EX-99.1 2 exhibit99-1.htm EXHIBIT 99.1 Dominion Diamond Corp.: Exhibit 99.1 - Filed by newsfilecorp.com

Exhibit 99.1

September 15, 2016

VIA SEDAR
British Columbia Securities Commission
Alberta Securities Commission
Financial and Consumer Affairs Authority of Saskatchewan
The Manitoba Securities Commission
Ontario Securities Commission
Autorité des marchés financiers
Financial and Consumer Services Commission (New Brunswick)
Nova Scotia Securities Commission
Office of the Superintendent of Securities Service (Newfoundland and Labrador)
Office of the Superintendent of Securities (Prince Edward Island)
Office of the Superintendent of Securities, Department of Justice, Government of the Northwest Territories
Nunavut Securities Office, Department of Justice, Government of Nunavut
Office of the Yukon Superintendent of Securities, Community Services, Government of Yukon

Dear Sirs/Mesdames:

Re: Voluntary Filing of Technical Report – Dominion Diamond Corporation (the“Corporation”)

The enclosed technical report (the “Report”) entitled “Ekati Diamond Mine, Northwest Territories, Canada, NI 43-101 Technical Report”, which has an effective date of July 31, 2016, is being filed by the Corporation on a voluntary basis as contemplated under section 4.2(12) of the Companion Policy to National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”). The Report is being filed by the Corporation in order to provide updated scientific and technical information in respect of the Ekati Diamond Mine and not as a result of a requirement under NI 43-101.

Yours sincerely,

(Signed)

Chantal Lavoie, P.Eng
Chief Operating Officer
Dominion Diamond Corporation

Dated 15, September, 2016.




CERTIFICATE OF QUALIFIED PERSON

I, Jon Carlson, P.Geo., am employed as the Manager of Strategic Planning for the Ekati Operation with Dominion Diamond Corporation, whose office is situated at 1102-4920 52nd Street, Yellowknife, NT X1A 3T1.

This certificate applies to the technical report entitled “Ekati Diamond Mine, Northwest Territories, Canada, NI 43-101 Technical Report” that has an effective date of 31 July 2016 (the “technical report”).

I am a Professional Geologist member of the Association of Professional Engineers, Geologists and Geophysicists of the Northwest Territories (#L833). I graduated from West Virginia University with a Bachelor’s Degree in Geology in 1979; and from the Colorado State University with a Masters Degree in Economic Geology in 1983.

I have practiced my profession for 32 years. I have been directly involved in diamond exploration and project development and have been continuously engaged with the discovery, exploration, evaluation and development of the Ekati Diamond Mine in the Northwest Territories, Canada since 1992.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101- Standards of Disclosure for Mineral Projects (NI 43–101).

I have worked in the Ekati project area for 24 years, the last 10 years of which I have had direct involvement with mine site operations.

I am responsible for Sections 1.2, 1.3, 1.6, 1.7, 1.8, 1.9, 1.10, 1.25, 1.26; Section 2; Section 3; Section 4; Section 5; Section 6; Section 7; Section 8; Section 9; Section 10; Section 11; Section 12; Section 23; Sections 25.1, 25.4, 25.5, 25.6, 25.7, 25.8, 25.18, 25.19; Section 26; Section 27 and Appendix A of the technical report.

I am not independent of Dominion Diamond Corporation as independence is described by Section 1.5 of NI 43–101.

I have previously co-authored the following technical reports on the Ekati Operation as follows:

Heimersson, M., and Carlson, J., 2013: Ekati Diamond Mine, Northwest Territories, Canada, NI 43-101 Technical Report: Report prepared for Dominion Diamond Corporation, effective date 10 April 2013.

Carlson, J., Ravenscroft, P., Lavoie, C., and Cunning, J., 2015: Ekati Diamond Mine, Northwest Territories, Canada, NI 43-101 Technical Report: Report prepared for Dominion Diamond Corporation, effective date 31 January, 2015.

   
Dominion Diamond Corporation  
1102-4920 52nd Street www.ddcorp.ca
Yellowknife, NT X1A 3T1  


I have read NI 43–101 and the sections of the technical report for which I am responsible have been prepared in compliance with that Instrument.

As of the effective date of the technical report, to the best of my knowledge, information and belief, the sections of the technical report for which I am responsible contain all scientific and technical information that is required to be disclosed to make those sections of the technical report not misleading.

Dated: 15 September, 2016

“Signed and sealed”

Jon Carlson, P.Geo.

   
Dominion Diamond Corporation  
1102-4920 52nd Street www.ddcorp.ca
Yellowknife, NT X1A 3T1  


CERTIFICATE OF QUALIFIED PERSON

I, Peter John Ravenscroft, FAusIMM, am the owner of Burgundy Mining Advisors Limited, whose office address is Marron House, Virginia & Augusta Streets, P.O. Box N-8326, Nassau, Bahamas.

This certificate applies to the technical report entitled “Ekati Diamond Mine, Northwest Territories, Canada, NI 43-101 Technical Report” that has an effective date of 31 July 2016 (the “technical report”).

I am a Fellow of the Australasian Institute of Mining and Metallurgy (membership number 205218). I graduated from the University of Cape Town in 1979 with a Bachelor of Science degree in Mathematical Statistics, and from the Ecole des Mines de Paris in 1985 with the equivalent of a Masters degree in Geostatistics.

I have practiced my profession for 37 years. I have been directly involved in resource and reserve estimation, mine planning and project evaluation for a wide range of commodities, including over ten diamond properties in Africa, Australia and Canada.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 - Standards of Disclosure for Mineral Projects (NI 43–101).

I visited the Ekati Operation between January 11–14, 2016, June 25, 2015, March 10–13, 2014, and November 3–6, 2014.

I am responsible for Sections 1.12, 1.13, 1.14, 1.15, 1.16, 1.25; Sections 2.1, 2.2, 2.3, 2.4, 2.5; Section 14; Section 15; Sections 25.10, 25.11, 25.18, and Section 27 of the technical report.

I am independent of Dominion Diamond Corporation as independence is described by Section 1.5 of NI 43–101.

I have been involved with the Ekati Operation since 2013 and have conducted detailed technical work, including reviews of all relevant resource models and supervision of updated resource estimation for the Jay, Sable, Fox and Misery Satellite pipes.

I have previously co-authored a technical report on the Ekati Operation as follows:

Carlson, J., Ravenscroft, P., Lavoie, C., and Cunning, J., 2015: Ekati Diamond Mine, Northwest Territories, Canada, NI 43-101 Technical Report: Report prepared for Dominion Diamond Corporation, effective date 31 January, 2015.

Burgundy Mining Advisors Limited  
Registered Office: Marron House, Virginia & Augusta Streets,  
P.O. Box N-8326, Nassau, Bahamas www.burgundymining.com


I have read NI 43–101 and the sections of the technical report for which I am responsible have been prepared in compliance with that Instrument.

As of the effective date of the technical report, to the best of my knowledge, information and belief, the sections of the technical report for which I am responsible contain all scientific and technical information that is required to be disclosed to make those sections of the technical report not misleading.

Dated: 15 September, 2016

“Signed”

Peter Ravenscroft, FAusIMM

Burgundy Mining Advisors Limited  
Registered Office: Marron House, Virginia & Augusta Streets,  
P.O. Box N-8326, Nassau, Bahamas www.burgundymining.com


CERTIFICATE OF QUALIFIED PERSON

I, Chantal Lavoie, P.Eng., am employed with Dominion Diamond Corporation as the Chief Operating Officer and President of the Ekati Diamond Mine, whose office is situated at 1102-4920 52nd Street, Yellowknife, NT X1A 3T1.

This certificate applies to the technical report entitled “Ekati Diamond Mine, Northwest Territories, Canada, NI 43-101 Technical Report” that has an effective date of 31 July, 2016 (the “technical report”).

I am a Professional Engineer, member of the Professional Engineers of Ontario (#100153256) and the Northwest Territories and Nunavut Association of Professional Engineers and Geoscientists (#1671). I graduated from Université Laval (Québec) with a Bachelor of Applied Sciences – Mining Engineering in 1986.

I have practiced my profession for 30 years. I have mining experience in both open pit and underground operations, including 11 years specific to the diamond industry where I have been involved in the design, construction, commissioning and operations aspects of diamond mines.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 - Standards of Disclosure for Mineral Projects (NI 43–101).

I have worked in the Ekati Operation for four years.

I am responsible for Sections 1.1, 1.4, 1.5, 1.11, 1.17, 1.18, 1.19, 1.20, 1.21, 1.22, 1.23, 1.24, 1.25, 1.26; Section 2; Section 3; Section 13; Sections 16.1, 16.2, 16.3, 16.4.1, 16.4.2, 16.4.3, 16.4.4, 16.4.5, 16.4.6, 16.4.7, 16.4.8, 16.4.9.4, 16.5, 16.6, 16.7, 16.8, 16.9, Section 17, Section 18.1, 18.2, 18.3.1, 18.3.2, 18.4, 18.5, 18.6, 18.7.1, 18.7.2, 18.7.3, 18.7.5, 18.8, 18.9, 18.10, 18.11, 18.12; Section 19; Section 20; Sections 21.1.1, 21.1.2, 21.1.3, 21.1.4.2, 21.1.5, 21.1.6, 21.1.7, 21.1.8, 21.2, 21.3; Section 22; Section 24; Sections 25.2, 25.3, 25.9, 25.12, 25.13, 25.14, 25.15, 25.16, 25.17, 25.18, 25.19; Section 26; and Section 27 of the technical report.

I am not independent of Dominion Diamond Corporation as independence is described by Section 1.5 of NI 43–101.

I have been involved with the operation for the past three years in my role as Chief Operating Officer of Dominion Diamond Corporation and President of the Ekati Diamond Mine.

I have previously co-authored a technical report on the Ekati Operation:

Carlson, J., Ravenscroft, P., Lavoie, C., and Cunning, J., 2015: Ekati Diamond Mine, Northwest Territories, Canada, NI 43-101 Technical Report: Report prepared for Dominion Diamond Corporation, effective date 31 January, 2015.

   
Dominion Diamond Corporation  
1102-4920 52nd Street www.ddcorp.ca
Yellowknife, NT X1A 3T1  


I have read NI 43–101 and the sections of the technical report for which I am responsible have been prepared in compliance with that Instrument.

As of the effective date of the technical report, to the best of my knowledge, information and belief, the sections of the technical report for which I am responsible contain all scientific and technical information that is required to be disclosed to make those sections of the technical report not misleading.

Dated: 15 September 2016

“Signed and sealed”

Chantal Lavoie, P.Eng.

   
Dominion Diamond Corporation  
1102-4920 52nd Street www.ddcorp.ca
Yellowknife, NT X1A 3T1  



CERTIFICATE OF QUALIFIED PERSON

I, John Cunning, P.Eng., am employed as a Principal and Geotechnical Engineer with Golder Associates Ltd., with a business address at Suite 200—2920 Virtual Way, Vancouver, BC, V5M 0C4.

This certificate applies to the technical report entitled “Ekati Diamond Mine, Northwest Territories, Canada, NI 43-101 Technical Report” that has an effective date of 31 July 2016 (the “technical report”).

I am a member of the Association of Professional Engineers and Geoscientists of the Northwest Territories and Nunavut (Licensee L1870) and the Association of Professional Engineers and Geoscientists of British Columbia (Member 22325). I graduated from the University of Alberta with a Bachelor degree in Civil Engineering in 1991 and a Master’s degree in Geotechnical Engineering in 1994.

I have practiced my profession continuously since 1994. My relevant experience includes project management, engineering and construction of mineral projects in the Northwest Territories, Nunavut, and British Columbia, Canada.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 - Standards of Disclosure for Mineral Projects (NI 43–101).

I visited the Ekati Operation between January 20 and 23, 2014, and again from August 5 to 6, 2015.

I am responsible for Sections 2.1, 2.2, 2.3, 2.5, 16.4.9.1, 16.4.9.2, 16.4.9.3, 18.3.3, 18.7.4, 21.1.4.1, and Section 27. I am responsible for those portions of the report content relating to the work performed by Golder Associates Ltd. on the Jay project in Sections 1.22.1, 1.26, 16.4.9.4, 21.1.8, 24.2.1, 24.2.2.1, 24.2.2.2, 25.16, and 26.4.

I am independent of Dominion Diamond Corporation as independence is described by Section 1.5 of NI 43–101.

I have been involved with the Ekati Operation since May 2013 during which time I participated in the Jay project pre-feasibility and feasibility studies.

I have previously co-authored a technical report on the Ekati Operation:

Carlson, J., Ravenscroft, P., Lavoie, C., and Cunning, J., 2015: Ekati Diamond Mine, Northwest Territories, Canada, NI 43-101 Technical Report: Report prepared for Dominion Diamond Corporation, effective date 31 January 2015.

I have read NI 43–101 and the sections of the technical report for which I am responsible have been prepared in compliance with that Instrument.


Golder Associates Ltd.
Suite 200 - 2920 Virtual Way, Vancouver, BC, V5M 0C4
Tel: +1 (604) 296 4200 Fax: +1 (604) 298 5253 www.golder.com
Golder Associates: Operations in Africa, Asia, Australasia, Europe, North America and South America
Golder, Golder Associates and the GA globe design are trademarks of Golder Associates Corporation.



1546701-E16054-SOQ-Rev0-2070
15 September 2016

As of the effective date of the technical report, to the best of my knowledge, information and belief, the sections of the technical report for which I am responsible contain all scientific and technical information that is required to be disclosed to make those sections of the technical report not misleading.

Dated: 15 September 2016

“Signed and Sealed”
John Cunning, P.Eng

JCC/it


2/2  



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

C O N T E N T S

1.0 SUMMARY   1-1
  1.1 Introduction 1-1
  1.2 Project Setting 1-1
  1.3 Mineral Tenure and Royalties 1-2
  1.4 Permits and Agreements 1-3
  1.5 Environment and Social Licence 1-4
  1.6 Geology and Mineralization 1-5
  1.7 Exploration 1-6
  1.8 Drilling   1-7
  1.9 Sampling 1-8
  1.10 Quality Assurance, Quality Control, and Data Verification 1-9
  1.11 Metallurgical Test Work 1-9
  1.12 Mineral Resource Estimates 1-10
  1.13 Mineral Resource Statement 1-13
  1.14 Targets for Further Exploration 1-15
    1.14.1 Coarse Reject Tails 1-15
    1.14.2 Misery Deep 1-16
  1.15 Mineral Reserve Estimates 1-16
  1.16 Mineral Reserve Statement 1-17
  1.17 Mining Recovery 1-19
    1.17.1 Open Pit Mining 1-19
    1.17.2 Underground Mining 1-20
    1.17.3 Grade Control 1-20
    1.17.4 Geotechnical 1-20
    1.17.5 Hydrogeological 1-21
  1.18 Process Recovery 1-21
  1.19 Infrastructure 1-22
  1.20 Mine Plans 1-24
  1.21 Markets and Contracts 1-24
  1.22 Capital and Operating Cost Estimates 1-25
    1.22.1 Capital Costs 1-25
    1.22.2 Operating Costs 1-26
  1.23 Economic Analysis 1-27
  1.24 Sensitivity Analysis 1-32
  1.25 Conclusions 1-33
  1.26 Recommendations 1-34
2.0 INTRODUCTION 2-1
  2.1 Terms of Reference 2-3
  2.2 Qualified Persons 2-3
  2.3 Site Visits and Scope of Personal Inspection 2-3
  2.4 Effective Dates 2-5

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

  2.5 Information Sources and References 2-5
  2.6 Exemptive Relief Approval 2-6
  2.7 Previous Technical Reports 2-7
3.0 RELIANCE ON OTHER EXPERTS 3-1
4.0 PROPERTY DESCRIPTION AND LOCATION 4-1
  4.1 Property and Title in the Northwest Territories 4-1
    4.1.1 Mineral Tenure 4-1
    4.1.1.1.   Licence to Prospect   4-1
    4.1.1.2.   Permit to Prospect   4-2
    4.1.1.3.   Mineral Claim   4-2
    4.1.1.4.   Mineral Leases   4-2
    4.1.1.5.   Legislative Changes   4-3
    4.1.2 Surface Rights 4-3
    4.1.3 Royalties 4-4
    4.1.4 Environmental Impact Assessment 4-4
    4.1.5 Taxation 4-4
    4.1.6 Fraser Institute Survey 4-4
  4.2 Project Ownership 4-5
  4.3 Property Agreements 4-5
    4.3.1 Core Zone Joint Venture 4-5
    4.3.2 Buffer Zone Joint Venture 4-6
    4.3.3 Impact and Benefit Agreements 4-7
  4.4 Mineral Tenure 4-7
  4.5 Surface Rights 4-13
  4.6 Water Rights 4-13
  4.7 Royalties and Encumbrances 4-13
    4.7.1 Mining Tax 4-13
    4.7.2 Misery Royalty 4-13
  4.8 Permits 4-13
  4.9 Environmental Liabilities 4-14
  4.10 Native Title 4-14
  4.11 Social License 4-14
  4.12 Comments on Property Description and Location 4-14
5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY 5-1
  5.1 Accessibility 5-1
  5.2 Climate 5-1
  5.3 Local Resources and Infrastructure 5-1
  5.4 Physiography, Vegetation and Fauna 5-2
  5.5 Comments on Accessibility, Climate, Local Resources, Infrastructure, and Physiography 5-3
6.0 HISTORY   6-1
7.0 GEOLOGICAL SETTING AND MINERALIZATION 7-1
  7.1 Regional Geology 7-1

   
September 2016 TOC ii



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

  7.2 Project Geology 7-4
  7.3 Deposits   7-7
    7.3.1 Koala   7-7
    7.3.2 Koala North 7-11
    7.3.3 Fox   7-11
    7.3.4 Misery   7-15
    7.3.4.1. Misery Main 7-15
    7.3.4.2. Misery South and Misery Southwest Extension 7-18
    7.3.4.3. Other Kimberlite Bodies in the Misery Area 7-20
    7.3.5 Pigeon   7-20
    7.3.6 Sable   7-24
    7.3.7 Jay   7-27
    7.3.8 Lynx   7-31
  7.4 Mineralogy   7-34
  7.5 Comments on Geological Setting and Mineralization 7-35
8.0 DEPOSIT TYPES   8-1
  8.1 Comment on Deposit Type 8-4
9.0 EXPLORATION   9-1
  9.1 Grids and Surveys 9-1
  9.2 Mapping   9-1
    9.2.1 Surface Mapping 9-1
    9.2.2 Mine Mapping 9-3
  9.3 Geochemical Sampling 9-3
  9.4 Geophysics   9-3
    9.4.1 Airborne Geophysical Surveys 9-3
    9.4.2 Ground Geophysical Surveys 9-5
    9.4.3 Core Hole Seismic Surveys 9-5
  9.5 Petrology, Mineralogy, and Research Studies 9-5
  9.6 Exploration Potential 9-6
  9.7 Comments on Exploration 9-12
10.0 DRILLING     10-1
  10.1 Drill Methods   10-10
    10.1.1 RC Drilling 10-10
    10.1.2 Core Drilling 10-11
    10.1.3 Sonic Drilling 10-11
  10.2 Geological Logging 10-12
    10.2.1 RC Drilling 10-12
    10.2.2 Core Drilling 10-13
  10.3 Recovery   10-13
  10.4 Collar Surveys   10-13
    10.4.1 RC Drilling 10-13
    10.4.2 Core Drilling 10-14
  10.5 Down-hole Surveys 10-14
    10.5.1 RC Drilling 10-14
    10.5.2 Core Drilling 10-15

   
September 2016 TOC iii



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

  10.6 Underground Test Hole Data 10-15
  10.7 Geotechnical Drilling 10-15
  10.8 Sample Length/True Thickness 10-17
  10.9 Drill Data by Major Kimberlite 10-18
    10.9.1 Koala   10-18
    10.9.2 Fox   10-19
    10.9.3 Misery   10-21
    10.9.4 Misery Satellites 10-22
    10.9.5 Pigeon 10-22
    10.9.6 Sable   10-23
    10.9.7 Jay   10-24
    10.9.8 Lynx   10-24
  10.10 Comments on Drilling 10-25
11.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY 11-1
  11.1 Bulk Sampling Methods 11-1
    11.1.1 Koala   11-1
    11.1.1.1.   Phase 5 RVK Unit 11-1
    11.1.1.2.   Phase 6 PVK Unit 11-1
    11.1.2 Misery   11-2
    11.1.3 Misery Satellites 11-2
    11.1.4 Pigeon 11-3
    11.1.5 Sable   11-3
    11.1.6 Fox   11-4
    11.1.7 Jay   11-4
    11.1.8 Lynx   11-4
  11.2 RC Sampling Methodology 11-5
    11.2.1 RC Sample Tonnage Calculation 11-6
    11.2.2 Slough Diamond Allocation 11-6
  11.3 Sampling Protocols 11-7
  11.4 Sampling Error 11-9
  11.5 Density Determinations 11-10
  11.6 Sample Plant Operations 11-11
  11.7 Quality Assurance and Quality Control 11-14
  11.8 Databases 11-15
    11.8.1 Database Management 11-15
  11.9 Sample Storage 11-16
  11.10 Sample Security 11-16
  11.11 Valuation Parcels 11-17
    11.11.1 Koala     11-17
    11.11.2 Fox     11-17
    11.11.3 Misery Main and Misery Satellite Pipes 11-18
    11.11.4 Pigeon     11-18
    11.11.5 Sable     11-18
    11.11.6 Jay     11-18
    11.11.7  Lynx    11-19
  11.12 Comments on Sample Preparation, Analyses, and Security 11-19

   
September 2016 TOC iv



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

12.0 DATA VERIFICATION   12-1
  12.1 Down Hole Deviation Survey Accuracy 12-1
  12.2 Database Verification 12-1
    12.2.1 Data Reviews 12-1
    12.2.2 Database Maintenance 12-1
  12.3 Sample Plant Audits 12-1
  12.4 Technical Reports   12-4
  12.5 Comments on Data Verification 12-4
13.0 MINERAL PROCESSING AND METALLURGICAL TESTING 13-1
  13.1 Metallurgical Test Work 13-1
    13.1.1 Plant Design Test Work 13-1
    13.1.2 Current Testing 13-2
  13.2 Recovery Estimates   13-2
    13.2.1 Incidental Fine Diamond Recovery 13-4
    13.2.2 DMS Sinks Screens 13-4
    13.2.3 Diamond Recovery Comparison – Process Plant and Bulk Sample Plant 13-5
  13.3 Metallurgical Variability 13-7
    13.3.1 Bulk Sampling 13-7
    13.3.2 Coarse Tail Rejects 13-7
  13.4 Deleterious Elements 13-7
  13.5 Comments on Mineral Processing and Metallurgical Testing 13-8
14.0 MINERAL RESOURCE ESTIMATES 14-1
  14.1 Geological Models   14-1
  14.2 Exploratory Data Analysis 14-1
  14.3 Block Models     14-2
  14.4 Grade Estimation/Interpolation Methods 14-3
  14.5 Block Model Validation 14-4
  14.6 Classification     14-4
  14.7 Estimation Methodology by Kimberlite Pipe 14-4
    14.7.1 Koala     14-5
    14.7.1.1.   Geological Models 14-5
    14.7.1.2.   Geotechnical Assessment 14-5
    14.7.1.3.   Variable Estimation 14-5
      14.7.1.3.1. Block Models     14-5
      14.7.1.3.2. Bulk Density     14-5
      14.7.1.3.3. Moisture     14-7
      14.7.1.3.4. Grade     14-7
    14.7.1.4.   Depletion 14-8
    14.7.1.5.   Uncertainty Assessment 14-9
    14.7.1.6.   Initial Classification 14-9
    14.7.2 Fox     14-10
    14.7.2.1.   Geological Models 14-10
    14.7.2.2.   Geotechnical Assessment 14-11
    14.7.2.3.   Variable Estimation 14-12

   
September 2016 TOC v



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

        14.7.2.3.1. Block Models 14-12
        14.7.2.3.2. Bulk Density 14-12
        14.7.2.3.3. Moisture 14-12
        14.7.2.3.4. Grade 14-12
      14.7.2.4.   Depletion 14-13
      14.7.2.5.   Uncertainty Assessment 14-13
      14.7.2.6.   Initial Classification 14-13
    14.7.3   Misery 14-14
      14.7.3.1.   Geological Models 14-14
      14.7.3.2.   Geotechnical Assessment 14-14
      14.7.3.3.   Variable Estimation 14-15
        14.7.3.3.1. Block Models 14-15
        14.7.3.3.2. Bulk Density 14-15
        14.7.3.3.3. Moisture 14-15
        14.7.3.3.4. Grade 14-15
      14.7.3.4.   Uncertainty Assessment 14-16
      14.7.3.5.   Initial Classification 14-16
    14.7.4   Misery Satellites 14-17
      14.7.4.1.   Geological Models 14-17
      14.7.4.2.   Volume, Bulk Density and Tonnage 14-18
      14.7.4.3.   Grade 14-18
    14.7.5   Pigeon 14-19
      14.7.5.1.   Geological Models 14-19
      14.7.5.2.   Hydrogeological Assessment 14-20
      14.7.5.3.   Geotechnical Assessment 14-20
      14.7.5.4.   Variable Estimation 14-20
        14.7.5.4.1. Block Model   14-20
        14.7.5.4.2. Bulk Density   14-20
        14.7.5.4.3.  Moisture  14-21
        14.7.5.4.4.  Grade  14-22
      14.7.5.5.   Uncertainty Assessment 14-24
      14.7.5.6.   Initial Classification 14-25
    14.7.6   Sable 14-25
      14.7.6.1.   Geological Models 14-25
      14.7.6.2.   Geotechnical Assessment 14-26
      14.7.6.3.   Variable Estimation 14-26
        14.7.6.3.1. Block Models   14-27
        14.7.6.3.2. Bulk Density   14-27
        14.7.6.3.3.  Moisture  14-27
        14.7.6.3.4. Grade   14-27
      14.7.6.4.   Uncertainty Assessment 14-28
      14.7.6.5.   Initial Classification 14-29
    14.7.7   Jay 14-30
      14.7.7.1.   Geological Models 14-30
      14.7.7.2.   Geotechnical Assessment 14-30
      14.7.7.3.   Variable Estimation 14-31

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

      14.7.7.3.1. Block Models   14-31
      14.7.7.3.2. Bulk Density   14-31
      14.7.7.3.3.  Moisture   14-31
      14.7.7.3.4. Grade   14-31
    14.7.7.4.   Uncertainty Assessment 14-32
    14.7.7.5.   Initial Classification 14-33
    14.7.8 Lynx 14-33
    14.7.8.1.   Geological Models 14-33
    14.7.8.2.   Geotechnical Assessment 14-34
    14.7.8.3.   Variable Estimation 14-34
      14.7.8.3.1. Block Models    14-34
      14.7.8.3.2.   Bulk Density   14-34
      14.7.8.3.3.   Moisture   14-34
    14.7.8.4.   Uncertainty Assessment 14-35
    14.7.8.5.   Initial Classification 14-35
  14.8 Final Classification of Mineral Resources 14-35
    14.8.1 Koala   14-35
    14.8.2 Fox   14-36
    14.8.3 Misery   14-36
    14.8.4 Misery Southwest Extension and Misery South 14-36
    14.8.5 Pigeon   14-36
    14.8.6 Sable   14-36
    14.8.7 Jay   14-37
    14.8.8 Lynx   14-37
  14.9 Reasonable Prospects of Eventual Economic Extraction 14-37
    14.9.1 Diamond Recovery at 0.5 mm 14-37
    14.9.2 Diamond Reference Price 14-38
    14.9.3 Conceptual Mine Designs for Resource Reporting 14-40
    14.9.4 Stockpiles 14-41
  14.10 Mineral Resource Statement 14-41
  14.11 Factors That May Affect the Mineral Resource Estimates 14-44
  14.12 Targets for Further Exploration 14-44
    14.12.1 Coarse Reject Material 14-45
    14.12.2 Misery Deep 14-46
  14.13 Comments on Mineral Resource Estimates 14-47
15.0 MINERAL RESERVE ESTIMATES 15-1
  15.1 Estimate Basis 15-1
  15.2 Diamond Recovery and Price Estimates 15-1
  15.3 Mineral Reserve Estimation – Open Pits 15-3
    15.3.1 Mineral Reserve Estimation Procedure 15-3
    15.3.2 Misery   15-4
    15.3.3 Pigeon   15-5
    15.3.4 Sable   15-5
    15.3.5 Lynx   15-6
    15.3.6 Jay   15-6
  15.4 Mineral Reserve Estimation – Underground 15-7

