Technical Report on the Feasibility Study and Updated Mineral Reserve for the Star – Orion South Diamond Project Fort à la Corne, Saskatchewan, Canada

Latitude 53° 15’ N; Longitude 104° 48’ W

Effective Date: July 14, 2011 Signing Date: August 25, 2011

NI 43-101F1

Technical Report

Mr. George Read, P. Geo.

Mr. Fred H. Brown, CPG PrSciNat

Dr. Wayne Ewert, P.Geo

Mr. Shawn Harvey, P. Geo.

Mr. Al Hayden, P. Eng.

Mr. David Orava P. Eng.

Mr. Eugene Puritch, P.Eng

Mr. Ethan Richardson, P. Eng.

Mr. Hugh Rudolf, P. Eng.

Mr. Harnam Trehin, P.Eng.

TABLE OF CONTENTS

1.0� SUMMARY......................................................................................................................... I�KEY CONCLUSIONS ................................................................................................................... I�

PROJECT TIMELINE .................................................................................................. III�MINERAL RESERVE ESTIMATE ............................................................................. III�PROCESS PLANT .......................................................................................................... III�DIAMOND PRICES ....................................................................................................... III�ROYALTIES ................................................................................................................... IV�OVERBURDEN STRIPPING ....................................................................................... IV�MINING ........................................................................................................................... IV�DEWATERING .............................................................................................................. IV�ENERGY ......................................................................................................................... IV�TRANSPORTATION ..................................................................................................... IV�ENVIRONMENT ............................................................................................................. V�

TECHNICAL SUMMARY ......................................................................................................... V�LOCATION, ACCESS AND INFRASTRUCTURE .................................................... V�TENURE AND SURFACE RIGHTS ............................................................................ VI�GENERAL GEOLOGY ................................................................................................. VI�

KIMBERLITE GEOLOGY ............................................................................ VI�GEOLOGICAL MODELS ............................................................................ VII�

SAMPLING AND SAMPLE PROCESSING ............................................................. VII�UNDERGROUND SAMPLING .................................................................... VII�LARGE DIAMETER DRILLING ............................................................... VIII�DIAMOND RECOVERY ............................................................................. VIII�

DIAMOND VALUATION .......................................................................................... VIII�MINE DESIGN BASIS ................................................................................................... IX�OPTIMIZATION ............................................................................................................ IX�GEOTECHNICAL AND HYDROGEOLOGICAL CONSIDERATIONS ............... XI�MINING OPERATION ................................................................................................ XII�PHASED PIT DEVELOPMENT ............................................................................... XIII�MINE SCHEDULE AND PRODUCTION RATE .................................................... XIV�

PRODUCTION SCHEDULE ....................................................................... XIV�MINERAL RESERVE ESTIMATE AS OF JULY 14, 2011 .................................... XV�ORE PROCESSING PLANT ................................................................................... XVII�PROJECT INFRASTRUCTURE ............................................................................. XVII�

ELECTRICAL POWER SUPPLY ............................................................ XVII�ADMINISTRATION AND MAINTENANCE FACILITIES ................ XVIII�WATER BALANCE AND WATER MANAGEMENT .......................... XVIII�

SOCIAL AND ENVIRONMENTAL ...................................................................... XVIII�FINANCIAL EVALUATION ................................................................................................. XIX�

SUMMARY .................................................................................................................. XIX�CASH FLOW MODEL ................................................................................................ XX�ECONOMIC CRITERIA AND ASSUMPTIONS ................................................. XXIV�BASIS OF GROSS REVENUE ESTIMATES ....................................................... XXIV�

DIAMOND VALUATION ........................................................................... XXV�PRICE ESCALATION ................................................................................ XXV�

MARKETING COST ................................................................................... XXV�TAXES AND ROYALTIES ......................................................................... XXV�

CONTINGENCY ...................................................................................................... XXVI�SENSITIVITY ANALYSIS .................................................................................... XXVII�

2.0� INTRODUCTION ............................................................................................................. 1�2.1� SITE VISITS ...................................................................................................................... 2�2.2� OWNERSHIP AND JOINT VENTURE ........................................................................ 3�2.3� ABBREVIATIONS AND SYMBOLS ............................................................................. 3�3.0� RELIANCE ON OTHER EXPERTS ............................................................................ 11�4.0� PROPERTY DESCRIPTION AND LOCATION ........................................................ 13�4.1� SHORE AND FALC-JV EXPLORATION LICENSES ............................................. 13�

4.1.1� SURFACE RIGHTS AND LEASES ............................................................... 21�5.0� ACCESSIBILITY, CLIMATE, LOCAL RESOURCES,

INFRASTRUCTURE AND PHYSIOGRAPHY .......................................................... 22�5.1� PHYSIOGRAPHY AND CLIMATE ............................................................................ 22�5.2� LOCAL AND REGIONAL INFRASTRUCTURE ...................................................... 22�

5.2.1� STAR PROPERTY DESCRIPTION .............................................................. 23�5.2.2� ORION SOUTH PROPERTY DESCRIPTION ............................................ 23�

6.0� HISTORY ........................................................................................................................ 24�7.0� GEOLOGICAL SETTING AND MINERLIZATION ................................................ 25�7.1� LOCAL GEOLOGY - FALC AREA ............................................................................ 28�7.2� STAR KIMBERLITE GEOLOGY AND MINERALIZATION ................................ 29�

7.2.1� CANTUAR KIMBERLITE ............................................................................. 30�7.2.2� PENSE KIMBERLITE .................................................................................... 32�7.2.3� EARLY JOLI FOU KIMBERLITE (EJF) ..................................................... 32�7.2.4� MID JOLI FOU KIMBERLITE (MJF) ......................................................... 34�7.2.5� LATE JOLI FOU KIMBERLITE (LJF) ........................................................ 34�7.2.6� UPPER KIMBERLITIC SEDIMENTS .......................................................... 34�

7.3� ORION SOUTH KIMBERLITE GEOLOGY AND MINERALIZATION .............. 35�7.3.1� CANTUAR KIMBERLITE ............................................................................. 36�7.3.2� PENSE KIMBERLITE .................................................................................... 36�7.3.3� EARLY JOLI FOU KIMBERLITE (EJF) ..................................................... 38�7.3.4� LATE JOLI FOU KIMBERLITE (LJF) ........................................................ 40�7.3.5� VIKING KIMBERLITE .................................................................................. 40�7.3.6� UPPER KIMBERLITIC SEDIMENTS (UKS) .............................................. 41�

7.4� GEOLOGICAL MODEL ............................................................................................... 41�7.4.1� STAR GEOLOGICAL MODEL ..................................................................... 41�7.4.2� ORION SOUTH GEOLOGICAL MODEL ................................................... 42�

8.0� DESPOSIT TYPES ......................................................................................................... 43�8.1� KIMBERLITE HOSTED DIAMOND DEPOSITS ..................................................... 43�8.2� FORT À LA CORNE KIMBERLITE MODEL .......................................................... 44�9.0� EXPLORATION ............................................................................................................. 45�

9.1� STAR KIMBERLITE EXPLORATION ...................................................................... 45�9.2� ORION SOUTH EXPLORATION EXPLORATION ................................................. 46�10.0� DRILLING ....................................................................................................................... 47�10.1� STAR KIMBERLITE DRILLING ................................................................................ 47�10.2� ORION SOUTH DRILLIING ....................................................................................... 50�11.0� SAMPLE PREPARATION, ANALYSIS AND SECURITY ...................................... 53�11.1� DIAMOND DRILLING – LOGGING AND SAMPLING PROCEDURES ............. 53�11.2� UNDERGROUND SAMPLING PROCEDURES AND SAMPLE

SECURITY ...................................................................................................................... 54�11.2.1� SHAFT AND LATERAL DRIFT SAMPLING ............................................. 54�11.2.2� UNDERGROUND BULK SAMPLING PROTOCOLS ............................... 54�

11.3� LDD (RC DRILLING) SAMPLE RECOVERY .......................................................... 55�11.3.1� LDD DOWNHOLE CALIPER MEASUREMENTS .................................... 56�

11.4� SAMPLE PREPARATION, ANALYSES AND SECURITY ..................................... 56�11.4.1� INTRODUCTION - MINERAL PROCESSING AND DIAMOND

RECOVERY ...................................................................................................... 56�11.4.2� PROCESS PLANT – CRUSHING AND SCRUBBING CIRCUIT ............. 56�11.4.3� PROCESS PLANT DMS CIRCUIT ............................................................... 57�11.4.4� DIAMOND RECOVERY PLANT SAMPLE HANDLING AND

PROCESSING PROCEDURES ...................................................................... 59�11.4.5� X-RAY DIAMOND SORTER ......................................................................... 61�11.4.6� GREASE TABLE DIAMOND RECOVERY ................................................. 61�11.4.7� CHAIN OF CUSTODY AND SECURITY PROTOCOLS ........................... 61�11.4.8� DIAMOND PICKING AND SORTING PROCEDURES ............................ 62�

12.0� DATA VERIFICATION................................................................................................. 64�12.1� INTRODUCTION ........................................................................................................... 64�12.2� QA/QC AUDITS .............................................................................................................. 64�12.3� DATA BASE VERIFICATION ..................................................................................... 68�12.4� BULK DENSITY VALIDATION .................................................................................. 68�13.0� MINERAL PROCESSING AND METALLURGICAL TESTING ........................... 69�13.1� STAR UNDERGROUND BULK SAMPLING PROGRAM ...................................... 69�13.2� ORION SOUTH UNDERGROUND BULK SAMPLING PROGRAM .................... 70�13.3� LDD SAMPLING PROGRAMS ................................................................................... 72�

13.3.1� STAR LDD PROGRAM .................................................................................. 72�13.3.2� ORION SOUTH LDD PROGRAM ................................................................ 72�

14.0� MINERAL RESOURCE ESTIMATES ........................................................................ 74�14.1� STAR GRADE MODEL ................................................................................................. 74�14.2� ORION SOUTH GRADE MODEL ............................................................................... 74�14.3� DIAMOND VALUATION ............................................................................................. 75�15.0� MINERAL RESERVE ESTIMATES ........................................................................... 77�

15.1� INFERRED RESOURCES............................................................................................. 77�16.0� MINING METHODS ...................................................................................................... 79�16.1� SUMMARY...................................................................................................................... 79�

16.1.1� MINE PRE-PRODUCTION DEVELOPMENT ............................................ 82�16.1.2� IN-PIT CRUSH CONVEY WASTE STRIPPING SYSTEM ....................... 83�16.1.3� TRAFFICABILITY .......................................................................................... 85�16.1.4� ORE PRODUCTION ....................................................................................... 88�

16.2� HYDROGEOLOGY AND PIT DEWATERING ......................................................... 88�16.3� GEOTECHNICAL AND PIT SLOPES ........................................................................ 89�

16.3.1� PIT SLOPES IN THE OVERBURDEN SOILS ............................................ 89�16.3.2� PIT SLOPES IN THE SUB-OVERBURDEN ROCK ................................... 91�

16.4� PIT DESIGN .................................................................................................................... 93�16.4.1� STAR PIT DESIGN .......................................................................................... 95�16.4.2� ORION SOUTH PIT DESIGN ........................................................................ 97�

16.5� PIT OPTIMIZATION .................................................................................................. 101�16.5.1� STAR DEPOSIT PIT OPTIMIZATION ...................................................... 101�16.5.2� ORION SOUTH DEPOSIT PIT OPTIMIZATION .................................... 101�

16.6� PRODUCTION SCHEDULE ...................................................................................... 103�16.7� MINING EQUIPMENT ............................................................................................... 104�16.8� MAINTENANCE .......................................................................................................... 105�16.9� OPERATIONS AND MAINTENANCE PERSONNEL REQUIREMENTS .......... 105�16.10� MINE INFRASTRUCTURE ........................................................................................ 105�

16.10.1� MINE ELECTRICAL POWER .................................................................... 105�16.11� EXPLORATION POTENTIAL .................................................................................. 106�17.0� RECOVERY METHODS ............................................................................................ 107�17.1� INTRODUCTION ......................................................................................................... 107�17.2� BASIS OF DESIGN ...................................................................................................... 111�

17.2.1� METALLURGICAL TESTING AND ORE DRESSING STUDIES FOR STAR KIMBERLITE ........................................................................... 111�

17.2.2� METALLURGICAL TESTING AND ORE DRESSING STUDIES FOR ORION SOUTH KIMBERLITE ......................................................... 116�

17.2.3� PROCESS DESIGN CRITERIA ................................................................... 121�17.2.4� DESIGN PRINCIPLES .................................................................................. 121�17.2.5� DIAMOND DAMAGE ................................................................................... 121�17.2.6� BOTTOM CUT-OFF SIZE ............................................................................ 122�17.2.7� TOP CUT-OFF SIZE ..................................................................................... 122�17.2.8� COMMINUTION AND DIAMOND LIBERATION .................................. 123�17.2.9� RECRUSH – ELIMINATED ......................................................................... 124�17.2.10� PRIMARY CRUSHING ................................................................................. 125�17.2.11� THICKENING ................................................................................................ 125�17.2.12� PROCESSED KIMBERLITE CONTAINMENT FACILITY

(PKCF) ............................................................................................................. 125�17.2.13� SOLIDS SURGE CAPACITY ....................................................................... 125�17.2.14� MASS BALANCE ........................................................................................... 126�

17.2.15� PROCESS PLANT BUILDINGS .................................................................. 130�17.2.16� PROCESS PLANT PRE-COMMISSIONING, COMMISSIONING

AND RAMP-UP .............................................................................................. 130�17.3� PROCESS DESCRIPTION .......................................................................................... 131�

17.3.1� RUN OF MINE (ROM) STOCKPILE .......................................................... 133�17.3.2� COMMINUTION SECTION ........................................................................ 133�17.3.3� DMS SECTION ............................................................................................... 134�17.3.4� THE RECOVERY SECTION ....................................................................... 134�17.3.5� THE -1 MM TAILINGS ................................................................................. 136�17.3.6� DMS REJECTS ............................................................................................... 137�17.3.7� RECOVERY REJECTS ................................................................................. 137�

17.4� CONTROL AND INSTRUMENTATION .................................................................. 137�17.5� PLANT LABOUR REQUIREMENTS ....................................................................... 137�

17.5.1� OPERATIONAL LABOUR REQUIREMENTS ......................................... 137�17.5.2� MAINTENANCE LABOUR REQUIREMENTS ........................................ 138�

17.6� BULK SAMPLE (AUDIT) PLANT ............................................................................. 140�17.7� PROCESS / RECOVERY PLANT SECURITY ........................................................ 140�18.0� INFRASTRUCTURE.................................................................................................... 142�18.1� SUMMARY.................................................................................................................... 142�18.2� SITE PREPARATION ................................................................................................. 142�

18.2.1� ORGANIC COVER REMOVAL AND STOCKPILING ........................... 142�18.2.2� SITE ACCESS AND UTILITIES ROADWAYS ......................................... 142�18.2.3� SITE GRADING ............................................................................................. 143�18.2.4� PIT PRE-STRIPPING .................................................................................... 143�18.2.5� SITE ROAD, UTILITIES, PIPELINES & CONVEYANCE WAYS ........ 143�18.2.6� PERIMETER BOUNDARY .......................................................................... 144�

18.3� SITE PLAN DESCRIPTION ....................................................................................... 144�18.3.1� GENERAL SITE PLAN ................................................................................. 144�

18.4� PLANT SITE LOCATION .......................................................................................... 146�18.5� ACCESS ROAD ............................................................................................................ 146�

18.5.1� ROUTE SELECTION .................................................................................... 146�18.5.2� ACCESS ROAD DESIGN .............................................................................. 147�18.5.3� ACCESS CORRIDOR ................................................................................... 148�

18.6� RAILWAY SPUR .......................................................................................................... 148�18.7� POWER SUPPLY AND DISTRIBUTION ................................................................. 148�

18.7.1� POWER SUPPLY OPTIONS ........................................................................ 148�18.7.2� POWER SUPPLY REQUIREMENTS ......................................................... 151�18.7.3� SITE ELECTRICAL DISTRIBUTION ....................................................... 151�

18.8� NATURAL GAS AND GEOTHERMAL ENERGY SUPPLY ................................. 152�18.9� FUEL SUPPLY AND DISTRIBUTION ..................................................................... 152�18.10� EXPLOSIVES SUPPLY AND DISTRIBUTION ....................................................... 152�18.11� TELECOMMUNICATIONS ....................................................................................... 152�18.12� EARTHWORKS ........................................................................................................... 153�

18.13� PROCESS WATER SUPPLY ...................................................................................... 153�18.14� POTABLE WATER ...................................................................................................... 153�18.15� WASTE POTABLE WATER AND SEWAGE .......................................................... 153�18.16� COMBUSTIBLE SOLID DOMESTIC WASTE MANAGEMENT

FACILITIES AND RECYCLING ............................................................................... 154�18.16.1� CONSTRUCTION PHASE ........................................................................... 154�18.16.2� OPERATIONS PHASE .................................................................................. 154�18.16.3� HAZARDOUS WASTE ................................................................................. 154�

18.17� INFORMATION TECHNOLOGY ............................................................................. 155�19.0� MARKET STUDIES AND CONTRACTS ................................................................. 156�19.1� SALES AND MARKETING ........................................................................................ 156�19.2� CONTRACTS ................................................................................................................ 156�20.0� ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR

COMMUNITY IMPACT ............................................................................................. 157�20.1� PROJECT SCOPE ........................................................................................................ 157�20.2� EXISTING ENVIRONMENT ..................................................................................... 157�20.3� SUBMISSION OF THE DRAFT EIS, REVIEW PROCESS UNDERWAY .......... 158�20.4� PERMITTING ............................................................................................................... 158�20.5� COMMUNITY ENGAGEMENT ................................................................................ 159�20.6� POTENTIAL FOR MATERIAL ISSUES .................................................................. 160�21.0� CAPITAL AND OPERATING COSTS ...................................................................... 162�21.1� CAPITAL COSTS ......................................................................................................... 162�

21.1.1� SUMMARY ..................................................................................................... 162�21.1.2� BASIS OF ESTIMATE .................................................................................. 163�

21.1.2.1� LABOUR WAGE RATES ........................................................... 163�21.1.2.2� LABOUR EFFICIENCY FACTORS ......................................... 164�21.1.2.3� PROCESSING (MAIN PROCESS PLANT AND BULK

SAMPLE PLANT) ........................................................................ 164�21.1.2.3.1 TAGGED PROCESS, MECHANICAL AND ELECTRICAL

EQUIPMENT QUANTITIES AND COSTS .............................. 164�21.1.2.3.2 TAGGED EQUIPMENT INSTALLATION HOURS ............... 165�21.1.2.4 BULK MATERIAL QUANTITIES, INSTALLATION HOURS

AND COSTS .................................................................................. 165�21.1.2.5� INFRASTRUCTURE ................................................................... 167�21.1.2.5.1 TAGGED MECHANICAL AND ELECTRICAL EQUIPMENT

QUANTITIES AND COSTS ........................................................ 167�21.1.2.5.2 TAGGED EQUIPMENT INSTALLATION HOURS ............... 168�21.1.2.5.3 BULK MATERIAL QUANTITIES, INSTALLATION HOURS

AND COSTS .................................................................................. 168�21.1.3� MINING ........................................................................................................... 170�

21.1.3.1� MINE CAPITAL COST SUMMARY ........................................ 170�21.1.3.1.1� MINE EQUIPMENT COSTS ...................................................... 170�21.1.3.2 MINING PRE-PRODUCTION DEVELOPMENT COSTS ........ 174�21.1.3.3� MINE SUSTAINING CAPITAL ................................................. 175�

21.1.4� PROCESS PLANT CAPITAL ...................................................................... 180�21.1.4.1� PROCESS EQUIPMENT ............................................................ 180�

21.1.5� INFRASTRUCTURE CAPITAL .................................................................. 181�21.1.6� AUXILIARY EQUIPMENT .......................................................................... 182�21.1.7� CAPITAL INDIRECTS ................................................................................. 182�21.1.8� PROJECT CONTINGENCY ........................................................................ 184�

21.2� OPERATING COSTS .................................................................................................. 184�21.2.1� BASIS OF ESTIMATE .................................................................................. 184�

21.2.1.1� PERSONNEL COSTS .................................................................. 186�21.2.2� MINE OPERATING COSTS ........................................................................ 186�

21.2.2.1� SAND AND CLAY PRE-STRIPPING ....................................... 189�21.2.2.2� IPCC WASTE STRIPPING ........................................................ 190�21.2.2.3� ORE AND WASTE ROCK MINING ......................................... 190�21.2.2.4� MINE INDIRECT COSTS .......................................................... 192�21.2.2.5� MINE POWER COSTS ............................................................... 193�

21.2.3� PROCESS PLANT OPERATIONAL COSTS ............................................. 193�21.2.3.1� SITE SERVICES WATER TREATMENT ............................... 194�21.2.3.2� SOFTWARE REQUIREMENTS ................................................ 195�21.2.3.3� PERSONNEL SALARIES (OPERATIONAL) ......................... 196�21.2.3.4� PERSONNEL SALARIES (MAINTENANCE) ......................... 199�21.2.3.5� PROCESS PLANT POWER CONSUMPTION ........................ 201�21.2.3.6� PROCESSING CONSUMABLES AND WEAR

REPLACEMENTS ....................................................................... 203�21.2.3.7� PROCESSED KIMBERLITE CONTAINMENT FACILITY

(PKCF) OPERATIONAL REQUIREMENTS .......................... 210�21.2.3.8� COARSE REJECT STOCKPILES OPERATIONAL

REQUIREMENTS ........................................................................ 212�21.2.3.9� RECOVERY REJECTS STOCKPILES OPERATIONAL

REQUIREMENTS ........................................................................ 212�21.2.3.10� LIGHT VEHICLE REQUIREMENTS ...................................... 213�21.2.3.11� LABORATORY REQUIREMENTS .......................................... 213�21.2.3.12 � SUMMARY ................................................................................... 214�

21.2.4� GENERAL AND ADMINISTRATION ........................................................ 214�21.2.4.1� FIXED G&A COMPONENTS .................................................... 217�21.2.4.1.1� LABOUR ....................................................................................... 217�21.2.4.1.3� SITE SERVICES MOBILE EQUIPMENT ............................... 221�21.2.4.1.4� HEALTH & SAFETY .................................................................. 221�21.2.4.1.5� EMPLOYEE / PUBLIC RELATIONS ....................................... 222�21.2.4.1.6� CONSUMABLES.......................................................................... 222�21.2.4.1.7� JANITORIAL ............................................................................... 222�21.2.4.1.8� LIGHT VEHICLES ...................................................................... 222�21.2.4.1.8� BULK SAMPLE PLANT OPERATION .................................... 222�21.2.4.1.9� SOFTWARE .................................................................................. 222�21.2.4.1.10� RECLAMATION CREDIT FACILITY ................................. 222�21.2.4.1.11� ENVIRONMENTAL SUPPLIES AND COMPLIANCE ...... 222�21.2.4.1.12� LICENSES AND FEES ............................................................ 223�21.2.4.1.13� COMMUNICATIONS .............................................................. 223�21.2.4.1.14� LEGAL SERVICES .................................................................. 223�21.2.4.1.15� WASTE MANAGEMENT ....................................................... 223�21.2.4.2� VARIABLE G&A COSTS ........................................................... 223�

21.2.4.2.1� SURFACE LEASES ..................................................................... 223�21.2.4.2.2� MUNICIPAL TAXATION .......................................................... 223�21.2.4.2.3� INSURANCE ................................................................................. 223�

21.2.5� OFFSITE SORTHOUSE AND SITE INTERPRETIVE CENTRE OPERATIONAL COSTS ............................................................................... 224�21.2.5.1� SORTHOUSE................................................................................ 224�21.2.5.1.1� CONSUMABLES AND WEAR REPLACEMENTS ................ 224�21.2.5.1.2� ELECTRONIC MAINTENANCE AND SOFTWARE

REQUIREMENTS ........................................................................ 225�21.2.5.1.3� MANPOWER SALARIES ........................................................... 226�21.2.5.1.4� BUILDING COSTS AND MUNICIPAL FEES ......................... 227�21.2.5.1.5� TRANSPORTATION COSTS AND COMMISSIONS............. 228�21.2.5.2� THE INTERPRETIVE CENTRE ............................................... 228�21.2.5.3� SUMMARY ................................................................................... 229�

21.2.6� SALES AND MARKETING .......................................................................... 229�22.0� ECONOMIC ANALYSIS ............................................................................................. 230�22.1� SUMMARY.................................................................................................................... 230�22.2� CASH FLOW MODEL ................................................................................................ 232�22.3� ECONOMIC CRITERIA AND ASSUMPTIONS ..................................................... 235�

22.3.1� PROJECT SCOPE ......................................................................................... 236�22.3.2� 100 % BASIS ................................................................................................... 236�22.3.3� MINERAL RESERVE ................................................................................... 236�22.3.4� PLANT THROUGHPUT ............................................................................... 236�22.3.5� EIS, PERMITTING, AND FS COSTS ......................................................... 236�22.3.6� BASIS OF GROSS REVENUE ESTIMATES ............................................. 236�

22.3.6.1� DIAMOND VALUATION ........................................................... 237�22.3.6.2� CURRENCY EXCHANGE RATE ............................................. 237�22.3.6.3� PRICE ESCALATION ................................................................. 237�

22.3.7� CAPITAL COST ............................................................................................. 237�22.3.8� OPERATING COSTS .................................................................................... 238�22.3.9� MARKETING COST ..................................................................................... 238�22.3.10� INDIRECT COSTS ........................................................................................ 238�

22.3.10.1� EPCM COSTS............................................................................... 238�22.3.10.2� INDIRECT COSTS DURING THE PRE-PRODUCTION

PHASE ........................................................................................... 238�22.3.10.3� G&A COSTS ................................................................................. 238�22.3.10.4� PIT DEWATERING AND CRANE COSTS .............................. 239�

22.3.11� WORKING CAPITAL ................................................................................... 239�22.3.12� MINE CLOSURE COST ............................................................................... 239�22.3.13� SALVAGE VALUE ........................................................................................ 239�22.3.14� TAXES AND ROYALTIES ........................................................................... 239�22.3.15� CONTINGENCY ............................................................................................ 240�

22.4� SENSITIVITY ANALYSIS .......................................................................................... 241�23.0� ADJACENT PROPERTIES ........................................................................................ 243�24.0� OTHER RELEVANT DATA AND INFORMATION .............................................. 244�24.1� FEASIBILITY STUDY ................................................................................................ 244�24.2� ENVIRONMENTAL IMPACT STATEMENT ......................................................... 244�

24.3� UPDATED DIAMOND VALUATION ....................................................................... 244�25.0� INTERPRETATION AND CONCLUSIONS ............................................................ 246�25.1� PREVIOUS RECOMMENDATIONS ........................................................................ 246�25.2� MINERAL RESERVES ............................................................................................... 247�25.3� PROCESS PLANT ........................................................................................................ 247�25.4� DIAMOND PRICES ..................................................................................................... 248�25.5� ROYALTIES ................................................................................................................. 248�25.6� OVERBURDEN STRIPPING ...................................................................................... 248�25.7� MINING ......................................................................................................................... 249�25.8� DEWATERING ............................................................................................................. 249�25.9� ENERGY ........................................................................................................................ 249�25.10� TRANSPORTATION ................................................................................................... 249�25.11� ENVIRONMENT .......................................................................................................... 250�26.0� RECOMMENDATIONS .............................................................................................. 251�26.1� MINING ......................................................................................................................... 251�26.2� GEOTECHNICAL ........................................................................................................ 252�26.3� PROCESS KIMBERLITE MANAGEMENT ............................................................ 252�26.4� WATER MANAGEMENT........................................................................................... 253�26.5� PROCESSING ............................................................................................................... 253�26.6� INFRASTRUCTURE.................................................................................................... 254�26.7� COSTS ............................................................................................................................ 254�27.0� REFERENCES .............................................................................................................. 255�28.0� CERTIFICATES ........................................................................................................... 268�APPENDICES ........................................................................................................................... 278�A.0� PROCESSED KIMBERLITE AND PROCESSED WATER

MANAGEMENT ........................................................................................................... 278�A.1� INTRODUCTION ......................................................................................................... 278�A.2� MINE PLAN .................................................................................................................. 278�A.3� PROCESSED KIMBERLITE PRODUCTION ......................................................... 279�A.4� KIMBERLITE GEOCHEMISTRY ............................................................................ 280�

A.4.1� ACID ROCK GENERATION POTENTIAL .............................................. 280�A.4.2� METAL LEACHING ..................................................................................... 281�A.4.3� ML/ARD CONSIDERATIONS ..................................................................... 281�

A.5� SITE GEOTECHNICAL CHARACTERIZATION ................................................. 281�A.6� COARSE PK MANAGEMENT .................................................................................. 282�

