhibits

Financial Statements

The Consolidated  Financial  Statements of the Company and exhibits listed below
are filed with this  report on Form 20-F in the United  States.  This  report is
also filed in Canada as an Annual  Information Form and the Canadian filing does
not include the  Consolidated  Financial  Statements and exhibits  listed below.
Canadian  investors  should  refer to the audited  Financial  Statements  of the
Company  for the  years  ended  March  31,  2003 and 2002  filed  with  Canadian
Securities  Regulators on Sedar under  "Audited  Annual  Financial  Statements -
English" and incorporated herein by reference.

The  following  financial  statements  are  attached  to and form a part of this
report filed with the SEC (see Appendix) :

Consolidated Financial Statements of the Company:

Auditors' Report.

Comments by Auditor for U.S. readers on Canada-U.S. Reporting Differences.

Consolidated Balance Sheets as of March 31, 2003 and 2002.

Consolidated  Statements of Operations and Deficit for the years ended March 31,
2003, 2002 and 2001.

Consolidated  Statements of Cash Flows for the years ended March 31, 2003,  2002
and 2001.

Notes to the Consolidated Financial Statements



Exhibits

The following exhibits are attached to and form part of this Annual Report:



                                                                                                       
Exhibit                                                                                                 Remarks.


- ----------- ------------------------------------------------------------------------------------------- ---------------
1.1         Memorandum and Articles of the Company.                                                          (3)

1.2         Arrangement Agreement between the Company and Glenmore Highlands Inc. dated May 10, 2000.        (6)

1.3         Joint Information Circular of the Company and Glenmore Highlands Inc.                            (4)

4.1         Transfer agreement between MPV, Monopros and Camphor dated November 24, 1999 pursuant to         (3)
            which MPV and Camphor transferred the GOR to Monopros.

4.2         Letter Agreement between MPV, Monopros, Glenmore and Camphor dated December 17, 1999             (3)
            relating to acquisition of property, within the "Area of Interest" as defined in the
            agreement and acquisition of property through third party agreements.

4.3         Letter Agreement dated December 17, 1999 between MPV, Monopros, Camphor and Glenmore             (3)
            amending the Monopros Joint Venture Agreement.

4.4         Form of Subscription Agreement for the private placement described in item 1 of "Material        (3)
            Contracts".

4.5         Second Amendment Agreement dated January 1, 2002 between the Company and Paul Shatzko.           (3)

4.6         Second Amendment Agreement dated January 1, 2002 between the Company and Jan Vandersande.        (3)

4.7         Third Amendment Agreement dated December 13, 2002 between the Company and Jan Vandersande         -

4.8         Letter Agreement dated December 13, 2002 between the Company and Pradeep Varshney                 -

4.9         Letter agreement dated December 13, 2002 between the Company and Elizabeth Kirkwood               -

4.10        Agreement dated as of January 1, 2002 between the Company, Camphor Ventures Inc. and De          (1)
            Beers Canada Exploration Inc.

8.1         List of Subsidiaries                                                                             (2)

10.1        Management Information Circular for 2003 AGM                                                     (5)

10.2        Independent Qualified Person's Review and Technical Report dated June 16, 2003 entitled          (3)
            Gahcho Kue, Northwest Territories, Canada prepared by Malcom L. Thurston, Ph.D., MAusimm

12.1        Section 302 Certification of the Company's Chief Executive Officer                                -

12.2        Section 302 Certification of the Company's Chief Financial Officer                                -

13.1        Section 906 Certification of the Company's Chief Executive Officer                                -

13.2        Section 906 Certification of the Company's Chief Financial Officer                                -
- ----------- ------------------------------------------------------------------------------------------- ---------------


(1)  The  Registrant  has applied for  confidential  treatment  with  respect to
     certain  portions of this Agreement,  which have been omitted,  pursuant to
     Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

(2)  See list of subsidiaries on page 11 of this Annual Report.

(3)  Previously filed and incorporated by reference.



(4)  Previously  furnished  under  cover  of Form 6K  dated  June  2,  2000  and
     incorporated by reference.

(5)  Previously furnished under cover of Form 6K dated August 15, 2003.

(6)  Attached as Appendix A to the Joint Information Circular of the Company and
     Glenmore Highlands Inc. which information circular was previously furnished
     under cover of Form 6K dated June 2, 2000, and incorporated by reference.



                                   SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and that it has duly caused and authorized the  undersigned to sign
this annual report on its behalf.

                                                 Mountain Province Diamonds Inc.
                                                            (Company)





                                                               "Jan Vandersande"
                                                               -----------------
                                                                   (Signature)*

Date:   August 18, 2003                                       Jan W. Vandersande
        ---------------                                   President and Director

*Print the name and title of the signing officer under this signature.


                                  EXHIBIT INDEX



                                                                                                 
Exhibit                                                                                         Remarks
- ----------------------------------------------------------------------------------------------- ------------------

1.1        Memorandum and Articles of the Company.                                                     (3)

1.2        Arrangement Agreement between the Company and Glenmore Highlands Inc. dated May             (6)
           10, 2000.

1.3        Joint Information Circular of the Company and Glenmore Highlands Inc.                       (4)

4.1        Transfer agreement between MPV, Monopros and Camphor dated November 24, 1999                (3)
           pursuant to which MPV and Camphor transferred the GOR to Monopros.

4.2        Letter Agreement between MPV, Monopros, Glenmore and Camphor dated December 17,             (3)
           1999 relating to acquisition of property, within the "Area of Interest" as defined
           in the agreement and acquisition of property through third party agreements.

4.3        Letter Agreement dated December 17, 1999 between MPV, Monopros, Camphor and                 (3)
           Glenmore amending the Monopros Joint Venture Agreement.

4.4        Form of Subscription Agreement for the private placement described in item 1 of             (3)
           "Material Contracts".

4.5        Second Amendment Agreement dated January 1, 2002 between the Company and Paul               (3)
           Shatzko.

4.6        Second Amendment Agreement dated January 1, 2002 between the Company and Jan                (3)
           Vandersande.

4.7        Third Amendment Agreement dated December 13, 2002 between the Company and Jan                -
           Vandersande

4.8        Letter Agreement dated December 13, 2002 between the Company and Pradeep Varshney            -

4.9        Letter agreement dated December 13, 2002 between the Company and Elizabeth Kirkwood          -

4.10       Agreement dated as of January 1, 2002 between the Company, Camphor Ventures Inc.            (1)
           and De Beers Canada Exploration Inc.

8.1        List of Subsidiaries                                                                        (2)

10.1       Management Information Circular for 2003 AGM                                                (5)

10.2       Independent Qualified Person's Review and Technical Report dated June 16, 2003              (3)
           entitled Gahcho Kue, Northwest Territories, Canada prepared by Malcom L. Thurston,
           Ph.D., MAusimm

12.1       Section 302 Certification of the Company's Chief Executive Officer                           -

12.2       Section 302 Certification of the Company's Chief Financial Officer                           -

13.1       Section 906 Certification of the Company's Chief Executive Officer                           -

13.2       Section 906 Certification of the Company's Chief Financial Officer                           -
- ---------- ------------------------------------------------------------------------------------ ------------------


(1)  The  Registrant  has applied for  confidential  treatment  with  respect to
     certain  portions of this Agreement,  which have been omitted,  pursuant to
     Rule 24b-2 of the Securities Exchange Act of 1934, as amended.



(2)  See list of subsidiaries on page 11 of this Annual Report

(3)  Previously filed and incorporated by reference.

(4)  Previously  furnished  under  cover  of Form 6K  dated  June  2,  2000  and
     incorporated by reference.

(5)  Previously  furnished  under  cover of Form 6K dated  August  15,  2003 and
     incorporated by reference.

(6)  Attached as Appendix A to the Joint Information Circular of the Company and
     Glenmore Highlands Inc. which information circular was previously furnished
     under cover of Form 6K dated June 2, 2000, and incorporated by reference.



                       Consolidated Financial Statements
                         (Expressed in Canadian dollars)

                         MOUNTAIN PROVINCE DIAMONDS INC.

                    Years ended March 31, 2003, 2002 and 2001



[KPMG LOGO OMITTED]
             KPMG  LLP
             Chartered Accountants
             Box 10426, 777 Dunsmuir Street             Telephone (604) 691-3000
             Vancouver BC V7Y 1K3                       Telefax   (604) 691-3031
             Canada                                     www.kpmg.ca

Auditors' Report

To the Board of Directors
Mountain Province Diamonds Inc.

We have audited the consolidated  balance sheets of Mountain  Province  Diamonds
Inc. as at March 31, 2003 and 2002 and the consolidated statements of operations
and deficit and cash flows for each of the years in the three year period  ended
March  31,  2003.  These  financial  statements  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We have  conducted our audits in accordance  with  Canadian  generally  accepted
auditing  standards  and  auditing  standards  generally  accepted in the United
States of America.  Those standards require that we plan and perform an audit to
obtain  reasonable  assurance  whether  the  financial  statements  are  free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.

In our opinion,  these consolidated  financial statements present fairly, in all
material  respects,  the financial  position of the Company as at March 31, 2003
and 2002 and the  results of its  operations  and its cash flows for each of the
years in the three year period ended March 31, 2003 in accordance  with Canadian
generally accepted accounting principles.

KPMG LLP (signed)

Chartered Accountants

Vancouver, Canada
June 13, 2003

Comments by Auditor for U.S. READERS ON CANADA-U.S. reporting difference

In the United States,  reporting  standards for auditors require the addition of
an explanatory  paragraph  (following the opinion  paragraph) when the financial
statements are affected by conditions and events that cast substantial  doubt on
the Company's ability to continue as a going concern, such as those described in
note 1 to the financial  statements.  Our report to the directors dated June 13,
2003 is expressed in accordance with Canadian  reporting  standards which do not
permit a reference to such events and  conditions in the  auditors'  report when
they are adequately disclosed in the financial statements.

KPMG LLP (signed)

Chartered Accountants

Vancouver, Canada
June 13, 2003



MOUNTAIN PROVINCE DIAMONDS INC.
Consolidated Balance Sheets
(Expressed in Canadian dollars)

March 31, 2003 and 2002


                                                                                        
- ------------------------------------------------------------------------ -------------------- --------------------
                                                                                       2003                 2002
- ------------------------------------------------------------------------ -------------------- --------------------

Assets

Current assets:
        Cash and cash equivalents                                        $        1,210,076   $          585,879
        Accounts receivable                                                          24,941               38,679
        Marketable securities (note 4)                                               32,392               32,392
        Advances and prepaid expenses                                                10,196                7,192
        ---------------------------------------------------------------- -------------------- --------------------
        Total current assets                                                      1,277,605              664,142

Assets held for sale (note 5)                                                             -              100,000

Mineral properties (note 6)                                                       1,701,659            1,628,822

Deferred exploration costs (note 6)                                              31,421,493           31,492,926

Equipment (note 7)                                                                   17,198               61,274
- ------------------------------------------------------------------------ -------------------- --------------------

Total assets                                                             $       34,417,955   $       33,947,164
- ------------------------------------------------------------------------ --- ---------------- --- ----------------

Liabilities and Shareholders' Deficiency

Current liabilities
        Accounts payable and accrued liabilities                         $          228,299   $          213,209
        Due to related party (note 10)                                                3,050               99,036
        Taxes payable                                                                 8,796               12,000
        ---------------------------------------------------------------- -------------------- --------------------
        Total current liabilities                                                   240,145              324,245

Shareholders' equity:
        Share capital (note 8)                                                   55,719,260           53,470,446
        Contributed surplus (note 8(c))                                              24,419                    -
        Deficit                                                                 (21,565,869)         (19,847,527)
        ---------------------------------------------------------------- -------------------- --------------------
        Total shareholders' equity                                               34,177,810           33,622,919
- ------------------------------------------------------------------------ -------------------- --------------------

Total liabilities and shareholders' equity                               $       34,417,955   $       33,947,164
- ------------------------------------------------------------------------ --- ---------------- --- ----------------


Nature of operations (note 1)
Commitments (note 9)

See accompanying notes to consolidated financial statements.



MOUNTAIN PROVINCE DIAMONDS INC.
Consolidated Statements of Operations and Deficit
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001


                                                                                       
- -------------------------------------------------------- ------------------- ------------------ ------------------
                                                                      2003              2002               2001
- -------------------------------------------------------- ------------------- ------------------ ------------------

Expenses:
        Amortization                                     $         17,319    $        19,357    $        29,508
        Capital taxes                                                   -            (15,600)            (7,247)
        Consulting fees (notes 8(c) and 10)                       189,474            227,023            262,500
        Directors' fees and honorarium                             12,493              2,000                  -
        Interest and bank charges                                   2,489              2,344              4,347
        Management fees (note 10)                                 376,500             96,000            171,000
        Office and miscellaneous                                  132,898            159,994            171,828
        Professional fees                                         240,203            167,444            275,460
        Promotion and investor relations                          213,760            193,010            369,434
        Property evaluation and maintenance                        62,076            108,197             10,000
        Rent                                                       37,095            126,356            123,759
        Salaries and benefits                                     166,550            231,984            288,995
        Transfer agent and regulatory fees                         55,697             55,475             57,841
        Travel                                                     59,944             83,114            140,347
        ------------------------------------------------ ------------------- ------------------ ------------------
                                                                1,566,498          1,456,698          1,897,772

Other earnings (expenses):
        Interest                                                   19,034             17,901             65,826
        Gain on sale of marketable securities                           -                  -             19,135
        Loss from write-down of marketable securities                   -             (3,868)           (11,314)
        Loss from write-down of assets held for sale                    -                  -         (1,220,211)
        Loss on disposal of equipment                             (44,862)                 -                  -
        Write-down of mineral properties and deferred
           exploration                                           (120,435)                 -                  -
        ------------------------------------------------ ------------------- ------------------ ------------------
                                                                 (146,263)            14,033         (1,146,564)
- ------- ------------------------------------------------ ------------------- ------------------ ------------------

Loss before income taxes                                       (1,712,761)        (1,442,665)        (3,044,336)

Income tax expense                                                  5,581             13,216             15,736
- -------------------------------------------------------- ------------------- ------------------ ------------------

Loss for the year                                              (1,718,342)        (1,455,881)        (3,060,072)

Deficit, beginning of year                                    (19,847,527)       (18,391,646)       (15,331,574)
- -------------------------------------------------------- ------------------- ------------------ ------------------

Deficit, end of year                                     $    (21,565,869)   $   (19,847,527)   $    (18,391,646)
- -------------------------------------------------------- --- --------------- --- -------------- --- --------------

Basic and diluted loss per share                         $          (0.03)   $         (0.03)   $          (0.07)

Weighted average number of shares outstanding                  49,345,950         46,734,442          44,186,062

- -------------------------------------------------------- --- --------------- -- --------------- -- ---------------


See accompanying notes to consolidated financial statements.



MOUNTAIN PROVINCE DIAMONDS INC.
Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001


                                                                                      
- -------------------------------------------------------- ------------------- ------------------ ------------------
                                                                      2003              2002               2001
- -------------------------------------------------------- ------------------- ------------------ ------------------

Cash provided by (used in):

Cash flows provided by (used in) operating activities:
        Loss for the year                                $     (1,718,342)   $   (1,455,881)   $     (3,060,072)
        Items not involving cash:
           Amortization                                            17,319            19,357              29,508
           Gain on sale of marketable securities                        -                 -             (19,135)
           Loss from write-down of marketable                                         3,868              11,314
             securities                                                 -
           Loss from write-down of assets held for sale                 -                 -           1,220,211
           Loss on disposal of equipment                           44,862                 -                   -
           Write-down of mineral properties and
             deferred exploration                                 120,435                 -                   -
           Stock-based compensation expense                        24,419                 -                   -
        Changes in non-cash operating working capital:
           Accounts receivable                                     13,738            (6,180)             55,893
           Advances and prepaid expenses                           (3,004)           48,722             (37,366)
           Accounts payable and accrued liabilities                15,090            10,265            (581,620)
           Due to related party                                   (95,986)            3,926            (137,003)
           Taxes payable                                           (3,204)            6,640              (9,640)
        ------------------------------------------------ --- --------------- -- -------------- -- ----------------
                                                               (1,584,673)       (1,369,283)         (2,527,910)

Cash flows provided by (used in) investing activities:
        Deferred exploration costs                                      -           (44,456)           (182,541)
        Purchase of equipment                                     (19,105)           (3,772)            (16,053)
        Proceeds on sale of equipment                               1,000               788                   -
        Proceeds on sale of marketable securities                       -                 -              63,908
        Advances to Klondike Gold Mining Corp.                          -                 -             (60,630)
        Mineral properties                                        (21,839)                -             (20,000)
        Amalgamation costs                                              -                 -            (402,931)
        Cash received on acquisition of Glenmore
          Highlands                                                                       -              11,102
        ------------------------------------------------ --- --------------- -- -------------- -- ----------------
                                                                  (39,944)          (47,440)           (607,145)

Cash flows provided by financing activities:
        Shares issued for cash, net of share issue
          costs                                                 2,248,814           920,409           2,236,480
- ------- ------------------------------------------------ --- --------------- -- -------------- -- ----------------

Increase (decrease) in cash and cash equivalents                  624,197           (496,314)          (898,575)

Cash and cash equivalents, beginning of year                      585,879          1,082,193          1,980,768
- -------------------------------------------------------- ------------------- ------------------ ------------------

Cash and cash equivalents, end of year                   $      1,210,076    $       585,879          1,082,193
- -------------------------------------------------------- -- ---------------- -- --------------- - ----------------

Supplementary information:
        Income taxes paid                                $          8,201    $        6,576    $         27,762
        Non-cash transactions
           Acquisition of Glenmore Highlands Inc. for
            issuance of 15,980,962 shares (note 3)                      -                 -          16,780,010
           Shares issued pursuant to Rabbit Track
            Diamond Project                                             -            29,000                   -

- ------- ------------------------------------------------ --- --------------- -- -------------- -- ----------------


See accompanying notes to consolidated financial statements.



MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

1.   Nature of operations:

     On November 1, 1997,  Mountain  Province  Mining Inc. and 444965 B.C.  Ltd.
     amalgamated  and  continued  as Mountain  Province  Mining  Inc.  under the
     Company Act (British  Columbia).  During the year ended March 31, 2001, the
     Company changed its name to Mountain Province Diamonds Inc.

     The Company is in the process of exploring its mineral  properties  and has
     not yet determined  whether these properties  contain mineral reserves that
     are economically recoverable.  The continuing operations of the Company and
     the recoverability of the amounts shown for mineral properties and deferred
     exploration  costs is  dependent  upon the ability of the Company to obtain
     the necessary  financing to meet the Company's  liabilities and commitments
     as they become payable and to complete  exploration  and  development,  the
     discovery of economically  recoverable  reserves and upon future profitable
     production  or  proceeds  from   disposition   of  the  Company's   mineral
     properties.  Failure to discover  economically  recoverable  reserves  will
     require the Company to write-off costs capitalized to date.

2.   Significant accounting policies:

     These  consolidated  financial  statements are prepared in accordance  with
     Canadian  generally  accepted  accounting  principles.  A reconciliation of
     material  measurement   differences  between  Canadian  generally  accepted
     accounting  principles  and United  States  generally  accepted  accounting
     principles,  including practices  prescribed by the Securities and Exchange
     Commission, is included in note 12.

     (a)  Basis of consolidation:

          The  consolidated  financial  statements  include the  accounts of the
          Company and its wholly owned  subsidiaries,  Mountain  Province Mining
          Corp. (U.S.A.) and Mountain Glen Mining Inc. (note 3). All significant
          intercompany   amounts  and  transactions   have  been  eliminated  on
          consolidation.

     (b)  Cash and cash equivalents:

          Cash equivalents consist of highly liquid investments that are readily
          convertible to known amounts of cash and generally have  maturities of
          three months or less when acquired.

     (c)  Marketable securities:

          Marketable  securities  are  carried  at the lower of cost and  market
          value.



MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

2.   Significant accounting policies (continued):

     (d)  Mineral properties and deferred exploration costs:

          The Company  accounts  for its mineral  properties  whereby all direct
          costs related to the acquisition, exploration and development of these
          properties are capitalized. All sales and option proceeds received are
          first  credited  against the costs of the related  property,  with any
          excess credited to earnings. Once commercial production has commenced,
          the net costs of the applicable property will be charged to operations
          using the  unit-of-production  method based on  estimated  recoverable
          reserves.  On an ongoing  basis,  the Company  evaluates each property
          based on results to date to determine the nature of  exploration  work
          that is warranted in the future. If there is little prospect of future
          work on a property  being  carried out, the deferred  costs related to
          that property are written down to the estimated amount recoverable.

          The amounts shown as mineral properties and deferred exploration costs
          represent  unamortized  costs to date and do not  necessarily  reflect
          present or future values.

          All general and administrative expenses are expensed as incurred.

     (e)  Equipment:

          Equipment  is  initially  recorded  at cost and  amortized  over their
          estimated useful lives on the declining balance basis at the following
          annual rates:

          ----------------------------------------------------------------------
          Asset                                                          Rate
          ----------------------------------------------------------------------
          Furniture and equipment                                         20%
          Computers                                                       30%
          ----------------------------------------------------------------------

     (f)  Stock-based compensation:

          Effective April 1, 2002, the Company  adopted the new  recommendations
          of the Canadian Institute of Chartered Accountants with respect to the
          accounting  for  stock-based   compensation   and  other  stock  based
          payments. The new recommendations are applied prospectively.

          No  compensation  cost is recorded for options  granted to  employees.
          Consideration  paid by employees  on the exercise of stock  options is
          recorded as share capital.  The Company discloses the pro forma effect
          of accounting for these awards under the fair value based method.  The
          Company  accounts for all stock based payments to  non-employees,  and
          employee  awards that are direct  award of stock,  granted on or after
          April 1, 2002, using the fair value method.

          Under  the  fair  value   based   method,   stock-based   payments  to
          non-employees  are  measured  at the fair  value of the  consideration
          received,  or the fair  value of the  equity  instruments  issued,  or
          liabilities  incurred,  whichever is more reliably  measurable and are
          amortized over the vesting period. The cost of stock-based payments to
          non-employees  that are fully vested and non  forfeitable at the grant
          date is measured and recognized at that date.



MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

2.   Significant accounting policies (continued):

     (g)  Income taxes:

          The Company  uses the asset and  liability  method of  accounting  for
          income taxes. Under the asset and liability method,  future tax assets
          and  liabilities  are  recognized  for  the  future  tax  consequences
          attributable to differences  between the financial  statement carrying
          amounts of existing assets and  liabilities  and their  respective tax
          bases. Future tax assets and liabilities are measured using enacted or
          substantively enacted tax rates expected to apply to taxable income in
          the years in which  those  temporary  differences  are  expected to be
          recovered or settled.  The effect on future tax assets and liabilities
          of a change in tax rates is  recognized  in income in the period  that
          includes the  enactment  date.  The amount of future income tax assets
          recognized is limited to the amount that is more likely than not to be
          realized.

     (h)  Loss per share:

          Basic loss per share is  calculated  by  dividing  loss  available  to
          common  shareholders (to the Company this is loss for the year) by the
          weighted average number of common shares outstanding. In addition, the
          treasury  stock  method  is used to  compute  the  dilutive  effect of
          options, warrants and similar instruments.

     (i)  Foreign currency translation:

          Monetary  assets and liabilities  expressed in a foreign  currency are
          translated  at rates of  exchange  in  effect  at the end of the year.
          Revenue and expense items are  translated at the average rates for the
          months in which such items are  recognized  during the year.  Exchange
          gains and losses  arising  from the  translation  are  included in the
          statement of operations.

     (j)  Financial instruments:

          The fair values of the Company's cash and cash  equivalents,  accounts
          receivable,  accounts  payable  and  accrued  liabilities  and  due to
          related  party  approximate  their  carrying  values  because  of  the
          immediate  or short term to maturity of these  financial  instruments.
          The fair value of marketable securities is disclosed in note 4.

     (k)  Use of estimates:

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and  assumptions  that affect the  reported  amounts of the assets and
          liabilities and disclosure of contingent assets and liabilities at the
          date of the financial  statements and the reported amounts of revenues
          and expenses during the reporting period.  Significant areas requiring
          the  use  of  management  estimates  relate  to the  determination  of
          impairment of mineral properties,  deferred  exploration,  assets held
          for sale and capital assets and their useful lives for amortization or
          depletion. Actual results could differ from these estimates.



MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

2.   Significant accounting policies (continued):

     (l)  Released accounting standards:

          In  March  2000,  the  Accounting  Standards  Board  of  the  Canadian
          Institute of Chartered  Accountants (CICA) issued Accounting Guideline
          No. 11 entitled "Enterprises in the Development Stage" ("AcG 11"). The
          guideline  addresses  three distinct  issues:  (i)  capitalization  of
          costs/expenditures, (ii) impairment and (iii) disclosure. Prior to its
          issuance,  development  stage  entities  were  exempt  from  following
          certain  aspects of Canadian  GAAP. AcG 11 requires that all companies
          account for transactions  based on the underlying  characteristics  of
          the  transaction  rather  than  the  maturity  of the  enterprise.  In
          addition,  AcG 11  requires  specific  disclosure  of  information  by
          development stage companies. The guideline was effective commencing no
          later than fiscal periods  beginning on or after April 1, 2000,  which
          is the Company's 2001 fiscal year.

          In March  2002,  the  Emerging  Issues  Committee  of the CICA  issued
          EIC-126 - "Accounting by Mining  Enterprises  for  Exploration  Costs"
          which  interprets how AcG 11 affects mining  companies with respect to
          the deferral of  exploration  costs.  EIC-126  refers to CICA Handbook
          Section 3061  "Property,  Plant and  Equipment",  paragraph .21, which
          states  that for a mining  property,  the cost of the  asset  includes
          exploration costs if the enterprise considers that such costs have the
          characteristics of property, plant and equipment.

          EIC-126 then states that a mining  enterprise that has not established
          mineral reserves objectively,  and therefore does not have a basis for
          preparing a projection of the  estimated  cash flow from the property,
          is not precluded from  considering the  exploration  costs to have the
          characteristics  of property,  plant and equipment.  EIC-126 also sets
          forth  the  Committee's  consensus  that a  mining  enterprise  in the
          development stage is not required to consider the conditions in AcG-11
          regarding  impairment in determining  whether exploration costs may be
          initially  capitalized.  With  respect to  impairment  of  capitalized
          exploration costs, EIC-126 sets forth the Committee's consensus that a
          mining  enterprise in the  development  stage that has not established
          mineral reserves objectively,  and therefore does not have a basis for
          preparing a projection of the  estimated  cash flow from the property,
          is not obliged to conclude that capitalized  costs have been impaired.
          However,  such an enterprise  should consider the conditions set forth
          in AcG-11 and CICA  Handbook  Section  3061 in  determining  whether a
          subsequent  write-down  of  capitalized  exploration  costs related to
          mining properties is required.

          The   Company   considers   that  its   exploration   costs  have  the
          characteristics of property,  plant and equipment,  and,  accordingly,
          defers  such  costs.   Furthermore,   pursuant  to  EIC-126,  deferred
          exploration  costs  would not  automatically  be  subject  to  regular
          assessment  of  recoverability,   unless  conditions,  such  as  those
          discussed in AcG 11, exist.

          AcG  11  also  provides  guidance  on  measuring  impairment  of  when
          pre-operating  costs have been deferred.  The Company does not believe
          its  application  will result in  impairment  as, to the date of these
          consolidated  financial  statements,  no pre-operating costs have been
          deferred.



MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

3.   Business combination:

     During the year ended March 31,  2001,  the Company  incorporated  a wholly
     owned  subsidiary  ("Mountain Glen Mining Inc.") which  amalgamated on June
     30, 2000, by way of a Plan of  Arrangement,  with Glenmore  Highlands  Inc.
     ("Glenmore").  Glenmore's  major asset at the date of the  amalgamation was
     the ownership of 16,015,696,  or approximately  37.7%, of the issued common
     shares of the  Company.  The  amalgamation  has been  accounted  for by the
     Company as an  acquisition  of Glenmore by the Company  using the  purchase
     method. As consideration  for the purchase of Glenmore,  the Company issued
     15,980,962  common shares to the  shareholders  of Glenmore on the basis of
     the exchange ratio of 0.5734401 common shares of the Company for each share
     of Glenmore  outstanding.  Provided below is the purchase price allocation.
     The fair value of the Mountain  Province shares of $1.05 per share is based
     on a valuation opinion by an independent  Canadian  investment  dealer. The
     results of operations of Glenmore are included in the financial  statements
     of the Company commencing from June 30, 2000.



                                                                                           
        ---------------------------------------------------------------- --- ---------------- --- ----------------

        Net assets acquired at assigned values:
            Current assets                                                                    $           33,293
            Mineral properties                                                                           562,534
            Equipment                                                                                    113,033
            Investment in Klondike Gold Mining Corporation                                               500,000
            Investment in Mountain Province (16,015,696 common
              shares), owned by Mountain Glen Mining Inc. and
              eliminated on consolidation                                                             16,816,481
            Current liabilities                                                                         (720,127)
        ---------------------------------------------------------------- --- ---------------- --- ----------------

                                                                                              $        17,305,214
        ---------------------------------------------------------------- --- ---------------- --- ----------------

        Consideration paid:
            15,980,962 common shares of Mountain Province                                     $        16,780,010
            Costs of acquisition                                                                          525,204
        ---------------------------------------------------------------- --- ---------------- --- ----------------

                                                                                              $        17,305,214
        ---------------------------------------------------------------- --- ---------------- --- ----------------


     It is anticipated that the Company and Mountain Glen Mining Inc. ("Mountain
     Glen")  will  effect a  further  reorganization  in the  future in order to
     cancel the  16,015,696  common shares of the Company held by Mountain Glen.
     The shares  held by  Mountain  Glen are  non-voting  while held by Mountain
     Glen,  no dividend is payable on the shares while held by Mountain Glen and
     they do not  participate  in any share  distributions,  and the  Company is
     unable to sell the shares without prior written regulatory approval.


4.   Marketable securities:

     The quoted  market  value of  marketable  securities  at March 31, 2003 was
     $100,178 (2002 - $32,392).



MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

5.   Assets held for sale:

     During the year ended March 31,  2001,  the  Company  wrote down the assets
     held for sale by $1,220,211 to $100,000,  being the estimated net amount to
     be realized on a sale of the assets.  As of March 31, 2003,  the Company is
     no longer  attempting to sell these assets and the carrying  value has been
     reclassified  from  assets  held for sale to the  Haveri  mineral  property
     project (note 6).


6.   Mineral properties and deferred exploration:

     Acquisition costs:



                                                                                        
        ---------------------------------------------------------------- --- ---------------- --- ----------------
                                                                                        2003                 2002
        ---------------------------------------------------------------- --- ---------------- --- ----------------


        AK/CJ claims                                                     $        3,847,553   $        3,847,553
        Proceeds received on sale of royalty                                     (2,295,000)          (2,295,000)
        ---------------------------------------------------------------- --- ---------------- --- ----------------
                                                                                  1,552,553             1,552,553

        Baffin Island Project                                                        27,267               27,267
        Rabbit Tracks Diamond Project                                                     -               49,000
        Ketza River Project                                                               -                    1
        Molanosa Diamond Project                                                          -                    1
        Haveri Project                                                              121,839                    -
        ---------------------------------------------------------------- --- ---------------- --- ----------------

                                                                         $        1,701,659   $        1,628,822
        ---------------------------------------------------------------- --- ---------------- --- ----------------




MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

6.   Mineral properties and deferred exploration (continued):

     Deferred exploration:



                                                                                        
        -------------------------------------- -- ------------ -- -------------- -- -------------- --- ------------
                                                                                           Rabbit
                                                                         Baffin            Tracks
                                                        AK/CJ            Island           Diamond            Total
                                                                        project           project
        -------------------------------------- -- ------------ -- -------------- -- -------------- --- ------------

        Balance, March 31, 2000                $  30,861,544   $       491,858   $             -    $  31,353,402

        Exploration expenditures:
             Airborne and geophysical survey               -            24,411                 -           24,411
             Consulting and other
               professional services                       -            20,498             4,750           25,248
             Sampling and processing                       -             2,779            22,011           24,790
             Travel, transportation and                    -            17,427             3,192           20,619
               supplies
             --------------------------------- -- ------------ -- -------------- -- -------------- --- ------------
                                                           -            65,115            29,953           95,068

        -------------------------------------- -- ------------ -- -------------- -- -------------- --- ------------

        Balance, March 31, 2001                   30,861,544           556,973            29,953       31,448,470

        Exploration expenditures:
             Airborne and geophysical survey               -                 -            28,764           28,764
             Consulting and other
               professional services                       -             2,307             3,776            6,083
             Line-cutting                                  -                 -            12,000           12,000
             Report and filing fees                        -               669                 -              669
             Travel, transportation and                    -                 -             8,537            8,537
               supplies
             Reimbursement of costs by
               provincial government                       -                 -           (11,597)         (11,597)
             --------------------------------- -- ------------ -- -------------- -- -------------- --- ------------
                                                           -             2,976            41,480           44,456

        -------------------------------------- -- ------------ -- -------------- -- -------------- --- ------------

        Balance, March 31, 2002                   30,861,544           559,949            71,433       31,492,926

        Write-down of deferred exploration                 -                 -           (71,433)         (71,433)
        costs

        -------------------------------------- -- ------------ -- -------------- -- -------------- --- ------------

        Balance, March 31, 2003                $  30,861,544   $       559,949   $             -    $  31,421,493
        -------------------------------------- -- ------------ -- -------------- -- -------------- --- ------------


     (a)  AK/CJ claims:

          Effective  November 1, 1997,  the Company  held a 90%  interest in the
          AK/CJ  claims   located  in  the  District  of  Mackenzie,   Northwest
          Territories.  Camphor Ventures Inc. ("Camphor") held the remaining 10%
          interest in the claims.

          Pursuant to a joint venture agreement between the Company, Camphor and
          De Beers Canada Exploration Inc. ("De Beers Canada"),  De Beers Canada
          was granted the right to earn up to a 60% interest in the AK/CJ claims
          by spending  specified amounts on further  exploration and development
          of the properties.



MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

6.   Mineral properties and deferred exploration (continued):

     (a)  AK/CJ claims (continued):

          In March 2000,  De Beers Canada agreed to carry all  subsequent  costs
          incurred and committed to certain minimum  expenditures and activities
          per year.  In return,  De Beers Canada was to earn its 51% interest on
          completion of a desktop study of the project. This study was completed
          and presented in August 2000. Thus the Company currently holds a 44.1%
          interest and Camphor a 4.9% interest. Decisions are to be jointly (via
          a management  committee  consisting  of two members each from De Beers
          Canada  and  the  Company)  made  as to the  further  progress  of the
          project,  and  specifically  the timing of  possible  full  conceptual
          pre-feasibility and feasibility  studies. De Beers Canada is to update
          its  desktop  study on an annual  basis up to and  including  2004 and
          continue  to fund  the  exploration  and  development  work.  Once the
          desktop  study  shows  that an  internal  rate of return of 15% can be
          achieved,  De Beers Canada is to proceed with a feasibility  study. If
          they do not proceed with the feasibility study, De Beers interest will
          be diluted down to a 30%.

          Upon  completion  of a  feasibility  study,  De Beers  interest in the
          claims shall increase to 55% and upon  development,  construction  and
          commencement  of  production of a commercial  mine, De Beers  interest
          shall increase to 60%.

          All costs paid with respect to the expenses  incurred by the venturers
          shall be repaid first to De Beers for all  exploration and development
          costs  incurred  by De Beers  outside of the  Kennedy  Lake area since
          March 8, 2000 out of 100% of annual  available  cash flow  (i.e.  cash
          flow after  provision for ongoing  operating and  non-operating  costs
          including third party debt  repayments)  from any mine  constructed on
          the property with interest at a rate equal to LIBOR plus 5% compounded
          annually; then to all venturers for all other exploration, development
          and mine  construction  costs out of 90% of annual available cash flow
          from any mine  constructed  on the  property  with  interest at a rate
          equal to LIBOR plus 4% compounded  annually;  and the remaining 10% of
          such available cash flow shall be distributed to the  participants  in
          proportion to their respective participating interests.

          During the years ended March 31, 2003 and 2002, the venturers  allowed
          certain  claims to lapse.  As the claims that were retained  relate to
          the area that is of interest,  no write-down has been taken related to
          the lapsing of the claims.

     (b)  Baffin Island claims:

          Pursuant to an agreement  dated July 13, 1999, the Company was granted
          an option to acquire a 50% interest in four mineral  claims located in
          the Northwest Territories and Nunavut Territory.  In order to exercise
          the option and earn the 50% interest in the property,  the Company had
          to incur  expenditures  on or in respect of the  property  of not less
          that $300,000 on or before July 13, 2000. The Company has incurred the
          minimum   required   expenditure   and  exercised  its  option.   Upon
          commencement of a bulk sampling  program,  which has yet to occur, the
          Company must issue 50,000 fully paid common shares to the optionor and
          upon  commencement of a full feasibility study of the construction and
          development  of a mine  on the  property,  the  Company  will  issue a
          further  50,000 common shares to the optionor.  Subsequent to entering
          into the  agreement,  the Company staked another claim that is subject
          to the option agreement.



MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

6.   Mineral properties and deferred exploration (continued):

     (c)  Rabbit Tracks Diamond project:

          During the year  ended  March 31,  2003,  the  Rabbit  Tracks  Diamond
          property  in Manitoba  was written  down to a nil value as the Company
          will  not be  proceeding  further  with  exploration  and  will not be
          renewing the claims.

     (d)  Haveri project:

          The Company has a 100%  interest in this mineral  property  located in
          Northern Europe.  Pursuant to an amended  acquisition  agreement,  the
          Company  has  granted a third  party a right to receive  an  aggregate
          commencement-of-production  payment  of  US$500,000  phased  over  two
          years.

          On October 10, 2002,  Vision Gate Ventures Limited ("Vision Gate") was
          granted an option to acquire a 70%  undivided  interest  in the Haveri
          Mine. In exchange for this option,  Vision Gate must expend a total of
          $1,650,000 in  exploration  and  development  expenditures  over three
          years as follows:

             -------------------------------------------------------------------
             By:
                 October 10, 2003                              $          50,000
                 October 10, 2004                                        600,000
                 October 10, 2005                                      1,000,000
             -------------------------------------------------------------------

          Vision Gate may exercise the option as to a 51% undivided  interest at
          any time  prior to  October  10,  2004 by  delivering  written  notice
          confirming a  cumulative  total of $650,000 in  expenditures;  and the
          remaining 19% undivided interest at any time prior to October 10, 2005
          by  delivering   written  notice  confirming  a  cumulative  total  of
          $1,650,000 in expenditures.

          Once a positive  feasibility study of the construction and development
          of a mine on the property is complete,  Vision Gate will issue 200,000
          of its common shares to the Company. Once commercial production begins
          on the  property,  Vision  Gate will  issue a further  200,000  of its
          common shares to the Company. Vision Gate is entitled to terminate the
          agreement  at any time prior to the  exercise  date on 30 days written
          notice.

7.   Equipment:



                                                                                     
        ------------------------------------------- --- ---------------- --- ---------------- --- ----------------
                                                                                 Accumulated             Net book
        2003                                                       Cost         amortization                value
        ------------------------------------------- --- ---------------- --- ---------------- --- ----------------

        Furniture                                   $           11,088    $           8,364   $            2,724
        Equipment                                               15,497                4,663               10,834
        Computers                                               14,584               10,944                3,640
        ------------------------------------------- --- ---------------- --- ---------------- --- ----------------

                                                    $           41,169    $          23,971   $           17,198
        ------------------------------------------- --- ---------------- --- ---------------- --- ----------------




MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

7.   Equipment (continued):



                                                                                     
        ------------------------------------------- --- ---------------- --- ---------------- --- ----------------
                                                                                 Accumulated             Net book
        2002                                                       Cost         amortization                value
        ------------------------------------------- --- ---------------- --- ---------------- --- ----------------

        Furniture                                   $           59,255    $          42,438   $           16,817
        Equipment                                               73,548               54,945               18,603
        Computers                                              108,523               82,669               25,854
        ------------------------------------------- --- ---------------- --- ---------------- --- ----------------

                                                    $           241,326   $         180,052   $           61,274
        ------------------------------------------- --- ---------------- --- ---------------- --- ----------------


8.   Share capital:

     (a)  Authorized:

                500,000,000 common shares without par value

     (b)  Issued and fully paid:



                                                                                        
             ----------------------------------------------------------- -- ----------------- -- -----------------
                                                                                      Number
                                                                                   of shares               Amount
             ----------------------------------------------------------- -- ----------------- -- -----------------


             Balance, March 31, 2000                                             42,457,760   $       50,321,028

             Issued pursuant to acquisition of Glenmore Highlands Inc.
               (note 3)                                                          15,980,962           16,780,010

             Issued for cash pursuant to:
                Private placements                                                3,727,466            2,236,480
             ----------------------------------------------------------- -- ----------------- -- -----------------
                                                                                 62,166,188           69,337,518

             Shares owned by wholly owned subsidiary (note 3)                   (16,015,696)         (16,816,481)
             ----------------------------------------------------------- -- ----------------- -- -----------------

             Balance, March 31, 2001                                             46,150,492           52,521,037

             Issued pursuant to Rabbit Tracks Diamond Project
               (note 6(c))                                                           50,000               29,000

             Issued for cash pursuant to:
                 Private placement                                                1,636,912              902,409
                 Exercise of stock options                                           30,000               18,000
             ----------------------------------------------------------- -- ----------------- -- -----------------

             Balance, March 31, 2002                                             47,867,404           53,470,446

             Issued for cash pursuant to:
                 Exercise of stock options                                          544,900              607,829
                 Exercise of warrants                                             2,169,766            1,640,985
             ----------------------------------------------------------- -- ----------------- -- -----------------

             Balance, March 31, 2003                                             50,582,070   $       55,719,260
             ----------------------------------------------------------- -- ----------------- -- -----------------




MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

8.   Share capital (continued):

     (c)  Stock options:

          The Company, through its Board of Directors and shareholders,  adopted
          a November 26, 1998 Stock  Option Plan (the "Plan")  which was amended
          on February 1, 1999.  As at March 31, 2003,  the Company has 2,399,100
          (2002 - 3,661,000)  stock options  outstanding in total,  comprised of
          1,919,100 (2002 - 2,045,000) granted inside the Plan and 480,000 (2002
          - 1,516,000) granted outside the plan.



                                                                                 
             ------------------------------------------------------ --- -------------- --- -----------------------
                                                                               Number            Weighted average
                                                                            of shares              exercise price
             ------------------------------------------------------ --- -------------- --- -----------------------

             Balance, March 31, 2000                                       2,229,700   $                    2.68
                Granted                                                      397,273                        0.80
                Cancelled                                                   (277,203)                       2.85
                Expired                                                     (152,734)                       2.16
             ------------------------------------------------------ --- -------------- --- -----------------------

             Balance, March 31, 2001                                       2,197,036                        2.38
                Granted                                                    1,845,000                        1.27
                Exercised                                                    (30,000)                       0.60
                Expired                                                     (261,700)                       3.46
                Cancelled                                                    (89,336)                       1.72
             ------------------------------------------------------ --- -------------- --- -----------------------

             Balance, March 31, 2002                                       3,661,000                        1.78
                Granted                                                      364,000                        1.61
                Cancelled                                                          -                          -
                Expired                                                   (1,081,000)                       2.78
                Exercised                                                   (544,900)                       1.12
             ------------------------------------------------------ --- -------------- --- -----------------------

             Balance, March 31, 2003                                        2,399,100  $                    1.46
             ------------------------------------------------------ --- -------------- --- -----------------------


          The following  table  summarizes  information  about the stock options
          outstanding and exercisable at March 31, 2003:



                                                                                            
             -------------------------- ---------------------------------------- --- ------------------------------
                                                  Options outstanding                     Options exercisable
                                        ----------------------------------------     ------------------------------
                                                        Weighted       Weighted                           Weighted
                                        Number           average        average           Number           average
                                        of shares      remaining       exercise      exercisable    exercise price
                                                            life          price
             -------------------------- ---------- -------------- -------------- --- ------------ -----------------

             $0.60 - $0.67                325,000      3.2 years        $  0.63          325,000           $  0.63
             $1.01 - $1.50              1,520,500      3.2 years           1.37        1,520,500              1.37
             $2.25 - $2.80                553,600      1.0 years           2.19          507,000              2.24
             -------------------------- ---------- -------------- -------------- --- ------------ -----------------

                                        2,399,100      2.7 years        $  1.46        2,352,500           $  1.45
             -------------------------- ---------- -------------- -------------- --- ------------ -----------------


          At March 31, 2003, there were 46,600 options with an exercise price of
          $1.71 that vest between  April 30, 2003 and  December  31,  2003.  All
          other options are fully vested.



MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

8.   Share capital (continued):

     (c)  Stock options (continued):

          During the year ended  March 31,  2003,  the Company  granted  339,000
          options to  directors,  officers  and  employees  at  exercise  prices
          ranging from $1.36 to $1.71 per share. The weighted average fair value
          of the options  granted to employees in 2003 was $0.26.  In accordance
          with  the  Company's   stated   accounting   policy  (note  2(f)),  no
          compensation cost is recorded in these financial  statements for share
          options granted to directors, officers and employees.

          The Company also granted 25,000 options to a consultant  during fiscal
          2003 at an exercise price of $2.06 per share. These options had a term
          of  five  years  or  30  days  after   cessation  of  the   consulting
          arrangement.  The fair  value of the  25,000  options  granted  to the
          consultant  has been  estimated to be $24,419 and has been recorded as
          consulting expense in the year ended March 31, 2003.

          The  table  below  presents  pro forma net loss and net loss per share
          using the fair market  value  method of  accounting  for all  employee
          stock-based  compensation  plans. The pro forma adjustments  presented
          below  pertain to the 339,000 new options  granted to employees  since
          adoption of the new  stock-based  compensation  standards  on April 1,
          2002 as  described  in note 2(f).  The pro forma  disclosure  does not
          include the effect of awards granted before April 1, 2002.

          Reconciliation of pro forma net loss to common shareholders:

             -------------------------------------------------------------------
              Net loss as reported                          $        (1,718,342)
              Pro forma adjustment                                      (69,957)
             -------------------------------------------------------------------
              Pro forma net loss                            $        (1,788,299)
             -------------------------------------------------------------------
              Pro forma basic and diluted loss per share    $             (0.04)
             -------------------------------------------------------------------

          The fair value of the options  granted to employees and  non-employees
          in 2003  has  been  estimated  on the  date  of the  grant  using  the
          Black-Scholes option pricing model with the following assumptions:

             -------------------------------------------------------------------
              Dividend yield                                                  0%
              Expected volatility                                      62% - 75%
              Risk-free interest rate                                       4.0%
              Expected lives                                      1 to 30 months
             -------------------------------------------------------------------



MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

8.   Share capital (continued):

     (d)  Share purchase warrants:

          The  following  presents the  continuity  of share  purchase  warrants
          outstanding:



                                                                                              
             ------------------- ----------- ----------- ------------ ---------- ------------ ---------- -----------------
                                 Balance,                                           Balance,
                                 March 31,                                         March 31,  Exercise
             Issue date                2002      Issued    Exercised     Lapsed         2003      price  Expiry date
             ------------------- ----------- ----------- ------------ ---------- ------------ ---------- -----------------
             September 15, 2000    983,666           -     (983,666)         -            -       $0.80  September 15,
                                                                                                         2002
             October 24, 2000      880,066           -     (755,066)  (125,000)           -        0.80  October 24, 2002
             December 6, 2001    1,636,912           -     (431,034)         -    1,205,878        0.58  December 6, 2004
             ------------------- ----------- ----------- ------------ ---------- ------------ ---------- -----------------

                                 3,500,644           -   (2,169,766)  (125,000)   1,205,878
             ------------------- ----------- ----------- ------------ ---------- ------------ ---------- -----------------


             ------------------- ----------- ----------- ------------ ---------- ------------ ---------- -----------------
                                 Balance,                                           Balance,
                                 March 31,                                         March 31,  Exercise
             Issue date                2001      Issued      Exercised   Lapsed         2002      price  Expiry date
             ------------------- ----------- ----------- ------------ ---------- ------------ ---------- -----------------

             September 15, 2000    983,666           -              -        -      983,666      $0.80   September 15,
                                                                                                         2002
             October 24, 2000      880,066           -              -        -      880,066       0.80   October 24, 2002
             December 6, 2001            -   1,636,912              -        -    1,636,912       0.58   December 6, 2004
             ------------------- ----------- ----------- ------------ ---------- ------------ ---------- -----------------

                                 1,863,732   1,636,912              -        -    3,500,644
             ------------------- ----------- ----------- ------------ ---------- ------------ ---------- -----------------


9.   Commitments:

     The  Company is  committed  to total  minimum  payments  of  $16,910  under
     operating leases that expire in 2004.

     The Company has entered into a consulting  agreement with an officer of the
     Company  which  provides  for  severance  in an amount that is equal to the
     greater  of (i)  three  times  annual  salary;  and  (ii)  US$504,000.  The
     severance is  applicable  in the event of  termination  without  cause,  in
     certain  change of control  conditions of the Company or if the  respective
     officer  ceases to be a director  of the  Company  for any reason  provided
     there is an absence of just cause.

10.  Related party transactions:

     Included in management fees during the year ended March 31, 2003 is $45,000
     (2002 - $96,000;  2001 - $163,000) for management services to a director of
     the Company  and a $331,500  (2002 and 2001 - nil)  severance  payment to a
     director of the Company.

     During the year ended March 31,  2003,  the Company paid  $193,301  (2002 -
     $207,913; 2001 - $267,891) for consulting,  management, property evaluation
     and  administration  services to a director and to companies in which other
     directors have an interest.

     During the year ended March 31,  2003,  the Company  paid  $20,340  (2002 -
     $35,200;  2001 - $40,891) for secretarial and public relations  services to
     individuals related to a director of the Company.

     As at March 31, 2003,  $3,050 (2002 - $99,036) was owed to directors of the
     Company.  Amounts  are  repayable  on demand,  unsecured  and  non-interest
     bearing.



MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

11.  Income taxes:

     Income tax expense (recovery) differs from the amounts computed by applying
     the combined federal and provincial tax rate of 42.6% (2002 - 42.6%; 2001 -
     45.4%) to pre-tax income from continuing  operations  primarily as a result
     of losses,  the tax benefits of which have not been recognized.  Income tax
     expense  of  $5,581  (2002 -  $13,216;  2001 -  $15,736)  relates  to large
     corporation tax.

     As at March 31, 2003, the tax effect of the significant  components  within
     the Company's future tax asset (liability) are as follows:



                                                                                       
        ---------------------------------------------- --- ---------------- --- --------------- -- ---------------
                                                                     2003                2002               2001
        ---------------------------------------------- --- ---------------- --- --------------- -- ---------------

        Mineral properties and deferred exploration    $         (286,000)  $        (715,000)  $       (993,000)
        Loss carry forwards                                     3,827,000           5,414,000          3,136,000
        Equipment                                                 167,000             145,000            100,000
        Other                                                       4,000                   -                  -
        ---------------------------------------------- --- ---------------- --- --------------- -- ---------------
                                                                3,712,000           4,844,000          2,243,000
        Valuation allowance                                    (3,712,000)         (4,844,000)        (2,243,000)
        ---------------------------------------------- --- ---------------- --- --------------- -- ---------------

        Net future income tax asset (liability)        $                -   $               -   $              -
        ---------------------------------------------- --- ---------------- --- --------------- -- ---------------


     At March 31, 2003, the Company has available losses for income tax purposes
     totalling  approximately $9.0 million,  expiring at various times from 2004
     to 2010. Of the available losses $3.6 million are subject to acquisition of
     control rules which may restrict  their future  deductibility.  The Company
     also has available tax pools of approximately  $32.5 million,  which may be
     carried forward and utilized to reduce future taxable  income.  Included in
     the $32.5 million of tax pools is $24.5 million that is successored,  which
     can  only  be  utilized   against  taxable  income  from  specific  mineral
     properties.



MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

12.  Reconciliation to United States generally  accepted  accounting  principles
     ("US GAAP"):

     These financial statements have been prepared in accordance with accounting
     principles  generally  accepted in Canada ("Canadian  GAAP"). A description
     and  reconciliation  of material  measurement  differences from US GAAP and
     practices  prescribed by the US Securities and Exchange  Commission ("SEC")
     follows:

     (a)  Mineral properties and deferred exploration costs:

          US GAAP requires  that  long-lived  assets be reviewed for  impairment
          whenever events or changes in circumstances indicate that the carrying
          amount of an asset may not be  recoverable.  In performing  the review
          for  recoverability,  the Company is to estimate the future cash flows
          expected  to  result  from  the  use of the  asset  and  its  eventual
          disposition.   If  the  sum  of  the   expected   future   cash  flows
          (undiscounted  and without interest charges) is less than the carrying
          amount of the asset, an impairment loss is recognized.  SEC staff have
          indicated  that  their  interpretation  of US  GAAP  requires  mineral
          property  exploration  and land use costs to be  expensed  as incurred
          until  commercially  minable deposits are determined to exist within a
          particular property as cash flows cannot be reasonably estimated prior
          to such  determination.  Accordingly,  for all periods presented,  the
          Company has expensed  all mineral  property  exploration  and land use
          costs for US GAAP  purposes.  In fiscal 2002 and prior years,  mineral
          property  acquisition  costs were capitalized for both Canadian and US
          GAAP purposes.  However,  as a result of a recent  interpretation from
          SEC staff,  all mineral  property  acquisition  costs for  development
          stage  enterprises  should also be  expensed  as incurred  for US GAAP
          purposes,  similar to exploration costs.  Accordingly,  $12,914,617 of
          mineral  property  acquisition  costs have been  expensed  for US GAAP
          purposes  in fiscal  2003,  including  $12,892,778  incurred  in prior
          years.

          For  Canadian   GAAP,   cash  flows   relating  to  mineral   property
          acquisition,  exploration and land use costs are reported as investing
          activities.  For US  GAAP,  these  costs  would  be  characterized  as
          operating activities.

     (b)  Stock-based compensation:

          The  Financial  Accounting  Standards  Board  in the U.S.  has  issued
          Statement of Financial  Accounting  Standards No.123,  "Accounting for
          Stock-Based   Compensation"  ("FAS  123").  The  statement  encourages
          entities to adopt a fair value  methodology of accounting for employee
          stock-based compensation.



MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

12.  Reconciliation to United States generally  accepted  accounting  principles
     ("US GAAP") (continued):

     (b)  Stock-based compensation (continued):

          As  permitted  by the  statement,  the Company has elected to continue
          measuring compensation costs using the intrinsic value based method of
          accounting for stock-based compensation issued to employees. Under the
          intrinsic  value method,  compensation  is the excess,  if any, of the
          quoted  market  value  of the  stock at the  date of the  granting  of
          options to employees and  directors to purchase  stock over the amount
          an optionee must pay to acquire the stock at that date. This excess is
          recognized by a charge to operations over the vesting  period.  As the
          exercise  price of options  granted by the  Company to  employees  and
          directors  approximates,  or is greater than,  the market value at the
          grant  date,  the  Company has  determined  that the  adoption of this
          accounting policy for stock options granted to employees and directors
          has no material  effect on its  results of  operations  for U.S.  GAAP
          purposes.

          Stock options granted to  non-employees  for services  rendered to the
          Company are  required to be  accounted  for as  compensation  cost and
          charged to  operations  as the services are  performed and the options
          earned.  The  compensation  cost is to be  measured  based on the fair
          value of the stock  options  granted.  This  method is  similar to the
          Canadian  standard adopted as of April 1, 2002, and so the adoption of
          the  accounting  policy for U.S.  GAAP  purposes  does not result in a
          measurement  difference  for  the  year  ended  March  31,  2003.  The
          stock-based  compensation  expense in respect of stock options granted
          to  non-employees,  under U.S. GAAP,  based upon the fair value of the
          options granted,  determined  using an option pricing model,  would be
          $20,000   for  the  year  ended  March  31,  2002  (2001  -  nil)  and
          cumulatively  $1,704,000 from the date of adoption of FAS 123 to March
          31, 2002.

     (c)  Unrealized holding gains and losses on marketable securities:

          Statement of Financial Accounting Standards Board No. 115, "Accounting
          for  Investments in Debt and Equity  Securities"  ("FAS 115") requires
          that  the   Company's   marketable   securities   be   classified   as
          available-for-sale  securities  and that  they be  recorded  at market
          value with unrealized  gains or losses recorded outside of income as a
          component  of  shareholders'  equity  unless  a  decline  in  value is
          considered  to be  other  then  temporary.  The  Company's  marketable
          securities  are  presented  at the lower of cost or market value under
          Canadian GAAP. At March 31, 2002, the Company's marketable  securities
          were written down to market value. As the write-down was considered to
          be other than  temporary,  there was no US GAAP difference in 2002. At
          March 31, 2003,  the market  value of the  marketable  securities  had
          increased  and  accordingly,  an  unrealized  gain of $67,786 has been
          recorded through comprehensive income for US GAAP purposes.



MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

12.  Reconciliation to United States generally  accepted  accounting  principles
     ("US GAAP") (continued):

     (d)  Reporting comprehensive income:

          Statement  of  Financial  Accounting  Standards  No.  130 ("FAS  130")
          "Reporting  Comprehensive  Income",   establishes  standards  for  the
          reporting and display of comprehensive  income and its components in a
          full set of general purpose financial statements. Comprehensive income
          equals net income  (loss)  for the  period as  adjusted  for all other
          non-owner changes in shareholders'  equity.  FAS 130 requires that all
          items that are required to be recognized under accounting standards as
          components  of  comprehensive   income  be  reported  in  a  financial
          statement. For the year ended March 31, 2003, the Company has recorded
          an  unrealized  holding  gain  of  $67,786  on  marketable  securities
          classified  as  "available  for sale"  securities  as a  component  of
          comprehensive income under US GAAP. For the years ended March 31, 2002
          and 2001, comprehensive loss equals loss for the year.

     (e)  Recent accounting pronouncements:

          In  June  2001,  the  Financial   Accounting  Standards  Board  issued
          Statement  No.  143  ("FAS  143")  "Accounting  for  Asset  Retirement
          Obligations",  which addresses financial  accounting and reporting for
          obligations  associated  with the  retirement  of tangible  long-lived
          assets and the associated asset retirement costs. The standard applies
          to legal  obligations  associated  with the  retirement  of long-lived
          assets that result from the acquisition, construction, development and
          (or) normal use of the asset.

          FAS 143  requires  that the fair  value  of a  liability  for an asset
          retirement  obligation  be  recognized  in the  period  in which it is
          incurred if a reasonable  estimate of fair value can be made. The fair
          value  of the  liability  is  added  to  the  carrying  amount  of the
          associated  asset and this  additional  carrying amount is depreciated
          over the life of the asset.  The  liability  is accreted at the end of
          each period through charges to operating expense. If the obligation is
          settled  for other  than the  carrying  amount of the  liability,  the
          Company will recognize a gain or loss on settlement.

          The Company is required and plans to adopt the  provisions  of FAS 143
          for US GAAP  purposes for the year ending March 31, 2004.  The Company
          has not completed its analysis of the potential impact on its reported
          financial position on adoption of FAS 143.

          Effective  for  fiscal  years   beginning  after  December  15,  2001,
          Statement  of  Financial  Accounting  Standards  No.  144 ("FAS  144")
          "Accounting  for the  Impairment or Disposal of Long-Lived  Assets" is
          applicable  for US GAAP  purposes.  FAS 144 requires  that  long-lived
          assets  that are to be disposed of by sale be measured at the lower of
          book value or fair value less cost to sell.  The Company does not have
          any long-lived assets that are held for sale and measured at an amount
          greater than the  estimated  fair value of the asset and thus does not
          believe  the  adoption  of FAS 144  will  result  in a  material  GAAP
          differences.



MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

12.  Reconciliation to United States generally  accepted  accounting  principles
     ("US GAAP") (continued):

     (f)  Reconciliation:

          The  effect  of the  differences  between  Canadian  GAAP  and US GAAP
          (including  practices  prescribed  by the  SEC)  on  the  consolidated
          balance  sheets,  statements  of loss and cash flows is  summarized as
          follows:


                                                                                             
              ---- ----------------------------------------------------- --- ---------------- --- -----------------
                                                                                    Years ended March 31,
                                                                             -------------------------------------
                                                                                       2003                  2002

              (i)  Total assets, under Canadian GAAP                     $       34,417,955   $        33,947,164
                   Adjustment for mineral property acquisition costs
                     (note 12(a))                                               (12,865,615)                    -
                   Adjustment for deferred exploration (note 12(a))             (20,257,537)          (20,328,970)
                   Adjustment for change in fair value of available
                     for sale marketable securities (notes 12(c) and                 67,786                     -
                     (d))
                   ----------------------------------------------------- --- ---------------- --- -----------------

                   Total assets, under US GAAP                           $        1,362,589   $        13,618,194
                   ----------------------------------------------------- --- ---------------- --- -----------------

              (ii) Accumulated other comprehensive income for US GAAP purposes:

                   Adjustment for change in fair value of available
                      for sale marketable securities (note 12(d))        $           67,786   $                 -
                   ----------------------------------------------------- --- ---------------- --- -----------------

              (iii)Contributed surplus:

                   Contributed surplus, under Canadian GAAP              $           24,419   $                 -
                   Adjustment for stock-based compensation (note 12(b))
                                                                                  1,704,000             1,704,000
                   ----------------------------------------------------- --- ---------------- --- -----------------

                   Contributed surplus, under US GAAP                    $        1,728,419   $         1,704,000
                   ----------------------------------------------------- --- ---------------- --- -----------------

              (iv) Deficit:

                   Deficit, under Canadian GAAP                          $       21,565,869   $        19,847,527
                   Adjustment for mineral property acquisition costs
                     (note 12(a))                                                12,865,615                     -
                   Adjustment for deferred exploration (note 12(a))              20,257,537            20,328,970
                   Adjustments for stock-based compensation
                      (note 12(b))                                                1,704,000             1,704,000
                   ----------------------------------------------------- --- ---------------- --- -----------------

                   Deficit, under US GAAP                                $       56,393,021   $        41,880,497
                   ----------------------------------------------------- --- ---------------- --- -----------------




MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2003, 2002 and 2001

- --------------------------------------------------------------------------------

12.  Reconciliation to United States generally  accepted  accounting  principles
     ("US GAAP") (continued):

     (f)  Reconciliation (continued):

              (v) Loss and loss per share for the year:



                                                                                     
                   ---------------------------------------- ------------------------------------------------------
                                                                            Years ended March 31
                                                             ---- ------------- --- ------------- --- -------------
                                                                        2003              2002              2001
                   ---------------------------------------- ---- ------------- --- ------------- --- -------------

                   Loss for the year, under Canadian GAAP   $     (1,718,342)  $    (1,455,881)  $    (3,060,072)
                   Adjustment for mineral property
                     acquisition costs (note 12(a))              (12,865,615)                -                 -
                   Adjustment for deferred exploration
                     (note 12(a))                                     71,433           (44,456)          (95,068)
                   Adjustment for stock-based
                     compensation (note 12(b))                             -           (20,000)                -
                   ---------------------------------------- ---- ------------- --- ------------- --- -------------

                   Loss for the year, under US GAAP              (14,512,524)      (1,520,337)        (3,155,140)
                   Other comprehensive income:
                      Change in fair value of available
                      for sale marketable securities                  67,786                 -                 -
                      (noted 12(c) and (d))
                   ---------------------------------------- ---- ------------- --- ------------- --- -------------

                   Comprehensive loss, under US GAAP        $    (14,444,738)  $   (1,520,337)   $    (3,155,140)
                   ---------------------------------------- ---- ------------- --- ------------- --- -------------

                   Basic and diluted loss per share,
                     under US GAAP                                  $  (0.29)         $  (0.03)         $  (0.07)
                   ---------------------------------------- ---- ------------- --- ------------- --- -------------

              (vi) Cash provided by (used in) operating
                     activities, under Canadian GAAP         $    (1,584,673)  $     (1,369,283)  $    (2,527,910)
                   Adjustment for mineral properties
                     (note 12(a))                                    (21,839)                 -           (20,000)
                   Adjustment for deferred exploration
                     (note 12(a))                                          -            (44,456)         (182,541)
                   ----------------------------------------- --- ------------- --- -------------- -- --------------

                   Cash provided by (used in) operating
                     activities, under US GAAP               $    (1,606,512)  $     (1,413,739)  $    (2,730,451)
                   ----------------------------------------- --- ------------- --- -------------- -- --------------

              (vii) Cash provided by (used in) investment
                     activities, under Canadian GAAP         $       (39,944)  $        (47,440)  $      (607,145)
                   Adjustment for mineral properties
                     (note 12(a))                                     21,839                  -            20,000
                   Adjustment for deferred exploration
                     (note 12(a))                                          -             44,456           182,541
                   ----------------------------------------- --- ------------- --- -------------- -- --------------

                   Cash provided by (used in) investment
                     activities, under US GAAP               $       (18,105)  $         (2,984)  $      (404,604)
                   ----------------------------------------- --- ------------- --- -------------- -- --------------




                                                                     Exhibit 4.7

                            THIRD AMENDMENT AGREEMENT


THIS AGREEMENT MADE AS OF THE 13TH DAY OF DECEMBER 2002.

BETWEEN:

          MOUNTAIN  PROVINCE  DIAMONDS INC.,  formerly  Mountain Province Mining
          Inc., a company incorporated under the laws of British Columbia having
          a business  office at 212 - 525  Seymour  Street,  Vancouver,  British
          Columbia V6B 3H7;

          (the "Company")

AND:

          JAN W. VANDERSANDE, of 1777 Maywood Avenue, Upland, California, U.S.A.
          91784;


          (the "Consultant")

WHEREAS:

A.   The Consultant is retained by the Company under the terms and conditions of
     a  Consulting  Agreement  dated  June 1, 1997,  as amended by an  Amendment
     Agreement  dated  January 1, 2001 and a Second  Amendment  Agreement  dated
     January 1, 2002 (the "Amended Consulting Agreement"); and

B.   The Company and the  Consultant  now wish to enter into this agreement (the
     "Third  Amendment  Agreement") to further amend the terms and conditions of
     the Amended Consulting Agreement.

NOW THEREFORE  THIS  AGREEMENT  WITNESSES  that in  consideration  of the mutual
covenants and agreements contained herein, the parties hereto agree as follows:

1.   Bonus Payments

Subject to the terms and  conditions  of this  Third  Amendment  Agreement,  the
Company will pay the Consultant,  as a bonus (the "Bonus") in  consideration  of
continued reduction in remuneration  described in section 2 below, the aggregate
sum of  Cdn$61,560  in 12 equal  instalments  of  Cdn$5,130  each,  provided the
Consultant  applies the proceeds of each instalment to the exercise of incentive
stock options in the Company within 30 days of its receipt.  The Consultant will
receive an  instalment  on the last day of each month  commencing on January 31,
2003 and ending on December  31, 2003.  Notwithstanding  the  foregoing,  in the
event the Amended Consulting Agreement is terminated, or the Consultant fails to
apply the  proceeds  of any  instalment  of the Bonus to the  exercise  of stock
options,  as provided herein, the Consultant will not be entitled to receive any
further instalments that would otherwise have been payable under this section.

2.   Amendments

The Consultant agrees that,  notwithstanding  any other provision in the Amended
Consulting  Agreement,  the  remuneration,   exclusive  of  the  Bonus,  of  the
Consultant  for the 12 month period  commencing on



January  1, 2003 and  ending on  December  31,  2003 will be at the base rate of
US$8,000 per month. Commencing on January 1, 2004 and continuing thereafter, the
remuneration of the Consultant will be at the base rate of US$14,000 per month.

3.   Definitions

Any  capitalized  terms not otherwise  defined herein will have the  definitions
given to those terms in the Amended Consulting Agreement.

4.   Independent Advice

The Consultant  agrees that he has been afforded an opportunity to independently
review and read and obtain  independent  advice  with  respect to the details of
this Third  Amendment  Agreement and hereby  confirms he is executing this Third
Amendment Agreement freely, voluntarily and without duress.

5.   Governing Laws

This Third  Amendment  Agreement  is subject to and  governed by the laws of the
Province of British Columbia and the laws of Canada applicable therein.

6.   Ratification

The parties  hereby  ratify and confirm the  Amended  Consulting  Agreement,  as
further  amended by this Third  Amendment  Agreement  and agree that the Amended
Consulting  Agreement as further amended by this Third Amendment  Agreement will
continue in full force and effect.

7.   Enurement

This Third Amendment  Agreement will enure to the benefit of and be binding upon
the  parties  hereto  and their  respective  heirs,  executors,  administrators,
successors and assigns.

8.   Counterparts

This Third  Amendment  Agreement  may be signed in  counterparts  and  facsimile
signatures are acceptable and binding.

IN WITNESS WHEREOF the parties have executed this Third  Amendment  Agreement as
of the date first above written.


The CORPORATE SEAL of MOUNTAIN  PROVINCE  DIAMONDS INC. was hereunto  affixed in
the presence of:


/s/"Jesus Martinez"                                                          c/s
- ---------------
Jesus Martinez



SIGNED, SEALED & DELIVERED by JAN W. VANDERSANDE in the
presence of:                                            )
                                                        )
/s/"Eileen Merenda"                                     )
- ----------------                                        )
Signature of Witness                                    )   /s/"Jan Vandersande"
                                                        )    -------------------
                                                        )   JAN W. VANDERSANDE
Eileen Merenda                                          )
- --------------                                          )
Name                                                    )
                                                        )
11501 Marcello Way, Rancho Cucamonga. CA                )
- ----------------------------------------                )
Address                                                 )
                                                        )
Office Manager                                          )
- --------------                                          )
Occupation                                              )



                                                                     Exhibit 4.8

                         Mountain Province Diamonds Inc.
                          Suite 212-525 Seymour Street
                                 Vancouver, B.C.
                                     V6B 3H7

                                                         Date: December 13, 2002

To:  Pradeep Varshney

Re:  Agreed Changes to Base Salary

We write to confirm our recent  discussion  and agreement  regarding  changes to
your base salary.

Mountain Province Diamonds Inc. (the "Company") had hoped to be in a position to
return  your base  salary to $6,000 per month  effective  January  1,  2003,  in
accordance with the letter agreement dated December 20, 2001 between you and the
Company. Unfortunately, the Company is not in a position to do so.

Accordingly, you agreed that for the period from January 1, 2003 to December 31,
2003,  your base salary  would  remain at $4,000 per month.  On January 1, 2004,
your base salary will return to $6,000 per month.

In consideration of your agreement to this reduction in base salary:

(a)  the Company,  additionally,  will pay you the aggregate sum of $13,680 (the
     "Bonus") in 10 equal  instalments  of $1,368  each,  provided you apply the
     proceeds of each  instalment to the exercise of incentive  stock options in
     the Company  within 30 days of its receipt.  You will receive an instalment
     on the last day of each month  commencing on January 31, 2003 and ending on
     October 31, 2003.  Notwithstanding  the foregoing,  if a Termination  Event
     occurs,  you will not be entitled to receive any further  instalments  that
     would otherwise have been due after the date of the Termination Event;

(b)  if the Company  provides you with  working  notice of  termination  of your
     employment  without  cause and your base  salary on the date such notice is
     delivered (the "Notice Date") is less than $6,000 per month, then effective
     the Notice Date, your base salary will return to $6,000 per month; and

(c)  if the Company  terminates  your  employment  without cause and the Company
     provides you with payment in lieu of notice (whether by salary  continuance
     or a lump sum or any combination  thereof),  then the amount of the payment
     in lieu of notice  will be based upon the  greater of (i) your  actual base
     salary on your last day of employment; and (ii) a base salary of $6,000 per
     month.

For the purposes of this letter,  "Termination Event" includes (a) you providing
to the Company notice of your  resignation from your employment with the Company
(for greater  certainty,  the date of the Termination Event is the date that you
provide such  notice);  (b) delivery by the Company to you of written  notice of
termination  of your  employment,  for any reason or no reason and whether  such
termination  is lawful  or  unlawful  (for  greater  certainty,  the date of the
Termination  Event is the date that the Company  delivers such written notice to
you);  and (c) your failure to apply the proceeds of any instalment of the Bonus
to the exercise of stock options, as provided herein.



All sums referred to in this letter are in Canadian funds.

Please signify your agreement with the foregoing by signing and returning a copy
of this letter to the Company.

Yours truly,

/s/"Jan Vandersande"
- -----------------
Jan W. Vandersande, President and CEO

I have read and agree with the foregoing.

/s/"Pradeep Varshney"
- ---------------------
Pradeep Varshney



                                                                     Exhibit 4.9

                         Mountain Province Diamonds Inc.
                          Suite 212-525 Seymour Street
                                 Vancouver, B.C.
                                     V6B 3H7

                                                        Date:  December 13, 2002

To:  Elizabeth Kirkwood

Re:  Chairman's Honorarium

Further to our recent  discussions,  the Company is pleased to confirm  that, in
consideration of your acceptance of the position of Chairman of the Company, and
your activity in that capacity,  Mountain Province Diamonds Inc. (the "Company")
will pay you an  aggregate  honorarium  of  $34,200 in 10 equal  instalments  of
$3,420 each,  provided you apply the proceeds of each instalment to the exercise
of incentive  stock  options in the Company  within 30 days of its receipt.  You
will receive an instalment  on the last day of each month  commencing on January
31, 2003 and ending on October 31, 2003.  Notwithstanding  the  foregoing,  if a
Termination  Event  occurs,  you will not be  entitled  to receive  any  further
instalments  that  would  otherwise  have  been  payable  after  the date of the
Termination Event.