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

    15.4.1 Control of Waste Dilution 15-7
    15.4.2 Koala   15-7
  15.5 Mineral Reserve Statement 15-10
  15.6 Factors That May Affect the Mineral Reserve Estimates 15-11
  15.7 Comments on Mineral Reserve Estimates 15-12
16.0 MINING METHODS   16-1
  16.1 Introduction   16-1
  16.2 Geotechnical   16-1
    16.2.1 Gas   16-2
  16.3 Hydrogeology   16-2
  16.4 Open Pit Operations 16-3
    16.4.1 Design Considerations 16-3
    16.4.2 Explosives 16-5
    16.4.3 Grade Control 16-5
    16.4.4 Open Pit Geotechnical 16-5
    16.4.5 Misery Open Pit 16-5
    16.4.5.1.   Status and Design 16-5
    16.4.5.2.   Geotechnical 16-6
    16.4.5.3.   Hydrogeology and Dewatering 16-7
    16.4.5.4.   Operations 16-8
    16.4.5.5.   Satellite Pipes 16-8
    16.4.6 Pigeon Open Pit 16-9
    16.4.6.1.   Status and Design 16-9
    16.4.6.2.   Geotechnical 16-9
    16.4.6.3.   Operations 16-11
    16.4.7 Sable Open Pit 16-12
    16.4.7.1.   Status and Design 16-12
    16.4.7.2.   Geotechnical 16-14
    16.4.7.3.   Hydrogeology and Dewatering 16-14
    16.4.7.4.   Operations 16-15
    16.4.8 Lynx Open Pit 16-16
    16.4.8.1.   Status and Design 16-16
    16.4.8.2.   Geotechnical 16-16
    16.4.8.3.   Hydrogeology and Dewatering 16-17
    16.4.8.4.   Operations 16-18
    16.4.9 Jay Open Pit 16-18
    16.4.9.1.   Status and Design 16-18
    16.4.9.2.   Geotechnical 16-20
    16.4.9.3.   Hydrogeology and Dewatering 16-21
    16.4.9.4.   Operations 16-22
  16.5 Underground Operations 16-25
    16.5.1 Underground Mining Method Selection 16-25
    16.5.2 Dilution and Recovery 16-25
    16.5.3 Koala Underground 16-26
    16.5.3.1.   Status and Design 16-26
    16.5.3.2.   Koala Geotechnical 16-30

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

    16.5.3.3.   Production Draw Control 16-31
    16.5.3.4. Koala Hydrology and Hydrogeology 16-31
    16.5.3.5.   Mud Rushes 16-31
    16.5.4 Consideration of Marginal Cut-Off Grades for Underground 16-32
    16.5.5 Underground Access and Materials Handling 16-32
    16.5.6 Underground Mine Ventilation 16-35
    16.5.7 Explosives 16-36
  16.6 Mining Equipment 16-36
    16.6.1 Open Pit 16-36
    16.6.1.1.   Current Equipment 16-36
    16.6.1.2.   Planned Equipment 16-38
    16.6.2 Underground 16-38
  16.7 Consideration of Process Plant Throughput Rates 16-39
  16.8 Mine Plan   16-39
    16.8.1 Mineral Reserves Base Case Mine Plan 16-39
    16.8.2 Operating Case Mine Plan 16-42
  16.9 Comments on Mining Methods 16-47
17.0 RECOVERY METHODS 17-1
  17.1 Process Flowsheet 17-1
  17.2 Plant Design   17-3
  17.3 Fines Dense Media Separation 17-5
  17.4 Energy, Water and Process Materials Requirements 17-6
  17.5 Considerations Relating to Ore Sources in Development 17-6
    17.5.1 Sable   17-6
    17.5.2 Lynx   17-6
    17.5.3 Jay   17-7
  17.6 Comments on Recovery Methods 17-8
18.0 PROJECT INFRASTRUCTURE 18-1
  18.1 Road and Logistics 18-1
    18.1.1 Tibbitt to Contwoyto Winter Road 18-1
    18.1.2 Air Transport 18-1
    18.1.3 Haul Roads 18-2
  18.2 Infrastructure   18-3
    18.2.1 Ekati Main 18-3
    18.2.2 Koala   18-4
    18.2.3 Misery   18-4
    18.2.4 Sable   18-5
    18.2.5 Jay   18-5
  18.3 Waste Storage Facilities 18-6
    18.3.1 Existing Facilities 18-6
    18.3.2 Sable   18-6
    18.3.3 Jay   18-7
    18.3.3.1.   WRSA 18-7
    18.3.3.2.   Lynx Pit Waste Rock 18-8
  18.4 Processed Kimberlite Storage Facilities 18-9

   
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Northwest Territories, Canada
NI 43-101 Technical Report

  18.5 Stockpiles     18-10
  18.6 Aggregate Crusher 18-10
  18.7 Water Management 18-10
    18.7.1 Ekati Main 18-10
    18.7.2 Misery   18-11
    18.7.3 Sable   18-12
    18.7.4 Jay   18-12
    18.7.4.1.   Jay and North Dikes 18-12
    18.7.4.2.   Diversion Channel 18-13
    18.7.4.3.   Dewatering Strategy 18-14
    18.7.5 Sewage 18-15
  18.8 Power and Electrical 18-15
    18.8.1 Ekati Main 18-15
    18.8.2 Misery   18-15
    18.8.3 Sable   18-16
    18.8.4 Jay   18-16
  18.9 Fuel       18-16
  18.10 Water Supply   18-17
    18.10.1 Ekati Main 18-17
    18.10.2 Long Lake Containment Facility 18-17
    18.10.3 Misery 18-17
    18.10.4 Sable 18-17
    18.10.5 Jay   18-17
  18.11 Communications 18-17
  18.12 Comments on Infrastructure 18-18
19.0 MARKET STUDIES AND CONTRACTS 19-1
  19.1 Reference Market 19-1
  19.2 Market Fundamentals 19-3
  19.3 Long Term Price and Mining Limits 19-5
  19.4 Contracts     19-10
  19.5 Comments on Market Studies and Contracts 19-11
20.0 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT 20-1
  20.1 Permitting     20-1
    20.1.1 Environmental Agreement 20-1
    20.1.2 Surface Leases and Land Use Permits 20-1
    20.1.2.1.   Winter Road 20-5
    20.1.2.2.   Jay 20-5
    20.1.3 Water Licence 20-6
    20.1.4 Fisheries Act Authorizations 20-6
    20.1.5 Navigable Waters Protection Act Authorizations 20-7
  20.2 Monitoring Activities and Studies 20-8
    20.2.1 Water Quality 20-8
    20.2.2 Aquatic Effects Monitoring Program 20-10
    20.2.3 Fish Habitat Compensation Works 20-11

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

    20.2.3.1.   Panda Diversion 20-11
    20.2.3.2. Nero–Nema Stream Monitoring Program 20-12
    20.2.4 Seepage 20-12
    20.2.5 Waste Management Plan 20-12
    20.2.6 Wildlife Effects Monitoring 20-13
    20.2.7 Re-vegetation 20-13
    20.2.8 Air Quality (AQMP) 20-13
    20.2.9 Geotechnical Inspections 20-14
  20.3 Environmental Liabilities 20-14
  20.4 Closure and Reclamation Plan 20-14
  20.5 Reclamation Security 20-15
  20.6 Considerations of Social and Community Impacts 20-16
    20.6.1 Impact Benefit Agreements 20-16
    20.6.2 Socio-Economic Agreement 20-16
    20.6.3 Community Development Programs 20-17
    20.6.4 Traditional Knowledge 20-17
    20.6.5 Proposed Jay Development 20-17
20.7 Comments on Environmental Studies, Permitting, and Social or Community Impact 20-18
21.0 CAPITAL AND OPERATING COSTS 21-1
  21.1 Capital Cost Estimates 21-1
    21.1.1 Koala, Misery, and Pigeon 21-1
    21.1.2 Lynx   21-1
    21.1.3 Sable   21-2
    21.1.4 Jay   21-2
    21.1.4.1.   Capital Cost Estimates (Golder) 21-2
    21.1.4.2.   Additional Capital Cost Estimates (Dominion) 21-4
    21.1.5 Development Capital Costs 21-4
    21.1.5.1.   Sable Capital Costs 21-4
    21.1.5.2.   Jay Capital Costs 21-5
    21.1.6 Other Development Capital Costs 21-7
    21.1.7 Sustaining Capital Costs 21-8
    21.1.8 Capital Cost Summary 21-8
  21.2 Operating Cost Estimates 21-9
    21.2.1 Basis of Estimates 21-9
    21.2.1.1.   Mine Plans 21-9
    21.2.1.2.   Labour Costs 21-10
    21.2.1.3.   Material Costs 21-10
      21.2.1.3.1. Mining Consumables   21-10
      21.2.1.3.2. Diesel   21-11
      21.2.1.3.3.    Maintenance  21-11
      21.2.1.3.4. Processing Consumables    21-11
    21.2.1.4.   Camp Costs 21-11
    21.2.1.5.   General & Administrative Costs 21-12
    21.2.1.6.   Reclamation Costs 21-12
    21.2.1.7.   Marketing Costs 21-12

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

    21.2.2 Operating Cost Summary 21-12
  21.3 Comments on Capital and Operating Costs 21-15
22.0 ECONOMIC ANALYSIS 22-1
  22.1 Methodology Used 22-1
  22.2 Financial Model Parameters 22-2
    22.2.1 Mineral Resource, Mineral Reserve, and Mine Life 22-2
    22.2.2 Metallurgical Recoveries 22-2
    22.2.3 Operating Costs 22-2
    22.2.4 Capital Costs 22-2
    22.2.5 Royalties 22-3
    22.2.6 Working Capital 22-3
    22.2.7 Taxes   22-3
    22.2.8 Closure Costs and Salvage Value 22-3
    22.2.9 Inflation 22-3
    22.2.10 Diamond Prices   22-3
  22.3 Financial Results 22-6
  22.4 Sensitivity Analysis 22-11
  22.5 Comments on Economic Analysis 22-12
23.0 ADJACENT PROPERTIES 23-1
24.0 OTHER RELEVANT DATA AND INFORMATION 24-1
  24.1 Sable     24-1
    24.1.1 Project Schedule 24-1
    24.1.2 Execution Plan 24-1
    24.1.2.1.   Construction 24-1
    24.1.2.2.   Operations 24-2
    24.1.2.3.   Closure 24-2
    24.1.3 Risk Assessments 24-3
    24.1.3.1.   Safety 24-3
    24.1.3.2.   Project Execution 24-3
    24.1.3.3.   Failures and Malfunctions 24-5
  24.2 Jay     24-5
    24.2.1 Project Schedule 24-5
    24.2.2 Execution Plan 24-6
    24.2.2.1.   Detailed Design Phase 24-6
    24.2.2.2.   Construction 24-7
    24.2.2.3.   Operations 24-7
    24.2.2.4.   Closure 24-8
    24.2.3 Risk Assessments 24-8
25.0 INTERPRETATION AND CONCLUSIONS 25-1
  25.1 Mineral Tenure and Royalties 25-1
  25.2 Permits   25-1
  25.3 Environment and Social Licence 25-2
  25.4 Geology and Mineralization 25-3
  25.5 Exploration   25-3

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

  25.6 Drilling   25-3
  25.7 Sampling   25-3
  25.8 Quality Assurance, Quality Control, and Data Verification 25-4
  25.9 Metallurgical Test Work 25-4
  25.10 Mineral Resource Estimates 25-4
  25.11 Mineral Reserve Estimates 25-5
  25.12 Mining Recovery 25-5
  25.13 Process Recovery 25-6
  25.14 Infrastructure 25-6
  25.15 Markets   25-7
  25.16 Capital and Operating Costs 25-7
  25.17 Economic Analysis 25-7
  25.18 Conclusions 25-7
  25.19 Risks and Opportunities 25-8
    25.19.1 Risks 25-8
    25.19.2 Opportunities 25-8
26.0 RECOMMENDATIONS 26-1
  26.1 Introduction 26-1
  26.2 Current Operations 26-1
  26.3 Sable   26-1
  26.4 Jay   26-2
  26.5 Fox Deep   26-2
  26.6 Process Plant 26-2
27.0 REFERENCES   27-1

T A B L E S

Table 1-1: Diamond Reference Price Assumptions for Mineral Resources as at 31 July 2016 1-12
Table 1-2: Mineral Resource Statement 1-14
Table 1-3: Mineral Reserves Statement 1-18
Table 1-4: Capital Cost Estimate ($C million) 1-26
Table 1-5: Mineral Reserves Base Case Mine Plan Operating Costs (C$ million) 1-27
Table 1-6: Operating Case Mine Plan Operating Costs (C$ million) 1-27
Table 1-7: Economic Analysis Summary, Mineral Reserves Base Case Mine Plan 1-30
Table 1-8: Economic Analysis Summary, Operating Case Mine Plan 1-31
Table 1-9: NPV Sensitivity Analysis under Mineral Reserves Base Case Mine Plan (estimate base case is highlighted) 1-33
Table 1-10: NPV Sensitivity Analysis under Operating Case Mine Plan (estimate base case is highlighted)   1-33
Table 4-1: Core Zone Mineral Lease Summary Table 4-8
Table 4-2: Buffer Zone Mineral Lease Summary Table 4-10
Table 6-1: Production History 6-3
Table 9-1: Airborne Geophysical Surveys 9-4
Table 9-2: Pipes with Exploration Potential – Diamond Drilling 9-8
Table 10-1: Drill Summary Table   10-2

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Table 11-1: De-grit Screen Slot Width for Key Bulk Sample Programs 11-9
Table 12-1: Jay 2015 Dense Medium Separation Tail Audits – Sample Information 12-3
Table 12-2: Jay 2015 Dense Medium Separation Tail Audits – Results 12-3
Table 12-3: Jay 2015 Dense Medium Separation Tail Audits – Comparison to Ekati Bulk Sample Plant Data 12-4
Table 13-1: Plant Design Test Work Summary 13-1
Table 14-1: Model Details 14-2
Table 14-2: Dry Bulk Density Estimation Parameters, Koala 14-6
Table 14-3: Grade Estimation Parameters, Koala 14-8
Table 14-4: Kriging Output Variables Used for Koala Underground Mineral Resource Classification 14-10
Table 14-5: Variogram Models (Spherical), Pigeon Dry Bulk Density Estimate 14-21
Table 14-6: Variogram Models (Spherical), Pigeon Moisture Estimate 14-22
Table 14-7: Grade Estimation Parameters, Pigeon 14-24
Table 14-8: Diamond Recovery Factors to 0.5 mm as at 31 July, 2016 14-38
Table 14-9: Diamond Reference Price Assumptions for Mineral Resources as at 31 July, 2016 14-40
Table 14-10: Mineral Resource Statement   14-42
Table 14-11: Mineral Resources in Stockpiles by Area   14-43
Table 15-1: Diamond Recovery Factors for Conversion to Mineral Reserves 15-2
Table 15-2: Diamond Reference Price Assumptions for Mineral Reserves as at 31 July 2016 15-3
Table 15-3: Summary of Dilution and Mining Recovery Factors For Open Pit Operations 15-4
Table 15-4: Mineral Reserves Statement 15-11
Table 16-1: Ekati RMR Ratings by Kimberlite Pipe 16-2
Table 16-2: Misery Open Pit Design Parameters 16-7
Table 16-3: Pigeon Stage II Design Angles (inter-ramp based, expected case, 20 m bench height) 16-10
Table 16-4: Sable Design Parameters 16-14
Table 16-5: Lynx Design Parameters (estimated inter-ramp and associated bench face angles; conservative) 16-17
Table 16-6: Slope Design Parameters, Jay 16-21
Table 16-7: Open Pit Mobile Equipment Fleet 16-37
Table 16-8: Underground Mobile Equipment Fleet 16-39
Table 16-9: Mineral Reserves Base Case Mine Plan Production 16-40
Table 16-10: Operating Case Mine Plan Production   16-44
Table 18-1: Design Basis, Sable WRSAs 18-7
Table 20-1: Surface Lease Summary Table 20-2
Table 20-2: Land Use Permit Summary Table 20-2
Table 21-1: Golder Capital Cost Estimates, Jay Project ($C million) 21-3
Table 21-2: Development Capital Cost Estimate, Sable Project (C$ million) 21-5
Table 21-3: Initial Capital Development Cost Estimate, Jay Project (C$ million) 21-7
Table 21-4: Capital Cost Summary (C$ million) 21-9
Table 21-5: Mineral Reserves Base Case Mine Plan Operating Costs (C$ million) 21-13
Table 21-6: Operating Case Mine Plan Operating Costs (C$ million) 21-14
Table 22-1: Price Forecast by Pipe by Fiscal Year 22-5
Table 22-2: Mineral Reserves Base Case Mine Plan Cash Flow Analysis Table (includes post- operational closure costs to FY 40) 22-7

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Table 22-3: Operating Case Plan Cash Flow Analysis Table (includes post-operational closure costs to FY 40) 22-9
Table 22-4: NPV Sensitivity Analysis under Mineral Reserve Base Case Mine Plan (estimate base case is highlighted) 22-11
Table 22-5: NPV Sensitivity Analysis under Operating Case Mine Plan (estimate base case is highlighted) 22-11
Table 24-1: Overview of Project Timeline and General Activities for the Sable Project 24-1
Table 24-2: Risk and Mitigation Strategies 24-4
Table 24-3: Project Schedule 24-5
Table 24-4: Risk Register and Mitigation 24-9

F I G U R E S

Figure 2-1: Project Location Plan 2-2
Figure 4-1: Mineral Tenure Map 4-11
Figure 4-2: Mineral Tenure Map showing Kimberlite Locations by Lease 4-12
Figure 7-1: Regional Geology Map 7-3
Figure 7-2: Bedrock Geology Map 7-5
Figure 7-3: Surface Plan, Koala Pipe 7-9
Figure 7-4: Isometric Cross-Section, Koala Pipe 7-10
Figure 7-5: Surface Plan, Fox Pipe 7-13
Figure 7-6: Isometric Cross-Section, Fox Pipe 7-14
Figure 7-7: Surface Plan, Misery Pipe 7-16
Figure 7-8: Isometric Cross-Section, Misery Pipe 7-17
Figure 7-9: Three-Dimensional Geological Models of Misery Main, South and Southwest Extension 7-19
Figure 7-10: Plan View, Pigeon Pipe 7-22
Figure 7-11: Isometric Cross Section, Pigeon Pipe 7-23
Figure 7-12: Plan View, Sable Pipe 7-25
Figure 7-13: Isometric Cross-Section, Sable Pipe 7-26
Figure 7-14: Plan View, Jay Pipe 7-29
Figure 7-15: Isometric Cross-Section, Jay Pipe 7-30
Figure 7-16: Plan View, Lynx Pipe 7-32
Figure 7-17: Isometric Cross-Section, Lynx Pipe 7-33
Figure 9-1: Simplified Geomorphology Map 9-2
Figure 9-2: Exploration Potential Map 9-11
Figure 10-1: Ekati Project Drill Collar Location Map 10-8
Figure 10-2: Map Showing Location of All Drill Holes With Insets for Pipes with Reported Mineral Resources 10-9
Figure 10-3: Geotechnical Drill Hole Location Plan with Insets 10-16
Figure 11-1: Sample Plant Flowsheet 11-13
Figure 13-1: Schematic Flowsheet showing the Control Points for the Bottom Cut-off 13-4
Figure 13-2: Comparison of Size Frequency Distributions from the Misery SWE Trial of September/October 2015 13-6
Figure 14-1: Long Section showing Misery Deep Area Relative to Existing Drill Holes 14-47
Figure 15-1: Section through the PGCA Koala Model Showing Mixing and Wall Dilution 15-8

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Figure 16-1: Conceptual Layout Plan, Sable 16-13
Figure 16-2: Conceptual Layout Plan, Jay 16-19
Figure 16-3: 3D View of Koala, Koala North, and Panda Open Pit and Underground Mines 16-27
Figure 16-4: Koala Underground – 3D View Showing Development 16-29
Figure 16-5: Concentric Arrangement of Draw Points in the Incline Cave below 1970L 16-30
Figure 16-6: Koala Ore Handling System 16-34
Figure 16-7: Ore Tonnes Mined by Fiscal Year – Mineral Reserves Base Case Mine Plan 16-41
Figure 16-8: Stockpiles by Fiscal Year – Mineral Reserves Base Case Mine Plan 16-42
Figure 16-9: Kimberlite Tonnes Mined by Fiscal Year – Operating Case Mine Plan 16-45
Figure 16-10: Stockpiles by Fiscal Year – Operating Case Mine Plan   16-46
Figure 17-1: Process and Recovery Flowsheet 17-2
Figure 19-1: Rough and Polished Diamond Price Index 19-2
Figure 19-2: Rough Diamond Supply 19-4
Figure 19-3: Rough Carat Production Forecast 19-7
Figure 19-4: Production (Supply) versus Demand Forecast – 2015 19-9
Figure 20-1: Surface Lease Plan 20-3
Figure 20-2: Sable Road Corridor Plan 20-4
Figure 20-3: Water Monitoring Point Sites 20-9

A P P E N D I C E S

Appendix A: Mineral Leases

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

1.0

SUMMARY


1.1

Introduction

Mr. Jon Carlson, P. Geo., Mr. Peter Ravenscroft, FAusIMM, Mr. Chantal Lavoie, P. Eng., and Mr. John Cunning, P. Eng., (collectively the Qualified Persons, or QPs) on behalf of Dominion Diamond Corporation (Dominion), have prepared a technical report (the Report) on the Ekati Diamond Mine (also referred to as the Ekati Project) in the Northwest Territories, Canada.

On November 13, 2012, Dominion and its wholly-owned subsidiary, Dominion Diamond Holdings Ltd., entered into share purchase agreements with BHP Billiton Canada Inc. (BHP Billiton), and various affiliates to purchase all of BHP Billiton’s diamond assets, including its controlling interest in the Ekati Diamond Mine, as well as the associated diamond sorting and sales facilities in Yellowknife, Northwest Territories and Antwerp, Belgium.

Dominion uses a wholly-owned subsidiary, Dominion Diamond Holdings Ltd. as the holding entity for the Ekati Project in the Northwest Territories. The participating entity for the Ekati Project is Dominion Diamond Ekati Corporation, an indirectly wholly-owned subsidiary of Dominion Diamond Holdings Ltd. In this Report, the name Dominion is used interchangeably for the parent and subsidiary companies.

This Report is being filed by the Corporation on a voluntary basis as contemplated under section 4.2(12) of the Companion Policy to National Instrument 43-101 Standards of Disclosure for Mineral Projects. The Report is being filed by Dominion to provide updated scientific and technical information in respect of the Ekati Diamond Mine, and not as a result of a requirement under NI 43-101.

The Report uses Canadian English, Canadian dollars, the metric system of units, and an assumption of a 100% ownership basis unless otherwise specified. Two different year descriptors are used. Calendar years (January to December) are used for Project milestone dates. Dominion uses a fiscal year (FY) for financial information and life of mine plans; this year runs from February of one year to January of the following year, such that FY17 runs from February 2016 to January 2017; there is only one month of calendar year 2017 in Dominion’s 2017 fiscal year.

1.2

Project Setting

The Ekati Diamond Mine is located near Lac de Gras, approximately 300 km northeast of Yellowknife and 200 km south of the Arctic Circle in the Northwest Territories of Canada.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

This area is within the Canadian sub-arctic; cold winter conditions predominate for the majority of the year, with approximately five months of spring/summer/fall weather each year when day-time temperatures are above freezing. Mining activities are conducted year-round.

Road access to the Ekati operation is by a winter ice road that is typically open for 8– 10 weeks out of the year, from mid-January to late March. The ice road is built each year as a joint venture between the Ekati Diamond Mine, the Diavik mine, and the Gahcho Kué mine that is under construction. All heavy freight except emergency freight is transported to the site by truck over the ice road. The Ekati Project has an all-season runway and airport facilities suitable to accommodate large airplanes. Air transport is used year round for transport of all personnel to and from the site as well as light or perishable supplies, and as required for emergency freight.

The mine site is within the continuous permafrost zone. The topography across the property is generally flat with local surface relief rising up to 20 m. The terrestrial vegetation community is composed of species adapted to freezing temperatures, low nutrients and localized areas of drought and standing water. The Ekati Project area is predominately wildlife habitat, with limited human use, mainly for hunting.

1.3

Mineral Tenure and Royalties

The Ekati Project was acquired from BHP Billiton Canada Inc. in April 2013. The Project consists of two joint ventures, the Core Zone and the Buffer Zone Joint Ventures. A portion of the tenure originally held under the two joint venture agreements has subsequently been relinquished.

As at the Report effective date:

 

The Core Joint Venture is held 88.9% by Dominion and 11.1% by Dr. Stewart Blusson. It encompasses 175 mining leases, totalling about 172,992 ha. Mineral Resource estimates have been performed for the Koala, Misery Main, Misery South, Misery Southwest Extension, Pigeon, Sable, and Fox kimberlites in the Core Joint Venture area. Mineral Resources were converted to Mineral Reserves for the Koala, Sable, Misery Main, Pigeon and Sable kimberlites.

     
 

The Buffer Joint Venture is held 65.3% by Dominion and 34.7% by Archon Minerals Ltd (Archon) . It contains 106 mining leases covering 89,184 ha. Mineral Resource estimates have been performed for the Jay and Lynx kimberlites within the Buffer Joint Venture area. Mineral Resources were converted to Mineral Reserves for the Jay and Lynx kimberlites.


   
September 2016 Page 1-2



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

 

In January 2016, the management committee of the Buffer Zone approved a program and budget for the Buffer Zone for fiscal year 2017. In March 2016, Archon provided notice to DDEC, as operator of the Buffer Zone, of its objection to certain elements of the fiscal 2017 program and budget, and indicated that it was only prepared to contribute to certain portions of the program and budget. Dominion has elected to fund all of the cash calls for those elements of the fiscal 2017 program and budget that will not be funded by Archon. Archon has asserted that its objection to the fiscal 2017 program and budget was based on its position that certain proposed expenditures in the fiscal 2017 program and budget were in breach of the terms of the Buffer Zone Joint Venture agreement, and as such, the management committee of the Buffer Zone was not permitted to approve those aspects of the fiscal 2017 program and budget. Accordingly, Archon has disputed Dominion's dilution of Archon's participating interest in the Buffer Zone. A revised program and budget for fiscal year 2017 is expected to be presented to the management committee of the Buffer Zone in the third quarter of fiscal 2017 to incorporate changes to the mine plan impacting the Lynx project in the Buffer Zone. Dilution of Archon's participating interest in the Buffer Zone had been expected in the second quarter of fiscal 2017, but has been temporarily withheld until Archon re-confirms its intentions with respect to funding the revised program and budget.

All mining leases were legally surveyed by licensed surveyors. Annual lease payment requirements have been met as required.

A royalty is payable to the Government of the Northwest Territories (the NWT Royalty). The NWT Royalty payable is either 13% of the value of output of the mine, or an amount calculated based on a sliding scale of royalty rates dependent upon the value of output of the mine, ranging from 5% for value of output between $10,000 and $5 million to 14% for value of output over $45 million.

1.4

Permits and Agreements

Within the Ekati mineral leases, there are 10 surface leases, which provide tenure for operational infrastructure. All mine project developments are within these surface leases.

The Mackenzie Valley Resource Management Act came into effect after issuance of the six original surface leases and before issuance of the Pigeon, Sable and Lynx surface leases. Therefore, land use permits issued by the Wek´èezhìi Land and Water Board were also required for the Pigeon, Sable and Lynx sites.

   
September 2016 Page 1-3



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Dominion has eight Type A land use permits (Sable haul road, Sable open pit and associated activities, Pigeon open pit and associated activities, Misery power line, Lynx open pit and associated activities, Lynx Waste Rock Storage Area, exploration activities, and the Jay Early Works and associated activities). The surface leases for the Misery site and road were amended in 2014 to explicitly allow for the construction and use of a power distribution line from the central Ekati Mine power-generating plant to the Misery site. The surface leases for the Pigeon to Sable Haul Road, Sable Pit, and the Pigeon Pit were renewed in May and July 2016.

Dominion has impact benefit agreements (IBAs) with four groups: Tlicho, Akaitcho, North Slave Metis Alliance and Hamlet of Kugluktuk/Kitikmeot Inuit Association. The IBAs establish requirements for funding, training, preferential hiring, business opportunities, and communications. Although the terms of the IBAs are confidential, the responsible QPs consider the agreements to be similar to other agreements of this type that have been negotiated with Aboriginal groups in Canada. The agreements extend over the current life-of-mine.

1.5

Environment and Social Licence

Dominion operates the Ekati Project under an Environmental Agreement with the Government of Canada and the Government of the Northwest Territories that was concluded in 1997. The agreement is binding over the life-of-mine until full and final reclamation has been completed. The Environmental Agreement provides for an Independent Environmental Monitoring Agency which acts as an independent reviewer representing the public interest.