A.6.1� COARSE PK MANAGEMENT CONSIDERATIONS ............................... 282�A.6.2� COARSE PK DESIGN CRITERIA .............................................................. 282�A.6.3� COARSE PK FACILITY ............................................................................... 283�

A.6.4� WATER MANAGEMENT FOR COARSE PK FACILITY ...................... 285�A.6.5� COARSE PK RECLAMATION AND CLOSURE ..................................... 285�

A.7� FINE PK MANAGEMENT ......................................................................................... 286�A.7.1� FINE PK MANAGEMENT CONSIDERATIONS ...................................... 286�A.7.2� FINE PK FACILITY DESIGN CRITERIA ................................................ 286�A.7.3� FINE PK CONTAINMENT FACILITY ...................................................... 287�A.7.4� WATER MANAGEMENT FOR FINE PK FACILITY ............................. 288�

A.8� RECOVERY TAILINGS STOCKPILES ................................................................... 288�B.0� WATER MANAGEMENT........................................................................................... 290�B.1� INTRODUCTION ......................................................................................................... 290�B.2� REGIONAL GEOLOGY ............................................................................................. 290�

B.2.1� BEDROCK GEOLOGY ................................................................................. 290�B.2.1.1� SOURIS RIVER FORMATION ................................................. 290�B.2.1.2� MANNVILLE GROUP ................................................................ 292�B.2.1.3� COLORADO GROUP ................................................................. 292�

B.2.2� OVERBURDEN GEOLOGY ........................................................................ 293�B.2.2.1� EMPRESS GROUP ...................................................................... 293�B.2.2.2� SUTHERLAND GROUP ............................................................. 294�B.2.2.3� SASKATOON GROUP ................................................................ 294�

B.3� HYDROLOGY AND HYDROGEOLOGY ................................................................ 296�B.3.2� HYDROGEOLOGY ....................................................................................... 298�

B.3.2.1� SHALLOW GROUNDWATER SYSTEM ................................ 298�B.3.2.2� CONFINING LAYER .................................................................. 299�B.3.2.3� DEEP GROUNDWATER SYSTEM .......................................... 300�

B.4� WATER QUALITY ...................................................................................................... 302�B.4.1� SURFACE WATER QUALITY .................................................................... 302�B.4.2� GROUNDWATER QUALITY ...................................................................... 306�

B.4.2.1� SHALLOW GROUNDWATER SYSTEM (SURFICIAL SAND AND SILT) .................................................................................... 309�

B.4.2.2� CONFINING LAYER .................................................................. 310�B.4.2.3� DEEP GROUNDWATER SYSTEM .......................................... 311�

B.5� LOCAL CLIMATIC CONDITIONS .......................................................................... 314�B.6� WATER MANAGEMENT INFRASTRUCTURE .................................................... 317�

B.6.1� WATER MANAGEMENT ............................................................................ 320�B.7� ADDITIONAL WATER MANAGEMENT REQUIREMENTS .............................. 321�

B.7.1� SURFACE WATER RUNOFF MANAGEMENT ....................................... 321�B.7.2� POTABLE WATER SUPPLY ....................................................................... 322�B.7.3� SEWAGE HANDLING AND DISPOSAL ................................................... 322�

B.8� SITE WATER BALANCE ........................................................................................... 324�B.8.1� GROUNDWATER (DEWATERING WELLS) WATER BALANCE ...... 324�B.8.2� IN-PIT WATER BALANCE ......................................................................... 325�B.8.3� PROCESSED KIMBERLITE CONTAINMENT FACILITY

(PKCF) WATER BALANCE ........................................................................ 326�C.0� ANCILLARY BUILDINGS AND FACILITIES ....................................................... 327�C.1� SUMMARY.................................................................................................................... 327�

C.2� ANCILLARY BUILDING SITE LAYOUT ............................................................... 327�C.3� ADMINISTRATION AND SECURITY BUILDING ................................................ 329�C.4� INTERPRETIVE CENTRE ......................................................................................... 329�C.5� MAINTENANCE / DRY AND TECHNICAL SERVICES BUILDING ................. 329�C.6� WAREHOUSE AND COLD STORAGE BUILDING .............................................. 330�C.7� BULK FUEL AND LUBRICANT SYSTEMS ........................................................... 331�C.8� VEHICLE WASH FACILITY, WARM-UP SHED AND FIRE AND

EMERGENCY RESPONSE BUILDING ................................................................... 332�C.9� MINE YARD LAYOUT ............................................................................................... 332�C.10� SECURITY .................................................................................................................... 332�C.11� FIRE PROTECTION SYSTEMS ................................................................................ 333�C.12� BULK SAMPLE PLANT (BSP) .................................................................................. 333�C.13� AUXILIARY FACILITIES OUTSIDE OF THE PLANT SITE .............................. 333�

C.13.1� SORTING FACILITY ................................................................................... 333�C.13.2� STAGING AREA ............................................................................................ 334�

D.0� WORKFORCE, HEALTH, SAFETY AND SECURITY.......................................... 335�D.1� SUMMARY.................................................................................................................... 335�D.2� MANAGEMENT ORGANIZATION ......................................................................... 335�D.3� WORKFORCE TRANSPORTATION AND SHIFT SCHEDULES ....................... 335�D.4� RECRUITMENT, TRAINING AND DEVELOPMENT .......................................... 336�D.5� EMPLOYEE RELATIONS ......................................................................................... 338�D.6� WORKFORCE SUMMARIES BY AREA ................................................................. 338�D.7� OCCUPATIONAL HEALTH, SAFETY AND WELLNESS ................................... 340�D.8� SECURITY .................................................................................................................... 342�E.0� CONSTRUCTION AND DEVELOPMENT .............................................................. 345�E.1� PROJECT ORGANIZATIONAL STRUCTURE ...................................................... 345�

E.1.1� PROCESSING ................................................................................................ 346�E.1.2� ACCOUNTING ............................................................................................... 346�E.1.3� PROCUREMENT ........................................................................................... 346�E.1.4� HUMAN RESOURCES ................................................................................. 347�E.1.5� HEALTH, SAFETY AND WELLNESS ....................................................... 347�E.1.6� ENVIRONMENT ............................................................................................ 347�E.1.7� CONSTRUCTION .......................................................................................... 347�E.1.8� ENGINEERING .............................................................................................. 348�E.1.9� SECURITY ...................................................................................................... 348�E.1.10� MINING ........................................................................................................... 348�E.1.11� MAINTENANCE ............................................................................................ 348�E.1.12� TECHNICAL SERVICES ............................................................................. 349�

E.2� PROJECT PLANNING AND MOBILIZATION ...................................................... 351�E.3� ENGINEERING ............................................................................................................ 351�

E.4� PROCUREMENT ......................................................................................................... 352�E.5� CONTRACTING PLAN............................................................................................... 352�E.6� CONSTRUCTION ........................................................................................................ 353�E.7� COMMISSIONING AND START-UP ....................................................................... 354�E.8� PROJECT IMPLEMENTATION SCHEDULE ........................................................ 354�

LIST OF FIGURES

Figure ES.1: Sensitivity Analysis (Pre-Tax and Royalty Basis, NPV (7 %)) ........................ xxviii�Figure 4.1: Location Map of the Star-Orion South Diamond Project .......................................... 13�Figure 4.2: Shore and FalC-JV Mineral Disposition Map ........................................................... 14�Figure 7.1: Regional Geology of the FalC Area with the Magnetic Outlines of the FalC Kimberlites .................................................................................................................................... 26�Figure 7.2: Cretaceous Stratigraphic Column of the Star – Orion South Area ............................ 27�Figure 7.3: Cross-Section across the Western Portion of the Star Kimberlite (view towards the west) .............................................................................................................................................. 30�Figure 7.4: Photographs of Underground Hand Samples and Core from the Star Kimberlite .... 31�Figure 7.5: a). Topographic Elevation Map (lows are Blue; Highs are Magenta) of the Top Contact of the Olivine-Rich EJF. b) Three Dimensional View Looking Towards the North ....... 33�Figure 7.6: Isopach Map of the EJF Kimberlite Intersections (Contour Interval: 5 m) ............... 34�Figure 7.7: Orion South Kimberlite West To East Cross-Section Along UTM Line 5900600N 35�Figure 7.8: Example of Typical Matrix-Rich Pense Kimberlite with a More Altered (Lighter) Domain and a Less Altered (Darker) Domain (from 141-06-071C: 273.55 m) (from Harvey, 2011) ............................................................................................................................................. 37�Figure 7.9: Pense Kimberlite Isopach Map (Contour Interval: 10 m) ......................................... 37�Figure 7.10: EJF Kimberlite Isopach Map (Contour Interval: 10 m)........................................... 38�Figure 7.11: Example of a Normally Graded EJF Bed with a Coarser Xenolith-Rich Base Fining-Up to a Very Fine-Grained Xenolith-Poor Top (from 140-06-058C: from 132.01 to 136.79 m) (from Harvey, 2011) .................................................................................................... 39�Figure 7.12: Example of Pense Autoliths in the lower EJF ......................................................... 40�Figure 7.13: Variably Sized EJF Autoliths within Viking Kimberlite from Hole 141-92-002C at a Depth of 190.15 m ...................................................................................................................... 41�Figure 7.14: Star Kimberlite 3-D Geological Model ................................................................... 42�Figure 7.15: 3D Northwest View of the Orion South Kimberlite Geological Model .................. 42�Figure 10.1: Surface Drill Hole Locations for the Star Kimberlite .............................................. 49�Figure 10.2: Drilling Map for the Orion South Kimberlite Deposit Including Core, Mud Rotary and Large-Diameter Drilling ......................................................................................................... 52�Figure 11.1: Example of an Underground Wall Map Showing the Contact Between the bedded EJF (shades of green) Kimberlite and the More Massive MJF Kmberlite (peach) ....................... 55�Figure 11.2: Process Plant Flowsheet – Primary Kimberlite Processing ..................................... 58�Figure 11.3: Recovery Plant Flowsheet ....................................................................................... 60�Figure 13.1: Star Kimberlite Underground Batch and Geology Map .......................................... 69�Figure 13.2: Geological Map of the Underground Drifts on Orion South ................................... 71�Figure 16.1: Plan View of Star Open Pit Phases 1a, 1b, 2, 3 and 4 .............................................. 80�Figure 16.2: Plan View of Orion South Open Pit Phases 1a, 1b and 2 ......................................... 82�Figure 16.3: Typical Pit Slope Configuration ............................................................................... 94�Figure 16.4: Star Pit Cross Section 514,600E Showing Surficial Sand and Clay Layers ............. 95�Figure 16.5: Ultimate Pit Design – Star Pit Phases 1a, 1b, 2, 3 & 4 ............................................. 96�Figure 16.6: Star Open Pit Phases – Cross Section 514,600E ...................................................... 97�Figure 16.7: Orion South Pit Cross Section 5900800N Showing Surficial Sand and Clay Layers ....................................................................................................................................................... 98�Figure 16.8: Orion South Ultimate Pit Design – Pit Phases 1 and 2 ............................................. 99�Figure 16.9: Orion South Open Pit Phases – Cross Section 5900800N ...................................... 100�Figure 17.1: Process Plant and Stockpile ................................................................................... 108�Figure 17.2: The Mechanical Configuration of the Process Plant ............................................. 110�Figure 17.3: Example EJF Kimberlite (PK) from the Star Diamond Deposit ........................... 123�

Figure 17.4: Example of EJF Kimberlite (KB) from the Orion South Diamond Deposit ......... 124�Figure 17.5: The Flowsheet for the Recovery Section ............................................................... 129�Figure 17.6: Block Flowsheet of the Process Plant .................................................................... 132�Figure 17.7: The Three Methods Used to Recover Diamonds in the Recovery Section ........... 136�Figure 17.8: Operational Labour Requirements Org Chart ........................................................ 138�Figure 17.9: Plant Maintenance Personnel Org Chart (Note: D = Day Shift; R = Rotational Shift) ............................................................................................................................................ 139�Figure 18.1: General Site Plan (1 km grid) ................................................................................ 145�Figure 18.2: Star Diamond Project Access Road Options ......................................................... 147�Figure 18.3: Power Transmission Line and Natural Gas Pipeline Options ............................... 150�Figure 21.1: Site Layout with Electrical Distribution Network .................................................. 173�Figure 21.2: Operational Personnel ............................................................................................ 196�Figure 21.3: Maintenance Personnel .......................................................................................... 200�Figure 21.4: A Schematic of the Stockpile and the Process Plant with the Walls Removed ..... 202�Figure 21.5: A Photograph of a typical Glove Box for Sorting Diamonds Fitted with Gloves and the Secure Matlock Canister Above. ........................................................................................... 210�Figure 21.6: Sorthouse Personnel .............................................................................................. 226�Figure 22.1: Sensitivity Analysis (Pre-Tax and Royalty Basis, NPV (7 %))............................. 242�Figure A.1: General Site Plan (1 km grid) with Coarse PK Pile and PKCF ............................... 284�Figure A.2: Proposed Layout of the Process Plant, Stockpile and Recovery Tailings Stockpile ..................................................................................................................................................... 289�Figure B.1: Schematic Stratigraphic Column for the Fort à la Corne Area ............................... 291�Figure B.2: Project Area Watercourses (from Shore and AMEC, 2010) ................................... 297�Figure B.3: Groundwater Testing and Monitoring Network...................................................... 301�Figure B.4: Project Area Wind Rose .......................................................................................... 315�Figure B.5: Wind Class Frequency Distribution ......................................................................... 316�Figure B.6: Site Water Management Schematic ........................................................................ 319�Figure B.7: Seepage Rate into Star Pit vs. Pit Lake Elevation .................................................... 325�Figure B.8: PKCF Pond Water Volume vs. Surface Area Relationship ..................................... 326�Figure C.1: General Plant Site Layout (1 km grid) .................................................................... 328�Figure E.1: Construction and Development Organization Chart ............................................... 350�Figure E.2: Feasibility Summary Schedule ................................................................................ 357�

LIST OF TABLES

Table ES.1: Pre-Tax and Royalty Results of the Cash Flow Analysis .......................................... ii�Table ES.2: After-Tax and Royalty Results of the Cash Flow Analysis ....................................... ii�Table ES.3: Star – Orion South Diamond Project Mineral Reserve as of July 14, 2011 .............. iii�Table ES.4: The Parcel and Model Price Details for the Star and Orion South Kimberlites (February, 2011 pricebook) ............................................................................................................ ix�Table ES.5: Weighted Average Model and High Diamond Prices for the Star and Orion South Kimberlites ..................................................................................................................................... ix�Table ES.6: Summary of Star pit optimization inputs .................................................................... x�Table ES.7: Summary of Orion South pit optimization inputs ...................................................... xi�Table ES.8: Star Open Pit Development Phases ......................................................................... xiii�Table ES.9: Orion South Open Pit Development Phases ............................................................ xiii�Table ES.10: LOM Open Pit Production Schedule ....................................................................... xv�Table ES.11: Mineral Reserve Estimate Kimberlite Unit Detail for Star – Orion South Diamond Project, effective July 14, 2011 .................................................................................................... xvi�Table ES.12: Inferred Mineral Resource Estimate for the Star – Orion South Kimberlite Units, effective July 14, 2011 ................................................................................................................ xvii�Table ES.13: Pre-Tax and Royalty Results of the Cash Flow Analysis ...................................... xx�Table ES.14: After-Tax and Royalty Results of the Cash Flow Analysis ................................... xx�Table ES.15: Base Case Cash Flow (Model Price + 15 %) ....................................................... xxii�Table ES.16: Case 1 (High Model Price) ................................................................................. xxiii�Table ES.17: Economic Criteria Utilized in the Cash Flow Models ........................................ xxiv�Table ES.18: Summary of Contingency included in Base Case and Case 1 pre-production capital (years 2012 – 2016) ................................................................................................................... xxvii�Table ES.19: Summary of Contingency included in Base Case and Case 1 during production (years 2017-2036) ..................................................................................................................... xxvii�Table ES.20: Sensitivity Analysis Results (Pre-Tax and Royalty Basis, NPV (7 %)) ............ xxvii�Table 4.1: Tenure Summary of Shore 100 % Held Property, Effective July 7, 2011 .................. 15�Table 4.2: Tenure Summary of the FalC-JV Property, Effective July 7, 2011 ............................. 18�Table 4.3: Summary of Surface Leases Granted to Shore and the FalC-JV ................................ 21�Table 7.1: Average Depth (and Elevation) to Major Stratigraphic Units .................................... 25�Table 7.2: Average Thickness of Major Stratigraphic Units ....................................................... 25�Table 9.1: Summary of Exploration Activities on the Star Kimberlite Deposit, 1996-2010 ....... 45�Table 9.2: Summary of Exploration Activities on the Orion South Kimberlite Deposit, 1988-2010 ............................................................................................................................................... 46�Table 10.1: Summary of Surface and Underground Drilling on the Star Kimberlite Deposit 1995-2010 ..................................................................................................................................... 47�Table 10.2: Summary of Drilling on the Orion South Kimberlite Deposit, 1992-2010 .............. 50�Table 13.1: Summary of Combined Production and Sample Results (Underground, RE, Geotech and Clean-Up) for Star Kimberlite (including Star West) ............................................................ 70�Table 13.2: Summary of Underground ROM Diamond Grades from the Various Star Kimberlite Units .............................................................................................................................................. 70�Table 13.3: Underground Bulk Sampling Results on a Per Kimberlite Unit Basis – FalC-JV Orion South Kimberlite ................................................................................................................. 72�Table 13.4: Summary of Star Kimberlite LDD Processing and Total Carat Recovery on a Per Kimberlite Unit Basis .................................................................................................................... 72�Table 13.5: Diamond Results from Orion South LDD Mini-bulk Samples on a Per Unit Basis . 73�Table 14.1: The Parcel and Model Price Details for the Star and Orion South Kimberlites (February, 2011 pricebook) ........................................................................................................... 76�

Table 14.2: Weighted Average Model and High Diamond Prices for the Star and Orion South Kimberlites .................................................................................................................................... 76�Table 15.1: Probable Mineral Reserve Estimate Kimberlite Unit Detail for Star – Orion South Diamond Project, effective July 14, 2011 ..................................................................................... 77�Table 15.2: In Pit Inferred Mineral Resource Estimate for the Star – Orion South Kimberlite Units, effective July 14, 2011........................................................................................................ 78�Table 16.1: Star Open Pit Development Phases ............................................................................ 79�Table 16.2: Orion South Open Pit Development Phases .............................................................. 81�Table 16.3: Projected Tonnages of Material to be Stripped by The IPCC System in Each Pit Phase ............................................................................................................................................. 84�Table 16.4: Projected tonnages of material to be stripped by the IPCC system per year ............ 85�Table 16.5: Estimated Average Trafficability of Star and Orion South Overburden ................... 87�Table 16.6: Trafficability summary for sub-overburden domains ................................................ 88�Table 16.7: Ground pressure assessment ...................................................................................... 88�Table 16.8: Shear Strength Parameters Used in Star and Orion South Stability Analyses ........... 90�Table 16.9: Star Pit Wall Zonation and Pit Wall Slope Angles .................................................... 90�Table 16.10: Orion South Pit Wall Zonation and Pit Wall Slope Angles ..................................... 91�Table 16.11: Material and Hydrogeological Properties per Geotechnical Domain ...................... 92�Table 16.12: Slope Configuration per Geotechnical Domain ....................................................... 93�Table 16.13: Summary of Star pit optimization inputs ............................................................... 101�Table 16.14: Summary of Orion South pit optimization inputs .................................................. 102�Table 16.15: LOM Open Pit Production Schedule ..................................................................... 103�Table 16.16: Projected Electrical Loads .................................................................................... 106�Table 17.1: Star Axb Breakage Index Classification ................................................................. 112�Table 17.2: Star Ta Abrasion Index Classification .................................................................... 112�Table 17.3: Star Diamond Breakage Results ............................................................................. 114�Table 17.4: Summary of the Metallurgical Test Work Conducted on the Star Kimberlite ....... 115�Table 17.5: Orion South Axb Breakage Index Classification .................................................... 117�Table 17.6: Orion South Ta Abrasion Index Classification ....................................................... 117�Table 17.7: Summary of the Test Work Conducted on the Orion South Kimberlite ................. 120�Table 17.8: Predicted Longest Occurrence of a 45 mm Diamond for each of the Three Main Kimberlite Lithologies for the Star Kimberlite ........................................................................... 122�Table 17.9: Predicted Occurrence of Large Diamonds and their Associated Period of Occurrence for the Orion South Kimberlite ................................................................................................... 123�Table 17.10: Mass Balance Summary – 45,000 tpd Operation (45 mm Top Size and 1 mm Bottom Size) ................................................................................................................................ 126�Table 17.11: Water Balance Summary – 45,000 tpd Operation (45 mm Top Size and 1 mm Bottom Size) ................................................................................................................................ 127�Table 17.12: Mass Balance Summary for the Recovery Section (30 t/h Operation) ................. 128�Table 17.13: The Various Sections of the Process Plant and their Corresponding Dimensions 130�Table 17.14: Process Plant Building Size Comparison .............................................................. 130�Table 17.15: Summary of Plant Operating Personnel ................................................................ 138�Table 17.16: Summary of Plant Maintenance Personnel ........................................................... 139�Table 18.1: Estimated Demand and Load Profile for the Project Site ....................................... 151�Table 21.1: Pre-Production Capital Cost Summary .................................................................... 162�Table 21.2: Life of Mine Capital Costs Including Contingency ................................................. 162�Table 21.3: Mine Capital Cost Summary .................................................................................... 170�Table 21.4: Mine Capital Equipment Cost .................................................................................. 171�Table 21.5: Timing of Mining Equipment Capital Expenditures ................................................ 172�Table 21.6: Pre-Production Development Costs Summary (X $1,000) ...................................... 174�Table 21.7: Timing of Mine Sustaining Capital Expenditures over the LOM ............................ 176�

Table 21.8: Mine Sustaining Capital (with contingency) Costs (x1,000) through LOM............ 179�Table 21.9: Summary of Process Plant and BSP Capital Costs .................................................. 181�Table 21.10: Summary of Infrastructure Capital Costs............................................................... 182�Table 21.11: Summary of Indirect Capital Costs ........................................................................ 183�Table 21.12: Key Parameters Used in Developing the Operating Costs .................................... 185�Table 21.13: Life of Mine Material Production Direct Costs ..................................................... 187�Table 21.14: Life of Mine Indirect Costs .................................................................................... 187�Table 21.15: Life of Mine Total Costs ........................................................................................ 188�Table 21.16: Sand and Clay Pre-strip Equipment and Labour Requirements in Year 2020 ....... 189�Table 21.17: IPCC Operating Costs in Year 2020 (Production year 4) ..................................... 190�Table 21.18: Ore Mining Operating Cost in Year 2020 .............................................................. 191�Table 21.19: Waste Rock Mining Cost in Year 2020 ................................................................ 192�Table 21.20: Mine indirect operating costs for year 2020 .......................................................... 192�Table 21.21: Annual Mine Power Costs ..................................................................................... 193�Table 21.22: Pump Operational Costs ....................................................................................... 194�Table 21.23: Water Purification and Treatment Costs ............................................................... 195�Table 21.24: Processing Software Costs .................................................................................... 196�Table 21.25: Operations Personnel Summary Information and Costs ....................................... 199�Table 21.26: Maintenance Personnel Summary Information and Costs .................................... 201�Table 21.27: The Expected Annual Power Consumption of the Equipment Categories in the Process Plant ............................................................................................................................... 203�Table 21.28: Estimated Annual Consumption of FeSi and the Associated Costs ..................... 205�Table 21.29: Estimated Annual Cost of Grease ......................................................................... 206�Table 21.30: Estimated Annual Cost for Ortanol 90 .................................................................. 206�Table 21.31: The Number of PMTs Required for the Recovery Section ................................... 207�Table 21.32: Annual cost of PTMs ............................................................................................ 207�Table 21.33: Annual Costs of X-ray tubes ................................................................................. 207�Table 21.34: Annual Costs of Lasers ......................................................................................... 207�Table 21.35: Annual Costs of Screen Media.............................................................................. 208�Table 21.36: Annual Operating Cost of Conveyers & Flexowell .............................................. 208�Table 21.37: Tracer Consumption and Costs ............................................................................. 209�Table 21.38: Annual Operating Costs for the Pumps Associated with Maintaining the PKCF 211�Table 21.39: Annual Costs for general Maintenance on the PKCF ........................................... 212�Table 21.40: Annual Costs Associated with Maintaining the Coarse Reject Stockpiles ........... 212�Table 21.41: Annual Costs Associated with Maintaining the Recovery Reject Stockpiles ....... 213�Table 21.42: Annual Maintenance Costs for Plant Vehicles ..................................................... 213�Table 21.43: Summary of Annual Processing Operation Costs ................................................. 214�Table 21.44: General and Administration Costs ........................................................................ 215�Table 21.45: General and administration Cost Estimate by Year .............................................. 216�Table 21.46: Estimated G&A Labour Cost ................................................................................ 218�Table 21.47: Site Services Mobile Equipment ........................................................................... 221�Table 21.48: Operating Costs Associated with Expenditures on Consumables and General Wear Items ............................................................................................................................................ 225�Table 21.49: Annual Operating Costs Associated with the Maintenance of the Electronic Scanners, Surveillance Equipment and Software ........................................................................ 225�Table 21.50: Sorthouse Roles, Shifts, Annual Compensation, Including Bonuses and Perquisites ..................................................................................................................................................... 227�Table 21.51: Building Costs and Municipal Fees ...................................................................... 228�Table 21.52: Transportation Costs and Commission on Sales ................................................... 228�Table 21.53: Interpretive Centre Costs ...................................................................................... 229�Table 21.54: Summary of Sorthouse and Interpretive Centre Costs .......................................... 229�

Table 22.1: Pre-Tax and Royalty Results of the Cash Flow Analysis ....................................... 230�Table 22.2: After-Tax and Royalty Results of the Cash Flow Analysis .................................... 231�Table 22.3: Economic Analysis Results of Discounted Cash Flow Model for the Base Case .. 231�Table 22.4: Base Case Cash Flow (Model Price + 15 %) .......................................................... 233�Table 22.5: Case 1 (High Model Price)...................................................................................... 234�Table 22.6: Economic Criteria Utilized in the Cash Flow Models ............................................ 235�Table 22.7: WWW Modeled Diamond Price by Kimberlite Unit .............................................. 237�Table 22.8: Summary of Contingency included in Base Case and Case 1 pre-production capital (years 2012 – 2016) ..................................................................................................................... 240�Table 22.9: Summary of Contingency included in Base Case and Case 1 during production (years 2017-2036) ....................................................................................................................... 240�Table 22.10: Sensitivity Analysis Results (Pre-Tax and Royalty Basis, NPV (7 %)) ............... 241�Table 24.1: The Parcel and Model Price Details for the Star Kimberlite units (July 18, 2011 pricebook).................................................................................................................................... 245�Table 24.2: The Parcel and Model Price Details for the Orion South Kimberlite units (July, 2011 pricebook).................................................................................................................................... 245�Table 25.1: Summary and Status Update of Recommendations Presented in the Star – Orion South Diamond Project PFS (Orava et al., 2010) ....................................................................... 246�Table A.1: Phased Pit Production .............................................................................................. 278�Table A.2: Star Tailings Split Percentages................................................................................. 280�Table A.3: Orion South Tailings Split Percentages ................................................................... 280�Table A.4: Coarse PK Design Criteria ....................................................................................... 283�Table A.5: Coarse PK Pile Design Characteristics .................................................................... 285�Table A.6: Calculated Design Parameters for the PKCF ........................................................... 287�Table B.1: Summary of Exceedances of SSWQO1 and/or CWQG2 Guidelines for Surface Water Quality Samples in Streams within LSA, 2006 to 2009 ............................................................. 303�Table B.2: Summary of the Groundwater Monitoring Network ................................................ 307�Table B.3: Saskatchewan Environment Water Quality Guideline and MIEPR Exceedances, Groundwater ................................................................................................................................ 310�Table B.4. Representative Mannville Water Chemistry from the 2010 Prototype Dewatering Well Pump Test ........................................................................................................................... 312�Table B.5: Annual Meteorological Parameters at Fort à la Corne Weather Station .................. 314�Table B.6: Climate Normals for the Prince Albert SK Area for the 1971-2000 Period ............ 317�Table B.7: Daily Dewatering Values by Year ............................................................................ 324�Table C.1: Proposed Ancillary Buildings .................................................................................. 327�Table C.2: Site Security Zoning ................................................................................................. 332�Table D.1: Project Workforce by Area (2020) ........................................................................... 339�Table E.1: Project Development and Organization .................................................................... 345�Table E.2: Contractor Work Components .................................................................................. 353�Table E.3: Commissioning Component Completion Targets .................................................... 354�Table E.4: Key Tasks and Milestones ........................................................................................ 356�

i

1.0 SUMMARY

Shore Gold Inc. (Shore) prepared this NI 43-101 compliant Technical Report (the Report) on the Feasibility Study (FS) for the Star – Orion South Diamond Project (the Project) situated in the Fort à la Corne (FalC) Provincial Forest, Saskatchewan, Canada. In addition, P&E Mining Consultants Inc. (P&E) and AECOM were retained and have prepared or contributed to sections of this Report. WWW International Diamond Consultants Ltd. (WWW) of Antwerp, Belgium provided the diamond pricing estimates utilized in the FS. This Report documents the Mineral Reserve Estimate as of July 14, 2011 for the Star – Orion South Diamond Project and the results of a FS for the potential Star – Orion South Diamond Project open pit mining and on-site processing operation. The Star Kimberlite deposit straddles a mineral disposition boundary between property that is held 100 % by Shore (Star Property), and property that is held by the FalC Joint Venture (FalC-JV), between Kensington Resources Ltd. (Kensington), a wholly-owned subsidiary of Shore (66 %) and Newmont Mining Corporation of Canada Limited (Newmont) (34 %) (the Star West Property). The Orion South Kimberlite deposit is held by the FalC-JV. Both the Star Diamond Project and the Orion South Diamond Project are operated by Shore and are being developed as a single entity as the Star – Orion South Diamond Project. The financial evaluation in the FS is done on a 100 % combined ownership basis and does not separate the cash flows of the joint venture partners. The FS assessed the viability of developing and operating the Project as open pits with on-site ore processing based on the proposed mining method, ore processing methodology, stated assumptions of technical, engineering, legal, operating, economic, social and environmental factors and other relevant factors with projected gross revenues from rough diamond sales. Costs are reported in Q2, 2011 Canadian dollars unless otherwise stated, and all projected revenues are reported in Canadian dollars.