For the purposes of this letter,  "Termination Event" includes (a) you providing
to the Company  notice of your  resignation  as  Chairman  of the  Company  (for
greater  certainty,  the date of the  Termination  Event  is the  date  that you
provide such  notice);  (b) delivery by the Company to you of written  notice of
termination  of your  position as Chairman of the Company,  for any reason or no
reason  and  whether  such  termination  is  lawful  or  unlawful  (for  greater
certainty,  the  date of the  Termination  Event is the  date  that the  Company
delivers such written notice to you); and (c) your failure to apply the proceeds
of any  instalment  hereunder  to the  exercise  of stock  options,  as provided
herein.

All sums referred to in this letter are in Canadian funds.

Please signify your agreement with the foregoing by signing and returning a copy
of this letter to the Company.

Yours truly,



/s/"Jan Vandersande"
- --------------------
Jan W. Vandersande, President

I have read and agree with the foregoing.

/s/"Elizabeth Kirkwood"
- -----------------------
Elizabeth Kirkwood



                                                                    Exhibit 4.10

                            JOINT VENTURE AGREEMENT

AMONG

                         MOUNTAIN PROVINCE DIAMONDS INC.

                                     - and -

                              CAMPHOR VENTURES INC.

                                     - and -

                        DE BEERS CANADA EXPLORATION INC.

                           (formerly MONOPROS LIMITED)




                                Table of Contents



                                                                                             
                                                                                                     Page

Article 1                  GENERAL......................................................................2

         1.1      Definitions...........................................................................2

         1.2      Statutes.............................................................................10

         1.3      Headings.............................................................................10

         1.4      References...........................................................................10

         1.5      Extended Meanings....................................................................11

         1.6      Entire Agreement.....................................................................11

         1.7      Amendment............................................................................11

         1.8      Waiver of Rights.....................................................................11

         1.9      Schedules............................................................................11

         1.10     Applicable Law.......................................................................12

         1.11     Currency.............................................................................12

         1.12     Performance on Holidays..............................................................12

         1.13     Calculation of Time..................................................................12

         1.14     Interest Rate........................................................................12

Article 2                  REPRESENTATIONS, WARRANTIES AND COVENANTS...................................12

         2.1      Representations of Each Party........................................................12

         2.2      Representations of MPV Group.........................................................13

         2.3      Representation of the MPV Group......................................................14

         2.4      Continuation of Representations, Warranties and Covenants............................14

Article 3                  JOINT VENTURE...............................................................15

         3.1      Continuation of Joint Venture and Relationship of Parties............................15

         3.2      Ownership of Joint Venture Property..................................................15

         3.3      Participating Interests..............................................................16

         3.4      Encumbrances on Joint Venture Property...............................................16

         3.5      Obligations of the Participants......................................................17

Article 4                  MANAGEMENT AND OPERATIONS OF THE JOINT VENTURE..............................18

         4.1      Management Committee and Procedures..................................................18

         4.2      Duties of the Management Committee...................................................21



                                Table of Contents
                                  (continued)

Article 5                  OPERATOR....................................................................21

         5.1      Appointment of Operator..............................................................21

         5.2      Resignation of Operator..............................................................21

         5.3      Replacement of Operator..............................................................22

         5.4      Prior Obligations....................................................................23

         5.5      Transfer of Property.................................................................23

Article 6                  RESPONSIBILITIES AND INDEMNIFICATION OF THE OPERATOR........................24

         6.1      Responsibilities of the Operator.....................................................24

         6.2      Indemnification of Operator..........................................................27

         6.3      Management Fees......................................................................27

Article 7                  PARTICIPATING INTERESTS.....................................................28

         7.1      Participating Interests and Adjustments..............................................28

         7.2      Conversion of Participating Interest.................................................30

Article 8                  EXPLORATION WORK............................................................31

         8.1      Exploration Work.....................................................................31

Article 9                  DEVELOPMENT WORK............................................................32

         9.1      Review of First Desk Top Study.......................................................32

         9.2      Feasibility Study and Development Work...............................................33

         9.3      Subsequent Feasibility Studies and Development Work..................................34

         9.4      Mining Lease.........................................................................35

         9.5      Security for Obligations.............................................................35

         9.6      Environmental Responsibility.........................................................36

         9.7      Inukshuk Capital Ltd. and Canamera Geological Ltd....................................36

Article 10                 PRODUCTION..................................................................36

         10.1     Annual Plans and Budgets.............................................................36

         10.2     Disposal of Minerals.................................................................36

Article 11                 FINANCING JOINT VENTURE EXPENSES............................................37

         11.1     Financing............................................................................37

         11.2     Election to Not Participate..........................................................40



                                Table of Contents
                                  (continued)

         11.3     Repayment of Joint Venture Expenses..................................................40

Article 12                 LIABILITY OF PARTIES........................................................41

         12.1     Separate and Not Joint...............................................................41

         12.2     Ownership of Property................................................................41

         12.3     Events of Default....................................................................41

         12.4     Default Notice.......................................................................42

         12.5     Security for Performance.............................................................42

         12.6     Remedies on Default..................................................................43

         12.7     Further Assurances...................................................................47

         12.8     Liability............................................................................47

         12.9     Other Remedies.......................................................................48

Article 13                 TRANSFERS...................................................................48

         13.1     Right of Refusal On Transfers........................................................48

         13.2     Exempt Transfers.....................................................................49

         13.3     Transfer of Interest In Participating Interest.......................................50

         13.4     Minerals Other Than Diamonds.........................................................50

         13.5     Partition............................................................................51

Article 14                 ABANDONMENT.................................................................51

         14.1     Abandonment..........................................................................51

         14.2     Sale Restricted......................................................................51

Article 15                 ARBITRATION.................................................................51

         15.1     Settlement of Amounts Payable........................................................51

         15.2     Location of Arbitration..............................................................52

         15.3     Arbitration Act......................................................................52

         15.4     Cost of Arbitration..................................................................52

Article 16                 CONFIDENTIALITY.............................................................52

         16.1     Information..........................................................................52

         16.2     Survival.............................................................................54

Article 17                 FORCE MAJEURE...............................................................54

         17.1     Suspension of Obligations............................................................54



                                Table of Contents
                                  (continued)

Article 18                 OTHER INTERESTS.............................................................55

         18.1     Acquisition Of Property By Staking Or Purchase.......................................55

Article 19                 MISCELLANEOUS...............................................................55

         19.1     Expenses.............................................................................55

         19.2     Time.................................................................................55

         19.3     Liquidation of Assets and Decommissioning............................................55

         19.4     De Beers Can Negotiate Pooling Arrangement...........................................57

         19.5     Notice...............................................................................57

         19.6     Governing Law........................................................................59

         19.7     Further Assurances...................................................................59

         19.8     Counterparts.........................................................................59

         19.9     Facsimile Execution..................................................................59

         19.10    Successors and Assigns...............................................................59

         19.11    Formal Transfers.....................................................................59

         19.12    GST..................................................................................60

SCHEDULE "A"               ACCOUNTING AND FINANCIAL PROCEDURES.........................................61

SCHEDULE "B"               FIFTEEN PERCENT IRR CALCULATION ESCALATED / DE-ESCALATED MODEL - METHOD OF
                           CALCULATION.................................................................71

SCHEDULE "C"               NET PROFIT ROYALTY..........................................................76

SCHEDULE "D"               LIST OF MINING CLAIMS COMPRISING THE PROPERTY...............................82

SCHEDULE "E"               RULES OF PROCEDURE FOR ARBITRATION..........................................83

SCHEDULE "F"               LIST OF JOINT VENTURE EXPENSES INCURRED TO MARCH 8, 2000....................87

SCHEDULE "G"               DIAMOND SALE AGREEMENT......................................................88




                    THIS  AGREEMENT made effective as of the 1st day of January,
                    2002.

A M O N G:

                    MOUNTAIN PROVINCE DIAMONDS INC.

                    a  corporation   incorporated  under  the  laws  of  British
                    Columbia  and  having an office at Suite  212,  525  Seymour
                    Street, Vancouver, B.C. V6B 3H7;

                    (hereinafter called "MPV")

                    - and -

                    CAMPHOR VENTURES INC.

                    a  corporation   incorporated  under  the  laws  of  British
                    Columbia  and  having  an  office  at Suite  1304,  925 West
                    Georgia Street, Vancouver, B.C. V6C 3L2;

                    (hereinafter called "CV")

                    - and -

                    DE BEERS CANADA EXPLORATION INC.

                    (formerly Monopros Limited)

                    a  corporation  incorporated  under the laws of Ontario  and
                    having an  office  at One  William  Morgan  Drive,  Toronto,
                    Ontario, M4H 1N6;

                    (hereinafter called "De Beers")

WHEREAS:

                    (a)  Pursuant  to  the  Letter   Agreement  (as  hereinafter
                         defined) MPV and CV and both  Glenmore  Highlands  Inc.
                         ("GH") and 444965  B.C.  Ltd.  ("444965")  as they then
                         were prior to their  merger  with MPV, as the owners of
                         the Property (as hereinafter  defined),  entered into a
                         Joint Venture (as hereinafter  defined),  with De Beers
                         and granted to De Beers the exclusive  right and option
                         to acquire a 51% undivided co-ownership interest in and
                         to the Property and the Joint Venture upon carrying out
                         certain work and making certain expenditures;

                    (b)  Pursuant to the terms of the Letter Agreement, MPV, CV,
                         GH, and 444965 granted to De Beers the exclusive  right
                         and option, upon certain conditions, to purchase the 3%
                         gross overriding royalty payable to



                         Inukshuk  Capital  Ltd.  (the  "GOR")  to be held by De
                         Beers  on  behalf  of  the  Joint  Venture.   De  Beers
                         exercised  its right and option to acquire  the GOR and
                         by a  transfer  agreement  among  MPV,  De Beers and CV
                         dated November 24, 1999 (the "Transfer Agreement"),  De
                         Beers  acquired  the GOR and is holding it on behalf of
                         the Joint Venture. The parties further agreed that upon
                         De  Beers   acquiring  a  51%  undivided   co-ownership
                         interest in the Property and the Joint Venture, the GOR
                         would be cancelled for no further consideration;

                    (c)  On November 3, 1997, a Certificate of Amalgamation  was
                         issued by the Registrar of Companies (British Columbia)
                         certifying   that  MPV  and  444964   had   amalgamated
                         effective November 1, 1997 as one corporation under the
                         name Mountain Province Mining Inc.;

                    (d)  On June  30,  2000  MPV and GH were  merged  by plan of
                         arrangement   into  one  corporation   under  the  name
                         Mountain Province Mining Inc.;

                    (e)  On October  25,  2000,  Mountain  Province  Mining Inc.
                         changed its name to Mountain  Province Diamonds Inc. or
                         MPV as defined above;

                    (f)  The parties  acknowledge  that De Beers has carried out
                         the work and made the expenditures  contemplated  under
                         the Letter  Agreement,  exercised the option  contained
                         therein and has acquired a 51%  undivided  co-ownership
                         interest in the Property and the Joint Venture;

                    (g)  The parties  acknowledge  that each has  discharged its
                         respective  obligations  under the Letter  Agreement to
                         the date  hereof  and has  agreed  to enter  into  this
                         Agreement to record the rights and  obligations  of the
                         parties  with  respect  to the  Property  and the Joint
                         Venture as and from the date hereof and to confirm that
                         this Agreement,  upon its execution and delivery,  will
                         supersede and replace the Letter Agreement;

NOW THEREFORE THIS AGREEMENT  WITNESSES that, in  consideration of the premises,
the  mutual  covenants  and  agreements  herein  contained,  and other  good and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged, the parties hereby covenant and agree as follows:

                                   Article 1
                                     GENERAL

1.1  Definitions

     In this  Agreement,  unless  something in the subject  matter or context is
     inconsistent therewith:

     "Accounting  and  Financial   Procedures"   mean  the  terms,   conditions,
     principles and procedures outlined or referenced in Schedule "A";



     "Affiliate"  means an entity,  corporate or  non-corporate,  controlling or
     controlled  by a party  hereto,  or related to such  party  through  common
     controlling or controlled entities.  For the purposes hereof, control shall
     be deemed to exist if one entity  owns,  directly  or  indirectly,  through
     shareholdings  or  otherwise,  more than 50% of the voting  shares or other
     voting units of  participation  of another  entity and  "Affiliated"  has a
     corresponding meaning;

     "Agreement" means this Agreement including all attached Schedules,  as same
     may be supplemented,  amended,  restated or replaced in accordance herewith
     from time to time;

     "Associate"  means any relationship  between two Persons whereby one of the
     Persons  beneficially owns or controls,  directly or indirectly,  shares or
     units of  participation  of the other or securities  currently  convertible
     into shares or units of  participation  of the other carrying more than 10%
     of the voting rights  attached to all securities or units of  participation
     of  the  other  then  outstanding  which  carry  voting  rights  under  all
     circumstances  or by reason of the occurrence of an event that has occurred
     and is continuing,  or a currently  exercisable option or right to purchase
     such shares,  units of  participation  or such  convertible  securities and
     "Associated" has a corresponding meaning;

     "Available  Cash Flow" has the meaning  assigned  to it in Section  11.1(d)
     hereof;

     "Business  Day"  means  any day  which is not a  Saturday,  Sunday or a day
     observed  as a holiday  under the laws of the  Northwest  Territories,  the
     Province of Ontario,  the Province of British  Columbia or the federal laws
     of Canada;

     "Cash Call" has the meaning  assigned to it in the Accounting and Financial
     Procedures;

     "Chairman" has the meaning assigned to it in Section 4.1(a) hereof;

     "CIM" means the Canadian Institute of Mining, Metallurgy and Petroleum;

     "Commencement of Commercial Production" means the first day of the calendar
     month following the first thirty  consecutive  days (excluding  maintenance
     days) that the relevant Mine has achieved 70% of rated Production specified
     in the relevant Feasibility Study;

     "Commercial  Quantities" mean a deposit of diamonds of sufficient  quantity
     and quality  that the end  products of  Production  from such  deposit will
     yield a Fifteen Percent IRR;



     "Consequential  Damages" mean all damages for  consequential  loss, as that
     term is understood in the common law of damages including:

     (a)  loss of anticipated profits; and

     (b)  loss of business opportunities,

     whether such loss  results  from a tortious  act or  omission,  breach of a
     fiduciary duty or from a breach (fundamental or otherwise) of a contractual
     obligation, or otherwise;

     "Conversion  Event" has the meaning  ascribed  to it in Section  7.1(a)(iv)
     hereof;

     "Cost  Share"  means the share of a Joint  Venture  Expense  for which each
     Participant is responsible  and liable pursuant to Section 3.5(a) hereof or
     other provisions hereof;

     "DCS" means DCS Corporation Limited;

     "Decommissioning  Costs" has the meaning  assigned to it in Section 19.3(b)
     hereof;

     "Default Notice" has the meaning assigned to it in Section 12.4(a) hereof;

     "Desk  Top  Study"  means  a  detailed  study  of the  theoretical  design,
     construction  and  operation of a mine over its projected  life  including,
     without  limitation,  a study of engineering  details of the mine, mill and
     other relevant plant, equipment and infrastructure, which indicates whether
     such mine will be  economically  profitable  having  regard to net  present
     value and IRR calculations where the relevant  calculations are based on an
     inferred  resource as defined in the CIM Definitions and Guidelines and the
     accuracy of cost estimates are at best in a range of -25% to +25%.

     "Development  Work" means all work  necessary,  expedient or desirable  for
     development of any mineral deposit located on or in the Property  including
     any Desk Top  Study,  Pre-Feasibility  Study or  Feasibility  Study and any
     update or review  thereof  and all work  required to develop  such  mineral
     deposit  and  bring  it into  Production  including  mine  development  and
     construction  and  installation  of all buildings,  plant and equipment and
     other infrastructure required for Production;

     "Election" has the meaning assigned to it in Section 19.12 hereof;

     "Electronic Transmission" has the meaning assigned to it in Section 19.5(b)
     hereof;



     "encumbrance"  means any  encumbrance  of any kind  whatsoever  on property
     including any privilege, mortgage, hypothec, lien, charge, pledge, security
     interest,  adverse claim, or any other option,  right or claim of others of
     any kind whatever, whether contractual, statutory or otherwise arising but,
     for  greater  certainty,  shall not  include  any  inchoate  or  contingent
     encumbrance  which has not and which  will not,  as a result of any  action
     taken  pursuant  to or in  furtherance  of the  obligations  of the parties
     hereunder, become choate, crystallized or attached;

     "Event of Default" has the meaning assigned to it in Section 12.3 hereof;

     "Excess Amount" has the meaning assigned to it in Section 11.1(d) hereof;

     "Exploration  Work" means any  prospecting or exploration  work carried out
     with respect to minerals  located on or in the Property,  including  ground
     and airborne geophysical and radiometric work, geochemical surveys, diamond
     and percussion drilling, bulldozing, trenching, evaluation of work done and
     all other work commonly  regarded as  prospecting  or  exploration  work in
     accordance with good Canadian mining practice including evaluation studies;

     "Feasibility  Study"  means a  detailed  study of the  theoretical  design,
     construction  and  operation of a mine over its projected  life  including,
     without  limitation,  a study of engineering  details of the mine, mill and
     other relevant plant, equipment and infrastructure, which indicates whether
     such mine will be  economically  profitable  having  regard to net  present
     value and IRR calculations where the relevant  calculations are based on an
     indicated resource as defined in the CIM Definitions and Guidelines and the
     accuracy of cost estimates are in a range of -10% to +15%.

     "Fifteen Percent IRR" means an after-tax,  unleveraged,  real internal rate
     of return to the project of 15% based on a discounted  series of cash flows
     calculated in accordance with Schedule "B";

     "Final Date" has the meaning assigned to it in Section 7.1(b)(ii);

     "First Desk Top Study" means the study dated 24th July 2000  prepared by De
     Beers and presented to MPV on 4th August, 2000;

     "First Mine" means those producing  orebodies on the Property which are the
     subject of the Development  Work  contemplated by the Feasibility  Study in
     respect of which the  Management  Committee  has approved the  execution of
     such Development Work;

     "GOR" means the 3% gross  overriding  royalty  payable to Inukshuk  Capital
     Ltd., and acquired by De Beers as described in the recitals hereto;



     "Guaranteeing  Participant"  has  the  meaning  assigned  to it in  Section
     11.1(d) hereof;

     "Holdback" has the meaning assigned to it in Section 12.6 hereof;

     "including" or "includes"  means "including  without  limitation" and shall
     not be  construed  to limit any general  statement  which it follows to the
     specific similar items or matters immediately following it;

     "Joint  Account"  has the  meaning  assigned  to it in the  Accounting  and
     Financial Procedures;

     "Joint   Venture"  means  the  joint  venture   between  the   Participants
     established pursuant to the Letter Agreement and continued pursuant to this
     Agreement and includes all activities of the  Participants and the Operator
     relating  to or to be  performed  in  connection  with or  pursuant to this
     Agreement;

     "Joint  Venture  Arrangement"  means a joint venture,  partnership,  common
     enterprise or similar arrangement with a third party joint venturer;

     "Joint Venture  Expense(s)" means all charges,  costs and expenses incurred
     by the  Operator  and  paid  by one or  more  Participants  in  respect  of
     Exploration  Work,  Development  Work  and/or  Production  under the Letter
     Agreement and under this Agreement, plus all other charges as authorized by
     the  Management  Committee  or  specifically  provided  as a Joint  Venture
     Expense in this Agreement, and all charges, costs and expenses of the Joint
     Venture,  the Cost Share of which this Agreement obligates the Participants
     to bear and includes those costs set out in Schedule F;

     "Joint   Venture   Property"   means  all  property  and  rights  of  every
     description,  whether  real,  personal or mixed,  heretofore  or  hereafter
     acquired  by the  Participants  or by  the  Operator  as  trustee  for  the
     Participants for the purposes of the Joint Venture including,

     (a)  the Mineral Rights in or with respect to the Property;

     (b)  all easements appurtenant to the Property;

     (c)  all geological, geophysical,  geochemical and test data related to the
          work carried out hereunder;

     (d)  all  improvements  to the Property,  all fixtures,  plant,  machinery,
          equipment, supplies, infrastructure and any other properties or rights
          of any  description,  whether  real or  personal,  acquired  at  Joint
          Venture Expense pursuant to this Agreement;



     (e)  all minerals derived from the exploitation and mining of the Property;

     (f)  all proceeds accruing from the sale of Joint Venture Property,  except
          the proceeds from the sale of diamonds;

     (g)  all proceeds of insurance  received on account of loss of or damage to
          Joint Venture Property; and

     (h)  the  leasehold  interest of the  Participants  in any surface lease or
          leases or any mining lease with respect to the Property,

     but shall specifically exclude any knowledge, information,  concepts, ideas
     or know-how  relating to internal  proprietary  techniques  and methods now
     owned,  held or used by a  Participant  for the purposes of  geological  or
     geophysical  interpretation,  extraction,  mining or processing of minerals
     and any other similar  information or hereafter developed or acquired by an
     individual Participant or any of its Affiliates  independently of the other
     Participants, all of which shall remain the property of such Participant;

     "Kennady Lake Area of the Property" means the area covered by mining claims
     F28441 and F28442;

     "Letter  Agreement" means the letter agreement dated March 6, 1997 among De
     Beers,  MPV,  GH, CV and 444965  pursuant  to which MPV,  GH, CV and 444965
     granted De Beers the sole and  exclusive  right and option to acquire a 51%
     ownership  interest in the Property in consideration  of incurring  certain
     expenditures,  as amended or supplemented  by: an agreement dated April 10,
     1997  between De Beers,  the MPV Group and 444965 B.C.  Ltd.,  an assurance
     given to De Beers by the MPV Group and 444965 B.C. Ltd.,  dated July, 1997,
     an  agreement  given to De  Beers by MPV  dated  November  1,  1997 and two
     agreements each dated December 17, 1999 among the parties;

     "LIBOR" means for the period (the "Month")  from (and  including)  the last
     day of each calendar  month up to (but  excluding) the last day of the next
     following  calendar  month,  the rate for  deposits  in U.S.  dollars for a
     period of one month which appears on Page 3740 or 3750 (as  applicable)  of
     Bridge's  Telerate Service as of 11:00 a.m., London time, on the second day
     prior to the  commencement  of the Month on which  dealings in U.S.  dollar
     deposits are transacted in the London interbank  market.  If such rate does
     not  appear  on Page  3740 or 3750 (as  applicable)  of  Bridge's  Telerate
     Service,  the rate  will be  determined  on the  basis of the rate at which
     deposits  in dollars are offered by the Royal Bank of Canada to prime banks
     in the  London  interbank  market for such  period and in a  representative
     amount as quoted by the Royal Bank of Canada on such second day;



     "Management  Committee" means a committee made up of representatives of the
     Participants as provided for in Section 4.1 hereof;

     "Management  Committee  Vote"  or  "Vote of the  Management  Committee"  or
     language similar thereto, means a vote conducted in accordance with Section
     4.1(d) hereof;

     "Mine"  when used as a noun,  means an opening in or on the  Property  from
     which  minerals may be removed and all contiguous  Joint Venture  Property,
     including any dewatering, ore extraction, mill processing and tailings pond
     facilities used in Production;

     "mine" when used as a verb, means all activities relating to the removal of
     minerals and all processes carried out at a Mine;

     "Mineral  Rights"  mean the rights to prospect  and explore for, to develop
     and to mine minerals on, in or under any lands;

     "MPV Group" means each of MPV and CV;

     "Net Profit  Royalty" has the meaning  ascribed to that term in Section 7.2
     hereof;

     "Non-contributing Participant(s)" has the meaning assigned to it in Section
     11.2 hereof;

     "Non-defaulting  Participant(s)"  has the meaning assigned to it in Section
     12.6 hereof;

     "Notice" has the meaning assigned to it in Section 19.5 hereof;

     "Notional  Account"  has the  meaning  assigned  to it in  Section  19.3(b)
     hereof;

     "Offered Interest" has the meaning assigned to it in Section 13.1 hereof;

     "Offerees" has the meaning assigned to it in Section 13.1(a) hereof;

     "Offering Notice" has the meaning assigned to it in Section 13.1(a) hereof;

     "Operating  Year"  means that  period of time  commencing  on January 1 and
     ending on December 31 of the same year;

     "Operator"  means the Person  duly  appointed  to the  position of operator
     pursuant to Article 5 hereof when acting in that capacity;

     "Participant"  means any legal entity which has executed and delivered this
     Agreement  or  a   counterpart   of  this   Agreement  and  which  holds  a



     Participating Interest for itself or in trust for itself and another, which
     at the date of entering into this Agreement  means only two legal entities,
     namely, De Beers and MPV, as Trustee, on behalf of itself and CV.

     "Participating  Interest"  means  the  right,  title  and  interest,  as an
     undivided  co-owner,  of  each  Participant  in and to  the  Joint  Venture
     Property,  which shall initially be in the percentages set forth in Section
     3.3  hereof  and  which  may  subsequently  be  adjusted  pursuant  to  the
     provisions of this Agreement;

     "Person"  shall be broadly  interpreted  and includes an  individual,  body
     corporate,  partnership, joint venture, trust, association,  unincorporated
     organization,  the  Crown,  any  domestic  or  foreign  government  and any
     governmental  agency,  authority,  tribunal  or  commission  and any entity
     recognized by law;

     "Plan and  Budget"  means a plan and  budget  submitted  to the  Management
     Committee  by the  Operator  for  approval,  such to include a statement of
     proposed activities and expenditures for Exploration Work, Development Work
     or Production, as the case may be, in respect of the Property;

     "Pre-Feasibility  Study" means a detailed study of the theoretical  design,
     construction  and  operation of a mine over its projected  life  including,
     without  limitation,  a study of engineering  details of the mine, mill and
     other relevant plant, equipment and infrastructure, which indicates whether
     such mine will be  economically  profitable  having  regard to net  present
     value and IRR calculations where the relevant  calculations are based on an
     inferred  and/or  indicated  resource as defined in the CIM Definitions and
     Guidelines  and the  accuracy of cost  estimates  are in a range of -15% to
     +25%.

     "Production"  means the  mining,  extraction,  processing  and  handling of
     minerals in Commercial  Quantities which are discovered and developed on or
     in the  Property  and other work related  thereto as may be  incidental  or
     reasonably required;

     "Property" means the group of mining claims and prospecting permits located
     in the Northwest Territories listed or described on Schedule "D", excluding
     however,  any  portion of the  Property  which  ceases to be subject to the
     terms of this Agreement in accordance with Section 14.1 hereof;

     "Security Interest" means any mortgage,  charge, security interest or other
     encumbrance  of any  nature or kind  whatsoever  given or  granted on or in
     respect of real or personal property;

     "Special  Costs" means all Joint Venture  Expenses of Exploration  Work and
     Development  Work  carried  out by the Joint  Venture  on the  Property  in



     accordance  with a Plan and Budget  approved  by the  Management  Committee
     where  such  Joint  Venture  Expenses  are  determined  by  the  Management
     Committee  to be  incurred  after March 8, 2000 and prior to the Final Date
     and:  (i) in the  case of  Exploration  Work  are  Joint  Venture  Expenses
     incurred  in respect of  Exploration  Work in  relation to that part of the
     Property situate outside the Kennady Lake Area of the Property; and (ii) in
     the case of Development Work are Joint Venture Expenses incurred in respect
     of  Development  Work in  relation  to any part of the First  Mine  situate
     outside the Kennady Lake Area of the Property.  For example,  Special Costs
     would include Joint Venture Expenses incurred after March 8, 2000 and prior
     to the Final Date in respect of the  construction  of plant,  equipment and
     infrastructure within or without the Kennady Lake Area of the Property that
     relates to any part of the First Mine situate outside the Kennady Lake Area
     of the Property.

     "Third Party Offer" has the meaning assigned to it in Section 13.1 hereof;

     "Transfer" has the meaning assigned to it in Section 13.1 hereof;

     "Transfer  Agreement" has the meaning assigned to it in recital (b) of this
     Agreement; and

     "Vendor" has the meaning assigned to it in Section 13.1 hereof.

1.2  Statutes

Unless specified  otherwise,  reference in this Agreement to a statute refers to
that statute as it may be amended,  or to any restated or successor  legislation
of comparable effect.

1.3  Headings

The  division  of  this  Agreement  into  Articles,  sections,  subsections  and
Schedules and the insertion of headings are for  convenience  of reference  only
and shall not affect the construction or interpretation  of this Agreement.  The
Article,  section,  subsection  and Schedule  headings in this Agreement are not
intended to be full or precise  descriptions of the text to which they refer and
are not to be considered part of this Agreement.

1.4  References

The  terms  "this  Agreement",   "hereto",   "herein,"  "hereof,"  "hereby"  and
"hereunder"  and  similar  expressions  refer to this  Agreement  and not to any
particular Article, section, subsection or other portion of it. Unless something
in the subject matter or context is inconsistent therewith, references herein to
an Article,  section,  subsection  or Schedule  are to the  applicable  Article,
section, subsection or Schedule of this Agreement.



1.5  Extended Meanings

In this  Agreement,  words in the singular  number only shall include the plural
and vice-versa,  words importing one gender shall include all genders, and words
importing persons shall include individuals,  corporations,  partnerships, joint
ventures,  associations,  trusts, unincorporated  organizations,  the crown, any
domestic or foreign government and any governmental agency, authority,  tribunal
or commission and any other entity recognized by law.

1.6  Entire Agreement

This Agreement  constitutes the entire agreement between the parties  pertaining
to the subject matter hereof and supersedes all prior agreements,  negotiations,
discussions and understandings,  written or oral, between the parties. Except as
specifically  set  forth  in  this  Agreement,  there  are  no  representations,
warranties,  conditions or other agreements or acknowledgements,  whether direct
or collateral,  express or implied,  that form part of or affect this Agreement,
or which induced any party to enter into this Agreement, or on which reliance is
placed by any party.

1.7  Amendment

This  Agreement  may be  amended,  modified  or  supplemented  only by a written
agreement signed by each party.

1.8  Waiver of Rights

Any waiver of, or consent to depart from, the  requirements  of any provision of
this  Agreement  shall be  effective  only if it is in writing and signed by the
party giving it, and only in the specific  instance and for the specific purpose
for which it has been  given.  No failure on the part of any party to  exercise,
and no delay in exercising,  any right under this  Agreement  shall operate as a
waiver of such  right.  No single or partial  exercise  of any such right  shall
preclude  any other or further  exercise  of such right or the  exercise  of any
other right.

1.9  Schedules

The following are the Schedules  annexed  hereto which are  incorporated  in and
form part of this Agreement:

Schedule "A" -    Accounting and Financial Procedures
Schedule "B" -    Rate of Return Calculation
Schedule "C" -    Net Profit Royalty
Schedule "D" -    List of mining claims and prospecting permits comprising the
                  Property
Schedule "E" -    Rules of Procedure for Arbitration
Schedule "F" -    Joint Venture Expenses incurred to March 8, 2000 - include
                  those shown on this Schedule
Schedule "G" -    Diamond Sale Agreement



1.10 Currency

Unless specified otherwise, all statements of or references to dollar amounts in
this Agreement are to lawful money of Canada.

1.11 Performance on Holidays

If any action is required  to be taken  pursuant  to this  Agreement  on or by a
specified  date which is not a Business  Day, then such action shall be valid if
taken on or by the next succeeding Business Day.

1.12 Calculation of Time

In this  Agreement  a period  of days  shall be deemed to begin on the first day
after the event which began the period and to end at 6:00 p.m. (Toronto time) on
the last day of the  period.  If,  however,  the last day of the period does not
fall on a Business Day, the period shall  terminate at 6:00 p.m.  (Toronto time)
on the next Business Day.

1.13 Interest Rate

Where an annual rate of interest payable under this Agreement is expressed to be
a rate per annum equal to LIBOR, or LIBOR plus a percentage,  and it is based on
a 360 day year,  for the purposes of the Interest Act (Canada) the equivalent of
LIBOR may be determined by multiplying  such rate by a fraction the numerator of
which is the actual number of days in the relevant year of  calculation  and the
denominator of which is 360.

                                   Article 2
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

2.1  Representations of Each Party

Each  party  hereby  represents  and  warrants  to and in a favour  of the other
parties that:

     (a)  it has been duly incorporated and is a validly subsisting  corporation
          under  the  laws  of its  jurisdiction  of  incorporation  and is duly
          qualified  to carry on business in the  Northwest  Territories  and to
          hold an interest in the Property;

     (b)  it  has  duly   obtained  all   governmental,   corporate   and  other
          authorizations  necessary  to  its  execution  and  delivery  of  this
          Agreement  and  performance  of  its  obligations  hereunder  and  the
          consummation of the transactions  herein  contemplated  will not, with
          the giving of notice or the  passage of time,  or both,  result in any
          breach of,  constitute a default  under,  or result in the creation of
          any encumbrance  under,  the terms or provisions of any law applicable
          to it, its constating documents, any shareholders' or



          directors' resolution or any indenture,  agreement or other instrument
          whatsoever to which it is a party or to which it may be subject;

     (c)  no proceedings are pending for, and it is unaware of any basis for the
          institution  of  any  proceedings   leading  to,  its  dissolution  or
          winding-up or the placing of it in bankruptcy or its subjection to any
          other laws governing the affairs of bankrupt or insolvent Persons;

     (d)  this  Agreement  has been duly  executed  and  delivered  by it and is
          validly binding and  enforceable  against it under the laws of Ontario
          and the Northwest Territories in accordance with its terms; and

     (e)  all  representations  and warranties given or made by it in the Letter
          Agreement are hereby confirmed as being in full force and effect as if
          given or made expressly in this Agreement.

2.2  Representations of MPV Group

MPV and CV hereby  jointly and severally  represent and warrant to and in favour
of De Beers that:

     (a)  immediately  prior to the acquisition by De Beers of its 51% legal and
          beneficial  interest in the Property under the Letter  Agreement,  MPV
          and CV were the sole legal and beneficial  owners of an undivided 100%
          ownership interest in the Property,  including all Mineral Rights with
          respect  thereto free and clear of any  encumbrance and MPV and CV had
          and have the  exclusive  right to dispose of the legal and  beneficial
          interest  in the  Property to De Beers as  contemplated  by the Letter
          Agreement;

     (b)  there was no default under the agreement dated August 18, 1992 between
          MPV and 923185 N.W.T.  Limited (now Inukshuk  Capital Ltd.) in respect
          of the GOR and that the GOR was duly acquired by MPV free and clear of
          any  encumbrance  and that  upon the  payment  by De Beers for the GOR
          pursuant to the Transfer  Agreement,  De Beers became the owner of the
          GOR  free of any  encumbrance  other  than  as set  out in the  Letter
          Agreement; and

     (c)  there  are  no  pending  or  threatened  claims,   excluding  possible
          aboriginal  claims,  relating to the Property or any portion  thereof,
          there are no outstanding  agreements or options to acquire or purchase
          the Property or any portion  thereof or interest  therein and no other
          Person  claiming  under or through  either of them has any net profits
          interest,  royalty,  profit-a-prendre  or other interest whatsoever in
          the Property or any portion thereof or any production therefrom.



2.3  Representation of the MPV Group

Each member of the MPV Group hereby covenants and agrees that from and after the
execution  and  delivery  of this  Agreement  all  negotiations  to be had,  all
agreements  to be made,  all  notices to be given and  payments  to be made with
respect to this  Agreement and the Property by or to De Beers shall be deemed to
have been duly and effectively had, made or given if had, made or given to, with
or from MPV. MPV shall hold the title to its  Participating  Interest as Trustee
for and on  behalf  of  itself  and CV as  members  of the MPV Group as a single
Participating  Interest and shall be entitled to hold,  deal with and dispose of
such  Participating  Interest and all rights and benefits relating  thereto,  in
accordance with this  Agreement,  on behalf of MPV and CV as MPV may in its sole
discretion  decide  without De Beers having to obtain any  consent,  approval or
authorization from CV. MPV shall assume and discharge all of its obligations and
liabilities under this Agreement for and on behalf of itself and CV. Each member
of the MPV Group hereby unconditionally and irrevocably constitutes and appoints
MPV as its attorney and gives MPV the sole  authority to make all  decisions and
agreements  and to give all consents  and  approvals on behalf of each member of
the MPV Group  hereunder  and with respect to the  Property,  including  without
limitation, any amendments of any kind to this Agreement and the negotiation and
settlement of any other agreement  contemplated herein and any amendments of any
kind  thereto.  Each  member of the MPV Group  agrees  that all such  decisions,
agreements  consents and  approvals  shall be fully  binding on and  enforceable
against the MPV Group and each member thereof as if made or given  separately by
each member of the MPV Group.

