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Significant Changes to the November 2011 Feasibility Study

The Feasibility Study included both ramp and shaft access to the Renard underground mine. Shaft sinking will now be deferred until later in the mine life and access to the underground mine will be by way of a ramp only. This will be developed to a depth of 610 meters, sufficient to extract all Mineral Reserves and the Inferred Mineral Resources, and enlarged to accommodate the planned production rate of 6,000 tonnes of ore daily. Ore will be hauled to surface by 60 tonne trucks, with ramp ventilation capacity and surface maintenance facilities expanded to accommodate the increased fleet. Plant capacity remains at 6,000 tonnes per day (2.2 Mtonnes/year) expandable to 7,000 tonnes per day (2.6 Mtonnes/year). Power requirements are expected to total 12.2 MW during operations and be provided by on-site diesel power generation.

Diamond production in Years 1 and 2 remains predominantly derived from the Renard 2/3 open pit. Diamond production from the underground mine will commence during Year 2. As with the Feasibility Study, underground ore will be mined with blast-hole shrinkage on 250 meter, 430 meter and 610 meter development levels, with waste back fill from surface. The Optimization Study contains a refined draw point design and a mining sequence incorporating a panel-retreat method to better assure geomechanical stability and militate against the unexpected onset of natural caving. Numerical analysis of blast fragmentation, and modeling of ore flow during the draw, has been conducted using REBOP™ software. This has resulted in a modest increase in the overall estimate for ore dilution and a modest decrease in the estimate for ore recovery.

No changes have been made to assumptions contained within the Feasibility Study for diamond price, exchange rate, or marketing costs. The cost of diesel fuel is based on an assumed oil price of US$95/barrel compared to US$90/barrel previously.

The Optimization Study incorporates the impact of a Framework Agreement between Stornoway and the Quebec Ministere des Transports, the Ministere des Ressources Naturelles, and the Ministere des Finances et de l'Economie ("MFE") for the completion of the Route 167 Extension and the Renard Mine Road, and a revised financing agreement between Stornoway and the MFE (Stornoway press releases dated November 15 and 30, 2012). The Optimization Study assumes a cost to Stornoway of $78 million (after escalation) to complete the road. The MFE loan to Stornoway funding the Renard Mine Road is in two tranches, $77 million at 3.35% and, to the extent required, an additional $7.7 million at 6.3%, both with a term of 15 years, with interest accruing from January 2016 and interest and principal payments beginning in December 2016. As a result of these agreements, the new project development schedule assumes first road access to the project site by the fourth quarter of 2013 rather than July 2013 previously. Plant commissioning is now scheduled to begin in December 2015 with commercial production achieved by June 2016, compared to July 2015 and January 2016 previously.

The Optimization Study also incorporates certain financial terms of the Mecheshoo Agreement, the Impacts and Benefits Agreement between Stornoway, the Cree Nation of Mistissini, the Grand Council of the Crees (Eeyou Istchee) and the Cree Regional Authority (Stornoway press release dated March 27, 2012). The Mecheshoo Agreement includes a mechanism by which the Cree parties will benefit financially from the success of the project on a long term basis, consistent with mining industry best practices for social engagement.