KEY CONCLUSIONS The Base Case presented herein considers the February 2011 price book Model diamond prices plus 15 percent; Case 1 utilizes the February 2011 price book High Model diamond prices. The pre-tax and royalty results of the cash flow analysis for the Base Case and Case 1 are summarized in Table ES.1. The after-tax and royalty results of the cash flow analysis for the Base Case and Case 1 are summarized in Table ES.2. The FS has demonstrated the potential of the Project to become a significant diamond producer. As such, and assuming both a positive production decision by the Company’s board of directors and the FalC-JV, and the securing of financing, it is the opinion of the Company that the Project warrants being advanced to the detailed design phase, which will support the necessary construction permits to allow for the construction of a mine and process facility at FalC. It is recommended that the permitting applications adhere to the engineering plans developed as part of the FS. This Report has been prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects and Form 43-101 F1 Technical Report. The terms “Mineral Resource”, “Measured Mineral Resource”, “Indicated Mineral Resource”, “Inferred Mineral Resource”, “Mineral Reserve”, and “Probable Mineral Reserve” have the meanings ascribed to those terms by the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), as the

ii

CIM Definition Standards on Mineral Resources and Mineral Reserves adopted by CIM Council on December 11, 2005. Table ES.1: Pre-Tax and Royalty Results of the Cash Flow Analysis

1 The Project schedule includes an estimated 5 year pre-production period and a 20 year long mine production phase followed by mine closure.

2 The projected gross annual revenues from rough diamond sales have been estimated taking into consideration the mining and processing schedule; Model diamond parcel values by kimberlite unit presented in the WWW February 2011 re-pricing of samples of Star and Orion South diamonds; a US$0.945=CAD$1.00 exchange rate; and Shore’s current perception of the future diamond market.

3 The cash flow model for the Project estimates future federal, provincial and local government taxes. 4 The estimated capital and operating costs (± 15 % estimation) were derived from first principles and supported

by budget quotations and/or cost information derived from relevant cost databases and/or contractor quotations, and assumptions. The models include $253 million of contingency estimates on both capital and operating costs.

5 The results of the FS presented in this Report assess the economic viability of the following mining sequence: Star Pit - Phases 1 to 4, followed by Orion South Pit - Phases 1 and 2.

Table ES.2: After-Tax and Royalty Results of the Cash Flow Analysis

1 The Project schedule includes an estimated 5 year pre-production period and a 20 year long mine production phase followed by mine closure.

2 The projected gross annual revenues from rough diamond sales have been estimated taking into consideration the mining and processing schedule; Model diamond parcel values by kimberlite unit presented in the WWW February re-pricing of samples of Star and Orion South diamonds; a US$0.945=CAD$1.00 exchange rate; and Shore’s current perception of the future diamond market.

3 The cash flow model for the Project estimates future federal, provincial and local government taxes. 4 The estimated capital and operating costs (± 15 % estimation) were derived from first principles and supported

by budget quotations and/or cost information derived from relevant cost databases and/or contractor quotations, and assumptions. The models include $253 million of contingency estimates on both capital and operating costs.

5 The results of the FS presented in this Report assess the economic viability of the following mining sequence: Star Pit - Phases 1 to 4, followed by Orion South Pit - Phases 1 and 2.

Item Base Case

(Model Price + 15 %)1,2,3,4,5

Case 1 (High Model Price)1,2,3,4,5

Pre-tax & royalty IRR 16.4 % 19.3 % Pre-tax & royalty undiscounted total cash flow

$8,307 M $10,737 M

Pre-tax & royalty NPV (5%) $3,199 M $4,377 M Pre-tax & royalty NPV (7%) $2,136 M $3,041 M

Item

Base Case (Model Price + 15

% )1,2,3,4,5Case 1

(High Model Price)1,2,3,4,5

After-tax & royalty IRR 13.7 % 16.3 % After-tax & royalty undiscounted total cash flow

$5,558M $7,141 M

After-tax & royalty NPV (5%) $2,014 M $2,796 M After-tax & royalty NPV (7%) $1,272 M $1,879 M Payback 5.3 years 3.9 years

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PROJECT TIMELINE The FS assumes the following Project timelines:

� Detailed design planned to commence in second half of 2011; � Permitting activities to support a Q3, 2012 construction start; � SaskPower supply to site Q4, 2013; and � Processing plant commissioning approximately 4 years after acquiring the necessary

permits to proceed with construction. MINERAL RESERVE ESTIMATE The Star – Orion South Diamond Project updated Mineral Reserve Estimate was derived from the recent Mineral Resource dollar value per tonne block models created for the Star and Orion South Kimberlite deposits. Utilizing feasibility-level operating costs for mining, processing and G&A, along with engineered pit slopes, pit optimizations were undertaken to derive pit shells for design purposes for each deposit. The phased pit designs developed include allowance for vehicle access ramps, conveyor ramps, and berms. The resulting open pit design surfaces for Star and Orion South were subsequently utilized to determine the mineralization contained within the resource models that was amenable for conversion to Mineral Reserves by dollar value-cut-off. Only material in the measured and indicated resource categories were converted with dilution and losses applied to determine the Reserve. A summary of the Mineral Reserve for the Star – Orion South Diamond Project is shown in Table ES.3. Table ES.3: Star – Orion South Diamond Project Mineral Reserve as of July 14, 2011

Deposit Category Ore (mt) Ore Grade (cpht) Carats (m)

Star Probable 165.890 12.3 20.386

Orion South Probable 113.090 12.4 13.994

Total Probable 278.980 12.3 34,380Note: The Mineral Reserves have a 1 mm bottom screen size cut-off. PROCESS PLANT The FS estimates that the plant will process 14.3 Mtpa ore, which is equivalent to 87 % of the 16.4 Mtpa plant’s nameplate capacity. The plant design is substantially based on the Star Kimberlite deposit, which contains significantly harder rock and generates, on average, higher Dense Media Separation (DMS) mass yields than the Orion South Kimberlite deposit. DIAMOND PRICES The diamond prices used in the cash flow model for the Star – Orion South Diamond Project are based on valuations by WWW using their February 2011 price book. Expectations are

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that Shore will sell its rough diamonds through a sales arrangement (e.g. in Antwerp) at an estimated marketing cost of 2.0 % of gross value.

ROYALTIES The Government of Saskatchewan has developed its diamond royalty structure, and, as such, the financial analysis in the FS utilizes this structure. The government of Saskatchewan’s diamond royalty regime features:

� a one percent base royalty on the value of mine production, with an initial five-year holiday;

� a stepped royalty rate on profits to a maximum of 10 % once capital investment is fully recovered; and,

� full-cost recognition including a 100 % depreciation rate of capital costs and a processing allowance.

OVERBURDEN STRIPPING The FS includes a 20,000 tph capacity in-pit crush and convey (IPCC) system to strip overburden and waste rock which will be transported to a designated overburden and waste rock pile (overburden pile). The pre-strip of the sand and clay will be completed by truck and shovel fleet operated by Shore personnel. MINING The proposed Star and Orion South open pits will be conventional open pit mining operations. Shore will operate and maintain the waste stripping IPCC system, and mine the kimberlite ore using its own equipment and labour force. DEWATERING The open pits will be dewatered using deep dewatering wells and in-pit sumps and pumps. Hydrogeological modeling indicates that the pit dewatering systems will produce sufficient water to meet the plant’s process water requirements. ENERGY Electrical power will be obtained from the provincial electrical utility SaskPower. The incoming electrical supply will be via overhead lines and, thus, will not require extensive groundwork. During the initiation of the construction phase, however, diesel generators will be required to supply electricity to the temporary camp, site based office trailers and surface waste stripping operations. TRANSPORTATION During construction, a new road will be built to accommodate the large loads and heavy traffic that will travel to the Project location. The road would be constructed along existing rural municipality rights of way, with approximately 9 km built over existing provincial grid roads, and 20.9 km built through the FalC forest. Through the FalC forest, the road would

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generally follow the existing forestry roads, which would marginally reduce construction costs and the environmental impact associated with new road development. There is an opportunity to provide a rail spur to the site, although for the FS, no extension of the current line from Choiceland to site was utilized. ENVIRONMENT The draft Environmental Impact Statement (EIS) process for the Project was submitted in December 2010 to the Saskatchewan MOE and federal agencies for the Star – Orion South Diamond Project in consideration of the potential for a combined mining and processing project. The EIS is currently in the technical review phase. Comments from regulators and other reviewers have been considered in the FS relating to baseline studies, community engagement activities, potential impacts of the proposed Project, plans for the progressive reclamation and closure of the Project and the cumulative effects assessment. The EIA for the Project is being carried out under the terms of the Saskatchewan Canada Harmonization Agreement where projects that require an environmental assessment by both the federal and provincial governments undergo a single assessment, administered cooperatively by both governments. The EIA will follow the process for a comprehensive study under the Canadian Environmental Assessment Act (CEAA). The government agencies with interest in the EIA for the Project include the Saskatchewan MOE, the Canadian Environmental Assessment Agency, Fisheries and Oceans Canada, Natural Resources Canada, Environment Canada and Transport Canada. The EIA for the Project is a rigorous assessment with a high level of technical and regulatory scrutiny and will include public consultation and opportunities for feedback. Based on technical feedback on the EIS from reviewers, and incorporation of comments received into the feasibility design, including alternatives, Shore is not aware of any material environmental issues that would prevent the Project from proceeding. TECHNICAL SUMMARY LOCATION, ACCESS AND INFRASTRUCTURE The Star – Orion South Diamond Project is located in the FalC Provincial Forest, situated some 60 km east of Prince Albert, Saskatchewan. Good access is provided by paved highways, a grid gravel road system and an extensive network of forestry roads, passable by four-wheel drive and high clearance two-wheel drive vehicles all year round. The Project is situated on the north side of the Saskatchewan River, which can be crossed by bridge at either Prince Albert, to access the area from the west, or at Wapiti, north of Melfort, to access the area from the east. A 230 kV power line runs 9.6 km south of the area, and a large capacity 230 kV power line is located 21 km to the east. A pool of personnel is available from the many communities in the area. The climate in this region of Saskatchewan ranges from warm, dry summers with temperatures typically averaging 23°C to cold, dry winters with temperatures averaging -11°C. Precipitation averages 323 mm annually.

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TENURE AND SURFACE RIGHTS The Star Kimberlite deposit and associated infrastructure are located within mineral disposition S-132039 in Section 18 of Township 49, Range 19, west of the 2nd Meridian. Township 49 is located within the Rural Municipality of Torch River. This mineral disposition is part of a larger group of 23 contiguous mineral dispositions totalling 9,280 ha. Shore owns a 100 % working interest in these claims. Mineral dispositions have been legally surveyed in accordance with the Saskatchewan Mineral Disposition Regulations of 1986, Part IV, Article 30(1)(d), and the boundaries coincide with the boundaries of the land survey system pursuant to the Saskatchewan Land Surveys Act and with the boundaries of existing surveyed land parcels. Shore holds a 100 % interest in an additional 93 claims in the immediate area, for a total of 116 claims covering 38,830 ha as of July 7, 2011. Shore also holds an interest in the FalC-JV, which is partially contiguous with the Star Diamond Project. Two of the mineral dispositions within the FalC-JV are considered to be part of the Star Diamond Project, namely S-127109 and S-127186. The Orion South Diamond Project is situated entirely within FalC-JV claims. The FalC-JV holds 121 claims totalling 22,544 ha as of July 7, 2011. GENERAL GEOLOGY The Project lies near the northeastern edge of the Phanerozoic Interior Platform, which extends from the Rocky Mountains in the west, to the Precambrian Canadian Shield in the northeast. The Interior Platform sediments exceed 600 m in thickness. The unmetamorphosed sedimentary rocks of the Interior Platform unconformably overlie metamorphosed basement rocks. These Proterozoic basement rocks have been interpreted to form part of the Glennie Domain which has been tectonically emplaced overtop of the Archean Sask craton. In the Star and Orion South area, the Precambrian is estimated to be at a depth of 730 m. KIMBERLITE GEOLOGY Based on surface and underground core drilling and underground mapping data the Star and Orion South Kimberlite deposits contain two distinct types of kimberlite: 1) eruptive kimberlite phases; and, 2) kimberlitic sedimentary rocks. The eruptive kimberlites of the Star Kimberlite are sub-divided into five main phases: Cantuar Kimberlite, Pense Kimberlite, Early Joli Fou Kimberlite (EJF), Mid Joli Fou Kimberlite (MJF) and Late Joli Fou Kimberlite (LJF). The eruptive kimberlites of the Orion South Kimberlite are sub-divided into five main phases: Cantuar Kimberlite, Pense Kimberlite, EJF, LJF and Viking Kimberlite. Each phase has distinct physical and chemical properties that enable their mapping and stratigraphic correlation in three dimensions within each kimberlite. It is important to note, however, that two stratigraphically equivalent kimberlite packages (e.g. Pense Kimberlite on Star and Orion South) may not have any genetic relationship and each may have very different diamond grade and carat value characteristics. Some of the stratigraphically equivalent kimberlite units (e.g. EJF on Star and Orion South) do, however, have similarities

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in mineral constituents, mantle signatures, chemistry and diamond distribution that suggest a genetic relationship. The Star Kimberlite deposit is dominated by crater facies rocks, which include well-defined pyroclastic flows that radiate away from the crater. The sheet-like, inter-sedimentary Cantuar and Pense kimberlites are kimberlites deposited from pyroclastic flows from nearby kimberlite volcanoes. The EJF is a combination of vent filling pyroclastics and pyroclastic flows away from the crater. The MJF and LJF are crater facies vent filling pyroclastic kimberlite deposits. Within the Orion South Kimberlite, the phases have cross-cutting relationships near conduits, but are stacked vertically within the volcanic edifice and crater / extra-crater deposits. Several conduits, feeding different units, have been identified on Orion South. GEOLOGICAL MODELS A 3-D geological model for the Star Kimberlite was created from surface and underground drill information. Limited deep drilling restricts the 3-D modelling of the Star Kimberlite to the kimberlite above the 350 m level. The geological model estimates that the Star Kimberlite (including both the Star and Star West kimberlite) contains a total of approximately 278 Mt of kimberlite. The Orion South Kimberlite geological model contains a total estimated tonnage of between 333 and 375 Mt, with the high priority EJF estimated tonnage between 210 and 234 Mt (Figure 5.13). This geological estimate considers all kimberlite down to a depth of 445 m. SAMPLING AND SAMPLE PROCESSING

UNDERGROUND SAMPLING Shore sank a 250 m shaft at the Star Diamond Project, with a pumping station at 175 m from surface and a working level at 235 m from surface, in order to bulk sample the various kimberlite phases for diamond grade estimation and diamond valuation purposes. Shaft sinking began in January, 2003 and was completed in May, 2004. Underground drifting and bulk sampling was completed in April, 2007. Upon completion of the underground bulk sampling program on the Star Kimberlite, a combined total of 10,966 carats of commercial sized diamonds greater than 0.85 mm were recovered from a total of 75,435.68 dry tonnes of kimberlite material that was processed through Shore’s bulk sampling plant (BSP) from both Shore’s 100 % owned Star Kimberlite and the FalC-JV Star West bulk sampling programs. Tonnages include sampling of drift material, underground resource evaluation (RE) samples, geotechnical test samples and clean-up samples. The largest stone recovered from the Star underground bulk sample was a 49.50 carat stone. Shaft sinking to 210 m below surface commenced in July, 2007 at Orion South and with lateral drifting at a depth of 186 m below surface completed in February, 2009. After final processing of 75 underground batches (78 samples) from a total of 25,468 dry tonnes of kimberlite in March, 2009, there was a total recovery of 2,346 carats from the Orion South

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bulk sample. The largest stone recovered from the Orion South underground bulk sample was a 45.95 carat stone. All underground openings were geologically mapped and are adequate to support Mineral Reserve Estimation and related mine planning activities.

LARGE DIAMETER DRILLING Utilizing the entire Star Kimberlite LDD sampling (103 LDD holes) and processing (96 LDD holes processed) dataset a total of 1,416.6 carats were recovered from 11,662.8 processed tonnes (19,977.6 theoretical tonnes) of kimberlite. Upon completion of the LDD drilling program on Orion South, a total of 882 samples totalling 1,039.7 carats were recovered from 9,579.6 processed tonnes (16,213.2 theoretical tonnes) of kimberlite. These results include both the 1.20 metre diameter LDD holes drilled by the current joint venture and those from twenty-four 0.914 and 0.609 metre diameter LDD holes completed by the previous joint venture operators prior to 2006. The LDD data are acceptable for Mineral Reserve Estimation; however, adjustment for diamond breakage and stone loss during sampling is required. DIAMOND RECOVERY Shore purchased and commissioned a Bateman Engineering PTY Limited-designed process plant was commissioned in late January, 2004. The process plant consists of a 30 t/h crushing circuit, and a 10 t/h DMS circuit which utilizes a 250 mm diameter separating cyclone, and a recovery section consisting of a Flow Sort® X-Ray diamond-sorting machine and grease tables. All kimberlite was stored in individual batch samples in a dedicated storage facility. DIAMOND VALUATION Diamond prices used in this combined FS are based on valuations by WWW using their February 2011 price book. While High Model prices were used in the August 2009 reserve estimate for the Star Kimberlite, the September 2009 resource estimate for Orion South and the February 2010 combined Star and Orion South reserve estimate, the Base Case presented in the FS uses the more conservative Model prices plus 15 percent for each kimberlite unit within Star and Orion South. WWW is in agreement with the use of the Model Prices plus 15 percent for the FS. The Case 1 FS uses High Model prices for comparative purposes. The details of the February 2011 valuation of the Star and Orion South diamond parcels were published in Shore News Release dated March 2, 2011 and the parcel and model prices for the Star and Orion South diamonds used in this FS are listed in Table ES.4. According to WWW, current rough diamond prices are on average some 30 to 35 percent higher than the February 2011 pricebook.

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Table ES.4: The Parcel and Model Price Details for the Star and Orion South Kimberlites (February, 2011 pricebook)

DepositKimberlite Lithology

Model Price (US$/ct)

Model Price plus 15% (US$/ct)

Minimum Price

(US$/ct)High Price

(US$/ct)Star MJF-LJF $198 $225 $106 $290

EJF $225 $259 $176 $296Pense $175 $201 $131 $224Cantuar $355 $408 $281 $499

Orion South EJF $192 $221 $149 $258Pense $129 $148 $94 $177

Weighted average diamond prices calculated using the carat proportions of the Star and Orion South Mineral Reserve estimates (see Table ES.4) result in the values listed in Table ES.5. Table ES.5: Weighted Average Model and High Diamond Prices for the Star and Orion South Kimberlites

Kimberlite Weighted Average Model Price (US$/carat)

Weighted Average Model Price plus 15%

(US$/carat)

Weighted Average High Model Price

(US$/carat) Star $230 $264 $306 Orion South $182 $209 $245 Combined Star - Orion South

$210 $242 $281

MINE DESIGN BASIS Following the completion of the P&E 2009 Mineral Resource Estimates for the Star Diamond Project and the Orion South Diamond Project, the Project focus moved from a capital intensive data gathering exercise (underground bulk sampling, core drilling and LDD) to lower cost, engineering studies and data analysis including pit design, Mineral Reserve Estimation, and the PFS and FS. OPTIMIZATION Pit optimizations were undertaken to create pit shells that were then utilized as a guide for pit design purposes for the Star and Orion South pits. The inputs to the optimizations were as follows: Star Optimization To undertake the Star pit design exercise, an open pit optimization was completed using the Lerch-Grossman technique to create a pit shell that could be used as a guide for design purposes. The inputs to the optimization are in Table ES.6.

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Table ES.6: Summary of Star pit optimization inputs

Diamond Price: Taken from WWW February 2011 valuation Waste Mining Cost (by unit):Sand C$3.01/ tonneClay C$3.01/ tonneTill C$0.80/ tonneColorado, Mannville, and Kimberlite C$1.63/ tonneOre Mining Cost C$1.96/ tonneProcessing Cost C$2.24/ tonneG&A Cost C$2.64/ tonneUltimate Pit Slopes varied by unit as follows:Sand, Clay, Till 16°Colorado Group 15°Upper Mannville (Pense, Waseca, Sparky) 20°Mannville/Kimberlite 25°

The resulting optimized pit shell was used to produce plan views to guide the pit design on a bench by bench basis from pit bottom to pit crest. A five phase pit design approach was taken in order to reduce the amount of pre-strip waste removal and to reduce the waste / ore ratio and pit equipment capital expenditures in the early years of pit production. The starter pit (Phase 1a) is developed on a high grade zone, located in the southern portion of the deposit. The pit is expanded to Phase-1b, Phase-2, Phase-3, and Phase-4. Orion South Optimization In order to undertake the Orion South pit design exercise, a pit optimization was undertaken using MineSight’s economic pit routine to create a pit shell that could be used as a guide for design purposes. The inputs to the pit optimization are shown in Table ES.7.

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Table ES.7: Summary of Orion South pit optimization inputs

Diamond Price: Taken from WWW February 2011 valuation Waste Mining Cost (by unit):Sand C$2.66/ tonneClay C$2.66/ tonneTill C$1.22/ tonneColorado, Mannville, and Kimberlite C$1.63/ tonneOre Mining Cost C$1.96/ tonneProcessing Cost C$2.24/ tonneG&A Cost C$2.64/ tonneUltimate Pit Slopes varied by unit and azimuth (for the OVB) as follows:Azimuth (345 to 45) Overall inter-ramp angle: 20°

Sand and Clay 16°Till 22°

Azimuth (45 to 75; 130 to 165; 315 to 345) Overall inter-ramp angle: 22°

Sand and Clay 16°Till 27°

Azimuth (75 to 130; 165 to 315) Overall inter-ramp angle: 16°Sand and Clay 16°

Till 16°Colorado Group 15°

Upper Mannville (Pense, Waseca, Sparky) 20°Mannville/Kimberlite 25°

The resulting optimized pit shell was applied in conjunction with MineSight’s pit design utility where plan views were developed to guide the pit design on a bench-by-bench basis from pit bottom to pit crest. While a three phase approach has been considered in this FS for the Orion South design, going forward a two phase approach should be evaluated, with the first phase in the south end of the deposit with the second phase expanding to the north and depth. Phase 1A, shown in Figures 16.7 and 16.8, is essentially internal to Phase 1B thereby creating difficulties for ramp placement and the like during stripping of Phase 1B. The Phase 1A design was created to evaluate the possibility of reducing the upfront stripping requirements for Orion South. The approach and schedule contained below should be reviewed as Star is mined and re-optimized for final mine design.

GEOTECHNICAL AND HYDROGEOLOGICAL CONSIDERATIONS The proposed open pit designs are based on the results of pit slope geotechnical and hydrogeological investigations and assessments completed to date. The principal drivers of slope stability concerns relate to high ground water levels in shale and glacial sediments that will be slow to depressurize upon dewatering; and the existence of glacially sheared horizons, mostly in the Colorado Group (Westgate and Joli Fou Formation) shale and near the drift-bedrock contact. It is currently estimated that 23 dewatering wells will be required to depressurize the country rock around the Star open pit, and that an additional 7 dewatering wells will be required to depressurize the country rock around the Orion South open pit. It is

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estimated that a peak of approximately 130,800 m3/d of water may have to be pumped to lower water levels sufficiently for mining in year 19 while operations are ongoing in the Orion South pit. Based on 2009-2011 hydrogeological modeling, the pit dewatering rates will vary over the life of the mine. The deep well pumping rate is projected to range from 84,000 to 130,800 m3/d over the mine life. MINING OPERATION Comprehensive mining optimization simulations completed by P&E determined that the optimal economic approach to the mining of the combined Star – Orion South reserves is to commence with four phases over twelve years of mining on Star, followed by two phases over eight years of mining on Orion South for a total LOM of 20 years. The pit plans incorporate the geotechnical and hydrogeological design criteria developed through extensive site investigations and modeling. Conventional hydraulic excavators and haul trucks will be used to strip the upper sand and clay layers of the overburden, followed by an In-Pit Crush and Convey (IPCC) system to excavate the remaining till layers and waste rock materials thus exposing the kimberlite ore in Star and Orion South. The excavator and truck fleet will be used to mine the ore and to remove associated overburden and waste rock to another, smaller IPCC system. The ore and waste rock will be separately sized in the pit and subsequently conveyed to the processing plant ore stockpile and to the overburden pile, respectively. The pits will be developed by Shore, using Shore equipment and personnel. Shore will be responsible for: establishment of pit haulage roads; de-watering, production drilling and blasting; the excavation of ore to the primary crusher; excavation of overburden and waste rock to the overburden pile; boulder drilling and blasting, oversize breakage; haul road maintenance; and equipment maintenance. The overburden at the first open pit (e.g. Star Phase 1a) will be stripped by Shore using conventional earthmoving equipment including hydraulic excavators, haul trucks and scrapers. Shore will concurrently procure and commission the waste stripping IPCC system, and complete the Phase 1a waste stripping work to expose ore. The IPCC equipment will then be relocated to the Phase 1b pushback to recommence stripping. This general approach of using the IPCC system to strip to ore and then moving it to the next scheduled pit phase will be repeated over the LOM. The IPCC system will be progressively expanded over the LOM to include two overland conveyors: one between the Star pit and the overburden pile, and another between the Orion South pit and the overburden pile. The rate at which overburden and waste rock can be stripped by the IPCC system was assessed during the FS. P&E prepared a request for budget pricing package that included: a summary of geotechnical information relevant to the operation of equipment in the overburden and rock layers; conditions expected in the pits; preliminary equipment specifications including required throughput capacity and equipment options; conceptual layouts; and 15 m high benches. The request for budget pricing was reviewed with a leading IPCC system supplier and requests for budget pricing were also issued to two other suppliers.

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PHASED PIT DEVELOPMENT The FS is based on mining the Star open pit followed by Orion South. Star Kimberlite Deposit

The Star pit contains an estimated 165.89 million diluted tonnes of ore in the Probable Mineral Reserve category and 545 Mbcm of waste material. The pit will be developed in phases as noted in Table ES.8. Table ES.8: Star Open Pit Development Phases

Item Star Open Pit Development Phases Total 1a 1b 2 3 4

Diluted ore (Mt)1 29.46 25.76 45.18 49.45 16.02 165.89Waste: Surficial zone sand (Mbcm) 18.9 11.7 19.3 3.3 9.4 62 Surficial zone clay (Mbcm) 21.0 10.5 10.0 6.6 12.8 61 Tills (Mbcm) 107.2 41.4 49.0 38.4 39.4 275 Waste rock (Mbcm)2 31.6 18.3 41.4 37.7 17.5 146 Total waste (Mbcm) 178.7 81.9 119.7 86.0 79.1 545 Total waste (Mt)1 343.6 154.7 225.2 166.1 148.9 1038 Stripping ratio (bcm waste: t ore) (t waste: t ore)

6.06:1 11.66:1

3.18:1 6.00:1

2.65:1 4.98:1

1.74:1 3.36:1

4.94:1 9.29:1

3.28:1 6.26:1

1 Dry tonnes. Moisture is taken into account in equipment throughput and mine operating costs. 2 Includes Colorado and Manville formation rock and waste kimberlite. 3 Totals may not sum exactly due to rounding. Orion South Kimberlite Deposit The Orion South open pit contains an estimated 113.09 million diluted tonnes of ore in the Probable Mineral Reserve category and 398 Mbcm of waste material. The pit will be developed in phases as noted in Table ES.9. Table ES.9: Orion South Open Pit Development Phases

Item Orion South Open Pit Development Phases

Total

1a 1b 2 Diluted ore (Mt)1 24.91 32.30 55.87 113.09 Waste: Surficial zone sand (Mbcm) 37.6 34.1 21.2 92.9 Surficial zone clays (Mbcm) 28.8 20.7 11.9 61.4 Tills (Mbcm) 49.0 63.0 52.4 164.4 Waste rock (Mbcm)2 5.5 34.7 38.6 78.8 Total waste (Mbcm) 120.9 152.5 124.1 397.5 Total waste (Mt)1 216.5 281.5 235.8 733.8 Stripping ratio (bcm waste: t ore) (t waste: t ore)

4.85:1 8.69:1

4.72:1 8.71:1

2.22:1 4.22:1

3.51:1 6.49:1

1 Dry tonnes. Moisture is taken into account in equipment throughput and mine operating costs. 2 Includes Colorado and Manville formation rock and waste kimberlite. 3 Totals may not sum exactly due to rounding.