2.4  Continuation of Representations, Warranties and Covenants

The  representations  and warranties of the parties as set out in this Article 2
are  conditions on which the parties have relied in entering into this Agreement
and shall survive the acquisition of any interest in the Property  hereunder and
each party will  indemnify and save the others  harmless from all loss,  damage,
costs and  expenses  which may be suffered or incurred by the others as a result
of or in connection with any breach or inaccuracy of any such representation and
warranty made by such party.

                                   Article 3
                                  JOINT VENTURE

3.1  Continuation of Joint Venture and Relationship of Parties

     (a)  The joint  venture  established  by De Beers,  MPV,  GH and CV for the
          purpose of  prospecting,  exploring  and  developing  the Property for
          minerals  pursuant to the Letter  Agreement  is hereby  confirmed  and
          continued under and pursuant to the terms of this Agreement.

     (b)  The GOR is hereby cancelled for no further  consideration  and (i) the
          $2,550,000  paid by De Beers to the MPV  Group to  purchase  De Beers'
          interest in the GOR shall be repayable to De Beers and (ii) the amount
          of $450,000 being the $3,000,000 paid by MPV to Inukshuk  Capital Ltd.
          to



          purchase the GOR less the amount of  $2,550,000  shall be repayable to
          MPV, in each case as a Joint Venture Expense  pursuant to Section 11.3
          hereof.

     (c)  Nothing  contained in this Agreement shall be deemed to constitute any
          Participant the partner of the others,  or, except as otherwise herein
          expressly  provided,  to constitute any Participant the agent or legal
          representative  of the  others.  The  Participants  do not  intend  to
          create,  and this  Agreement  shall not be  construed  to create,  any
          mining, commercial or other partnership.  Neither Participant, nor any
          of its  directors,  officers,  employees,  agents  and  attorneys,  or
          Affiliates,  shall act for or assume any obligation or  responsibility
          on behalf  of any other  Participant,  except as  otherwise  expressly
          provided herein,  and any such action or assumption by a Participant's
          directors,  officers,  employees,  agents and attorneys, or Affiliates
          shall be a breach by such  Participant of this  Agreement.  Except for
          those  representations  and  warranties  of the parties in Section 2.2
          which are  expressed  to be joint and  several,  the  rights,  duties,
          obligations and liabilities of the  Participants  shall be several and
          separate  and  not  joint,  collective  or  joint  and  several.  Each
          Participant  shall be responsible  only for its  obligations as herein
          set out and  shall be  liable  only for its  share  of the  costs  and
          expenses  as  provided  herein,  and it is  the  express  purpose  and
          intention of the  Participants  that their ownership of Assets and the
          rights acquired hereunder shall be as tenants in common.

     (d)  All  minerals  derived from this Joint  Venture  shall be taken by the
          Participants in kind in proportion to their  respective  Participating
          Interests.

3.2  Ownership of Joint Venture Property

     (a)  The  Property has been  transferred  to De Beers as Operator who shall
          hold and deal with the  Property  for and on behalf of the  parties in
          accordance  with the  terms  of this  Agreement  as part of the  Joint
          Venture Property; and

     (b)  The parties  acknowledge  that the Joint  Venture as such shall own no
          Joint  Venture  Property.  The Operator  shall hold title to the Joint
          Venture  Property  in trust for the  benefit  of the  Participants  as
          undivided  co-owners in proportion to their  respective  Participating
          Interests from time to time.

3.3  Participating Interests

The  Participating  Interest  of the  Participants  shall  be as  follows  until
adjusted in accordance with the terms of this Agreement:

          De Beers                                          51.00%
          MPV (as trustee on behalf of itself and CV)       49.00%       100.00%



3.4  Encumbrances on Joint Venture Property

     (a)  No Participant shall grant any Security Interest on any portion of the
          Joint Venture  Property,  its  Participating  Interest or its interest
          under this Agreement  except as specifically  provided in this Section
          or Article  12. A  Participant's  Participating  Interest  may be made
          subject to a Security  Interest  with the prior  approval of all other
          Participants  or made subject to a Security  Interest to a third party
          lender  but only  for the  purpose  of  borrowing  money  to  enable a
          Participant to pay its Cost Share of Joint Venture Expenses,  and then
          only if in either  case  such  Security  Interest  is  expressly  made
          subject to the  requirements  of this  Section  3.4 and Article 12 and
          subordinate  to any Security  Interests  that may be given pursuant to
          Section 3.4(c) hereof.  The discharge of any  obligations  relating to
          any  Security  Interest  which is  placed  against  the  Participating
          Interest   of  any   particular   Participant   shall   be  the   sole
          responsibility of such Participant.

     (b)  Every agreement whereby a Participant's Participating Interest is made
          subject to a Security  Interest shall provide that,  without  limiting
          the remedies  available pursuant to Article 12 hereof, in the event of
          a default by the encumbering Participant under the said agreement, any
          one or more of the other  Participants  shall have the right,  but not
          the obligation, to make good the default and to take over the claim as
          against the defaulting  Participant with all remedies contained in the
          said  agreement  or  available at law.  Each  Participant  shall also,
          before  or  concurrently  with  agreeing  to  make  its  Participating
          Interest  subject  to a Security  Interest,  notify the holder of said
          Security  Interest of the other  Participants'  rights  hereunder  and
          obtain the  written  acknowledgement  from such  holder that the other
          Participants may exercise those remedies available pursuant to Article
          12 hereof against the defaulting  Participant and may, upon payment of
          all  but  not  part  of the  indebtedness  relating  to  the  Security
          Interest,  take over the claim under the Security  Interest as against
          the defaulting  Participant  with all resulting rights and remedies of
          the creditor.

     (c)  De Beers may give and grant Security Interests on behalf of itself and
          all other Participants on all or any portion of the Property to secure
          the  repayment of funds  borrowed to finance the costs of  Exploration
          Work and  Development  Work but only as permitted by Section  11.1(c).
          Such Security  Interests shall constitute a paramount first, fixed and
          specific  and/or  floating  charge on all or any  portion of the Joint
          Venture  Property  and shall rank in  priority  to all other  Security
          Interests on the Joint  Venture  Property  theretofore  or  thereafter
          granted  pursuant  to this  Section  3.4 or  Section  12.5  hereof  or
          otherwise.

     (d)  Any Security Interest to be held by a third party holder shall be made
          subject to the rights of De Beers and of the other  Participants under
          this Agreement.  The Participant  granting the Security Interest shall
          provide



          the other  Participants  with the written  agreement  of the holder of
          such  Security  Interest  that it  agrees  to the  rights of the other
          Participants  under this  Agreement  including this Section 3.4 and it
          shall be a term of any Security  Interest that the holder of it agrees
          to hold  and  deal  with  such  Security  Interest  and  the  security
          constituted  thereby  subject to the rights of the other  Participants
          under this Agreement as fully as if such holder were a Participant and
          a party to this Agreement.

3.5  Obligations of the Participants

In order to facilitate the proper and timely  exploration and development of the
Property, each of the parties hereto covenants and agrees as follows:

     (a)  except as  specifically  provided for in Article 11 hereof,  all Joint
          Venture Expenses shall be borne by the Participants pro rata according
          to their  respective  Participating  Interests  at the time the  Joint
          Venture  Expense is incurred or the Cash Call is made, as the case may
          be,  (herein called the "Cost Share") and each  Participant  shall pay
          its  Cost  Share  in  accordance  with the  Accounting  and  Financial
          Procedures;

     (b)  to perform its  obligations  pursuant to this  Agreement and to comply
          with all  applicable  laws and  regulations  of Canada insofar as same
          apply to the Joint Venture;

     (c)  to use  its  best  efforts  to  cause  the  Operator  to  perform  its
          obligations   pursuant  to  this   Agreement  and  all  other  related
          agreements,  including  obligations under any surface leases,  mineral
          leases,  mineral  claims,  claim blocks and permits  necessary for the
          exploration  and  development of the Property,  to the extent that the
          failure to perform such  obligations  affects or may affect the rights
          or obligations of any of the parties to this Agreement;

     (d)  to pay and cause to be paid all  applicable  royalties and other valid
          taxes,  levies and other amounts properly payable by it and arising in
          whole or in part out of the  participation by such party in this Joint
          Venture;

     (e)  to refrain  from holding out itself or any of its  representatives  as
          representing the Joint Venture, except as the Operator or the Chairman
          of the Management Committee as may be specifically  authorized by this
          Agreement, and to act in respect of the Joint Venture only through its
          representatives   participating   in  the   Management   Committee  as
          contemplated by this Agreement; and

     (f)  to give  prompt  notice to the  other  parties  and to the  Management
          Committee of any Event of Default of which it becomes aware  affecting
          it, any other party,  the Operator or the Joint  Venture and to act in
          good faith in respect of the  conduct of the Joint  Venture  vis-a-vis
          the other parties.



                                   Article 4
                 MANAGEMENT AND OPERATIONS OF THE JOINT VENTURE

4.1  Management Committee and Procedures

The business  and affairs of the Joint  Venture  shall be under the  management,
direction and control of the Management  Committee and the following  provisions
shall apply:

     (a)  Subject to Section 4.1(k),  the Management  Committee shall consist of
          two   representatives  of  each  Participant  and  a  maximum  of  two
          designated    alternates   for   each   such    representative.    The
          representatives,  and in the absence of a  representative,  one of his
          alternates,  shall  be  entitled  to  be  present  at  the  Management
          Committee  meetings.  Each such  Participant  shall have  unrestricted
          discretion in the appointment of such  representatives and alternates,
          whose names shall be furnished to the other Participant within 30 days
          from the date of execution of this Agreement and who shall continue to
          serve unless replaced by written notice to the other Participants. The
          Management  Committee  shall  designate  its Chairman by majority vote
          (the "Chairman").

     (b)  Meetings  of the  Management  Committee  shall  be  held  in  Toronto,
          Ontario,  Vancouver,   British  Columbia  or  Yellowknife,   Northwest
          Territories unless the Management Committee determines otherwise. Each
          Participant shall bear the cost of its representatives, alternates and
          advisers,  if  any,  attending  Management  Committee  meetings.  If a
          Management  Committee  meeting is held at a location  other than where
          the Operator has its principal business offices,  any costs associated
          with the Operator and its  representatives and advisers attending such
          meeting  shall be charged to the Joint  Account,  provided that if the
          Operator  is a  Participant,  the costs  charged to the Joint  Account
          shall not include  those costs that, as a  Participant,  it would have
          had to incur in attending  such  meeting if it were not the  Operator.
          The  Management  Committee  shall  meet  not less  than  twice in each
          calendar  year,  at such time as may be  determined by the Chairman of
          the Management Committee.  Meetings of the Management Committee may be
          called by the  Chairman  or by a  representative  of any  Participant.
          Unless longer notice is required by the  provisions  hereof,  not less
          than 30 days' notice shall be given of each meeting of the  Management
          Committee;

          If all of the members of the Management  Committee or their respective
          alternates present at a meeting of the Management Committee consent, a
          meeting  of the  Management  Committee  may be held by  means  of such
          telephone,  electronic or other communication facilities as permit all
          Persons  participating  in the meeting to communicate  with each other
          simultaneously and instantaneously and a Person  participating in such
          a meeting by such means shall be deemed to be present at the meeting;



     (c)  A quorum of the Management Committee shall consist of a representative
          (or alternate) of each Participant provided such Participant is not in
          default for the purposes of Section 12.6(a) hereof. If a quorum is not
          present  at a  meeting,  it  shall  be  adjourned  on  notice  to  all
          Participants  to a date  not  earlier  than  10  days  thereafter,  as
          selected by the Chairman,  and those present at such adjourned meeting
          shall constitute a quorum for the transaction of business;

     (d)  Unless otherwise provided in this Agreement, any decision or action by
          the  Management  Committee  shall be by majority vote at a duly called
          and constituted  meeting.  Voting on the Management Committee shall be
          proportional to each  Participant's  Participating  Interest such that
          the  representatives  of each  Participant  will have in the aggregate
          that  number  of  votes  equal  to  such  Participant's  Participating
          Interest  (rounded to the nearest whole  number).  The Chairman  shall
          have an  additional  or casting  vote on all matters in the case of an
          equality of votes;

     (e)  An agenda of items to be discussed  at each meeting  shall be provided
          to the  Chairman who shall  distribute  a final agenda and  supporting
          material  to  each  Participant  entitled  to  representation  at  the
          meeting,  at least 7 days prior to the date of each meeting.  All such
          Participants  shall  have the  right to place  items on the  agenda by
          notifying the Chairman. No decision shall be reached by the Management
          Committee  at any  meeting  unless  the  item to be  decided  has been
          included in the agenda of that meeting  except where the  Participants
          otherwise unanimously agree;

     (f)  The Chairman shall be responsible for  coordinating  all activities of
          the  Management  Committee,  but he shall  always  be  subject  to the
          direction of the Management Committee.  It shall be the responsibility
          of the  Chairman  to act as  liaison  between  the  Operator  and  the
          Management Committee and to advise the Operator of the instructions of
          the Management Committee;

     (g)  No  activities  or other  action  shall be  commenced,  undertaken  or
          altered by the  Operator  or any  Participant  unless  the  Management
          Committee, in its sole discretion, has approved the activity or action
          pursuant to this Agreement;

     (h)  The  Management  Committee  may  conduct  business  without  holding a
          meeting, provided:

          (i)  the decision made by the Management Committee is unanimous; and

          (ii) the Chairman of the  Management  Committee  receives by letter or
               Electronic   Transmission  approval  of  the  decision  from  the
               representatives of each Participant.



     (i)  Minutes of each Management  Committee meeting shall be prepared by the
          Chairman with copies to be made available to each Participant entitled
          to  representation at the meeting within a period of 14 days after the
          meeting.  Each such Participant shall notify all other Participants of
          its  approval  or  disapproval  thereof in  writing  within 21 days of
          receipt of the same, failing which it shall be deemed to have approved
          the minutes;

     (j)  The Management  Committee may make additional rules for the conduct of
          its business which are not inconsistent with this Agreement;

     (k)  Only those  Participants  having a Participating  Interest of at least
          10% shall be entitled  to appoint  representatives  to the  Management
          Committee  and to  receive  notice  of and be  present  at  Management
          Committee  meetings.  Each such  Participant  may invite a  reasonable
          number  of  technical  and  other   advisers  who  must  be  officers,
          directors, bona fide employees or legal counsel of the Participant, to
          assist at  meetings of the  Management  Committee,  but such  advisers
          shall  have no  right  to vote at such  meetings.  The  provisions  of
          Article  16  hereof  shall  apply  with  respect  to any  confidential
          information disclosed to such advisers;

     (l)  Decisions of the  Management  Committee  shall be final when taken and
          the parties  shall be bound and hereby  covenant and agree to be bound
          by such decisions; and

     (m)  All  Votes  of the  Management  Committee  shall be taken by a show of
          hands or orally unless any  Participant  requests  confirmation of the
          Management  Committee  Vote by ballot  and in such event the said vote
          shall be by ballot.

4.2  Duties of the Management Committee

The Management  Committee  shall be  responsible  for directing the business and
affairs  of the  Joint  Venture  in  accordance  with  the  provisions  of  this
Agreement,  and without limiting the generality of the foregoing, the Management
Committee shall perform this duty by:

     (a)  reviewing any Plan and Budget  submitted by the Operator in accordance
          with the provisions of this Agreement;

     (b)  receiving and discussing any reports of the Operator;

     (c)  reviewing   the  progress  made  in  respect  of   Exploration   Work,
          Development  Work and Production  and, if considered  necessary by the
          Management Committee,  instructing or directing the Operator as to the
          steps  which the  Operator  should  take to carry  out the  activities
          related thereto;



     (d)  instructing  or directing  the Operator in any matter  relating to the
          conduct of the Joint Venture; and

     (e)  promptly  considering  any request by the Operator which, by the terms
          of this  Agreement,  must be referred to the Management  Committee for
          decision prior to implementation.

                                    Article 5
                                    OPERATOR

5.1  Appointment of Operator

The Operator shall have the powers,  rights and obligations conferred upon it by
this  Agreement.  The  Operator  or its  Affiliates  must  have a  Participating
Interest of at least 15% unless the Management  Committee determines pursuant to
Section  5.3(c)  hereof that the Operator or its  Affiliates  may have a smaller
Participating Interest. It is agreed between the parties hereto that, subject to
this Article 5, the Operator shall be De Beers.

5.2  Resignation of Operator

The Operator may, by notice in writing to all  non-Operator  parties,  resign at
any time and in any case  shall  be  bound to  resign  if its or its  Affiliates
Participating  Interest  is  reduced  to less than 15%,  unless  the  Management
Committee  determines,  pursuant to Section 5.3(c) hereof,  that the Operator or
its  Affiliates  may have less than a 15%  Participating  Interest.  Subject  to
Section 5.4 hereof,  an Operator  that  resigns  shall not be released  from its
obligations  hereunder  for a period of 90 days after its  resignation  unless a
successor  Operator  shall have been  appointed  and shall have arranged to take
over as Operator prior to the expiration of such period.  The successor Operator
shall be chosen by the Management  Committee within such 90-day period and shall
assume the duties and obligations of the Operator  forthwith upon the expiration
of the  aforesaid  90 day period or at such  earlier  time as  specified  by the
Management Committee.

5.3  Replacement of Operator

The Operator may be removed and replaced in the following circumstances:

     (a)  at  the  end of any  Operating  Year,  upon  a  majority  vote  of the
          Management  Committee,  provided  at least 90 days  written  notice is
          given to the  Operator  prior to the end of the  applicable  Operating
          Year;

     (b)  upon the occurrence of any of the following events:

          (i)  the Operator  fails in a material  respect to perform its duties,
               responsibilities   and   obligations  in  accordance   with  this
               Agreement  or  the  direction  of  the  Management  Committee  or
               performs  such



               duties  and  obligations  in a  manner  which  is  contrary  in a
               material respect to good Canadian mining practice;

          (ii) an attachment or seizure not related to the business of the Joint
               Venture but which is due to the  negligent act or omission of the
               Operator is made on or of the Joint Venture Property;

          (iii)the Operator  institutes  voluntary  liquidation,  dissolution or
               winding-up proceedings or takes any voluntary proceeding pursuant
               to  any   statute   relating   to   bankruptcy,   insolvency   or
               reorganization  of debts to be  adjudicated  bankrupt  or for any
               other  relief,   or  makes  an  assignment  for  the  benefit  of
               creditors,  or if a  receiver,  manager,  receiver  and  manager,
               trustee or liquidator or any other Person with similar  powers is
               appointed  with  respect to any material  part of the  Operator's
               property,  or if a court of competent  jurisdiction  adjudges the
               Operator  to  be  bankrupt  or  makes  an  order   requiring  the
               liquidation, dissolution or winding up of the Operator, or if the
               corporate existence of the Operator is otherwise terminated; or

          (iv) if  the  Operator  is  also a  Participant,  it  defaults  in the
               performance of any of its obligations as a Participant under this
               Agreement;  but only if the  Operator  fails,  within  20 days of
               receipt of the notice of such  event,  to  commence to remedy and
               diligently to continue to remedy such event on a timely basis.

               In any such case the Management  Committee shall meet to consider
               removal  of  the   Operator  and  the   appointment   of  another
               Participant  or  non-Participant  as Operator,  provided that any
               decision  to  remove  the  Operator  and  the  selection  of  the
               successor   Operator   shall  require  a  majority  vote  of  the
               Management  Committee.  The  Operator  being  replaced may not be
               returned  as  Operator  for a  period  of 4 years  following  the
               removal  except  by a 75%  or  greater  vote  of  the  Management
               Committee; and

     (c)  in the  event  an  Operator  who is a  Participant  or its  Affiliates
          reduces  its/their  Participating  Interest to less than 15%,  then in
          such  instance a Management  Committee  meeting shall  immediately  be
          called to appoint a new Operator or confirm the  existing  Operator as
          Operator,  as the case may be. The  Management  Committee may continue
          the existing Operator as Operator by a majority vote.

5.4  Prior Obligations

Nothing herein shall relieve an Operator which has resigned  pursuant to Section
5.2 or been replaced  pursuant to Section 5.3 from paying and being  responsible
for  its  debts  and  obligations  incurred  prior  to  the  effective  date  of
resignation or



termination,  as the case may be. Such Operator  shall  promptly  deliver to the
succeeding  Operator  and to the  Participants  a report in  respect of the work
carried  out by it on  the  Property  up to  the  date  of  its  resignation  or
replacement and copies of all maps, reports,  surveys,  drilling results and all
the raw geological, geophysical and assay data resulting from such work and will
file such work on the Property for assessment purposes.

5.5  Transfer of Property

     (a)  Upon ceasing to be Operator, the Operator shall forthwith transfer its
          title  to  all  Joint  Venture  Property  to its  successor  or to any
          Participant nominated for such purpose by the Management Committee and
          deliver  custody  of all  books  and  records  relating  to the  Joint
          Venture.  The  former  Operator  shall use all  reasonable  commercial
          efforts to transfer to its successor,  effective as of the date of the
          former  Operator's  resignation or removal,  its rights and subject to
          Section  5.4,  its   obligations   as  Operator  under  all  contracts
          exclusively  relating to the Joint Venture operations and pending such
          transfer,  the former Operator shall hold such rights from the date of
          resignation  or removal  for the  account  and to the order of the new
          Operator.

     (b)  As soon as  practicable  after the effective  date of  resignation  or
          removal of an Operator, the Participants shall audit the Joint Account
          and conduct an inventory of all Joint Venture Property.  All costs and
          expenses incurred in connection with such audit and inventory shall be
          considered Joint Venture Expenses.

                                   Article 6
              RESPONSIBILITIES AND INDEMNIFICATION OF THE OPERATOR

6.1  Responsibilities of the Operator

Subject always to the control of the Management  Committee and, unless otherwise
provided  herein,  at Joint Venture  Expense,  the Operator  shall carry out all
activities in connection with Exploration Work,  Development Work and Production
and, without restricting the generality of the foregoing, shall:

     (a)  submit to the  Management  Committee  at least two weeks  prior to its
          proposed  implementation in each Operating Year, and at any other time
          as requested by the  Management  Committee,  a new or updated Plan and
          Budget for Exploration  Work,  Development Work or Production,  as the
          case may be,  outlining its proposed  activities  for the  initiation,
          continuation or completion,  as the case may be, of Exploration  Work,
          Development  Work or  Production,  as the case may be, during the said
          Operating Year. A Plan and Budget for Exploration  Work or Development
          Work may  relate  to work to be  carried  out over  several  Operating
          Years;



     (b)  within 30 days after the end of each  quarter  during  each  Operating
          Year, provide statements to the Management Committee for the completed
          portion of said Operating Year setting out:

          (i)  all activities  undertaken in connection with  Exploration  Work,
               Development Work or Production, as the case may be, together with
               a summary of the technical results;

          (ii) actual costs as compared with the prior forecast of costs; and

          (iii)details of the work  proposed for the  remainder of the Operating
               Year, or in the case of the statement  delivered on completion of
               each Operating Year, for the following Operating Year,

               and within 7 days of receipt  provide  the  Management  Committee
               with  current  reports  and   information  on  material   results
               obtained;

     (c)  commencing with the Beginning of Commercial Production and at least 90
          days  prior to the  beginning  of each  semiannual  period  thereafter
          (January  1  through  June 30 and July 1 through  December  31 of each
          Operating Year),  estimate the probable quantity of diamonds per month
          which can be produced  during the said period in accordance  with good
          Canadian   mining   practice  and  which  can  be  available  for  the
          Participants,   and  notify  the  Management   Committee  as  to  such
          estimates;

     (d)  conduct  all  operations  in  accordance  with  good  Canadian  mining
          practice under the laws of the Northwest Territories;

     (e)  determine the number of employees  and their terms of  employment  and
          hire,  direct  and,  in its  discretion,  discharge  any  or all  such
          employees,  each of whom  shall be  employed  by the  Operator  and be
          subject to its control and direction;

     (f)  purchase or otherwise provide all necessary materials and supplies;

     (g)  purchase,  lease or  otherwise  provide all  necessary  machinery  and
          equipment  which  may be  acquired  or  leased  from  any  Participant
          provided that the price and terms are competitive;

     (h)  comply,  and require  compliance of others doing work on Joint Venture
          Property, with the requirements of federal, territorial and local laws
          relating to employer's  liability  insurance,  workers'  compensation,
          social  insurance,  unemployment,  fair  employment,  pay equity,  the
          environment  and other  applicable  laws with  respect  to any work or
          operation conducted under this Agreement;

     (i)  take all proper and  reasonable  steps for the protection of rights of
          surface owners against damage occasioned by operations to be conducted



          hereunder  and pay such  damages  as may  lawfully  be  determined  as
          resulting from such operations;

     (j)  facilitate  the  right of  authorized  employees  and  agents  of each
          Participant  to enter upon and into the Joint Venture  Property at all
          reasonable  times for the  purpose  of  inspecting  the Joint  Venture
          Property  and  the  work  performed  and to be  performed  under  this
          Agreement and  observing  the conduct of  operations  and giving those
          Persons  designated by the Participants  access to all preliminary and
          final technical data relating to field work done on the Property. Each
          Participant  shall  have the  right  at all  reasonable  times  and on
          reasonable  notice to  inspect,  review and  require  the  Operator to
          furnish, at the sole expense of the Participant  concerned,  copies of
          documents in the  possession or control of the Operator,  wherever the
          same may be located,  relating to the Joint Venture.  Each Participant
          shall have the right, upon reasonable notice given to the Operator, to
          authorize any Person designated by a lending  institution to which the
          Participant  is or  expects  to  become  indebted  or  by a  potential
          purchaser of such Participant's  Participating Interest (provided such
          Person  first  executes  and  delivers to all  Participants  a written
          confidentiality  undertaking approved by the Management Committee), to
          visit  and  inspect  the  Property  and  facilities,  to  examine  the
          documents of the Operator relating to the Joint Venture and to discuss
          the Joint Venture and the affairs,  finances and accounts thereof with
          the Operator or with its independent professional advisers. Any access
          granted to any  Participant  or Person  designated by any  Participant
          pursuant to the foregoing provisions shall be at such Participant's or
          Person's sole expense and risk and must not  unreasonably  obstruct or
          interfere with operations being conducted by the Operator;

     (k)  review all invoices for approval,  pay all invoices  which it approves
          and maintain in Canada records in accordance  with generally  accepted
          accounting principles;

     (l)  except  as may be  permitted  under  this  Agreement,  keep the  Joint
          Venture  Property free of  encumbrances  arising from  operations  and
          proceed with all  diligence to contest or  discharge  any  encumbrance
          that is filed;

     (m)  prosecute  or  defend  all   litigation   arising  out  of  operations
          hereunder,  provided  that  any  Participant  may  also  join  in  the
          prosecution  or defence of such  litigation at its sole  expense,  and
          further  provided  that the Operator  shall  apprise each  Participant
          hereto of such pending or actual  litigation  immediately upon receipt
          of relevant documentation or information pertaining to same;

     (n)  pay,  at the time and in the  manner  required  by law,  all  federal,
          territorial  or local taxes  (other than any taxes on or  referable to
          income)  assessed or levied  against Joint  Venture  Property or Joint
          Venture  operations.  Where



          taxes,  in the opinion of the  Management  Committee,  are  wrongfully
          assessed or levied  against  Joint  Venture  Property or Joint Venture
          operations,  the Operator  shall protest the assessment or levy within
          the time limit and in the manner  prescribed  by law and shall  pursue
          the protest to final determination;

     (o)  obtain and maintain  inclusive  coverage insurance as is in accordance
          with good Canadian  mining  practice and  designated by the Management
          Committee,  in the name of the  Operator  with all other  Participants
          named as additional  insureds.  The parties acknowledge that different
          stages of a project might require that  different  levels of insurance
          be maintained.  The insurance shall include general public  liability,
          bodily  injury and  property  damage  coverage and  automobile  public
          liability  and  property  damage  coverage.  Insurance  shall  also be
          obtained to cover the full  insurable  value of  physical  assets when
          they are  acquired,  with loss to be payable to the Operator who shall
          have the obligation to distribute the proceeds in accordance  with the
          Participating  Interests of the  Participants  involved.  The Operator
          shall request that the insurer  provide a certificate  of insurance to
          each Participant;

     (p)  regularly consult with the Participants  concerning the operations and
          keep the  Participants  currently  advised  of all  important  matters
          arising in connection therewith;

     (q)  comply with all terms and  conditions of title  documents  relating to
          the Property and implement and do all things necessary  (including the
          implementation   and   carrying   out  of  the   minimum   amount   of
          representation work) to keep the Property in good standing and in full
          force and effect for the benefit of the  Participants;  provided  that
          the  Operator  may  allow to lapse  and shall  have no  obligation  to
          maintain in good  standing any mining  claims or  prospecting  permits
          comprised  in  the  Property  which  the   Management   Committee  has
          determined to abandon pursuant to Section 14.1 hereof; and

     (r)  in order to facilitate  the  preparation  by the  Participants  of all
          returns  and  reports  to the  Governments  of Canada,  the  Northwest
          Territories  and other  applicable  authorities,  the  Operator  shall
          provide the  Participants  with the basic data  required to permit the
          reporting of the required information to such public authorities.

6.2  Indemnification of Operator

     (a)  Each  Participant  hereby agrees to indemnify and to hold the Operator
          harmless  in  proportion  to its  Participating  Interest  against any
          action  brought  or claim made  against  the  Operator,  its agents or
          employees and any loss,  expense,  damage or liability,  including any
          Consequential Damages,  suffered by one or more Persons resulting from
          any act or



          omission  of the  Operator,  its  agents or  employees  in  conducting
          operations  pursuant to this  Agreement to the extent that the action,
          claim, loss, expense, damage or liability is not covered by insurance;
          excepting  that the  Operator,  its agents or  employees  shall not be
          indemnified  or held  harmless  by the  Participants  for any  action,
          claim,  loss,  expense,  damage  or  liability,  to  any  third  party
          resulting  from the gross  negligence of the  Operator,  its agents or
          employees  unless such act or omission of the Operator,  its agents or
          employees, is or has been done or omitted at the instruction,  or with
          the  concurrence  of  Participants  holding  not less  than 75% of the
          Participating Interests.

     (b)  The Operator shall not be liable to any Participant or other party for
          any action,  claim,  loss,  expense,  damage or liability  except when
          resulting  from the  gross  negligence  or  wilful  misconduct  of the
          Operator,  its agents or employees.  In no event shall the Operator be
          liable to any  Participant  or other party for  Consequential  Damages
          suffered by a Person.

6.3  Management Fees

     (a)  The  Operator  will be able to claim a  management  fee as part of all
          charges,  costs and expenses  incurred in respect of Exploration Work,
          Development Work and/or Production by the Operator (including any work
          carried  out to date  under the  Letter  Agreement)  of 5% of all such
          expenses  incurred up to the equivalent of 100 million dollars of such
          costs  and 3% of such  costs  in  excess  of  such  amount.  From  the
          Commencement of Commercial Production,  such management fee in respect
          of Production will be  renegotiated in good faith it being  understood
          that the  Operator is neither to make a profit nor to suffer a loss in
          performing its duties.

     (b)  All fees to which the Operator is entitled  pursuant to Section 6.3(a)
          above shall be considered Joint Venture Expenses.

     (c)  The Operator may contract for work to be done by any Person Associated
          or Affiliated with a Participant, provided such work is done at prices
          that are competitive in the marketplace.

                                   Article 7
                             PARTICIPATING INTERESTS

7.1  Participating Interests and Adjustments

     (a)  Subject to Section 7.2 hereunder,

          (i)  the  Participating  Interest  of De  Beers  and MPV in the  Joint
               Venture  confirmed and  continued  under Section 3.1 hereof shall
               initially be as set forth in Section 3.3 hereof;



          (ii) upon the completion of a Feasibility  Study  commissioned  by the
               Management  Committee  pursuant  to  Sections  9.1(b),  9.1(c) or
               9.1(d)  hereof  and the  payment of all costs of such study by De
               Beers, De Beers shall automatically be deemed to have acquired an
               additional 4%  Participating  Interest  proportionately  from the
               other Participants such that thereafter De Beers shall have a 55%
               Participating  Interest  and MPV shall  have a 45%  Participating
               Interest;

          (iii)if  the  Management  Committee  approves  the  execution  of  the
               necessary  Development  Work for a First Mine on the  Property as
               referred to Section 9.2(d) hereof,  then upon the Commencement of
               Commercial  Production  from  such  First  Mine  De  Beers  shall
               automatically  be  deemed  to  have  acquired  an  additional  5%
               Participating    Interest    from    the    other    Participants
               proportionately such that De Beers shall have a 60% Participating
               Interest and MPV shall have a 40% Participating Interest;

          (iv) if a Conversion Event occurs pursuant to Sections 9.1(b), 9.1(c),
               9.1(d) or 9.2(d) hereof, the Participating  Interests of De Beers
               and MPV shall be automatically  adjusted such that De Beers shall
               have  a 30%  Participating  Interest  and  MPV  shall  have a 70%
               Participating Interest; and

          (v)  a  Participant's  Participating  Interest  shall also be adjusted
               from time to time pursuant to the provisions of Sections 11.1(d),
               11.2 and 12.6(b)(i) hereof.

               It shall not be  necessary  for the  Participants  to execute and
               deliver transfers or assignments of their Participating Interests
               in  order  for  the   adjustments  in   Participating   Interests
               contemplated by this Section 7.1 to be valid and effective.

     (b)  Where the  Participating  Interest of a party is subject to adjustment
          pursuant  to  Section  7.1(a)(v)  hereof,  it shall  automatically  be
          increased or decreased in accordance with the following formula:

               Adjusted Participating

               Interest of a Party  = [(P.E. + C.E. ) / (T.P.E. + T.C.E.)] x 100

Where:

P.E.   =  the Participant's Participating Interest (before adjustment) x T.P.E.
C.E.   =  the total amount of money spent by a Participant with respect to the
          current Joint Venture Expenses
T.P.E. =  the total amount of money spent by the Participants in



          respect of Joint Venture Expenses excluding T.C.E.
T.C.E. =  the total amount of money spent by all Participants with respect to
          the current Joint Venture Expenses

          For  purposes  of  calculating  the  adjustments  required  under this
          Section 7.1(b) only and not for the purpose of calculating  the amount
          of Joint Venture  Expenses to be repaid to Participants  under Section
          11.3, the following shall apply:

          (i)  upon  completion of the  Feasibility  Study  commissioned  by the
               Management  Committee  pursuant  to Sections  9.1(b),  9.1(c) and
               9.1(d) hereof,  the aggregate of all Joint Venture  Expenses paid
               by  all   Participants  in  carrying  out  Exploration  Work  and
               Development  Work  on  the  Property  up  to  the  date  of  such
               completion including, without limitation, those costs referred to
               in  Schedule  "F"  shall  be  deemed  to have  been  spent by the
               Participants in the following proportions: De Beers - 55% and MPV
               - 45%;

          (ii) if Management  Committee  approves the execution of the necessary
               Development  work for a First Mine on the Property as referred to
               in Section 9.2(d) hereof, then the aggregate of all Joint Venture
               Expenses  paid by all  Participants  in carrying out  Exploration
               Work  and  Development  Work on the  Property  up to the 90th day
               after the  Commencement of Commercial  Production from such First
               Mine (the "Final  Date")  including,  without  limitation,  those
               costs  referred to in  Schedule  "F" shall be deemed to have been
               spent by the Participants in the following proportions:  De Beers
               - 60% and MPV - 40%;

          (iii)after the Final Date the aggregate of all Joint Venture  Expenses
               paid by a  Participant  in  carrying  out  Exploration  Work  and
               Development  Work on the Property  from time to time shall be the
               aggregate of the amount of Joint Venture  Expenses deemed to have
               been spent by such  Participant  under  Section  7.1(b)(ii)  plus
               those  amounts  actually paid by such  Participant  on account of
               Joint  Venture   Expenses  on  the  Property  during  the  period
               following the Final Date to the date of calculation; and

          (iv) Joint  Venture  Expenses  paid by  Participants  in carrying  out
               Development  Work shall not include those Joint Venture  Expenses
               in respect of  Development  Work for a First Mine on the Property
               the  financing  of  which is  arranged  by De Beers or any of the
               other  Participants by way of third party borrowings  pursuant to
               Section 11.1(c) hereof.

     (c)  No adjustment to any Participating Interest pursuant to the provisions
          hereof  shall  affect the validity of any vote taken by the parties on
          the basis



          of their Participating Interests prior to such adjustment.  As soon as
          reasonably  possible  after the  completion of each Operating Year the
          Operator shall provide the parties with a written statement specifying
          the  Participating  Interests  of all of the parties  and  particulars
          regarding  the  determination  of same in the event the  Participating
          Interests have been adjusted in accordance with this provision  during
          or after the said Operating Year.