A number of environmental monitoring programs are in place, and include ongoing assessments of water quality, aquatic effects, fish habitat compensation measures, site reclamation projects, waste rock storage area seepage, wildlife effects, air quality, and geotechnical stability of engineered structures.

Compliance with environmental requirements and agreements is reported publicly on an annual basis through the Water Licence, Environmental Agreement, Fisheries Act Authorizations and other means.

Version 2.4 of the Ekati Mine Interim Closure and Reclamation Plan (ICRP) was approved by the Wek´èezhìi Land and Water Board in November 2011. Various updates to the ICRP have been approved through the Annual Reclamation Progress Report. The Ekati Mine is required under Water Licence W2012L2-0001 and the Environmental Agreement to have a closure plan in place for the Project during active mining operations, and to update that plan on a regular basis and/or when there is a significant change to the Mineral Reserves mine plan. A final closure and reclamation plan will be required two years prior to mine closure.

   
September 2016 Page 1-4



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

A total of $298.9 million dollars is currently held for reclamation security of the Ekati Diamond Mine. A total of $11.2 million is required by the Wek’èezhìi Land and Water Board to be posted prior to any future developments at the Sable open pit and prior to commencement of the early works associated with the Jay open pit. An additional $13.9 million has been proposed by Dominion to be required for the remaining development of the Jay open pit.

The current and expected environmental impact of the operation is well identified and subsequent closure and remediation requirements have been sufficiently studied and budgeted for in the opinion of the responsible QPs. Monitoring programs are in place.

Dominion currently holds the appropriate social licenses to operate. A SocioEconomic Agreement was concluded with the Government of the Northwest Territories, and has been in place since 1996. Four IBAs have also been concluded; current relationships with each of the IBA groups are considered positive and are maintained through regular meetings and communications. Dominion currently provides financial support for projects that support the development of long-term sustainable community initiatives. Dominion also tries to incorporate the use of traditional knowledge in monitoring programs by involving communities in the programs and teaching the environmental staff the traditional way of the land.

1.6

Geology and Mineralization

Bedrock at the Ekati Project is dominated by Archean granitoids, intruded by meta-greywackes of the YK Supergroup and transected by Proterozoic mafic dykes. No younger cover sediments are preserved. Bedrock is overlain by Quaternary glacial deposits which are generally less than 5 m thick.

The 45 to 75 Ma kimberlites, part of the Lac de Gras kimberlite field, intrude both the granitoids and metasediments. The kimberlites are mostly small pipe-like bodies (surface area predominantly <3 ha but can reach as much as 20 ha) that typically extend to projected depths of 400–600 m below the current land surface. Kimberlite distribution is controlled by fault zones, fault intersections and dyke swarms.

The kimberlites are made up almost exclusively of volcaniclastic olivine-rich volcaniclastic kimberlite (VK), with lesser mud-rich, resedimented volcaniclastic kimberlite (RVK) and primary volcaniclastic kimberlite (PVK). In rare cases (e.g. Pigeon), pipes are dominated by or include significant proportions of magmatic kimberlite (MK). Economic mineralization is mostly limited to olivine-rich resedimented volcaniclastic and primary volcaniclastic types.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Diamond grades are highly variable. Estimated average grades for kimberlites that have been bulk sampled range from less than 0.05 cpt to more than 4 cpt.

The geological understanding of the settings, lithologies, structural and alteration controls on kimberlite emplacement, and kimberlite continuity and geometry in the different pipes is sufficient to support estimation of Mineral Resources and Mineral Reserves.

Group 1 kimberlites represent the vast majority of worldwide primary diamond deposits that are presently being exploited. The Ekati kimberlites display most of the typical features of Group 1 kimberlite pipes and are therefore considered to be Group 1 type kimberlites. Based on this model, the exploration programs completed to date are appropriate to the mineralization style and setting.

1.7

Exploration

The early stages of diamond exploration consisted of heavy mineral sampling from fluvial and glaciofluvial sediments on a scale of tens of kilometres. Follow-up till sampling of a tighter scale coupled with ground geophysics pinpointed the Point Lake kimberlite pipe which was subsequently confirmed as diamondiferous kimberlite by core drilling. The entire property was then intensively explored using helicopter-borne total field magnetic (TFM), electromagnetic (EM) and very low frequency electromagnetic (VLF) surveys. The targets defined from the airborne geophysics were prioritised for drilling by collecting till samples along lines perpendicular to the dominant flow direction of the last glaciation. The extent and compositional characteristics of kimberlite indicator mineral dispersion trains were evaluated. Ground geophysical surveys including TFM, EM and gravity have enabled more precise target discrimination and estimates of pipe size. Final exploration sweeps of the property were carried out using an improved airborne EM system with tighter line spacing and reduced sensor height and with BHP Billiton’s airborne gravity gradiometer.

Approximately 350 geophysical and/or indicator dispersion targets were drilled, with a total of 150 kimberlites discovered on the Core Zone and Buffer Zone properties. The kimberlites were prioritized using microdiamond and indicator mineral chemistry. Forty kimberlite occurrences were subsequently tested for diamond content using reverse circulation (RC) drilling and/or surface bulk samples. Significant macrodiamond results were obtained on 17 pipes.

   
September 2016 Page 1-6



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

There has been no exploration of the Ekati Project area for new kimberlites since 2007. The exploration programs completed to date are appropriate to the styles of the kimberlite pipes within the Project. Significant exploration potential remains in the Project area, with 14 kimberlite pipes identified as potentially warranting additional evaluation.

1.8

Drilling

Drilling completed on the Ekati Project between 1991 and 31 July 2016 includes 1,389 core holes (254,490 m), 111 sonic drill holes (2,596 m) and 513 RC holes (106,547 m).

Core drilling using synthetic diamond-tipped tools and/or carbide bits is used to define the pipe contacts, wall-rock conditions, and internal geology. An initial drill pattern around each pipe is completed, and depending on the results, additional drilling may be required to further delineate potential problem areas. Core drilling is also used to obtain geotechnical and hydrogeological data.

Sonic drilling is used to core both soil and bedrock along proposed civil construction projects such as dike alignments. The primary objective of sonic drilling is to characterize the nature and variation of the soil layers beneath the proposed civil work and to determine the depth to bedrock. Recovered soil is geotechnically logged and geotechnical laboratory testing is performed on selected samples.

Diamonds for grade estimation and valuation are obtained by RC drilling and/or by bulk sampling in underground or open pit bulk sample mines. Samples are processed through an on-site sample plant.

Core and RC logging is performed by trained staff. Digital geological and geotechnical logging is completed and core is photographed before being stored in the attached unheated core storage building. A small sub-sample (approximately 300 cm3) of RC drill material is taken for every two metres of drilling within kimberlite and a representative portion of this material (approximately 50 to 100 cm3) is washed and retained; these drill chips are examined and described macroscopically and under binocular microscope.

All core and RC drill hole collars are surveyed with total station global positioning system instruments (GPS) prior to and after drilling. The responsible QPs consider that the drill hole collar location error is minimal.

For core holes, down-hole surveys were done with industry standard instruments (e.g. Maxibor and Century Geophysical Corporation gyroscope). Three Century Geophysical Corporation tools, including the “9095” tool (for gyroscopic deviation surveying); the “9065” three arm calliper; and the “9511” tool (conductivity induction and natural gamma readings), are used on all RC holes.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Samples are taken from core holes for determination of dry bulk density and moisture content of host rock and kimberlite. Sample spacing has historically varied from 1 m to 10 m in kimberlite and every 10 m in host rock. Density determination methods are in line with leading industry practices, and are performed using wax immersion methods.

In the opinion of the responsible QPs, the quantity and quality of the lithological, geotechnical, density, collar and down hole survey data collected in the drill programs are sufficient to support Mineral Resource and Mineral Reserve estimation.

1.9

Sampling

Conventional concepts of sample preparation and analysis do not apply to diamonds. Diamonds from large samples must be physically separated from their host rock and evaluated on a stone by stone basis. To accomplish that, all bulk samples, from RC drilling or underground/surface operations, must be processed and the diamonds separated and collected. To do that, a sample plant is required. Sample plants are essentially scaled-down process plants designed to handle a few tonnes to tens of tonnes per hour.

Bulk sampling and RC sampling provide information on the size frequency distribution and value of the diamonds in a kimberlite pipe. The underground sampling programs yielded large diamond parcels (more than 2,000 ct) for valuation from relatively large individual sample sizes (ca. 40 to 70 t each) at close sample spacing of samples (ca. 3 m). During RC drilling, an initial 100 to 200 t sample is taken from each prioritized kimberlite pipe and, if encouraging results are obtained, more extensive sampling campaigns are undertaken to provide sufficient grade and diamond price data to support classification of resources. The density and spatial distribution of RC drill holes between pipes varies considerably and depends on a number of factors including pipe size, geologic complexity and grade characteristics relative to economic cut-offs.

Sampling methods meet industry-standard practices for diamond operations, and can be used for Mineral Resource and Mineral Reserve estimation and mine planning purposes.

Sampling error has the potential to cause over- or under-estimation of diamond grade. For both RC and drift bulk samples, it is typically not possible to measure fundamental grade sample error (e.g. check assays) as the entire sample is processed. Dominion considers that the precision of the diamond weight estimates is high, because concentrates are double picked by different qualified sorters and audits are undertaken on the double picked concentrates.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

The quality of the analytical data is reliable and sample preparation, analysis, and security are generally performed in accordance with diamond exploration best practices and industry standards.

1.10

Quality Assurance, Quality Control, and Data Verification

Data verification is undertaken on geological, geotechnical, survey and bulk density data collected. Data are reviewed for accuracy by the Resource and/or Production Geologists and corrected as necessary. The findings of this data validation process are summarized and any modifications to the database are reviewed by appropriate staff prior to implementation of those changes.

A reasonable level of verification has been completed during the exploration and production phases, and no material issues would have been left unidentified from the verification programs undertaken. Because of the uncertainties inherent in establishing local grade estimates (sample support size), estimation of Measured Mineral Resources is not supported.

1.11

Metallurgical Test Work

Metallurgical test work has been carried out at the Ekati Project site using both the main process plant (production trials) and a similarly configured smaller sampling plant (approximately 10 t/h). Production trials have been completed at various times for the open pit operations (including Fox, Misery and Koala) and during pre-feasibility-level studies for Koala North and Pigeon (test pits). Production trials were recently completed for the Misery SW Extension, Pigeon, and Misery Main pipes.

The sample plant is utilised for grade model validation for the current operations, testing of new kimberlite sources as possible process plant feed (e.g. satellite kimberlite intrusions and reprocessed plant rejects) and periodic recovery audits for the main process plant. The processing circuit comprises crushing, scrubbing, sizing, dense media separation and final diamond recovery using both X-ray sorting and grease table methodologies.

Security protocols are in place at the recovery area of the main process plant and sample plant.

   
September 2016 Page 1-9



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

1.12

Mineral Resource Estimates

Mineral Resources are estimated for the Koala, Fox, Misery Main, Misery South and Misery Southwest Extension, Pigeon, Sable, Jay and Lynx kimberlite pipes and for stockpiles.

Resource estimation is a two-step process at Ekati. The first step is to develop three-dimensional object models for key geological domains, analyse spatial sample data in relation to geological domains, and validate their application. The second step is to create a block model storing the spatial distribution of relevant parameters.

In general, kimberlite pipes are roughly ovoid in plan-view, and taper consistently at depth. Vulcan and Leapfrog software are used to develop three-dimensional wireframe models of the kimberlite pipes and internal lithological divisions. Drill hole boundary intersections and surface geophysical outlines are used to define the outer boundary. The lower limits of models are based on the lowest drill hole (RC or diamond) intersection. Internal domain boundaries are typically modelled as planar surfaces. Internal dilution (e.g. granitic xenoliths) is modelled as enclosed volumes assuming sub-rounded, sub-horizontal shapes. The geological models are refined and updated with mining development and production data.

Block models are built for Mineral Resource estimates for kimberlite pipes that are deemed to have reasonable prospects of eventual economic extraction and are periodically updated as new data are collected, or as required to meet reporting requirements and for engineering studies. The block models contain an extensive set of variables to provide a mining block model suitable for both resource evaluation and mine planning. Selective mining unit (SMU) sizes in the block models vary, based on the intended mining method. The SMU size is jointly agreed to by the modelling geologist and mining engineers and is appropriate to the drill hole spacing, mining production scale, and overall geometry of each pipe.

RC sampling programs provide diamond grade and size frequency distribution data for grade estimation. For resource estimates completed since 2014, the base grade estimation variable was the stones per metre cubed (spm3) from +1.0 mm diamonds. The spm3 is calculated from a subset of stones over a representative set of size fractions chosen to obviate the effects of poor recovery of small stones and variability in recovery of large stones (i.e. stone density method).

Where feasible, non-mineralized units (i.e. granitic xenoliths >2 m in size) are modelled separately. Waste kimberlite, mud, and xenoliths <2 m in size are considered part of the models, and are therefore included in the Mineral Resource estimate as internal dilution.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

The grade variable for the Jay, Sable, and Fox pipes was modeled as spm3 of a stable size fraction, and then converted on a block-by-block basis to carats per metre cubed (cpm3) using a factor to map the estimated variable onto the chosen size frequency distribution. In all other pipes grade is estimated directly from sampled cpm3 values. Dry bulk density in t/m3 and moisture content in percent were estimated into the block model. Block grade, expressed in carats per tonne (cpt), was calculated by dividing the block cpm3 grade by the block dry bulk density value.

Drill spacing studies were conducted to support mineral resource classification confidence category assignments. No Measured Mineral Resources have been classified. Drill hole spacing classification is typically as follows:

  Indicated – less than 60 m to nearest sample;
     
  Inferred – less than 90 m to nearest sample.

In certain deposits, such as Koala, the kriging variance was also used to support classification categories. In models estimated since 2014, the weight attributed to the mean in the simple kriging process was used to support classification.

During estimation of Mineral Resources, a slot screen size cut-off of 0.5 mm and a 100% recovery factor is used. This allows for determination of Mineral Reserves that include additional diamond recovery from the planned fines dense media separation (Fines DMS) plant. Conversion of Mineral Resource block model grades to reflect recovery at a 0.5 mm slot screen size is done by comparative analysis of size frequency distribution data, and adjustment factors determined for each pipe.

The diamond price is estimated for each size cut-off using exploration or production sample parcels, as described in Section 11.11, and stone frequency distributions. The average diamond price (diamond reference price) is estimated for each pipe (and in some cases multiple geological domains within a pipe) using exploration and/or production parcels ranging in size from several hundred carats to tens of thousands of carats. These diamond parcels have been valued on Dominion’s Price Book and are adjusted for current market conditions. Dominion has modelled the approximate rough diamond price per carat for each of the Ekati kimberlite types, shown in Table 1-1, using the diamond reference prices from the exploration and production parcels, adjusted to a 0.5 mm slot lower cut-off size, and prices from Dominion’s June 2016 rough diamond sale. For the purposes of this Mineral Resource estimate it has been assumed that there is a 2.5% per annum real price growth during the life of the mine excluding the current year in which pricing is assumed to be flat.

   
September 2016 Page 1-11



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Table 1-1: Diamond Reference Price Assumptions for Mineral Resources as at 31 July 2016

  Joint Venture
Agreement Area
Kimberlite Pipe and Domain US$/carat at 0.5 mm
  Core Zone Koala Ph5 (RVK) $243
Koala Ph6 (VK) $296
Koala Ph7 (VK/MK) $311
Fox TK $241
Misery Main $64
Misery Southwest Extension $37
Misery South $49
Pigeon RVK $154
Pigeon MK $149
Sable $128
 
Buffer Zone
Jay RVK $56
Jay VK $49
Lynx RVK/VK $230

Notes to Accompany Diamond Reference Price Table:

  1.

Diamond reference price is based upon diamonds that would be recovered by the Ekati Bulk Sample Plant using 0.5 mm width slot de-grit screens and retained on a 1.0 mm circular aperture screen.

  2.

RVK = resedimented volcaniclastic kimberlite; VK = volcaniclastic kimberlite; MK = magmatic kimberlite; TK = tuffisitic kimberlite.

Conceptual pit designs for Mineral Resources amenable to open pit mining methods (Misery, Pigeon, Sable, Jay and Lynx) were completed using Whittle shell analysis. Parameters used in pit shell analysis varied by kimberlite, and ranges included:

  Overall pit slope angles vary considerably and were selected to meet the particular design requirements for each pipe, ranging from 35–62º;
     
  Mining cost assumptions of $5–8/wmt;
     
  Processing costs of $16–26/dmt;
     
  General and administrative (G&A) costs of $17–29/dmt.

Conceptual underground designs for Koala were based on a sub-level cave mining method utilising 20 m sub-levels and a $38–63/dmt operating cost range, which was also dependent on elevation. Conceptual underground designs for Fox were based on a 130 m deep block cave mining method and a $50–84/dmt operating cost range.

The classification of stockpiles is based on the resource classification for each source. Active stockpiles are surveyed at the end of July 2016. A number of active run-of-mine (ROM) stockpiles are included in the end July 2016 stockpile estimates. Stockpiles are from Misery Main, Misery South, Misery Southwest Extension, Koala and Pigeon.

   
September 2016 Page 1-12



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

1.13

Mineral Resource Statement

The Mineral Resource statement is reported in accordance with the 2014 CIM Definition Standards. Mineral Resources take into account geological, mining, processing and economic constraints, and have been defined within a conceptual stope design or a conceptual open pit shell. Depletion has been included in the estimates. No Measured Mineral Resources are estimated.

The qualified person for the Mineral Resource estimates is Mr. Peter Ravenscroft, FAusIMM, of Burgundy Mining Advisors Ltd., an independent mining consultant. Mineral Resources are reported inclusive of Mineral Reserves. Dominion cautions that Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Mineral Resources are reported effective 31 July 2016 on a 100% basis. Mineral Resource estimates are presented in Table 1-2 by kimberlite pipe.

Factors which may affect the Mineral Resource estimates include: diamond book price and valuation assumptions; changes to geological interpretations; changes to the assumptions used to estimate the diamond carat content; conceptual block cave and open pit design assumptions; geotechnical, mining and process plant recovery assumptions; diamond parcel sizes for the pipes with estimates that are not in production or planned for production; and the effect of different sample-support sizes between RC drilling and underground sampling.

   
September 2016 Page 1-13



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Table 1-2: Mineral Resource Statement

  Classification Joint Venture
Agreement Area
Kimberlite Pipe Tonnes (millions) Grade (cpt) Carats (millions)
  Indicated Core Zone Koala Underground 4.8 0.9 4.3
Fox Underground 35.2 0.3 11.6
Misery Main 3.4 5.4 18.3
Pigeon 11.0 0.5 5.5
Sable 15.4 0.9 14.3
Stockpiles 1.0 1.1 1.1
  Subtotal Indicated
(Core Zone only)
70.7 0.8 55.1
  Indicated Buffer Zone Jay 48.1 1.9 89.8
       
Lynx 1.3 0.8 1.1
  Subtotal Indicated
(Buffer Zone only)
49.5 1.8 90.9
  Total Indicated     120.2 1.2 145.9
  Inferred Core Zone Koala Underground 0.3 1.7 0.6
    Fox Underground 2.0 0.4 0.8
    Misery Main 0.8 3.5 2.8
    Misery South 0.1 1.1 0.1
  Misery Southwest
Extension
0.9 2.9 2.5
    Pigeon 1.7 0.4 0.8
    Sable 0.3 1.0 0.3
    Stockpiles 6.9 0.3 1.9
  Subtotal Inferred
(Core Zone)
12.9 0.8 9.7
  Inferred Buffer Zone Jay 4.2 2.1 8.7
Lynx 0.2 0.7 0.2
  Subtotal Inferred
(Buffer Zone)
4.4 2.0 8.9
  Total Inferred     17.3 1.1 18.6

Notes to Accompany Mineral Resource Table.

  1.

Mineral Resources have an effective date of 31 July 2016. The Mineral Resources estimate was prepared under the supervision of Mr. Peter Ravenscroft, FAusIMM, of Burgundy Mining Advisors Ltd., an independent mining consultancy. Mr. Ravenscroft is a Qualified Person within the meaning of National Instrument 43-101.

  2.

Mineral Resources are reported on a 100% basis. As at 31 July 2016, Dominion has an 88.9% participating interest in the Core Zone Joint Venture and a 65.3% participating interest in the Buffer Zone Joint Venture.

  3.

Mineral Resources are reported inclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

  4.

Mineral Resources are reported at +0.5 mm (based upon diamonds that would be recovered by the Ekati Bulk Sample Plant if it was operated with an effective 0.5 mm lower cut-off size and retained on a 1.0 mm circular aperture screen).


   
September 2016 Page 1-14



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

  5.

Mineral Resources have been classified using a rating system that considers drill hole spacing, volume and moisture models, grade, internal geology and diamond valuation, mineral tenure, processing characteristics and geotechnical and hydrogeological factors, and, depending on the pipe, may also include kriging variance.

  6.

Mineral Resources amenable to open pit mining methods include Misery, Pigeon, Sable, Jay and Lynx. Conceptual pit designs for open cut Mineral Resources (Misery, Pigeon, Sable, Jay and Lynx) were completed using Whittle shell analysis. Parameters used in pit shell analysis varied by kimberlite and ranges included: overall pit slope angles were selected to meet the particular design requirements for each pipe and range from 35–62º, mining costs of C$5–8/wmt, processing costs of C$16–26/dmt, general and administrative costs of C$17-29/dmt and diamond valuations that ranged from US$37–$230 per carat.

  7.

Mineral Resources amenable to underground mining methods include Koala and Fox Underground. Conceptual underground designs for Koala were based on a sub-level cave mining method utilising 20 m sub-levels and C$38– 63/dmt operating cost. Conceptual underground designs for Fox were based on a 130 m deep block cave mining method and C$50-84/dmt operating cost. Operating costs vary by elevation within the deposits. Diamond valuations ranged from US$231–$311 per carat.

  8.

Stockpiles are located near the Fox open pit and were mined from the uppermost portion of the Fox open pit operation (crater domain kimberlite). Run-of-mine stockpiles (underground and open pit) are maintained at or near the process plant and are available to maintain blending of kimberlite sources to the plant.

  9.

Tonnes are reported as millions of metric tonnes, diamond grades as carats per tonne (cpt), and contained diamond carats as millions of contained carats.

  10.

Tables may not sum as totals have been rounded in accordance with reporting guidelines.


1.14

Targets for Further Exploration

Two targets for further exploration have been estimated, based on the allowance in National Instrument 43-101 Section 2.3 (2) to report the potential quantity and grade, expressed as ranges, of a target for further exploration. Dominion cautions that the potential quantity and grade of the targets for further exploration are conceptual in nature. There has been insufficient exploration and/or study to define the targets for further exploration as Mineral Resources. It is uncertain if additional exploration will result in the targets for further exploration being delineated as Mineral Resources.

1.14.1

Coarse Reject Tails

Coarse reject tails have been stockpiled at Ekati since the start of production in 1998 to the present. Several production periods have been identified during which high-grade feed sources were blended through the process plant using coarser de-grit screens (1.6 mm slot) compared to the current 1.2 mm configuration. In addition, the re-crush circuit was not utilised during these periods. A production test for grade and diamond recovery was completed in November 2013. A sample of 20,734 dmt was excavated from the coarse rejects dump and was treated through the main processing plant using the existing plant operating parameters. A total of 12,931 carats was recovered for an overall grade of 0.62 cpt. The diamond parcel was valued on the July 2013 Dominion Price Book and an average value of US$93 per carat was obtained. The parcel was re-priced on the June 2016 Dominion Price Book at an average price of US$84 per carat.

   
September 2016 Page 1-15



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Based on the production trial, previous modeling, and depletion, the tonnage, grade and diamond value of the coarse rejects is estimated at 1.0 to 2.0 M dmt at 0.4 to 0.8 cpt and US$60 to $115 per carat, respectively. Coarse reject material was introduced to the plant feed in July 2014.

1.14.2

Misery Deep

Based on the current drilling information and production sampling of Misery Main kimberlite, the tonnage, grade, and diamond price of the Misery Deep exploration target (i.e. excluding the Indicated and Inferred Mineral Resources above 90 masl) is estimated at 1.2 to 2.6 dmt at 2.0 to 5.0 cpt and US$50 to US$80 per carat, respectively.

The exploration target is based on four RC drill holes and four diamond drill holes. There are four pierce points constraining pipe volume below 90 masl. The lowest elevation pierce point is at -22 masl.

1.15

Mineral Reserve Estimates

Mineral Reserve estimation is based on Indicated Mineral Resources and is generally supported by either a pre-feasibility-level or a feasibility-level study. Mineral Reserves were estimated for the Koala, Misery Main, Pigeon, Sable, Jay, and Lynx pipes, and active stockpile materials. Koala is mined as a sub-level/incline cave (SLC), similar to a block cave. The Misery open pit is undergoing a pushback, and the phase one open pit was completed at Pigeon in early 2016. Pre-stripping is underway at Lynx, whereas mining has not yet commenced at the Sable and Jay pits. The Panda, Koala, Beartooth, and Fox open pits are mined out. The Panda and Koala North underground mines are also fully depleted.

Geotechnical parameters used during open pit mine design include inter-ramp and inter-bench angles, structural domains determined from wall mapping, and geotechnical drilling. Underground geotechnical considerations are more focused on ground support, and monitoring of ground movement.

There are two types of waste dilution, internal and external, for the Ekati kimberlites; one is accounted for in the Mineral Resource block model and Mineral Resource estimate and the second is applied as part of Mineral Reserve estimation. The dilution and mining recovery factors for open pit operations have been applied based on operating experience gained since mining commenced in 1998. For underground operations, waste removal practices have been applied to the estimation of waste dilution and mining recovery, and include an assessment of the amount of waste rock visible such that ore-dominant draw points (≥75% kimberlite) are loaded to the crusher and conveyor system for delivery to the process plant. Waste rock dominant draw points (≤75% to ≥25% kimberlite) are designated as rocky ore and are stored separately in remucks then later hauled to the surface using the truck system where it is stockpiled for sorting by the surface ore sorters (backhoes) in good visibility conditions. Material with >75% granite is designated as waste and is hauled to the surface waste dumps.

   
September 2016 Page 1-16



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Diamond recovery factors are applied based on parameters established during evaluation of recovered diamonds collected from bulk samples, and are specific to each kimberlite deposit and contained geologic domain. The process plant currently uses 1.2 mm slotted de-grit screen sizes and 0.85 mm slot dense media separation (DMS) sink screens. The overall diamond recovery for the processing plant is effectively 100% relative to the Ekati sample plant which uses 1.0 mm slot de-grit screen sizes. Ekati Mineral Resources are reported at 0.5 mm slot screen cut-off. For the Ekati Mineral Reserves, a diamond recovery factor is applied to normalize the grade from 0.5 mm slot screen basis to an effective 1.0 mm slot screen basis. In addition, from the start of FY18 (early 2017), Ekati will be operating a new Fines DMS circuit that will provide additional recovery of diamonds in the -3+1 and -5+3 DTC size classes.

1.16

Mineral Reserve Statement

Mineral Reserve estimates have been converted from material classed as Indicated Mineral Resources under the 2014 CIM Definition Standards. Consideration of the environmental, permitting, legal, title, taxation, socio-economic, marketing and political factors support the estimation of Mineral Reserves.

Mr. Peter Ravenscroft, FAusIMM, is the QP for the estimate. Mineral Reserves have an effective date of 31 July, 2016, and are reported on a 100% basis. Mineral Reserves are summarized in Table 1-3 by kimberlite pipe. No Proven Mineral Reserves have been estimated.

Factors which may affect the Mineral Reserve estimates include diamond price assumptions; grade model assumptions, underground mine design, open pit mine design, geotechnical, mining and process plant recovery assumptions, practical control of dilution, changes to capital and operating cost estimates and variations to the permitting, operating or social license regime assumptions, in particular if permitting parameters are modified by regulatory authorities during permit renewals.

   
September 2016 Page 1-17



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Table 1-3: Mineral Reserves Statement

  Classification Joint Venture
Agreement Area
Kimberlite Pipe Tonnes (millions) Grade (cpt) Carats (millions)
  Probable Core Zone Koala (underground) 2.3 0.6 1.3
Misery (open pit) 2.8 5.2 14.7
Pigeon (open pit) 6.6 0.5 3.2
Sable (open pit) 12.0 0.8 10.1
Stockpiles (surface) 1.0 0.8 0.8
  Subtotal Probable
(Core Zone only)
24.7 1.2 30.2
  Probable Buffer Zone Jay (open pit) 44.7 1.8 78.6
Lynx (open pit) 1.0 0.8 0.8
  Subtotal Probable
(Buffer Zone only)
45.7 1.7 79.4
  Total Probable     70.4 1.6 109.6

Notes to Accompany Mineral Reserves Table.