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MINE SCHEDULE AND PRODUCTION RATE The open pit, plant and infrastructure will be developed over a four year time line, and is scheduled to produce ore at a rate of 14.3 Mtpa for 20 years commencing in Q1, 2017. The proposed open pit production rate of 14.3 Mtpa is 87 % of the 16.4 Mtpa processing plant capacity and allows for possible mine production delays during pit mobile equipment and conveyor moves. The pit designs are sufficient to support a ± 15 % cost estimation for the purposes of the FS. PRODUCTION SCHEDULE The overall LOM production schedule is shown in Table ES.10. The schedule was developed taking into consideration the time line to procure the pit equipment and carry out the mine pre-production works including the pre-stripping of the surficial sand and clay layers within the Star Phase 1a pit; establishing mine services including electrical power; the 14.3 Mtpa ore processing rate; ore availability on benches; the phased pit development sequence; the waste stripping rate and IPCC waste system capacity; and inter-bench and inter-phase equipment moves. These and other aspects are incorporated in the detailed Project schedule.

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Table ES.10: LOM Open Pit Production Schedule

Year

Ore Production (Mt)

Waste Stripping (Mt) (Total tonnes of waste from pre-stripping, IPCC stripping, waste rock stripping during

mining)

Star Pit

Orion South

Pit

Star Pit Orion South Pit Phase

1a Phase

1b Phase 2 Phase 3 Phase 4 Phase

1a Phase

1bPhase 2

2012 5.955

2013 61.312

2014 100.917 4.347

2015 92.820 15.491

2016 0.416 72.906 15.280 3.156 5.482 5.615

2017 14.669 8.848 66.903 33.026 10.965 11.231

2018 14.966 1.243 50.933 16.258 11.231

2019 14.975 0.925 88.300 7.019 17.660

2020 15.145 0.277 57.801 21.735

2021 14.918 10.610 63.773 21.735 20.119

2022 14.897 10.138 44.751 6.995 21.735 20.119

2023 14.896 5.973 9.725 24.964 21.735 20.119

2024 14.745 8.460 8.641 4.076 20.119

2025 14.863 7.451 29.539 91.109 20.119 5.692

2026 15.674 0.248 15.544 32.647 3.874 34.904 17.012

2027 14.799 14.612 0.007 7.375 8.276 47.958 17.012

2028 0.925 10.0514 3.719 0.469 44.815 17.012

2029 3.2364 18.853 47.773

2030 15.103 15.791 80.114

2031 15.154 2.757 40.736

2032 15.170 19.035

2033 14.527 8.465

2034 15.346 2.118

2035 9.639 0.884

Total1,2 165.893 113.093 344 154 225 166 149 212 266 256 1 The tonnages are based on dry bulk densities. The pit equipment selection process and the mine operating cost

estimates take into account additional weight due to moisture. 2 Totals may not sum exactly due to rounding. 3 Dry tonnes of ore mined. 4 The Process Plant will continue to process 14.3 Mtpa ore in years 2028 and 2029. Ore reclaimed from a

stockpile will be fed to the plant at certain times in years 2028 and 2029 while the Orion South Phase 1b pit is being stripped and readied for ore production.

MINERAL RESERVE ESTIMATE AS OF JULY 14, 2011 The Star – Orion South Diamond Project updated Mineral Reserve Estimate was derived from the recent Mineral Resource dollar value per tonne block models created for the Star and Orion South Kimberlite deposits. Utilizing feasibility-level operating costs for mining, processing and G&A, along with engineered pit slopes, pit optimizations were undertaken to derive pit shells for design purposes for each deposit. The phased pit designs developed include allowance for vehicle access ramps, conveyor ramps, and berms. The resulting open pit design surfaces for Star and Orion South were subsequently utilized to determine the

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mineralization contained within the resource models that was amenable for conversion to Mineral Reserves by dollar value-cut-off. Only material in the measured and indicated resource categories were converted with dilution and losses applied to determine the Reserve. A summary of the Mineral Reserve for the Star – Orion South Diamond Project is shown in Table ES-11. Table ES.11: Mineral Reserve Estimate Kimberlite Unit Detail for Star – Orion South Diamond Project, effective July 14, 2011

Deposit Kimberlite Unit Ore (mt) Carats (m) Ore Grade (cpht)

STAR

LJF 4.078 0.093 2.3 MJF 22.403 1.057 4.7

EJF-Inner 88.364 13.554 15.3 EJF-Outer 33.783 3.039 9

Pense 7.802 1.203 15.4 Cantuar 9.460 1.440 15.2

STAR TOTAL 165.890 20.386 12.3

ORION SOUTH

EJF Inner 62.040 9.986 16.1 EJF Outer 17.362 1.680 9.7

Pense 33.688 2.328 6.9

ORION SOUTH TOTAL 113.090 13.994 12.4

TOTAL 278.980 34.380 12.3

Note: The Mineral Reserves have a 1 millimetre bottom screen size cut-off.

Inferred Resources In addition to the entire Mineral Reserve, an estimated total of 80 million tonnes of Inferred Resources containing a total of approximately 9.1 million carats are excavated by the FS pit designs for the Star and Orion South Kimberlites (Table ES-12). The cost of excavation of these Inferred Resources is included in the FS but processing costs and resultant revenue cannot be included as NI 43-101 only permits revenue derived from Indicated Resources to be reported.

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Table ES.12: Inferred Mineral Resource Estimate for the Star – Orion South Kimberlite Units, effective July 14, 2011

Deposit Kimberlite Unit Ore (mt) Carats (m) Grade (cpht)

STAR

LJF 0.053 0.001 1.8MJF - - -Pense 0.534 0.076 14.2EJF-Inner 1.821 0.294 16.1EJF-Outer 9.21 0.790 8.6Cantuar 0.003 0.000 13.4

STAR TOTAL 11.621 1.161 10.0

ORION SOUTH

Viking 0.277 0.026 9.5SAK 0.108 0.007 6.3LJF 9.928 0.523 5.3EJF Inner 21.79 4.231 19.4EJF Outer 24.977 2.095 8.4Pense Inner 10.963 1.021 9.3Pense Outer 0.584 0.034 5.8Cantuar 0.052 0.002 3.7

ORION SOUTH TOTAL 68.679 7.939 11.5TOTAL 80.300 9.100 11.3

ORE PROCESSING PLANT The Star – Orion South FS assumes that the processing facility will be optimally located near the Star and Orion South pit edges. The facility is designed to treat 45,000 tonnes of kimberlite per day employing autogenous milling as the primary diamond liberation method, followed by spiral classifiers and dense media separation. The recovery section employs magnetic separation and x-ray technology with grease as the scavenging technology to recover the low luminescence diamonds. Single particle sorters using both x-ray technology and laser Raman are used to further concentrate the material before hand-sorting. Extensive ore dressing investigations on drill core samples and pilot scale testing on underground bulk samples, coupled with detailed computer simulations, show that autogenous milling of the Star and Orion South Kimberlites offers the most efficient and cost effective method of diamond liberation. Furthermore, when the autogenous mills are operated within the simulated design specifications, diamond breakage and diamond damage is minimal. PROJECT INFRASTRUCTURE ELECTRICAL POWER SUPPLY Electrical service will be provided to the site by a 16 km transmission line at 230 kV, connecting to the existing provincial grid to the southeast of the site and crossing the Saskatchewan River. Shore has executed a Construction Agreement with the Saskatchewan Power Corporation to fund the design and construction of the appropriate power line for the Star – Orion South Diamond Project. This agreement also ensures that SaskPower will have the generation capacity required for the Project’s anticipated power requirements. An opportunity may exist to use geothermal systems for all of the Project’s heating requirements, which may reduce operating costs and be positive for the environment.

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ADMINISTRATION AND MAINTENANCE FACILITIES The Administration Building will provide a health centre and offices, meeting and lunch rooms, IT, medical and security personnel facilities. The administration building will be connected to the Maintenance Facility and to the Process Plant by exterior covered walkways. The maintenance facility will provide heavy equipment repair bays, welding shop, maintenance shop, machine shop, electrical and instrumentation shop, light vehicle repair bays, tire shop, changehouse facilities and mine offices. The diamond sorting facility will be established off-site. WATER BALANCE AND WATER MANAGEMENT The main components of the water management system are: the dewatering wells; the in-pit dewatering system; the PKCF and the polishing pond. The results of 2009-2011 hydrogeological modelling assessment indicate that the dewatering wells and the in-pit dewatering systems at the Star and Orion South open pits will produce sufficient quantities of water to meet the plant’s process water requirement. The hydrogeological model of the Project will be refined as part of the FS. SOCIAL AND ENVIRONMENTAL The Environmental Impact Assessment (EIA) process for the Star-Orion South Diamond Project (Project) has been on-going since the Project Proposal was filed in November 2008. The Environmental Impact Statement (EIS), which describes the potential environmental and socio-economic effects of the Project, was submitted to provincial and federal regulators in December 2010. Provincial, federal, and other reviewers have provided technical comments on the EIS, and Shore is currently working to address the questions and comments received. Once the regulators are satisfied with the responses, the EIS will be released for public comment. Anticipated provincial and federal EIA process timelines are accounted for in the FS. Shore currently has all necessary licences and permits for present on-site activities. The permits that will be required for the construction and operation of the proposed mine will be applied for following provincial and/or federal Ministerial approval upon conclusion of the EIA. While the majority of permits will be required from provincial authorities, permits required from the federal government include authorization from the Department of Fisheries and Oceans to allow anticipated changes to fish and fish habitat, permits from Natural Resources Canada for the explosives storage site and authorizations from Environment Canada and Transport Canada. This permitting phase is also accounted for in the FS schedule. Progressive reclamation of the overburden will proceed throughout the LOM and is accounted for in the G&A cost. Final site reclamation and closure, including the removal of site facilities, will be performed at the end of the LOM in accordance with Saskatchewan's Reclaimed Industrial Sites Act. The conceptual closure plan is based on a target end land use of self-sustaining forest. Since January 2007, Shore has listened to community concerns and ideas and provided information updates on development plans at regular meetings of the Diamond Development

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Advisory Committee (DDAC). The DDAC is a community-based committee comprised of approximately two dozen representatives of cities, towns, villages, rural municipalities and Aboriginal parties in the vicinity of the Fort à la Corne forest. As well, the general public has been widely consulted. Community Open House meetings conducted by Shore in furtherance of the Star-Orion South Diamond Project were successfully conducted in February 2009, and in June 2010, with local communities showing overwhelming support for the Project at both rounds of Open Houses. The meetings, held both years in six communities throughout the region of the proposed site, attracted hundreds of citizens and were part of the Environmental Impact Assessment process underway as a result of the filing of the Project Proposal. In addition, Shore hosted an Environmental Interests Workshop in Prince Albert in October 2010 at which potential environmental impacts arising from the project were presented, possible mitigation measures explored and input sought from a wide variety of community, environmental and government representatives. A description of extensive community engagement activities forms part of the Environmental Impact Statement submitted to the Saskatchewan Ministry of Environment and federal agencies in December 2010. Development of a mine will bring substantial economic development to the cities of Prince Albert and Melfort, as well as other communities in the surrounding district. The mine is expected to provide direct employment for hundreds of people throughout the construction phase and in excess of 500 people continuously over its 20 year operating life. There do not appear to be any material environmental issues that would prevent the Project from proceeding. FINANCIAL EVALUATION The Project has been valued using a discounted cash flow analysis, and the effects of changes in key cash flow inputs on the economic viability of the Project have been assessed. SUMMARY The Base Case presented herein considers the February 2011 price book Model diamond prices plus 15 percent; Case 1 utilizes the February 2011 price book High Model diamond prices. The pre-tax and royalty results of the cash flow analysis for the Base Case and Case 1 are summarized in Table ES.13. The after-tax and royalty results of the cash flow analysis for the Base Case and Case 1 are summarized in Table ES.14.

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Table ES.13: Pre-Tax and Royalty Results of the Cash Flow Analysis

1 The Project schedule includes an estimated 5 year pre-production period and a 20 year long mine production phase followed by mine closure.

2 The projected gross annual revenues from rough diamond sales have been estimated taking into consideration the mining and processing schedule; Model diamond parcel values by kimberlite unit presented in the WWW February 2011 re-pricing of samples of Star and Orion South diamonds; a US$0.945=CAD$1.00 exchange rate; and Shore’s current perception of the future diamond market.

3 The cash flow model for the Project estimates future federal, provincial and local government taxes. 4 The estimated capital and operating costs (± 15 % estimation) were derived from first principles and supported

by budget quotations and/or cost information derived from relevant cost databases and/or contractor quotations, and assumptions. The models include $253 million of contingency estimates on both capital and operating costs.

5 The results of the FS presented in this Report assess the economic viability of the following mining sequence: Star Pit - Phases 1 to 4, followed by Orion South Pit - Phases 1 and 2.

Table ES.14: After-Tax and Royalty Results of the Cash Flow Analysis

1 The Project schedule includes an estimated 5 year pre-production period and a 20 year long mine production phase followed by mine closure.

2 The projected gross annual revenues from rough diamond sales have been estimated taking into consideration the mining and processing schedule; Model diamond parcel values by kimberlite unit presented in the WWW February re-pricing of samples of Star and Orion South diamonds; a US$0.945=CAD$1.00 exchange rate; and Shore’s current perception of the future diamond market.

3 The cash flow model for the Project estimates future federal, provincial and local government taxes. 4 The estimated capital and operating costs (± 15 % estimation) were derived from first principles and supported

by budget quotations and/or cost information derived from relevant cost databases and/or contractor quotations, and assumptions. The models include $253 million of contingency estimates on both capital and operating costs.

5 The results of the FS presented in this Report assess the economic viability of the following mining sequence: Star Pit - Phases 1 to 4, followed by Orion South Pit - Phases 1 and 2.

CASH FLOW MODEL The cash flow models for the Base Case and Case 1 are summarized in Tables ES.15 and ES.16 respectively. The cash flow model was developed by Shore and is based on the same cash flow model that was reviewed in detail by P&E for the PFS. The discounted cash flow analysis is

ItemBase Case

(Model Price + 15 %)1,2,3,4,5Case 1

(High Model Price)1,2,3,4,5

Pre-tax and royalty IRR 16.4 % 19.3 % Pre-tax and royalty undiscounted total cash flow

$8,307 M $10,737 M

Pre-tax and royalty NPV (5%) $3,199 M $4,377 M Pre-tax and royalty NPV (7%) $2,136 M $3,041 M

ItemBase Case

(Model Price + 15 % )1,2,3,4,5Case 1

(High Model Price)1,2,3,4,5

After-tax and royalty IRR 13.7 % 16.3 % After-tax and royalty undiscounted total cash flow

$5,558M $7,141 M

After-tax and royalty NPV (5%) $2,014 M $2,796 M After-tax and royalty NPV (7%) $1,272 M $1,879 M Payback 5.3 years 3.9 years

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conventional and utilizes annual cash flow inputs (annual revenues) and annual costs (i.e. operating costs, capital costs, taxes) based on the mine plan and ore processing schedule, and assumes 100 % equity (0 % debt). The annual net cash flows are discounted back to present value at the date of evaluation (assuming a 2012 start date) using a range of discount rates and summed to determine the after-tax NPV of the Project. The IRR, the discount rate at which the NPV equals zero, was determined using the cash flow model.

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Table ES.15: Base Case Cash Flow (Model Price + 15 %)

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Table ES.16: Case 1 (High Model Price)

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ECONOMIC CRITERIA AND ASSUMPTIONS The economic criteria utilized in the Base Case and Case 1 are summarized in Table ES.17 and reviewed in the following subsections. Table ES.17: Economic Criteria Utilized in the Cash Flow Models

Area Criterion Base Case (Model Price + 15 %)

Case 1 (High Model Price)

Project Start Date

Assumed date of corporate approval to proceed with project

Q4, 2011 Q4, 2011

Production Parameters

Process plant functional Q4, 2016 Q4, 2016 Projected start of ore production Q4, 2016 Q4, 2016 No. of operating days per year 350 days per year 350 days per year Process plant availability 87 % 87 % Processing rate 45,000 tpd ore 45,000 tpd ore Estimated LOM total plant feed 279 Mt ore at a weighted

average 12.3 cpht grade 279 Mt ore at a weighted average 12.3 cpht grade

Diamond recovery 100 % 100 % Revenue Source of revenue Rough diamond sales Rough diamond sales

Revenue per tonne of ore processed (includes escalation)

$54.24 $63.12

Net revenue per tonne of ore processed after capital cost recovery

$19.92 $25.60

Weighted average diamond price per carat (February 2011 valuation)

US$210 plus 15% = US$242

US$281

Escalation Projected diamond price escalation 3.5 % 3.5 % Cost Assumptions

Cost escalation 0 % 0 % Exchange rate $1.00=US$0.945 $1.00=US$0.945 Marketing costs 2 % of gross revenue 2 % of gross revenue Royalties Based on Saskatchewan

royalty regime Based on Saskatchewan royalty regime

Operating Costs Mining (includes waste removal cost) $8.58 / tonne processed $8.58 / tonne processed Ore processing $3.01 / tonne processed $3.01 / tonne processed General and Administration $2.48 / tonne processed $2.48 / tonne processed

Capital Costs Capital over LOM $8.99 / tonne processed $8.99 / tonne processed Marketing Marketing cost $1.08 / tonne processed $1.26 / tonne processed Royalties Royalties cost $2.87 / tonne processed $3.81 / tonne processed Closure Mine closure cost $0.31 / tonne processed $0.31 / tonne processed Taxes Tax cost $6.98 / tonne processed $9.08 / tonne processed Contingency Applied to pre-production and mining

operating expenditures; mine, plant and facilities capital costs

$253 million $253 million

Level of Accuracy

+/- 15 % +/- 15 %

BASIS OF GROSS REVENUE ESTIMATES The projected annual gross revenues from the sale of rough diamonds are based on the ore release and processing schedule and a diamond valuation carried out by WWW. The

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projected annual gross revenues were converted to Canadian dollars and escalated as described in the section titled “Price Escalation” below. DIAMOND VALUATION The diamond prices used in the cash flow model for the Star – Orion South Diamond Project are based on valuations by WWW using their February 2011 price book. While High Model prices were used in the August 2009 reserve estimate for the Star Kimberlite, the September 2009 resource estimate for Orion South and the February 2010 combined Star and Orion South reserve estimate, the Base Case FS uses the more conservative Model prices plus 15 % for each kimberlite unit within Star and Orion South. WWW is in agreement with the use of the Model Prices plus 15 % for the FS. The Case 1 FS uses High Model prices for comparative purposes. The details of the February 2011 valuation of the Star and Orion South diamond parcels were published in Shore News Release dated March 2, 2011. According to WWW, current rough diamond prices are on average some 30 to 35 % higher than the February 2011 price book. WWW noted that the High Price scenario does not represent maximum values, and that, for modelling purposes, the same average price was applied to all stones of 6 ct or higher. PRICE ESCALATION The Base Case and Case 1 cash flows shown in Tables L.4 and L.5 utilize a 3.5 % annual compound diamond price escalation rate starting in year 2011 to year 2036. Shore anticipates that diamond prices will increase at a rate faster than costs due to long-term diamond supply / demand fundamentals. The 3.5 % escalation is based on price escalation forecasts obtained by Shore from WWW as well as a review of the industry. MARKETING COST Shore will sell and promote its rough diamonds and provide assurance as to their origin in accordance with the Kimberley Process. It is assumed that Shore will enter into an arrangement with a diamond marketer (e.g. in Antwerp) and that marketing costs will amount to 2.0 % of gross revenue. TAXES AND ROYALTIES The cash flow model takes Federal and Provincial corporate income taxes, the Federal Goods and Services Tax (GST), Saskatchewan Provincial Sales Tax (PST), and Municipal property and education taxes and projected royalties into consideration. There are currently no producing diamond mines in the Province of Saskatchewan, but in anticipation of the development of a diamond mine, the Province has developed its diamond sector royalty structure. The FS uses that diamond royalty structure and includes the estimated royalties in total cash costs, as indicated in Tables L.4 and L.5. As part of the work to estimate the diamond royalties, Shore consulted with authorities at various Saskatchewan government ministries, which allowed Shore to do a detailed model of how the royalty structure would react to Shore’s specific circumstances. The diamond royalty structure adopted by the Government of Saskatchewan is competitive with those in other Canadian jurisdictions and includes two components; an ad valorem component which is 1 percent of

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gross revenue and a profit component, which is based on a graduated system up to a maximum 10 percent of profit. The ad valorem component has a five year royalty holiday from the date of commercial production. Detailed regulations regarding the royalty structure are still being finalized by the Saskatchewan government. Based on current legislation, the projected combined federal and provincial income tax rates applicable at the time of anticipated production are 27 % of net income, the federal component being 15 % of net income and the provincial component being 12 % of net income. Net income for tax purposes allows for the deduction of normal operating costs, capital development and previous exploration work. The cash flow model assumes Canadian exploration expenses (CEE) and Canadian development expenses (CDE) tax pools incurred to the end of 2008 by Shore and its subsidiaries are available as a tax deduction to the Project. CEE are generally exploration expenses incurred to determine the existence of a Mineral Resource in Canada while CDE are, in Shore’s case, payments for interests in Canadian resource properties. Where tax pool deductions are limited as a percentage on an annual basis, the cash flow model assumes the Company will claim deductions to generate non-capital losses, which will maximize the present value of such tax pools. All other tax pools currently available to Shore and its subsidiaries, such as non-capital losses, capital cost allowance (CCA), and cumulative eligible capital, have been excluded from the cash flow model. All goods and services are subject to the Federal GST at rate of 5 %. This tax is refundable to Shore and is therefore not included in the analysis. Certain goods and services are subject to a Saskatchewan PST at a rate of 5 %. Capital and operating costs that are estimated to be subject to PST have been included in the cash flow model with an additional 5 % of the estimated costs to account for the PST. Municipal property tax and education taxes have been included in the G&A expense line of the cash flow model and have been estimated based on anticipated mill rates to be in effect and estimated assessable property values as determined by Saskatchewan Assessment Management Agency (SAMA). Estimated property taxes payable during the pre-production phase have also been included in capital. CONTINGENCY The $253 million contingency included in the models is allocated to the following areas as presented in Table ES.18 and in Table ES.19 over the LOM:

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Table ES.18: Summary of Contingency included in Base Case and Case 1 pre-production capital (years 2012 – 2016) Area Capital Contingency TotalProcessing Plant $ 504 M $ 49 M $ 553 MSite Facilities $ 300 M $ 29 M $ 329 MPre-strip of sand and clay $ 349 M $ 19 M $ 368 MIn Pit Crush and Convey System (IPCC) $ 472 M $ 6 M $ 478 MMobile Equipment $ 147 M $ 44 M $ 191 MTotal $ 1,772 M $ 148 M $ 1,919 M

Table ES.19: Summary of Contingency included in Base Case and Case 1 during production (years 2017-2036) Area Timeframe Contingency Processing Plant 2017 $ 1 M Mining Costs Over 2017-2034 $ 67 M Mobile Equipment Over 2017-2034 $ 37 M Total $ 105 M

SENSITIVITY ANALYSIS Economic risks were assessed using Base Case cash flow sensitivities to recovered grade, diamond prices, CAD$/US$ exchange rate, capital expenditure (CAPEX), and operating expenditure (OPEX). Each of the sensitivity items were independently adjusted up and down by 10 %, 20 % and 25 % to project the impact it would have on the NPV at a 7 % discount rate. The NPV of the Project after each sensitivity item was adjusted by 75 %, 80 %, 90 %, 110 %, 120 % and 125 % of the base case. The results are presented in Table ES.20. Table ES.20: Sensitivity Analysis Results (Pre-Tax and Royalty Basis, NPV (7 %))

75 % 80 % 90 % 100 % 110 % 120 % 125 %

Recovered Grade (cpht) $730 M $1,011 M $1,573 M $2,136 M $2,698 M $3,260 M $3,541 M

Diamond Price $730 M $1,011 M $1,573 M $2,136 M $2,698 M $3,260 M $3,541 M CAD$/US$ Exchange rate $3,984 M $3,522 M $2,752 M $2,136 M $1,632 M $1,211 M $1,027 M

CAPEX $2,596 M $2,504 M $2,320 M $2,136 M $1,952 M $1,768 M $1,676 M OPEX $2,576 M $2,488 M $2,312 M $2,136 M $1,960 M $1,783 M $1,695 M As depicted in Figure ES.1, the Star – Orion South Diamond Project is most sensitive to CAD$/US$ exchange rate fluctuations to the positive and Recovered Grade and Diamond Price to the negative. Capital costs and operating costs have a similar impact and are the least sensitive items in the model.

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Figure ES.1: Sensitivity Analysis (Pre-Tax and Royalty Basis, NPV (7 %))

0

500

1000

1500

2000

2500

3000

3500

4000

4500

0.7 0.8 0.9 1 1.1 1.2 1.3

NPV

�@�7%�After�Tax�($

M�CAD)

Per�Cent�of�Value

Sensitivity�Graph�at�7%�NPV

Recovered�Grade�(cpht)

Diamond�Price

CAD/US$�exchange�rate

Capital�Expenses

Operating�Expenses

1

2.0 INTRODUCTION The following Technical Report (the Report) presents the details of the updated Mineral Reserve Estimate as of July 14, 2011 along with the results of a Feasibility Study (FS) both prepared by Shore. Both the updated Mineral Reserve Estimate and the FS outlined in this report have been prepared in compliance with the requirements of Canadian National Instrument (NI) 43-101 and in accordance with guidelines of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council December 11, 2005. Shore is a Saskatoon based company trading on the TSX exchange under the symbol “SGF” with its corporate office at: 300-224 4th Avenue South Saskatoon, Saskatchewan S7K 5M5 Telephone: (306) 664-2202 Fax: (306) 664-7181 This report is considered current as of August 25, 2011. The Star – Orion South Diamond Project encompasses the Star Kimberlite deposit which straddles a mineral disposition boundary between ground that is held 100 % by Shore, and ground that is held by the Fort à la Corne Joint Venture (FalC-JV) between Kensington Resources Ltd. (“Kensington”, 66 %), a wholly owned subsidiary of Shore, and Newmont Mining Corporation of Canada Limited (“Newmont”, 34 %) and the Orion South Kimberlite deposit which is on 100 % FalC-JV property. The Star – Orion South Diamond Project is operated by Shore and is being explored and developed as a single entity. The financial evaluation in the FS is done on a 100 % basis and does not separate the cash flows of the joint venture partners. The FS for the Star – Orion South Diamond Project has been prepared by Shore. Shore retained and worked with a number of consulting firms, which then provided their study results to Shore for use in developing the FS. The general areas in which the consulting firms worked are as follows:

� AECOM: Design of infrastructure and capital estimation. � AMEC (Earth and Environmental): Geotechnical and environmental consulting in

regard to mine waste (processed kimberlite) management and disposal, groundwater and surface water management and water balance calculations.

� Clifton Associates Ltd (Clifton): Geotechnical consulting in regard to pit slope stability and trafficability in overburden horizons.

� ENGCOMP Engineering and Computing Professionals (ENGCOMP): Capital and cost estimation.

� Klohn Crippen Berger: Design of the processed kimberlite storage facilities. � Metso Minerals (Metso): Processing and plant design. � P&E Mining Consultants Inc. (P&E): The development of the updated Mineral

Reserve Estimate for the Star – Orion South Diamond Project based on the geological block models and data provided by Shore, on the following matters:

2

o The development of an open pit mining schedule for the phased development and exploitation of the Star and Orion South kimberlite deposits;

o The development of estimates of the open pit operating costs, and mine capital and sustaining capital costs, with cost accuracy to be ± 15 %; and

o An updated Mineral Reserve Estimate, block model, pit design, mine development and ore release schedule, mining capital and operating costs and financial evaluation.

