Botswana

EXPLORATION UPDATE (Q3 2018)

Karowe Resource (AK06 kimberlite) Update

During Q2 2018, an updated mineral resource was announced for the AK06 kimberlite. The updated Mineral Resource Estimate was completed by Mineral Services Canada Inc. The estimate is based on historical evaluation data combined with new sampling results (microdiamond, bulk density and petrography) from recent deep core drilling and from historical drill cores. New delineation drill coverage and review of historical drill cores supported an update of the internal geological model. Production data (including a controlled production run from the Eastern magmatic/pyroclastic kimberlite ((“EM/PK(S)”) unit) and recent sales / valuation results have been incorporated into the grade and value estimates, which have been made based on an updated model of process plant recovery efficiency. The updated Mineral Resource is reported based on the Canadian Institute of Mining Definition Standards for Mineral Resources and Reserves as incorporated by National Instrument 43-101 Standards of Disclosure for Mineral Projects.

The updated Mineral Resource, valid at the cut-off date of December 26, 2017, includes a recoverable Indicated Mineral Resource at a 1.25 mm bottom cut off size of 7.9 million carats hosted in 57.85 million tonnes at an average grade of 13.7 cpht with an average modeled diamond value of $673 per carat. The new base of the Indicated Mineral Resource is 400 metres above sea level (“masl”) (600 metres below surface). The updated Mineral Resource also includes an Inferred Mineral Resource of approximately 1.17 million carats hosted in 5.84 million tonnes at an average grade of 20 cpht with an average modeled diamond value of $716 per carat between 400 masl to 256 masl (base of current geological and resource model).

During Q3 2018, an updated Open Pit Mineral Reserve was declared and a National Instrument 43-101 Technical Report was filed on the SEDAR website (www.sedar.com). The in situ Mineral Reserve for AK06 with an effective date of May 25, 2018 is within the probable category containing 19.84 Million tonnes with a recoverable grade of 13.08 carats per hundred tonne for 2.60 Million carats with an average price per carat of $ 624/ct. Life of Mine and Working stockpiles contribute an additional 5.56 Million tonnes with a recoverable grade of 6.7 carats per hundred tonne with an average price of $625/ct. The recoverable grade is based on the updated Mineral Resource estimate as presented in the technical report (1.25 mm bottom cut off size - BCOS) at 70% of in situ carats at 1.00 mm bottom cut off size.

These new results are being used for mine planning and to support the preparation of current feasibility-level studies for the potential development of an underground mine, after the completion of the current open pit mine.

Botswana Prospecting Licenses:

In 2014, the Company was awarded two precious stone prospecting licenses (PL367/2014 and PL371/2014). The prospecting licenses are located within a distance of 15 km and 30 km from the Karowe Diamond mine. The BK02 license was relinquished in Q3 2018 and the AK11/24 license was reduced by 50% in area and extended for two periods until the third quarter of 2019.

AK11 & AK24

For AK11 during the third quarter, the Company completed processing of the large diameter drilling (“LDD”) sample (estimated in-situ tonnage of 490 tonnes) at the Company’s Bulk Sample Plant located at the Karowe Mine. No diamonds were recovered during processing and no further work will be conducted at AK11. At AK24, four holes were sampled for microdiamonds and samples were shipped to the Saskatchewan Research Council. Microdiamond results are expected in early Q4 2018.

Sunbird Exploration Generative Project:

During Q2 2018, an agreement was signed with a Botswana company to focus on new kimberlite discoveries within Botswana using a proprietary UAV magnetometer platform to identify potential targets. Data acquisition commenced during Q2 2018 and continued through Q3 2018 with the drilling of selected targets commencing in late Q3 2018. This work is being funded from the original exploration budget of $6.0 million for fiscal 2018.