  1.

Mineral Reserves have an effective date of 31 July 2016. The Mineral Reserves were prepared under the supervision of Mr. Peter Ravenscroft, FAusIMM, of Burgundy Mining Advisors Ltd., an independent mining consultancy. Mr. Ravenscroft is a Qualified Person within the meaning of National Instrument 43-101.

  2.

Mineral Reserves are reported on a 100% basis.

  3.

Dominion is operator and as at 31 July 2016 has an 88.9% participating interest in the Core Zone Joint Venture area where Mineral Reserves are estimated for the Koala, Misery, Sable, and Pigeon kimberlites and stockpiled materials. Dominion is operator and as at 31 July 2016 has a 65.3% participating interest in the Buffer Zone Joint Venture area where Mineral Reserves are estimated for the Jay and Lynx kimberlites.

  4.

The reference point for the definition of Mineral Reserves is at the point of delivery to the process plant.

  5.

Mineral Reserves are reported at +1.0 mm (based upon diamonds that would be recovered by the Ekati Bulk Sample Plant using 1.0 mm slot de-grit screens and equivalent to the current Ekati process plant recovery) and inclusive of incremental small diamonds recovered by the fines dense media separation (Fines DMS) circuit which is scheduled for commissioning in late FY17.

  6.

Mineral Reserves that will be, or are mined using open pit methods include Misery, Pigeon, Sable, Lynx and Jay. Mineral Reserves are estimated using the following assumptions: Misery open pit design assumed dilution of 4% waste and mining recovery of 98% diluted material; Pigeon open pit design assumed dilution of 6% waste and mining recovery of 98% diluted material, Sable open design assumed dilution of 2% waste and mining recovery of 98% diluted material; Lynx open pit design assumed dilution of <2% waste and mining recovery of 98% diluted material; Jay open pit design assumed dilution of 2% waste and mining recovery of 98% diluted material.

  7.

Koala Mineral Reserves are mined using underground mining methods. The Koala Mineral Reserves estimate assumed an overall dilution of 4% and mining recovery of 87% of the diluted material.

  8.

Stockpiles are minor run-of-mine stockpiles (sourced from underground and open pit) that are maintained at or near the process plant and are available to maintain blending of kimberlite sources to the plant.

  9.

Tonnes are reported as metric tonnes, diamond grades as carats per tonne, and contained diamond carats as millions of contained carats.

  10.

Tables may not sum as totals have been rounded in accordance with reporting guidelines.


   
September 2016 Page 1-18



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

1.17

Mining Recovery

Mineral Reserves were estimated for the Koala, Misery, Pigeon, Sable, Jay and Lynx pipes, and active stockpile materials. Koala is mined as a sub-level/incline cave (SLC), similar to a block cave. Both Pigeon and Misery open pits have commenced production. The Lynx open pit started pre-stripping in 2015 and production is scheduled for early 2017. The Sable open pit is scheduled to start pre-stripping in 2018 and production in 2019. The Jay open pit is scheduled to start pre-stripping in 2021 and production in 2022.

1.17.1

Open Pit Mining

Dewatering of lake systems that have developed over the kimberlite pipes is generally required prior to commencement of open pit mining activities.

The kimberlite pipes at Ekati are approximately circular in plan view and are generally located within granite, a competent host rock. The ore–waste boundary is abrupt and is readily distinguished by rock type. Ultimate vertical mining depths are 300 m at Misery, 190 m at Pigeon, 300 m at Sable, 140 m at Lynx, and 360 m at Jay.

The open pits are currently mined using conventional truck-shovel operations and are developed in benches that are typically 10 m high. The Jay pit, due to the presence of overburden and significant resedimented kimberlite, will have double bench (30 m) configuration in granite and metasediment, single bench (15 m) configuration in kimberlite, and single bench (10 m) configuration in the overburden. Sable is planned on triple benches (3 x 10 m).

The open pits at Ekati are relatively small. Design pit slopes vary significantly between waste and kimberlite and are established based on detailed geotechnical and hydrogeological studies and operational requirements for each pipe. Phased mining has been used at the Misery and Pigeon pipes, and is planned for the Lynx and Jay pipes. Sable will be mined in a single pit phase.

A single circular access ramp around the perimeter of the pit is developed progressively as the benches are mined. Waste rock is hauled to a designated waste rock storage area and dumped to an engineered design. Kimberlite is hauled directly from the Pigeon pit benches to the process plant. For all other open pit operations, additional kimberlite storage and handling is required.

The main truck loading and haulage equipment currently in use are diesel hydraulic shovel/excavators with a bucket capacity of 12 m3 and 90 t capacity off-road haul trucks. The Jay mine plan assumes 225 t capacity off-road haul trucks for ore and waste haulage. The main loading units selected for Jay were 17 m3 loaders and 34 m3 shovels.

   
September 2016 Page 1-19



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

1.17.2

Underground Mining

The Koala mine was developed with sub-levels spaced 20 m apart vertically and 5 m x 5 m draw points on a 14.5 m spacing (centre to centre). The highest elevation production sub-level is located at 2050L, approximately 160 m below the base of the former Koala open pit. Ore production from the draw points is a combination of the blasted kimberlite and caved kimberlite that lies above the blasted zone through to the pit. As production proceeds, the top of the cave zone below the pit is constantly being drawn down, and the level and profile of the surface expression of the cave zone is closely monitored. Below sub-level 1850L the mine transitions to an incline cave, with the lowest production level located at 1810L.

Kimberlite is transported from the mines via a 1.37 m wide conveyor system hung via chain from the back of the conveyor ramp. The system consists of four main underground conveyor sections plus a surface “stacker” conveyor, with a transfer arrangement between each conveyor. All production mucking is carried out using load haul dump (LHD) vehicles, tramming to the remuck bays or loading 45 t capacity diesel haulage trucks. Ore is dumped into an ore pass system, and fed to a 500 t/h primary mineral sizer before loading onto the 2.4 km long conveyor system from Koala to the process plant. On surface, the radial stacking conveyor discharges to an 8,000 t surface stockpile.

1.17.3

Grade Control

There are no grade control programs. However, grade verification of block models is carried out periodically by collecting and processing run-of-mine open pit development samples (typically 50 t each). Generally all kimberlitic material within the Mineral Resource models is considered to be economic, and is either processed directly or stockpiled for possible future processing.

1.17.4

Geotechnical

The major kimberlite lithologies in the production pipes have a wide range of measured strengths that range between very poor to upper fair rock mass (RMR) ratings. The granitic rocks and schist rocks at Ekati range between fair to excellent quality and the majority of the granite is good quality.

   
September 2016 Page 1-20



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Separate geotechnical assessments have been conducted for each pipe that is being mined, and will be conducted on future deposits. These investigations are designed to quantify geotechnical domains in detail.

Geotechnical parameters used during open pit mine design include inter ramp, and inter-bench angles, structural domains determined from wall mapping and geotechnical drilling. Pit wall designs are reviewed using commercially available software to ensure appropriate wall angles, and catch bench widths are safe and efficient. The following geotechnical monitoring programs are performed in the active open pits: observational logs; instrumentation including prism, time domain reflectometry (TDR), thermistors and multi-point borehole extensometer (MPBX); photogrammetry; mapping; slope stability radar (SSR) and the use of regular field inspections by geotechnical engineers.

Underground geotechnical considerations are more focused on ground support, and monitoring of ground movement. The following underground geotechnical programs are in place in to ensure the long term stability of infrastructure required for the continuation of underground mining at Ekati: drive closure monitoring; surveillance photographs; structural mapping; and instrumentation including extensometers, thermistors, TDR and “smart cable” extensometer-enabled cable bolts. Daily visual inspections of ground and ground support conditions in development and production workings are also an integral part of the geotechnical program.

1.17.5

Hydrogeological

As host rocks have been faulted and overprinted there is potential for hydraulic conductivity or storage. Kimberlite has very low hydraulic conductivity (measured at Koala, Panda, Misery and Fox pits) and the intensity of kimberlite fracturing has little effect; however, kimberlite has a high storage capacity due to its porosity. The chemical properties of groundwater collected and pumped from the underground are monitored.

Studies conducted indicate that groundwater is currently not recharged from surface water bodies at an observable rate.

1.18

Process Recovery

The Ekati processing plant had an original design capacity of 9,000 dmt/d. Through various efficiency improvements, the current capacity and budgeted operating rate is 10,800 dmt/d with an overall equipment efficiency (OEE) of 83.4% (fiscal year 2017). Further efficiency improvements are planned to achieve 12,000 dmt/d in conjunction with the Jay project.

   
September 2016 Page 1-21



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

The recovery of diamonds from the processing of the host kimberlite ore at the Ekati Diamond Mine includes:

  Primary crushing—redundancy with primary, secondary, and reclaim sizers;
     
  Stockpiling—used as a buffer between plant and crushing;
     
  Secondary crushing (wet cone crusher);
     
  Tertiary crushing and re-crushing for further diamond liberation using high pressure grind rolls (HPGR);
     
  Sizing, de-gritting, and desanding;
     
  Dense media separation (DMS);
     
  Final recovery:

 

Wet high-intensity magnetic separation;

 

Wet X-ray sorting;

 

Drying;

 

Dry single particle X-ray sorting;

 

Grease tables;

 

Diamond concentrate weighing and packaging, sorting, and preparation for transport to the Yellowknife sorting and valuation facility.

A sample plant adjacent to the processing plant building is routinely used for diamond recovery audits and for grade control.

A Fines DMS section is presently undergoing construction (for commissioning in early 2017). This section is designed on the basis of a conventional DMS layout and is for the recovery of diamonds in the -1.2 mm +0.65 mm size range from the discharge of the desanding screen. The design capacity is 120 dmt/h. Concentrate from this section will be treated over grease tables to further improve the diamond concentrate by weight before caustic fusion and acid treatment on site. The design has taken into account that any downtime in the Fines DMS does not affect the OEE of the main treatment plant.

1.19

Infrastructure

Ekati is an operating mine and key infrastructure on site includes open pits, underground mines, sample and process plants, waste rock storage and processed kimberlite storage facilities, buildings (mobile and permanent), pipelines, pump stations, electrical systems, quarry site, camp pads and lay-downs, ore storage pads, roads, culverts and bridges, airstrip, helipad, and mobile equipment.

   
September 2016 Page 1-22



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Waste rock storage areas are designed for placement of rock excavated from the open pits and underground mine; rock stored is primarily granite. Waste rock storage areas also contain and store other materials including coarse kimberlite rejects, low grade kimberlite stockpiles, metasediments, land-fill, and land-farm. There is sufficient space in the waste rock storage areas for life-of-mine (LOM) requirements.

Temporary kimberlite stockpile areas will be required during the operations of the Jay project. Due to the greater distance from the Sable pit to the process plant, ore will also be stockpiled in the vicinity of the Sable pit.

Fine processed kimberlite is deposited into the Long Lake Containment Facility and the mined-out Beartooth pit. The containment cell expansions and Beartooth pit will provide capacity to 2019 with the mined-out Panda, Koala and Fox pits available to provide additional capacity beyond that date. Fine processed kimberlite from the Jay and Sable pits will be deposited in the mined-out Koala and Panda open pits and associated underground workings.

Due to the low value of the coarse processed kimberlite relative to the existing stockpiles, the increasing haul distances of waste rock storage area deposition as the coarse stockpiles from Jay and Sable grow in size, and the reclamation benefits of in-pit deposition and co-deposition of fine and coarse processed kimberlite is the recommended alternative.

Three primary water diversion structures have been constructed at Ekati, the Bearclaw Lake dam and pipeline, Panda diversion dam and channel, and Pigeon stream diversion. Two water management structures are required at Sable, the Two Rock dam, and the Two Rock filter dike. Mining of the Jay pipe will require construction of the Jay and North dikes, and the Sub-Basin B diversion channel.

Open pit mine water is collected via the in-pit dewatering systems that are designed to maintain safe and reliable operations in active mining areas. Water that enters the underground mining operations is managed through a series of sumps that ultimately direct the underground mine water to a single dewatering sump from where it is pumped to surface. Surface mine water (run-off over mine areas that is collected in various sumps) is pumped or trucked to the Long Lake Containment Facility. Misery pit water is pumped to the King Pond Settlement Facility.

The operations are not on a commercial power grid. Diesel generators on site provide power to the mining operations and ancillary facilities. A new 69 kV transmission line is under construction from Ekati Camp to Misery Camp. The construction is nearing completion as of the end of July 2016, and the line is scheduled to be energized in September 2016. From that point onward, Misery infrastructure power requirements will no longer require the stand-alone diesel generators.

   
September 2016 Page 1-23



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Freshwater for Ekati operations is permitted to be drawn from Grizzly Lake, Little Lake, Thinner Lake (Misery Camp), and Two Rock Lake. The Long Lake Containment Facility and Two Rock Sedimentation Pond are makeup sources for process use as required.

Site-wide communications consist of radio, phone, local area network (LAN), wireless internet and mining fleet management systems. Onsite communications are provided by microwave link from Yellowknife to Ekati.

1.20

Mine Plans

The Report presents two mine plans and two economic analyses based on those mine plans. The Mineral Reserves Base Case Mine Plan is the base case mine plan for the Project, and is based on Mineral Reserves only. This plan assumes production from Misery, Pigeon, Sable, Lynx and Jay open pits, and the Koala underground operation.

The Operating Case Mine Plan is a scenario that has the Misery South and Misery Southwest Extension material included in addition to that in the Mineral Reserves Base Case Mine Plan. Investors are cautioned that Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability and are further cautioned that the Operating Case Mine Plan includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the Operating Case Mine Plan will be realized.

1.21

Markets and Contracts

Dominion has significant expertise in marketing diamonds, and therefore does not use third parties to value its goods, but relies entirely upon its own sorting and valuation methods for internal analysis, mine planning, and financial modelling.

No forward market for rough diamonds exists to provide external long run pricing trends. The reasons for this are rooted in the lack of homogeneity in quality and absence of agreed standards for classifying and pricing the diamonds. Consequently, diamond price forecasts are dependent upon the fundamental views of future supply and demand. Various independent diamond market forecasts are produced by specialist companies, financial institutions, and respected major consulting firms, such as McKinsey & Company and Bain & Company. Dominion regularly reviews these reports together with its own market intelligence when formulating its own view of future diamonds prices. Universally, all diamond market forecasts predict that supply will be constrained. Mid- to long-term production levels are well understood given that most of the major sources are already in production and new developments that are in the pipeline are well defined.

   
September 2016 Page 1-24



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Nearly all commentators have supply gradually rising for five years but at a lower rate than the growth in demand, resulting in modest growth in rough diamond prices. Although production peaks around 2019–2020 (but to a level still below pre-global crisis levels), demand is expected to continue to grow, resulting in a widening of the supply–demand gap that will likely lead to higher diamond price increases. The implication is that rough diamond prices would have to increase at an average nominal rate of around 6.8% per annum to bridge the demand gap.

On the basis that the consensus view is of a healthy and continued demand growth against a long-term supply constraint, Dominion uses a base case rough diamond price rising at a long-term average rate of 2.5% per annum in real terms from CY2017 (start of FY18) for the whole life of the project.

The Ekati Mine has a Socio-Economic Agreement with the Government of the Northwest Territories, along with Impact and Benefit Agreements with local aboriginal groups. Within these agreements, the Ekati Mine has committed to developing contracts with Northern and Aboriginal businesses, wherever commercially viable. Furthermore, the Ekati Mine is committed to supporting and developing sustainable businesses, and encourages local and Aboriginal business owners to examine opportunities to develop joint ventures with existing and established businesses.

1.22

Capital and Operating Cost Estimates


1.22.1

Capital Costs

The capital cost estimate is the same for the Mineral Reserves Base Case Mine Plan and the Operating Case Mine Plan. Estimated capital costs for the Ekati Mine are summarized in Table 1-4. These totals are exclusive of capital expenditures during 1H FY17, and exclusive of capital allocations and pre-stripping costs.

   
September 2016 Page 1-25



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Table 1-4: Capital Cost Estimate ($C million)

  Cost Area Cost
  Jay Project 825
  Sable Project 148
  Other Development 29
  Sustaining Capital Costs 436
  Total Capital Costs 1,437

Note: Totals may not sum due to rounding

1.22.2

Operating Costs

Operating cost estimates have been produced for both the Mineral Reserves Base Case Mine Plan and the Operating Case Mine Plan.

Mining costs include direct open pit and underground mine operating costs as well as mobile maintenance, fixed plant maintenance related to the underground, and mine technical services. Pre-stripping costs at Lynx, Sable, and Jay prior to commercial production will be capitalized for accounting purposes, but are included in the mining operating costs below for the purposes of the economic analysis in this report.

Processing costs include processing plant operations, power consumption related to the process plant, and fixed plant maintenance related to the process plant.

Camp costs include communications, site management, training, project engineering services, maintenance engineering and planning, electrical services, maintenance services, power consumption not related to the process plant, travel, contracts and purchasing, catering and cleaning, warehouse, health and safety, security, site services, and strategic planning.

General and administrative (G&A) costs include administration, information technology, environment and communities, external affairs, finance, human resources, and legal.

Reclamation and marketing costs are not included in total operating costs.

The operating cost estimate for the Mineral Reserves Base Case Mine Plan is included as Table 1-5 and the Operating Case Mine Plan estimate is provided in Table 1-6.

   
September 2016 Page 1-26



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Table 1-5: Mineral Reserves Base Case Mine Plan Operating Costs (C$ million)

  Cost Area Costs
  Mining Costs 2,868
  Processing Costs 1,119
  Camp and G&A Costs 2,475
  Total Operating Costs 6,463

Note: Totals may not sum due to rounding

Table 1-6: Operating Case Mine Plan Operating Costs (C$ million)

  Cost Area Costs
  Mining Costs 2,879
  Processing Costs 1,139
  Camp and G&A Costs 2,475
  Total Operating Costs 6,492

Note: Totals may not sum due to rounding

1.23

Economic Analysis

The results of the economic analysis to support Mineral Reserves represent forward-looking information that is subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those presented here.

Forward-looking statements in this Report include, but are not limited to, statements with respect to future diamond valuations and diamond sales contracts, the estimation of Mineral Reserves and Mineral Resources, the realization of Mineral Reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new kimberlite pipes, permitting time lines for development of new pipes or treatment of stockpiles, requirements for additional capital, exchange rate assumptions, in particular Canadian/US dollar exchange rate, government regulation of mining operations, accidents, labour disputes and other risks of the mining industry, environmental risks, unanticipated reclamation expenses, continuation of the social licence to operate, and title disputes or claims.

Without limiting the generality of the above risk statements, some specific risks can come from changes in parameters as mine and process plans continue to be refined. These include possible variations in Mineral Resource and Mineral Reserve estimates, grade or recovery rates; diamond reference price estimate assumptions; geotechnical considerations during mining and geotechnical and hydrogeological considerations during Jay Dike construction and operation, including impacts of mud rushes, pit wall failures, or dike integrity; failure of plant, equipment or processes to operate as anticipated if granite or clay content of ore increases over the assumptions used in the mine plan; modifications to existing practices so as to comply with any future permit conditions that may be imposed by the appropriate regulator; and delays in obtaining regulatory approvals and lease renewals.

   
September 2016 Page 1-27



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Investors are cautioned that Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability and are further cautioned that the Operating Case Mine Plan includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the Operating Case Mine Plan will be realized.

To support estimation of Mineral Reserves, Dominion prepared an economic analysis to confirm that the economics based on the Mineral Reserves could repay life-of-mine operating and capital costs. The Ekati Diamond Mine was evaluated on an after-tax, project stand-alone, 100% equity-financed basis at the project level, using diamond valuations as at 30 June, 2016 and a 7% discount rate. The model was prepared starting in the second half of fiscal year 2017.

The financial analysis is based on two cases.

 

The Mineral Reserves Base Case Mine Plan is based on Probable Mineral Reserves of 70.3 dry Mt grading 1.6 cpt. The mine life based on the Mineral Reserves Base Case Mine Plan is 17 years, to FY34;

     
 

The Operating Case Mine Plan is based on Probable Mineral Reserves of 70.3 dry Mt grading 1.6 cpt, and Inferred Mineral Resources in the Misery South and Misery Southwest Extension areas of 1.2 dry Mt grading 2.6 cpt. The Operating Case Mine Plan also has a mine life of 17 years, to FY34.

The Mineral Reserves Base Case Mine Plan and the Operating Case Mine Plan capital costs are estimated at $984 million of development capital and $436 million of sustaining capital for each plan.

Direct and indirect operating costs are estimated at $6,420 million in the Mineral Reserves Base Case Mine Plan, and $6,494 million in the Operating Case Mine Plan. Marketing costs, royalty payments and estimated reclamation costs are included as separate line items to the operating cost estimate in the financial analysis.

The Northwest Territories royalty payable (NWT Royalty) is the lessor of (i) 13% of the value of output of the mine, or (ii) an amount calculated based on a sliding scale of royalty rates dependent upon the value of output of the mine, ranging from 5% for value of output between $10,000 and $5 million to 14% for value of output over $45 million. For modelling purposes an illustrative NWT Royalty calculation has been used, calculated as 13% of modelled free cash flow.

   
September 2016 Page 1-28



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

The taxation treatment in the economic analyses is applied to the Ekati Diamond Mine as a stand-alone whole entity and on a simplified basis. The joint venture partners in the Ekati Diamond Mine are separate parties, each of which are responsible for their own corporate income taxes. For modelling purposes an illustrative income tax calculation has been used calculated as 26.5% of modelled free cash flow post Northwest Territory royalty. The 26.5% rate is based on the 2016 Federal corporate income tax rate of 15% and the 2016 Northwest Territories corporate income tax rate of 11.5%.

Results of the financial analysis using the Mineral Reserves Base Case Mine Plan indicated positive economics until the end of mine life in FY34, and supported the declaration of Mineral Reserves. Over the life of mine outlined in the Mineral Reserves Base Case Mine Plan, assuming a 7% discount rate, the net present value (NPV) is $1.14 billion and the pre-tax cumulative cash flow is $4.43 billion.

In the Operating Case Mine Plan, also assuming a 7% discount rate, the NPV is $1.2 billion and the pre-tax cumulative cash flow is $4.52 billion.

For both the Mineral Reserves Base Case Mine Plan and the Operating Case Mine Plan, given that the mine is generating an immediate positive cash flow, payback period and internal rate of return (IRR) calculations are not relevant.

Table 1-7 provides a life-of-mine summary for the Mineral Reserves Base Case Mine Plan. Table 1-8 provides the life-of-mine summary for the Operating Case Mine Plan.

   
September 2016 Page 1-29



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Table 1-7: Economic Analysis Summary, Mineral Reserves Base Case Mine Plan

Area Item Mineral Reserve Base Case Mine Plan Totals
Waste mined
(wMt)
Total 305.64
Ore mined
(wMt)
Total 75.01
Ore processed
(dMt)
Underground Koala 2.40
Open Pit Misery 2.93
Pigeon 7.31
Sable 11.98
Lynx 0.99
Jay 44.67
Grade
(cpt)
Underground Koala 0.54
Open Pit Misery 5.15
Pigeon 0.47
Sable 0.85
Lynx 0.77
Jay 1.76
Carats recovered
(Mcts)
Underground Koala 1.30
Open Pit Misery 15.07
Pigeon 3.46
Sable 10.15
Lynx 0.76
Jay 78.64
Revenue Average Price US$ / ct Variable by year
Exchange Rate US$ / C$ 0.75
Cash Inflow C$ M 12,785
Costs Development Capital C$ M 1,002
Sustaining Capital C$ M 436
Total Operating Costs C$ M 6,463
Reclamation Costs C$ M 277
Marketing Costs C$ M 240
Cash Outflow C$ M 8,416
Net Cash Flow before Taxes C$ M 4,368
Tax NWT Royalty
(13% of pre-tax free cash flow)
C$ M 640
Income tax
(26.5% of post-NWT royalties free cash flow)
C$ M 1,136
Cash Flow Revenue less Costs C$ M 2,592
Net Present Value at 7% discount rate C$ M 1,102

   
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NI 43-101 Technical Report

Table 1-8: Economic Analysis Summary, Operating Case Mine Plan

Area Item Operating Case Mine Plan Totals
Waste mined
(wMt)
Total 305.64
Ore mined
(wMt)
Total 75.01
Mill feed mined
(wMt)
Total 1.00
Ore processed
(dMt)
Underground Koala 2.40
Open Pit Misery 2.93
Pigeon 7.31
Sable 11.98
Lynx 0.99
Jay 44.67
Mill feed processed
(dMt)
Misery South 0.12
Misery SW Ext. 1.04
Grade
(cpt)
Underground Koala 0.54
Open Pit Misery 5.15
Pigeon 0.47
Sable 0.85
Lynx 0.77
Jay 1.76
Misery South 1.23
Misery SW Ext. 2.80
Carats recovered
(Mcts)
Underground Koala 1.30
Open Pit Misery 15.07
Pigeon 3.46
Sable 10.15
Lynx 0.76
Jay 78.64
Misery South 0.14
Misery SW Ext. 2.92
Revenue Average Price US$ / ct Variable by year
Exchange Rate US$ / C$ 0.75
Cash Inflow C$ M 12,950

   
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Northwest Territories, Canada
NI 43-101 Technical Report

Area Item Operating Case Mine Plan Totals



Costs


Development Capital C$ M 1,002
Sustaining Capital C$ M 436
Total Operating Costs C$ M 6,492
Reclamation Costs C$ M 277
Marketing Costs C$ M 240
Cash Outflow C$ M 8,446
Net Cash Flow before Taxes C$ M 4,504

Tax
NWT Royalty
(13% of pre-tax free cash flow)
C$ M 653
Income tax
(26.5% of post-NWT royalties free cash flow)
C$ M 1,159


Cash Flow
Revenue less Costs C$ M 2,692
Net Present Value at 7% discount rate C$ M 1,188

Notes to Accompany Cash Flow Tables:

  (1)

Value by pipe weighted by production from each pipe.

  (2)

Tax calculation is illustrative (i.e. applies basic taxes on the year that production and revenue is incurred).

  (3)

The cash flow tables are provided on a 100% ownership basis. As at 31 July 2016, Dominion has an 88.9% participating interest in the Core Zone Joint Venture and a 65.3% participating interest in the Buffer Zone Joint Venture.


1.24

Sensitivity Analysis

The sensitivity of the Ekati Project under the Mineral Reserves Base Case Mine Plan assumptions to changes in diamond price, diamond grade, operating costs, capital costs and Canadian/US dollar exchange rate is summarized in Table 1-9. The sensitivity of the mine under the Operating Case Mine Plan assumptions is summarized in Table 1-10. In both tables, net present value (NPV) at a 7% real discount rate is used as the indicator to evaluate the impact of varying the diamond prices, the grade, the capital costs, the operating costs and the Canadian/US dollar exchange rate on the Ekati Project economics. For the variables in the sensitivity analysis, a ±10% change was applied.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Table 1-9: NPV Sensitivity Analysis under Mineral Reserves Base Case Mine Plan (estimate base case is highlighted)

  Parameter Financial Sensitivity NPV ($ Million)
- 10% Change Base Case + 10% Change
  Price 583 1,102 1,600
  Grade 583 1,102 1,600
  Capital Costs 1,191 1,102 1,013
  Operating Costs 1,399 1,102 798
  US$/C$ Foreign Exchange Rate 1,655 1,102 632

Table 1-10: NPV Sensitivity Analysis under Operating Case Mine Plan (estimate base case is highlighted)

  Parameter Financial Sensitivity NPV ($ Million)
- 10% Change Base Case + 10% Change
  Price 679 1,188 1,688
  Grade 679 1,188 1,688
  Capital Costs 1,271 1,188 1,106
  Operating Costs 1,479 1,188 896
  US$/C$ Foreign Exchange Rate 1,743 1,188 726

The analysis demonstrated that the Ekati Diamond Mine is most sensitive to variations in exchange rate, diamond parcel valuations and diamond grades, less sensitive to fluctuations in operating costs, and least sensitive to changes in the capital cost assumptions.

1.25

Conclusions

Mineral Resources are estimated for the Koala, Fox, Misery Main, Misery South, Misery South Extension, Pigeon, Sable, Jay and Lynx kimberlite pipes. Mineral Reserves were estimated for the Koala, Misery, Pigeon, Sable, Jay and Lynx pipes, and active stockpile materials. Based on the Mineral Reserve estimates and the assumptions detailed for the Mineral Reserves Base Case Mine Plan in this Report, the Ekati Project has positive project economics to fiscal year 2034, when the current Mineral Reserves will be exhausted.