� SRK Consulting (SRK): Geotechnical consulting with regard to pit slope stability below overburden/kimberlite contact and hydrogeological modelling of the Star and Orion South open pits and pit dewatering.

Shore provided overall management and coordination of the FS including liaison with its mining, metallurgical, geotechnical, hydrogeological and environmental consultants. Shore received and reviewed study results received from consultants and prepared the FS. The Star and Orion South kimberlite deposits have been exploration-drilled with advanced exploration underground workings including shafts, exploration level development and underground sampling. In developing the updated Mineral Reserve Estimate for the Star and Orion South kimberlite deposits, P&E assessed the possible influence of these underground workings on the updated Mineral Reserve Estimate and determined that it does not impact the updated Mineral Reserve Estimate and is well within the level of resolution for the FS. It is projected that these historical and small heading underground workings will collapse or can be backfilled as encountered and will have no significant effect on the envisaged open pit mining operation and mine operating costs. Shore managed the collection of the FS sections from its consultants, reviewed the information and prepared the report. All sections have been reviewed and approved for inclusion in the report by the Qualified Persons (QP) responsible for them. The following is a list of all the contributing QPs:

� Mr. Fred H. Brown, CPG, Pr.Sci.Nat. (P&E) � Dr. Wayne Ewert, P.Geo (P&E) � Mr. Shawn Harvey, P.Geo (Shore) � Mr. Al Hayden, P.Eng (P&E) � Mr. David Orava, P.Eng (P&E) � Mr. Eugene Puritch, P.Eng (P&E) � Mr. George Read, P.Geo (Shore) � Mr. Ethan Richardson, P.Eng (Shore) � Mr. Hugh Rudolf, P.Eng (AECOM) � Mr. Harnam Trehin, P.Eng. (P&E)

2.1 SITE VISITS During the course of the Mineral Resource / Mineral Reserve Estimation and FS process for the Star – Orion South Diamond Project, the following third party QPs visited the site to review the status of the Project, conduct audits, and discuss future plans with Shore staff.

3

Site visits by the QPs for the Report were as follows: Name Company Site Visit Dates

Mr. Fred Brown P&E May 4-7, 2008 Dr. Wayne Ewert P&E October 27-28, 2008 Mr. Al Hayden P&E No site visit Mr. David Orava P&E October 1, 2009 Mr. Eugene Puritch P&E October 1, 2009; October 27-28, 2008 Mr. Hugh Rudolf AECOM December 1, 2009; September 27, 2010 Mr. Harnam Trehin P&E No site visit Shore has accepted that the qualifications, expertise, experience, competence and professional reputation of all of the QPs who have contributed to this Report are appropriate and relevant for the preparation of this Report and the QPs are members of professional bodies that are appropriate and relevant for the preparation of this Report. The purpose of the Report is to provide a NI 43-101 compliant Technical Report and updated Mineral Reserve Estimate on the Star – Orion South Diamond Project. The QPs understand that this Report will be used for internal decision making purposes and may be used to support detailed design on the Star – Orion South Diamond Project. This Report will be filed to conform with the requirements of NI 43-101. 2.2 OWNERSHIP AND JOINT VENTURE As indicated the Star – Orion South Diamond Project includes the 100 % Shore owned Star Diamond Project, as well as Star West and the Orion South Kimberlite, which fall within the adjacent FalC-JV. Shore has a 66 % interest in the FalC-JV and Newmont has a 34 % interest.

2.3 ABBREVIATIONS AND SYMBOLS

Abbreviation Description

% Percent ~ Approximately ° Degree < Less than > Greater than μ Micron μg Microgram μm Micrometre �g/m –3 Microgram per cubic meter 3-D Three Dimensional AA Air Ambulance AADT Average annual daily traffic AAQO Ambient Air Quality Objective AARD Acid/Alkaline rock drainage ABA Acid base accounting

4

AED Aboriginal Employment Development AG Autogenous grinding AM Amplitude Modulation AMD Acid mine drainage AMEC AMEC Americas Limited ANFO Ammonium nitrate and fuel oil ASTM American Society for Testing and Materials ATV All Terrain Vehicle Avg Average Axb Measure of a rocks impact breakage Bateman Bateman Engineering PTY Limited bgl Below ground level BOD5 Five day biological oxygen demand BQ Drill core with a diameter of 36.4 mm BSP Bulk sample plant Budget Project’s value: accumulation of estimates plus factors and contingencies C Celsius C1 Upper Lacustrine Clay C2 Lower Lacustrine Clay CA Census Agglomeration CaCO3 Calcium Carbonate CAD$ Canadian dollar CanNorth Canada North Environmental Services Cameco Cameco Corporation CAP Community Access Program CAPEX Capital expenditure CBC Canadian Broadcasting Coorperation CCA Capital cost allowance CCME Canadian Council of Ministers of the Environment CCTV Closed circuit television CDE Canadian development expenses CEA Cumulative Effects Assessment CEA Act The Canadian Environmental Assessment Act CEAA Canadian Environmental Assessment Agency CEE Cumulative environmental effects CIM Canadian Institute of Mining, Metallurgy and Petroleum Clifton Clifton Associates Ltd cm Centimetres

cm3/g Centimetres cubed per gram

CMHC Canada Mortgage and Housing Corporation

CNP Carbonate Neutralization Potential CNW Canada News Wire

5

Coarse Ore

Typical def: Original Kimberlite fed into the Process Plant This material composition is important: too “fine" and the AG system does not have the mass required for scrubbing plus mine costs will be higher; too “coarse" chutes could plug or product may experience excessive breakage Coarse ore is ROM usually after primary crushing or sizing – depends on mining and the mine equipment

Coarse PK Coarse processed kimberlite

Concentrate Kimberlite material passing selection criteria that are largely based on specific mineral properties (eg high density)

COSEWIC Committee on the Status of Endangered Wildlife in Canada cpht Carats per hundred tonnes CPT Cone Penetration Test cpt Carats per tonne CSA Canadian Standards Association CSD Census Subdivision CT Current Transformer ct Carat CTV Canadian Television Network CWQG Canadian Water Quality Guidelines d Day d/wk Days per week dBA Decibal DBM Design Based Memorandum DDAC Diamond development advisory committee De Beers De Beers Canada Inc DFO Fisheries and Oceans Canada DMS Dense media separation DTC Diamond Trading Company EA Environmental Assessment EA Executive Air EIA Environmental Impact Assessment EIS Environmental Impact Statement EJF Early Joli Fou Kimberlite el Elevation level EM Electro-magnetic EPCM Engineering, procurement, construction management ERT Emergency Rescue Team Estimate Predicted value from design guide lines FalC Fort à la Corne FalC-JV Fort à la Corne Joint Venture FeSi Ferro silicon FF Foundation fieldbus Fine PK Fine processed kimberlite FM Frequency Modulation FMA fines management area FOS Factor of Safety

6

FS Feasibility Study ft Foot/feet g Gram G&A General and administration g/t Gram per tonne Gangue The valueless rock or mineral aggregated in the kimberlite GIS Geographic Information System GJ Gigajoule GLC Ground Level Concentrations Golder Golder Associates Gp Group (Several stratigraphic formations of similar sedimentological properties) GPS Global Positioning System GST Goods and services tax H Horizontal h Hour h/d Hours per day h/wk Hours per week h/y Hours per year ha Hectare HBR Heritage Resource Branch HCI Hydrologic Consultants Inc HIMS High intensity magnetic separator HLS Heavy liquid separation Howe A.C.A. Howe International Limited HPGR High pressure grinding roll HPRC High pressure rolls crusher HQ Drill core with a diameter of 63.5 mm HRIM Heritage Resource Impaqct Mitigation HSW Health, Safety and Wellness HSWDG Hazardous substances and waste dangerous goods HVAC Heating, ventilation and air conditioning Hwy Highway IBA Impact Benefit Agreement IFR Instrument Flight Rules IGA Information Gathering Agreement IP Internet Protocol IPCC In-pit crush and convey IRR Internal rate of return ISO/IEC Main standard used by testing and calibration laboratories

ISQG Interim Sediment Quality Guidelines IT Information technology JHA Job Hazard Analysis JLRPK Juvenile pyroclasts-rich pyroclastic kimberlite k Kilo (thousand)

7

K Hydraulic conductivity kBtu One thousand (1,000) British thermal units KDF-KSST Upper Kimberlitic Sediments – Star Kensington Kensington Resources Ltd kg Kilogram kg/h Kilograms per hour kg/m3 Kilograms per cubic metre kg/t Kilograms per tonne kh Horizontal hydraulic conductivity Kimberlite The volcanic rock containing the diamonds km Kilometre kPa Kilopascal KSTST-KSST Kimberlite sediments – Orion South kV Kilovolt kv Vertical hydraulic conductivity kVa Kilovolt amperes kW Kilowatt kWh Kilowatt hour L Litre LDD Large Diameter Drill LIMS Laboratory information management systems LJF Late Joli Fou kimberlite LJFKS Late Joli Fou kimberlitic Slump LOM Life of Mine LSA Local study area Ltd Limited M Mega or Million m Metre m/d Metres per day m2 Square metre m3 Cubic metre m3/d Cubic metres per day m3/h Cubic metres per hour m3/s Cubic metres per second Ma Millions of years masl Metres above sea level Mbps Megabits per second MCC Motor control centers, 600Vac, 3-phase, 60hz Metso Metso Minerals Canada Inc mg/L Milligrams per litre MIEPR Mineral Industry Environmental Protection Regulations

Mine The area of the kimberlite deposit that is being excavated through open pit mining methods

Mine Site The area containing the open pit(s), overburden and reject piles, plant facilities and associated mine infrastructure involved in the mining/processing operation

8

MJF Mid Joli Fou kimberlite ML Metal leaching MLS Multiple Listing Service ML/ARD Metal leaching/acid rock drainage mm Millimetre Mm3 Million cubic metres MMD Mobile mineral sizer MOE Ministry of Environment MOU Memoranda of Understanding MPA Maximum potential acidity MSC Mineral Services Canada Inc MSDS Material safety data sheet Mt Million tonnes Mtpa Million tonnes per annum MVA Megavolt-ampere MVAr Megovolt-amperes reactive (reactive power) MW Megawatt NCQ Northern Career Quest Newmont Newmont Mining Corporation of Canada Limited NGO Non-government Organization NI National Instrument No Number NO2 Nitrogen Dioxide NP Neutralization potential ratio (from acid base accounting analyses) NPI Net profit interest NPR Net potential ratio NPRI National Pollutant Release Inventory NPV Net Present Value NQ Drill core with a diameter of 47.6 mm NQC Northern Career Quest NRCAN Natural Resources Canada OH&S Occupational health and safety OPEX Operating expenditures Orion South pit Orion South Kimberlite open pit OVB Overburden P&E P&E Mining Consultants Inc P&H P&H Mining Equipment Inc PAG Potentially acid generating (rock) PCS Process Control System PEL Permissable Exposure Limit PFS Preliminary feasibility study PK Processed Kimberlite PKCF Processed Kimberlite Containment Facility PM Particulate Matter

9

PPE Personal protective equipment PQ Drill core with a diameter of 75.0 mm PSG Project Specific Guidelines PST Provincial sales tax PT Potential Transformer PZ Piezometer Q Quarter QA/QC Quality assurance and quality control QP Qualified Person RC reverse circulation (drilling) RE Resource Evaluation

Rejects Kimberlite material failing selection criteria that are largely based on specific mineral properties

RCMP Royal Canadian Mounted Police RM Rural Municipality ROM Run of Mine, Kimberlite as it is extracted from earth (mine) RPT Report RQD Rock quality designation RSA Regional Study Area RVK Resedimented volcaniclastic kimberlite S1 Upper Deltaic Sand S2 Lower Delatic Sand SAMA Saskatchewan Assessment Management Agency SARR Saskatchewan Archaeological Resource Record SaskPower Saskatchewan Power Corporation SE Saskatchewan Environment SEDAR System for Electronic Document Analysis and Retrieval SFD Size frequency distribution SG Specific Gravity SGF TSX symbol for Shore Gold Inc. SGS Lakefield SGS Lakefield Research Limited SGS Saskatoon SGS Canada Inc (Saskatoon) SHC Saskatchewan Housing Corporation Shore Shore Gold Inc SIIT Saskatchewan Indian Institute of Technologies Slime Kimberlite particles smaller, even much smaller, than 1 mm with water SMOE Saskatchewan Ministry of Environment SO2 Sulphur Dioxide Sortex Flow-Sort® X-ray diamond sorting machine SPT Standard Penetration Test SQL Sequel database SRC Saskatchewan Research Council SRK SRK Consulting SRSA Socio-Economic Regional Study Area SSWQO Site Specific Water Quality Objectives

10

SWEP Standard waste extraction procedure t Tonne (metric, 1,000 kg) t/a Tonnes per annum (year) t/d Tonnes per day t/h Tonnes per hour t/wk Tonnes per week T10 Drop test samples Ta Scrubbability Tailings Rejects or PK in a slurry form – typically rejects from the Comminution circuit TC Transport Canada TDS Total dissolved solids The Project Star-Orion South Diamond Project TK Traditional Knowledge TLU Traditional Land Use tph Tonnes per hour TSP Total suspended particulate TSX Toronto Stock Exchange UCS Unconfined compressive strength UG Underground drift bulk samples UKS Upper Kimberlitic Sediments US$ US dollar UTM Universal Transverse Mercator V Vertical VC Valued Component WAN/LAN Wide Area Network / Local Area Network WHIMS Wet high intensity magnetic separator WHMIS Workplace hazardous materials information system wt Wet tonne WWW WWW International Diamond Consultants Ltd y Year

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3.0 RELIANCE ON OTHER EXPERTS The authors of this Technical Report have assumed, and relied on the fact, that all the information and existing technical documents listed in the references section of this Report are accurate and complete in all material aspects. While all the available information presented to us has been carefully reviewed, we cannot guarantee its accuracy and completeness. We reserve the right, but will not be obligated, to revise our Report and conclusions if additional information becomes known to us subsequent to the date of this Report. A draft copy of this Report has been reviewed for factual errors by all the QPs and the QPs have relied on Shore’s historical and current knowledge of the property in this regard. Any statements and opinions expressed in this document are given in good faith and in the belief that such statements and opinions are not false and misleading at the date of this Report. When preparing this Report, Shore liaised with senior representatives of the Saskatchewan Power Corporation (SaskPower) in regard to power transmission line cost and timing and electrical power cost; Saskatchewan MOE in regard to EIA completion and EIS preparation; and other government ministries in regard to taxation and the development of a diamond royalty structure for Saskatchewan. Shore’s personnel provided cost information / criteria to the QPs including: tabulated projected annual labour cost including payroll burdens on a per person basis for staff, mine and plant operations and maintenance job classifications; unit costs for new pit mobile and ancillary equipment and IPCC equipment based on budget quotes received from suppliers during the preparation of the FS; information on the projected drilling and blasting of a portion of the total ore and waste rock tonnage contained within the pit limits; and the projected electrical power cost and diesel fuel price. Shore provided its cash flow model to the QPs and provided guidance concerning applicable corporate and sales taxes, royalties, price escalation, diamond marketing costs, available tax pools, mineral lease costs and other information applicable to the Project revenue or income. During the QPs’ detailed review of the cash flow model and the inputs to the model, Shore also provided supporting information in regard to the reported WWW February 2011 diamond parcel valuation; tax pool; and the corporate tax rates as reported in tabulated substantively enacted income tax rates for general corporations (KPMG, 2009) in which in year 2012 and beyond the gross federal rate is projected to reduce to 15 % and the provincial (Saskatchewan) rate is projected to be 12 %. The QPs have relied on publicly available information concerning trailing average US$/CAD$ exchange data obtained from the Bank of Canada, and publicly available information with respect to the Province of Saskatchewan’s diamond royalty structure. The QPs also reviewed the status of the EIA process for the Project and assessed the social and environmental aspects of the Project using information provided by Shore as well as publicly available information.

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Diamond Valuations Shore retained WWW International Diamond Consultants Ltd. (WWW) to price diamonds from the Star – Orion South Diamond Project. WWW’s February 2011 rough diamond pricing was utilized in projecting annual gross revenues from rough diamond sales. In addition, Shore retained WWW to provide a report on diamond price forecasting and the diamond market outlook. This report was used as the basis for the diamond price escalation value (3.5 %) used in the financial model utilized in the FS. In the opinion of the QPs, it is reasonable to rely on the opinions and reports of WWW because WWW is recognized as an international leader in the fields of diamond valuation, diamond price forecasting and diamond market outlooks, and whose experts provide the valuations for the Federal Government of Canada for the Canadian diamond mines in the Northwest Territories and for the Province of Ontario for the Victor Mine. In preparation of the FS and this Report, Shore utilized the following information from WWW:

� Valuation and Modelling of the Average Price of Diamonds from the Star Diamond Project – February 2011.

� Valuation and Modelling of the Average Price of Diamonds from the Orion South Diamond Project – February 2011.

� Price Forecast for the Star and Orion South Kimberlites – March 2011 While diamond prices have continued to increase, there is always a risk that they may not continue to rise as rapidly as they have in 2011, and there is always a risk that diamond prices may fall due to instability in world financial markets. Geotechnical Investigations The geotechnical investigations of the overburden and sub-overburden were completed by Clifton and SRK, respectively. The purpose of these investigations was to gather information to complete a slope stability analysis and provide engineering slope design parameters for mine planning purposes and mine equipment trafficability assessments. The geotechnical assessments made by Clifton and SRK were relied upon in sections 16.2 to 16.5 of the Report utilized by the QPs and include: � Clifton Associates Limited (2011): Geotechnical and geological feasibility report for

the Star and Orion South orebodies, Fort à la Corne Kimberlite Field, Saskatchewan, dated July 20, 2011 and

� SRK Consulting (2010): Pit Slope Design for the Orion South and Star Kimberlite Deposits. Dated October 2010.

Clifton and SRK are both geotechnical experts with Clifton having critical geotechnical experience in Saskatchewan overburden units and SRK having critical geotechnical experience in kimberlite deposits worldwide.

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4.0 PROPERTY DESCRIPTION AND LOCATION The Star – Orion South Diamond Project (the Project) is located in the Fort à la Corne (FalC) Provincial Forest approximately centred at 53° 15' N latitude and 104° 48' W longitude and situated 60 km east of Prince Albert, Saskatchewan (Figure 4.1). Highway 55, located to the north of the Project, connects Prince Albert with several towns located directly north of FalC to the town of Nipawin, east of FalC. Highway 6 runs north-south and is located to the east of FalC. Figure 4.1: Location Map of the Star-Orion South Diamond Project

The Project is accessible by paved highways, a grid gravel road system and an extensive network of forestry roads, passable to four-wheel drive and high-clearance two-wheel drive vehicles all year round. 4.1 SHORE AND FALC-JV EXPLORATION LICENSES The Star Kimberlite deposit and associated infrastructure are located within mineral disposition S-132039 in Section 18 of Township 49, Range 19, west of the 2nd Meridian. Township 49 is located within the Rural Municipality of Torch River. This mineral disposition is part of a larger group of 23 contiguous mineral dispositions totalling 9,280 ha. Shore owns a 100 % working interest in these claims. Mineral dispositions have been legally surveyed in accordance with the Saskatchewan Mineral Disposition Regulations of 1986, Part IV, Article 30(1)(d), and the boundaries coincide with the boundaries of the land survey system pursuant to the Saskatchewan Land Surveys Act and with the boundaries of existing surveyed land parcels.

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Shore holds a 100 % interest in an additional 93 claims in the immediate area, for a total of 116 claims covering 38,830 ha as of July 7, 2011 (Figure 4.2). Shore also holds an interest in the FalC-JV, which is partially contiguous with the Star Diamond Project. Two of the mineral dispositions within the FalC-JV are considered to be part of the Star Diamond Project, namely S-127109 and S-127186. The Orion South Diamond Project is situated entirely within FalC-JV claims. The FalC-JV holds 121 claims totalling 22,544 ha as of July 7, 2011. As shown in Tables 4.1 and 4.2, all Shore and FalC-JV dispositions including those that cover the Star – Orion South Diamond Project are in good standing as of July 7, 2011. In accordance with Saskatchewan Mineral Disposition Regulations, 1986, Sask. Reg. 30/86 (under the Crown Minerals Act, S.S. 1984-85-86, c-50.2), each claim may be held for two years and, thereafter, from year to year subject to the holder expending the required amounts in exploration operations on the claim lands. There are no charges for the first year of the claim; there is a $12/ha fee for the second to tenth year and a $25/ha fee for every year thereafter. As Saskatchewan Ministry of Energy and Resources accepts assessment work as credit instead of paying the yearly fees, most of the claims have enough assessment credits to keep them in good standing for several years. Figure 4.2: Shore and FalC-JV Mineral Disposition Map

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Table 4.1: Tenure Summary of Shore 100 % Held Property, Effective July 7, 2011 Disposition(Claim) Number

Area(Ha) Effective Date Renewal Date Current Status

S-124672 256 8/16/1988 8/15/2011 ACTIVE S-124674 256 8/16/1988 8/15/2011 ACTIVE S-127283 256 6/1/1992 5/31/2011 ACTIVE S-127284 256 6/1/1992 5/31/2011 ACTIVE S-132025 256 12/1/1995 11/30/2011 ACTIVE S-132026 128 12/1/1995 11/30/2011 ACTIVE S-132027 128 12/1/1995 11/30/2011 ACTIVE S-132028 128 12/1/1995 11/30/2011 ACTIVE S-132029 128 12/1/1995 11/30/2011 ACTIVE S-132030 256 12/1/1995 11/30/2011 ACTIVE S-132031 128 12/1/1995 11/30/2011 ACTIVE S-132032 128 12/1/1995 11/30/2011 ACTIVE S-132033 512 12/1/1995 11/30/2011 ACTIVE S-132034 512 12/1/1995 11/30/2011 ACTIVE S-132035 512 12/1/1995 11/30/2011 ACTIVE S-132036 512 12/1/1995 11/30/2011 ACTIVE S-132037 512 12/1/1995 11/30/2011 ACTIVE S-132038 512 12/1/1995 11/30/2011 ACTIVE S-132039 256 12/1/1995 11/30/2011 ACTIVE S-132079 512 1/19/1996 1/18/2012 ACTIVE S-132080 256 1/19/1996 1/18/2012 ACTIVE S-132081 512 1/19/1996 1/18/2012 ACTIVE S-132082 256 1/19/1996 1/18/2012 ACTIVE S-133444 64 2/2/1998 2/1/2012 ACTIVE S-133445 128 2/2/1998 2/1/2012 ACTIVE S-133446 128 2/2/1998 2/1/2012 ACTIVE S-133447 128 2/2/1998 2/1/2012 ACTIVE S-133452 128 2/2/1998 2/1/2012 ACTIVE S-133453 128 2/2/1998 2/1/2012 ACTIVE S-133454 192 2/2/1998 2/1/2012 ACTIVE S-133455 256 2/2/1998 2/1/2012 ACTIVE S-133456 96 2/2/1998 2/1/2012 ACTIVE S-133457 128 2/2/1998 2/1/2012 ACTIVE S-133458 128 2/2/1998 2/1/2012 ACTIVE S-133459 32 2/2/1998 2/1/2012 ACTIVE S-133460 256 2/2/1998 2/1/2012 ACTIVE S-133461 192 2/2/1998 2/1/2012 ACTIVE S-133714 128 6/1/1998 5/31/2012 ACTIVE S-133715 128 6/1/1998 5/31/2012 ACTIVE S-133716 128 6/1/1998 5/31/2012 ACTIVE

16

Disposition(Claim) Number

Area(Ha) Effective Date Renewal Date Current Status

S-133717 256 6/1/1998 5/31/2012 ACTIVE S-133722 256 6/1/1998 5/31/2012 ACTIVE S-133723 256 6/1/1998 5/31/2012 ACTIVE S-133726 256 6/1/1998 5/31/2012 ACTIVE S-133733 128 8/5/1998 8/4/2011 ACTIVE S-134407 64 9/20/2000 9/19/2011 ACTIVE S-135759 384 7/2/2002 7/1/2011 ACTIVE S-135760 256 7/2/2002 7/1/2011 ACTIVE S-135761 256 7/2/2002 7/1/2011 ACTIVE S-135762 256 7/2/2002 7/1/2011 ACTIVE S-135763 256 7/2/2002 7/1/2011 ACTIVE S-135764 256 7/2/2002 7/1/2011 ACTIVE S-135765 256 7/2/2002 7/1/2011 ACTIVE S-135766 256 7/2/2002 7/1/2011 ACTIVE S-135767 256 7/2/2002 7/1/2011 ACTIVE S-135771 256 7/2/2002 7/1/2011 ACTIVE S-135772 256 7/2/2002 7/1/2011 ACTIVE S-135773 256 7/2/2002 7/1/2011 ACTIVE S-135818 32 9/3/2002 9/2/2011 ACTIVE S-135819 32 9/3/2002 9/2/2011 ACTIVE S-135820 16 9/3/2002 9/2/2011 ACTIVE S-135841 192 2/3/2003 2/2/2012 ACTIVE S-136686 128 11/3/2003 11/2/2011 ACTIVE S-137280 24 4/1/2004 3/31/2012 ACTIVE S-137321 512 4/1/2004 3/31/2012 ACTIVE S-137322 512 4/1/2004 3/31/2011 ACTIVE S-137323 512 4/1/2004 3/31/2011 ACTIVE S-137324 512 4/1/2004 3/31/2011 ACTIVE S-137327 512 4/1/2004 3/31/2012 ACTIVE S-137328 512 4/1/2004 3/31/2011 ACTIVE S-137332 128 4/1/2004 3/31/2012 ACTIVE S-137333 512 4/1/2004 3/31/2011 ACTIVE S-137921 256 1/3/2005 1/2/2012 ACTIVE S-137924 192 1/3/2005 1/2/2012 ACTIVE S-137925 256 1/3/2005 1/2/2012 ACTIVE S-137926 256 1/3/2005 1/2/2012 ACTIVE S-138346 128 5/1/2005 4/30/2012 ACTIVE S-138873 64 12/1/2005 11/30/2011 ACTIVE S-139000 512 1/3/2006 1/2/2012 ACTIVE S-139006 256 1/3/2006 1/2/2012 ACTIVE S-139010 128 1/3/2006 1/2/2012 ACTIVE S-140248 1024 6/19/2006 6/18/2012 ACTIVE

17

Disposition(Claim) Number

Area(Ha) Effective Date Renewal Date Current Status

S-140253 1024 6/19/2006 6/18/2012 ACTIVE S-140256 512 6/19/2006 6/18/2012 ACTIVE S-140257 1024 6/19/2006 6/18/2012 ACTIVE S-140259 768 6/19/2006 6/18/2012 ACTIVE S-140263 1024 6/19/2006 6/18/2012 ACTIVE S-140264 256 6/19/2006 6/18/2012 ACTIVE S-140265 512 6/19/2006 6/18/2012 ACTIVE S-140268 768 6/19/2006 6/18/2012 ACTIVE S-140269 1024 6/19/2006 6/18/2012 ACTIVE S-140271 512 6/19/2006 6/18/2012 ACTIVE S-140272 1024 6/19/2006 6/18/2012 ACTIVE S-140273 1280 6/19/2006 6/18/2012 ACTIVE S-140274 1013 6/19/2006 6/18/2012 ACTIVE S-140275 1024 6/19/2006 6/18/2012 ACTIVE S-140276 224 6/19/2006 6/18/2012 ACTIVE S-140277 256 6/19/2006 6/18/2012 ACTIVE S-140471 64 9/19/2006 9/18/2011 ACTIVE S-140472 64 9/19/2006 9/18/2011 ACTIVE S-140473 640 9/19/2006 9/18/2011 ACTIVE S-140474 256 9/19/2006 9/18/2011 ACTIVE S-140475 64 9/19/2006 9/18/2011 ACTIVE S-140476 768 9/19/2006 9/18/2011 ACTIVE S-140477 768 9/19/2006 9/18/2011 ACTIVE S-140529 384 11/16/2006 11/15/2011 ACTIVE S-140530 72 11/16/2006 11/15/2011 ACTIVE S-141420 512 12/20/2006 12/19/2011 ACTIVE S-141426 128 12/20/2006 12/19/2011 ACTIVE S-141427 64 12/20/2006 12/19/2011 ACTIVE S-141875 768 7/19/2007 7/18/2011 ACTIVE S-143354 128 1/28/2010 1/27/2012 ACTIVE S-143355 185 1/28/2010 1/27/2012 ACTIVE S-143356 256 1/28/2010 1/27/2012 ACTIVE S-143724 48 3/7/2011 3/6/2013 ACTIVE S-143732 256 5/26/2011 5/25/2013 ACTIVE 116 38,830

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Table 4.2: Tenure Summary of the FalC-JV Property, Effective July 7, 2011