7.2  Conversion of Participating Interest

Anything in this Agreement to the contrary notwithstanding, if the Participating
Interest of any Participant is reduced in accordance with the provisions of this
Agreement to 5% or less then such Participating Interest shall automatically and
without any further act by or on behalf of any of the parties, be converted into
and become a 2.5% net profit royalty  calculated in accordance with Schedule "C"
hereto (the "Net Profit  Royalty") and the  Participating  Interest so converted
shall be  transferred  to the remaining  Participants  proportionately  to their
respective  Participating  Interests.  If a  Participant  assigns  part  of  its
Participating Interest in accordance with the terms of this Agreement to a third
party, the percentage  Participating Interest to which the Participant's and the
assignee's  Participating  Interest must be diluted  prior to its  Participating
Interest being  converted to a Net Profit Royalty shall remain at 5% for each of
them  and the  percentage  of the Net  Profit  Royalty  to which  the  assigning
Participant's  or assignee's  Participating  Interest will be converted shall be
that derived by  multiplying  the  percentage of the Net Profit Royalty to which
the assigning  Participant's  Participating  Interest  would have been converted
prior  to such  assignment  by the  fraction,  the  numerator  of  which  is the
Participant's  Participating  Interest  immediately after the assignment and the
denominator  of  which is the  assigning  Participant's  Participating  Interest
immediately prior to such assignment,  and such shall be applied in like fashion
for any additional assignments.

The Net Profit Royalty will be calculated and payable  semi-annually  in arrears
within 90 days of the end of the  period  and will be  audited  annually  by the
Operator  within  four months of the year end with any  adjustments  revealed by
such audit being made  promptly.  No such  conversion  into a Net Profit Royalty
shall relieve the Participant  whose  Participating  Interest is subject to such
conversion of any of its  obligations or liabilities  which are  undischarged at
the time of such conversion unless all Participants so agree in writing.

Any time  within the first five years  after the Net Profit  Royalty  comes into
existence, one or more Participants may elect by notice in writing to the holder
of such royalty not later than 90 days prior to the end of any calendar  year to
purchase,   proportionately   according  to  their  Participating  Interests  or
otherwise as they may agree,  the Net Profit Royalty as of January 1 of the next
following  calendar year for an amount equal to the aggregate Net Profit Royalty
projected to be payable over the next  following  five years  commencing on such
January 1. Upon the giving of such notice,  the holder of the Net Profit Royalty
shall be obligated  to sell and the  Participants  making the election  shall be
obligated to purchase the Net Profit Royalty for such purchase price. The



purchasing  Participants  and the Net Profit  Royalty  holder shall meet in good
faith with a view to reaching  agreement on such purchase  price and if they are
unable  to reach  such  agreement  within  60 days any one of them may refer the
matter to arbitration in accordance with Article 15 hereof.

The Net Profit Royalty shall be non-assignable for the first five years after it
comes  into  existence  and if one or more  Participants  does  not so  elect to
purchase the Net Profit  Royalty  within such five years as  aforesaid,  the Net
Profit  Royalty  shall  thereafter  become  assignable by the holder but only in
whole and not in part.

For greater certainty,  the Participating  Interest held by MPV, as Trustee,  on
behalf of itself and CV shall be treated as a single Participating  Interest and
should that  Participating  Interest be converted to a 2.5% Net Profit  Royalty,
such royalty shall be held by MPV, as Trustee, on behalf of itself and CV.

                                   Article 8
                                EXPLORATION WORK

8.1  Exploration Work

     (a)  The  parties  acknowledge  that the Joint  Venture  has spent at least
          three  million  dollars  ($3,000,000)  as Joint  Venture  Expenses  on
          Exploration Work on the Property,  during the period  commencing March
          8, 2000 and ending on December 31, 2001.

     (b)  The Management  Committee shall determine the nature and extent of all
          Exploration Work to be carried out on the Property;

     (c)  Where the Management  Committee  approves the execution of Exploration
          Work on the Property,  the Chairman of the Management  Committee shall
          inform the  Operator of the  Management  Committee's  decision and the
          Operator shall,  pursuant to Section 6.1(a) hereof,  submit a Plan and
          Budget in respect of the Exploration Work to the Management  Committee
          outlining its proposed  activities  and  expenditures.  Thereafter,  a
          Management  Committee meeting shall be called on not less than 14 days
          notice  to  consider  the  Plan and  Budget  of the  Operator  and any
          submissions  from the  Participants.  Details  of the Plan and  Budget
          shall be sent with the notice  calling the  meeting.  If the said Plan
          and Budget is approved by the Management  Committee,  Exploration Work
          shall  be  forthwith  commenced  on the  Property  as a Joint  Venture
          Expense.  The Management  Committee  shall have the right to amend the
          said Plan and Budget from time to time;



                                   Article 9
                                DEVELOPMENT WORK

9.1  Review of First Desk Top Study

     (a)  The First Desk Top Study will,  unless deferred by agreement among the
          parties, be updated and reviewed by the Management  Committee at least
          once  annually  commencing  in 2002 with the last such review being in
          2004. These reviews will have regard,  among other things,  to changes
          in diamond  resources  on the  Property or diamond  prices  where such
          changes would  reasonably  be expected to have a favourable  impact on
          the IRR determined in the First Desk Top Study;

     (b)  If the Management  Committee  determines that the First Desk Top Study
          as updated and  reviewed  pursuant to Section  9.1(a)  concludes  that
          there is a reasonable probability that a First Mine can be constructed
          and  operated on the  Property  which will  achieve at least a Fifteen
          Percent  IRR,  then  the  Participants   shall  cause  the  Management
          Committee  to  commission   either  a   Pre-Feasibility   Study  or  a
          Feasibility  Study with respect to the construction and operation of a
          First Mine on the Property and the failure by the Management Committee
          to do so shall cause a Conversion Event to occur;

     (c)  The  Pre-Feasibility  Study  referred  to in Section  9.1(b)  shall be
          reviewed by the  Management  Committee and if it  determines  that the
          Study  concludes that there is a reasonable  probability  that a First
          Mine can be  constructed  and  operated  on the  Property  which  will
          achieve at least a Fifteen  Percent IRR, then the  Participants  shall
          cause the Management  Committee to commission a Feasibility Study with
          respect  to the  construction  and  operation  of a First  Mine on the
          Property  and the failure by the  Management  Committee to do so shall
          cause a Conversion Event to occur;

     (d)  MPV may at any time up to the Management Committee's  commissioning of
          a  Pre-Feasibility  Study pursuant to Section 9.1(b) hereof at its own
          expense,  commission its own Pre-Feasibility Study with respect to the
          viability of constructing  and operating a First Mine on the Property.
          If such Study concludes that there is a reasonable  probability that a
          First Mine can be constructed  and operated on the Property which will
          achieve a Fifteen  Percent IRR, then the  Management  Committee  shall
          review such Study. If after such review De Beers can demonstrate  that
          there is not a reasonable  probability that such a Fifteen Percent IRR
          can be achieved,  then the matter shall not proceed further.  If after
          such review De Beers cannot demonstrate that there is not a reasonable
          probability that such a Fifteen Percent IRR can be achieved,  then the
          Participants  shall cause the  Management  Committee  to  commission a
          Feasibility  Study with respect to the construction and operation of a
          First Mine on the Property and the



          failure by the Management  Committee to do so shall cause a Conversion
          Event to occur; and

     (e)  Any update and review of the First Desk Top Study  pursuant to Section
          9.1(a) and any  Pre-Feasibility  Study emanating from it shall include
          an evaluation of the mining of all categories of kimberlite orebodies,
          including  pipes,  sills and dykes,  in the  Kennady  Lake Area of the
          Property and  elsewhere  on the  Property if such is required,  with a
          view to evaluating whether such orebodies can be profitably mined as a
          single mining operation with a Fifteen Percent IRR.

9.2  Feasibility Study and Development Work

     (a)  Where  the  Management  Committee  approves  the  commissioning  of  a
          Feasibility  Study  pursuant  to  Sections  9.1(b),  9.1(c)  or 9.1(d)
          hereof,  the  Chairman of the  Management  Committee  shall inform the
          Operator  of the  Management  Committee's  decision  and the  Operator
          shall,  pursuant to Section 6.1(a) hereof, submit a Plan and Budget in
          respect of the Development Work to the Management  Committee outlining
          its  proposed  activities  and  expenditures.  Thereafter a Management
          Committee  meeting  shall be called on not less than 14 days notice to
          consider   the  Plan  and   Budget  and  any   submissions   from  the
          Participants.  Details of the Plan and  Budget  shall be sent with the
          notice  calling the meeting.  If the said Plan and Budget are approved
          by the Management  Committee,  the Development Work shall be forthwith
          commenced on the Property as a Joint Venture  Expense.  The Management
          Committee  shall have the right to amend the said Plan and Budget from
          time to time.

     (b)  Upon completion of the Feasibility Study referred to in Section 9.2(a)
          hereof,  copies  of it shall be given to the  Participants  and to the
          Management  Committee.  The Management  Committee  shall meet not less
          than 30 and no more than 90 days following receipt of such Feasibility
          Study. The Management  Committee shall decide whether such Feasibility
          Study  requires   revision  or  clarification  and  upon  satisfactory
          completion of such  revisions or  clarifications,  if any, it shall be
          approved by the Management  Committee.  The Management Committee shall
          then  consider the findings and  recommendations  of such  Feasibility
          Study as it may have been revised.

     (c)  If the Management  Committee  determines  that the  Feasibility  Study
          referred to in Section 9.2(a) hereof does not conclude that there is a
          reasonable  probability  that a  First  Mine  can be  constructed  and
          operated on the Property which will achieve at least a Fifteen Percent
          IRR,  then  the  Management   Committee  shall  give  notice  of  such
          determination  to the parties.  Thereafter  the  Management  Committee
          shall  determine  what  actions  should be taken  with  respect to the
          Property.



     (d)  If the Management  Committee  determines  that the  Feasibility  Study
          referred  to in  Section  9.2(a)  hereof  concludes  that  there  is a
          reasonable  probability  that a  First  Mine  can be  constructed  and
          operated on the Property which will achieve at least a Fifteen Percent
          IRR, then the  Participants  shall cause the  Management  Committee to
          approve the  execution of the  necessary  Development  Work for such a
          First Mine and the failure to do so shall cause a Conversion  Event to
          occur.

     (e)  If the  Management  Committee  approves the execution of the necessary
          Development  Work for such a First Mine under Section  9.2(d)  hereof,
          the  Management  Committee  shall notify the Operator and the Operator
          shall,  pursuant to Section 6.1(a) hereof, submit a Plan and Budget in
          respect of the Development Work to the Management  Committee outlining
          its  proposed  activities  and  expenditures.  Thereafter a Management
          Committee meeting shall be called on not less than 30 and no more than
          90 days notice to consider the Plan and Budget of the Operator and any
          submissions from the Participants. A copy of the Plan and Budget shall
          be sent with the notice calling the meeting.  The Management Committee
          shall  settle such Plan and Budget and the  Development  Work shall be
          commenced on the Property as soon as reasonably possible.

9.3  Subsequent Feasibility Studies and Development Work

     (a)  Except  for  the  Feasibility  Study  commissioned  by the  Management
          Committee pursuant to Sections 9.1(b), 9.1(c) or 9.1(d) hereof and any
          Development Work and Production  resulting  therefrom,  the Management
          Committee  shall  determine  the   commissioning  and  timing  of  any
          Development  Work and Production on the Property and the provisions of
          this Section 9.3 shall apply.

     (b)  If the results of  Exploration  Work  conducted  on any portion of the
          Property are such that in the  Operator's  judgment  Development  Work
          ought  to  be  considered,  then  the  Operator  may  present  to  the
          Management  Committee a proposal for such Development  Work. A meeting
          of the Management  Committee  shall be called to consider the proposal
          on not  less  than 30 days  notice  after  receipt  of such  proposal.
          Details  of the  proposal  shall be sent with the notice  calling  the
          meeting.

     (c)  The  findings  and  recommendations  contained  in any Desk Top Study,
          Pre-Feasibility  Study or Feasibility Study shall be considered by the
          Management Committee at a meeting to be held not less than 30 nor more
          than 90 days following  receipt by the  Participants  of the completed
          study.  The  Management  Committee  shall  decide  whether  the  study
          requires revision or clarification and upon satisfactory completion of
          all such  revisions  or  clarifications,  if any,  the study  shall be
          approved by the Management  Committee.  The Management Committee shall
          consider  the findings  and  recommendations  of such study or revised
          study and decide



          whether  Development  Work  should  be  commenced  in  respect  of the
          Property.

     (d)  If the Management  Committee  approves the commencement of Development
          Work in  respect  of the  Property,  the  Chairman  of the  Management
          Committee  shall  inform the  Operator of the  Management  Committee's
          decision and the Operator  shall,  pursuant to Section  6.1(a) hereof,
          submit a Plan and  Budget in respect  of the  Development  Work to the
          Management   Committee   outlining   its   proposed   activities   and
          expenditures.  Thereafter,  a Management  Committee  meeting  shall be
          called on not less than 30 nor more  than 90 days  notice to  consider
          the Plan and  Budget  of the  Operator  and any  submissions  from the
          Participants.  A copy of the Plan and  Budget  shall be sent  with the
          notice calling the meeting. The Management Committee shall settle such
          Plan and Budget and the  Development  Work shall be  commenced  on the
          Property as soon as reasonably possible.

9.4  Mining Lease

When the mining claims  comprising  the Property  reach their tenth  anniversary
date, the  Participants,  as undivided  co-owners,  shall cooperate and take all
necessary  steps to obtain a mining  lease of the  Property or relevant  portion
thereof determined by the Management Committee,  which mining lease will be held
by the Operator in trust for the Participants as their respective interests may,
from time to time, appear.

9.5  Security for Obligations

Prior to commencing any Exploration  Work,  Development Work or Production,  the
Management Committee may require any Participant who is obliged to contribute to
the Joint  Venture  Expenses  to be  incurred  in  respect  thereof  to  provide
satisfactory  evidence of its ability to fund such contribution,  which evidence
may be in the form of a letter of credit issued by a Canadian  chartered bank in
an amount not less than 110% of the  Participant's  estimated  Cost Share of the
Plan and Budget for such  Exploration Work or Development Work and having a term
of not less than the expected duration of the Plan and Budget plus 90 days.

9.6  Environmental Responsibility

De  Beers  shall  have no  responsibility  or  liability  for any  environmental
pollution  on or damage to the  Property  existing as at March 6, 1997 and prior
thereto and the MPV Group  hereby  agrees to  indemnify  and save De Beers fully
harmless  from any  obligation  or  liability  arising  from such  environmental
pollution  or damage to the  Property.  Any  repair of  environmental  damage or
pollution caused after March 6, 1997 shall be treated as a Joint Venture Expense
and borne by the Participants pursuant to their obligations under this Agreement
to pay Joint Venture Expenses.



9.7  Inukshuk Capital Ltd. and Canamera Geological Ltd.

The MPV Group acknowledges that it has settled its outstanding  differences with
Inukshuk Capital Ltd. ("Inukshuk") and Canamera Geological Ltd. ("Canamera") and
agrees that it will indemnify and save De Beers harmless from any claim that may
be made by Canamera or  Inukshuk  or by any party  through  Canamera or Inukshuk
arising out of any  contractual  relationship  between  Canamera or Inukshuk and
444965 B.C. Ltd.,  Glenmore  Highlands Inc., or a member of the MPV Group, prior
to the date hereof.

                                   Article 10
                                   PRODUCTION

10.1 Annual Plans and Budgets

The Operator shall,  commencing with the Commencement of Commercial  Production,
submit  to  the  Management   Committee  annual  Plans  and  Budgets  respecting
activities  required  to  continue  with  or  complete,  as  the  case  may  be,
Production.  A Management Committee meeting shall be called not less than 14 nor
more than 60 days after receipt by the  Participants of copies of such Plans and
Budgets to consider the submissions  from the Operator and any submissions  from
the  Participants  and to approve such annual  Plans and  Budgets.  All expenses
incurred  for or on  account of such Plans and  Budgets  shall be Joint  Venture
Expenses.

10.2 Disposal of Minerals

     (a)  All minerals  produced in Commercial  Quantities  from any Mine on the
          Property by the Joint  Venture will be taken by the parties in kind in
          proportion to their  respective  Participating  Interests in the Joint
          Venture subject to the following:

          (i)  all diamonds  recovered from the Property during exploration will
               remain  in  the  possession  of  the  Operator  pending  ultimate
               disposition  of them by the Operator.  Prior to such  disposition
               and while in the  Operator's  possession,  such  diamonds  may be
               examined by the other  Participants  under conditions  reasonably
               imposed by the  Operator  which will insure  preservation  of the
               security for  identification  and integrity of the diamonds.  Any
               such diamonds in the Operator's  possession  when it ceases to be
               the Operator shall be separated according to size, weight, colour
               and  clarity,  divided  proportionately  among  the  Participants
               according  to  their  respective   Participating   Interests  and
               delivered to the Participants;

          (ii) the Operator is hereby authorized and instructed to enter into an
               agreement with DCS, on behalf of the Participants, providing that
               all diamonds recovered from the Property in Commercial Quantities
               will be sold by the Operator on behalf of the



               Participants  to the DCS or otherwise  as the DCS may direct,  on
               standard  terms  and  conditions  in force in  current  contracts
               between the DCS and other producers  incorporating the principles
               set forth in Schedule "G" hereto.  The valuer  referred to in the
               sales   agreement  shall  be  a  person  of  good  character  and
               reputation,  who is familiar with the  operations of the DCS, who
               can act  independently  and who has no conflict of interest which
               may affect its role.  So long as the  Participants  other than De
               Beers have not less than a 33-1/3% aggregate  undivided  interest
               in the Property,  they shall have the right to appoint the valuer
               provided  they  establish  that  such  valuer  meets  all  of the
               criteria set forth in the  preceding  sentence.  If the aggregate
               undivided interest of the Participants other than De Beers in the
               Property  falls below  33-1/3%,  De Beers shall have the right to
               appoint such valuer; and

          (iii)all minerals  other than diamonds  recovered from the Property in
               commercial  quantities  will  be  disposed  of  by  each  of  the
               Participants as it may see fit.

                                   Article 11
                        FINANCING JOINT VENTURE EXPENSES

11.1 Financing

     (a)  Except as  otherwise  provided in this  Section  11.1 and Section 11.2
          hereof, the costs in respect of all Exploration Work, Development Work
          and Production  carried out by the Joint Venture on the Property shall
          be  treated  as  Joint  Venture  Expenses  and  shall  be  paid by the
          Participants  in accordance  with Section 3.5(a)  hereof.  The parties
          acknowledge  and agree that  Schedule "F" sets out some but not all of
          the costs of  Exploration  Work and  Development  Work on the Property
          incurred by De Beers as Operator  and paid by the  Participants  up to
          March 8, 2000.

     (b)  All Joint Venture Expenses incurred in respect of Exploration Work and
          Development  Work  during the period  commencing  on March 8, 2000 and
          ending on the Final  Date shall be paid for or the  financing  thereof
          arranged by De Beers.

     (c)  Any  financing in respect of  Exploration  Work and  Development  Work
          arranged by De Beers in connection with the construction and operation
          of the First Mine on the Property  pursuant to Section  11.1(b) may be
          arranged  by De Beers by way of third  party  borrowings  which may be
          secured by a mortgage, charge or other encumbrance on the Property and
          assets of the Joint  Venture in which event De Beers  shall,  if it is
          able to do so on  commercially  reasonable  terms,  arrange  for  such
          borrowings to be with recourse to the Joint Venture  Property only and
          not to the  Participants  personally  and to the extent that it is not
          able to do so on commercially



          reasonable  terms, such borrowings shall be with recourse to the Joint
          Venture  Property  and  to  the  Participants  personally.   Any  such
          mortgage,  charge or encumbrance  shall  constitute a paramount first,
          fixed and specific and/or floating charge on all or any portion of the
          property and assets of the Joint  Venture  including  the Property and
          shall  rank  in  priority  to all  other  Security  Interests  on such
          property and assets and the Participants  agree to execute and deliver
          the necessary postponement and subordination agreements to give effect
          to  such  priority.   Each  of  the  Participants  hereby  irrevocably
          nominates,  constitutes  and appoints De Beers as its attorney for the
          purposes of this Section  11.1(c),  with full power of substitution to
          execute and  deliver all  necessary  grants,  conveyances,  mortgages,
          charges,  postponements and subordination agreements or other deeds or
          documents  necessary  to give effect to such  Security  Interests  and
          their  priority  on its behalf and on behalf of the Joint  Venture and
          each  Participant will execute and deliver such powers of attorney and
          other  documents  as are  necessary  to carry  out the  intent of this
          Section.  Such powers of attorney are acknowledged by each Participant
          to  be  coupled  with  an  interest,  shall  not  be  revoked  by  the
          dissolution,   winding  up,   surrender  of  charter,   bankruptcy  or
          insolvency of the  Participant and may be exercised by the officers of
          any successor or permitted assign of De Beers.

     (d)  The funding of all Joint  Venture  Expenses in respect of  Exploration
          Work, Development Work and Production,  including, without limitation,
          the  financing  of  all  operating  and  non-operating  costs  of  any
          producing  Mine on the  Property,  carried out by the Joint Venture on
          the Property subsequent to the Final Date, shall be from the cash flow
          from the  operation  of such First Mine after full  provision  for all
          operating and non-operating costs, including,  without limitation, all
          third party debt  obligations  incurred prior to such  Commencement of
          Commercial Production  ("Available Cash Flow") and to the extent there
          is  insufficient  or no Available Cash Flow, such funding shall not be
          arranged by De Beers but shall be paid as a Joint  Venture  Expense by
          each of the Participants in proportion to its  Participating  Interest
          in accordance with Section 3.5(a) hereof.

          If a third party lender insists that it receive  repayment  guarantees
          or completion or construction guarantees from the Participants or that
          the Participants establish a cost overrun escrow account in respect of
          Development Work or Production,  then each Participant shall give such
          a  guarantee  or fund such an  account  but only in an amount or to an
          extent equal to its Participating  Interest in the Joint Venture to be
          calculated after such Participant has given notice of its intention to
          participate  or  not  to  participate  in  the  Development   Work  or
          Production.



          If a Participant (the "Guaranteeing  Participant") is required to give
          such a guarantee or to fund such a cost overrun  escrow  account in an
          amount which is greater than that percentage of

          (i)  the total amount to be guaranteed by the Guaranteeing Participant
               and the Participants for such Development Work or Production, or

          (ii) the total amount to be funded in such cost overrun escrow account
               for such Development Work or Production,

          equal to its  Participating  Interest in the Joint Venture (the amount
          by which it is greater  being  called the "Excess  Amount"),  then the
          other Participants shall pay to the Guaranteeing Participant quarterly
          commencing on the date the guarantee is given or the account is funded
          its  proportion  (based on its  Participating  Interest)  of an amount
          equal to interest on such Excess Amount at a variable nominal rate per
          annum equal on each day to LIBOR as then in effect plus 5%  compounded
          annually  both before and after  default and  judgment.  Such interest
          payments shall be secured by first charge on the  Participant's  share
          of  annual  Available  Cash  Flow  from  any Mine  constructed  on the
          Property.

          If the  Excess  Amount  becomes  payable in whole or in part under the
          guarantee or from the cost overrun  escrow account and is paid over to
          or to the  order of the  third  party  lender,  then the  Guaranteeing
          Participant   shall  give   notice  of  such   payment  to  the  other
          Participants  and each other  Participant  shall  forthwith pay to the
          Guaranteeing  Participant its proportion  (based on its  Participating
          Interest) of the amount equal to the Excess  Amount so paid over to or
          to the order of the third party lender plus interest  thereon from the
          date of such payment at a variable  nominal rate per annum equal to on
          each day  LIBOR as then in effect  plus 5%  compounded  annually  both
          before and after default and judgment.  If any such Participant  fails
          to make  payment of such  amount  within 60 days of the giving of such
          notice,  then such amount shall become costs  actually  contributed by
          the Guaranteeing  Participant to the Joint Venture on account of Joint
          Venture Expenses and its  Participating  Interest in the Joint Venture
          shall be  proportionately  adjusted  in  accordance  with  Section 7.1
          hereof.  Upon such adjustment  being made the  Participant  failing to
          make the  payment  shall  cease  to be  indebted  to the  Guaranteeing
          Participant in respect of such amount.

11.2 Election to Not Participate

Notwithstanding  Section 3.5(a) hereof, any Participant whose  representative or
alternate has voted against any matter  requiring a Joint Venture  Expense to be
funded by the Participants under Sections 11.1(a) and 11.1(d) hereof may, within
10 days after the date of such approval by the Management Committee, give notice
to the other  Participants  that it does not wish to pay its Cost Share thereof.
If a Participant



("Non-Contributing  Participant") gives such notice within such period, it shall
not be entitled or obliged to pay its Cost Share of such Joint  Venture  Expense
and if the other Participants proceed with such matter and pay the Joint Venture
Expense in respect of it either pro rata in  proportion  to their  Participating
Interests or otherwise as agreed between them, then the Participating  Interests
of the Non-contributing Participant and the other Participants shall be adjusted
in accordance  with Section 7.1(b) hereof.  If a Participant  fails to give such
notice  within  such  period,  it shall be deemed to have agreed to pay its Cost
Share of such  Joint  Venture  Expense  in  accordance  with  the  terms of this
Agreement.

11.3 Repayment of Joint Venture Expenses

All Joint Venture Expenses paid by the Participants hereunder shall be repaid to
the Participants paying them as follows:

     (a)  all Special Costs shall be repaid first to De Beers out of 100% of the
          Available  Cash  Flow  from the  First  Mine and any  subsequent  Mine
          constructed  on the Property  with interest from the date such Special
          Costs were paid by De Beers at a variable nominal rate per annum equal
          on each day to LIBOR as then in  effect  plus 5%  compounded  annually
          both before and after default and judgment; and

     (b)  after  payment  of such  Special  Costs,  all Joint  Venture  Expenses
          actually  paid by the  Participants,  shall be repaid to them pro rata
          according to Joint Venture Expenses  actually paid by them, out of 90%
          of Available Cash Flow from the First Mine constructed on the Property
          with interest  from the date such Joint Venture  Expenses were paid by
          the  Participants  at a variable  nominal rate per annum equal on each
          day to LIBOR as then in effect plus 4% compounded annually both before
          and after default and judgment; and

     (c)  the remaining 10% of such  Available Cash Flow shall be distributed to
          the Participants in proportion to their Participating Interests.

                                   Article 12
                              LIABILITY OF PARTIES

12.1 Separate and Not Joint

The rights,  duties,  obligations  and  liabilities of the parties to each other
under this Agreement and as  Participants  in the Joint Venture shall be several
and separate and not joint or collective or joint and several.  Each party shall
be  responsible  only  for  its  obligations  herein  set  forth.  It is not the
intention of the parties to create a mining,  commercial or other partnership or
agency  relationship  between  the  parties  and  this  Agreement  shall  not be
construed  so as to render  the  parties  liable as  partners  or as  creating a
mining, commercial or other partnership. No party shall be or be deemed to be or
shall hold itself out as the  partner of any party,  and no party shall be or be
deemed to



be or shall  hold  itself out to be the agent of any other  party  except in its
capacity as Operator.

12.2 Ownership of Property

The  Participants'  ownership  of  beneficial  interests  in the  Joint  Venture
Property  shall  be  as  co-owners  in  undivided   shares  according  to  their
Participating Interests. No party shall in any way be obligated for the debts or
obligations of the other parties.

12.3 Events of Default

A Participant shall be in default in the following  events,  each of which shall
for purposes of this Agreement, constitute an "Event of Default":

     (a)  if the  Participant  defaults in the due and  punctual  payment of its
          Cost Share or any other monies  payable under this Agreement when same
          shall become due and payable;

     (b)  if the  Participant  defaults in the  performance or observance of any
          other  covenant or term contained in this Agreement to be performed or
          observed by it;

     (c)  if the Participant  institutes voluntary  liquidation,  dissolution or
          winding-up  proceedings or takes any voluntary  proceeding pursuant to
          any statute relating to bankruptcy,  insolvency or  reorganization  of
          debts to be adjudicated  bankrupt or for any other relief, or makes an
          assignment  for the benefit of creditors,  or if a receiver,  manager,
          receiver and manager,  trustee or  liquidator or any other Person with
          similar  powers is appointed with respect to property or assets of the
          Participant  which  includes  all or  any  part  of the  Participating
          Interest of the  Participant  and such  appointment  is not terminated
          within 7 days,  or if a court of competent  jurisdiction  adjudges the
          Participant   to  be  bankrupt  or  makes  an  order   requiring   the
          liquidation,  dissolution  or winding-up of the  Participant or if the
          corporate existence of the Participant is otherwise terminated; or

     (d)  if a  judgment  for the  payment  of money in  excess  of One  Hundred
          Thousand  Dollars  ($100,000.00)  is rendered  against the Participant
          which may be enforced against  property in the Northwest  Territories,
          and the  Participant  does not  discharge  the same or provide for the
          discharge  thereof in accordance  with its terms or does not procure a
          stay of  execution  thereof  within 60 days from the date of the entry
          thereof, or does not, within the said period of 60 days or such longer
          period during which execution on such judgment shall have been stayed,
          appeal  therefrom  or from the order,  decree or process upon which or
          pursuant to which the said judgment shall have been granted, passed or
          entered  and cause the  execution  thereof  to be stayed  during  such
          appeal, or if, on the final appeal being taken, such order,  decree or
          process is affirmed,  the



          Participant  does not  discharge  such  judgment  or  provide  for its
          discharge in accordance  with its terms within 60 days after the entry
          of the order or decree or affirmation.

12.4 Default Notice

     (a)  If any  Participant  claims  that  there has been an Event of  Default
          committed  by or  affecting  any other  Participant,  the  Participant
          making  such  claim  shall  give to the  Participant  alleged to be in
          default a notice (a "Default  Notice") and in the Default Notice shall
          designate the alleged Event of Default.  A copy of the Default  Notice
          shall also be given to all other Participants at such time.

     (b)  The Participant alleged to be in default shall, if there is a default:

          (i)  remedy  such  default  within  30 days  after  the  giving of the
               Default Notice; or

          (ii) if the default is capable of remedy but not within such period of
               time,  promptly  commence and diligently  continue  thereafter to
               remedy such default on a timely basis.

12.5 Security for Performance

To secure the  performance  of the  obligations of each  Participant  under this
Agreement and the due and punctual payment by each Participant of its Cost Share
and any other monies payable under this Agreement when the same shall become due
and  payable,  each  Participant  does hereby  grant to the others,  jointly,  a
Security Interest in and does hereby grant, mortgage and charge to and in favour
of  the  other   Participants   (pari  passu  amongst  the  other   Participants
irrespective  of any  registration  or perfection  which might  otherwise  grant
priority to one Participant over another) all of the following:

     (a)  the share of minerals of such Participant; and

     (b)  the Participating Interest of such Participant.

          The  encumbrance  hereby  created  shall in no way hinder or prevent a
          Participant at any time or from time to time,  until such  encumbrance
          has become enforceable pursuant to Section 12.6 hereof, from:

     (c)  subject  to the  provisions  of this  Agreement,  selling,  assigning,
          transferring,  conveying or otherwise  disposing of all or any part of
          its share of  diamonds,  free from such  encumbrance,  in the ordinary
          course of its business and for the purpose of carrying on the same;

     (d)  selling, assigning, conveying,  transferring or otherwise disposing of
          all or an  undivided  part of its  Participating  Interest but only in
          accordance with to the provisions of this Agreement; or



     (e)  granting an  encumbrance  referred  to in Section 3.4 hereof,  and any
          such  encumbrance  may  rank in  priority  to the  encumbrance  hereby
          created,

provided that any such action is not in breach of any express  provision of this
Agreement.

12.6 Remedies on Default

If a Default Notice is given and if the  Participant in default does not proceed
in the manner  contemplated in Section 12.4(b)(i) or (ii) hereof or if the Event
of Default is not capable of remedy,  the security  constituted  by Section 12.5
hereof  shall become  enforceable  and the  Participants  not so in default (the
"Non-defaulting Participants") shall have the following rights and remedies:

     (a)  if the  Event of  Default  is of the  nature  referred  to in  Section
          12.3(a)  hereof  or  is  another  Event  of  Default,  the  defaulting
          Participant  shall,  during the period of the continuance of the Event
          of Default:

          (i)  have no right to attend  meetings or to  participate in decisions
               of the  Management  Committee or any  subcommittee  thereof,  the
               activities  of which shall be conducted as if the only members of
               the Management  Committee and of the  subcommittees  thereof were
               those  Persons  appointed  to  act  as   representatives  of  the
               Non-defaulting Participants and any decision made by such Persons
               shall be deemed to have been duly made unless the  Non-defaulting
               Participants  can be shown to be acting  contrary  to  reasonable
               financial or good Canadian mining practice;

          (ii) have no right to  exercise  any of the  rights  to which it would
               otherwise have been entitled under Article 13 hereof; and

          (iii) have no right to receive its share of minerals;

     (b)  if the  Event of  Default  is of the  nature  referred  to in  Section
          12.3(a) hereof, the  Non-defaulting  Participants shall have the right
          from time to time to either elect to pay on behalf of the  Participant
          in default or to advance to the  Operator an amount  equal to the Cost
          Share of the defaulting  Participant or other payment in arrears.  The
          Non-defaulting  Participants shall make any such payment or advance in
          such  proportions  as they may  agree or  failing  agreement  pro rata
          according to their respective  Participating Interests at the time. In
          any such case:

          (i)  if   a   Non-defaulting   Participant   or   the   Non-defaulting
               Participants  elect  to pay  the  Cost  Share  of the  defaulting
               Participant  on its  behalf,  the  Participating  Interest of the
               defaulting  Participant  shall be adjusted in accordance with the
               provisions  of  Section  7.1(b)  hereof  and  the  Non-defaulting
               Participants  shall  have  no  rights  to be  reimbursed  by  the
               Participant in default for such amounts;



          (ii) if the  Non-defaulting  Participants  elect to advance amounts to
               the  Operator  to  fund  payments  in  arrears,   the  defaulting
               Participant   shall   forthwith   pay   to   the   Non-defaulting
               Participants  an amount  equal to the amounts so advanced by them
               respectively  plus interest at a variable  nominal rate per annum
               equal on each day to LIBOR as then in effect  plus 4%  compounded
               annually  until paid both before and after  default and  judgment
               provided  that if  applicable  law requires that a lesser rate be
               paid such lesser rate shall apply; and

               (A)  with  or  without  taking  possession,   the  Non-defaulting
                    Participants  shall be entitled  to sell,  free and clear of
                    the  Security  Interest  created  under  Section 12.5 but in
                    accordance  with the terms of any other  Security  Interests
                    created in accordance  with this  Agreement,  all or part of
                    the   minerals   pledged  and  charged  by  the   defaulting
                    Participant  pursuant to Section 12.5(a) hereof,  to the DCS
                    either as a whole or in separate parcels, in such manner, at
                    such times and places and upon such terms and  conditions as
                    the Non-defaulting Participants shall determine;

               (B)  with  or  without  taking  possession,   the  Non-defaulting
                    Participants  shall be entitled  upon 90 days prior  written
                    notice given to the defaulting Participant, to sell free and
                    clear of the Security  Interest  created  under Section 12.5
                    but in  accordance  with  the  terms of any  other  Security
                    Interests  created in accordance  with this Agreement all or
                    an undivided part of the Participating  Interest pledged and
                    charged by the  defaulting  Participant  pursuant to Section
                    12.5(b) hereof,  in such manner,  at such time and upon such
                    terms  and  conditions  as the  Non-defaulting  Participants
                    shall determine; and

               (C)  subject  to clause  (iv) of this  Section  12.6(b),  the net
                    proceeds from any sale effected pursuant to this clause (ii)
                    shall be applied to the extent  required  to  discharge  the
                    payment obligations of the defaulting  Participant hereunder
                    and the balance,  if any, of such proceeds  shall be paid to
                    the defaulting Participant;

          (iii)all monies paid or applied in  satisfaction  of amounts  owing to
               the Non-defaulting  Participants under this Section 12.6(b) shall
               be  applied  firstly  to satisfy  interest  owing on the  amounts
               advanced pursuant to Section 12.6(b)(ii) hereof and thereafter to
               such amounts so advanced;



          (iv) upon  payment of all amounts  owing by a  defaulting  Participant
               under  this  Section   12.6(b)  and  otherwise   hereunder,   the
               defaulting Participant shall cease to be a defaulting Participant
               and, to the extent of the Participating  Interest (if any) of the
               defaulting  Participant at such time, shall be entitled to resume
               full  exercise  of  its  rights  hereunder,  provided  that  such
               Participant is not otherwise in default  hereunder in such manner
               that the rights and  remedies  contained in this Section 12.6 are
               then applicable;

     (c)  subject as hereinafter  provided in this Section 12.6(c), if the Event
          of Default is of the nature referred to in Sections 12.3(a),  12.3(b),
          12.3(c) or 12.3(d)  hereof,  and if the Event of Default if capable of
          being remedied has not been remedied by or on behalf of the defaulting
          Participant  within one  hundred  and eighty  (180) days from the time
          when  the  remedies  set  forth  in this  Section  12.6  first  become
          available or if the Event of Default is  incapable of being  remedied,
          then the  Non-defaulting  Participants  shall  have the  right,  to be
          exercised by written notice to the defaulting  Participant at any time
          during the continuation of the Event of Default,  to elect to purchase
          all of the Participating  Interest of the defaulting  Participant at a
          purchase price equal to 90% of the fair market value thereof as of the
          date of such  notice,  such fair  market  value to be  established  by
          agreement  within 90 days from the giving of the  notice  or,  failing
          agreement  within  those 90 days,  as  determined  by  arbitration  in
          accordance  with Article 15 hereof.  The  Non-defaulting  Participants
          shall have the right to  purchase  the  Participating  Interest of the
          defaulting  Participant  in such  proportions  as they  may  agree  or
          failing   agreement,   pro  rata,   according   to  their   respective
          Participating  Interests  at the time.  Any amounts  which,  as of the
          closing, are owing by the defaulting Participant to the Non-defaulting
          Participants  in  respect of any  expenses  or costs  incurred  by the
          Non-defaulting  Participants  on behalf of the defaulting  Participant
          relating to the Joint  Venture,  shall be deducted  from the  purchase
          proceeds  payable to the  defaulting  Participant  under this  Section
          12.6(c).  Such amount of the  purchase  proceeds  shall be paid to the
          Non-defaulting  Participants  and applied to such amounts owing to the
          Non-defaulting Participants in this Section 12.6(c).