Mineral Resources that are not included in either the current Mineral Reserve Base Case Mine Plan or the Operating Case Mine Plan include a portion of Koala underground, Misery Deep and Fox Deep. Of these deposits, Misery Deep represents the most significant opportunity, due to its high estimated diamond grade, potential for development below the existing open pit, and advanced permitting. The coarse reject tails, along with Mineral Resources estimated for the additional levels at the Koala underground, Misery Deep and Fox Deep represent future plant feed upside potential, and some or all of this mineralization may be able to be incorporated in the life-of-mine plan once sufficient additional work has been undertaken. There is also upside potential to treat low-grade stockpiles, primarily derived from open pit mining at the Fox kimberlite if the grades in the stockpiles can be demonstrated to be economic.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

1.26

Recommendations

A single-phase, multi-part work program has been outlined. No portion of the work program is dependent on the results of completion of another. The total program is estimated to cost approximately $10 million. The program is recommended to include the following:

 

For the current operations, the recommended work includes diamond drilling at Misery Main, completion of a revised Mineral Resource estimate for Misery Main and Pigeon, assessments of the most appropriate methodologies to access the Misery Deep kimberlite, and completion of a production trial and bulk sample testing at the Lynx pit. This work is estimated at approximately $1.9 million;

     
 

Additional infill geotechnical drilling to finalize the pit design prior to mining is recommended for the Sable project, at an estimated cost of $1.6 million;

     
 

The Jay project recommendations include confirmatory geotechnical drilling completed along the dike alignment, and additional infill geotechnical drilling to finalize the pit design prior to mining. A budget of about $5.1 million will be required to complete the work;

     
 

In support of estimating Mineral Resources for the Fox Deep zone, the following work program, estimated at $800,000, is suggested: complete sample processing and analysis for RC samples collected in winter 2016; update Fox resource block model; and complete a scoping study to assess the potential large-scale underground development;

     
 

Work proposed for the process plant area comprises capital studies to improve the ability of the front-end of the process plant to handle kimberlite with high clay content, with an estimated cost of about $600,000.


   
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NI 43-101 Technical Report

2.0

INTRODUCTION

Mr. Jon Carlson, P. Geo., Mr. Peter Ravenscroft, FAusIMM, Mr. Chantal Lavoie, P. Eng., and Mr. John Cunning, P. Eng., (collectively the Qualified Persons, or QPs) on behalf of Dominion Diamond Corporation (Dominion), have prepared a technical report (the Report) on the Ekati Diamond Mine (also referred to as the Ekati Mine or the Project) in the Northwest Territories, Canada (Figure 2-1).

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Figure 2-1: Project Location Plan

Figure prepared by Dominion, 2016.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

The Ekati Mine was acquired from BHP Billiton Canada Inc. (BHP Billiton) on 10 April, 2013 and included BHP Billiton’s controlling interest in the Ekati Diamond Mine as well as the associated diamond sorting and sales facilities in Yellowknife, Northwest Territories and Antwerp, Belgium.

Dominion uses a wholly-owned subsidiary, Dominion Diamond Holdings Ltd., as the holding entity for the Ekati Mine in the Northwest Territories. The participating entities for the Ekati Mine is Dominion Diamond Ekati Corporation, an indirectly wholly-owned subsidiary of Dominion Diamond Holdings Ltd. In this Report, the name Dominion is used interchangeably for the parent and subsidiary companies.

2.1

Terms of Reference

This Report is being filed by the Corporation on a voluntary basis as contemplated under section 4.2(12) of the Companion Policy to National Instrument 43-101 Standards of Disclosure for Mineral Projects. The Report is being filed by the Dominion to provide updated scientific and technical information in respect of the Ekati Diamond Mine and not as a result of a requirement under NI 43-101.

2.2

Qualified Persons

The following serve as the qualified persons (QPs) for this Technical Report as defined in National Instrument 43-101, Standards of Disclosure for Mineral Projects:

 

Mr. Jon Carlson, P. Geo., Senior Manager of Strategic Planning for the Ekati Operation, Dominion;

   

 

 

Mr. Peter Ravenscroft, FAusIMM, Burgundy Mining Advisors Ltd.;

   

 

 

Mr. Chantal Lavoie, P. Eng., Chief Operating Officer of Dominion, and President of Dominion Diamond Ekati Corporation (DDEC);

   

 

 

Mr. John Cunning, P. Eng., Principal, Geotechnical Engineer, Golder Associates Ltd., (Golder).


2.3

Site Visits and Scope of Personal Inspection

The responsible QPs have either visited site on the dates indicated below, or are full-time employees at the mine.

Mr. Jon Carlson has worked at the Ekati Project site for 24 years. His QP scope of personal inspection of the site has been undertaken as part of his role as the Senior Manager of Strategic Planning. Mr. Carlson has visited kimberlite occurrences, supervised exploration programs during the period where exploration was active on the Ekati Project; inspected drill core and RC cuttings, visited drill platforms and sample cutting and logging areas; visited bulk sample sites; discussed geology and mineralization with Ekati Project staff; reviewed geological interpretations with staff; supervised and reviewed modeling efforts; audited and reviewed on-site data including reviews of budgets, exploration programs and sample results; visited the open pit and underground workings; and viewed the locations of key infrastructure.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Mr. Peter Ravenscroft has visited the site on several recent occasions including from January 11–14, 2016, June 25, 2015, March 10–13 2014, and November 3–6 2014. He has visited mine operations at Koala underground mine, Misery open pit mine, and Pigeon open pit mine, and has examined the processing plant during three of the site visits. He inspected the Jay project site during the 2014 drilling campaign and visited the bulk sample plant in 2014 and 2015. Mr. Ravenscroft has held extensive discussions with Dominion corporate personnel, as well as with Ekati management, geological, mining, processing and strategic planning staff. In addition in his capacity as a consultant to Dominion he has conducted detailed technical work, including reviews of all relevant resource models and supervision of updated resource estimation for the Jay, Sable, Fox and Misery Satellite pipes.

Mr. Chantal Lavoie has worked at the Ekati Project for three years. His QP scope of personal inspection of the site has been undertaken as part of his role as Dominion’s Chief Operating Officer and the President of DDEC. In this role, Mr. Lavoie has the overall responsibility for the operational activities at the Project site including mine technical services (geology, geotechnical, mine, planning and scheduling), surface and underground mining, processing, maintenance and associated support services. He participates directly in all aspects associated with the execution of annual business plans; has performed detailed reviews of operational performance, process plant efficiencies, mining technical designs and financial performance; participates in discussions and the decision processes associated with long-term strategic planning.

Mr. John Cunning visited the site from January 20 to 23, 2014, as part of preparations and planning for the Jay Project winter 2014 geotechnical and hydrogeological drilling program and again from August 5 to 6, 2015, for a Jay Project planning meeting and risk assessment. In his capacity as a consultant to Dominion he has supervised the capital development cost estimates for the construction of the proposed Jay Dike and its associated infrastructure, including roads and pumping infrastructure.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

2.4

Effective Dates

There are a number of effective dates pertinent to the Report, as follows:

Database close-out date for Koala, Fox, Pigeon, Misery Main, Misery South, Misery Southwest Extension, Sable, Jay, Lynx and stockpile material: 31 July, 2016;

   

 

 

Effective date of the Mineral Resource estimates: 31 July, 2016;

   

 

 

Effective date of the Mineral Reserve estimates: 31 July, 2016;

   

 

 

Date of the supply of the last information on mineral tenure and property ownership: 31 July, 2016;

   
 

Date of the economic analysis that supports Mineral Reserve estimation: 31 July, 2016.

The overall Report effective date is taken to be 31 July, 2016, and is based on the date of the Mineral Reserve estimates and the economic analysis supporting the Mineral Reserves.

2.5

Information Sources and References

The primary data sources for Report compilation include:

 

Competent Persons Reports that were prepared by Ekati staff on an annual basis from 1993 to 2012 for the previous owner, BHP Billiton;

   

 

 

Mineral Services Canada Inc., 2015: Misery Satellites, 2015 Resource Estimates: report prepared for Dominion, February, 2015;

   

 

 

Dominion Diamond Corporation, 2016: Sable Pipe Prefeasibility Study (PFS): report prepared for Dominion, February, 2016

   

 

 

Dominion Diamond Corporation and Golder Associates Ltd., 2016: Jay Project Feasibility Study (FS): report prepared for Dominion, June, 2016.

Dominion has also used the information and references cited in Section 27 as information sources for the Report.

Additional information on the operations was provided to the responsible QPs from Dominion and Ekati employees in specialist discipline areas as required. Selected Golder and Mineral Services Canada Inc. (Mineral Services) staff also provided input in the areas where the companies had provided specialist services in support of the Jay feasibility study and the Mineral Resource estimate for the Misery South and Misery Southwest Extension kimberlites, respectively. Mineral Services staff also contributed to Section 7.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

The Report uses Canadian English and the metric system of units unless otherwise noted.

Cost estimates are provided as Canadian dollar figures unless otherwise indicated. The feasibility study for the Jay kimberlite was prepared primarily using Canadian dollars, however, US dollars were used for some estimates. The news release dated 6 July, 2016 on the Jay project assumed a Canadian dollar to US dollar exchange rate of 1.33 for the duration of construction and operation.

The Jay feasibility study used metric units. The Mineral Resource estimate for the Misery pipe and satellite deposits also used metric units.

All figures and illustrations have been prepared by Dominion staff for inclusion in this Report unless otherwise noted.

The underground mining operations use a modifying factor to convert metres above sea level (masl) elevations to mining levels, whereby the number 2,000 is added to masl. Thus the underground 1800L would correspond to -200 masl and the 1770L corresponds to the -230 masl.

Calendar years (January to December) are used for Project milestone dates. Dominion uses a fiscal year (FY) for financial information and life-of-mine plans; this year runs from February of one year to January of the following year, such that FY17 runs from February 2016 to January 2017 and there is only one month of calendar year 2017 in Dominion’s 2017 fiscal year.

Mineral Resource, Mineral Reserve, mine plan, capital and operating cost and economic analysis data, tables, and figures in the Report are presented on a 100% ownership basis.

2.6

Exemptive Relief Approval

Dominion applied for, and was granted, exemptive relief from the Ontario Securities Commission, as principal regulator, on July 18, 2014, in relation to the inclusion of Misery South and Misery Southwest Extension Inferred Mineral Resources in the alternate economic analysis plan termed the Operating Case Mine Plan, discussed in Section 16, Section 21 and Section 22 of the Report.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

2.7

Previous Technical Reports

Dominion has previously filed the following technical reports on the Ekati Project:

 

Heimersson, M., and Carlson, J., 2013: Ekati Diamond Mine, Northwest Territories, Canada, NI 43-101 Technical Report: Report prepared for Dominion Diamond Corporation, effective date 10 April 2013.

     
 

Carlson, J., Ravenscroft, P., Lavoie, C., and Cunning, J., 2015: Ekati Diamond Mine, Northwest Territories, Canada, NI 43-101 Technical Report: Report prepared for Dominion Diamond Corporation, effective date 31 January, 2015.


   
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Northwest Territories, Canada
NI 43-101 Technical Report

3.0

RELIANCE ON OTHER EXPERTS

This section is not relevant to the Report as advice was sought from Dominion’s internal experts in the fields of legal, political, environmental, and tax matters relevant to the technical report as required in support of Report preparation.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

4.0

PROPERTY DESCRIPTION AND LOCATION

The Ekati Diamond Mine is located near Lac de Gras, approximately 300 km northeast of Yellowknife and 200 km south of the Arctic Circle in the Northwest Territories of Canada.

The approximate Ekati Project centroid is located at 64.7 oN, 110.6 oW, which is the location of the Ekati airstrip. The project coordinate system adopted for x and y locations is UTM Zone 12 tied to a NAD 83 datum.

4.1

Property and Title in the Northwest Territories

Information in this subsection is based on data in the public domain (Aboriginal Affairs and Northern Development Canada, 2014; Government of the Northwest Territories, 2014; and Fasken Martineau DuMoulin, 2006), and has not been independently verified by the responsible QPs.

The Northwest Territories has undergone a period of devolution, which resulted during April 2014 in the transfer of primary authority over most public lands, resources and waters in the Northwest Territories from the Government of Canada to the Government of the Northwest Territories (GNWT).

4.1.1

Mineral Tenure

Mineral rights in the Northwest Territories are held by the Government. Under the current legislation (Northwest Territories and Nunavut Mining Regulations) in the Northwest Territories and Nunavut, there are four types of mineral tenure:

  Licence to Prospect;
     
  Permit to Prospect;
     
  Mineral Claim;
     
  Mining Lease.

  4.1.1.1.

Licence to Prospect

A license grants the holder the right to prospect for minerals on public lands open for mineral exploration. Licences are granted on an annual basis.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

  4.1.1.2.

Permit to Prospect

A Permit to Prospect allows a prospector to explore for minerals in a three-year period for areas located south of the 68th parallel of north latitude and for a five-year period for areas located north of the 68th parallel. The areas are one quarter of a mineral claim staking sheet (1:50,000 scale map) and vary in size from 8,319 to 22,900 ha. Any area of further interest to the holder must be converted to a mineral claim(s) prior to permit expiry provided the work requirements for the specified period have been completed.

  4.1.1.3.

Mineral Claim

The area of a mineral claim cannot exceed 2,582.5 acres (1,045 ha). A mineral claim includes all areas lying within its boundaries, including those covered by water.

A mineral claim staked can be held for up to 10 years from the date of recording. If not converted to a mineral lease on or before the 10 year grant-date anniversary, the claim will lapse.

One of the requirements to take a mineral claim to lease includes a legal survey to demarcate the boundaries of the mineral claim.

To register a claim it must be physically staked by marking the corners and the boundaries of a rectangular area with posts in accordance with the Northwest Territories and Nunavut Mining Regulations.

Once a mineral claim is properly located, the locator must record the mineral claim with the Mining Recorder with 60 days from the date of locating the claim. The application includes a sketch map showing the position of the claim, and a fee equal to $0.10 per acre ($0.25/ha) for the area contained within the claim. After a mineral claim is recorded, the holder must perform representation work to keep the claim in good standing. During the two-year period immediately following the date the mineral claim is recorded, the holder must perform representation work of at least $4.00 per acre. During each subsequent one year period, the holder must perform representation work of at least $2.00 per acre.

To maintain the mineral claim, within 30 days of the anniversary of the claim, the holder has to submit a statement of representation work, an assessment report, and pay a fee of $0.10 per acre ($0.25/ha) .

  4.1.1.4.

Mineral Leases

Mineral leases are converted from mineral claims under the following circumstances:

   
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Northwest Territories, Canada
NI 43-101 Technical Report

 

The value of the ore to be removed from the claim exceeds $100,000, unless the purpose of removal is for assay and testing;

   

 

 

Representation work has reached a total value of $10/acre ($24.71/ha);

   

 

 

A legal boundary survey of the claim has been recorded;

   

 

 

The right to the claim(s) to be leased is not under dispute.

A lease has a 21-year term and can be renewed for a further 21 years. There is currently an annual rent levied of $1/acre ($2.47/ha) for the first 21-year term, and $2/acre ($4.94/ha) for subsequent renewal periods. The rent payable can be reduced by 50% on filing representation work.

A Mining Lease is required to bring a property into commercial production.

  4.1.1.5.

Legislative Changes

Under current legislation, the application for conversion from a mineral claim to a mineral lease must be made before the 9th anniversary of the grant date, and there will be a one year extension period for preparing and filing the required boundary survey. Mineral claim sizes have been amended such that the maximum mining claim size is 1,250 hectares, and mineral claims will not be renewable after the 10-year anniversary.

Mineral claim and mineral lease payment obligations have been transitioned to the metric system and will be payable on hectares rather than the current acreage payment requirements.

4.1.2

Surface Rights

Public lands are lands owned by the Federal or Provincial Governments. Administration of public lands, including minerals for the Northwest Territories and Nunavut, is based on the Territorial Lands Act and its regulations. The Regulations under the Territorial Lands Act that deal with mineral tenure, leasing and royalties are the Northwest Territories and Nunavut Mining Regulations, formerly known as the Canada Mining Regulations Under the current Northwest Territories and Nunavut Mining Regulations, a party may prospect for minerals and stake mineral claims on any public lands covered under the Territorial Lands Act.

A surface lease is required under the Territorial Lands Act if a project will require the use of public land anywhere in the Northwest Territories for longer than two years.

   
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Northwest Territories, Canada
NI 43-101 Technical Report

4.1.3

Royalties

All mines in the Northwest Territories that are located on Crown lands must pay royalties. Currently, royalties are calculated on the value of the output of the mine for each financial year, and equal the lesser of:

 

13% of the value of output of the mine; or

   

 

 

An amount calculated based on a sliding scale of royalty rates dependent upon the value of output of the mine, ranging from 5% for value of output between $10,000 and $5 million to 14% for value of output over $45 million.


4.1.4 Environmental Impact Assessment

There are two assessment and regulatory processes in the Northwest Territories: the Mackenzie Valley Resource Management Act (MVRMA) which applies to all regions of the Northwest Territories except the Inuvialuit Settlement Region, where the process set out in the Inuvialuit Final Agreement applies. The Ekati Project is regulated under the MVRMA.

As part of the MVRMA permitting process, land and water boards conduct a preliminary screening as the initial stage of Environmental Impact Assessment. Based on a public review, the land and water board determines whether or not a permit is issued at that time or if further environmental impact assessment is necessary through referral to the Mackenzie Valley Environmental Impact Review Board (MVEIRB). Both Boards and other select government agencies also have the authority for direct referral.

If an Environmental Assessment or Environmental Impact Review is deemed necessary, this is conducted by the MVEIRB and, when completed, the project returns to the land and water board for final regulatory permitting.

4.1.5

Taxation

Taxation assumptions used in the economic analysis are discussed in Section 22.

4.1.6

Fraser Institute Survey

Dominion has used the Investment Attractiveness Index from the 2015 Fraser Institute Annual Survey of Mining Companies report (the Fraser Institute survey) as a credible source for the assessment of the overall political risk facing an exploration or mining project in the Northwest Territories of Canada.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Dominion has relied on the Fraser Institute survey because it is globally regarded as an independent report-card style assessment to governments on how attractive their policies are from the point of view of an exploration manager or mining company, and forms a proxy for the assessment by industry of political risk in the Northwest Territories from the mining perspective.

The Fraser Institute annual survey is an attempt to assess how mineral endowments and public policy factors such as taxation and regulatory uncertainty affect exploration investment.

Overall, the Northwest Territories ranked 35 out of 109 jurisdictions in the survey in 2015.

4.2

Project Ownership

On November 13, 2012, Dominion Diamond Corporation and its wholly-owned subsidiary, Dominion Diamond Holdings Ltd. entered into share purchase agreements with BHP Billiton Canada Inc., and various affiliates to purchase all of BHP Billiton’s diamond assets, including its controlling interest in the Ekati Diamond Mine as well as the associated diamond sorting and sales facilities in Yellowknife, Northwest Territories and Antwerp, Belgium.

On 9 July 2014, C. Fipke Holdings Ltd. sold its interests in the Core and Buffer Zones to the other joint venture participants. Section 4.3 describes the current ownership and joint venture percentage holdings.

4.3

Property Agreements

Information presented on the joint venture ownership percentages was current as at 31 July, 2016.

4.3.1

Core Zone Joint Venture

A group of 175 mining leases, totalling 172,992 ha forms the Core Zone Joint Venture. The parties to the joint venture, and their respective interests, are:

 

Dominion Diamond Holdings Ltd. through its wholly-owned subsidiary Dominion Diamond Ekati Corporation 88.9%;

   

 

 

Dr. Stewart L. Blusson 11.1%.

The Core Zone Joint Venture operates under the Northwest Territories Diamonds Joint Venture Agreement – Core Zone Property dated 17 April 1997.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

4.3.2

Buffer Zone Joint Venture

The Buffer Zone Joint Venture contains 106 mining leases covering 89,184 ha. The parties to the joint venture, and their respective interests, as at the Report effective date, are:

 

Dominion Diamond Holdings Ltd. through its wholly-owned subsidiary Dominion Diamond Ekati Corporation 65.3%;

   

 

 

Archon Minerals Ltd (Archon) 34.7%.

The Buffer Zone Joint Venture is operated through the Northwest Territories Diamonds Joint Venture Agreement – Buffer Zone Property dated 17 April 1997.

Archon’s interest in the Buffer Zone Joint Venture is held by Archon and a related company; however, the parties to the Buffer Zone Joint Venture have agreed that Archon and the related company are to be treated as one party for the purposes of the Buffer Zone Joint Venture.

In January 2016, the management committee of the Buffer Zone approved a program and budget for the Buffer Zone for fiscal year 2017. In March 2016, Archon provided notice to DDEC, as operator of the Buffer Zone, of its objection to certain elements of the fiscal 2017 program and budget, and indicated that it was only prepared to contribute to certain portions of the program and budget. Dominion has elected to fund all of the cash calls for those elements of the fiscal 2017 program and budget that will not be funded by Archon. Archon has asserted that its objection to the fiscal 2017 program and budget was based on its position that certain proposed expenditures in the fiscal 2017 program and budget were in breach of the terms of the Buffer Zone Joint Venture agreement, and as such, the management committee of the Buffer Zone was not permitted to approve those aspects of the fiscal 2017 program and budget. Accordingly, Archon has disputed Dominion's dilution of Archon's participating interest in the Buffer Zone. A revised program and budget for fiscal year 2017 is expected to be presented to the management committee of the Buffer Zone in the third quarter of fiscal 2017 to incorporate changes to the mine plan impacting the Lynx project in the Buffer Zone. Dilution of Archon's participating interest in the Buffer Zone had been expected in the second quarter of fiscal 2017, but has been temporarily withheld until Archon re-confirms its intentions with respect to funding the revised program and budget.

   
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4.3.3

Impact and Benefit Agreements

Impact and Benefit Agreements (IBAs) were concluded with the four aboriginal communities, Tlicho, Akaitcho Treaty 8, North Slave Métis, and the Inuit of Kugluktuk, who were impacted by the mine's operations prior to the commencement of mining.

The IBAs establish requirements for funding, training, preferential hiring, business opportunities, and communications. Although the terms of the IBAs are confidential, the responsible QPs consider the agreements to be similar to other agreements of this type that have been negotiated with Aboriginal groups in Canada. The agreements extend over the current life of mine.

4.4

Mineral Tenure

When the two joint venture agreements were concluded, the mineral tenure was larger than the current ground holdings, as a number of leases have since been relinquished.

The Ekati mining lease block currently comprises 281 mining leases that cover an area of approximately 262,176 ha. The Core JV includes 175 mining leases, totalling about 172,992 ha. The Buffer JV contains 106 mining leases (approximately 89,262 ha). Mineral tenure ownership details are as summarized in Section 4.3.1 and Section 4.3.2.

Lease data are summarized in Table 4-1 (Core Zone) and Table 4-2 (Buffer Zone). Appendix A contains a full lease list by lease number. Locations of the outlines of the mineral leases in each joint venture area are shown in Figure 4-1; Figure 4-2 shows the locations of the various kimberlite pipes with Mineral Resource estimates in relation to the Ekati Project boundaries.

All mining leases were legally surveyed by licensed surveyors.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Table 4-1: Core Zone Mineral Lease Summary Table

Lease
Number
Owner Name NTS Map
Sheet
Numbers
Issue Date Expiry Date Yearly
Payment
Hectares
3473—3502 Dominion Diamond Ekati Corporation (88.9%); 076D 09, 10 10-Apr-1996 10-Apr-2017 $66,729 27,004
and Dr. Stewart L. Blusson (11.1%)
3507—3509 Dominion Diamond Ekati Corporation (88.9%); 076D 09 10-Apr-1996 10-Apr-2017 $4,266 1,726
and Dr. Stewart L. Blusson (11.1%)
3513—3514 Dominion Diamond Ekati Corporation (88.9%); 076D 09 10-Apr-1996 10-Apr-2017 $4,949 2,003
and Dr. Stewart L. Blusson (11.1%)
3518—3522 Dominion Diamond Ekati Corporation (88.9%); 076D 09, 10, 10-Apr-1996 10-Apr-2017 $12,240 4,953
and Dr. Stewart L. Blusson (11.1%) 15, 16
3589—3597 Dominion Diamond Ekati Corporation (88.9%); 076D 15, 16 26-Jun-1997 26-Jun-2018 $22,129 8,955
and Dr. Stewart L. Blusson (11.1%)
3803—3806 Dominion Diamond Ekati Corporation (88.9%); 076D 15, 16 5-Nov-1999 5-Nov-2020 $9,890 4,002
and Dr. Stewart L. Blusson (11.1%)
3807—3837 Dominion Diamond Ekati Corporation (88.9%); 076D 10, 11, 17-Nov-1999 17-Nov-2020 $75,991 30,753
and Dr. Stewart L. Blusson (11.1%) 14, 15, 16
3848 Dominion Diamond Ekati Corporation (88.9%); 076D 16 16-Aug-1999 16-Aug-2020 $2,578 1,043
and Dr. Stewart L. Blusson (11.1%)
3849—3856 Dominion Diamond Ekati Corporation (88.9%); 076D 15, 16 5-Nov-1999 5-Nov-2020 $17,269 6,989
and Dr. Stewart L. Blusson (11.1%)
3857—3877 Dominion Diamond Ekati Corporation (88.9%); 076D 09, 10,        
and Dr. Stewart L. Blusson (11.1%) 15, 16 17-Nov-1999 17-Nov-2020 $51,729 20,934
3895 Dominion Diamond Ekati Corporation (88.9%); 076D 15 2-Jun-2000 2-Jun-2021 $2,476 1,002
and Dr. Stewart L. Blusson (11.1%)
3896 Dominion Diamond Ekati Corporation (88.9%); 076D 15 17-Jul-2000 17-Jul-2021 $2,566 1,038
and Dr. Stewart L. Blusson (11.1%)
3897—3922 Dominion Diamond Ekati Corporation (88.9%); 076D 09, 11, 2-Jun-2000 2-Jun-2021 $63,921 25,868
and Dr. Stewart L. Blusson (11.1%) 14, 15

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Lease
Number
Owner Name NTS Map
Sheet
Numbers
Issue Date Expiry Date Yearly
Payment
Hectares
3932—3940 Dominion Diamond Ekati Corporation (88.9%); 076D 11, 14, 2-Jun-2000 2-Jun-2021 $22,433 9,079
and Dr. Stewart L. Blusson (11.1%) 15, 16
3945—3971 Dominion Diamond Ekati Corporation (88.9%); 076D 09, 10, 2-Jun-2000 2-Jun-2021 $68,307 27,643
and Dr. Stewart L. Blusson (11.1%) 11, 14, 16
Total Hectares 172,992

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Table 4-2: Buffer Zone Mineral Lease Summary Table

Lease Number
Owner Name
NTS Map Sheet Numbers
Issue Date
Expiry Date
Yearly
Payment
Hectares
3486—3487 Dominion Diamond Ekati Corporation (65.3%), 076D 09 10-Apr-1996 10-Apr-2017 $6,469 2,618
and Archon Minerals Ltd. (34.7%)
3503—3506 Dominion Diamond Ekati Corporation (65.3%), 076D 09 10-Apr-1996 10-Apr-2017 $6,483 2,624
and Archon Minerals Ltd. (34.7%)
3519—3512 Dominion Diamond Ekati Corporation (65.3%), 076D 09 10-Apr-1996 10-Apr-2017 $7,754 3,138
and Archon Minerals Ltd. (34.7%)
3515—3517 Dominion Diamond Ekati Corporation (65.3%), 076D 09 10-Apr-1996 10-Apr-2017 $4,227 1,743
and Archon Minerals Ltd. (34.7%)
3541—3943 Dominion Diamond Ekati Corporation (65.3%), 076C 12; 076D 09 27-Jul-2001 27-Jul-2022 $4,568 1,849
and Archon Minerals Ltd. (34.7%)
3975—3976 Dominion Diamond Ekati Corporation (65.3%), 076C 12; 076D 09 27-Jul-2001 27-Jul-2022 $4,439 1,797
and Archon Minerals Ltd. (34.7%)
3977—3978 Dominion Diamond Ekati Corporation (65.3%), 076C 12; 076D 09 1-Nov-2001 1-Nov-2022 $4,308 1,743
and Archon Minerals Ltd. (34.7%)
3979 Dominion Diamond Ekati Corporation (65.3%), 076C 12; 076D 09 27-Jul-2001 27-Jul-2022 $2,414 977
and Archon Minerals Ltd. (34.7%)
3980 Dominion Diamond Ekati Corporation (65.3%), 076D 09 1-Nov-2001 1-Nov-2022 $2,442 988
and Archon Minerals Ltd. (34.7%)
3981—3984 Dominion Diamond Ekati Corporation (65.3%), 076D 09, 16 27-Jul-2001 27-Jul-2022 $10,124 4,097
and Archon Minerals Ltd. (34.7%)
3985 Dominion Diamond Ekati Corporation (65.3%), 076D 09 1-Nov-2001 1-Nov-2022 $2,574 1,042
and Archon Minerals Ltd. (34.7%)
3986—3990 Dominion Diamond Ekati Corporation (65.3%), 076C 12; 076D 09 27-Jul-2001 27-Jul-2022 $9,178 3,714
and Archon Minerals Ltd. (34.7%)
3991—3993 Dominion Diamond Ekati Corporation (65.3%), 076D 16 1-Nov-2001 1-Nov-2022 $7,657 3,099
and Archon Minerals Ltd. (34.7%)
4003 Dominion Diamond Ekati Corporation (65.3%), 076D 15 1-Nov-2001 1-Nov-2022 $2,522 1,021
and Archon Minerals Ltd. (34.7%)
4010—4027 Dominion Diamond Ekati Corporation (65.3%), 076D 09, 15, 16 1-Nov-2001 1-Nov-2022 $34,108 13,803
and Archon Minerals Ltd. (34.7%)
4028—4031 Dominion Diamond Ekati Corporation (65.3%), 076C 12; 076D 09, 16 27-Jul-2001 27-Jul-2022 $9,511 3,849
and Archon Minerals Ltd. (34.7%)
4032—4035 Dominion Diamond Ekati Corporation (65.3%), 076D 15, 16 1-Nov-2001 1-Nov-2022 $9,717 3,932
and Archon Minerals Ltd. (34.7%)
4036—4039 Dominion Diamond Ekati Corporation (65.3%), 076C 12; 076D 09 27-Jul-2001 27-Jul-2022 $9,805 3,968
and Archon Minerals Ltd. (34.7%)
4040—4043 Dominion Diamond Ekati Corporation (65.3%), 076C 12, 076D 12 1-Nov-2001 1-Nov-2022 $8,113 3,283
and Archon Minerals Ltd. (34.7%)
4273—4277 Dominion Diamond Ekati Corporation (65.3%), 076D 09, 10 16-Nov-2001 16-Nov-2022 $8,084 3,272
and Archon Minerals Ltd. (34.7%)
4281—4282 Dominion Diamond Ekati Corporation (65.3%), 076D 10 16-Nov-2001 16-Nov-2022 $5,128 2,075
and Archon Minerals Ltd. (34.7%)
4287—4290 Dominion Diamond Ekati Corporation (65.3%), 076D 10 16-Nov-2001 16-Nov-2022 $8,368 3,386
and Archon Minerals Ltd. (34.7%)
4351—4372 Dominion Diamond Ekati Corporation (65.3%), 076D 09, 10, 16 16-Nov-2001 16-Nov-2022 $46,707 18,902
and Archon Minerals Ltd. (34.7%)
4380 Dominion Diamond Ekati Corporation (65.3%), 076D 16 16-Nov-2001 16-Nov-2022 $ 2,465 997
and Archon Minerals Ltd. (34.7%)
4532—4533 Dominion Diamond Ekati Corporation (65.3%), 076 D10 16-Nov-2001 16-Nov-2022 $ 3,131 1,267
and Archon Minerals Ltd. (34.7%)
Total Hectares 89,184

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Figure 4-1: Mineral Tenure Map

Note: Within the context of the joint venture agreements, that portion of licence 3516 which hosts the Misery deposit (refer to inset figure), is considered to be part of the Core Zone.