Disposition (Claim) Number

Area (Ha) Effective Date Renewal Date Current Status

S-124553 768 8/12/1988 8/11/2011 ACTIVE S-124554 768 8/12/1988 8/11/2011 ACTIVE S-124555 768 8/12/1988 8/11/2011 ACTIVE S-124556 768 8/12/1988 8/11/2011 ACTIVE S-124557 768 8/12/1988 8/11/2011 ACTIVE S-124561 512 8/12/1988 8/11/2011 ACTIVE S-124562 512 8/12/1988 8/11/2011 ACTIVES-124563 512 8/12/1988 8/11/2011 ACTIVE S-124568 512 8/12/1988 8/11/2011 ACTIVE S-124573 256 8/12/1988 8/11/2011 ACTIVES-124574 256 8/12/1988 8/11/2011 ACTIVE S-124639 192 8/16/1988 8/15/2011 ACTIVE S-124640 384 8/16/1988 8/15/2011 ACTIVES-124641 384 8/16/1988 8/15/2011 ACTIVE S-124646 576 8/16/1988 8/15/2011 ACTIVE S-124647 384 8/16/1988 8/15/2011 ACTIVE S-124649 512 8/16/1988 8/15/2011 ACTIVE S-124651 768 8/16/1988 8/15/2011 ACTIVE S-124652 768 8/16/1988 8/15/2011 ACTIVE S-124653 768 8/16/1988 8/15/2011 ACTIVE S-125981 256 7/20/1989 7/19/2011 ACTIVE S-125983 128 7/20/1989 7/19/2011 ACTIVE S-126003 256 7/20/1989 7/19/2011 ACTIVE S-126004 256 7/20/1989 7/19/2011 ACTIVE S-126007 256 7/20/1989 7/19/2011 ACTIVE S-126008 256 7/20/1989 7/19/2011 ACTIVE S-126009 256 7/20/1989 7/19/2011 ACTIVE S-126010 256 7/20/1989 7/19/2011 ACTIVES-126038 64 8/18/1989 8/17/2011 ACTIVE S-126039 64 8/18/1989 8/17/2011 ACTIVE S-126040 64 8/18/1989 8/17/2011 ACTIVES-126041 64 8/18/1989 8/17/2011 ACTIVE S-126042 64 8/18/1989 8/17/2011 ACTIVE S-126043 64 8/18/1989 8/17/2011 ACTIVE S-126044 64 8/18/1989 8/17/2011 ACTIVE S-126045 64 8/18/1989 8/17/2011 ACTIVE S-126046 64 8/18/1989 8/17/2011 ACTIVE S-126047 64 8/18/1989 8/17/2011 ACTIVE S-126048 64 8/18/1989 8/17/2011 ACTIVE S-126049 64 8/18/1989 8/17/2011 ACTIVE

19

Disposition (Claim) Number

Area (Ha) Effective Date Renewal Date Current Status

S-126095 64 8/28/1989 8/27/2011 ACTIVE S-126096 64 8/28/1989 8/27/2011 ACTIVE S-126097 64 8/28/1989 8/27/2011 ACTIVE S-126098 64 8/28/1989 8/27/2011 ACTIVE S-126099 64 8/28/1989 8/27/2011 ACTIVE S-126100 64 8/28/1989 8/27/2011 ACTIVE S-126101 64 8/28/1989 8/27/2011 ACTIVE S-126102 64 8/28/1989 8/27/2011 ACTIVE S-126103 64 8/28/1989 8/27/2011 ACTIVE S-126104 64 8/28/1989 8/27/2011 ACTIVE S-126105 64 8/28/1989 8/27/2011 ACTIVE S-126106 64 8/28/1989 8/27/2011 ACTIVE S-126112 64 9/6/1989 9/5/2011 ACTIVE S-126113 64 9/6/1989 9/5/2011 ACTIVE S-126114 64 9/6/1989 9/5/2011 ACTIVE S-126115 64 9/6/1989 9/5/2011 ACTIVE S-126116 64 9/6/1989 9/5/2011 ACTIVE S-126117 64 9/6/1989 9/5/2011 ACTIVE S-126118 64 9/6/1989 9/5/2011 ACTIVE S-126119 64 9/6/1989 9/5/2011 ACTIVE S-126120 64 9/6/1989 9/5/2011 ACTIVE S-126121 64 9/6/1989 9/5/2011 ACTIVE S-126122 64 9/6/1989 9/5/2011 ACTIVE S-126123 64 9/6/1989 9/5/2011 ACTIVE S-126124 64 9/6/1989 9/5/2011 ACTIVE S-126221 64 9/13/1989 9/12/2011 ACTIVE S-126257 64 9/21/1989 9/20/2011 ACTIVE S-127085 64 1/2/1991 1/1/2012 ACTIVE S-127086 64 1/2/1991 1/1/2012 ACTIVE S-127087 64 1/2/1991 1/1/2012 ACTIVE S-127088 64 1/2/1991 1/1/2012 ACTIVE S-127089 64 1/2/1991 1/1/2012 ACTIVE S-127090 64 1/2/1991 1/1/2012 ACTIVE S-127091 64 1/2/1991 1/1/2012 ACTIVE S-127092 64 1/2/1991 1/1/2012 ACTIVE S-127093 64 1/2/1991 1/1/2012 ACTIVE S-127094 64 1/2/1991 1/1/2012 ACTIVE S-127095 64 1/2/1991 1/1/2012 ACTIVE S-127096 64 1/2/1991 1/1/2012 ACTIVE S-127097 32 1/2/1991 1/1/2012 ACTIVE S-127098 64 1/2/1991 1/1/2012 ACTIVE S-127099 64 1/2/1991 1/1/2012 ACTIVE

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Disposition (Claim) Number

Area (Ha) Effective Date Renewal Date Current Status

S-127100 64 1/2/1991 1/1/2012 ACTIVE S-127101 64 1/2/1991 1/1/2012 ACTIVE S-127102 64 1/2/1991 1/1/2012 ACTIVE S-127103 64 1/2/1991 1/1/2012 ACTIVE S-127104 64 1/2/1991 1/1/2012 ACTIVE S-127105 64 1/2/1991 1/1/2012 ACTIVE S-127106 64 1/2/1991 1/1/2012 ACTIVE S-127107 64 1/2/1991 1/1/2012 ACTIVE S-127108 64 1/2/1991 1/1/2012 ACTIVE S-127109 64 1/2/1991 1/1/2012 ACTIVE S-127110 64 1/2/1991 1/1/2012 ACTIVE S-127111 64 1/2/1991 1/1/2012 ACTIVE S-127112 32 1/2/1991 1/1/2012 ACTIVE S-127113 64 1/2/1991 1/1/2012 ACTIVE S-127114 64 1/2/1991 1/1/2012 ACTIVE S-127115 64 1/2/1991 1/1/2012 ACTIVE S-127116 64 1/2/1991 1/1/2012 ACTIVE S-127117 64 1/2/1991 1/1/2012 ACTIVE S-127118 64 1/2/1991 1/1/2012 ACTIVE S-127145 64 2/20/1991 2/19/2012 ACTIVE S-127146 64 2/20/1991 2/19/2012 ACTIVE S-127147 64 2/20/1991 2/19/2012 ACTIVE S-127148 64 2/20/1991 2/19/2012 ACTIVE S-127183 352 8/12/1988 8/11/2011 ACTIVE S-127184 496 8/12/1988 8/11/2011 ACTIVE S-127185 256 8/12/1988 8/11/2011 ACTIVE S-127186 448 8/12/1988 8/11/2011 ACTIVE S-127187 192 8/16/1988 8/15/2011 ACTIVE S-127188 256 8/16/1988 8/15/2011 ACTIVE S-127189 256 8/16/1988 8/15/2011 ACTIVE S-127190 192 8/16/1988 8/15/2011 ACTIVE S-127191 480 8/16/1988 8/15/2011 ACTIVE S-127192 768 9/13/1988 9/12/2011 ACTIVE S-127193 128 7/20/1989 7/19/2011 ACTIVE S-127194 192 7/20/1989 7/19/2011 ACTIVE S-127195 32 9/6/1989 9/5/2011 ACTIVE S-127196 192 7/20/1989 7/19/2011 ACTIVE S-127275 192 5/5/1992 5/4/2012 ACTIVE S-127341 192 6/12/1992 6/11/2012 ACTIVE 121 22,544

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4.1.1 SURFACE RIGHTS AND LEASES As the mineral dispositions are located on Crown lands, the Crown retains all surface rights in the area of the Star and Orion South kimberlites mineral dispositions. Surface access for exploration purposes is obtained through the issuance of exploration permits from the Saskatchewan Ministry of Environment (MOE). To date, nine site-specific surface leases have been granted to Shore and the FalC-JV, covering a total area of 86 ha (Table 4.3). Table 4.3: Summary of Surface Leases Granted to Shore and the FalC-JV

Location PropertyArea (Ha) Lease No. Expiry

Date Main Camp Shore 4.06 355000 3/31/2019 Star Mine Site Shore 51.79 355001 3/31/2018 Star Mine Site FalC-JV 3.38 355002 3/31/2018 Star West Pump Test Site FalC-JV 7.1 355003 3/31/2018 Division Road Pump Test Site FalC-JV 3.34 355004 3/31/2018 Sewage Lagoon FalC-JV 1.05 355005 3/31/2018 Test Grow Plots FalC-JV 1.42 355006 3/31/2018 Orion South Shaft Site FalC-JV 5.55 355007 3/31/2018 Core Shack and Laydown Area FalC-JV 8.46 355008 3/31/2018 TOTAL 86.16

Shore is not aware of any environmental liabilities to which the mineral claims or property which would be part of the Project are subject. To conduct the work proposed for the property, in addition to obtaining environmental approval from the Saskatchewan Ministry of Environment and federal authorities, a variety of leases, permits and authorizations would be required from ministries and agencies of Saskatchewan and Canada. These would include mineral leases, surface leases, permits to construct and/or operate plant and other facilities, equipment and related infrastructure including overburden or other piles, and permits related to operational issues, water issues and aquatic habitat. As well, a municipal development permit would be required. There are no known factors or risks that may affect access, title, or the right or ability to perform work on the property. Various First Nations and Métis communities assert that the area of the Project lies within their traditional territory, i.e. territory within which they historically or presently pursue Aboriginal rights to hunt, fish, trap or gather berries, other food or medicine on unoccupied Crown land. This situation is not unique to Shore, the Project or Saskatchewan, given that all mineral development or other projects on unoccupied Crown land in Canada occur within the traditional territory of some Aboriginal party or parties. All such development, therefore, gives rise to the duty of the Crown as represented by provincial or federal governments to consult with Aboriginal parties when issuing permits.

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5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

5.1 PHYSIOGRAPHY AND CLIMATE The Star and Orion South Kimberlites are situated on the north side of the Saskatchewan River. The Saskatchewan River is located approximately 1.5 km south of the underground and surface workings of the Star Diamond Project. The Project area comprises rolling glacial topography that is drained by numerous small tributaries running south towards the Saskatchewan River. Elevation varies from 360 to 450 m above sea level. Much of the land surrounding the FalC Provincial Forest has been cleared for agriculture; the forest consists of jack pine, aspen, white and black spruce, poplar and tamarack. The climate of the FalC area can be characterized by long, cold winters with mean January temperature of -19.1ºC and short, hot summers with a mean July temperature of 17.5ºC. Precipitation is limited to periodic showers and snowfall and averages 323 mm annually. A weather station, erected at the project site in 2006 and removed in the fall of 2008, was utilized for the collection of daily meteorological data used for baseline environmental studies. The local climate is conducive to year-round operations and would not be expected to impact mining activities. 5.2 LOCAL AND REGIONAL INFRASTRUCTURE Prince Albert is the main centre for a pool of skilled and unskilled mining personnel, with additional personnel available from the City of Melfort and the many towns in the area, which have traditionally supplied miners to the Saskatchewan potash industry as well as to the gold and uranium mines in Northern Saskatchewan. Current and future water supplies have been, and will continue to be, supplied by underground sources. A 230 kV powerline runs approximately 9.6 km south of the area and a larger capacity 230 kV powerline is approximately 21 km to the east of the Project from the Nipawin Hydroelectric and E.B. Campbell Hydroelectric stations. In addition, a SaskPower powerline connection from the main power grid is also available from the town of Smeaton. Telecommunications within the FalC forest are currently available through a cell phone tower located 5 km south of the area. Shore Gold Inc’s (Shore) main exploration camp, located within claim blocks S-135767 and S-135765, was located approximately 12 km northeast of the Star site and 8 km northeast of the Orion South site. The camp was constructed to provide accommodation for Shore staff and contractors and was operational from August, 2005 to February, 2009.

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Electricity to the main exploration camp was provided by two diesel power generators (a 125 kVa and a 300 kVa). Utility water was pumped from local wells near the main exploration camp, and drinking water was trucked in. All diesel fuel utilized at both the project site and at the main exploration camp was purchased in the Prince Albert area and transported by fuel trucks. Waste and processed kimberlite material storage areas, and the processing plant location are detailed in Appendix A and Section 18 respectively. 5.2.1 STAR PROPERTY DESCRIPTION The Star Kimberlite deposit comprises Shore’s Star Diamond Project and straddles a mineral disposition boundary between ground that is held 100 % by Shore, and ground that is held by the Fort à la Corne Joint Venture (FalC-JV), between Kensington (a wholly-owned subsidiary of Shore; 66 %) and Mining Corporation of Canada Limited (Newmont) (34 %). The Star Diamond Project is operated by Shore, and is being explored and developed as a single entity. For convenience, that portion of the Star Kimberlite deposit which falls on the FalC-JV mineral dispositions is referred to as Star West, and, unless otherwise specified, the Star Kimberlite deposit refers to kimberlite on both the Star and Star West properties. The Star Kimberlite deposit has a surface area totalling some 352 ha. 5.2.2 ORION SOUTH PROPERTY DESCRIPTION The Orion South Kimberlite deposit comprises the FalC-JV’s Orion South Diamond Project and is on ground held by the FalC-JV. The Orion South Diamond Project is operated by Shore, and is being explored and developed as a single entity. The Orion South Kimberlite deposit has a surface area totalling some 403 ha.

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6.0 HISTORY As early as 1940, diamonds were being reported in the Prince Albert, Saskatchewan area. It was only when regional airborne geophysical surveys were completed in the 1960’s, however, that possible diamond exploration targets were identified in the FalC area. Follow-up of these targets in 1988 led to the first discovery of kimberlite in the area by Uranerz Exploration and Mining Limited (Lehnert-Thiel et al., 1992). The major part of the FalC kimberlite province has been under investigation since the early 1990’s by a consortium of companies including Cameco Corporation (Cameco), De Beers Canada Inc. (De Beers) and Kensington. In October 2006, the previous FalC-JV changed ownership through the merger of Shore and Kensington and by the purchase of the De Beers/Cameco interest by Shore and the subsequent joining of Newmont to form the current FalC-JV. Much of the FalC JV work from the 1990’s through to 2005 involved drilling exploration and preliminary delineation holes on the numerous anomalies in the FalC area. More recent work (2006-present) has been focussed on the Orion cluster of kimberlites (Orion South, Orion Central and Orion North), Star West and the Taurus cluster (situated 2 km west of the Orion cluster). Work has included grid-pattern core drilling on a 100 m grid spacing on the thicker portions of Star West, Orion South and North and on a 200 m spacing on the thinner portions of those kimberlites and all of Taurus and Orion Centre Kimberlites. In order to recover appreciable quantities of diamonds for grade and value estimation, underground bulk sampling has been completed on both Star West and Orion South. LDD mini-bulk sampling was also completed on Orion South, Orion North, Star West and Taurus. On the properties held 100 % by Shore, exploration was commenced in 1996 by flying a low-altitude helicopter-borne magnetic survey. Several magnetic anomalies were identified and subsequent follow-up with ground magnetic surveys confirmed the presence of shallow, closed anomalies that indicated potential kimberlite. Four anomalies in the northwest corner of the survey area were selected for initial drill testing. Subsequent drilling confirmed the presence of kimberlite (the Star Kimberlite). Between 1996 and 2008 several core drilling programs resulted in the development of a robust kimberlite model. Mini-bulk sampling, via LDD, was completed between 2005 and 2008. Underground bulk sampling, via a vertical shaft and lateral drifting, was completed on the Star Kimberlite between 2003 and 2007. Details of the more recent exploration conducted in the FalC area by Shore and FalC-JV are summarized in Sections 9, 10 and 11.

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7.0 GEOLOGICAL SETTING AND MINERLIZATION The Project lies near the northeastern edge of the Phanerozoic Interior Platform, which extends from the Rocky Mountains in the west, to the Precambrian Canadian Shield in the northeast. The Interior Platform sediments exceed 600 m in thickness (Figure 7.1). The unmetamorphosed sedimentary rocks of the Interior Platform unconformably overlie metamorphosed basement rocks. These Proterozoic basement rocks have been interpreted to form part of the Glennie Domain which has been tectonically emplaced overtop of the Archean Sask craton (Chiarenzelli et al., 1997). In the Star and Orion South area, the Precambrian is estimated to be at a depth of 730 m (Table 7.1). Table 7.1: Average Depth (and Elevation) to Major Stratigraphic Units

STAR ORION SOUTH Depth

(m) Elevation

(masl) Depth

(m)Elevation

(masl) Avg. Ground Level (Top of OVB) 0 421 0 444 Avg. Top of Colorado Gp (Base of OVB)

92 329 105 339

Avg. Top of Mannville Gp (Base of Colorado Gp)

170 251 191 253

Avg. Top of Paleozoic Carb (Base of Mann Gp)

340 81 347 97

Avg. Top of Precambrian (Base of Paleozoic)*

730 -309 730 -286

* top of Precambrian based on very limited oil and exploration work 16 km NE and 30 km SW of Star and Orion South.

Table 7.2: Average Thickness of Major Stratigraphic Units

STAR ORION SOUTH Thickness (m) Thickness (m) Avg. Overburden Thickness 92 105 Avg. Colorado Group Thickness

78 86

Avg. Mannville Group Thickness

170 156

Avg. Paleozoic Carbonate Thickness*

390 383

* top of Precambrian based on very limited oil and exploration work 16 km NE and 30 km SW of Star and Orion South.

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Figure 7.1: Regional Geology of the FalC Area with the Magnetic Outlines of the FalC Kimberlites

The Phanerozoic cover sequence consists of 390 m thick Cambro-Devonian basal unit of dolomitic carbonate and clastic sedimentary rocks overlain by 150-180 m of Cretaceous Mannville siltstone and sandstone and 70-90 m of Cretaceous Colorado Group shale (Tables 7.1 and 7.2) and siltstone (Figures 7.1 and 7.2). The sedimentary formations dip gently to the south-southwest bringing progressively younger strata into contact with the Quaternary glacial till towards the southwest. In the vicinity of the Project, the area is overlain by Quaternary glacial deposits ranging from 90 to 130 m in thickness. These consist of lower till deposits with discontinuous intra-till gravel and sand deposits and an upper layered sequence of clay and very fine-grained sand deposits.

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Figure 7.2: Cretaceous Stratigraphic Column of the Star – Orion South Area

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7.1 LOCAL GEOLOGY - FALC AREA A northwest-trending kimberlite province covering a 50 km by 30 km area has been identified in the FalC area (Figure 7.1). These kimberlites have clearly defined magnetic anomaly signatures within a quiet background. Approximately 69 kimberlitic bodies have been drilled to date, with the majority of discovered kimberlite bodies occurring within the extensive FalC Main Trend. The ‘classical champagne-glass’ shaped morphologies typically associated with FalC kimberlite bodies represent the explosive emplacement of kimberlite material within sequences of poorly consolidated sediments (Scott Smith et al., 1994). Geophysical modelling suggests that the areal extent of the individual kimberlitic bodies in the FalC kimberlite province range from 2.7 ha to over 400 ha. The kimberlite bodies themselves typically occur as stacked, subhorizontal lenses or shallow zones of crater facies kimberlite with footprints ranging up to 2,000 m wide and occur at depths ranging from 100 m to greater than 700 m. Limited deep drilling precludes interpretation of the shape of the kimberlites below about 350 m. At depth, FalC kimberlites may resemble the idealized South African kimberlite model. While both hypabyssal and volcaniclastic kimberlitic facies have been intersected by drilling, their inter-relationship is not well known. It is possible that the former represent either late stage pulses or even xenolithic blocks. The more important kimberlite occurrences discovered to date comprise crater facies volcaniclastic kimberlite emplaced into Cretaceous marine, lacustrine and continental siliciclastic deposits laid down in, or along, a shallow epicontinental sea. Importantly, individual kimberlite phases (or units) may be distinguished according to grain size, style of emplacement, xenoliths and xenoliths types and abundances, alteration and the abundance of olivine macrocrysts. In general, the main volcaniclastic kimberlite deposits were preceded by smaller kimberlite bodies comprising conformable, graded beds of pyroclastic debris as much as 40 m thick, indicative of subaerial eruption onto Albian (Middle Cretaceous) floodplains, intertidal zones, or lakes. Subsequently, larger, shallow craters were excavated in poorly-consolidated marine to marginal-marine shale under subaerial to shallow marine conditions and backfilled with pyroclastic sediments forming multiple-graded kimberlitic beds. Kimberlitic pyroclastic flows, erupted at the time of crater excavation, produced stacked kimberlite deposits and are preserved as aprons around the craters that can extend several hundred metres from the crater edge. Contact angles of the kimberlite with the surrounding country rock can range from 90° to 0° depending on whether the contact is in the pipe or in the outflow pyroclastic deposits. Continued Cretaceous sedimentation buried the kimberlites in marine sediments. These cover rocks were largely removed by glaciation, essentially to the level of kimberlite. The majority of bodies drilled to date by both the FalC-JV and Shore are positioned just below the till / bedrock interface. In contrast, kimberlites discovered by De Beers in 1988, and later by Corona Corporation at Sturgeon Lake, 30 km northwest of Prince Albert, are regarded as rootless, ice-thrust rafts or erratics of kimberlite, indicating erosion of a possibly younger suite of kimberlites. Kimberlitic phases are well constrained within the Cretaceous stratigraphy in which they were deposited. For example, those kimberlites deposited during Cantuar Formation time

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(part of the Mannville Group) are considered to be Cantuar age-equivalent kimberlite and are termed Cantuar Kimberlite (Cantuar). Similarly, kimberlite deposited during Early Joli Fou Formation time (part of the lower Colorado Group) is Early Joli Fou age-equivalent kimberlite and is termed Early Joli Fou Kimberlite (EJF). It is important to note that two stratigraphically equivalent kimberlite packages (e.g. Pense Kimberlite on Star and Orion South) may not have any genetic relationship and each may have very different diamond grade and carat value characteristics. Some of the stratigraphically equivalent kimberlite units (e.g. EJF on Star and Orion South) do, however, have similarities in mineral constituents, mantle signatures, chemistry and diamond distribution that suggest a genetic relationship. 7.2 STAR KIMBERLITE GEOLOGY AND MINERALIZATION The Star Kimberlite was deposited within the Cretaceous sedimentary rocks of the lower Colorado and Mannville groups, which unconformably overlie Paleozoic limestones and dolomites. The glacial overburden thickness ranges from 90 to 130 m with an average of 92 m (Table 7.2). Portions of the Star Kimberlite have been emplaced contemporaneously with the deposition of the Mannville and lower Colorado sediments. However, the majority of the Star Kimberlite is interpreted to have erupted through the Mannville and into the early parts of the lower Colorado Group sediments (Joli Fou Formation time). The local lower Colorado and Mannville interface is situated approximately 170 m. The Mannville Group and Paleozoic interface lies approximately 340 m, as interpreted from Shore drill holes. The Star Kimberlite consists of two distinct types of kimberlite: dominant eruptive kimberlite and subordinate kimberlitic sediments. The eruptive kimberlite deposits at the Star Kimberlite are sub-divided into five main kimberlite phases, each with distinctive physical and chemical properties, which enable mapping and stratigraphic correlation of units as seen in Figure 7.3 (Harvey et al., 2006 and Harvey, 2009):

1. Cantuar Kimberlite 2. Pense Kimberlite 3. Early Joli Fou Kimberlite (EJF) 4. Mid Joli Fou Kimberlite (MJF) 5. Late Joli Fou Kimberlite (LJF)

All the major kimberlite phases of the Star Kimberlite have been proven to contain macrodiamonds.

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Figure 7.3: Cross-Section across the Western Portion of the Star Kimberlite (view towards the west) (The Figure illustrates the host Cretaceous sedimentary rocks and the relationship with distinct kimberlite eruptive phases, reworked equivalents and relatively young marine reworked kimberlitic sediments).

7.2.1 CANTUAR KIMBERLITE The oldest kimberlite phase within the Star Kimberlite is the Cantuar Kimberlite, which is hosted by sandstone, siltstone and mudstone units of the Cantuar Formation (Figure 7.3). These Cantuar Kimberlite deposits are typically restricted to thin sheet-like deposits that generally vary in width from 20 to 40 m. There are two end-member types of Cantuar Kimberlite: matrix-supported pyroclastic kimberlite, which primarily occurs to the north; and a clast-supported pyroclastic kimberlite and kimberlite breccia that occurs to the south (Figure 7.4). The Cantuar Kimberlite is typified by the ubiquitous presence of small (1-4 mm) clinopyroxene xenocrysts and relatively common mantle xenoliths. The kimberlite is variably fine- to medium-grained and is bedded at the 1 to 5 m scale, although more massive beds do occur. Rare fine-grained reworked equivalents are present and locally display cross-bedding.

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Figure 7.4: Photographs of Underground Hand Samples and Core from the Star Kimberlite (a) Ash-rich LJF sample with small (1-5 mm) shale clasts; b) Matrix-rich MJF sample with 5-20 mm shale clasts; c) Underground sub-horizontal core sample delineating the contact between olivine-rich EJF (right) and matrix-rich MJF (left) (36.5 mm diameter core); d) Olivine macrocryst-rich, clast-supported EJF pyroclastic kimberlite; e) Precambrian basement-dominated xenolithic EJF kimberlite breccia; f) Dark green, matrix-supported, olivine- and xenolith-rich pyroclastic Cantuar kimberlite).

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The Cantuar Kimberlite is restricted to the north and west-central portion of the kimberlite complex. The thickest intersections are on the western portion of the kimberlite near the EJF crater edge (Figure 7.3) with central Cantuar Kimberlite deposits likely having been removed by the main EJF eruptive event.

Restricted to the southern part of the Star Kimberlite is a younger, juvenile pyroclasts-rich pyroclastic kimberlite, known as JLRPK. It occurs as two spatially restricted feeder vents which have shapes similar to the classic South African model carrot-shaped pipes and is cross-cut by older Cantuar. 7.2.2 PENSE KIMBERLITE The Pense Kimberlite is restricted to the central and northeastern portions of the Star Kimberlite. In the northeast, Pense Kimberlite is deposited directly on the Pense sandstone and mudstone (Zonneveld et al., 2004). Towards the thicker central zone, the Pense appears to sit directly on the Cantuar Formation sediments, indicating either scouring into the older Cantuar sediments and/or previous erosion / denudation of the Pense sandstone. The Pense Kimberlite is clast-supported, and in the coarser-grained varieties, is characterized by the relative abundance of ilmenite megacrysts and sub-equal abundance of armoured juvenile pyroclasts (typically cored by olivine macrocrysts) and 0.5 to 2 cm sized olivine macrocrysts. The large olivine macrocrysts commonly contain small garnet intergrowths and are thus interpreted to be microperidotite xenoliths. The Pense Kimberlite generally occurs as up to 15 m thick, well bedded, fine to very coarse grained pyroclastic kimberlite with very rare breccia units. Cross bedded, well-sorted, fine- to medium-grained olivine enriched kimberlite sandstone is locally observed. 7.2.3 EARLY JOLI FOU KIMBERLITE (EJF) The widespread EJF is volumetrically the most important eruptive phase of the Star Kimberlite. Distal deposits of the kimberlite sit directly on Lower Joli Fou shale and are interpreted as Joli Fou-age equivalent. The EJF also sits directly on older Pense and Cantuar phases. The kimberlite is in contact with the Cantuar Formation in the vicinity of the crater/vent area in the west (Figure 7.3). The kimberlite is clast-supported and dominated by olivine crystals with rare juvenile pyroclasts (Figure 7.4). Mantle-derived xenocrysts and xenoliths are relatively common in this unit. Fining-up beds dominate and commonly occur as 1 to 5 m (rarely up to 15 m) thick, lithic-rich breccia (�15 wt. % xenolithic clasts) basal units overlain by a xenoliths poor tuffaceous kimberlite. Three zones have been identified in the EJF pyroclastic deposits: a central vent / crater; a positive relief tephra ring (cinder cone); and an extra-crater (tephra ring distal) zone (Figure 7.5). Kimberlite deposits largely confined to the inner crater / vent area and the positive relief tephra ring are referred to as EJF ‘inner’ area deposits and those confined to the distal, extra-crater areas are referred to as EJF ‘outer’ area deposits.

