Updated NPV Calculation

There have been 2 key events that occurred over the last month that has lead to some adjustments in the current NPV calculation.

Here is the current NPV calculation -- NPV #4 calculation

The result is an NPV of CAD$530 million discounted at 7% to today (year 2015) and assumes production in 2020.

The key bits of updates are included in 2 sources of information.

One is from an interview available to the public by Tom Peregoodoff --- Interview with Tom

Excerpt:

"Based on CH-6 and CH-7, Peregoodoff also believes a Phase 1 mine development at Chidliak has the potential to produce at least 1 million carats per year."

@ 1 million carats, the mine life goes to 20 years...but the revenue and operating costs per year go down as well. The capital cost of a mill of 500K tonnes per year will be cheaper than a 1 million tonne per year mill. There is a strong possibility that Chidliak will start with a smaller mill and scale up the mill as cashflow and available kimberlite tonnage permits.

The second point is from the recent news release on the Chidliak field program -- Summer program

The key point is the TFFE in CH-6 has close to 2 million tonnes in the above 250 metre category. This program update has a target to just convert 1 million of those tonnes to inferred. That updated target is what is included in the NPV calculation.

Those are the 2 key pieces of information.

This PEA in 2016 can be considered a base case.
Options beyond the PEA:

1 - more tonnage at CH-6 gets converted to TFFE.
2 - UG below 250 metres at CH-6 gets targeted and included in inferred at some point.
3 - CH-44 gets a bulk sample value and included in the mine plan.
4 - CH-45/46 and other potentially economic pipe get tested and brought into the Mine plan.
5 - All of the above can lead to a significant scaling of the mill to a 1 million tonne per annum capacity and that will have significant effect on the NPV.