   
September 2016 Page 4-11



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Figure 4-2: Mineral Tenure Map showing Kimberlite Locations by Lease

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Annual lease payments to the Northwest Territories comprise $1.00 per acre for the duration of the 21-year lease period. Payments increase to $2.00 per acre if a second 21-year term is granted after application to the Northwest Territories for the extension. All payments were up to date as at the Report effective date.

4.5

Surface Rights

Within the Ekati mineral leases, there are 10 surface leases, which provide tenure for operational infrastructure. All mine project developments are within these surface leases. Dominion also holds eight Type A land use permits (Sable Road, Sable Pit and associated activities, and Pigeon Pit and associated activities, Misery power line, Lynx open pit, Lynx Waste Rock Storage Area, exploration activities throughout the claim block, and the Jay Early Works and associated activities).

Additional information on the surface leases is provided in Section 20.

4.6

Water Rights

Water rights and water licences for the Ekati Project are discussed in Section 20.

4.7

Royalties and Encumbrances


4.7.1

Mining Tax

The current royalty payable to the Government of Northwest Territories is discussed in Section 4.1.3.

4.7.2

Misery Royalty

A royalty was payable to the Core Zone Joint Venture on kimberlite tonnes mined and processed from Misery Main, Misery South, and Misery Southwest Extension. The royalty has been fully discharged and no longer applies.

4.8

Permits

An exploration land use permit is required to conduct exploration activities on the mining leases outside of the areas covered by the Federal surface leases or other land use permits. The previous exploration land use permit was allowed, by the previous mine operator, to expire in October 2009. A new exploration land use permit was requested by Dominion and received in the fall of 2013.

Permit requirements in support of mining operations are discussed in Section 20.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

4.9

Environmental Liabilities

Current environmental liabilities comprise those to be expected of an active mining operation that is exploiting a number of kimberlite pipes, and includes open pits, processing plant, infrastructure buildings, water retention dams and dikes, waste rock storage facilities, and access roads.

The environmental permitting and closure plan is discussed in more detail in Section 20.

4.10

Native Title

The Ekati mineral tenure lies within a land area that is claimed by both the Dogrib (Tlicho Nation) and the Akaitcho Treaty 8.

The Tlicho Nation land claim has been settled with the Federal Government and the settlement had no material impact on the mining operations at Ekati.

The Akaitcho Treaty 8 land claim is still to be resolved.

The Tlicho and Akaitcho Treaty 8 have executed an agreement of cooperative management for the lands covered by the Ekati Project area.

The North Slave Metis and Inuit also exercised traditional use of the region.

4.11

Social License

Information on the mine’s social licence to operate is presented in Section 20.

4.12

Comments on Property Description and Location

In the opinion of the responsible QPs, the information discussed in this section supports the estimation of Mineral Resources and Mineral Reserves, based on the following:

Information provided by Dominion supports that the mining tenure held is valid and is sufficient to support estimation of Mineral Resources and Mineral Reserves;

   

Dominion holds sufficient surface rights in the Ekati Project area to support the mining operations, including access and power line;

   

 

Royalties are payable on production to the Government;

   

 

Dominion holds the appropriate permits under local, Territorial and Federal laws to allow mining operations;


   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

 

The appropriate environmental permits have been granted for Ekati Diamond Mine operation (refer to Section 20);

     

At the effective date of this Report, environmental liabilities are limited to those that would be expected to be associated with an operating diamond mine with production from several kimberlite pipes (refer to Section 20);

     

Dominion is not aware of any significant environmental, social or permitting issues that would prevent continued exploitation of the deposit; however, future renewals of surface leases will require engagement with Aboriginal groups;

   

 

To the extent known, there are no other significant factors and risks known to Dominion that may affect access, title, or the right or ability to perform work on the property.


   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

5.0

ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY


5.1

Accessibility

Road access to the Ekati Diamond Mine is by a winter ice road that is seasonal in nature. The ice road is 475 km long, is constructed largely (86%) across lakes, and connects from the permanent all-weather road east of Yellowknife to the main Ekati complex via the Misery haulage road. Typically the road is open 8–10 weeks a year, from mid-January to late March.

The ice road is built each year and is a joint venture between the Ekati, Diavik and Gahcho Kué mines. All heavy freight except emergency freight is transported to the site by truck over the ice road. See also the discussion in Section 18.1 on the ice road.

The Ekati Project has an all-season runway and airport facilities suitable to accommodate large airplanes such as the Hercules C-140 and Boeing 737 jets. Air transport is used year round for transport of all personnel to and from the site as well as light or perishable supplies, and, as required, emergency freight (see also discussion in Section 18.1) .

5.2

Climate

This area is within the Canadian sub-arctic; cold winter conditions predominate for the majority of the year, with approximately three months when day-time temperatures are consistently above freezing.

The mean annual temperature at the mine site is -10º C. The warmest average monthly temperature is 12º C in July. The coldest average monthly temperature is -28ºC in January, although extremes have reached below -50º C. The site is generally windy with velocities averaging 20 km/hr on typical days and the 100 year extreme exceeding 90 km/hr. Precipitation annual average is 345 mm, and consists of relatively equal amounts of rain and snow. Available daylight ranges from a minimum of four hours per day in December to a maximum of 22 hours in June.

The mine operates 24 hours per day year-round, except during white-out conditions.

5.3

Local Resources and Infrastructure

Infrastructure supporting the Ekati Project is discussed in Section 18.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

The closest community to Ekati is Wekweètì, located 180 km to the southwest. Yellowknife, the capital city of the Northwest Territories, is 310 km to the southwest of the mine. The nearest large city to Yellowknife is Edmonton, located due south via an 18-hour drive or accessed by several daily flights offered by four commercial airlines.

5.4

Physiography, Vegetation and Fauna

The topography across the property is generally flat with local surface relief rising up to 20 m, and terrain elevation ranging up to 100 m in total relief over the region.

The most distinctive physical features of the landscape are eskers, sinuous ridges of granular material deposited by glaciers. Eskers are important as wildlife habitat and also as construction material sources.

Bedrock generally outcrops at surface over the mine area, or is partially overlain by a thin (up to 5 m thick) veneer of Quaternary sediments consisting mainly of silty gravel, sand and organic matter. The overburden is thicker in some areas due to esker occurrence.

The watersheds within the Ekati Project area drain into Lac de Gras, then to the Coppermine River, which flows north westerly to the Arctic Ocean near the community of Kugluktuk. There are more than 8,000 lakes within the 266,300 hectare claim block.

Approximately one-third of the Ekati Project area is covered by typically oligotrophic1 water bodies. The low terrain has resulted in a diffuse drainage pattern, and streams typically meander in braided channels through extensive boulder fields between lakes and ponds. High flows are recorded during spring run-off, while low flows or intermittent stream channels are typical in late summer.

The site is within the continuous permafrost zone. In this area, the layer of permanently frozen subsoil and rock is generally 300 m deep and overlain by a 1–3 m active layer that thaws during summer. Talik (unfrozen) zones occur beneath water bodies and, depending on the thermal storage capacity of the lake, may fully penetrate the permafrost horizon.

The terrestrial vegetation community is composed of species adapted to freezing temperatures, low nutrients and localized areas of drought and standing water. The short growing season, cool soil temperatures, and lack of soil development limit the establishment of productive, diverse plant communities. The most common vegetation communities are mats of low shrubs, including dwarf birch, Labrador tea, crowberry and bearberry. Lichen communities are found in areas with very thin layers of soil.

______________________________________________
1
a body of water which is poor in dissolved nutrients and usually rich in dissolved oxygen.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Taller shrubs such as willows and scrub birch are found in sheltered areas such as ravines and along streams where there are depressions in the depth of the permafrost. The vegetation surrounding lakes and streams is dominated by lichen-covered boulders interspersed with depressions containing dense, spongy peat mats of moss and lichen.

The Ekati Project area is predominately wildlife habitat, with human use for hunting and fishing. The Bathurst caribou herd migrates through the area to access spring calving and winter forage grounds. Grizzly bears, wolves, foxes, wolverines and small mammals are also present at various times of the year. Most bird species are only summer residents but include loons, sandpipers, passerines and a few raptor species. Ravens and snowy owls are present year-round. The lakes support predominantly lake trout, round whitefish, slimy sculpin, ninespine stickleback, cisco, longnose sucker and Arctic grayling.

5.5 Comments on Accessibility, Climate, Local Resources, Infrastructure, and Physiography

In the opinion of the responsible QPs:

 

There is sufficient suitable land available within the mineral tenure held by Dominion for processed kimberlite disposal, mine waste disposal, and installations such as the process plant and related mine infrastructure. All necessary infrastructure has been built on site to support the existing operations at Koala, Pigeon, Misery, and Lynx. Additional infrastructure is planned for the Sable and Jay projects;

   

 

 

A review of the existing power and water sources, manpower availability, and transport options (refer also to Section 18) indicate that there are reasonable expectations that sufficient labour and infrastructure will continue to be available to support estimation of Mineral Resources, Mineral Reserves, and the mine plan based on the Mineral Reserves.


   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

6.0

HISTORY

The discovery of kimberlites in the Lac de Gras region was the result of systematic heavy mineral sampling over a ten year period by prospectors Dr. Charles E. Fipke and Dr. Stewart Blusson. By late 1989, Dia Met Minerals Ltd. (Dia Met) was funding the programs and began staking mineral claims in the region. After making significant indicator mineral finds in the area, Dia Met approached BHP as a potential partner. The Core Zone Joint Venture agreement between BHP, Dia Met, Charles Fipke and Stewart Blusson was subsequently signed in August 1990. Dia Met was acquired by BHP in 2001.

The first diamond-bearing kimberlite pipe on the property was discovered by drilling in 1991. An Addendum to the Core Zone Joint Venture in October 1991 gave BHP the right to acquire additional mineral claims within 22,500 feet of the exterior boundaries of the then property area. The claims acquired as a result became the Buffer Zone Joint Venture claims.

To date, exploration activities have included till sampling, airborne and ground geophysical surveys, and drill programs. Approximately 350 geophysical and/or indicator dispersion targets were drilled, with a total of 150 kimberlites discovered on the Core Zone and Buffer Zone properties. The kimberlites were prioritized using microdiamond and indicator mineral chemistry. Forty kimberlite occurrences were subsequently tested for diamond content using reverse circulation (RC) drilling and/or surface bulk samples. Significant macrodiamond results were obtained on 17 pipes. There has been no exploration of the Ekati Project area for new kimberlites since 2007.

Baseline environmental data were collected throughout the NWT Diamonds Project area (as the Ekati Project was then known) from 1993 to 1996. In 1995, BHP Billiton submitted its Environmental Impact Statement (EIS) for the NWT Diamonds Project to the Federally-appointed Environmental Assessment Review Panel. After a comprehensive review, the Government of Canada approved the development of the NWT Diamonds Project in November 1996.

In 1998, the Project was renamed Ekati Diamond Mine after the Tlicho word meaning “fat lake”. Construction of the mine began in 1997, open pit mining operations commenced in August 1998, and the Ekati Diamond Mine officially opened on October 14, 1998.

   
September 2016 Page 6-1



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

As at 31 July 2016, the mining status includes:

 

Open pit mining operations commenced in August 1998 at the Panda pipe, and continued through June 2003. Underground production from the Panda pipe began in June 2005 and completed in 2010. The Panda kimberlite pipe is fully depleted;

   
 

The Misery open pit operation commenced in 2002 and was completed in 2006. Production from the Misery stockpiles continued to 2007. Pre-stripping at Misery for a pushback pit commenced in 2011 and ore release was achieved in early 2016. The operation is currently active;

   
 

The Koala open pit operation commenced in 2003 and was completed in 2007. Underground production from the Koala pipe began in June 2007 and the operation is currently active;

   
 

The Koala North underground trial mine was operated from 2003 to 2004. Commercial underground mining at Koala North began in 2010 and completed in 2015. The Koala North kimberlite pipe is fully depleted;

   
 

The Beartooth open pit operation commenced in 2004 and was completed in 2008. The Beartooth kimberlite pipe is depleted and the open pit is being used for fine processed kimberlite deposition;

   
 

The Fox open pit operation commenced in 2005 and was completed in 2014;

   

 

 

The Pigeon open pit operation commenced in 2015 and ore release was achieved in late 2015;

   
 

Pre-stripping for the Lynx open pit commenced in late 2015;

   

 

 

Mining has been suspended for a planned approximately three month period at Pigeon and Lynx only (July–September 2016) while the process plant undergoes remediation.

In early 2016, a major milestone was reached when Ekati achieved production of 60 million carats of diamonds. Table 6-1 summarizes the Ekati Project production history from the mine opening in October 1998 to 31 July, 2016.

   
September 2016 Page 6-2



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Table 6-1: Production History

Fiscal Year Metric
Tonnes
Processed
(x 1,000)
Carats
Recovered
(x 1,000)
Grade
(carats per tonne)
1999 1,565 1,230 0.79
2000 3,377 2,777 0.82
2001 3,199 2,800 0.88
2002 3,354 4,562 1.36
2003 4,310 5,424 1.26
2004 4,446 6,853 1.54
2005 4,595 4,522 0.98
2006 4,297 3,197 0.74
2007 4,539 4,030 0.89
2008 4,411 4,188 0.95
2009 4,762 4,026 0.85
2010 4,895 3,811 0.78
2011 4,692 3,133 0.67
2012 4,482 2,231 0.50
2013 3,079 1,216 0.40
2014 3,381 1,677 0.49
2015 4,131 3,158 0.76
2016 3,618 3,732 0.97
1H2017 1,573 1,932 1.23
Total 69,088 60,767 0.88

Notes to Accompany Production History Table:

  1.

Fiscal year 1999: from 1 June, 1998 to 31 May, 1999.

  2.

Fiscal year 2000: from 1 June, 1999 to 30 June, 2000 (13 months).

  3.

Fiscal year 2001 to fiscal year 2012: from 1 July to 30 June to reflect BHP Billiton’s fiscal year.

  4.

Fiscal year 2013: reflects the period from 1 July, 2012 to 9 April, 2013.

  5.

Fiscal year 2014 (partial year): reflects period from 10 April, 2013 (Ekati transaction) to 31 January, 2014.

  6.

Fiscal year 2015: reflects the period from 1 February, 2014 to 31 January, 2015.

  7.

Fiscal year 2016: reflects the period from 1 February, 2015 to 31 January, 2016.

  8.

1H Fiscal year 2017: reflects the period from 1 February, 2016 to 31 July, 2016.


   
September 2016 Page 6-3



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

7.0

GEOLOGICAL SETTING AND MINERALIZATION


7.1

Regional Geology

This regional geological context was sourced from Nowicki et al., (2003).

The Ekati Project area is underlain by the Slave Structural Province, one of several Archean cratons, which together constitute the nucleus around which the North American continent evolved. The Slave Province is a granite–greenstone terrane that grew by tectonic accretion around a pre-3 Ga nucleus that is preserved in the central and western parts of the province, with a Neoarchean juvenile arc in the east.

Rock types within the Slave Province can be assigned to three broad lithostratigraphic groups: metasedimentary schists, migmatites, and various syn- and post-tectonic intrusive complexes.

The metasediments represent a metamorphosed greywacke sequence and are widespread in the central and southern portions of the Ekati Project area. Typically the metasediments are fine-grained with a high proportion of sheet silicates and generally foliated. Sulphide minerals are present at trace concentrations but occasionally at concentrations of up to 2% at centimetre scale. Locally, up to 5% sulphides are observed on a centimetre scale.

The metasediments are intruded by voluminous neo-Archean granitoids. Syntectonic (ca. 2.64 to 2.60 Ga) tonalites and granodiorites occur predominantly in the central and northern portions of the property, while post-tectonic (ca. 2.59 to 2.58 Ga) granites (two-mica granite and biotite granite) form large plutons in the eastern and northeastern portions of the property. The granodiorites are generally white to grey in colour, medium to coarse-grained and weakly foliated to massive. Locally, the granodiorite contains rounded biotite-rich mafic xenoliths ranging from 10 to 150 mm in size and rare cubic pyrite grains (up to 2 mm). The granodiorite has an average modal composition of 40% quartz, 45% feldspar and 15% biotite. In weakly altered zones, 1 to 3% epidote may be present. The two-mica granite contains fine to coarse-grained quartz, potassium feldspar, and plagioclase, with 3–15% biotite and muscovite. Tourmaline laths up to 0.5 cm by 3.5 cm have been observed. Pegmatite phases are common. Sulphide minerals are rarely observed, and if present only in trace amounts.

The western part of the Ekati Project area is dominated by migmatites which reflect melting of metasediments due to widespread granite intrusion and associated heat input.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Dykes of five major Proterozoic diabase dyke swarms (ages varying from 2.23 –1.27 Ga) intrude the Archean rocks. The dykes are a few centimetres to more than 30 m wide and classified as magnetic and non-magnetic. Generally, they are near vertical with sharp or fractured contacts of variable orientation. Magnetic dykes are very dark grey to black, fine-grained, and contain magnetite and traces of pyrite, chalcopyrite, with lesser amounts of pyrrhotite. Sulphide mineral concentrations of up to 2% are rarely observed but only over widths of a few centimetres. Non-magnetic dykes have very similar overall composition to magnetic dykes except that they lack abundant magnetite.

The kimberlite intrusions are of Phanerozoic age (i.e. younger than ~530 Ma). Erosion of the kimberlite pipes resulted in surface depressions, many of which became permanent, shallow lakes, which typically have several metres of silty sand sediments deposited on the lake bed.

The Wisconsinan Laurentide ice-sheet deposited glacial till, glaciofluvial eskers and related kames in the Lac de Gras area. Three glacial transport directions have been recognised: early transport to the southwest, followed by transport to the west, and finally by flow to the northwest.

Bedrock generally crops out at surface across the Ekati Project area, or is partially overlain by a thin (as much as 5 m thick) veneer of Quaternary sediments. Based on geomorphology work, these sediments consist mainly of silty gravel, sands, and organic matter.

The location and generalised geology of the Lac de Gras area is shown in relation to the Slave Craton in Figure 7-1.

   
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Northwest Territories, Canada
NI 43-101 Technical Report

Figure 7-1: Regional Geology Map

Note: Geologic map of the Slave craton in northwestern Canada (reproduced from Tappe et al., 2013; modified from Bleeker, 2003). The Ekati Diamond Mine is shown in relation to other producing and formerly producing mines in the region (Diavik and Snap Lake) as well as the outline of the Lac de Gras kimberlite field (dashed ellipse). The northeast–southwest-trending dashed lines delineate the northern, central, and southern lithospheric mantle domains as recognized from kimberlite- borne xenocrystic garnet compositions. The diamond symbols show the locations of currently active kimberlite-hosted diamond mines. Dominion holds interests in the Ekati and Diavik deposits. The remaining diamond occurrences are held by third parties and are not part of the Ekati Mine.

   
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7.2

Project Geology

The following Project geology description is summarised from Nowicki et al., (2004).

The Ekati kimberlite pipes are part of the Lac de Gras kimberlite field which is located in the central Slave craton. The kimberlites intrude both granitoids and metasediments. They define several linear trends and are typically associated with dykes and lineaments. There is no dominant or unique structural association of the kimberlites. A bedrock geology map of the Ekati Project area is provided as Figure 7-2 and includes the locations of the known kimberlite occurrences.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Figure 7-2: Bedrock Geology Map

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Fine-grained sediments have been preserved as xenoliths and disaggregated material in kimberlite which indicates that some sedimentary cover was present at the time of the kimberlite emplacement. None of this sedimentary cover has been preserved outside of the kimberlites.

The Ekati kimberlites range in age from 45 to 75 Ma. They are mostly small pipe-like bodies (surface areas are mostly <3 ha but can extend to as much as 20 ha) that typically extend to projected depths of 400–600 m below the current land surface. Kimberlite distribution is controlled by fault zones, fault intersections and dyke swarms.

Pipe infill has been broadly classified into six rock types:

  Magmatic kimberlite (MK) – hypabyssal;
     
  Tuffisitic kimberlite (TK);
     
  Primary volcaniclastic kimberlite (PVK);
     
  Olivine-rich volcaniclastic kimberlite (VK);
     
  Mud-rich, resedimented volcaniclastic kimberlite (RVK);
     
  Kimberlitic sediments.

With few exceptions, the kimberlites are made up almost exclusively of volcaniclastic VK, including very fine-grained to medium-grained kimberlitic sediments, RVK, and PVK. RVK represents pyroclastic material that has been transported (e.g. by gravitational slumping and flow processes) from its original location (likely on the crater rim) into the open pipe and has undergone varying degrees of reworking with the incorporation of surficial material (mudstone and plant material). In rare cases (e.g. Pigeon), pipes are dominated by or include significant proportions of MK.

While occasional peripheral kimberlite dykes are present, geological investigations undertaken to date do not provide any evidence for the presence of complex root zones or markedly flared crater zones.

Kimberlites at Ekati typically contain fragments of wood that was incorporated into the pipe during deposition. The wood fragments identified are related to the redwood Sequoia and Metasequoia genera, and are found relatively fresh and unmineralized. Fragments up to one metre size are common in Panda and Koala open pits, but the size and abundance decrease with depth.

Depending on the lithological unit, mud can make up a reasonable percentage of a given kimberlite unit. These xenoclasts range in size from millimetres to centimetres and are usually uniformly fine grained, dark grey to black in colour, and can have portions made up of kimberlitic minerals such as olivine and serpentine but with the majority consisting of smectite, quartz and pyrite;

   
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Northwest Territories, Canada
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Economic mineralization is mostly limited to olivine-rich resedimented volcaniclastic and primary volcaniclastic types. Approximately 10% of the 150 known kimberlite pipes in the Ekati Project are of economic interest or have exploration potential.

Diamond grades are highly variable. Estimated average grades for kimberlites that have been bulk sampled range from less than 0.05 cpt to more than 4 cpt.

7.3

Deposits


7.3.1

Koala

The Koala kimberlite pipe occurs near the central portion of the Ekati Project area. Koala is hosted in biotite granodiorite of the Koala Batholith. Open pit mining of the pipe was completed to optimal pit limits, and underground mining is in progress.

Mining and modelling work undertaken to date indicate that Koala has a roughly ovoid outline in plan view (approximately 5.7 ha, 380 m by 275 m) and a steep-sided inverted cone morphology that tapers inwards at 75o to 80o. Below 100 masl, the pipe morphology becomes increasingly complex, with significant pinching and swelling, ledges and overhangs. The shape and features of the Koala pipe are in many cases coincident with identified geologic structures such as faults. It is interpreted that the kimberlite exploited, or conversely, was constrained by, pre-existing geological structures in the granitic country rock into which it intruded.

The Koala pipe is occupied by a sub-horizontally layered sequence of distinctive kimberlite units. In contrast to the majority of the Ekati kimberlites, these units display well-defined contacts or transitions that, in most cases, can be correlated across the pipe, allowing construction of a three-dimensional model of the pipe's internal geology.

Seven major phases (geological domains) have been identified:

  Phase 1: a thick upper sequence of well graded material, the lower portion of which is dominated by coarse-grained, olivine-rich VK;
     
  Phase 2: a second smaller zone of graded kimberlite underlying Phase 1 in certain holes and suggesting the presence of more than one graded sequence;
     
  Phase 3: a considerably more mud-rich zone of intermixed mud-rich and olivine- rich RVK;

   
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Northwest Territories, Canada
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Phase 4: a distinctive siltstone marker unit characterised by abundant wood fragments;

   

 

Phase 5: a very thick mud-rich RVK unit with minor, gradational variations in olivine content divided into a monotonous largely granite-free thick upper zone (5A) and a basal zone characterised by the presence of abundant large granite blocks (5B);

   

 

Phase 6: a major phase dominated by competent, relatively homogeneous, olivine- and juvenile lapillus-rich, probable PVK;

   

  Phase 7: a deep, volumetrically relatively minor phase characterized by the presence of significant amounts of MK, intermixed with lesser VK.

Phases 5 through 7 comprise the mineralization that is currently exploited by underground mining.

The emplacement history of the Koala kimberlite pipe is interpreted as follows:

  Explosive emplacement and eruption of kimberlite magma resulting in excavation of a crater and steep sided diatreme (to depths of greater than 650 m below surface) and simultaneous deposition of large amounts of volcanic tephra in a cone surrounding the crater;
   
  Partial filling of the lower diatreme during the waning stages of eruption by direct deposition of pyroclastic material to form Phase 6 PVK;
   
  Emplacement of magma, representing the final stage of intrusion, into partially- consolidated Phase 6 PVK in the lower portions of the diatreme to form Phase 7;
   
  Filling of the remainder of the pipe by episodic re-sedimentation of tephra previously deposited around the crater rim (together with varying amounts of variably consolidated sedimentary material that was present on the surface at the time of eruption) to form Phases 5, 4, 3, 2 and 1;
   
  Erosion of the land-surface post emplacement resulting in removal of surface sediments and the uppermost portions of the kimberlite deposit.