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Figure 7.5: a). Topographic Elevation Map (lows are Blue; Highs are Magenta) of the Top Contact of the Olivine-Rich EJF. b) Three Dimensional View Looking Towards the North(In Figure 7.5a three distinct zones are distinguished: 1. a west-central zone of low relief (Crater zone); 2. an arcuate high surrounding the low (Tuff ring zone); and 3. a distal relative low (Distal zone). Approximation of kimberlite outline based on electro-magnetic (EM) signature. Note the underground workings at the center of the body).

Figure 7.6shows the EJF isopach map and highlights the thick deposits dominantly confined to the crater area of the kimberlite complex and attaining thicknesses in excess of 100 metres. Distal deposits occurring outside the crater are generally less than 30 metres in thickness.

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Figure 7.6: Isopach Map of the EJF Kimberlite Intersections (Contour Interval: 5 m)

7.2.4 MID JOLI FOU KIMBERLITE (MJF) The MJF, a younger cross-cutting kimberlite eruptive phase, is aerially restricted to the western portion of the Star Kimberlite and appears to be infilling the remnant EJF crater area (Figure 7.3). This phase has erupted through the older EJF, as evidenced by rarely preserved autoliths of EJF. The MJF kimberlite has many similarities to the EJF, but has a distinct matrix-supported texture (Figure 7.4), fewer indicator minerals, is very poorly sorted and is generally massive to weakly bedded. 7.2.5 LATE JOLI FOU KIMBERLITE (LJF) LJF, the youngest kimberlite eruptive event, is confined to the northern and northeastern portion of the Star Kimberlite and generally forms a thin veneer (generally < 20 metres thick) deposited on older EJF and MJF (Figure 7.3). The LJF has many similarities to the MJF but is generally finer grained, more massive and has the ubiquitous presence of small (0.5 to 50 mm) shale clasts (Figure 7.4). The relationship between the MJF and LJF remains ambiguous; however, the LJF may represent a finer grained remobilized version of the MJF, which slumped or flowed into the marginal marine sedimentary environment incorporating poorly consolidated mudstone material. A sub-unit of the LJF, known as the LJF Slump, is identified based on the distinct increase in the shale clast content and the weak development of sub-horizontal bedding planes. 7.2.6 UPPER KIMBERLITIC SEDIMENTS Sitting directly on the Late Joli Fou-aged kimberlite, or locally within the overlying shale sequence, are two main kimberlitic sedimentary units (Figure 7.3) that mantle the central core

35

of EJF and MJF kimberlite. Directly above the LJF, there is the typical development of kimberlitic sandstone (KDF), with common to abundant shale blocks. In general, the shale blocks appear to be massive and in sharp contact with the host KDF. A distinct fining-up sequence of kimberlitic sandstone that grades into kimberlitic siltstone and finally a calcareous light grey to white siltstone rests directly on the KDF and is more rarely separated by 2 to 10 m thick beds of shale. Situated 6 to 8 m above the fining-up unit is another fine grained kimberlite sandstone horizon, which acts as a distinct marker horizon over most of the kimberlite. This surface is a close approximation to the Newcastle (Viking)-Westgate contact. A 1 to 3 cm heavy mineral lag is present in many core holes, 2 to 4 m below this bed, which may represent a transgressive surface of erosion (Zonneveld et al., 2004). 7.3 ORION SOUTH KIMBERLITE GEOLOGY AND MINERALIZATION Like the Star Kimberlite, the Orion South Kimberlite was deposited within the Cretaceous sedimentary rocks of the lower Colorado and Mannville groups, which unconformably overlie Paleozoic limestones and dolomites. The glacial overburden thickness ranges from 97 to 121 m with an average of 105 m (Table 7.2). Portions of the Orion South Kimberlite have been emplaced contemporaneously with the deposition of the Mannville and lower Colorado sediments as seen in Figure 7.7. However, the majority of the Orion South Kimberlite is interpreted to have erupted through the Mannville and into the early parts of the lower Colorado Group sediments (Joli Fou Formation time). The local lower Colorado and Mannville interface is situated approximately 191 m. The Mannville Group and Paleozoic interface lies approximately 347 m, as interpreted from drill holes. Figure 7.7: Orion South Kimberlite West To East Cross-Section Along UTM Line 5900600N

(Note: Breccia-Dominated (Xenoliths-Rich) Zone Demarcated By Cross-Hatching. Note: RVK = Resedimented Volcaniclastic Kimberlite; UKS = Upper Kimberlitic Sediments) The Orion South Kimberlite is comprised of multiple eruptive units (or phases), each of which is texturally, mineralogically, physically and chemically distinct. Within the kimberlite, the units have cross-cutting relationships near conduits, but are stacked vertically within the volcanic edifice and crater / extra-crater deposits (Figure 7.7). Several conduits, feeding different units, have been identified on Orion South. During Cantuar (Mannville Group) deposition, thought to be a time of continental fluvial-deltaic deposition (Zonneveld et al., 2004), kimberlite was deposited and reworked. Drilling indicates that the Cantuar-aged kimberlite deposits are generally thin (< 30 m thick) sheets

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occurring at multiple horizons within the Cantuar sediments. The bulk of the kimberlite deposits are confined within the marginal marine to marine sedimentary strata (Zonneveld et al., 2004) of the Upper Mannville Group (Pense Formation) and the lower Colorado Group (Joli Fou Formation). These kimberlite deposits are associated with the main crater excavation and crater fill. Proximal to the conduits and in close proximity to the base of the Mannville Group sandstone, the conduits flare (Scott-Smith et al., 1994) at a steep angle giving way to shallow angles near the margin of the craters. The Orion South Kimberlite consists of two distinct types of kimberlite: dominant eruptive kimberlite and subordinate kimberlitic sediments. The eruptive kimberlite deposits at the Orion South Kimberlite are sub-divided into five main kimberlite phases, each with distinctive physical and chemical properties which enable mapping and stratigraphic correlation of units as seen in Figure 7.7 (Harvey et al., 2009):

1. Cantuar Kimberlite 2. Pense Kimberlite 3. Early Joli Fou Kimberlite (EJF) 4. Late Joli Fou Kimberlite (LJF) 5. Viking Pyroclastic Kimberlite

7.3.1 CANTUAR KIMBERLITE The earliest kimberlite deposit on Orion South, the Cantuar Kimberlite, consists of fine- to coarse-grained, massive to weakly normally graded, poorly sorted, matrix- to clast-supported, mixed olivine plus juvenile pyroclast-bearing lapilli tuff (Kjarsgaard et al., 2006 and 2009). These deposits are commonly pervasively carbonate cemented and are generally thin (0.5 to 5 m thick), although an intersection of 90 m has been drilled. Amoeboid juvenile pyroclasts, which locally display moulded boundaries, are common in the unit and rarely contain up to 10 % vesicles. U-Pb dating on perovskite gave an age of ca. 106 Ma for the Cantuar Kimberlite on Orion South (Kjarsgaard et al., 2006 and 2009).

7.3.2 PENSE KIMBERLITE The first major eruptive event on Orion South resulted in kimberlite being deposited onto Pense Formation sediments. The crater base is cut into the pre-eruptive paleosurface and cuts into Mannville Group sediments. The Pense Kimberlite is a fine to locally medium-grained, matrix-rich, very poorly sorted, massive to weakly-bedded volcaniclastic tuff (Figure 7.8) that is remarkably consistent both laterally and vertically. Xenoliths and juvenile pyroclasts are very rare within the Pense. Locally, distal deposits exhibit thin (0.1 to 0.5 m) planar bedding. The upper surface exhibits considerable and variable relief relative to the Pense paleosurface defining a distinct mound-like morphology that may represent the remnant of a Pense pyroclastic cone (Figure 7.9). The thickest intersection recovered 220 m of Pense while it thins to near 0 m over 700 m laterally.

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Figure 7.8: Example of Typical Matrix-Rich Pense Kimberlite with a More Altered (Lighter) Domain and a Less Altered (Darker) Domain (from 141-06-071C: 273.55 m) (from Harvey, 2011)

�

Figure 7.9: Pense Kimberlite Isopach Map (Contour Interval: 10 m) (Note the central thick accumulation associated with both a broad shallow crater and a positive relief mound).

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7.3.3 EARLY JOLI FOU KIMBERLITE (EJF) Distal deposits of the volumetrically dominant EJF were laid down directly on Joli Fou Formation sediments (Figure 7.7). Proximal deposits were deposited on Pense and Mannville Group sediments, due to erosion down cutting of the pre-eruptive paleosurface during initiation of the EJF eruptive cycle. There are two centres of thick EJF accumulation in the northwest and the southeast sections of the Orion South Kimberlite (Figure 7.10). The depocentre to the southeast is coincident with a spatially restricted feeder vent that cross-cuts the older Pense, while in the northwest there is a considerable thickening of kimberlite and a deepening of the basal contact, which suggests a postulated vent. In the centre of the body, the EJF thins to 0 metres and is coincident with the central Pense Kimberlite high. Figure 7.10: EJF Kimberlite Isopach Map (Contour Interval: 10 m) (Note the thick EJF deposits mantling the central Pense mound and the southeast and northwest depocentres).

The EJF is fine- to coarse-grained, olivine pyroclast-rich, poorly- to moderately-sorted, volcaniclastic tuff to tuff breccias (Figure 7.11). The kimberlite consists of multiple normally graded beds with coarser bases and finer grained tops that collectively form a fining upwards sequence. Rare fluid escape structures form narrow, discontinuous, anastomosing, subvertical, pipe-like structures up to 0.4 m in length. Individual beds are generally 0.5 to 5 m thick.

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Figure 7.11: Example of a Normally Graded EJF Bed with a Coarser Xenolith-Rich Base Fining-Up to a Very Fine-Grained Xenolith-Poor Top (from 140-06-058C: from 132.01 to 136.79 m) (from Harvey, 2011)

Xenolith-rich tuff breccias are common in the EJF and are found in two distinct geometric forms within the volcaniclastics. The first is a basal xenoliths-rich kimberlite up to 60 m thick that is thickest along the periphery of the Pense central mound and exhibits a higher abundance of Precambrian basement xenoliths relative to Paleozoic carbonate xenoliths. Pense autoliths are relatively common near the base of the xenoliths-rich series (Figure 7.12). The second type consists of 0.5 to 10 m thick xenoliths-rich horizons, which form the base of normally graded beds that fine upwards into olivine-rich volcaniclastic tuff (Figure 7.11). These xenolith-rich basal horizons are more common in the lower part of the EJF sequence. Towards the top of the EJF sequence, and in distal areas, kimberlite deposits are normally graded and typically do not have these xenoliths-rich basal horizons (Kjarsgaard et al., 2006, 2009).

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Figure 7.12: Example of Pense Autoliths in the lower EJF (Photo (close to the Pense-EJF contact) has common Pense autoliths with variably diffuse contacts within the EJF matrix (from 140-06-065 147.75 m) (from Harvey, 2011)).

. � In contrast to the Cantuar and Pense units, the EJF juvenile pyroclast population is dominated by cored juvenile pyroclasts, which are generally round to ovoid in shape. The pyroclasts are mostly cored with olivine macrocrysts, and more rarely, with country rock xenoliths and mantle-derived xenocrysts. Multi-rimmed juvenile pyroclasts are common within this unit. A U-Pb age of 99.4 Ma has been generated for the EJF at Orion South (Kjarsgaard et al., 2006, 2009). 7.3.4 LATE JOLI FOU KIMBERLITE (LJF) The LJF is a very fine- to fine-grained, moderately sorted, massive to weakly planar bedded, olivine-rich volcaniclastic kimberlite that cross-cuts previously emplaced kimberlite units and directly overlies EJF deposits. The LJF tuffs are olivine macrocryst-poor and phenocryst-rich, while juvenile pyroclasts are rare to absent. Proximal deposits are thick, but they thin over a short lateral distance. Similar to the LJF on the Star Kimberlite, the country rock xenolith population is Joli Fou Formation shale clast-dominated relative to basement and carbonate clasts. Thin (1 to 20 cm) shale clast-enriched beds are common. Fluid escape structures have also been identified in the LJF. 7.3.5 VIKING KIMBERLITE The Viking Kimberlite is the youngest primary kimberlite deposited on Orion South, and is age-equivalent to the Newcastle (Viking) Formation siltstone locally deposited between the Joli Fou and Westgate Formation shale deposits. The unit is restricted to the southeast and northwest parts of the Orion South Kimberlite as fine- to medium-grained, poorly to moderately sorted, moderate to well bedded volcaniclastic kimberlite. The Viking tuffs are

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relatively juvenile pyroclast-rich, are basement xenolith-poor and relatively EJF autolith-rich (Figure 7.13). The unit commonly has carbonate cement giving it a diagnostic texture.

Figure 7.13: Variably Sized EJF Autoliths within Viking Kimberlite from Hole 141-92-002C at a Depth of 190.15 m (Scale bar equals 1 cm (from Harvey, 2011)).

7.3.6 UPPER KIMBERLITIC SEDIMENTS (UKS) Minor volumes of kimberlite deposited as epiclastic sediment and known as the Upper Kimberlitic Sediments (UKS) are present on the upper periphery of the complex (Figure 7.7). Thicker deposits occur on the margins but thin towards the centre of the body. The deposits vary from olivine-rich kimberlitic sandstone through to weakly kimberlitic, very fine-grained siltstones that are commonly interbedded with Joli Fou Formation shale. The thickest deposits are on the northwest margin of the complex where they attain thicknesses up to 20 m but are generally limited to 2 to 9 m in thickness. Cross-bedding, shell fragments, ripples and wood fragments are observed locally. 7.4 GEOLOGICAL MODEL 7.4.1 STAR GEOLOGICAL MODEL A 3-D geological model for the Star Kimberlite was created from surface and underground drill information (Figure 7.14). Limited deep drilling restricts the 3-D modelling of the Star Kimberlite to the kimberlite above the 350 m level. The geological model estimates that the Star Kimberlite (including both the Star and Star West kimberlite) contains a total of approximately 278 Mt of kimberlite.

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Figure 7.14: Star Kimberlite 3-D Geological Model (Note: Northeastern view of the Star Kimberlite. Red: Cantuar Kimberlite; Magenta: JLRPK; Green: EJF; Navy Blue: MJF; Light Blue-green: LJF; Pense Kimberlite not observed in this view).

7.4.2 ORION SOUTH GEOLOGICAL MODEL The Orion South Kimberlite geological model contains a total estimated tonnage of between 333 and 375 Mt, with the high priority EJF estimated tonnage between 210 and 234 Mt (Figure 7.15). This geological estimate considers all kimberlite down to a depth of 445 m. Figure 7.15: 3D Northwest View of the Orion South Kimberlite Geological Model (Note: Dark Green: Cantuar Kimberlite; Light Brown: Pense; Green: EJF; Blue: LJF; Purple: Viking Kimberlite).

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8.0 DESPOSIT TYPES 8.1 KIMBERLITE HOSTED DIAMOND DEPOSITS Primary diamond deposits such as kimberlites and lamproites have produced over 50 % of the world's diamonds, whereas the remaining 50 % are derived from recent to ancient placer deposits that have formed from the erosion of kimberlite and / or lamproite. Notably, it has been established by the scientific community that diamonds are not genetically related to kimberlite or lamproite but that kimberlite, lamproite and other deeply derived magmas serve as a transport mechanism for bringing diamonds to surface (Kirkley et. al., 1991). The diamonds form at the same level as, or shallower than, the kimberlite magmas within the mantle and as the kimberlite magma ascends towards the surface they incorporate foreign fragments (termed mantle xenoliths) of the material they pass through. Those xenoliths commonly disaggregate into individual mineral constituents (termed xenocrysts). These xenocrysts include diamonds. Clifford (1966) and Janse (1994) have stated that a majority of economic diamondiferous kimberlites occur in stable Archaean age cratonic rocks that have not undergone thermal events or deformation since 2.5 Ga. Such Archaean-aged cratons include the Kaapvaal, Congo and West African Cratons in Africa, Superior and Slave Provinces in Canada, East European Craton (Russia, Finland, etc.), and the West, North and South Australia Cratons. The only exceptions, to date, are the Argyle and Ellendale lamproite mines of Australia, which occur in Proterozoic aged remobilized cratonic zones. To date, over 6,000 known kimberlite and lamproite occurrences have been discovered in the world, of which over 1,000 are diamondiferous. Economic diamond-bearing kimberlite and / or lamproite pipes range from less than 0.4 ha to 146 ha in footprint size, with the maximum size being greater than 200 ha (i.e. Catoca, Angola). Economic kimberlite diamond grades can range from 1.3 cpht to 600 cpht. Kimberlite remains the principal source of primary diamond despite the discovery of high grade deposits in lamproite. Mineralogical and Nd-Sr isotopic studies have shown that two varieties of kimberlite exist (Mitchell, 1986):

� Group 1: or olivine-rich monticellite-serpentine-calcite kimberlites; and � Group 2: or micaceous kimberlites (which predominantly occur in southern Africa).

With a few exceptions, such as the Finsch Kimberlite Mine in South Africa and the Dokolwayo Kimberlite Mine in Swaziland, most of the well known diamondiferous kimberlites in southern Africa and elsewhere are Group 1 kimberlites, including those in Canada and, in particular, FalC. In contrast, Group 2 kimberlites are largely confined to southern Africa. Currently, three textural-genetic groups of kimberlite are recognized in Group 1 kimberlites, each being associated with a particular style of magmatic activity (Mitchell, 1986). These are:

� crater facies � diatreme facies � hypabyssal facies.

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Rocks belonging to each facies differ in their petrology and primary mineralogy, but may contain similar xenocrystal and megacrystal assemblages (Mitchell, 1986).

8.2 FORT À LA CORNE KIMBERLITE MODEL Unlike the idealized South African kimberlite model (Hawthorne, 1975), the majority of the FalC kimberlites are mainly shallow bowl-shaped kimberlites which have kimberlite footprints ranging up to 2,000 m wide and extending to depths ranging from approximately 100 m to greater than 700 m. The limited deep drilling, however, precludes any interpretation of the shape of the kimberlites below about 350 m. Therefore, at depth, the FalC kimberlites may, in fact, resemble the idealized South African model. FalC kimberlites were emplaced into poorly consolidated Cretaceous-aged clastic and marine sedimentary rocks. They are generally interpreted to be in the form of stacked, sub-horizontal lenses or shallow zones of crater facies material with associated pyroclastic flow and fall deposits of large lateral extent. The kimberlite phases are classified entirely as crater-facies pyroclastic kimberlite, although a number of kimberlite units may be distinguished according to their grain size, style of emplacement, primary and chemical alteration and the abundance and presence of olivine macrocrysts.

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9.0 EXPLORATION 9.1 STAR KIMBERLITE EXPLORATION An extensive overview of the exploration activities on the Star Diamond Project is given in Ewert et al. (2009a), Eggleston et al. (2008) and Leroux (2008a) and is summarized in Table 9.1. Table 9.1: Summary of Exploration Activities on the Star Kimberlite Deposit, 1996-2010

YEAR EXPLORATION ACTIVITY 1996–1998 -Aeromagnetic surveys

-Diamond drilling (11 holes) -Microdiamond analysis

2000 -Diamond drilling (16 holes) -Microdiamond analysis

2000–2001 -Diamond drilling (7 holes) -Microdiamond analysis -Airborne geophysics re-interpretation

2001 -Petrographic studies -Diamond drilling (7 holes) -Microdiamond analysis -Large diameter (24 inch) reverse circulation (RC) drill program (Star 31 RC) -Sample processing (split sample: De Beers Canada’s Grande Prairie Processing Facility; Lakefield Research)

2002–2003 -Bulk rock and multi-element lithogeochemistry work (Targeted Geoscience Initiative or TGI) -2-D and 3-D seismic surveys -TGI borehole geophysics survey -TGI geochronology -Petrographic studies -Borehole collar surveying -Detailed core logging and re-interpretation studies -Initial bulk sampling work program (permitting, pilot hole drilling, etc.)

2003–2004 -Regional airborne GeoTEM survey -Diamond drilling (8 holes)

2003–2005 -Underground bulk sampling program - site set-up - Process Plant construction and commissioning - shaft sinking, lateral drift developments 175 m and 235 m levels - underground geological mapping and surveying - 16,000 m underground diamond drilling and sample processing between 2003-2006

-Bulk sampling results of Phase 1 program -Diamond valuation of 3,050 carat parcel

2005– 2007 -Underground bulk sampling program - lateral drift development 235 m and 215 m levels - underground geological mapping and surveying - 16,000 m underground diamond drilling and sample processing between 2003-2006

-Bulk sampling results of Phase 2 and 3 programs -Diamond valuation of 5,950 ct parcel -Airborne geophysical and laser surveys -233 exploration, geotechnical and hydrogeological core holes and 95 Large-diameter mini-bulk sample holes -45,000 m of surface core drilling

2008-2010 -Completion of 8 LDD holes -Geotechnical investigation utilizing cone penetrometer

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9.2 ORION SOUTH EXPLORATION EXPLORATION A summary of the 1988-2010 exploration work completed on the Orion South Kimberlite deposit is shown in Table 9.2. Table 9.2: Summary of Exploration Activities on the Orion South Kimberlite Deposit, 1988-2010

YEAR EXPLORATION WORK

1988-1999 -Various geophysical surveys (aeromagnetic- ground surveys) -Core and rotary drilling -Microdiamond analysis

2000 -Geophysical surveys (aeromagnetic- ground surveys) -Core and LDD drilling -Microdiamond analysis

2001 -Core drilling -LDD and mini-bulk sampling -Macrodiamond and microdiamond recovery and analysis -Microdiamond breakage study

2002 -Geophysical surveys -Core drilling -LDD and mini-bulk sampling -Macrodiamond and microdiamond recovery and analysis -Grade forecasts, revenue models

2003 -Airborne and ground gravity geophysical surveys -Core drilling -Geological modelling -Microdiamond sampling and analysis

2004 -Geological modelling and grade forecasts -Core drilling

2005 -Geological modelling and grade forecasts -Core drilling -LDD and mini-bulk sampling

2006 -Regional Light Detection and Ranging System (LIDAR) survey completed over FalC area -Geological modelling -Core drilling

2007 -Geological modelling -Core drilling -LDD and mini-bulk sampling -Initiation of Orion South Underground Bulk Sample Program

2008-2009 -Geological modelling -Core drilling -LDD and mini-bulk sampling -Orion South Underground Bulk Sample Program

2010 -Core drilling -Mud rotary drilling -Cone penetrometer testing -Prototype dewatering well test

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10.0 DRILLING 10.1 STAR KIMBERLITE DRILLING Between 1995 and 2010, 637 surface and underground, reverse circulation (RC), LDD and diamond drill holes totalling 108,306 m were drilled on the Star Kimberlite deposit. Table 10.1 outlines the drill programs for all years. In terms of geological data acquisition, variably-sized core drilling programs resulted in the completion of 321 surface core holes totalling 70,659 metres. Drilling was largely completed on a 100 metre grid on the thicker (approximately 50 metres of kimberlite) portion of the complex and a 200 metre grid on the thinner periphery (Figure 10.1). Table 10.1: Summary of Surface and Underground Drilling on the Star Kimberlite Deposit 1995-2010

Year

No. Of DrillHoles Metres

DrillType Location Drilling Program

1996 1 210.2 RCA Surface RCA hole completed on 134 anomaly.

1996 5 1,518.0 NQ-HQ Surface

Three NQ vertical drill holes drilled on the Star Kimberlite deposit totalling 812 m drilled to test four magnetic anomalies (FalC 96-2 to FalC 96-4). Two holes completed on anomaly 137.

1997 2 450.6 PQ Surface Two vertical drill holes drilled, totalling 450.60 m, close to FalC 96-3 to confirm presence of four stacked kimberlitic zones.

2000 25 5,686.1 NQ/PQ Surface

Star 1 to 24 drilled, consisting of 24 vertical NQ drill holes (one abandoned) and one vertical PQ drill hole. Drilled to test lateral extent off kimberlite, locate feeder zone and clarify geological interpretation.

2001 8 2,140.5 NQ/PQ Surface

Star 24 to 30 drilled, 7 vertical NQ drill holes, totalling 1,900.17 m and intersecting 859.6 m of kimberlitic material. Drilled for exploration as well as delineating pipe geometry and clarification of geological interpretation. PQ-sized Star 32 drilled as pilot hole for bulk sample shaft.

2001 1 295.6 LDD Surface 24-inch Large diameter RC hole Star 31RC drilled as a mini-bulk sample, totalling 295.55 m.

2002 9 432.5 Auger Surface 9 geotechnical holes in the shaft location.

2003 1 221.4 NQ Surface Drilled to test magnetic anomalies and further delineate geometry.

2003 1 121.9 BQ Underground Star 33 was a shaft extension drill hole to test kimberlite at depth of shaft.

2004 7 1,517.8 NQ Surface Drilled to test magnetic anomalies and further delineate geometry.

2004 8 449.26 BQ Underground Drilled to test kimberlite in proposed lateral drifts and delineate kimberlite morphology.

2005 5 1,134.0 HQ Surface 5 holes drilled to define 134 kimberlite.

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Year

No. Of DrillHoles Metres

DrillType Location Drilling Program

2005 124 29,343.8 PQ Surface SPF-series core hole drilled on a grid system to define the Star Kimberlite geologically, geotechnically and hydrologically.

2005 13 3,362.0 HQ/NQ Surface STR-series core hole drilled to define the Star West Kimberlite geologically, geotechnically and hydrologically.

2005 9 1,831.2 LDD Surface

LDD (1.2 m diameter) holes drilled to obtain geological, diamond grade and diamond valuation information on the various kimberlite facies previously identified.

2005 55 3,762.1 BQ/NQ Underground Drilled to test kimberlite in proposed lateral drifts and delineate kimberlite morphology.

2006 30 7,677.2 PQ Surface SPF-series core hole drilled on a grid system to define the Star Kimberlite geologically, geotechnically and hydrologically.

2006 38 7,153.0 NQ/HQ Surface

SND-series core holes completed to gather geotechnical information on glacial overburden and angle-drilled to access areas below the East Ravine.

2006 18 4,557.3 PQ Surface STR-series core hole drilled to define the Star West Kimberlite geologically, geotechnically and hydrologically.

2006 10 56.6 Auger Surface Geohydrological holes for piezometer installation.

2006 37 7,073.4 LDD Surface

LDD (1.2 m diameter) holes drilled to obtain geological, diamond grade and diamond valuation information on the various kimberlite facies previously identified.

2006 149 12,547.4 BQ/NQ Underground Drilled to test kimberlite in proposed lateral drifts and delineate kimberlite morphology.

2007 6 1,600.8 PQ Surface SPF-series core hole drilled on a grid system to define the Star Kimberlite geologically, geotechnically and hydrologically.

2007 2 521.9 PQ Surface STR-series core hole drilled to define the Star West Kimberlite geologically, geotechnically and hydrologically.

2007 49 10,493.3 LDD Surface

LDD (1.2 m diameter) holes drilled on Star main and Star West to obtain geological, diamond grade and diamond valuation information on the various kimberlite facies previously identified.

2008 1 268.4 PQ Surface Core completed for acid-base analysis test work.

2008 14 2,477.8 HQ Surface Vertical and angled core holes for hydrology and geotechnical analysis on and around Star.

2008 8 1,368.8 LDD Surface

LDD (1.2 m diameter) holes drilled on Star main and Star West to obtain geological, diamond grade and diamond valuation information on the various kimberlite facies previously identified.

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Year

No. Of DrillHoles Metres

DrillType Location Drilling Program

2010 1 33.4 Cone Penetrometer Surface

Cone penetrometer hole to test the upper stratified drift horizons over the Star Kimberlite.

TOTAL 637 108,306

Figure 10.1: Surface Drill Hole Locations for the Star Kimberlite

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10.2 ORION SOUTH DRILLIING Between 1992 and 2010, 253 surface drill holes totalling 58,209 m were drilled on the Orion South Kimberlite deposit. Table 10.2 outlines the drill programs for all years. In terms of core drilling, there have been 174 holes completed on Orion South resulting in a total drilling length of 39,732 metres. It is this material that is used for qualitative and quantitative data acquisition used for geological modeling and resource definition. Drilling was largely completed on a 100 metre grid on the thicker (approximately 50 metres of kimberlite) portion of the complex and a 200 metre grid on the thinner periphery (Figure 10.2). Table 10.2: Summary of Drilling on the Orion South Kimberlite Deposit, 1992-2010

Year

No. Of DrillHoles Metres Core Size Location Drilling Program

1992 6 1,503.7 PQ Surface Six PQ core holes were drilled in the magnetic highs on anomalies 140 and 141

1993 1 323.0 HQ Surface One HQ core hole was drilled on a postulated deepening zone on the 140 anomaly based on 1992 drilling

1993 1 204.0 Rotary (6.25-inch)

Surface One rotary test hole was completed between the 140 and 141 anomalies and intersected 102 m of weakly magnetic kimberlite

1994 2 520.0 RCA (12-inch)

Surface Two RCA holes were drilled into the 140 and 141 anomalies to test for diamond content

1995 2 705.5 RCA (12-inch)

Surface One RCA hole was drilled into the 133 anomaly to test for kimberlite and diamond content. Another was drilled on the 140 anomaly.

