Gahcho Ku Drilling Buoys Confidence

Vancouver — Mountain Province Diamonds (MPV-T, MDM-X) and De Beers Canada have wrapped up winter drilling on the Tuzo kimberlite pipe at the Gahcho Ku diamond property, located about 300 km northeast of Yellowknife, in the Northwest Territories. The joint-venture project is held 51% by De Beers, 44.1% by Mountain Province and 4.9% by Camphor Ventures (CFV-V, CMVIF-O).

Initial results from the winter program indicate the Tuzo kimberlite pipe flares substantially at depth, with four of the six deeper holes (about 400 metres) ending in kimberlite, suggesting the tonnage could increase significantly.

Designed to further define the volume, geology, dilution, density and grade of Tuzo, the program also looked to upgrade the resource, which stands at 10.55 million inferred tonnes averaging 1.15 carats per tonne with a modelled value of US$57 per carat.

Winter drilling consisted of more than 8,400 metres in 26 core holes based on a 35-metre grid pattern over the Tuzo pipe.

Five holes were also completed between the North and East Lobes of the 5034 pipe on the project, confirming kimberlite continuity between them at a depth of about 150 metres. With verification of the kimberlite between the two lobes, the joint-venture partners have an increased confidence to apply the diamond revenue model from the 5034 East Lobe (which is in the indicated resource category) to the North Lobe using a much smaller diamond parcel.

The JV plans a large-diameter (5.75-inch) core drilling program on the 5034 North Lobe this summer to extract about 60 tonnes of kimberlite, hopefully returning a 100-carat diamond sample for its revenue modelling. Several holes totalling about 1,500 metres are expected to be sufficient for the program, which is also expected to provide data to upgrade the North Lobe resource to the indicated category.

In February, Mountain Province launched a takeover bid for Camphor Ventures. Under its offer, Mountain Province recently reported holding more than 93% of Camphor’s shares. The company has begun the compulsory acquisition of the remaining shares, after which it will hold a 49% interest in Gahcho Ku.

De Beers, which is the project operator, can be called to fund the project through to commercial production. Upon funding a feasibility study, De Beers will increase its interest to 55% and can gain an additional 5% if Mountain Province asks it to fully fund mine construction.

The Gahcho Ku project is comprised of three main kimberlite pipes (5034, Hearne and Tuzo) hosting a combined indicated resource of 14.4 million tonnes grading 1.64 carats per tonne with a modelled value of US$77 per carat. The pipes contain a further 17 million inferred tonnes at 1.35 carats per tonne with a modelled value of US$70 per carat.

The project, currently in the permitting phase, is undergoing advanced-stage, predevelopment exploration. Planned development foresees production of about 3 million carats annually over 15 years, expected to begin in 2011. Operating costs of $65 per tonne are forecast for the open-pit mine with capital spending expected to ring in at $825 million.