Figure 7-3 is a plan of the kimberlite. Figure 7-4 is an isometric view of the Koala pipe, illustrating the morphology of the deposit, internal geological phases, final open pit development, and drill hole data.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Figure 7-3: Surface Plan, Koala Pipe

Note: Figure prepared by Dominion, data are current to end July 2016. Kimberlite triangulations are of the geological model prior to mining. Final open pit outline is shown. Grey = pit design. Drill hole traces are coded by drill hole type: green = RC, red = core. Grid is as labelled (50 x 50 m).

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Figure 7-4: Isometric Cross-Section, Koala Pipe

Note: Figure prepared by Dominion. Final pit bottom, underground workings, and drill holes are shown as at end July 2016. Grey = final pit outline. Drill hole traces are coded by drill hole type, green = RC, red = core. Elevation is as labelled (50 m spacing). Kimberlite phases are labelled as described in Section 7.3.1.

   
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Northwest Territories, Canada
NI 43-101 Technical Report

7.3.2

Koala North

The Koala North kimberlite pipe was a small body (approximately 0.5 ha surface area, 90 m by 50 m in surface diameter) situated directly between the Panda and Koala pipes. It is mined out.

7.3.3

Fox

The Fox kimberlite pipe covered an area of 17 ha at surface (500 m by 435 m) and is situated approximately 9 km southwest of the Koala pipe. The Fox pipe is hosted by granodiorite of the Koala Batholith. The Fox open pit has been mined out, but kimberlite mineralization extends at depth under the pit floor.

The Fox pipe consists of two major domains: the Crater and Diatreme domains, respectively. The approximate Crater/Diatreme geological boundary occurs at an elevation of 300 to 315 masl; the planned run-of-mine material is entirely contained within the Diatreme domain. Large rafted blocks of granite are entrained internally throughout the pipe.

The Crater domain is dominated by mud-rich RVK. This kimberlite is massively to crudely bedded, and contains variable amounts of fine- to medium-grained altered olivine macrocrysts and scattered small mudstone clasts set in a very fine-grained muddy to silty matrix. Large rafts of broken xenolithic material occur at the base of the crater domain.

The Fox Diatreme domain can be categorised into four main material types:

  Tuffisitic kimberlite breccia (TKB);
     
  Tuffisitic kimberlite (TK);
     
  Volcaniclastic kimberlite (VK);
     
  Granite or granite-rich zones.

TKB is distinctly different from kimberlites in any of the other development pipes at Ekati. It is characterised by a massive texture, high in-situ granite content (mostly small, altered clasts), relatively high olivine content, and a matrix dominated by variably clay-altered serpentine (as opposed to the clastic silt/mud that dominates the VK and RVK varieties). Granite is highly fragmented and characteristically includes 30%, small (less than 1 cm) microxenoliths or xenocrysts of feldspar and biotite derived from disaggregation of the granite. All olivine is pervasively altered to serpentine. Several varieties of TKB have been identified:

   
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TK is texturally similar to TKB but is characterised by a relatively fine-grain size with respect to olivine, xenocrysts and xenoliths. Granite occurs mostly as fine (less than 1 cm) altered fragments with relatively minor, scattered larger xenoliths. Xenoliths exceeding 5 cm are rare. Clay content within TK appears to be intermediate between those in VK (high) and TKB (moderate);

     
 

VK is a volumetrically small component mostly associated with the contact zones and granite breccia zones in the lower part of the open pit. VK is characterised by a dark silty to muddy, typically friable matrix with varying amounts of fine- to medium-grained altered olivine. Based on core logging and comparison with similar rock types of other Ekati kimberlite pipes, the clay content of VK is expected to be high. The xenolith content of VK is variable but generally low or very low. This is particularly true of xenoliths exceeding 5 cm, which are rare (on average 1 every 5 m in drill core) and xenoliths greater than 10 cm, which are extremely uncommon. Microxenoliths comprise approximately 15% of VK on average. In contrast with TK and TKB, small xenoliths (less than 5 cm) within VK are often not significantly altered. All larger xenoliths (greater than 5 cm) are fresh.

Internal granite occurs as evenly distributed small, commonly altered fragments within kimberlite (1 mm to 10 cm) and as large fresh xenolith blocks (20 cm to approximately 20 m in size). The latter are not evenly distributed and are concentrated primarily in a granite-dominated breccia zones occupying the lower portion of the open pit. They are also prevalent at the margins of the diatreme, close to the wall-rock contacts.

Modelling work undertaken to date indicates that the Fox pipe has a roughly square shape in plan view and a steep-sided inverted cone morphology that tapers inwards at 70o to 75o. Figure 7-5 is a plan view, and Figure 7-6 is an isometric view of the Fox kimberlite. The pipe flares to the northeast at 200 masl, resulting in a large embayment at this elevation.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Figure 7-5: Surface Plan, Fox Pipe

Note: Figure prepared by Dominion. Data are current as of end July, 2016. Data used are as at end of open pit mining operations. Colour key: dark grey = TK, yellow = xenoliths, light grey = pit outline as at end of pit life (May 2014). Drill hole traces are coded by drill hole type, green = RC, red = core. Grid is as labelled (100 x 100 m).

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Figure 7-6: Isometric Cross-Section, Fox Pipe

Note: Figure prepared by Dominion. Data are current as of end July, 2016. Figure looks northwest (azimuth 302o) with a slight incline (–12o), inset picture shows section line. Colour key: light grey = TK, yellow = xenoliths, dark grey = final pit outline (end May 2014). Elevation is as labelled (50 m spacing). Drill hole traces are coded by drill hole type, green = RC, red = core.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

7.3.4

Misery

The Misery kimberlite complex is located in the southeastern portion of the Ekati main claim block, 30 km from the Ekati production plant and 7 km northeast of the Diavik diamond mine. Misery Main is the largest pipe in this cluster of six main known kimberlite bodies (Main pipe, South pipe, Southwest (SW) Extension, Southeast Complex, Northeast pipe and East dyke) and several small dykes and other intrusive bodies in the area.

The kimberlites are interpreted to have been emplaced at approximately 56 Ma at the contact between Archean biotite schist (meta-greywacke) and two-mica granite when the area was overlain by poorly consolidated mudstones, siltstones and shale. These rocks are found as xenoliths in varying abundances and relative proportions throughout the kimberlites; some of the kimberlites additionally comprise varying amounts of disaggregated mud as a matrix component. Resedimented volcaniclastic kimberlite (RVK) and magmatic kimberlite (MK) are the dominant textural varieties of kimberlite found in the complex; pyroclastic kimberlite (PK) is less common. Kimberlite–wall rock contacts are typically sharp and readily identified; the country rock surrounding the bodies is weakly brecciated or un-brecciated.

  7.3.4.1.

Misery Main

Misery Main is a small steep-sided pipe with a pre-mining surface expression of approximately 90 m by 175 m (1.5 ha). The pipe is infilled predominantly with RVK ranging from dark, mud-rich to coarse grained, very olivine-rich material. Variable amounts of carbonized wood, mudstone, siltstone, granite and biotite schist xenoliths, peridotitic and eclogitic garnet and altered peridotite xenoliths are present. In places, well defined, fine-scale bedding is evident, generally characterized by variations in the abundance and grain size of olivine. Bedding angles appear to be highly variable with both shallow and steeply dipping beds present. Minor fine-grained sedimentary material is also present.

Misery Main is characterised by varying proportions of coarse-grained olivine-rich RVK and fine-grained olivine-rich RVK. These rock types are irregularly distributed and are observed to be broadly correlated with grade and bulk density. Areas dominated by coarse-grained RVK generally show higher grade and bulk density than those areas that are dominated by fine-grained RVK, but contacts between these zones are gradational and no hard geological boundaries can be defined.

Figure 7-7 is a plan view, and Figure 7-8 is an isometric view of the Misery Main pipe and surrounding satellite bodies.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Figure 7-7: Surface Plan, Misery Pipe

Note: Figure prepared by Dominion. Data used are as at end July, 2016. Grid is as labelled (100 x 100 m). Green outline denotes the East Dyke kimberlite, and the light tan outline is the Misery Southeast kimberlite body.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Figure 7-8: Isometric Cross-Section, Misery Pipe

Note: Figure prepared by Dominion. Data are current as of end July, 2016. Section is looking northwest (296º) with a slight incline (–2º), inset picture shows section line. Red = Southwest Extension, blue = Main Pipe, green = South Pipe, dark grey = pit outline as of end January 2015, silver–grey = final pit design, drill hole traces are coded by drill hole type, green = RC, red = core. Elevation is as labelled (50 m spacing).

   
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Northwest Territories, Canada
NI 43-101 Technical Report

  7.3.4.2.

Misery South and Misery Southwest Extension

Mineral Services were retained to perform an updated Mineral Resource estimate for the Misery South and Misery Southwest Extension areas. Information from that work is summarized in this section.

Integration of new drilling information acquired in 2014 with existing data has resulted in revisions to previous model assumptions. The new data indicate that there is no support for a geological boundary between Misery South and Misery Southwest Extension. For the purposes of reporting Mineral Resources, however, a geographic boundary has been placed in the approximate location of the contact in the previous model and used to subdivide the internal geological domains. The boundary between the Misery Southwest Extension and the Misery Main pipe remains not well determined or understood. Figure 7-9 provides a section through the current model for Misery South and Misery Southwest Extension.

Due to the geological complexity observed in the Misery South and Misery Southwest Extension drill cores, the various kimberlite and country rock units have been composited into three geological domains for the purpose of three-dimensional modelling: domains K2, K5 and K7 constitute the main infill material within the Misery South and Misery Southwest Extension, and each consists mainly of kimberlite units KIMB2, KIMB5, and KIMB7, respectively.

KIMB2 is a dark brown, massive, very fine to fine grained variably mud- or olivine-rich RVK that is characterized by the variable presence of large sediment xenoliths of mainly grey–tan siltstone. KIMB5 (encompassing variants KIMB5A and KIMB5B) is dark grey, diffusely very thickly bedded, fine to medium grained and variably olivine-rich. Texturally, the majority of KIMB5A is classified as possible PK, whereas KIMB5B is assigned to RVK. KIMB7 (encompassing variants KIMB7A and KIMB7B) is grey-brown, variably bedded, fine to medium grained and variably olivine-rich. KIMB7A is well bedded and comprised entirely of olivine-rich and very olivine-rich RVK. KIMB7B is diffusely bedded or massive and comprised of less olivine-rich RVK and mud-rich RVK. Of the kimberlite units identified in Misery South and Misery Southwest Extension to date, KIMB7 is the most comparable to the main infill material in the Misery Main pipe.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Figure 7-9: Three-Dimensional Geological Models of Misery Main, South and Southwest Extension

Note: Figure prepared by Dominion. Data used are current as at end July, 2016. Inclined views to the (a) northwest and (b) southeast of the Misery South and Misery Southwest Extension geological model showing internal geological domains K2 (green), K5 (dark blue), K7 (brown), RFW+XENO (yellow) and NoGeol (pink) in relation to Misery Main (light blue) and the traces of delineation drill holes. The position of the geographic divide between Misery South and Misery Southwest Extension is also shown (red vertical dashed line).

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Large (>1 m drill intercept) country rock xenoliths interpreted to occur within the body have been included in these domains. Each domain additionally contains minor amounts of uncorrelated kimberlite (denoted as “requires further work”, or RFW).

A fourth domain (RFW+XENO) was defined to represent a volumetrically minor zone in which RFW and country rock xenoliths appear to be concentrated, representing a greater degree of complexity and dilution than apparent in the surrounding K7 domain. The previous extent of the lower ‘no geology’ zone has been reduced in the updated model; the significantly reduced upper ‘no geology’ zone has been included in the K7 domain.

  7.3.4.3.

Other Kimberlite Bodies in the Misery Area

Misery Northeast is a small steep-sided pipe that plunges steeply towards the northeast (refer to Figure 7-8). A single drill hole through the centre of the pipe intersected a variably olivine-rich RVK unit as well as several large mudstone xenoliths and thin intervals of coherent/pyroclastic kimberlite.

The limited information available for Misery Southeast suggests a pipe and sheet complex comprised of VK and MK. The MK is texturally similar to that observed in the other satellite intrusions and appears to occur as a series of sub-horizontal and steeply dipping sheets likely emplaced prior to the pipe. No internal domains have been differentiated in Misery Southeast to date.

The remaining bodies, including the East dyke, appear to consist entirely of macrocrystic magmatic kimberlite and are interpreted to be small precursor intrusions. Available evidence suggests that the magmatic bodies form dykes and small plugs that appear to trend outwards from a focal point co-incident with the Misery Main pipe. None of the bodies transect Misery Main or Misery South/Misery Southwest Extension, suggesting that they probably pre-date these pipes.

7.3.5

Pigeon

The Pigeon kimberlite pipe is located 5 km northwest of the Koala pipe. The Pigeon kimberlite occurs along a regional, transitional lithological contact between syn-tectonic granitoid rocks and Yellowknife Supergroup metasedimentary rocks that runs in a southeast–northwest orientation (Kjarsgaard, 2001). Two parallel diabase dykes intrude in a north–south direction adjacent to the Pigeon pipe. The pipe is overlain by anomalously thick (up to 30 m) rolling ground moraine, composed of boulders, gravel with lesser sand and silt.

   
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Pigeon is estimated at approximately 3.5 ha at surface (275 m by 140 m) and is a steep-sided pipe. It is oblong along a northwest to southeast axis and is referred to as having a south lobe and north lobe.

The Pigeon pipe contains four kimberlitic domains:

 

Upper Crater (UC) domain: a thick sequence of mud-rich, variably olivine-rich, lithic RVK;

   
 

Lower Crater (LC) domain: texturally-complex VK characterised by variable alteration and a high proportion of granitoid country rock xenoliths with minor amounts of mud and shale;

   
 

Magmatic domain (MK): texturally complex rocks with both magmatic and volcaniclastic textures and variable dilution with common granitoids and extremely rare mud and shale. In general it is a massive MK consisting of olivine macrocrysts and phenocrysts in a dark, very fine grained crystalline matrix;

   
 

Intrusive South Crater (SC) domain: located along the southernmost portion of the pipe and characterised by massive, fine grained autolithic MK with low abundance of olivine macrocrysts and with conspicuous fragments of diabase xenoliths. This unit was not sampled for grade but it is considered to have low diamond-carrying capacity due to unfavourable geochemistry and microdiamond results.

There is a distinct but variable zone of wall rock xenoliths extending from the base of the Upper Crater domain to the top of the Magmatic domain.

Figure 7-10 is a deposit plan view, and Figure 7-11 is an isometric view of the Pigeon kimberlite pipe illustrating the morphology of the deposit.

   
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Northwest Territories, Canada
NI 43-101 Technical Report

Figure 7-10: Plan View, Pigeon Pipe

Note: Figure prepared by Dominion. Data are current as at end July, 2016. Grid is as labelled (100 x 100 m). Wall rock contacts change gradually; the pale blue line represents the change from almost 100% metasediments to granite mixed with metasediment. Drill hole traces are coded by drill hole type, green = RC, red = core.

   
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Northwest Territories, Canada
NI 43-101 Technical Report

Figure 7-11: Isometric Cross Section, Pigeon Pipe

Note: Figure prepared by Dominion. Data are current as at end July, 2016. The section looks northeast (36º) with a slight incline (–15º). Grey = pit outline. Drill hole traces are coded by drill hole type, green = RC, red = core. Green = Upper Crater, purple = Lower Crater, pale blue = Magmatic Kimberlite, yellow = Xenoliths. Elevation is as labelled (50 m spacing).

   
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7.3.6

Sable

The Sable kimberlite pipe is located approximately 16 km northeast of the Ekati process plant complex.

The Sable pipe is hosted by Archean two-mica granite. Linear magnetic features have been observed under and adjacent to Sable Lake and are interpreted to be mafic dykes. The pipe lies under Sable Lake and is covered by water and boulder- and gravel-dominated glacial till overburden.

The pipe sub-surface area is approximately 2 ha and the pipe has surface dimensions of 180 m by 140 m. It has an irregular triangular outline in plan view and a steep-sided vase shape; the pipe at approximately 200 m below surface is wider (2.4 ha) than the top or bottom of the model.

The Sable kimberlite contains two main VK lithologies:

  Olivine-rich RVK (ORVK): massive, matrix-supported, kimberlite with less than 30% fine- to medium-grained olivine, scattered mudstone clasts, rare small granite xenoliths and common wood fragments set in a dark, fine-grained matrix dominated by mud;
     
  Very olivine-rich VK (vOVK): clast-supported, very olivine-rich VK with common mudstone clasts, scattered granite xenoliths and carbonised wood fragments. Olivine content commonly exceeds 50% and due to the significantly lower proportion of muddy matrix material, the kimberlite is generally pale to dark greenish-brown/grey in colour.

Kimberlite intersections have been assigned to two major domains based on drill core observations. An Upper Crater domain is characterised by a significant proportion of ORVK. This kimberlite type generally dominates the upper portion of the kimberlite with increasing amounts of interbedded pale vOVK occurring with depth. The Lower Crater domain is dominated by vOVK, with the presence of scattered large (4 to 15 cm) granite xenoliths. The domain boundary is currently defined at the point below which matrix supported ORVK becomes an insignificant component.

Figure 7-12 is a plan view and Figure 7-13 is an isometric view of the Sable kimberlite pipe.

   
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Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Figure 7-12: Plan View, Sable Pipe

Note: Figure prepared by Dominion. Data are current as at end July, 2016. Grid is as labelled (100 x 100 m). Wall rock is predominantly two–mica granite. Drill hole traces are coded by drill hole type: green = RC, red = core

   
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Northwest Territories, Canada
NI 43-101 Technical Report

Figure 7-13: Isometric Cross-Section, Sable Pipe

Note: Figure prepared by Dominion. Data are current as at end July, 2016. Section is looking north (northing 7192970) with a slight incline (–11º). Brown = layer of overburden, grey = pit design, green = Sable Pipe. Drill hole traces are coded by drill hole type, green = RC, red = core. Elevation is as labelled (100 m spacing).

   
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7.3.7

Jay

The Jay kimberlite pipe is located in the southeastern corner of the property, about 25 km southeast of the Ekati main camp, and about 7 km north–northeast of the Misery Main pipe.

The Jay pipe is hosted within granitic rocks, ranging from granite to granodiorite in composition. A regional contact with meta-sedimentary rocks occurs to the west, and a diabase dyke trending approximately east–west occurs to the north of the pipe. Regional structures interpreted from geophysics extend east–west to the north of Jay and north–south to the west of Jay. The east–west structure to the north of Jay is partly associated with the diabase dyke; however, other zones of increased jointing have also been recognised in two core holes. The north–south structure is associated with the metasediment–granite contact.

The pipe is under Lac du Sauvage, overlain by about 30 m of water and 5 to 10 m of overburden.

The plan surface area of Jay is approximately 13 ha, and it has an extent of 375 m by 350 m. Jay has a roughly circular outline in plan view and a steep-sided vase shape. The sides of the pipe are interpreted to be roughly planar with minor concavities and bulges. The shape, particularly the north side, is believed to be coincident with geological structures.

The pipe is divided into the following three domains:

  Resedimented volcaniclastic kimberlite (RVK): uppermost 110 to 170 m in stratigraphic thickness. Small-scale chaotic bedding is present which is defined by waves of silty to sandy laminates, and variations in olivine abundance. Variable amounts and sizes of black-, pale grey-, blue–grey-, blue–green-, brown-, and tan- coloured mudstones and siltstone xenoliths are present. Rare shale breccia is present. The olivine content of the RVK appears to increase with depth;
   
  Transitional Kimberlite (MIX): 20 to 70 m thick package of interbedded RVK and volcaniclastic kimberlite (VK) material with varying degrees of alteration. The transition from RVK to MIX is indistinct and is marked by the appearance of small interbeds of fresh to highly altered, dark to pale coloured VK;
   
  VK: Primarily olivine-rich, competent, grey-blue to green volcaniclastic kimberlite with partially altered olivine set in a serpentinised matrix. The upper contact of the VK domain is marked by the absence of RVK and presence of highly-altered, pale- coloured VK material. Small, irregularly shaped, mudstone and granitic xenoliths are present, but decrease in abundance with depth.

   
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These domains are sub-horizontal and are interpreted to extend the width of the pipe. Boundaries between the domains are transitional in nature.

Figure 7-14 is a plan view, and Figure 7-15 is an isometric view of the Jay kimberlite pipe.

   
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Figure 7-14: Plan View, Jay Pipe

Note: Figure prepared by Dominion. Data are current as at end July, 2016. Grid is as labelled (100 x 100 m). Drill hole traces are coded by drill hole type: black = RC, red = core.

   
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Figure 7-15: Isometric Cross-Section, Jay Pipe

Note: Figure prepared by Dominion. Data are current as at end July, 2016. Section is looking east (easting 542335) with a slight incline (–15º). Colour key: purple = RVK, green = mix zone (RVK and VK), blue = VK, grey = stage 1 pit, dark blue-grey = stage 2 pit. Drill hole traces are coded by drill hole type: green = RC, red = core. Elevation is as labelled (100 m spacing)

   
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7.3.8

Lynx

The Lynx kimberlite pipe occurs in the southeastern portion of the Ekati property about 30 km from the Ekati main site facilities and approximately 3 km to the southwest of the Misery pipe.

The Lynx pipe is hosted by two-mica granite. The area immediately surrounding the Lynx pipe is transected by numerous probable diabase dykes, one of which runs very close to the northwestern margin of the pipe. The pipe lies within a small lake and is covered by approximately 18 to 30 m of water as well as boulder- and gravel-dominated glacial till that is 10 to 17 m thick.

The Lynx pipe has an elongated, steep-sided pipe morphology. In plan, the pipe is roughly tear-shaped (approximately 0.7 ha surface area, 150 m by 65 m) with the narrow portion of the pipe extending towards the west. The available drill data suggest that the more voluminous eastern portion of the pipe tapers inwards sharply.

The pipe is divided into an upper RVK domain and lower PVK domain. Drilling undertaken to date suggests that the PVK domain forms a steeply dipping wedge underlying the RVK domain, and extends up into the eastern portion of the pipe.

The RVK domain is dominated by olivine-rich RVK with 15 to 50% partially altered to fresh medium- to coarse-grained olivine macrocrysts set in a dark, mud-like matrix. Also present are minor amounts of small (generally less than 2–3 cm) grey to black mudstone clasts; between 1 and 3% rounded, fresh granite xenoliths ranging from approximately 1–10 cm; and occasional wood fragments. Lesser amounts of olivine-poor RVK (similar to above, but with less than 15% olivine) and minor interbedded epiclastic kimberlite are also present.

The PVK domain consists of very olivine-rich PVK which contains between 40% and 70% coarse-grained, fresh to altered, olivine macrocrysts set in a microcrystalline, serpentine-dominated matrix. Other components include relatively abundant rimmed magma clasts, autoliths of RVK (1–5%), and common granite xenoliths (5–15%).

Figure 7-16 is a plan view and Figure 7-17 is an isometric view of the Lynx kimberlite pipe.

   
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Figure 7-16: Plan View, Lynx Pipe

Note: Figure prepared by Dominion. Data are current as at end July, 2016. Light grey = Stage 1 pit design, dark grey = Stage 2 pit design. Drill hole traces are coded by drill hole type: green = RC, red = core. Blue = Lynx Pipe. Grid is as labelled (100 x 100 m).

   
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NI 43-101 Technical Report

Figure 7-17: Isometric Cross-Section, Lynx Pipe

Note: Figure prepared by Dominion. Data are current as at end July, 2016. Section is looking north (northing 7158110) with a slight incline (–6º). Light grey = Stage 1 pit design, Dark grey = Stage 2 pit design. Drill hole traces are coded by drill hole type, green = RC, red = core. Blue = RVK, green = PVK. Elevation is as labelled (100 m spacing).

   
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7.4

Mineralogy

Ekati kimberlite is predominately volcaniclastic and epiclastic material. The mineralogy is relatively simple with olivine and serpentine comprising approximately 60–70% of the rock. The following summary of the typical mineralogy is primarily based on studies completed at Panda and Koala:

Serpentine – Mg3Si2O5(OH)4: Serpentine typically occurs as very fine-grained (<0.01 mm), grey or brown, massive to acicular aggregates in the fine-grained kimberlite matrix. It is also a common alteration product of olivine (see below);

   

 

Olivine – (Mg,Fe)2SiO4: Olivine is typically highly fractured and varies in size from 0.1 mm to as large as 20 mm in diameter. In mud rich RVK, olivine may be altered to serpentine. Electron microprobe analysis of olivine from kimberlite shows these to be forsteritic (MgSiO4) in composition, with MgO contents placing these in the Fo90 to Fo94 range. Olivine is the primary host of the Ni found in kimberlites (typically contains between 0.2 and 0.3 wt% Ni);

   

Oxides: The oxides within the kimberlite are found within the fine-grained matrix and are approximately 1 to 10 µm in diameter. They are usually minerals that belong to the perovskite, ilmenite and various spinel groups and contain varying amounts of Ca, Ti, Mg, Fe, Al, and Mg;

   

 

Phlogopite – K2Mg6Si6Al2O20(OH)4: Phlogopite is the only primary mica mineral found within the kimberlite. The crystals are long thin tabular and commonly kinked. Concentrations are typically in less than 5%. When altered, phlogopite commonly breaks down to clays and chlorite;

   

 

Pyroxene – (Mg,Ca,Fe)2Si2O6: Two varieties of pyroxene may occur, chrome diopside (a Ca and Mg-rich clinopyroxene) and enstatite (a Ca-poor, Mg-rich orthopyroxene). Both of these are mantle-derived xenocryst minerals with clinopyroxene being a minor component and orthopyroxene a very rare component of the kimberlite. Cr-diopside is characterised by a distinctive apple-green colour and is by far the dominant pyroxene in kimberlite. Enstatite is pale green, and alters easily to serpentine and other clay minerals;

   

 

Garnet – (Mg,Fe,Ca)3(Al,Cr)2Si3O6: Garnet, also a mantle derived xenocryst mineral, is one of the key mineral indicators for kimberlite but it makes up very low percentage of samples usually less than 5%. It occurs as highly fractured grains with a wide range in colour including red, purple, pink, orange and colourless varieties. The garnets may be partially to completely altered, and most have kelyphitic rims as a product of the alteration. Three main garnet varieties are present: Cr-rich pyrope of peridotitic origin; Cr-poor eclogitic/websteritic pyrope; and Cr-poor to moderately Cr-rich megacryst pyrope. Peridotitic garnet typically dominates, with eclogitic/websteritic and megacryst varieties generally being significantly less abundant.


   
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  Calcite – CaCO3: Calcite is one of the primary components of the groundmass material within the pelletal and juvenile lapilli found within the kimberlite. Typical concentrations of calcite vary from 2.5 to 5.0 wt%;
   
  Sulphide and sulphate: Sulphide (and/or sulphate) minerals are typically restricted to the mud xenoclast phases and muddy matrix in kimberlite. They are present as very fine grained framboidal grains ranging in size from 0.5 µm to 10 µm in diameter. Energy dispersive spectrometric analysis (EDS) indicates that the likely sulphate phase is gypsum or anhydrite. Comparative sulphide studies between mud xenoliths and the kimberlite ore, reveal that the latter had lower sulphide (0.21 wt%) and sulphate (0.14 wt%) content as compared with the former (2.54 wt% and 0.27 wt%, respectively);
   
  Clay mineralogy: Clay is a dominant component of mud-rich RVK where it occurs both as an alteration product, and as fine-grained argillaceous material originally derived from surface sediments (mud) that were incorporated into the kimberlite. X-ray diffraction (XRD) analysis indicates that the clays are dominated by smectite- group minerals.

7.5 Comments on Geological Setting and Mineralization

In the responsible QPs’ opinion, the geological understanding of the settings, lithologies, structural and alteration controls on kimberlite emplacement, and kimberlite continuity and geometry in the different pipes is sufficient to support estimation of Mineral Resources and Mineral Reserves.

   
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8.0 DEPOSIT TYPES

This section provides a generalised description of kimberlite diamond deposits, outlining the geological and mineralisation model that formed the basis for kimberlite exploration and evaluation work at Ekati. The content is derived from a Mineral Services memorandum to Dominion (Mineral Services Canada, 2013).

The primary source rocks for diamonds that are presently being mined worldwide are Group 1 and Group 2 kimberlites and lamproites (Levinson et al., 2002). Of these rocks, Group 1 kimberlites represent the vast majority of primary diamond deposits that are presently being worked, and the Ekati Diamond Mine is one such example.

Kimberlites are mantle-derived ultramafic magmas (>150 km depth) that transport diamonds together with the rocks from which the diamonds are directly derived (primarily peridotite and eclogite) to the earth’s surface (e.g. Mitchell, 1986; Mitchell 1995). They are considered to be hybrid magmas comprising a mixture of incompatible-element enriched melt (probably of carbonatitic composition) and ultramafic material from the lower lithosphere that is incorporated and partly assimilated into the magma (Russell et al., 2012).