If notice under this Section 12.6(c) is given, the defaulting  Participant shall
sell  its   Participating   Interest  to  the   Non-defaulting   Participant  or
Participants as  contemplated  herein and the provisions of this Section 12.6(c)
shall apply to the purchase and sale.  Notwithstanding  Section 12.9 hereof,  if
the  Non-defaulting  Participants  proceed in the manner  stated in this Section
12.6(c), such Participants shall be deemed to have exercised the right contained
herein in lieu of all other rights, at law or in equity,  against the defaulting
Participant by reason of the Event of Default.  The right of the  Non-defaulting
Participants  contained in this Section 12.6(c) to purchase at a discount is not
intended to impose a penalty  upon the  defaulting  Participant,  but rather all
parties  agree  that the stated  discount  from fair  market  value is a genuine
pre-estimate  of the minimum  liquidated  damage  which would be suffered by the
Non-defaulting Participants in such



event,  bearing in mind the disruptive effect which a prolonged Event of Default
would have upon the Joint Venture.

The following provisions shall also apply to this Section 12.6(c):

          (i)  the  Non-defaulting  Participant  or  Participants  shall pay the
               purchase  proceeds  payable to the defaulting  Participant  under
               this Section  12.6(c) by certified  cheque or bank draft, or such
               other form of payment as is acceptable to all Persons  concerned,
               at a closing to be held 45 business days after the  determination
               of the purchase price;

          (ii) if any interest of the defaulting Participant in any agreement is
               assigned  or  transferred  to one or both  of the  Non-defaulting
               Participants  as a part of the  transaction  of sale  under  this
               Section 12.6, the defaulting Participant shall fulfill all of its
               obligations  thereunder  to the  date of the  closing  and  shall
               indemnify the Non-defaulting  Participants in respect of all such
               obligations.   The  purchasing   Non-defaulting   Participant  or
               Participants  shall  fulfill all  obligations  of the  defaulting
               Participant under such agreements, which arise from and after the
               closing date, and shall  indemnify the defaulting  Participant in
               respect of all such obligations;

          (iii)at the closing,  the  defaulting  Participant  shall deliver such
               assignments,  transfers and other assurances as may reasonably be
               required  to  assure  the  Non-defaulting  Participants  that the
               Participating  Interest sold by the  defaulting  Participant  has
               been  conveyed,  free and clear of all  encumbrances,  other than
               Security Interests created in accordance with this Agreement, and
               provided  that if any  mortgage,  charge  or lien in  favour of a
               contractor in respect of the Property  exists as of closing date,
               the  Non-defaulting  Participants  shall be  entitled to withhold
               from the amount otherwise  payable to the defaulting  Participant
               an amount  equal to the  defaulting  Participant's  proportionate
               share on  account  of such  mortgage,  charge  or lien  (such sum
               referred to herein as the "Holdback"). Until disbursed or applied
               as provided for herein,  the  Non-defaulting  Participants  shall
               invest  the  Holdback  in  an  interest-bearing  account  with  a
               Schedule I Bank Act  (Canada)  chartered  bank or in a short-term
               investment  instrument  issued by such a  chartered  bank or by a
               federal or provincial  government in Canada as the Non-defaulting
               Participants may in its discretion determine.  It is acknowledged
               that the Non-defaulting  Participants shall have no liability for
               failing to obtain any specified rate or minimum rate of return or
               to obtain the highest rate of return  available on the  Holdback,
               its sole obligation being to account for interest actually earned
               thereon.  For a period of five (5) years



               following the closing,  the Non-defaulting  Participants shall be
               entitled to set-off and deduct from the  Holdback  and apply such
               amounts  as may be  necessary  from time to time to  satisfy  the
               defaulting   Participant's   proportionate   share  of  any  such
               mortgage,  charge or lien in favour of a contractor in respect of
               the  Property.  On the  fifth  anniversary  of the  closing,  the
               Non-defaulting   Participants   shall   pay  to  the   defaulting
               Participant  the  balance  remaining,  if any,  of the  unapplied
               Holdback.

12.7 Further Assurances

From time to time the  Participants  shall execute,  acknowledge  and deliver by
their proper officers,  deeds or indentures  supplemental  hereto for any one or
more of the following purposes:

     (a)  confirming,   better   evidencing,   perfecting  or   publishing   the
          encumbrance referred to in Section 12.5 hereof;

     (b)  amplifying the  description of any property  hereby made subject to an
          encumbrance;

     (c)  confirming that the Security  Interest on the property  referred to in
          Section 12.5 hereof is subordinated and subject to the priority of any
          Security Interest contemplated by Section 3.4 hereof; and

     (d)  registering  or  filing  any  notice  or  other  document  that may be
          necessary   or  desirable  to  protect  or  preserve  the  rights  and
          priorities of the Participants under this Article 12.

12.8 Liability

Except as  provided  in Section 6.2 hereof no party shall be liable to any other
party in respect of Consequential Damages arising out of any Event of Default or
indemnity hereunder.

12.9 Other Remedies

Subject  to  Section   12.6(c)  and   notwithstanding   this   Article  12,  the
Non-defaulting  Participants  shall have any other rights and remedies available
at law or in equity, which may be exercised in the alternative,  concurrently or
cumulatively.  No  delay  or  omission  by  any  Non-defaulting  Participant  in
exercising its rights and remedies  hereunder  shall operate as a waiver thereof
or of any other right or remedy and no single or partial  exercise thereof shall
preclude  any other  future  exercise  thereof or exercise of any other right or
remedy.



                                   Article 13
                                    TRANSFERS

13.1 Right of Refusal On Transfers

If a Participant (hereafter in this Section 13.1 called the "Vendor") shall wish
to sell, assign,  transfer,  convey or otherwise dispose of (the "Transfer") all
or part of or any interest in its  Participating  Interest (herein  collectively
called  the  "Offered  Interest")  at any  time  during  the  currency  of  this
Agreement,  it shall do so only if it has a bona fide written  offer of purchase
from a third party (the "Third Party  Offer")  which the Vendor wishes to accept
and then the other  Participants  shall be  entitled  to a right of  refusal  in
respect thereof as follows:

     (a)  the Vendor shall give written notice  (hereafter  called the "Offering
          Notice") to the other  Participants  (the  "Offerees") of the Vendor's
          desire to sell the Offered  Interest to the Offerees on the same terms
          and conditions as those in the Third Party Offer.  The Offering Notice
          shall describe the Offered  Interest and all other pertinent terms and
          conditions of the intended  Transfer and shall be accompanied by (i) a
          copy of the  Third  Party  Offer,  and (ii)  particulars  known by the
          Vendor of who directly or indirectly controls such third party;

     (b)  the  offer  constituted  by an  Offering  Notice  shall  be  open  for
          acceptance  for a  period  of 60  days  following  the  giving  of the
          Offering  Notice  (herein the  "Acceptance  Period") by written notice
          given by the purchasing  Offeree or Offerees,  and the Offering Notice
          shall be irrevocable during the Acceptance Period;

     (c)  if any part of the consideration  payable by the third party under the
          Third Party Offer is other than cash, then the Offerees shall have the
          option of paying to the Vendor  cash in an amount  equivalent  to such
          non-cash consideration. If the Vendor and the Offerees cannot agree on
          the amount of such cash within the Acceptance Period,  then the matter
          shall  be  settled  by  arbitration  pursuant  to  Article  15 and the
          Acceptance  Period and all time  periods  for  performance  under this
          Section 13.1 shall be extended by a period of time equal to the period
          of time it takes to  finally  determine  the matter  pursuant  to such
          arbitration;

     (d)  if the  relevant  Offeree or Offerees  have not agreed to purchase the
          Offered Interest during the Acceptance  Period,  then the Vendor shall
          be entitled to sell the Offered  Interest to the third party  within a
          period of 120 days after the  expiration of the  Acceptance  Period at
          the price and upon the other  terms and  conditions  contained  in the
          Third Party Offer;

     (e)  if the Vendor does not complete  the sale to the third party  pursuant
          to  Section  13.1(d)  within  such  120 day  period,  then  the  other
          Participants' right of first refusal shall be deemed to be revived and
          any  subsequent



          proposed Transfer shall be subject to the terms and provisions of this
          Section 13.1;

     (f)  if any  law,  regulation  or  policy  of  general  application  of any
          government in Canada requires the prior approval of such government or
          any department or agency thereof to permit an acquisition contemplated
          above,  the acceptance  may be conditional on such approval,  provided
          that the Person intending to acquire the interest  diligently  pursues
          all reasonable measures to obtain such approval or authorization; and

     (g)  this Section 13.1 shall not apply to any conveyance resulting from the
          application  of  the  remedial  provisions  of any  Security  Interest
          permitted  by Sections  3.4 or Article 12 hereof by the holder of such
          Security Interest (subject to the rights of the other  Participants as
          referenced in Section 3.4(b) hereof).

It  shall  be a  condition  to the  completion  or  validity  of any sale of any
Participating Interest to a third party under this Section 13.1, that such third
party,  in accordance  with Section 13.3 hereof,  executes a counterpart of this
Agreement thereby agreeing to acquire the rights and benefits and to be bound by
and to discharge the duties and  obligations of the Vendor as if the third party
were the Vendor.

13.2 Exempt Transfers

Notwithstanding  Section 13.1 hereof,  each Participant  shall have the right to
sell,  transfer  or  otherwise  dispose  of all but  not  less  than  all of its
Participating Interest:

     (a)  to an Affiliate  provided the transferee  continues at all times to be
          an Affiliate of the original Participant and further provided that the
          original  Participant and the Affiliate each provide legal and binding
          undertakings  (in  form  and  substance   satisfactory  to  the  other
          Participants)  to the other  Participants  to the effect that:  (i) so
          long as the Affiliate  holds a Participating  Interest,  the Affiliate
          will remain an  affiliate of such  Participant;  and (ii) prior to the
          Affiliate  ceasing  to  be  such,  the  Affiliate  will  transfer  its
          Participating Interest back to such Participant; and

     (b)  to another corporation by way of statutory amalgamation or arrangement
          provided  such  Participant  or its  shareholders  receive a  majority
          equity interest in the corporation resulting from such amalgamation or
          arrangement that is generally proportionate to the value of the assets
          transferred or disposed of to such corporation on such amalgamation or
          arrangement.

The transferee under any Transfer or the entity resulting from any amalgamation,
arrangement  or merger  permitted by this Section 13.2 shall,  as a condition to
the  effectiveness  of such Transfer,  amalgamation,  arrangement or merger also
agree in writing with all other  Participants  to be bound by the  provisions of
this Agreement



including,  without limitation,  the provisions of this Article 13 and to assume
and perform the  obligations  of the  transferring,  amalgamating,  arranging or
merging Participant(s).

In the case of a transfer to an Affiliate,  the transferring  Participant  shall
remain liable to cause the  transferee to perform the  obligations so assumed by
it and for its failure to do so.

No transferor of a Participating  Interest will be released from its obligations
under this Agreement without the consent of all other Participants.

No Person may be  admitted  to the Joint  Venture or shall be able to possess or
exercise the rights of a Participant under this Agreement without the consent of
all other  Participants  unless the  provisions  of this  Section  are  strictly
observed.

13.3 Transfer of Interest In Participating Interest

Any and all sales,  assignments,  transfers,  conveyances or other  dispositions
made by any  Participant  (or its  successors in interest) of its  Participating
Interest  shall be  subject  to the  terms,  covenants  and  conditions  of this
Agreement and all applicable laws and  regulations.  The terms of this Agreement
shall be deemed to be covenants running with the Participating Interest acquired
hereunder and with all such sales, assignments,  transfers, conveyances or other
dispositions  thereof. The Participants shall require any and all transferees of
a  Participating  Interest to execute a counterpart  of this  Agreement  thereby
agreeing to acquire the rights and  benefits and to be bound by and to discharge
the duties and obligations of the transferring Participant (including under this
Article 13) as if such transferee were such  transferring  Participant.  No such
sale,  assignment,  transfer,  conveyance or other disposition shall relieve the
transferring  Participant of any of its  obligations  or  liabilities  which are
undischarged at the time of such sale, assignment, transfer, conveyance or other
disposition unless all Participants so agree in writing.

13.4 Minerals Other Than Diamonds

The parties acknowledge and agree that although the purpose of the Joint Venture
is to prospect,  explore for and develop  minerals on the Property,  the primary
focus shall be with respect to diamonds.  The parties  agree that if minerals in
commercial quantities are discovered on the Property other than diamonds, then a
party's  Participating  Interest  and its  rights  and  obligations  under  this
Agreement in respect of diamonds and in respect of minerals  other than diamonds
shall be held  separately and distinctly from each other and shall be capable of
being  sold,  transferred,  assigned or made  subject to a Security  Interest in
accordance with the terms of this Agreement,  separately and distinctly, and the
restrictions in this Agreement on a party's  selling,  transferring or assigning
its  Participating  Interest or its rights and obligations  under this Agreement
including a Net Profit Royalty, shall apply to each such holding separately.



13.5 Partition

Each  of the  Participants  hereby  waives  and  renounces  the  benefit  of all
provisions  of law,  as now in effect or as enacted in the  future,  relating to
actions for  partition or sale of real and personal  property and agrees that it
will not resort to any action at law or in equity to  partition or sell any real
or personal  property  subject to this Agreement.  This waiver and  renunciation
shall be in force for a period of 40 years or until  the  prior  termination  of
this  Agreement,  which  the  parties  agree is a  reasonable  period  under the
circumstances  and the Participants  may unanimously  agree to renew this waiver
and renunciation for a like period.

                                   Article 14
                                   ABANDONMENT

14.1 Abandonment

The  Operator  may from time to time  abandon any part of the Property by ceding
and  transferring  all right,  title and  interest  in such part to MPV free and
clear of any unpaid obligations to contractors engaged by it, as operator, to do
work  upon such part and in the case of any part of the  Property  so  abandoned
after the date hereof, with at least sufficient assessment work recorded against
such part (or moneys paid in lieu  thereof)  to keep such part in good  standing
for at least 90 days from the date of such  abandonment.  Upon such abandonment,
the Joint Venture and the Operator,  in its capacity as such,  shall be relieved
from  all  obligations  thereafter  accruing,  the  operations  thereon  and the
production therefrom and any part of the Property so ceded and transferred shall
cease to be part of the Property and cease to be subject to this Agreement.

14.2 Sale Restricted

None of De Beers, the Management Committee or the Operator has the right to sell
or abandon the  parties'  interest  in or title to all or part of the  Property,
except in accordance with Section 14.1 or with the consent of all parties.

                                   Article 15
                                   ARBITRATION

15.1 Settlement of Amounts Payable

In the  event  the  Participants  cannot  agree  on  the  amount  payable  for a
Participant's Net Profit Royalty under Section 7.2 hereof, the fair market value
of a defaulting  Participant's  Participating  Interest  under  Section  12.6(c)
hereof,  or the cash equivalent  value of non-cash  consideration  under Section
13.1(c) hereof or there is an unresolved audit claim under Section 1.4(b)(vi) of
Schedule "A" hereto or dispute over allocations  under Section 2 of Schedule "C"
hereto,  the matter shall be submitted to  arbitration  in  accordance  with the
provisions of this Article 15.



15.2 Location of Arbitration

Any  arbitration  under this  Article  shall take place in the City of  Toronto,
Ontario or in such other place as the Participants agree upon in writing.

15.3 Arbitration Act

The arbitration  shall be governed by the Rules of Procedure set out in Schedule
"E". It shall be a condition  precedent to the bringing of any legal proceedings
that are  contemplated  by such Rules that the parties will have  concluded  the
arbitration process as provided by such Rules. The provisions of the Arbitration
Act, 1991 (Ontario) shall apply to any arbitration conducted hereunder except to
the extent that they are modified by the provisions of this Article 15.

15.4 Cost of Arbitration

Unless  the  Participants  agree to share the costs of  arbitration  in the same
ratio as they hold Participating Interests (or in some other ratio agreed upon),
the arbitrator  shall determine what part of the costs and expenses  incurred in
any such  proceeding  shall be borne by each  Participant  participating  in the
arbitration.

                                   Article 16
                                 CONFIDENTIALITY

16.1 Information

     (a)  The parties agree that all information they may receive as a result of
          or in  connection  with the work carried out under the  provisions  of
          this Agreement shall be the exclusive  property of the parties,  shall
          be  classified as secret and treated as  proprietary  and shall not be
          shared or traded with others without the prior written  consent of all
          parties, such consent not to be unreasonably withheld. Notwithstanding
          the  foregoing,  any party may at any time and  without the consent of
          the other parties make a disclosure that would otherwise be prohibited
          by the  foregoing if such  disclosure is required by virtue of any law
          or  regulation  to which it is subject or any by-law,  policy or other
          rule,  of  any  securities   regulatory  bodies  having  jurisdiction,
          including  stock  exchanges,  or is made  to an  Affiliate  or,  where
          necessary or advisable, to a consultant,  financial adviser, lender to
          obtain moneys to pay Joint Venture Expenses under this Agreement, or a
          potential   bona  fide  purchaser  of  minerals  or  transferee  of  a
          Participating  Interest  under  Section 13.1 or 13.2 hereof;  provided
          that each such Affiliate, consultant, financial adviser, lender or any
          potential   bona  fide  purchaser  of  minerals  or  transferee  of  a
          Participating  Interest under Section 13.1 or 13.2 hereof shall, prior
          to any  disclosure,  be required to provide a written  confidentiality
          undertaking to the parties. Furthermore, each party shall endeavour on
          a best efforts basis to restrict the disclosure of information to such
          a consultant,  financial adviser, lender or such a potential purchaser
          of  minerals  or  of  a  Participating   Interest   hereunder  to



          the information required to finalize the financing or sale. If a party
          proposes to make a press release or public  statement  with respect to
          such  information,  it shall first  provide the other  parties  with a
          draft copy for review and  comment  and if the other  parties  fail to
          comment on the proposed  release in writing  within 3 Business Days of
          receipt, it shall be deemed to have been approved in its entirety.

     (b)  No member of the Management  Committee shall make statements on behalf
          of the Joint  Venture  excepting  that the Chairman of the  Management
          Committee  may from  time to time be  specifically  authorized  by the
          Management  Committee to make such  statements  on behalf of the Joint
          Venture;

     (c)  Notwithstanding  Section  16.1(b),  the Chairman  may make  statements
          about the  operations of the Joint Venture on the Property  considered
          in his opinion to be in the best interests of the Joint Venture if the
          circumstances  require same; however,  the Chairman shall use his best
          efforts to consult with all the Participants if practicable  before so
          proceeding  and to  distribute a written text of his  statement to all
          Participants immediately thereafter;

     (d)  Notwithstanding any other provision of this Section 16.1, the Operator
          may make a disclosure about the operations of the Joint Venture on the
          Property:

          (i)  if such disclosure is required by virtue of any law or regulation
               to which it is subject;

          (ii) if such  disclosure  is considered in the opinion of the Operator
               to be in the best  interests  of the Joint  Venture,  however the
               Operator  shall  endeavour  to consult with each  Participant  if
               practicable  before  so  proceeding  and it  shall  distribute  a
               written  summary of the disclosure or a written text of its press
               release,  as the case  may be,  to the  Participants  immediately
               thereafter; or

          (iii)if such  disclosure  is necessary  for the Operator to enter into
               contracts, provided however that in such event the Operator shall
               use all  reasonable  efforts to obtain a written  confidentiality
               undertaking  in  advance  from each party to be made privy to the
               aforesaid confidential information;

               but shall  otherwise be prohibited  from making any disclosure or
               statement to the media or to issue any press  release  respecting
               any thing or matter arising from this Agreement without the prior
               written  consent of the  Management  Committee and in such event,
               copies of any such  statement or release shall be  transmitted to
               each of the  Participants  in the  most  expeditious  manner  for
               review and



               comment  and  any  Participant  who  fails  to  comment  on  such
               statement or release  within 3 business  days of receipt shall be
               deemed to have approved of it in its entirety.

16.2 Survival

Notwithstanding  anything contained in this Agreement, the obligations contained
in this  Article 16 shall  continue to bind each party to this  Agreement  after
disposition of its Participating  Interest and shall survive for a period ending
three (3) years following the date that no further Exploration Work, Development
Work or Production is being carried out by the parties on the Property  pursuant
to this Agreement,  provided that the  obligations  contained in this Article 16
with respect to information  concerning the individual  parties or any concepts,
ideas or know-how of such parties  which is not Joint  Venture  Property,  shall
survive without time limitation.

                                   Article 17
                                  FORCE MAJEURE

17.1 Suspension of Obligations

     (a)  Save  for  payment  of a Cost  Share of Joint  Venture  Expenses,  the
          obligations  of any party  hereto shall be suspended as to any portion
          of the  Property for the reasons and causes and during the time and to
          the extent that the same or similar  obligations  are suspended  under
          any lease or other  instrument  covering  such portion of the Property
          and shall also be suspended to the extent and for the period that such
          party,  or  its  employees,   servants,  agents  or  contractors,  are
          prevented,  hindered or delayed in complying  with the  provisions  of
          this Agreement by any cause beyond its reasonable  control  (excluding
          lack of  funds)  but  including  strikes,  lockouts  or  other  labour
          disputes,  acts of god, laws,  rules and  regulations of  governmental
          bodies or agencies thereof, accidents,  actions of the elements, delay
          or failure by suppliers or transporters of materials, parts, supplies,
          services or equipment,  or by contractors or subcontractors,  shortage
          of or  inability  to obtain  or delay in  obtaining  permits,  labour,
          transportation,  materials,  machinery, equipment, supplies, utilities
          or services, breakdown of equipment,  machinery or facilities,  delays
          relating to  environmental  claims or  enquiries  or to claims made by
          aboriginal  groups  or any  other  cause,  except  financial,  whether
          similar or dissimilar  to those  specifically  enumerated,  beyond the
          reasonable control of the party affected.

     (b)  In the event that any such cause should  arise,  the Operator or party
          affected shall, as soon as practical, advise all parties in writing of
          the  occurrence  of such  cause  and  shall  take  such  action as may
          reasonably be available to it to endeavour to eliminate  such cause in
          a timely  manner,  provided  that neither De Beers nor any other party
          shall  be  required  to  settle  strikes,  lockouts  or  other  labour
          difficulties contrary to its wishes.



                                   Article 18
                                 OTHER INTERESTS

18.1 Acquisition Of Property By Staking Or Purchase

Each of De Beers,  MPV and CV shall be free to acquire,  directly or indirectly,
any interest in any mining  claims,  leases or  properties  by way of staking or
purchase  from or  through  a Joint  Venture  Arrangement  or a third  party  or
otherwise  outside the  Property  without any  liability  or  obligation  to the
others.

                                   Article 19
                                  MISCELLANEOUS

19.1 Expenses

Each party shall pay all expenses it incurs in authorizing, preparing, executing
and  performing  this  Agreement and the  transactions  contemplated  hereunder,
including  all fees and  expenses  of its  legal  counsel,  bankers,  investment
bankers, brokers, accountants or other representatives or consultants.

19.2 Time

Time is of the essence of each provision of this Agreement.

19.3 Liquidation of Assets and Decommissioning

     (a)  Subject to Section 19.3(d) hereof,  upon the final cessation of mining
          and milling  activities  under this Agreement and provided  additional
          Commercial  Quantities  of minerals  have not been  discovered  and no
          custom  milling  arrangement  is available  which would be in the best
          interests of the Joint  Venture,  the  Participants  shall salvage and
          liquidate  the  Joint  Venture  Property  and  complete  all  required
          decommissioning,  reclamation and environmental  cleanup. The proceeds
          from  such  salvage  and  liquidation  shall  be  distributed,   after
          deducting the costs related thereto, to the Participants  according to
          their Participating Interests at the time of liquidation;

     (b)  The Participants  agree that the Management  Committee shall annually,
          within 60 days  after the end of each  Operating  Year,  estimate  the
          decommissioning,  reclamation and environmental clean-up costs (herein
          collectively  called the  "Decommissioning  Costs")  for work that has
          been completed by the joint Venture prior to the end of such Operating
          Year.

          The Operator shall establish for each  Participant a notional  account
          ("Notional  Account")  to which will be added such  Participant's  pro
          rata  share  of  the  estimated   Decommissioning   Costs  when  first
          calculated  plus its pro rata share of any  increases to the aggregate
          amount of the estimated  Decommissioning Costs from time to time. Such
          pro rata share will be



          based upon each party's  Participating  Interest as at the end of each
          Operating  Year  save and  except  that any  Decommissioning  Costs in
          respect  of the  period  prior to March 6, 1997  shall be for the sole
          account  of MPV and CV.  It is  acknowledged  that  the  Participants'
          Notional  Accounts may be adjusted  from time to time pursuant to this
          Section 19.3(b).  Each party shall be liable for that portion of total
          Decommissioning  Costs  equal to the balance in its  Notional  Account
          from time to time plus its pro rata  share,  based  upon the  parties'
          respective  Participating  Interests,  of any  actual  Decommissioning
          Costs  exceeding  the  aggregate  estimated  Decommissioning  Costs as
          reflected by the aggregate of the Notional  Accounts.  Such  liability
          shall not be decreased by any decrease in the  Participating  Interest
          of such party  unless the Person  acquiring a  Participating  Interest
          from such party agrees, with the approval of the Management Committee,
          to assume the applicable pro rata share of such liability,  based upon
          the Participating Interest acquired. A party acquiring a Participating
          Interest of another party whose Participating Interest is diluted as a
          result of the  operation of Section  7.1(b) shall not be considered to
          assume any Decommissioning Cost liability of the diluting party unless
          the  acquiring  party  specifically  agrees,  with the approval of the
          Management  Committee,  to assume such liability.  If a party with the
          approval   of   the   Management   Committee   assumes   any   of  the
          Decommissioning Cost liability of another party, the Notional Accounts
          of both such parties shall be adjusted accordingly.

     (c)  The parties agree that at any time the Management Committee may decide
          to  establish  a  decommissioning  fund  to be  contributed  to by the
          Participants and to be used to pay for Decommissioning  Costs. If such
          a fund is established,  each party shall contribute  thereto an amount
          equal to the balance in such  party's  Notional  Account  from time to
          time or such  lesser  amount as may be  determined  by the  Management
          Committee,  subject  always  to any  applicable  laws  concerning  the
          establishment  and  maintenance  of  such a  fund.  If  such a fund is
          established  and the  balance of a party's  Notional  Account is later
          decreased,  the party shall be  entitled  to withdraw  from the fund a
          sufficient  amount so that the amount  contributed  to the fund is not
          greater  than the  balance  in such  party's  Notional  Account.  Such
          contributions  shall be made at such times as may be determined by the
          Management  Committee and shall consist of cash or such form of liquid
          securities as may be approved by the Management Committee from time to
          time, acting reasonably. Such fund shall be deposited with a financial
          institution to be determined by the Management Committee.

     (d)  Any income  from any  decommissioning  fund  established  pursuant  to
          Section 19.3(c) above shall be allocated, but not actually paid, among
          the parties pro rata according to their Participating  Interests as at
          the end of the  Operating  Year in which such income was earned.  Each
          such party shall be entitled to withdraw from any such decommissioning
          fund 50% of



          the  income  so  allocated  to it in  order  to pay the  income  taxes
          relating to the allocation of such income to it.

     (e)  Notwithstanding  Section  19.3(a)  hereof,  in  the  event  any of the
          parties to this Joint Venture  Agreement  wish to purchase all or part
          of the  saleable  assets  of the Joint  Venture,  they  shall  provide
          written  notice  to the  other  Participants  within  60  days  of the
          cessation  of mining  and  milling  activities.  In the event only one
          party wishes to purchase the subject assets,  it shall be obligated to
          purchase those assets at fair market value. In the event more than one
          party  wishes to  purchase  the  subject  assets,  each party shall be
          required  to tender a sealed bid with  respect to the  purchase of the
          assets to an agreed depository.  The said tenders shall then be opened
          and the party with the highest  tender  shall be obligated to purchase
          all of the assets.

     (f)  The  Operator  shall  prepare  and file with the  relevant  regulatory
          authorities all required plans and reports relating to  rehabilitation
          and  restoration  of the Property  which may be required by applicable
          law and the cost thereof shall constitute a Joint Venture Expense. The
          liability of the Participants for any financial  guarantee required in
          connection  therewith  shall  be borne  pro  rata to their  respective
          Notional Accounts.

19.4 De Beers Can Negotiate Pooling Arrangement

The MPV Group agrees that if at any time prior to  proceeding  to construct  and
develop  the First  Mine on the  Property  De Beers can  reasonably  demonstrate
through the results of a Desk Top Study,  Pre-Feasibility  Study or  Feasibility
Study that a Mine cannot be constructed  and operated on the Property which will
achieve a Fifteen  Percent IRR and also can reasonably  demonstrate  that if the
Property  were pooled or combined  with  adjacent or nearby  properties of third
parties that a Mine mining product from the Property and such adjacent or nearby
properties could be constructed and operated which would have a high probability
of achieving at least a Fifteen  Percent IRR, then De Beers shall have the power
and authority to conclude such a pooling or  combination  arrangement  with such
third parties based on the terms and conditions agreed to by De Beers and MPV.

19.5 Notice

Any notice or other  communication  (in this  Section a  "Notice")  required  or
permitted  to be given or made  hereunder  shall be in writing and shall be well
and sufficiently given or made if:

     (a)  delivered in Person during normal business hours on a business day and
          left with a receptionist or other responsible employee of the relevant
          party at the applicable address set forth below:

     (b)  sent by any electronic means of sending  messages,  including telex or
          facsimile transmission,  which produces a paper record (an "Electronic



          Transmission"),  charges  prepaid and confirmed by registered or first
          class mail; or

     (c)  sent by registered or first class mail unless any general interruption
          of postal services due to strike,  lockout or other cause exists or is
          threatened in which event only (a) or (b) shall be used;

          in the case of a Notice to De Beers, addressed to it at:

          De Beers Canada Exploration Inc.
          One William Morgan Drive
          Toronto, Ontario
          M4H 1N6

          Attention:  Chief Executive Officer
          Fax Number: (416) 423-0081

          and in the case of a Notice to MPV:

          Mountain Province Diamonds Inc.
          Suite 212
          525 Seymour Street
          Vancouver, British Columbia V6B 3H7

          Attention:  Chairman
          Fax Number: (604) 684-7208

          and in the case of a Notice to CV:

          Camphor Ventures Inc.
          Suite 1304
          925 West Georgia Street
          Vancouver, British Columbia V6C 3L2

          Attention:  Chairman
          Fax Number: (604) 682-4768

          Any Notice  given or made in  accordance  with this  section  shall be
          deemed to have been given or made and to have been received:

     (d)  on the day it was delivered, if delivered as aforesaid;

     (e)  on the day of sending if sent by Electronic Transmission during normal
          business hours of the addressee on a Business Day and, if not, then on
          the first Business Day after the sending thereof; and

     (f)  on the third Business Day after it was mailed,  if mailed as permitted
          hereby.



Either  party  hereto  may from time to time  change its  address  for notice by
giving notice to the other parties  hereto in accordance  with the provisions of
this section.

19.6 Governing Law

This  Agreement  shall be  governed  by the laws of the  Province of Ontario and
shall  be  treated  in all  respects  as an  Ontario  contract.  Subject  to the
provision for arbitration in Sections 7.2, 12.6(c),  13.1(c) and 15.1 hereof and
Section  1.4(b)(vi)  of Schedule "A" and Section 2 of Schedule  "C" hereto,  any
dispute  among the parties  arising  under this  Agreement  will be tried in the
proper courts of the Province of Ontario or British Columbia.

19.7 Further Assurances

Each party shall  promptly do such acts and shall  execute such  further  deeds,
documents,   conveyances,   deeds,   assignments,   transfers,   subordinations,
postponements, directions, authorizations and the like, and will cause the doing
of such acts and will cause the  execution of such  further  documents as may be
reasonably  within its power,  as the other party may in writing at any time and
from time to time reasonably  request be done and/or executed,  in order to give
full  effect  to  the  provisions  of  this  Agreement  all in  accordance  with
applicable laws.

19.8 Counterparts

This  Agreement  may be executed in any number of  counterparts.  Each  executed
counterpart  of each  such  agreement  shall be deemed  to be an  original.  All
executed counterparts taken together shall constitute one agreement.

19.9 Facsimile Execution

An  executed  copy of  this  Agreement  may be  delivered  by  either  party  by
facsimile.  In such event, such party shall forthwith deliver to the other party
an original copy of such agreement executed by such party.

19.10 Successors and Assigns

This  Agreement  shall be binding  upon,  and shall enure to the benefit of, the
parties and their respective successors and permitted assigns.

19.11 Formal Transfers

In connection  with the transfer of any interest in the Joint  Venture  Property
pursuant to a sale, assignment,  transfer,  conveyance or other disposition made
pursuant  to this  Agreement,  the parties  shall from time to time  execute and
deliver  such  instruments  in  recordable  form as may be  required to formally
effect such transfer and to evidence or record such transfer.  In addition,  the
parties shall execute such further agreements,  conveyances, assurances or other
instruments as may be reasonably requested by any party to effectuate the intent
of any provision of this Agreement.



19.12 GST

The  Participants  shall each execute a Joint Venture  election (the "Election")
pursuant  to Section  273 of the Excise Tax Act  (Canada),  confirming  that the
Operator shall account for all goods and services tax in respect of any supplies
made to or by the Joint  Venture and the  Operator  shall retain the Election in
its records and present it to Canada Customs and Revenue Agency,  upon demand. A
similar election shall be filed pursuant to any analogous  provisions  contained
in provincial legislation.

IN WITNESS WHEREOF the parties have executed and sealed this Agreement this 24th
day of October , 2002, by their proper officers in that behalf.

                           DE BEERS CANADA EXPLORATION INC.

                           By: "J. Joyce"
                           -----------------------------------------------------
                           Name: J. Joyce                                    c/s
                           Title: President/CEO

                           By: "W. Skublak"
                           -----------------------------------------------------
                           Name: W. Skublak
                           Title: Director

                           MOUNTAIN PROVINCE DIAMONDS INC.

                           By: "Jan W. Vandersande"
                           -----------------------------------------------------
                           Name: Jan W. Vandersande                          c/s
                           Title: President

                           By: "Paul Shatzko"
                           -----------------------------------------------------
                           Name: Paul Shatzko
                           Title: Chairman

                           CAMPHOR VENTURES INC.

                           By: "Raj Chowdhry"
                           -----------------------------------------------------
                           Name: Raj Chowdhry                                c/s
                           Title: President

                           By: "H B Varshney"
                           -----------------------------------------------------
                           Name: Hari Varshney
                           Title: Director



                                  SCHEDULE "A"
                       ACCOUNTING AND FINANCIAL PROCEDURES

STATEMENT OF INTENT

The purpose of these Accounting and Financial Procedures is to establish methods
for determining  charges and credits  applicable to any activities in respect of
Exploration Work,  Development Work and/or  Production,  which should prove fair
and equitable as between the Participants and the Operator.

Article 1       GENERAL PROVISIONS

1.1      Definitions

Unless  otherwise set forth in this Schedule "A", all capitalized  terms used in
this  Accounting  and  Financial  Procedures  Schedule  shall  have the  meaning
ascribed  to them in the  Agreement  to which this  Schedule  is  attached  (the
"Agreement").

          In this Schedule "A":

     (a)  "Joint Account" means an internal  financial  account to be maintained
          by the Operator  showing the charges and credits  accruing as a result
          of  carrying  out any  activities  in  respect  of  Exploration  Work,
          Development Work and/or Production,  or otherwise accruing pursuant to
          the Agreement,  which are to be shared by the Participants pursuant to
          the Agreement.

     (b)  "Material and Equipment"  shall mean personal  property,  supplies and
          equipment (including capital equipment) acquired or held for use on or
          in connection with the Joint Venture.

     (c)  "Non-Operator" shall mean any Participant other than the Operator.

     (d)  "Regional Office" shall mean an office from which the Operator directs
          and  supports  its joint  venture  activities  in respect of  projects
          situated in a remote  region,  where such office is located  near such
          remote  region and  allows the  Operator  to  conduct  its  activities
          involving such projects in a more expeditious way than conducting such
          activities from its other offices.

     (e)  "Senior  Management of the Operator"  shall mean the President and any
          Vice-President  of the  Operator  and  any  other  officer  performing
          functions normally performed by the President or a Vice-President of a
          corporation.

1.2      Responsibilities for Accounting Records



     (a)  The  Operator  shall  maintain  proper   accounting   records  of  the
          operations  of the Joint  Venture for the purposes of reporting to the
          Participants.

     (b)  Each of the  Participants  will be responsible  for its own accounting
          records required by law to support its income tax returns or any other
          accounting reports required by any governmental authority in regard to
          the Joint Venture.  To enable each  Participant to record such data on
          its own books, the Operator will provide the  Non-Operators  with such
          accounting data as may be required for any purpose described above, as
          long  as  such  data  is  available  as a  result  of  the  accounting
          procedures  prescribed in this  Accounting  and  Financial  Procedures
          Schedule.

     (c)  Nothing contained in the Agreement or in this Accounting and Financial
          Procedures  Schedule  shall  be  construed  as  relating  to  the  tax
          accounting of any of the parties to the Agreement or any joint venture
          or undertaking involving such parties or any of them.

          Nothing contained in the Agreement or in this Accounting and Financial
          Procedures  Schedule shall be construed as an election by a party with
          respect to any matter under the tax laws of any jurisdiction, or as an
          election with respect to any method of  accounting  for the purpose of
          accounting to any government, or any division or agency thereof, or as
          an election for any other purpose.

1.3      Statements and Cash Calls and Invoices

     (a)  Where  Participants  are  required  to pay their  Cost  Share of Joint
          Venture Expenses, the Operator shall, subject to subsection (b) below,
          invoice  each  Participant  on or  before  the 20th day  prior to each
          calendar  quarter for its respective share of charges paid and credits
          received during the preceding  month (a "Cash Call").  Such Cash Calls
          shall be accompanied by statements  reflecting all charges and credits
          to  the  Joint  Account,  summarized  by  appropriate  classifications
          indicative  of the nature  thereof,  as described in Article 2 in this
          Accounting and Financial Procedures Schedule. Such Cash Calls shall be
          payable within 30 days from receipt thereof.

     (b)  The Operator may require each  Participant  to advance its  respective
          share of the estimated  aggregate  Cash Call for a calendar  quarter's
          operations.  Each such advance  request shall be made at least 10 days
          but no more  than 30 days  prior  to the end of the  calendar  quarter
          preceding  the month for which the advance is  requested  and shall be
          payable 30 days from issue of the request.

     (c)  If the  Operator  is required to pay any large sums of money on behalf
          of the Joint Venture,  which were  unforeseen at the time of providing
          the   Non-Operators   with  the  applicable   quarterly   estimate  of
          expenditures



          under  subsection  (b) above,  the  Operator may make a request to the
          Non-Operators for special advances covering the  Non-Operators'  share
          of the payments and if so requested,  the Non-Operators shall pay such
          advances within 30 days after the date of such request.

     (d)  If payment of any Cash Call or  advance  relating  thereto is not made
          within the time set forth above,  the Participant  failing to make the
          payment  may, at the  Operator's  option,  be charged  Interest on any
          unpaid balance.

1.4      Audits and Adjustments

Payment of any invoice shall not prejudice the right of a Participant to protest
or question the correctness thereof.

     (a)  Audits by Independent Auditors

          (i)  Any  Participant  may,  by notice to the  Operator  and the other
               Participants  at least 60 days  prior to the end of any  calendar
               year,  require  that an  audit  of the  Operator's  accounts  and
               records  in  respect  of the  Joint  Venture  for  such  year  be
               conducted  by the  firm  of  chartered  accountants  used  by the
               Operator. Each Participant shall be permitted, at its expense, to
               have its own auditors review such audit.

          (ii) The costs and  expenses  of such an audit shall be charged to the
               Joint Account and all Participants  shall be provided with a copy
               of the audit report,  together with any supporting  documentation
               relating thereto.

          (iii)Any  Participant  may  request a meeting  with the  auditor  that
               provided  the audit report in order to ask  questions  concerning
               the audit report and supporting  documentation.  Any such meeting
               shall be at the sole expense of those Participants attending such
               meeting.

     (b)  Audits by Non-Operators

          (i)  Any  Participant  upon notice in writing to the Operator and each
               other  Participant,  shall have the right to audit the Operator's
               accounts  and  records in respect  of the Joint  Venture  for any
               calendar  year within the 24-month  period  following  the end of
               such calendar year,  provided,  however,  that a Participant must
               take  written  exception  to any invoice or make a claim upon the
               Operator  for any  discrepancies  disclosed  by such audit within
               such 24-month period.  No such audit shall be commenced until the
               Participant   requesting  same  has  delivered  to  the  Operator
               evidence satisfactory to the Operator that all other Participants
               have received the notice  referred to above.  Failure on the part
               of a  Participant  to



               claim  an   adjustment   within  such   24-month   period   shall
               conclusively  establish the  correctness  of the invoices  during
               that year and shall preclude the filing of exceptions  thereto or
               the making of claims for adjustment thereof.

          (ii) The other  Non-Operators  may join in any audit  being  conducted
               under  paragraph (i) above and, if so, the audit shall be a joint
               audit by such Non-Operators  conducted by a joint audit committee
               and the  provisions  of paragraph  (i) of this  subsection  shall
               apply mutatis mutandis to any joint audit so performed.

          (iii)Only one such audit shall be conducted  in any one calendar  year
               and only one such  audit  shall be  conducted  in  respect of the
               operations of any one calendar year.

          (iv) The Operator  shall bear no portion of the  Non-Operator's  audit
               costs unless the Operator otherwise agrees.

          (v)  All  Non-Operators  who  participate  in such an  audit  shall be
               entitled to receive a copy of the audit results.

          (vi) The Operator and Non-Operators shall make every reasonable effort
               to resolve all audit claims.  Any unresolved audit claim shall be
               referred to a firm of chartered  accountants  mutually acceptable
               to the  Participants to act as arbitrator under Article 15 of the
               Agreement.  Findings  of the  chartered  accounting  firm will be
               binding on all Participants.

          (vii)Notwithstanding  Section 15.4 of the Agreement,  the Participants
               that have  requested  or have  joined in an audit  shall bear the
               costs  of the  audit  pro  rata  according  to  their  respective
               Participating  Interests and any fees of any chartered accounting
               firm acting as arbitrator  pursuant to this  subsection (b) shall
               be borne by the Operator and the Participants that have requested
               the audit in such proportions as is determined by such arbitrator
               taking into  consideration the relative success of the parties to
               such arbitration.  Any benefits derived as a result of conducting
               the audit shall be shared by the  Participants  participating  in
               the audit pro rata  according to their  respective  Participating
               Interests.

Article 2       EXPENSES

Subject to the  provisions  hereof,  the Joint Account shall be charged with the
cost of all Joint Venture Expenses including,  without limitation, the following
items:



2.1      Rentals and Royalties

All fees and costs  relating  to  permits,  claims and  leases and all  rentals,
royalties and fees  including  renewal and extension fees or payments in lieu of
actual   exploration   expenditures,   other  than  royalties   payable  by  the
Participants  based on the sale of their share of Production and royalties,  net
profit  interests or similar  payments  payable by a  Participant  pursuant to a
third party arrangement made by it.

2.2      Personnel and Associated Costs

     (a)  Salaries and wages of employees  of the Operator  working  directly in
          connection with the Joint Venture, including salaries or wages paid to
          technical  employees  such as  geologists,  engineers,  draft persons,
          laboratory  technicians,   procurement  persons  and  others  who  are
          temporarily  assigned to the Joint Venture, but excluding salaries and
          wages of clerical help such as secretaries and administrative  support
          staff  other than those  working in a Regional  Office.  Salaries  and
          wages of Senior Management of the Operator may be charged to the Joint
          Account only when they are working  directly on  technical  aspects of
          the  project  in a field  location  and only at a rate  similar to the
          salaries and wages paid to the most senior personnel  normally working
          at such field location.

     (b)  Salaries of employees  referred to in  subsection  (a) of this Section
          while  attending  meetings,  conferences  and  seminars of a technical
          nature  relating  directly to Joint  Venture  matters and all costs of
          attending such meetings, conferences and seminars.

2.3      Employee Benefits

     (a)  Statutory holiday,  vacation,  sickness and other customary allowances
          applicable  to the  salaries  and wages  chargeable  under  subsection
          2.2(a) above.

     (b)  An  appropriate  portion of the  Operator's  cost from time to time of
          employee  benefit  plans such as group life  insurance,  sickness  and
          accident insurance,  long-term disability,  pension, and other benefit
          plans of a like nature,  with such portion being based upon the amount
          of time spent by  employees  described in  subsection  2.2(a) above on
          Joint Venture matters as compared to non-Joint  Venture  matters.  The
          Operator  shall make  reasonable  efforts to limit the total  value of
          employee benefits to an amount not exceeding thirty-five percent (35%)
          of the aggregate salary or wages paid to such employees.

     (c)  Expenditures or contributions  made pursuant to any assessment imposed
          by any  governmental  authority  which is applicable to the Operator's
          labour costs chargeable under subsection 2.2(a) above.



2.4      Personnel - Travel and Other Expenses

     (a)  Personal and travel expenses  incurred by employees  engaged  directly
          for the Joint Venture.

     (b)  Relocation  costs of  transferred  employees from a place within North
          America who are  primarily  assigned to the work site or the  Regional
          Office of the Joint Venture.  Any other relocation costs to be charged
          to the Joint Account must be approved by the Management Committee.

2.5      Purchased Material

Material and  Equipment  purchased or leased by the Operator  from third parties
for use in  connection  with  Joint  Venture  matters  separating  capital  from
non-capital items.

2.6      Transportation

     (a)  Transportation  of employees and Material and  Equipment  necessary to
          conduct  activities in respect of Exploration  Work,  Development Work
          and/or Production in the most economic way.

     (b)  Transportation  of Material and Equipment  moved between  locations or
          work sites shall be charged to the receiving location or work site.

     (c)  Transportation  of samples,  technical  information and  documentation
          relating to Joint Venture matters.

2.7      Services

     (a)  Any contracted or consulting  services  procured from outside  sources
          (including  Affiliates and Associates of De Beers) and approved by the
          Management Committee.

     (b)  User  charges  as set  forth  in  Article  4 of  this  Accounting  and
          Financial Procedures Schedule for equipment and facilities exclusively
          owned by the Operator, its Affiliates or Associates.

     (c)  Auditing services procured from third parties.

     (d)  Professional  services procured from third parties by the Operator for
          logistic and administrative support of the Joint Venture.

2.8      Litigation, Judgments and Claims; Outside Counsel

All costs and expenses of handling,  investigating  and settling  litigation  or
claims and paying any judgment  arising in  connection  with the Joint  Venture,
including but not limited to lawyers' fees,  court costs,  cost of investigation
or procuring evidence



and amounts paid in settlement or satisfaction of any such litigation or claims;
provided  that  regardless  of whether  such costs and  expenses  are related to
litigation  or are related to any other  aspect of the  operations  of the Joint
Venture (I) no charge  shall be made for the  services of the  Operator's  legal
staff (such services being  considered to be an indirect cost under Section 2.14
of this  Article),  except by agreement with  Non-Operators,  and (ii) no charge
shall be made for the fees and  expenses  of outside  legal  counsel  unless the
employment of such counsel is agreed to by all Participants  (such agreement not
to be  unreasonably  withheld).  In the event of  litigation  between any of the
Participants, each Participant shall bear its own costs.

2.9      Taxes

All taxes,  rates,  levies  and  assessments  of every  kind and nature  levied,
assessed or imposed upon or in connection with the Joint Venture Property or any
part thereof,  which has been paid for the benefit of the  Participants  hereto.
This shall not be deemed to include taxes based on income.

2.10     Insurance

Premiums paid for insurance  required to be carried for the benefit of the Joint
Venture  together with all  expenditures  incurred and paid in settlement of any
and all losses, claims, damages, judgments, and other expenses,  including legal
services,  not recovered from the insurer.  Any monies recovered from an insurer
will be credited to the Joint  Account.  The  Operator  shall  furnish the other
Participants  with written notice of damages or loss howsoever caused as soon as
practicable after a report of the same has been received by the Operator.

2.11     Camp Expenses

The expenses of operating and  maintaining  all necessary  camps and boarding of
employees at such camps. When other operations are served by such facilities,  a
reasonable  rate to cover  expenses  including  depreciation  or a fair  monthly
rental in lieu of  depreciation,  less any revenue  therefrom shall be pro rated
against all operations served on an equitable basis.

2.12     Other Expenditures

Any other expenditures not covered or dealt with in the preceding  provisions of
this  Article 2 and which are incurred by the  Operator  for the  necessary  and
proper conduct of the Joint Venture.  Notwithstanding anything herein contained,
no charge shall be made for any interest or  financing  charges  incurred by the
Operator except where incurred with the consent of the Management Committee.

2.13     Regional Office Costs

The Operator shall charge the Joint Account with the appropriate Regional Office
allocation,  to be approved annually by the Non-Operators in the annual Plan and
Budget,  such  approval  not  to  be  unreasonably  withheld.   Regional  Office
allocations  will



cover a pro rata portion of the cost of  maintaining  and operating the Regional
Office.  Such  charges  shall be  apportioned  to all  projects  served  by such
facilities  on an equitable  basis  consistent  with the  Operator's  accounting
practice  and in  accordance  with  generally  accepted  accounting  principles.
Approved  changes in scope for the base used in pro rating  allocated cost shall
automatically change the approved allocated amount.

2.14     Management Fee

The Operator shall be entitled to charge the Joint Account,  on a monthly basis,
with the  following  management  fees,  which are  intended  to  compensate  the
Operator  for the  services  provided  by it to the Joint  Venture  and to cover
office  expenses  and  general  and  administrative   charges  which  cannot  be
identified  as being  directly  incurred for the benefit of the Joint Venture in
respect of the Operator's principal business office:

     (a)  5% of all Joint  Venture  Expenses up to an aggregate of  $100,000,000
          incurred  in  carrying  out  Exploration  Work,  Development  Work and
          Production hereunder; and

     (b)  3% of all Joint Venture Expenses in excess of $100,000,000 incurred in
          carrying  out  Exploration  Work,   Development  Work  and  Production
          hereunder.

          If the Property is brought into  Production,  the management fee shall
          be renegotiated  in good faith in respect of the period  following the
          Beginning of Commercial Production,  it being agreed that the Operator
          should  neither gain nor lose  financially as a result of it acting as
          Operator.

          The above  percentages  may be revised  from time to time by unanimous
          decision  of  the  Management   Committee  if  such   percentages  are
          determined  to be either  excessive or  insufficient  to reimburse the
          Operator for overhead costs actually incurred.

Article 3       WARRANTY OF MATERIAL AND EQUIPMENT FURNISHED BY OPERATOR

The Operator does not warrant any Material and Equipment  furnished to the Joint
Venture beyond the dealer's or manufacturer's guarantee or warranty. In the case
of  defective  Material  and  Equipment,  a credit  shall be issued to the Joint
Account  when  an  adjustment  has  been  received  by  the  Operator  from  the
manufacturer or dealer.

Article 4       OPERATOR'S EXCLUSIVELY OWNED EQUIPMENT AND FACILITIES

The Operator may charge the Joint  Account for use of the  Operator's  equipment
and  facilities at rates  commensurate  with the costs of  maintenance,  repair,
insurance,  taxes,  depreciation  and interest on  investment.  The Operator may
charge these costs  directly to the Joint  Venture or in lieu of direct  charges
the Operator may charge the



Joint Venture  rental rates for the usage of the  equipment  provided such rates
shall not exceed  commercial  rates  prevailing in the area and such usage shall
not, without the unanimous approval of the Management Committee, exceed 4 months
for any piece of equipment rented.

Article 5       DISPOSAL OF MATERIAL AND EQUIPMENT

The  Operator  shall be under no  obligation  to  purchase  the  interest of the
Non-Operators in surplus new or second hand Material and Equipment.  Major items
of Material and  Equipment  shall not be removed by the Operator  from the Joint
Venture Property without the approval of the  Non-Operators.  The Operator shall
not sell major items of  Material  and  Equipment  to an outside  party  without
giving the  Non-Operators  an opportunity to purchase same at the price offered.
The Operator shall have the right to dispose of normal  accumulation of junk and
scrap  Material  and  Equipment  from the Joint  Venture  Property  and any such
revenue shall be credited to the Joint Account.

     (a)  Division in Kind

          Division of Material and Equipment in kind, if made among the Operator
          and the  Non-Operators  shall be in  proportion  to  their  respective
          interest  in  such  Material  and  Equipment.  Each  Participant  will
          therefore be charged  individually  with the value of the Material and
          Equipment   received   or   receivable   by  such   Participant,   and
          corresponding  credits  will  be  made by the  Operator  to the  Joint
          Account.

     (b)  Sales of Material and Equipment

          Proceeds of a sale to any  Participant of Material and Equipment which
          is Joint  Venture  Property  shall be credited by the  Operator to the
          Joint Account. Any claims, by the purchaser for defective Material and
          Equipment,  shall be charged  back to the Joint  Account,  if and when
          paid by the Operator.

     (c)  Basis of Pricing Material and Equipment

          The price of Material and  Equipment  sold shall be based upon current
          fair  market  value and shall be in  accordance  with  sound  business
          practice.

Article 6       INVENTORIES

6.1      Periodic Inventories

Periodic  inventories of Material and Equipment which are ordinarily  considered
controllable shall be taken by the Operator at reasonable intervals but at least
annually.  Upon request,  the Non-Operators may be represented when an inventory
is taken.



6.2      Failure to be Represented

Failure of the  Non-Operators to be represented at the inventory shall bind them
to accept the inventory taken by the Operator, who shall, upon request,  furnish
the Non-Operators with a copy thereof.

6.3      Inventory Expenses

The  expenses  of the  Non-Operators'  representatives  present at the taking of
regular inventory shall not be charged to the Joint Account.

6.4      Special Inventories

Special  inventories may be taken at the expense of the purchaser whenever there
is a sale or change in the  Participating  Interests.  In such  event,  both the
vendor and the  purchaser  shall be  represented  and shall be  governed  by the
inventory so taken.

Article 7       DECOMMISSIONING

Costs in respect of decommissioning, reclamation and environmental cleanup shall
be dealt with as provided in Section 19.3 of the Agreement.

Article 8       CONFLICT WITH AGREEMENT

In the  event of a  conflict  between  the  provisions  of this  Accounting  and
Financial  Procedures  Schedule  and  the  provisions  of  the  Agreement,   the
provisions of the Agreement shall prevail.



                                  SCHEDULE "B"
                         FIFTEEN PERCENT IRR CALCULATION
             ESCALATED / DE-ESCALATED MODEL - METHOD OF CALCULATION

Any  Feasibility   Study  intended  to  form  the  basis  of  an  approved  mine
construction program ("Construction Program") shall include a calculation of the
after-tax  unleveraged,  real internal rate of return to De Beers expected to be
achieved  through  production  from the  applicable  project area.  Such rate of
return shall be calculated pursuant to the following formula:

                            t=n
                                               t
                           (SIGMA) RCF  / (1+R)  = 0
                                      t
                            t=0

Where:

1.   "R" represents the rate of return.

2.   "n" represents the number of years the  Feasibility  Study  estimates there
     will be during  the  period  (the  "Applicable  Period")  from the date the
     Feasibility  Study is  completed  (the  "Start  Year") to the date when all
     obligations to decommission and reclaim the applicable area subject to such
     approved Construction Program have been fulfilled by the joint venture.

3.   "t" represents  one-year periods during the Applicable Period and t=0 means
     the beginning of the Applicable Period (the "Start Year").

4.   "RCF" represents estimated real unlevered,  after-tax cash flow during each
     one-year  period  of the  Applicable  Period,  calculated  pursuant  to the
     following formula, subject to the assumptions outlined below:

                           RCF = CF / PI
                                        x

Where:

1.   "RCF" represents the estimated real,  unlevered,  after-tax cash flow for a
     year, which may be a negative, a nil or a positive amount.

2.   "PIx"  represents  the price  index in year x relative to an index of unity
     for the Start Year,  calculated pursuant to the following formula,  subject
     to the assumptions outlined below:

                                          n
                           PI   =  (1 + f)
                             x

Where:



          (i)  "PIx"  represents  the price index in year x relative to an index
               of unity for the Start Year;

          (ii) "f" represents the annual Canadian  inflation rate, as calculated
               below, expressed as a decimal; and

          (iii) "n" represents the number of years between x and the Start Year.

               To convert  the "money of the day"  estimate  of a CF for a given
               year into a constant (today's) money estimate, such "money of the
               day" estimate will be divided by the PIx for that year determined
               in accordance  with the above formula.  For purposes of the above
               constant money unit  calculation,  the future inflation rate will
               be estimated by using the average  increase in the Consumer Price
               Index for Canada  (All Items,  Not  Seasonally  Adjusted,  Annual
               Averages,  published  by  Statistics  Canada) over the 5 calendar
               year period immediately preceding the Start Year.

3.   "CF"  represents  estimated  unlevered,  after-tax  cash flow  during  each
     one-year  period  of the  Applicable  Period,  calculated  pursuant  to the
     following formula, subject to the assumptions outlined below:

                           CF = ACI - ACO

Where:

          (i)  "CF" represents the estimated unlevered,  after-tax cash flow for
               a year, which may be a negative, a nil or a positive amount.

          (ii) "ACI"  represents  estimated  unlevered,  after-tax  annual  cash
               inflows  to the joint  venture  as a whole (as  distinct  from an
               individual party) including,  without  limitation,  the following
               annual cash inflows:

o    projected  revenue from the sale of diamond  production  or other  revenues
     resulting from the applicable project proceeding;

o    salvage value realized from the sale of used equipment;

o    fees received for custom sorting; and

o    return of Working  Capital (as defined  below) at the end of the  project's
     life.

          (iii)"ACO"  represents  estimated  unlevered,  after-tax  annual  cash
               outflows  from the joint  venture as a whole (as distinct from an
               individual  party)  to be  incurred  by the  parties  (but not as
               operator)



               pursuant  to  the  joint  venture  agreement  including,  without
               limitation, the following annual cash outflows:

o    exploration  expenditures  on the applicable  deposit to further define the
     extent of that deposit but not expenditures intended to increase reserves;

o    capital  expenditures for new mine  development,  expansion,  modification,
     equipment replacement or environment control;

o    Working  Capital  shall be  accounted  for in the year prior to the year of
     Commencement of Commercial  Production.  Working Capital will be assumed to
     be equal to operating  costs during the first 4 months of production  after
     the Commencement of Commercial Production;

o    total  actual   historic  joint  venture   prospecting,   exploration   and
     development  costs  incurred  prior  to the  approval  of the  Construction
     Program shall be accounted for in the Start Year;

o    operating, decommissioning, reclamation and environmental costs;

o    royalty  (including  provincial  royalties),  option or  lump-sum  payments
     necessary as a result of the applicable project proceeding;

o    taxes and other fiscal imposts  arising from the joint venture,  calculated
     on a stand-alone  basis on the  assumption  that the joint venture shall be
     deemed to be liable for full taxation and that no account shall be taken of
     any assessed losses or tax allowances of the joint venture partners;

o    transportation, marketing and further processing charges; and

o    costs incurred relating to any customs sorting.

For the purposes of calculating CF, ACI and ACO, the following assumptions shall
be used:

          (i)  Cash flows will be estimated based on optimum production from any
               indicated,  measured  or  proven  resources  as  defined  in  the
               Feasibility  Report and the  geological,  technical and financial
               parameters of the project.

          (ii) An end-of-year  convention  shall be adopted  whereby future cash
               flows will be assumed to occur at the end of each year during the
               Applicable Period.

          (iii)Pre-tax cash flows shall be  calculated in current money units as
               at the date the  calculation  is made and therefore  adjusted for
               inflation



               by  multiplying  the constant money pre-tax cash flow for a given
               year by the PIx for that year  determined in accordance  with the
               formula in (b).  With the exception of projected  annual  revenue
               from the sale of diamond production, this escalation procedure is
               to be carried out on all cash flows prior to the  calculation  of
               taxation and royalties.

          (iv) For the purpose of estimating  the projected  annual revenue from
               the sale of diamond  production  included in item ACI, as part of
               the  Feasibility  Study,  a minimum  5,000  carat  representative
               sample of rough diamonds  obtained from the joint  venture's bulk
               sample  test work will be  prepared.  Such  sample  shall then be
               sorted,  valued  and  modelled  at 90% of the SSV in force at the
               date of completion of the feasibility  study. The average revenue
               per  carat  value  obtained  will  be used  as the  base  for the
               calculation  of the  annual  estimate  of the sales  value of the
               joint venture's  diamond  production.  The annual estimate of the
               revenue per carat of diamond  production shall be assumed to vary
               in  accordance  with both the changing  geological  nature of the
               deposit   and  De  Beers'   anticipated   SSV   diamond   pricing
               assumptions,  contained  in the De Beers'  Diamond  Supply-Demand
               model  in  force at the  date of  completion  of the  Feasibility
               Study.

          (v)  All  calculations  shall  be made  in  Canadian  Dollars  and the
               following shall apply:

               US  Dollar-based  revenues  and  costs  shall be  converted  into
               Canadian  Dollars by multiplying the specific US Dollar cash flow
               to be converted by the Canadian  Dollar/US  Dollar  exchange rate
               calculated  for the specific  year during the  Applicable  Period
               when the cash flow takes place, as follows:

               CCF = UCF * E
                            x

               Where:

               (A)  "CCF" represents the Canadian Dollar cash flow.

               (B)  "UCF" represents the equivalent US Dollar cash flow.

               (C)  "Ex"  represents  the  forecast  annual  Canadian  Dollar/US
                    Dollar  exchange rate  calculated for the specific year x as
                    follows:

                    (I)  a base  exchange  rate (E0) is assumed  for the year in
                         which   the   feasibility   study  is   completed,   by
                         calculating  an average of the noon CAD/USD buying rate
                         as  specified  on Reuters  for a period of



                         30 business days  immediately  prior to the  completion
                         date of the feasibility study;

                    (II) this base exchange rate is then varied according to the
                         "Purchasing  Power Parity" economic model for each year
                         following  the year in which the  feasibility  study is
                         completed using the formula:

                         E  = E  * Pl  / UPI
                          x    0     x      x

               Where:

               (A)  "E0" is the base  exchange  rate  for the year in which  the
                    feasibility study is completed (the Start Year).

               (B)  "Plx" represents the Canadian price index in year x relative
                    to an index of unity for the Start Year, the calculation and
                    source of which is detailed above.

               (C)  "UPIx"  represents  the United  States price index in year x
                    relative to an index of unity for the Start Year, calculated
                    according to the formula:

                              n
               UPI  = (1 + Uf)
                  x

               Where:

               (A)  "Uf"  represents  an estimate of the forecast  annual United
                    States inflation rate, expressed as a decimal and calculated
                    by  averaging  the annual  change in the US  Consumer  Price
                    Index (All Items, Not Seasonally Adjusted,  Annual Averages,
                    as published in official US state  statistics)  for the five
                    calendar year period immediately preceding the Start Year.

               (B)  "n"  represents  the number of years between x and the Start
                    Year.

In terms of point (iv) above,  Standard Selling Value (SSV) shall mean the value
of diamonds sorted to the Standard  Selling  Assortment and priced in accordance
with the then official  London selling price list of the DTC.  Standard  Selling
Assortment (SSA) shall mean the assortment that is currently used by the DTC for
sales to its customers.

In this model, "Year" or "year" means a financial year.



                                  SCHEDULE "C"
                               NET PROFIT ROYALTY

1.   The Net Profit Royalty referred to in Section 7.2 of the attached agreement
     ("NP Royalty") shall be calculated as follows:

     (a)  "net  profit"  shall be  calculated  for each year  after the right to
          receive  the NP  Royalty  has arisen  and means the  aggregate  of the
          revenues received during such year from or in connection with carrying
          on the business relating to the mining, milling and/or other treatment
          of any ores or concentrates  and/or marketing of any product resulting
          from operations upon the Property including,  without limitation,  any
          cash proceeds received upon the sale of capital assets in the ordinary
          course  of  such  business  or  upon,  or  in  anticipation   of,  the
          termination of such business or from the investment of moneys retained
          with respect to such operations, less:

          (i)  all or part of the aggregate  amount (if any) by which  operating
               costs for any prior year or years exceed such  revenues  received
               during  such prior year or years to the extent that they have not
               previously been deducted;

          (ii) the aggregate of all operating costs allocable to such year;

          (iii)the aggregate of all preproduction  expenditures  incurred by the
               operator until deducted in full;

          (iv) such amount as may be required to maintain  working capital at an
               amount  considered  by the  operator to be  advisable in order to
               carry on  operations  on the  Property in a proper and  efficient
               manner;

          (v)  reserves for contingencies which are confirmed by the auditors of
               the  operator  to be  reasonable  in the  circumstances  and,  if
               required  by the NP  Royalty  recipient,  confirmed  by  mutually
               acceptable  independent  auditors  at the cost of the NP  Royalty
               recipient unless such reserve is so confirmed;

          (vi) the aggregate cost (or reserves  contemplating  such cost) of any
               major improvement, expansion, modernization and/or replacement of
               mine,  mill or ancillary  facilities  until deducted in full (for
               the   purposes   hereof,   a   major   improvement,    expansion,
               modernization  or  replacement is one which involves an aggregate
               cost of more than $500,000 lesser amounts being  considered to be
               part of the operating costs);



          (vii)the  aggregate of payments of the NP Royalty made pursuant to the
               attached   agreement  and  all  other  royalties  or  net  profit
               interests payable with respect to the Property;

     (b)  "operating  costs" means, for any year, the amount of all expenditures
          or costs (other than those costs  hereinafter  excepted and costs that
          have been included as preproduction  expenditures  hereunder) incurred
          in  connection  with  carrying on the business  related to the mining,
          milling  and/or  other  treatment  of  ores  or  concentrates   and/or
          marketing any product  resulting  from  operations  upon the Property,
          including, without limitation, the following costs:

          (i)  all  costs  of or  related  to  the  mining,  milling,  crushing,
               handling, concentrating, smelting, refining or other treatment of
               such ores or concentrates,  the handling,  treatment,  storage or
               disposal of any waste  materials  and/or  tailings  arising  with
               respect thereto, and the operation,  maintenance and/or repair of
               any mining, milling, crushing, handling,  treatment,  storage, or
               ancillary  facilities related to the carrying on of such business
               or the use of any  property,  asset,  process or  procedure  with
               respect thereto;

          (ii) all costs of or  related to  marketing  any  product,  including,
               without limitation, transportation, commissions and/or discounts;

          (iii)all costs of or related to taking to lease and/or  maintaining in
               good standing or renewing  from time to time the Property  and/or
               the taking of any steps  considered  advisable by the operator or
               owner of the Property to acquire, protect or improve any interest
               of a  Property  owner in the  Property  and/or in  properties  or
               property  rights  considered  by the  operator  or  owner  of the
               Property  necessary or advisable  for the purposes of carrying on
               such business;

          (iv) all costs of or related to providing  and/or  operating  employee
               facilities, including housing;

          (v)  all duties, charges, levies,  royalties,  taxes (other than taxes
               computed  upon the  basis  of the  income  of any of the  parties
               hereto) and other  payments  imposed upon or in  connection  with
               such  business or the carrying on of such business or any related
               business by any  government  or  municipality  or  department  or
               agency thereof;

          (vi) all  reasonable  costs and fees payable for providing  technical,
               management  and/or   supervisory   services   (including  to  the
               operator);



          (vii)all costs of or  related  to  reasonable  financing  arrangements
               relating to operations upon the Property and/or bringing the same
               into commercial production,  including,  without limitation,  the
               payment of interest;

          (viii) all costs of consulting, legal, accounting, insurance and other
               services or protection in connection with the carrying on of such
               business and/or standby fees;

          (ix) all amounts expended in doing work;

          (x)  all costs of  construction,  equipment,  mine  development  after
               commencement  of commercial  production,  including  maintenance,
               repairs and replacements, except capital expenditures relating to
               a major improvement,  expansion, modernization and/or replacement
               of mine, mill or ancillary facilities;

          (xi) all  costs  for   shutdown,   pollution   control,   reclamation,
               decommissioning  or any other  similar  costs  incurred  or to be
               incurred  as  a  result  of  any   governmental   regulations  or
               requirements  (including  reasonable  reserves  relating  to such
               costs);

          (xii)any  royalties,  land  use,  impact  benefit,  infrastructure  or
               similar  payments  made  to any  third  party  (save  for  the NP
               Royalty);

          (xiii) any costs or  expenses  incurred  or  estimated  to be incurred
               relating to the termination of such business  including,  without
               limitation,   disposal  of  assets,   termination  of  employees,
               reclamation  and  rehabilitation,   except  that  such  costs  or
               expenses shall not include  non-cash items such as  depreciation,
               depletion or amortization;

     (c)  "preproduction expenditures" means the aggregate of all costs (whether
          capital or  otherwise)  incurred  either before or after the date upon
          which the right to  receive  the NP Royalty  arose and  related to the
          exploration or development of the Property  and/or the bringing of the
          Property  into  commercial  production,  and/or  the  construction  of
          facilities  and/or services  (whether  located on or off the Property)
          related thereto, including, without limitation:

          (i)  all amounts  expended  in doing work but only until the  Property
               has been brought into commercial production;

          (ii) all costs of or related to the  construction  of any mine or mill
               buildings,  crushing,  grinding,  washing,  concentrating,  waste
               storage and/or disposal and/or other treatment  facilities and/or
               any facilities ancillary thereto;



          (iii)all costs of or related  to  exposing  and mining any  orebody or
               orebodies  situate in whole or in part on the Property,  but only
               until the date upon which the Property is brought into commercial
               production;

          (iv) all costs of or related  to the  construction  of storage  and/or
               warehouse  facilities;  the  construction  and/or  relocation  of
               roads;  the  acquisition   and/or  development  of  waste  and/or
               tailings areas and/or systems;

          (v)  all costs  (including  the costs of  acquiring  and  transporting
               thereof) of or related to  transportation  facilities  for moving
               ore, concentrates and/or any products derived therefrom, electric
               power including power lines and equipment, water pipelines, pumps
               and wells or any other utilities;

          (vi) all  costs  of  or  related  to  employee  facilities,  including
               housing;

          (vii)all  costs  of  or  related  to  the  supplying  of   management,
               marketing,   supervisory,   engineering,   accounting   or  other
               technical and/or consulting services or personnel, whether to the
               operator or otherwise;

          (viii) all costs of or related to taking to lease  and/or  maintaining
               of the Property in good  standing  and/or the taking of any steps
               considered  advisable by the operator or owner of the Property to
               acquire,  protect  and/or  improve any  interest in the  Property
               and/or  in  properties  or  property  rights  considered  by  the
               operator or owner of the  Property to be  necessary  or advisable
               for the purpose of carrying on such business,  but only until the
               date  upon  which  the  Property  is  brought   into   commercial
               production;

          (ix) all costs of or  related  to  feasibility,  marketing,  economic,
               reclamation,  rehabilitation and/or technical evaluations, plans,
               studies or reports;

          (x)  all costs of consulting,  legal,  insurance,  marketing and other
               services  in  connection  herewith,  but only until the date upon
               which the Property is brought into commercial production;

          (xi) all costs of or  related  to  reasonable  financing  arrangements
               relating  to  bringing  the  Property  or any part  thereof  into
               commercial production, including, without limitation, the payment
               of interest  and/or  standby or other fees or  charges,  but only
               until the date upon  which the  Property  has been  brought  into
               commercial production;



     (d)  "work" means prospecting, exploration, development and/or other mining
          work in, on, under or relating to the Property;

     (e)  "year" means  calendar year and a reference to a subdivision of a year
          shall mean a reference to the relevant subdivision of a calendar year.