The products of direct crystallisation of Group 1 kimberlite magma (referred to as coherent or magmatic kimberlite) are typically dominated by olivine set in a fine-grained matrix commonly rich in serpentine and/or carbonate as well as varying amounts of phlogopite, monticellite, melilite, perovskite and spinel (chromite to titanomagnetite) and a range of accessory minerals (Mitchell, 1995). While some olivine crystallises directly from the kimberlite magma on emplacement (to form phenocrysts), kimberlites generally include a significant mantle-derived (xenocrystic) olivine component that typically manifest as large (>1 mm) rounded crystals. In addition to olivine, kimberlites also commonly contain significant quantities of other mantle-derived minerals, the most common and important being garnet, Cr-diopside, chromite and ilmenite. These minerals, commonly referred to as indicator minerals, are important for kimberlite exploration and evaluation as they can be used both to find kimberlites (by tracing indicator minerals in surface samples) and to provide early indications of their potential to contain diamonds (Nowicki et al., 2007; Cookenboo and Grütter, 2010).

The texture and components observed in coherent kimberlites can be substantially modified by dilution with wall-rocks or surface sediments, as well as by sorting and elutriation (removal of fines) processes occurring in volcanic environments (Mitchell, 1986; Nowicki et al., 2008; Scott Smith and Smith, 2009).

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

 

Characteristics of the magma (volatile content, viscosity, crystal content, volume of magma, temperature etc.);

   
 

Nature of the host rocks (i.e. unconsolidated mud vs. hard granite);

   

 

 

The local structural setting;

   

 

 

The local and regional stress field;

   

 

 

The presence of water.

Kimberlites at surface are manifested as either sheet-like intrusions (dykes or sills) or irregular shaped intrusions and volcanic pipes. The sheets and irregular intrusions are typically emplaced along pre-existing planes of weakness in the country rock, and do not involve explosive volcanic activity. The pipes are generated by explosive volcanic activity related to the degassing of magma, or the interaction of mama and water, or a combination of both these processes (e.g. Mitchell, 1986; Lorenz et al, 1999; Sparks et al, 2006).

Due to the wide range of settings for kimberlite emplacement, as well as varying properties of the kimberlite magma itself (most notably volatile content), kimberlite volcanoes can take a wide range of forms and be in-filled by a variety of deposit types (e.g. Scott Smith, 2008).

Volcanic kimberlite bodies range in shape from steep-sided, carrot-shaped pipes (diatremes) to flared champagne-glass or even “pancake” like crater structures. While diatremes are often interpreted to generally be overlain by a flared crater zone, there are a few instances where both zones are preserved (e.g. the Orapa kimberlite in Botswana; Fox kimberlite at Ekati). These volcanic structures are infilled by a very wide range of volcaniclastic kimberlite types, ranging from massive, minimally texturally modified pyroclastic kimberlite, to highly modified pyroclastic and resedimented volcaniclastic deposits that have been variably affected by dilution, sorting, and removal of fines (e.g. Field and Scott Smith, 1999; Nowicki et al., 2004; Skinner and Marsh, 2004).

The Ekati kimberlites are primarily steep-sided volcanic pipes that are mostly filled with volcaniclastic material interpreted to be resedimented and lesser primary volcaniclastic (pyroclastic) kimberlite (Nowicki et al., 2004). While narrow hypabyssal kimberlite dykes are present, these are not volumetrically significant. These mostly appear to predate kimberlite and are commonly transected by the volcanic pipes. Coherent kimberlite is present in some pipes either as late stage intrusive material emplaced into volcaniclastic kimberlite (e.g. Koala), or as large pipe-filling bodies (e.g. Leslie; Grizzly).

   
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Kimberlites commonly show physical property contrasts with the rocks into which they are emplaced. As a result, in most cases, kimberlites generate geophysical anomalies that can be detected by airborne and ground geophysical surveys (e.g. Macnae, 1995). Properties that are most relevant in kimberlite exploration are magnetic susceptibility, electrical conductivity and specific gravity.

Diamonds also represent a xenocryst mineral within kimberlite as they are primarily formed and preserved in the deep lithospheric mantle (depths > ~150 km), generally hundreds of millions to billions of years before the emplacement of their kimberlite hosts (Gurney, 1989). The diamonds are “sampled” by the kimberlite magma and transported to surface together with the other mantle-derived minerals described above. Diamonds themselves occur in such low concentrations (even in economic kimberlites) that they are rarely useful for locating kimberlites and, following discovery, large samples are required in order to directly assess the diamond grade potential of a kimberlite (e.g. Rombouts, 1995; Dyck et al., 2004).

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

The overall concentration of diamonds in a kimberlite unit or domain is dependent on several factors (Nowicki et al., 2007), including:

  The extent to which the source magma has interacted with and sampled potentially diamondiferous deep lithospheric mantle;
     
  The diamond content of that mantle (diamonds are only present locally and under specific pressure temperature conditions in the mantle);
     
  The extent of resorbtion of diamond by the kimberlite magma during its ascent to surface and prior to solidification;
     
  Physical sorting and/or winnowing processes occurring during volcanic eruption and deposition;
     
  Dilution of the kimberlite with barren wall-rock material or surface sediment (in the case of crater deposits).

   
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At Ekati, the extent of mantle sampling, the degree of dilution by wall-rock and surface sediments and volcanic sorting processes are considered to be the main factors controlling variation in total diamond grade. The diamond size distribution characteristics are inherited from the original population of diamonds sampled from the mantle but can be affected by a number of secondary processes, including resorbtion and sorting during eruption and deposition of volcaniclastic kimberlite deposits.

The physical characteristics of the diamonds are largely inherited from the primary characteristics of the diamonds in their original mantle source rocks but can be affected by processes associated with kimberlite emplacement and eruption (e.g. Gurney et al., 2004). Most notable of these are:

  Formation of late stage coats of fibrous diamond either immediately prior to or at the early stages of kimberlite emplacement;
   
  Chemical dissolution (resorbtion) by the kimberlite magma resulting in features ranging from minor etching to complete dissolution of the diamonds;
   
  Physical breakage of the diamonds during turbulent and in some cases explosive emplacement processes.

8.1

Comment on Deposit Type

In the opinion of the responsible QPs, the Ekati kimberlites are considered to be examples of a Group 1 kimberlite deposit and display most of the typical features of Group 1 kimberlite pipes. Based on this model, the exploration programs completed to date are appropriate to the mineralization style and setting.

With reference to the generalised deposit model and characteristics of the mineralisation described in this section, the aim of the exploration and evaluation work documented in this Report is, and has been, to:

  1.

Undertake indicator mineral sampling of surface materials (primarily esker and till deposits) to detect the presence and track down the location of kimberlite bodies;

     
  2.

Implement airborne and ground-based magnetic, electromagnetic and gravity surveys to locate kimberlites;

     
  3.

Drill test and adequately sample each body for petrography, indicator minerals and diamonds, and analyse and interpret the results from these samples to confirm the presence of kimberlite and support prioritisation of kimberlites for advanced evaluation work;


   
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  4.

Delineate and interpret the external and internal geology of prioritised deposits so that three-dimensional (3D) models can be produced that reliably represent each body;

     
  5.

Evaluate prioritised kimberlites by means of bulk sampling and processing to recover diamonds for estimation of the grade and average diamond value of the main geological domains present.


   
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9.0

EXPLORATION

This section contains a summary of the information on the exploration programs conducted that were described in more detail in Heimersson and Carlson (2013). The reader is referred to this earlier technical report for additional program details.

9.1

Grids and Surveys

The UTM Nad83 Zone 12N is the basis for all survey data. The digital elevation model (DEM) was interpolated from 1 m, 2 m and 5 m contour data from an airborne survey flown in 2002 by Eagle Mapping.

9.2

Mapping


9.2.1

Surface Mapping

Bedrock mapping of the Ekati property and surrounding area was undertaken by the Geological Survey of Canada between 1994 and 2001 (Thomason and Kerswill, 1994; Kjarsgaard et al., 1994a, b; Kjarsgaard et al., 1999; Kjarsgaard, 2001). The resultant maps were augmented and modified by Ekati geologists based on airborne magnetic data (e.g. Kirkley, 1994).

Helmstaedt (2002) undertook a detailed review, compilation, and interpretation of previously published and internal Ekati geological work in the area and integrated this with high-resolution aeromagnetic data to provide an updated bedrock map of the Ekati property. A simplified version of this map is presented in Figure 7-2 in Section 7.

A detailed geomorphology map (1:10,000) of glacial overburden material was compiled by Mr. Roger Thomas during 2000. A simplified version of this map is included as Figure 9-1. The geomorphology map was used in combination with field observations to interpret heavy mineral sampling results.

   
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Figure 9-1: Simplified Geomorphology Map

   
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9.2.2

Mine Mapping

As each bench is exposed in the open pits, kimberlite/wall-rock and internal domain contacts are geologically mapped and surveyed. Specific geological information, such as olivine and granite content is collected as indicators of grade. Open pit wall mapping is done with a photogrammetry system. This allows large sections of wall to be photographed, and imported into Vulcan for processing of structural features.

During underground mining all major structures are mapped for geotechnical purposes as new levels are developed. This allows continuous updates of the fault and hydrological models and highlights any changes in discontinuity sets or rock competency. Within the kimberlite, development headings are visited regularly in order to maintain a record of kimberlite contacts, lithologies, physical properties, hydrology and relative grade.

9.3

Geochemical Sampling

The early stages of exploration for diamonds in the Northwest Territories consisted of territory-wide regional heavy mineral sampling from fluvial and glaciofluvial sediments on a scale of tens of kilometres (Fipke et al., 1995).

Property-wide (Core Zone and Buffer Zone) heavy mineral till sampling programs were carried out through the summers of 1990, 1991 and 1992, and nearly 6,000 till samples were collected. A total of approximately 15,000 till samples were taken across the Core Zone and Buffer Zone properties during the project exploration phase until exploration ceased in 2007.

Till samples were also used to prioritise airborne geophysical anomalies for drilling by collecting till samples at 250 m intervals along lines perpendicular to the dominant ice flow direction. The extent and chemistry of the indicator minerals dispersion trains were evaluated and used in combination with ground geophysical surveys to pinpoint drill targets.

9.4

Geophysics


9.4.1

Airborne Geophysical Surveys

Initial ground geophysical test surveys pinpointed the kimberlite target under Point Lake and prompted the flying of the entire property with helicopter-borne total field magnetics (TFM), electromagnetics (EM) and very low frequency electromagnetics (VLF). These programs were instrumental in detecting possible kimberlite pipes and in prioritising anomalies for diamond drilling. Table 9-1 summarizes the airborne programs completed on the Ekati property.

   
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Table 9-1: Airborne Geophysical Surveys

Year Program Contractor Details Comments
1991 to 1993 Helicopter- borne EM, TFM and VLF surveys DIGHEMV Core Zone and Buffer Zone; 125 m line spacing; 30 m EM bird height. High- sensitivity cesium vapour magnetometer and VLF EM system. Magnetometer sensor was towed in a bird that was 15 m above the EM bird and 10 m below the helicopter The majority of the significant kimberlite pipes in the Ekati mine plan were targeted in 1992 through to 1994 using these data
1996 TFM Minimag system High Sense Geophysics Property wide, 75 m line spacing, east-west flight lines, nominal 20 m agl sensor height. Beartooth kimberlite was identified in 1996. Twenty additional kimberlites were drill confirmed in 1998.
1999 to 2000 Helicopter- borne EM, TFM and VLF surveys DIGHEMV Magnetometer installed inside the EM bird, and with GPS navigation and positioning technology. 100 m line spacing and 25 m bird spacing. Numerous kimberlite discoveries, of which the most significant attributable to the survey was the Lynx kimberlite
2000 Airborne gravity gradiometer Sander Geophysics Property-wide, fixed wing survey, east-west flight lines. Gravity gradient anomalies typically reflected bedrock density contrasts as well as changes in overburden thickness. Known kimberlite pipes were mostly detected by the system and a few new anomalies were drilled and confirmed as kimberlite
2006 Falcon helicopter survey Fugro This system included a gravity gradiometer, a horizontal gradient pair of magnetometers, and high resolution Resolve EM coils. The survey line direction was north–south, except for a few smaller blocks which were flown using east–west oriented survey lines. The line spacing was 50 m. The nominal flying height was 60 m. A wide variety of geophysical images were produced including digital elevation model, total magnetic intensity, first vertical derivative of total magnetic intensity, vertical gravity gradient, Fourier gravity grids, and Resolve co-planar at various frequencies (in-phase and quadrature responses). A number of targets were identified on the Central, Misery, Sable and other smaller blocks

   
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9.4.2

Ground Geophysical Surveys

Ground geophysics including TFM, EM (mostly horizontal loop EM), gravity, ground penetrating radar, bathymetry, and limited seismic surveys were used to enable more precise kimberlite/non-kimberlite target discrimination and estimates of pipe size.

Ground geophysical surveys were completed on the majority of the drill targets and were completed on all of the pipes with reported Mineral Resource estimates.

The airborne and ground survey results were used in combination to improve target resolution while retaining the regional geophysical context.

9.4.3

Core Hole Seismic Surveys

A limited core hole seismic survey was conducted by Vibrometric in January 2005 for the Koala pipe volume. Two underground boreholes were used as a test for the geophysical delineation of kimberlites. The aim of the technique was to obtain the most spatial information about the Koala pipe geometry possible from drill holes.

However, a full seismic program was not completed; some of the planned survey holes were blocked at shallow depths, replacement of a lost receiver string in a hole directly impacted the program budget, and a desire to keep the drill program schedule on target contributed to the cancellation of the program.

The limited data proved that the borehole seismic technique can augment drill hole pierce points with seismically-determined pipe wall contacts. Additional evaluation in the use of core hole seismic surveys may be warranted for delineation of large pipes.

9.5

Petrology, Mineralogy, and Research Studies

Extensive geoscientific research work has been undertaken on the Ekati property and samples derived from the Ekati Project area. This research covers a wide range of topics and disciplines including kimberlite geology and petrology, mantle petrology, diamonds, geochronology, palynology and paleontology, resource estimation and mining.

Many of the key publications on the Ekati Project are found in the proceedings of the 8th and 9th International Kimberlite Conferences (Mitchell et al., 2004; Foley et al., 2009).

   
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9.6

Exploration Potential

There has been no exploration of the Ekati Project area for new kimberlites since 2007.

In most cases, individual kimberlite pipes were discovered based on coincident geophysical anomalies (magnetic and electromagnetic), with varying support from indicator mineral dispersion features. With the exception of a few outcropping kimberlites, initial discovery was via core drilling. In most cases, the discovery and initial exploration holes either drilled vertically from the frozen ice surface, or were angled and offset from the pipe, thereby generally providing initial pierce points. These, together with information on the pipe outline derived from geophysical data, provide an initial indication of the size of the body and supported first-pass estimates of potential kimberlite tonnages.

Kimberlite indicator mineral (KIM) compositions played a significant role in the successful exploration program that led to the development of the Ekati Mine. After discovery of the first kimberlite at Point Lake, which was followed by the subsequent identification of over 150 kimberlite bodies within the Ekati joint venture claim areas, the use of KIM geochemistry was adopted to prioritize likely high grade phases for follow-up bulk sampling and/or diamond drilling programs.

The method involves selecting representative samples, largely from diamond drill core material, and recovering a full suite of KIM’s from each sample, in such a way as to eliminate selection bias. The recovered grains (garnet, chromite, ilmenite, clinopyroxene) were analyzed by electron microprobe for major elements and by inductively-coupled plasma mass spectrometry (ICPMS) for nickel.

The Mantle Mapper software, developed by Mineral Services, incorporates a scoring system that rates the potential for each of the two main diamond paragenesis found in kimberlites, i.e. peridotitic and eclogitic. The scoring system is based on the abundance of specific compositional varieties of garnet and chromite known to be associated with diamonds, refined by consideration of thermal information derived from nickel thermometry in conjunction with mantle geotherms based on peridotite xenolith and clinopyroxene thermobarometry. The Mantle Mapper data and scores were presented in an integrated format for final expert review and classification of each sample as A, B, C or D, reflecting the range from forecast high grade to essentially barren diamond content.

Concurrently with the KIM investigation, microdiamonds were recovered from separate samples of the same kimberlite units sampled for KIMs. Recovered diamonds were weighed and described, and samples were ranked based on the abundance, size distribution and quality of diamonds. In addition, the kimberlite units were described petrographically in terms of a carefully defined set of criteria to provide information on diamond carrying capacity. These assessments, along with other relevant economic factors such as size, location and internal geology, were integrated into overall prospectivity assessments.

   
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Northwest Territories, Canada
NI 43-101 Technical Report

Subsequent bulk sampling confirmed the validity of this approach. Of the kimberlite pipes that have been mined out (e.g. Panda, Fox open pit, Koala North, and Beartooth) or are currently being mined (e.g. Koala, Pigeon, and Misery), all economic units are categorised as A-rated or B-rated phases. A number of other pipes on the property with estimated Mineral Resources (e.g. Lynx, Sable, and Jay) also are uniformly categorised by strong KIM scores. Other pipes of interest with strong scores included Point Lake, Phoenix, Leslie, Cardinal, Gazelle, Impala and Pegasus. Small bulk samples taken at a few C and D rated kimberlites confirmed very low grades and validated the scoring system.

In addition to contributing to the early stage development of the Ekati Diamond Mine, the approach outlined in this contribution demonstrated at an early stage that some G10 type peridotitic garnets in mantle beneath the Slave Craton are too shallow to be in the diamond stability field, and that the peridotitic/eclogitic diamond source ratio in the kimberlites can vary widely.

Kimberlite pipes were selected for initial bulk sampling primarily based on microdiamond and indicator mineral analyses of the drill core or surface samples. In some cases, pipe perimeter outlines from ground geophysics provided a means for designing RC drill hole patterns to obtain representative initial bulk samples without the need for delineation core drilling.

The bulk samples (typically 50 to 200 t) were processed in a 10 tonne per hour dense media separation plant which was constructed on site.

Table 9-2 summarizes diamond drilling for pipes currently considered to possess exploration potential. Bulk sample results (RC drilling) and summary data of the exploration potential pipes are provided in Table 9-3. Figure 9-3 shows pipe locations.

Sample grades for the exploration pipes range from 0.1 cpt at Falcon East to 2.3 cpt at Piranha. The exploration potential of these pipes is influenced by a number of factors including diamond grade, diamond quality, internal kimberlite geology, pipe size, pipe location, setting and distance to infrastructure. Further work is warranted for a number of the exploration potential pipes, particularly the larger pipes and/or the kimberlites with high sample grades.

   
September 2016 Page 9-7



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Table 9-2: Pipes with Exploration Potential Diamond Drilling

            Total Metres Drilled Maximum Hole Depth
  Pipe Name Joint Venture Year Number of Drill Holes Drill Hole Type (m) (m)
  Point Lake Core Zone 1991 1 NQ core 280 198
  2006 1 NQ core 401 283
  Subtotal 2   681 481
  Phoenix Core Zone 1998 2 NQ core 675 262
  Subtotal 2   675 262
  Leslie Core Zone 1995 2 6” core 410 240
  1996 10 NQ core 2,548 432
  Subtotal 12   2,958 672
  Grizzly Core Zone 1992 1 NQ core 366 259
  Subtotal 1   366 259
  Falcon Core Zone 1992 1 NQ core 268 188
  1993 2 NQ core 523 255
  Subtotal 3   791 443
  Falcon East Core Zone 1993 1 NQ core 275 195
  Subtotal 1   275 195
  Falcon South Core Zone 1993 1 NQ core 327 231
  Subtotal 1   327 231
  Cardinal Buffer Zone 1999 3 NQ core 407 104
  2008 1 NQ core 251 251
  2014 3 NQ core 664 260
  Subtotal 7   1,322 615
  Gazelle Buffer Zone 1995 1 NQ core 328 231

   
September 2016 Page 9-8



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

  Pipe Name Joint Venture Year Number of Drill Holes Drill Hole Type Total Metres Drilled Maximum Hole Depth
            (m) (m)
  1997 1 NQ core 400 283
Subtotal 2   728 514
  Piranha Buffer Zone 1997 9 NQ core 1,621 264
Subtotal 9   1,621 264
  Impala Buffer Zone 2001 1 NQ core 240 184
Subtotal 1   240 184
  Pegasus Buffer Zone 2000 1 NQ core 194 137
2001 3 NQ core 328 119
Subtotal 4   522 256
  Wallaby Buffer Zone 1995 2 NQ core 506 323
1997 1 NQ core 186 186
Subtotal 3   691 323
  Wombat Buffer Zone 1993 1 NQ core 424 424
2000 1 NQ core 287 287
2005 2 NQ core 814 433
Subtotal 4   1,525 433

   
September 2016 Page 9-9



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Table 9-2: Pipes with Exploration Potential Reverse Circulation Drilling

  Pipe Joint Size Sample Sample Type Est. Dry Total Sample Grade De-grit Screen
    Venture (ha) Year   Tonnes Carats (cpt) (mm)
  Point Lake Core Zone 13.0 1992 15 cm RC 160.0 101.0 0.6 1
  2006 35 cm RC 108.9 68.2 0.6 1
  Subtotal 268.9 169.2 0.6 1
  Phoenix Core Zone 1.4 1992 15 cm RC 8.3 15.1 1.8 1
  1999 35 cm RC 106.1 149.2 1.4 1
  Subtotal 114.4 164.4 1.4 1
  Leslie Core Zone 4.0 1993 27 cm RC 152.0 61.7 0.4 1
  1995 27–31 cm RC 679.5 223.6 0.3 0.5
  Subtotal 831.5 285.3 0.3 0.5 to 1
  Grizzly Core Zone 16.0 1993 27 cm RC 20.2 18.0 0.9 1
  1995 31 cm RC 139.0 66.6 0.5 0.5
  Subtotal 159.2 89.4 0.6 0.5 to 1
  Falcon Core Zone 15.0 1994 27 cm RC 280.7 92.7 0.3 1
  Falcon East Core Zone 0.8 1994 27 cm RC 181.2 18.0 0.1 1
  Falcon South Core Zone 1.8 1994 27 cm RC 15.9 17.3 1.1 1
  Cardinal Buffer Zone 0.8 2005 44.45 cm RC 70.8 65.2 0.9 1
  2007 44.45 cm RC 137.2 148.3 1.1 1
  Subtotal 207.9 213.5 1.0 1
  Piranha Buffer Zone 0.2 1999 35 cm RC 87.4 203.4 2.3 1
  Gazelle Buffer Zone 0.6 1999 35 cm RC 240.7 141.4 0.6 1
  Impala Buffer Zone 1.8 2002 35 cm RC 77.5 32.7 0.4 1
  Pegasus Buffer Zone 1.8 2002 35 cm RC 98.4 42.9 0.4 1

   
September 2016 Page 9-10



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Figure 9-2: Exploration Potential Map


   
September 2016 Page 9-11



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

9.7

Comments on Exploration

   

In the opinion of the responsible QPs, the exploration programs completed to date are appropriate to the style of the kimberlite pipes within the Ekati Project. Significant exploration potential remains in the Ekati Project area, with 14 kimberlite pipes identified as potentially warranting additional evaluation.


   
September 2016 Page 9-12



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

10.0

DRILLING

 

Drilling completed on the Ekati Project between 1991 and 31 July 2016 is summarized, by pipe, in Table 10-1. Drilling includes 1,389 core holes (254,490 m), 111 sonic drill holes (2,596 m) and 513 RC holes (106,547 m).

 

A drill collar location map is included for the Ekati Project area (includes discovery drill holes and all follow-up drilling through 31 July 2016) as Figure 10-1, and an inset for the areas of much closer-spaced drilling is included in Figure 10-2.


   
September 2016 Page 10-1



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

Table 10-1: Drill Summary Table

  Kimberlite Property Discovery Easting Northing Core Total RC Total
  Locality Name   Year UTM UTM # of Holes Meterage # of Holes Meterage
  Aaron Core Zone 1997 531,190 7,176,690 2 454 0 0
  Alexis Core Zone 1993 515,675 7,173,600 3 932 0 0
  Anaconda Core Zone 1996 502,350 7,190,290 1 222 0 0
  Antelope Core Zone 1995 538,030 7,188,970 2 260 0 0
  Arnie Core Zone 1992 532,960 7,177,000 0 0 8 622
  Barbara Core Zone 1997 522,730 7,173,480 1 127 0 0
  Barracuda Buffer Zone 1997 543,588 7,158,000 3 329 0 0
  Beartooth Core Zone 1996 519,750 7,178,855 71 12,750 19 3,057
  Beaver Core Zone 1993 516,750 7,191,600 1 136 1 108
  Bighorn Buffer Zone 2001 540,793 7,177,830 1 177 0 0
  Bison Buffer Zone 1995 542,290 7,179,220 1 353 0 0
  Blackbear Core Zone 1993 519,725 7,177,000 1 266 0 0
  Boa Core Zone 1996 505,170 7,196,475 2 294 0 0
  Bobcat Core Zone 2000 520,780 7,188,050 1 215 0 0
  Brent Core Zone 1994 530,800 7,174,540 1 209 0 0
  Cardinal Buffer Zone 1999 545,710 7,162,970 7 1322 5 920
  Caribou Buffer Zone 1993 541,430 7,188,400 1 158 0 0
  Caribou West Core Zone 1995 539,630 7,188,580 1 280 0 0
  Centennial Core Zone 2001 524,810 7,177,150 1 122 0 0
  Chad Core Zone 1999 531,180 7,175,380 3 513 0 0
  Char Buffer Zone 2001 517,350 7,162,720 1 178 0 0
  Cheetah Core Zone 1996 518,885 7,195,030 1 158 0 0
  Cobra Core Zone 1996 500,935 7,195,715 1 245 0 0
  Cobra South Core Zone 1996 501,119 7,195,653 1 142 0 0
  Coral Core Zone 2003 503,565 7,195,180 1 276 0 0

   
September 2016 Page 10-2



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

  Kimberlite Property Discovery Easting Northing Core Total RC Total
  Locality Name   Year UTM UTM # of Holes  Meterage  # of Holes  Meterage
  Cougar Core Zone 1999 520,206 7,192,798 1 164 2 505
  Coyote Core Zone 1997 516,310 7,191,525 1 139 0 0
  Crab Core Zone 1994 525,300 7,179,720 1 302 0 0
  Crow Core Zone 2001 525,080 7,177,670 1 163 0 0
  Cub-1 Core Zone 1994 522,000 7,177,350 2 375 4 435
  Cub-2 Core Zone 1994 523,125 7,176,900 1 252 0 0
  Cub-3 Core Zone 1997 524,535 7,177,110 2 477 0 0
  Darkwing Core Zone 2000 523,391 7,182,771 2 476 0 0
  Dingo Core Zone 1997 514,490 7,190,800 1 258 0 0
  Eagle Core Zone 2007 540,825 7,161,250 2 634 0 0
  Eel Core Zone 2001 521,150 7,173,421 1 118 0 0
  Elk Buffer Zone 1995 541,480 7,184,650 2 631 0 0
  Emu Core Zone 1999 522,609 7,181,601 1 133 0 0
  Falcon Core Zone 1992 523,550 7,184,100 2 523 14 2,513
  Falcon East Core Zone 1993 523,790 7,183,300 1 275 5 1,224
  Falcon South Core Zone 1993 522,820 7,182,740 1 327 3 411
  Falcon West Core Zone 2000 519,350 7,184,160 1 198 0 0
  Fifty Buffer Zone 1995 540,940 7,181,505 4 992 0 0
  Fisher Core Zone 2000 523,313 7,195,905 1 225 0 0
  Flamingo Core Zone 1998 523,063 7,183,493 2 321 0 0
  Flying V Core Zone 1994 509,945 7,200,755 1 197 0 0
  Fox Core Zone 1992 515,270 7,170,420 143 29,924 86 21,487
  Garter Core Zone 1996 507,990 7,196,535 2 465 0 0
  Gazelle Buffer Zone 1995 540,430 7,180,660 7 1,769 7 1,375
  Giraffe Buffer Zone 1998 542,240 7,186,690 2 479 5 1,007
  Glory Buffer Zone 1996 542,970 7,156,550 2 315 1 315

   
September 2016 Page 10-3



Ekati Diamond Mine
Northwest Territories, Canada
NI 43-101 Technical Report

  Kimberlite Property Discovery Easting Northing Core Total RC Total
  Locality Name   Year UTM UTM # of Holes Meterage # of Holes Meterage
  Grizzly Core Zone 1992 521,400 7,177,740 1 366 5 1,007