2.   The  determination of the NP Royalty hereunder is based on the premise that
     production  will  be  developed  solely  on  the  Property.   Other  mining
     properties  may be  incorporated  with the  Property  into a single  mining
     project and the minerals,  metals, ores or concentrates  pertaining to each
     may be  blended at the time of mining or at any time  thereafter,  provided
     however,  that the respective  mining  properties  (including the Property)
     shall  bear  and  have  allocated  to  them  their  proportionate  part  of
     expenditures  relating to the bringing of such single  mining  project into
     commercial  production  and  thereafter  operating  the same and shall have
     allocated to them the proportionate part of the revenues realised from such
     single operation,  all as determined in accordance with generally  accepted
     accounting  principles  and from records  maintained by the Operator or the
     remaining  Participant,  as  applicable.  The  NP  Royalty  recipient  (the
     "Holder") shall have the right,  during reasonable  business hours and upon
     prior notice the Operator or the remaining Participant,  as applicable,  to
     enter upon the mining  properties  and to inspect the plant and  procedures
     followed with respect to  allocations  made under this  paragraph  provided
     that such entry  shall be at the sole risk and cost of the Holder and shall
     not unreasonably disturb or disrupt the activities of the Operator.  If the
     parties  disagree  on  the  allocation  of  actual  proceeds  received  and
     deductions  therefrom,  such shall be referred to arbitration in the manner
     provided  in  Article 15 of the  Agreement  and the  arbitrator  shall have
     reference first to the Agreement, and then, if necessary, to practices used
     in mining operations that are of a similar nature.  The arbitrator shall be
     entitled  to retain  such  independent  mining  consultants  and  financial
     advisors as he considers necessary. The decision of the arbitrator shall be
     final and binding on the parties.

3.   The payor of the NP Royalty (the "Payor") shall be free to mine or not mine
     the Property as it sees fit and shall have the right to curtail, suspend or
     terminate  mining  operations at any time or from time to time as the Payor
     sees fit, all without the consent of or any  obligation or liability to the
     Holder.  The Payor may  without  the  consent  of the  Holder  and  without
     restriction  sell,  assign,  transfer or otherwise dispose of or abandon or
     permit to lapse all or part of its respective  interest under the Agreement
     and/or  in  the  Property,  upon  such  terms  as it  considers  advisable,
     provided,  only,  that any such sale,  assignment,  transfer or disposition
     shall not be  completed  unless  the  assignee  has agreed in writing to be
     bound by the  provisions  hereof  as  fully  as if it were a Payor,  to the
     extent of the interest so assigned, transferred, sold or otherwise disposed
     of to  it.  Upon  completion  of  such  a  sale,  assignment,  transfer  or
     disposition,  the assignor shall be relieved of a portion of the obligation
     to pay the  Royalty  equal to the  portion of the  interest  that was sold,
     assigned,  transferred  or otherwise  disposed of, it being agreed that the
     obligation  to pay the Royalty  shall be the separate and several,  and not
     joint or joint and several,  obligation and liability of those Participants
     having



     an  Interest  under  the  Agreement  and shall be borne by them pro rata to
     their respective Interests thereunder.

4.   The Holder  shall not,  without the express  written  consent of the Payor,
     which  consent  shall not be  unreasonably  withheld,  disclose any data or
     information concerning the operations conducted on the Property or obtained
     under this Agreement  which is not already in the public  domain,  or issue
     any press  releases  concerning  the  operations  of the  Payor;  provided,
     however,  the Holder may disclose data or  information  obtained under this
     Agreement without the consent of the Payor:

     (a)  if required for compliance with applicable laws, rules, regulations or
          orders of a governmental  agency or stock exchange having jurisdiction
          over the Holder;

     (b)  to any of the Holder's consultants;

     (c)  to any third  party to whom the  Holder,  in good  faith,  anticipates
          selling or assigning the Holder's interest hereunder; or

     (d)  to a prospective lender to whom an interest in the Royalty payments to
          be made to the Holder hereunder is proposed to be granted as security,

     provided   that  the  Payor   shall  first  have  been   provided   with  a
     confidentiality  agreement  executed  by such  consultant,  third  party or
     lender,  which  agreement shall include the  confidentiality  provisions of
     this Section 6.1.

5.   The Holder may  assign  its rights  hereunder  but only in whole and not in
     part and upon prior written notice to the Payor.

6.   The terms and provisions attaching to this NP Royalty shall enure to and be
     binding  upon the  parties  hereto  and  their  respective  successors  and
     permitted assigns.



                                  SCHEDULE "D"
                  LIST OF MINING CLAIMS COMPRISING THE PROPERTY

                                  Claim Number

                                F28351 to F28469

                                F51610 to F51622



                                  SCHEDULE "E"
                       Rules of Procedure for Arbitration

The following rules and procedures  shall apply with respect to any matter to be
arbitrated by the Parties under the terms of the Agreement.

1.   Initiation of Arbitration Proceedings

     (a)  If any Party to this  Agreement  wishes to have any matter  under this
          Agreement  arbitrated  in  accordance  with  the  provisions  of  this
          Agreement,  it shall give notice to the other Party hereto  specifying
          particulars of the matter or matters in dispute and proposing the name
          of the  person it wishes to be the single  arbitrator.  Within 15 days
          after receipt of such notice,  the other Party to this Agreement shall
          give notice to the first Party advising whether such Party accepts the
          arbitrator  proposed by the first  Party.  If such notice is not given
          within  such 15 day  period,  the other  Party shall be deemed to have
          accepted the arbitrator proposed by the first Party. If the Parties do
          not agree upon a single arbitrator  within such 15 day period,  either
          Party may apply to a judge of the Ontario Court General Division under
          the Arbitration Act, 1991 (Ontario),  (the "Arbitration  Act") for the
          appointment of a single arbitrator (the "Arbitrator").

     (b)  The individual  selected as Arbitrator shall be qualified by education
          and experience to decide the matter in dispute.  The Arbitrator  shall
          be at arm's  length from both Parties and shall not be a member of the
          audit or legal firm or firms who advise  either  Party,  nor shall the
          Arbitrator  be an  individual  who  is,  or  is a  member  of a  firm,
          otherwise regularly retained by either of the Parties.

2.   Submission of Written Statements

     (a)  Within  20  days  of the  appointment  of the  Arbitrator,  the  Party
          initiating the arbitration (the "Claimant") shall send the other Party
          (the  "Respondent")  a Statement  of Claim  setting out in  sufficient
          detail the facts and any  contentions  of law on which it relies,  and
          the relief that it claims.

     (b)  Within  20  days  of  the  receipt  of the  Statement  of  Claim,  the
          Respondent  shall send the Claimant a Statement of Defence  stating in
          sufficient  detail  which of the facts and  contentions  of law in the
          Statement of Claim it admits or denies,  on what grounds,  and on what
          other facts and contentions of law he relies.

     (c)  Within 20 days of receipt of the  Statement  of Defence,  the Claimant
          may send the Respondent a Statement of Reply.

     (d)  All  Statements of Claim,  Defence and Reply shall be  accompanied  by
          copies (or, if they are especially voluminous, lists) of all essential



          documents  on which  the Party  concerned  relies  and which  have not
          previously been submitted by any Party, and (where practicable) by any
          relevant samples.

     (e)  After  submission  of all the  Statements,  the  Arbitrator  will give
          directions for the further conduct of the arbitration.

3.   Meetings and Hearings

     (a)  The arbitration shall take place in Toronto,  Ontario or in such other
          place as the Claimant and the Respondent  shall agree upon in writing.
          The arbitration  shall be conducted in English unless otherwise agreed
          by such Parties and the Arbitrator.  Subject to any adjournments which
          the  Arbitrator  allows,  the  final  hearing  will  be  continued  on
          successive working days until it is concluded.

     (b)  All  meetings  and  hearings  will be in private  unless  the  Parties
          otherwise agree.

     (c)  Any Party may be  represented  at any  meetings  or  hearings by legal
          counsel.

     (d)  Each Party may examine,  cross-examine and re-examine all witnesses at
          the arbitration.

4.   The Decision

     (a)  The Arbitrator will make a decision in writing and, unless the Parties
          otherwise agree, will set out reasons for decision in the decision.

     (b)  The  Arbitrator  will  send the  decision  to the  Parties  as soon as
          practicable  after the  conclusion  of the final  hearing,  but in any
          event no later than 60 days  thereafter,  unless  that time  period is
          extended for a fixed  period by the  Arbitrator  on written  notice to
          each Party  because of illness or other cause beyond the  Arbitrator's
          control.

     (c)  The  provisions  of this  Agreement  and this  Schedule  requiring the
          determination of certain disputes of arbitration  shall not operate to
          prevent  recourse  to the  court  by any  Party  as  permitted  by the
          Arbitration  Act with  respect to  injunctions,  receiving  orders and
          orders  regarding  the  detention,   preservation  and  inspection  of
          property,  or whenever  enforcement of an award by the sole arbitrator
          reasonably  requires  access to any remedy which an arbitrator  has no
          power to award or enforce.  In all other respects an award by the sole
          arbitrator  or  arbitrators,  as the case  may be  shall be final  and
          binding  upon the  Parties and there shall be no appeal from the award
          of the  arbitrator or arbitrators as the case may be on a questions of
          law or any other  questions  provided that the Arbitrator has followed
          the



          rules  provided  herein in good faith and has  proceeded in accordance
          with the principles of natural justice.

5.   Jurisdiction and Powers of the Arbitrator

     (a)  By submitting to arbitration  under these Rules,  the Parties shall be
          taken to have conferred on the  Arbitrator the following  jurisdiction
          and powers,  to be exercised at the  Arbitrator's  discretion  subject
          only to these Rules and the  relevant  law with the object of ensuring
          the  just,  expeditious,  economical  and final  determination  of the
          dispute referred to arbitration.

     (b)  Without  limiting  the  jurisdiction  of the  Arbitrator  at law,  the
          Parties agree that the Arbitrator shall have jurisdiction to:

          (i)  determine any question of law arising in the arbitration;

          (ii) determine any question as to the Arbitrator's jurisdiction;

          (iii)determine  any  question  of  good  faith,  dishonesty  or  fraud
               arising in the dispute;

          (iv) order any Party to furnish  further details of that Party's case,
               in fact or in law;

          (v)  proceed in the arbitration notwithstanding the failure or refusal
               of any Party to comply with these Rules or with the  Arbitrator's
               orders or  directions,  or to attend any meeting or hearing,  but
               only after giving that Party written  notice that the  Arbitrator
               intends to do so;

          (vi) receive  and take into  account  such  written  or oral  evidence
               tendered by the Parties as the Arbitrator determines is relevant,
               whether or not strictly admissible in law;

          (vii) make one or more interim awards;

          (viii) hold  meetings and hearings,  and make a decision  (including a
               final  decision) in Ontario or elsewhere with the  concurrence of
               the Parties thereto;

          (ix) order the Parties to produce to the Arbitrator, and to each other
               for inspection, and to supply copies of, any documents or classes
               of documents in their  possession  or power which the  Arbitrator
               determines to be relevant;

          (x)  order the  preservation,  storage,  sale or other disposal of any
               property or thing under the control of any of the Parties; and



          (xi) make  interim  orders  to  secure  all or part of any  amount  in
               dispute in the arbitration.

6.   Arbitration Act

     The  rules  and  procedures  of the  Arbitration  Act  shall  apply  to any
     arbitration conducted hereunder except to the extent that they are modified
     by the express provisions of these Rules of Arbitration.



                                  SCHEDULE "F"
            LIST OF JOINT VENTURE EXPENSES INCURRED TO MARCH 8, 2000

                             Includes the following:



                                                                                                   
                                                                                               up to March
Description                                                1997          1998           1999    08, 2000            Total


Legal consultants                                        75,177         2,305         70,589       9,318          157,389

Consultants                                              12,039       412,048        385,906      21,689          831,682

Computer hardware/software/consultants                   43,331        34,220          3,274          -            80,825

Labour                                                  372,385       769,870      1,086,290      54,637        2,283,182

Freight                                                  94,277        92,722        982,895       1,242        1,171,135

Administration                                            1,114        10,943         15,718          -            27,775

Office supplies                                           2,833        11,008         32,025          31           45,897

Office telephone/fax/postage/courier                      5,583           271         62,387       2,121           70,363

Drawing office - digital data                             2,147         3,783          6,320          -            12,249

Travel                                                   41,661        82,981        137,827       9,598          272,069

Vehicle costs                                             1,992       114,396         44,765       7,253          168,406

Fixed wing rental and fuel                              372,297       949,400        444,150      17,474        1,783,321

Helicopter rental and fuel                              874,519       304,678        274,713          -         1,453,910

Storage                                                   8,650         8,502          8,400         299           25,851

Envrionmental expenses                                       -         44,708        315,658          -           360,367

Community consultations                                      -             -          16,973       3,034           20,007

Claims - staking & expenses                               25,481       62,668         51,773          -           139,922

Research                                                      -        13,855         51,065          -            64,921

Field Charges                                                                                                          -

Field supplies                                            88,192      456,804        946,061       6,988        1,498,046

Field equipment rental                                   142,354      126,387        103,684         729          373,153

Field accomodation                                        57,120       40,084         36,803          97          134,104

Field groceries                                           55,899      147,935        389,539          -           593,372

Drilling and pitting contracts (including supplies)      603,937    2,002,558      7,406,186         286       10,012,967

Geophysics                                               796,507      210,095        381,088      15,000        1,402,690

Contract services                                        102,769      428,228        563,475          -         1,094,472

Laboratory Charges                                                                                                     -

Treatment of sediment samples                            241,632       83,909         70,837          -           396,378

Indicator mineral sorting                                     -        36,808         11,109      38,686           86,602

Treatment of LDDH chips for MaDA                              -        41,224        392,486          -           433,710

Other laboratory supplies and charges                      6,119        9,852          4,642          -            20,613
                                                    --------------------------------------------------------------------------

Subtotal                                               4,028,014    6,502,243     14,296,639     188,482       25,015,378

Management fee (5% of expenses)                          201,401      325,112        714,832       9,424        1,250,769
                                                    --------------------------------------------------------------------------

Total                                                  4,229,415    6,827,355     15,011,471     197,906       26,266,147
                                                    ==========================================================================


NB ABOVE EXPENDITURES DO NOT INCLUDE LABORATORY AND OTHER CHARGES FROM OVERSEAS.



                                  SCHEDULE "G"
                             DIAMOND SALE AGREEMENT

     THIS AGREEMENT made as of the ___ day of ___, 2001.

BETWEEN:

     DE BEERS CANADA EXPLORATION INC. (formerly Monopros Limited), a corporation
     continued  under the laws of  Canada  and  having an office at One  William
     Morgan Drive,  Toronto,  Ontario M4H 1N6 (hereinafter called "DBX") for and
     on behalf of itself and MOUNTAIN  PROVINCE  DIAMONDS  INC.,  a  corporation
     incorporated  under the laws of the Province of British Columbia and having
     an office at Suite 212, 525 Seymour Street, Vancouver, British Columbia V6B
     3H7 (hereinafter called "MPV")

     (De Beers and MPV, being collectively called the "Sellers")

                                               being the Party OF THE FIRST PART

     - and-

     DCS  CORPORATION  LIMITED,  a  company  whose  head  office is  situate  at
     Hamilton, Bermuda;

     (hereinafter called "DCS")

                                              being the Party OF THE SECOND PART

     WITNESSETH:

WHEREAS the Sellers are producing  rough diamonds from their mine(s)  situate at
___ in Kennady Lake in the Northwest Territories, Canada (the "Mine(s)");

AND  WHEREAS the  Sellers  have agreed to sell the whole of their rough  diamond
production  exclusively to DCS and DCS has agreed to purchase such production on
the terms and conditions hereinafter set forth;

IN  CONSIDERATION  of the terms and the mutual  covenants and agreements  herein
contained, the parties hereto hereby covenant and agree as follows:

1.   Definitions

1.1  In this Agreement,  including the recitals hereto,  the following words and
     phrases  shall have the  meanings  assigned  pursuant to this  Section 1.1,
     namely:

     (a)  "Business  Day" means any day which is not a Saturday or a Sunday or a
          day observed as a holiday  under the laws of the  Provinces of Ontario
          or British Columbia or the federal laws of Canada;



     (b)  "bid price" has the meaning ascribed to the term in Section 7.1;

     (c)  "DTC" means The Diamond Trading  Company  (Proprietary)  Limited,  The
          Diamond  Trading Company  Limited,  CSO Valuations AG and/or any other
          subsidiaries  or  affiliates  of De Beers  Centenary AG which are from
          time to time engaged in selling diamonds to the market;

     (d)  "DTC  Sales"  means for any  calendar  year the total  value in United
          States  dollars of all qualities of rough diamonds sold by DTC in such
          calendar year as certified by DTC;

     (e)  "DTC  Standard  Selling  Assortment"  means the range of categories of
          rough  diamonds  (other than Special  Stones) each one  representing a
          different combination of mass, shape, colour and quality, in which DTC
          sells such diamonds to the market;

     (f)  "Mine(s)" has the meaning ascribed to the term in the first recital to
          this Agreement;

     (g)  "Quota  Percentage"  means the percentage that the aggregate  Standard
          Selling Value of rough  diamonds  capable of being produced in any one
          calendar year from the Sellers'  Mine(s) is of the aggregate  Standard
          Selling Value of all rough diamonds,

          (i)  contracted for purchase for or on behalf of DTC from all sources,
               and

          (ii) actually  purchased for or on behalf of DTC in the open market or
               otherwise,

               in such calendar  year and  certified  annually in arrears by the
               operator on behalf of the Sellers and by DTC.

     (h)  "SDV" has the meaning ascribed to the term in Section 3.1;

     (i)  "Sellers'  Sample  Parcel"  has the  meaning  ascribed  to the term in
          Section 4.1;

     (j)  "Special Stones" means gem diamonds each of which weighs more than the
          upper limit contained in the DTC Standard Selling Assortment from time
          to time which upper limit is currently 10.8 carats;

     (k)  "Standard  Selling Value" for a category of rough diamonds produced by
          the Sellers from the Mine(s)  means the selling price in United States
          dollars  attaching  from time to time to the  equivalent  category  of
          rough diamonds in the DTC Standard Selling Assortment;



     (l)  "Valuation  Certificate"  has  the  meaning  ascribed  to the  term in
          Section 5.3.

1.2  Headings

The division of this  Agreement  into Articles and Sections and the insertion of
headings  are for  convenience  of  reference  only and  shall  not  affect  the
construction or interpretation of this Agreement.

1.3  Expanded Meanings

In this  Agreement,  unless there is something in the subject  matter or context
inconsistent therewith,  the singular shall include the plural, the plural shall
include the singular and the masculine shall include the feminine.

2.   Purchases and Sales Commitments

2.1  Subject  to  Section  2.2,  the  Sellers  shall  sell to DCS and DCS  shall
     purchase from the Sellers with effect from ___, all rough diamonds produced
     by the Sellers from the Mine(s).

2.2  DCS shall  have the  right at any time and from  time to time,  in its sole
     discretion,  upon prior notice to and discussion with the Sellers, to limit
     its obligation under Section 2.1 to purchase rough diamonds in any calendar
     year to an amount of rough  diamonds  so  produced  by the  Sellers in such
     calendar  year  that  has a  Standard  Selling  Value  equal  to the  Quota
     Percentage of DTC Sales for such calendar year. All diamonds not sold shall
     be stockpiled for sale to DCS in the following year or years.

2.3  All deliveries shall be representative of the Sellers' production, provided
     that,  in the  event of a  limitation  under  Section  2.2 on the  Sellers'
     entitlement  to deliver its entire  production  for any calendar  year, the
     Sellers shall, at the request of DCS, fulfil their delivery  entitlement or
     part thereof by delivering  particular grades or classes of rough stones as
     specified by DCS and withhold from all deliveries all or part of particular
     grades or classes of rough stones that cannot be absorbed by the market.

3.   Sellers Diamond Valuator

3.1  The Sellers shall,  after  consultation with DCS to ensure that there is no
     conflict of interest,  appoint an independent diamond expert of established
     reputation,   with  a  working   knowledge  of  the  DTC  Standard  Selling
     Assortment, capable of performing the functions outlined in this Agreement,
     who shall be known as the Sellers diamond valuator ("SDV").  The SDV shall,
     among other  things,  examine the  assortment  against the Sellers'  Sample
     Parcel of each  shipment  of diamonds  produced  by the Sellers  from their
     Mine(s) and sold to DCS. The  relationship  between the Sellers and the SDV
     will be governed by any agreement between them.



4.   Sample Parcel

4.1  Subject to the SDV's scrutiny and approval, DCS will cause DTC to make up a
     representative sample parcel ("the Sellers' Sample Parcel") of the Sellers'
     production of rough diamonds from its Mine(s)  comprising all gem diamonds,
     other than Special Stones, and all industrial diamonds sorted into the same
     categories  as  those  used in the DTC  Standard  Selling  Assortment.  The
     Sellers'  Sample  Parcel  shall be under the control of DCS and the Sellers
     and shall be used as the reference for the sorting of all future production
     from the Sellers' Mine(s) for the purpose of sale to DCS.

4.2  The contents and  assortment of the Sellers'  Sample Parcel will be updated
     by DCS  in  consultation  with  the  Sellers  whenever  necessary  so as to
     represent  accurately  the  production  from the  Sellers'  Mine(s) and its
     assortment in accordance with the DTC Standard Selling  Assortment and will
     be  available to the DCS valuers and the SDV jointly for  verification  and
     comparison with the DTC Standard Selling Assortment.

4.3  The diamonds from time to time  comprising the Sellers' Sample Parcel shall
     not be sold to DCS but shall  remain  the  property  of the  Sellers  until
     removed from the Sellers' Sample Parcel pursuant to Section 4.2 and sold to
     DCS.

5.   Pricing and Sorting

5.1  The price  payable by DCS for each  category of the Sellers'  Sample Parcel
     will be 90 per cent of the Standard Selling Value for such category.

5.2  During each year DCS will on ten separate  occasions  approximately 5 weeks
     apart  arrange for the sorting of  production  of rough  diamonds  from the
     Sellers'  Mine(s) on to the Sellers'  Sample Parcel for shipment to DCS and
     shall determine their Standard Selling Value.  Before such determination is
     binding  on the  Sellers,  it shall be agreed to by both DCS and the SDV on
     behalf of the Sellers.  The reasonable  costs of sorting the rough diamonds
     produced by the Sellers shall be borne by the Sellers.

5.3  If the SDV and DCS  cannot  agree on the  assortment  of any  shipment  the
     following shall apply:

     (a)  those  parts of the  shipment in relation to which there is no dispute
          will be sold in accordance with this Agreement;

     (b)  the disputed  stones will be kept and  resorted and revalued  with the
          next shipment;

     (c)  failing  resolution  under (ii) above, the dispute will be referred to
          the President of each of the Sellers and the Managing  Director of DTC
          in order to seek a resolution of the matter;

     (d)  failing a  resolution  under  (iii)  above,  the  Sellers and DCS will
          endeavour  to  agree  on  a  suitable,   qualified   and   experienced
          arbitrator.  If they fail to agree on an arbitrator,  the Sellers will
          appoint an arbitrator  and DTC will



          appoint an arbitrator and the two  arbitrators  will appoint an umpire
          to adjudicate the issue;

     (e)  the  arbitration  shall be held in  London  in  accordance  with  such
          procedures as may  reasonably  determined by the arbitrator or umpire;
          and

     (f)  the decision of the  arbitrator or umpire will be final and binding on
          both  parties  and  the  costs  will  be  paid  as  determined  by the
          arbitrator or umpire.

5.4  When  the  Standard  Selling  Value of  production  of the  Sellers'  rough
     diamonds has been agreed  between DCS and the SDV,  pursuant to Section 5.2
     or,  where  applicable,  Section  5.3,  the  details of the  shipment,  the
     Standard  Selling  Value  and the  purchase  price  payable  by DCS will be
     recorded  on a  certificate  (the  "Valuation  Certificate")  which will be
     signed by DCS and the SDV.

5.5  [DELETED AS CONFIDENTIAL - See *, below.]

6.   Price Adjustment

6.1  Whenever DTC changes the Standard  Selling  Value,  DCS will give notice of
     the change to the  Sellers and the prices  attaching  the  Sellers'  Sample
     Parcel will be appropriately adjusted.

7.   Special Stones

7.1  The price  attaching  to  Special  Stones  will be 90 per cent of the value
     negotiated  and agreed  between the Sellers and DCS with  reference  to the
     prevailing  market  conditions for Special Stones.  If they cannot agree on
     such value for a Special  Stone,  it shall be withdrawn  from  shipment and
     kept in safe custody by DCS until the next shipment or, if mutually agreed,
     until the next  following  shipment  of  diamonds to DCS, at which time the
     Sellers  and DCS  will  endeavour  to  agree  upon  its  value.  If no such
     agreement  can be  reached,  then the Sellers and DCS may elect at the risk
     and expense of the Sellers to procure  the  cutting  and  polishing  of the
     Stone by an independent  reputable  diamantaire  and to offer the resulting
     polished  goods for sale to the market through DTC with a view to achieving
     the best possible  price ("bid  price").  If the bid price is acceptable to
     the Sellers,  acting reasonably,  they shall sell the polished goods to DCS
     at 90 per cent of such bid price and DCS shall sell the  polished  goods to
     the successful offeror at the bid price.

8.   Advertising Costs

8.1  The Sellers  acknowledge  that DTC will be  incurring  generic  advertising
     costs in relation to the  promotion of the sale of diamonds the benefits of
     which will accrue to all sellers of diamonds to DCS.  DCS shall  advise the
     Sellers from time to time of the nature of such costs and the Sellers agree
     to pay to DCS for remission to DTC an amount equal to the Quota  Percentage
     of such costs against invoices from DCS.



9.   Delivery and Export

9.1  Upon the  completion of the valuation  process  referred to in Sections 5.2
     and 5.3,  DCS shall  arrange for the  shipment of the rough  diamonds to be
     exported to such place outside Canada as DCS shall  designate,  free of all
     taxes and duties whatsoever.  Any taxes or duties applicable to such export
     of rough diamonds or to the subsequent sale to DCS of such diamonds,  shall
     be solely for the account of the Sellers.

9.2  Risk in and title to each  shipment of rough  diamonds  shall pass from the
     Sellers to DCS upon  payment for the  shipment in  accordance  with Section
     10.3 of the amount specified in the Valuation Certificate

10.  Payment

10.1 All purchases shall be effected outside Canada.

10.2 The  Sellers  jointly  shall  from time to time give  notice to DCS of each
     Sellers  percentage  undivided interest in the rough diamonds being sold to
     DCS. DCS shall pay to each Seller that portion of the total  purchase price
     for any  shipment  of  rough  diamonds  equal  to such  Seller's  undivided
     interest in such diamonds as stated in the latest notice to DCS.

10.3 When the  shipment  of rough  diamonds  referred to in Section 9.1 has been
     exported  and  received,  DCS shall  forward  to the  Sellers a copy of the
     Valuation  Certificate  referred to in Section  5.3 and the  Sellers  shall
     confirm the value of and purchase price payable for the shipment as set out
     in the Valuation  Certificate.  Upon receipt of the Sellers'  confirmation,
     DCS  shall,  within  three  (3)  Business  Days,  pay to the  bank  account
     designated  by each Seller the purchase  price  specified in the  Valuation
     Certificate in United States dollars.

11.  Information

11.1 In order to give effect to the terms of this Agreement, DCS shall cause DTC
     to make  available  to the  Seller at all  times  full  details  of the DTC
     Standard  Selling  Assortment and Standard  Selling Value and to inform the
     Sellers of any changes to them.

12.  Insurance

12.1 Subject to  satisfactory  security  arrangements  being  implemented by the
     Sellers,  DCS shall arrange for all diamonds  referred to in this Agreement
     to be insured, from their date of recovery, at their Standard Selling Value
     for diamonds  other than Special Stones and at the market value for Special
     Stones so as to provide comprehensive  insurance coverage against all risks
     of the Sellers and of DCS.  The  insurance  premiums  shall be borne by the
     Sellers.



13.  Changed Circumstances

13.1 If during the  currency of this  Agreement  any  circumstances  shall arise
     which produce fundamental  alterations in the rights and liabilities of the
     parties or in any other way fundamentally affect the Agreement, the parties
     shall meet together in good faith with a view to amending this Agreement in
     order to meet such altered circumstances.

14.  Confidentiality

14.1 Except as the parties may otherwise agree, this Agreement shall be regarded
     as classified  matter of restricted  circulation  and the parties shall use
     their best endeavours to preserve its confidentiality.

15.  Duration

15.1 This Agreement shall take effect on ___ and, subject to Section 15.2, shall
     remain in full force for [DELETED AS CONFIDENTIAL - See *, below.].

15.2 The Sellers  shall be entitled upon at least six months prior notice to DCS
     to terminate  this  Agreement at any time if DBX and/or its  Affiliates (as
     such term is defined in the Canada Business Corporations Act taken together
     hold less than a 10%  Participating  Interest in the joint venture to which
     the Sellers are presently parties in relation to the Sellers' Mine(s).  DCS
     acknowledges  that any such  decision  by the  Sellers  to  terminate  this
     Agreement  will require only the majority vote of the Sellers in accordance
     with the agreement between them governing such Joint Venture.

16.  Notice

16.1 Any notice or other  communication (in this section a "Notice") required or
     permitted  to be given or made  hereunder  shall be in writing and shall be
     well and sufficiently given or made if:

     (a)  delivered in person during normal business hours on a Business Day and
          left with a receptionist or other responsible employee of the relevant
          Party at the applicable address set forth below:

     (b)  sent by any electronic means of sending messages,  including facsimile
          transmission,   which   produces  a  paper   record  (an   "Electronic
          Transmission"),  charges prepaid and confirmed by prepaid certified or
          first class mail; or

     (c)  sent by certified or first class mail unless any general  interruption
          of postal services due to strike,  lockout or other cause exists or is
          threatened in which event only (i) or (ii) shall be used:



          in the case of a Notice to MPV, addressed to it at:
          Mountain Province Diamonds Inc.
          Suite 212
          552 Seymour Street
          Vancouver, B.C.  V6B 3H7

          Attention:        President
          Fax Number:       (909) 466-1409

          in the case of a Notice to DBX, addressed to it at:
          De Beers Canada Exploration Inc.
          One William Morgan Drive
          Toronto, Ontario   M4H 1N6

          Attention:        Chief Executive Officer
          Fax Number:       (416) 423-0081

          and in the case of a Notice to DCS, addressed to it at:
          DCS Corporation Limited
          69 Pitts Bay Road
          Pembroke
          Hamilton, Bermuda

          Attention: ___
          Fax Number: ___

          Any Notice  given or made in  accordance  with this  section  shall be
          deemed to have been given or made and to have been received:

     (a)  on the day it was delivered, if delivered as aforesaid;

     (b)  on the day of sending if sent by Electronic Transmission during normal
          business hours of the addressee on a Business Day and, if not, then on
          the first Business Day after the sending thereof; and

     (c)  on the third Business Day after it was mailed, if mailing is permitted
          hereby.

          Any Party  hereto may from time to time  change its address for notice
          by giving  notice to the other Parties  hereto in accordance  with the
          provisions of this section.

17.  Applicable Law

17.1 This  Agreement  shall be governed by and construed in accordance  with the
     laws of  Ontario  and shall be  treated,  in all  respects,  as an  Ontario
     contract.  Each party  hereto  irrevocably  attorns  to and  submits to the
     non-exclusive  jurisdiction  of the Courts of Ontario  with  respect to any
     matter arising hereunder or related hereto. The



     Parties  hereto  shall,  in  carrying  out  their  respective   obligations
     hereunder,  comply  with all duly and validly  created  laws of Ontario and
     Canada.

     IN WITNESS  WHEREOF this  Agreement  has been entered into the day and year
     first above written.

                         DE BEERS CANADA EXPLORATION INC.


                         By:
                            ----------------------------------------------------
                         (Authorized Signature)

                         on behalf of itself and Mountain Province Diamonds Inc.
                         DCS CORPORATION LIMITED

                         By:
                            ----------------------------------------------------
                         (Authorized Signature)

     *    The Registrar has applied for  confidential  treatment with respect to
          certain portions of this Agreement,  which have been omitted, pursuant
          to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.



                                                                    Exhibit 12.1

                  SECTION 302 CERTIFICATION OF JAN VANDERSANDE


I, Jan W. Vandersande, certify that:

1.   I have  reviewed  this  Annual  Report  on Form 20-F of  Mountain  Province
     Diamonds Inc.;

2.   Based on my  knowledge,  this  Annual  Report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this Annual Report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the period presented in this report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

     a)   Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this report is being prepared;

     c)   Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation;

     d)   Disclosed  in this  report  any  change in the  registrant's  internal
          control  over  financial  reporting  that  occurred  during the period
          covered by the  Annual  Report  that has  materially  affected,  or is
          reasonably likely to materially affect, the company's internal control
          over financial reporting; and

5.   The company's other certifying officers and I have disclosed,  based on our
     most recent evaluation of internal control over financial reporting, to the
     company's  auditors and the audit committee of company's board of directors
     (or persons performing the equivalent function):



     a)   All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably likely to adversely affect the company's ability to record,
          process, summarize and report financial information; and

     b)   Any fraud, whether or not material,  that involves management or other
          employees  who  have a  significant  role  in the  company's  internal
          control over financial reporting.


Date:        August 18, 2003
                                                   Jan W. Vandersande
By:          /s/ Jan W. Vandersande                Chief Executive Officer
             ----------------------                (Principal Executive Officer)



                                                                    Exhibit 12.2

                 SECTION 302 CERTIFICATION OF PRADEEP VARSHNEY





I, Pradeep Varshney, certify that:




1.   I have  reviewed  this  Annual  Report  on Form 20-F of  Mountain  Province
     Diamonds Inc.;

2.   Based on my  knowledge,  this  Annual  Report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this Annual Report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the period presented in this report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

     a)   Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this report is being prepared;

     c)   Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation;

     d)   Disclosed  in this  report  any  change in the  registrant's  internal
          control  over  financial  reporting  that  occurred  during the period
          covered by the  Annual  Report  that has  materially  affected,  or is
          reasonably likely to materially affect, the company's internal control
          over financial reporting; and



5.   The company's other certifying officers and I have disclosed,  based on our
     most recent evaluation of internal control over financial reporting, to the
     company's  auditors and the audit committee of company's board of directors
     (or persons performing the equivalent function):

     a)   All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably likely to adversely affect the company's ability to record,
          process, summarize and report financial information; and

     b)   Any fraud, whether or not material,  that involves management or other
          employees  who  have a  significant  role  in the  company's  internal
          control over financial reporting.

Date:        August 18, 2003

                                           Pradeep Varshney
By:          /s/ Pradeep Varshney          Chief Financial Officer
             --------------------          (Principal Financial Officer)



                                                                    Exhibit 13.1

                           CERTIFICATION PURSUANT TO
                               18 U.S.C. ss.1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Annual Report on Form 20F of Mountain  Province  Diamonds
Inc.  (the  "Company")  for the period  ended  March 31,  2003 as filed with the
Securities and Exchange Commission on the date here of (the "Report"), I, Jan W.
Vandersande,  Chief Executive  Officer of the Company,  certify,  pursuant to 18
U.S.C.  ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:

     (1)  The Report fully  complies with the  requirements  of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in this Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.




                                                     /s/"Jan Vandersande"
                                                     --------------------
                                                     Jan W. Vandersande
                                                     Chief Executive Officer
                                                     August 18, 2003

A signed  original of this  written  statement  required by Section 906 has been
provided to the  Registrant and will be retained by the Registrant and furnished
to the Securities and Exchange Commission or its staff upon request.



                                                                    Exhibit 13.2

                            CERTIFICATION PURSUANT TO
                               18 U.S.C. ss.1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report on Form 20F of Mountain  Province  Diamonds
Inc.  (the  "Company")  for the period  ended  March 31,  2003 as filed with the
Securities  and  Exchange  Commission  on the date  here of (the  "Report"),  I,
Pradeep Varshney, Chief Financial Officer of the Company,  certify,  pursuant to
18 U.S.C.  ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that:

     (1)  The Report fully  complies with the  requirements  of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in this Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.


                                                     /s/"Pradeep Varshney"
                                                     ----------------------
                                                     Pradeep Varshney
                                                     Chief Financial Officer
                                                     August 18, 2003


A signed  original of this  written  statement  required by Section 906 has been
provided to the  Registrant and will be retained by the Registrant and furnished
to the Securities and Exchange Commission or its staff upon request.