2000 2 520.8 LDD (24-inch)

Surface Two LDD holes were completed on the north-west portion of the 141 anomaly to recover appreciable diamond quantities

2001 14 3,757.2 NQ Surface Fourteen vertical NQ core holes were drilled to delineate the kimberlite body and develop geological models for the kimberlite

2001 10 2,202.6 LDD (24-inch)

Surface LDD drilling was completed to test the diamond distribution across a larger portion of the kimberlite

2002 25 6,030.0 NQ, HQ, PQ Surface An aggressive 25 hole program was developed to test the geological continuity across a larger area of the kimberlite

2002 8 2,143.9 LDD (24- and 36-inch)

Surface Eight LDD holes were drilled to test potentially higher grade areas of the kimberlite to recover appreciable diamond quantities to initiate estimates of diamond prices

2003 10 2,219.2 NQ, HQ Surface Nine core holes were drilled to test the southern extent of the 140 anomaly and one hole was completed west of the 141 anomaly to test a gravity high

2004 5 1,154.0 NQ, HQ Surface Five core holes were drilled to better model thick kimberlite breccia horizon(s) in the 140 portion of the kimberlite

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Year

No. Of DrillHoles Metres Core Size Location Drilling Program

2004 7 1,085.6 LDD (36-inch)

Surface LDD drilling was focused on testing kimberlite breccia-rich zones on the south-central portion of the kimberlite

2005 10 1,713.1 HQ Surface Six holes were drilled to gather a geological model for the 133 anomaly; Four holes (351 metres) of geotechnical drilling were also completed on Orion South

2006 54 12,872.6 PQ Surface A rigorous grid drilling program was completed to test the continuity, shape and thickness of various kimberlite units and to provide additional geological, geotechnical, geophysical and geotechnical data for a robust geological model

2007 1 241.2 PQ Surface One PQ core hole was completed to 241.21 metres to act as the pilot hole for shaft sinking

2007 4 1,017.2 LDD (47.2-inch)

Surface Four LDD holes were completed to recover appreciable diamond quantities for grade estimation on the Pense unit

2008 22 6,356.1 PQ Surface The core drilling program was completed to in-fill any gaps within the grid drilling pattern and act as pilot holes to subsequent LDD holes

2008 36 8,350.8 LDD (47.2-inch)

Surface An aggressive grid-drilling LDD program was completed to garner grade information across the breadth of the kimberlite and to assist in diamond pricing.

2010 4 59.4 Auger Surface Shallow auger drilling testing overburden material

2010 1 34.7 Cone Penetrometer

Surface Shallow cone penetrometers hole to detail the upper stratified drift material

2010 13 3,561.8

HQ Surface Geotechnical core holes along the proposed pit perimeter.

2010 2 429.0 Reverse Circulation

Surface One prototype dewatering test hole (and one failure)

2010 13 1,203.4 Mud Rotary Surface Geotechnical mud rotary holes along the proposed pit perimeter.

TOTAL 253 58,209

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Figure 10.2: Drilling Map for the Orion South Kimberlite Deposit Including Core, Mud Rotary and Large-Diameter Drilling

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11.0 SAMPLE PREPARATION, ANALYSIS AND SECURITY 11.1 DIAMOND DRILLING – LOGGING AND SAMPLING PROCEDURES Throughout the core drilling programs, the geotechnical and geological core logging was carried out at the main exploration core logging facility. Once a core hole was logged, all of the drill core boxes were transported to Saskatoon for storage. All geotechnical logging and photographic records were undertaken before the core was marked and cut for detailed core logging and sampling. During the detailed logging process, all geological descriptions were entered into a SQL-based logging program. For the majority of the core holes, the following samples and testwork were carried out for each major kimberlite facies / lithological break:

� bulk density sampling; � whole rock geochemistry sampling; and � ore dressing – communition sampling: drop test sampling (T10), scrubbability (Ta)

sampling and unconfined compressive strength (UCS) sampling. All core was digitally photographed on a hole by hole basis. The photographs included wooden depth markers denoting the driller’s runs and a marker board denoting the hole number, date, wet or dry state of the core, box numbers and interval. The photographs were incorporated into the Project database. During the geological core logging process, the following information / data collection was recorded:

� main lithological units and sub-units; o pyroclastic kimberlite o volcaniclastic kimberlite o kimberlite breccia o resedimented volcaniclastic kimberlite o other (shale, limestone, etc.)

� proportion of constituents (quantitatively captured); � grain size (quantitatively captured); � support (matrix or clast supported); � sorting (poorly or well sorted); � fabric (bedded, massive or granular); � country rock dilution percentages (crustal xenolith size, shape, alteration, percentage

that is quantitatively captured); � kimberlitic indicator minerals (type, size, percentage that is quantitatively captured); � nature of contacts (sharp, undulating or gradational); and � rock quality designation (RQD).

All drilling, sampling, analysis and logging data has been stored in an SQL-based database.

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11.2 UNDERGROUND SAMPLING PROCEDURES AND SAMPLE SECURITY Sampling methods and procedures were designed to optimize the precision and accuracy of the sample results in order to quantify the representative diamond grade within the sampled interval area. Efforts to reduce sample contamination during the underground mucking process were monitored by on-site geologists. The following is a description of the sampling method(s) used and procedures applied during the underground bulk sampling programs. 11.2.1 SHAFT AND LATERAL DRIFT SAMPLING In both shaft sinking phases, the shaft was drilled, blasted and mucked out on a bench by bench basis. Benches varied between 1.2 and 1.8 m in depth depending on ground conditions. The sample material was hauled to the surface and transported to the fenced, secure area by loader under the control of Shore security personnel. In the lateral drifts, each drift round (1.2 to 2.4 m in length with variable width and height) was drilled, blasted and mucked out. The kimberlite material was then hauled to surface where it was stored as individual batch sample piles within the dedicated storage facility area. Each batch sample was identified with a sign denoting the drift it was from and the batch number. All batch samples were then recorded by mapping of the pile locations. The kimberlite muck was piled on top of a sand / clay rich base. Geological control of the sampling enabled the various kimberlite units to be individually sampled with very little contamination by other kimberlite types, the results of which provide important diamond content data to model variations in diamond quality and abundance throughout the different phases of the Star and Orion South Kimberlite deposits. 11.2.2 UNDERGROUND BULK SAMPLING PROTOCOLS Individual batches were designed to provide representative samples of the different geological units encountered, while keeping individual sample batches similar in size where possible. Individual batch sample intervals were determined to reflect major geological breaks with very little contamination by other kimberlite types, while keeping individual batch sample sizes to 250-350 dry tonnes. Underground geological mapping on all drift walls and drift faces was conducted on a daily basis. On-site geologists were also able to identify and map, in detail, many distinctive kimberlite units following individual kimberlitic pyroclastic flow units and geologically distinct kimberlite phases, both massive and layered in extent (Figure 11.1). In accordance with the information obtained from underground mapping, on-site geologists continuously refined the sample separation process. Sample batches thus changed from the optimum planned size, and some of the larger batches were subdivided into smaller batches for processing in the plant.

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Figure 11.1: Example of an Underground Wall Map Showing the Contact Between the bedded EJF (shades of green) Kimberlite and the More Massive MJF Kmberlite (peach)

The following quality assurance and quality control (QA/QC) protocols were conducted and adhered to by Shore and its contractors during the bulk sampling programs:

� Geologists verified that all sample material for each sample interval was cleanly mucked out.

� Geologists verified that the kimberlite for each batch hoisted to surface was transported to its specified location.

� To avoid sample spillage, all loader operators were given specific instructions not to overload their buckets when transporting kimberlite.

� To maintain sample integrity and security of all extracted kimberlite from the underground workings, a Shore security officer was present at all times during the movement of kimberlite muck from the head frame to the storage facility.

� At Orion South, material was directly transported to the Star site for storage prior to processing, all monitored by security personnel.

11.3 LDD (RC DRILLING) SAMPLE RECOVERY The Bauer BG-36 drilling rig utilized on Star and Orion South was designed to carry out air-assisted fluid flush RC drilling, utilizing a drill string consisting of 6 metre-long dual walled drill rods, heavy weights (which provide downward pressure on the bit), stabilizers and a rotating drill bit assembly. The RC drilling was assisted through the introduction of compressed air, which was forced down through the outer annulus of the dual walled drill rods so as to assist the drill cuttings (product) and the mud in returning to the surface through the inner tube of the drill rods. The product then reported to the decelerating cyclone, which was located within a separate, adjacent Desander Plant. After the sample exited from the cyclone it was discharged onto the coarse shaker screen for initial sizing at 3 mm. The +3 mm size fraction and drill muds reported to twin densifying cyclones and dewatering screens (nominal 0.85 mm) to separate the drill solids from the drilling mud/fluid. The drill solids (+0.85 mm) were then washed and reported for sample collection while the drill muds (-0.85 mm) were reinstated and then returned downhole for recycling.

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Sample material was collected in one cubic metre dual-walled, woven polypropylene bags, which were labelled, securely sealed, and then loaded onto a trailer for shipment to the secure storage area at the sample process plant site. The material was then processed through Shore's on-site process plant. 11.3.1 LDD DOWNHOLE CALIPER MEASUREMENTS A downhole caliper survey to measure the diameter of the drill hole along its length was used to calculate the volume (in cubic metres) of material removed from each of the LDD holes. The data were presented as a graphic 3-D downhole log and a down hole Excel spreadsheet. This calculated volume, coupled with diamond recovery data, was then used for estimating the theoretical grade for each of the LDD samples. Eggleston et al. (2008) recalculated the volumes of several holes and found the volumes provided by the caliper survey to be accurate and reliable. P&E (in part through the Coopersmith, 2009 audit) found the sampling methods, sample storage, and security to be acceptable and was of the opinion that diamond grade and quality data generated from the underground and LDD samples was adequate for Mineral Reserve Estimation and mine planning purposes (Orava et al., 2009 and 2010). 11.4 SAMPLE PREPARATION, ANALYSES AND SECURITY The following section is taken from previous technical reports on the Star Diamond Project (Orava et al., 2009) and the Orion South Diamond Project (Ewert et al., 2009b). 11.4.1 INTRODUCTION - MINERAL PROCESSING AND DIAMOND

RECOVERY In order to process a significant amount of kimberlite, Shore purchased and commissioned a batch sampling process plant to treat the bulk samples and recover diamonds. The process plant was designed to simulate a commercial kimberlite ore treatment plant. Shore’s process plant (Bateman Reference Number M7007) was designed and constructed by Bateman Engineering PTY Limited (Bateman) of South Africa and consists of the following circuits:

� a 30 t/h crushing circuit; � a 10 t/h Dense Media Separation DMS) circuit which consists of a 250 mm DMS

cyclone; and � a recovery circuit consisting of a Flow-Sort® X-Ray diamond sorting machine and a

grease table. A description of Shore’s processing and diamond recovery circuits is briefly described below. 11.4.2 PROCESS PLANT – CRUSHING AND SCRUBBING CIRCUIT The kimberlite material (stored as individual batches or piles on surface) was delivered from the storage facility area to the primary static feed bin where, after being screened to 250 mm, it was fed at a constant rate onto the run-of-mine (ROM) conveyor belt to be weighed and

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recorded (Figure 11.2). The kimberlite was then crushed, cleaned and sized so that the final resultant size fraction reported to the DMS circuit was +1.0 mm to -20 mm. 11.4.3 PROCESS PLANT DMS CIRCUIT The +1.0 mm to -20 mm sized kimberlite material from the primary double deck vibrating classifying screen was pumped from the transfer pump box, dewatered and then stored into a 5 t capacity DMS surge bin for product separation into light and heavy mineral fractions. The material was then fed in a wet state to the DMS circuit by the combined vibrating pan feeder and DMS feed pump and dewatered once again. The kimberlite material was then mixed with a dense circulating medium consisting of ferrosilicon powder (FeSi) and water. Separation of the heavy and light particles (i.e. product) was achieved on the basis of the specific gravity (SG) of the minerals. Both the heavy (sinks) and light (floats) products exiting the cyclone were screened and then washed to recover the FeSi for recycling. The +1.0 mm to -20 mm heavy mineral concentrate (DMS concentrate) that reported to the sinks screen was collected in 40 L stainless steel canisters. When the steel canister was full, the canister was locked, then transported and escorted to the recovery plant for particle sizing and diamond recovery by the plant Lead Hand and Shore security personnel (prior to January, 2007 this process was completed by Howe personnel and two Shore security personnel). The +1.0 mm to -6 mm light fraction product (‘coarse reject kimberlite’) was disposed outside of the process plant via conveyor belt. A front-end loader was used to transport the coarse reject kimberlite to a dedicated storage area and stockpiled on a per batch basis. The SG of the circulating medium was monitored electronically, in real time with a dense medium controller system, and manually with a densitometer scale. Density tracer tests were carried out daily with the use of cube-shaped epoxy tracers, with SGs ranging from 2.70 to 3.53 and sizes from 2 mm, 4 mm and 8 mm, to monitor the separating effectiveness of the DMS cyclone. The density tracers that reported to the floats or sinks screen were counted separately and a Tromp curve was plotted in order to obtain the percentage of density tracers versus particle SG. An estimate of the effective separation of light and heavy fractions, including diamond, was determined from the shape and slope of the Tromp curve. The separating SG (or cut point) was determined as the point where the curve has a value of 50 %.

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Figure 11.2: Process Plant Flowsheet – Primary Kimberlite Processing

-250mm PrimaryFeed Bin + ROM Belt

+ Weightometer

+60mm VibratingGrizzly

Nordberg C80Jaw Crusher (-

30mm)

Scrubber

VibratingClassifying Screen(+22mm top screenand +1mm bottom

screen)

Combined Crusher-Product Conveyor

Belt

DMS Feed Bin -KimberliteMaterial

Degrit Cyclone

Degrit VibratingScreen

Degrit and-6mm

Float ScreenTailings

Feed PrepScreen

Circulating Medium- KimberliteMixing Box

DMS Cyclone(250 mm diam.)

Floats Sinks

Circulating Medium

Tank

Drain Screens Drain ScreensDilute Medium

Pump

DMSConcentrate

Canister

+20mm Secondary ConeCrusher

(Metso HP 100)(-13 mm)

+60mm

BottomScreen+1.0 to-6mm

SlimesTailingsDisposal

-1.0mm

MagneticSeparator

FeSi PulpCirculating

Medium

FeSi PulpCirculating

Medium

FeSimedia

+1.0mm to -20mm

-0.5mm

+0.5mm to -1.0mm

-60mm

Effluent Water(recycled back to

Scrubber)FeSi pulp

Transported toRecovery Plant

(see Flowsheet B)

ROM kimberlitematerial

Process Water + Effluent

Tertiary ConeCrusher

(Metso HP 100)(-6 mm)

Top Screen+6.0 to-20mm

+1.0mm to -20mm

+1.0mm to -20mm

ULTRASEPThickener

DensifyingCyclone

FeSimedia

StorageFacility

59

11.4.4 DIAMOND RECOVERY PLANT SAMPLE HANDLING AND PROCESSING PROCEDURES

Once a full canister of DMS concentrate arrived in the recovery plant, the gross weight (wet) and arrival time was taken and recorded by security personnel. The DMS concentrate canister was then loaded into a steel cradle and the contents emptied into the recovery plant hopper (Figure 11.3). The DMS concentrate was separated into three particle size fractions (+1 to -3 mm, +3 to -6 mm and +6 to -20 mm respectively) by a vibrating classifying screen deck unit beneath the recovery plant hopper. During the sizing process, the respective size fractions were collected in individual 40 L stainless steel canisters located below the vibrating classifying screen deck. Once the particle sizing was completed, each sized canister was left to dewater as much as possible. The gross weight (wet) of each sized canister was weighed and recorded by recovery personnel and readied for diamond processing.

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Figure 11.3: Recovery Plant Flowsheet

DMS Concentrate(+1mm to -20mm)

Classifying VibratingSizing Screen

+1mm to -3mm +3mm to -6mm +6mm to -20mm

X-Ray Sortex DiamondRecovery

SortexTailings

Grease Table

+6mmto

Re-crushInfeed Belt forsize reduction

+1mm to -6mm GreaseTable Tailings(Secure Bulk

Storage Bags)

Sortex DiamondConcentrate

(in steel canister)

Storage Facilityfor IndependentTailings Audit

Degreasing and GreaseConcentrate

(+1mm to -6mm)

Secure Recovery PlantStorage Facilityfor Shipment to

Independent Lab

+6mmVibrating Screen

Grease Tailings

+6mm to -20mm(processed twice

through the Sortex thentransported to Re-crush

Infeed Belt for sizereduction)

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11.4.5 X-RAY DIAMOND SORTER All of the wet DMS concentrate size fractions were processed separately via an x-ray sorter. All three individual sized fractions were manually fed to the x-ray sorter receiving hopper for processing, with only the +6 to –20 mm sized fraction processed twice through the x-ray unit. The x-ray sorter unit was designed on the principle of diamonds fluorescing / luminescing when bombarded by x-rays. The wet diamond bearing concentrates slide past photomultiplier tubes that detect fluorescent material (i.e. particles emitting light) which have been irradiated by x-rays. Excitation of the photomultiplier tubes triggers the ejector gate doors to open, forcing the diamond (and other fluorescent material plus surrounding gangue material) into a separate stainless steel canister. The x-ray tailings were collected in a 40 L steel canister to be reprocessed by the grease table. Each size fraction was processed individually; however, the diamonds ejected for each size fraction were collected in a single stainless steel canister that was locked in place below the x-ray sorter unit. Once a batch sample was processed, the stainless steel canister was removed, locked, and stored in Shore’s secure safe-house facility located within the recovery plant by Shore’s security personnel and kept under video surveillance until shipped to SGS Lakefield Research Limited (SGS Lakefield), SGS Canada Inc., Saskatoon (SGS Saskatoon) and / or Mineral Services Canada Inc. (MSC) for diamond sorting. After January 2007, the sample handling procedures were carried out by Shore personnel with no third party involvement, although Howe acted as an external QA/QC provider and made periodic audits of the Shore processing plant (prior to January 2007, the recovery room was operated under Howe supervision). 11.4.6 GREASE TABLE DIAMOND RECOVERY A two-stepped (1 m wide) grease table was employed to concentrate the +3 to -6 mm and +1 to -3 mm x-ray tailings. The +6 mm to -20 mm size fraction was not processed through the grease table, but processed twice through the x-ray sorter. Most diamonds are hydrophobic (i.e. non-wettable) and thus will adhere to grease specially formulated for diamond recovery. The diamonds adhere to the grease on first contact and the flow of concentrate over the adhering diamonds causes them to be pushed further into the grease. All non-adhering (i.e. hydrophyllic) material reported to the grease table tailings belt for storage in 1.0 m3 canvas bulk sample storage bags. The removal and application of fresh grease was dependent upon the amount of grease adherent material in the concentrate. More particles adhering to the grease reduces the effective surface area for diamonds to adhere. When the effective surface area was < 50 %, the grease and grease concentrates were scraped off the grease table and placed into pre-numbered, sealed plastic buckets and shipped to SGS Lakefield, SGS Saskatoon and / or MSC for diamond recovery.

11.4.7 CHAIN OF CUSTODY AND SECURITY PROTOCOLS During the processing plant commissioning period of the bulk sampling program in 2004, Shore and Howe representatives developed security protocols that were designed to enhance

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the chain of custody and maintain the integrity of the sampling program, as a whole, from the extraction of kimberlite from underground to the shipment of diamond concentrate to SGS Lakefield, SGS Saskatoon and MSC for final diamond picking. Shore’s chain of custody and security protocols were designed around a three-lock system, requiring three individuals be present at the removal, transport and escort of concentrate at all times. A video surveillance camera system was designed and installed in the process plant to follow the movement and processing of DMS concentrate from the DMS to the fenced-in recovery plant area. The video surveillance system was continuously monitored by Shore’s security personnel. All security images were backed up for potential security reviews by a third party security auditor. Howe and Shore also developed security and chain of custody protocols for both surface core and LDD drilling and sample processing programs. In October, 2006, a number of security system enhancements were implemented to augment the overall site and process/recovery plant security measures. The enhancements to the security systems included the building of a security entrance building on the north side of the process/recovery plant, allowing for the monitoring of persons entering the process/recovery plant and a more effective search capability for those persons leaving the plant. The plant security building also included male and female changing facilities. All plant employees and authorized visitors were required to change into designated pocket less coveralls before entering the process/recovery facilities. The plant security entrance also housed the security control area, which allowed for a more secure environment for the security officers to monitor all high risk areas, utilizing the digital video (CCTV) and door accesses recorded on the security management system. In addition a new main site access security building and security gate were constructed and placed in a location to afford tighter monitoring, recording and control of persons and vehicles accessing the main site. All vehicle parking was placed outside of the designated high security area, and only authorized vehicles were allowed entrance. All vehicles and persons leaving the designated high security areas were searched before being allowed to exit. Enhanced security protocols were also implemented within the process/recovery plant operations area. 11.4.8 DIAMOND PICKING AND SORTING PROCEDURES Since the commencement of the underground bulk sampling program and LDD mini-bulk sampling program in 2004 and September, 2005 respectively, diamond concentrate samples (X-ray, and grease table concentrates) were shipped to SGS Lakefield, SGS Saskatoon and / or MSC. SGS Lakefield is accredited to the ISO/IEC 17025 standard by the Standards Council of Canada, while SGS Saskatoon has followed the same quality protocols in preparation for accreditation. MSC is not currently accredited to the ISO/IEC 17025 standard by the Standards Council of Canada as a testing laboratory for specific tests; however, the MSC facility, process and quality assurance procedures have been audited and ratified by an independent industry expert (Harry Ryans, Process Specialist of AMEC Americas Limited (AMEC); see Ryans, 2006).

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Once all of the security checks were completed, the applicable laboratory carried out the following laboratory test work:

� processing and sorting of the x-ray concentrate; and, � processing and sorting of the grease concentrate.

All of the sample information was entered into SGS’s electronic Laboratory Information Management System (LIMS) or MSC’s Laboratory Data Management System. The QPs are of the opinion that the sample preparation, security and analytical procedures for the Star – Orion South Diamond Project are adequate for Mineral Reserve estimation purposes.

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12.0 DATA VERIFICATION The following section is taken from previous technical reports on the Star Diamond Project (Orava et al., 2009) and the Orion South Diamond Project (Ewert et al., 2009b). 12.1 INTRODUCTION The database management of underground shaft and drift sampling of the underground bulk sampling, LDD mini-bulk sampling, and diamond processing programs were administered and monitored on a number of levels throughout the program. From January 2003 to January 2007, Howe provided third party supervisory and monitoring services to Shore in the sample processing, chain of custody and sample integrity of the underground bulk sample program and LDD mini-bulk sampling program. Since January 2007, Shore personnel conducted all supervision and monitoring services while Howe acted as a third party auditor. Howe believes that the quality of the diamond processing data is reliable and that the sample preparation, analysis and security were carried out in accordance with exploration best practices and industry standards. Shore and Howe developed operating QA/QC protocols to monitor and quantify the efficiency and recovery of the process plant; these are discussed in detail in Eggleston et al. (2008) and briefly summarized below. 12.2 QA/QC AUDITS The following QA/QC operating protocols were established by Shore and Howe for the efficient operation of the DMS and recovery circuits.

� DMS QA/QC Operating Protocols: During the operation of the DMS circuit, the operating parameters were strictly monitored by Shore and Howe in order to achieve proper kimberlite material separation:

o The SG of the circulating medium was measured manually every 15 minutes with

a densitometer and in real time with a DebTech® dense medium controller system. Since the commissioning of the DMS circuit, the operating range of the DMS circuit, determined by numerous density tracer tests over several SG values was between SG 2.30 and SG 2.50.

o Circulating medium SG readings of both the DMS cyclone overflow and

underflow were collected periodically.

o The operating range of the cyclone inlet velocity pressure was maintained at a constant pressure (i.e. no surging).

o It was ensured that the volumetric ratio between kimberlite material feed and

circulating medium fed to the mixing box was such that the loss of diamonds to the floats screen (due to the overfeeding of material through the cyclone) was negligible.

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o Periodic wet screening checks of the circulating medium for fines from the kimberlitic material were carried out in order to verify the presence, quantity and size of non-magnetic contaminants that could increase the viscosity of the circulating medium.

o Periodic dry screening checks of the circulating medium particle size analysis

were carried out in order to determine the coarsening of the circulating medium due to a reduction of fine FeSi particles.

o Periodic checks of the +1 to -6 mm float material exiting the process plant for any

> 1 mm sized, high SG kimberlitic indicator minerals such as pyrope garnet (SG 3.50), eclogitic garnet (SG 3.50) and Cr-diopside (SG 3.20).

o Density tracer tests were carried out daily to monitor the separating effectiveness

of the DMS cyclone.

� X-ray Sorter QA/QC Operating Protocols: In order for the x-ray sorter to maintain operating efficiency, the unit was calibrated weekly by conducting marble tracer tests. As well, a regular preventive maintenance schedule for the x-ray sorter unit was strictly followed.

� Process Plant - Sample Contamination: Contamination of samples by diamonds

from previously run samples can adversely affect sample results and subsequent economic decisions. Therefore, strict guidelines were followed by Shore to prevent batch sample cross-contamination.

� Process Plant - Diamond Recovery Efficiency and QA/QC Audits: Audits of

grease and coarse reject kimberlite table tailings have been regularly undertaken since 2004.

Both AMEC and Howe concluded that audit results for the recovery plant tailings were good, and tailings data were accepted with no problems (Ryans 2006 and Eggleston et al. 2008). Results obtained to October, 2007 from MSC indicate that low diamond recoveries from the audited samples confirm the integrity of the process and recovery plants.

� Grease Table Tailings Audit Program: In order to confirm the efficiency of the

recovery plant circuit at Shore’s process plant facility, grease table tailings bulk sample bags from both the underground sampling and the LDD mini-bulk sampling programs were shipped to MSC for tailings audits with recovered diamonds being added to the Shore diamond database.

Four independent tests achieved 100 % recovery of spike diamonds in the size range +2 to -4 mm. The diamond summary reports provided by MSC conform to the CIM guidelines for the reporting of diamond exploration results (CIM, 2003). Results from the grease table tailings audits of 16 underground batches and 356 LDD batches completed by MSC indicate that the carats recovered in the audit process from underground batches on the Star Kimberlite deposit added 1.4 % to the total

66

carat weight of the batches audited. Carats recovered in the audit process from LDD batches added 4.6 % of the total carat weight. Any diamonds recovered at this audit stage were reported separately by MSC. The diamond counts and total carat weight for each batch sample, however, have been incorporated into a merged diamond results database containing the results from MSC for final diamond grade reporting. The processing method has been demonstrated to be effective and reliable in the recovery of diamonds through a series of tests run using natural diamond spikes on test sample material provided by Shore.

� X-Ray Concentrate Audit Program: To evaluate the final picking of x-ray concentrate by SGS Lakefield and SGS Saskatoon, final concentrate audits were completed by MSC on both underground (111 batches) and LDD (792 batches) sample batches from the Star Kimberlite. Carats recovered in the audit process from underground batches on the Star Kimberlite added approximately 2.3 % to the total carat weight. Carats recovered in the audit process from LDD batches added 1.2 % of the total carat weight for Star LDD samples. On Orion South, 18 underground batches and 230 LDD batch audits resulted in a total carat increase of 1.2 % and less than 1 % respectively.

Any diamonds recovered at this audit stage were reported separately by MSC and SGS Lakefield and SGS Saskatoon. The diamond counts and total carat weight for each batch sample, however, have been incorporated into a merged diamond results database containing the results for final diamond grade reporting.

� Independent Laboratory Audits: Howe conducted a laboratory audit of SGS

Lakefield on November 4, 2005. AMEC carried out a laboratory audit of MSC in November, 2007. Details of these earlier audits are presented in Eggleston et al. (2008).

From July, 2008 to December, 2008, Howe conducted an audit of the MSC and SGS Saskatoon laboratories in order to:

o review and audit the SGS Saskatoon facility; o review and audit the grease table tailings audit program (MSC); and o review and audit MSC’s processing facility for final diamond recovery from x-ray

and grease concentrates.

During the audits, the chain of custody, handling, sorting, and security protocols were reviewed by Howe and were determined to provide reasonable assurance of the adequacy of the quality of operations at each facility. No material deficiencies were identified.

� Site Audits: During the advanced exploration program phase, AMEC carried out

several site visits to review the operation of the process plant, examine the kimberlite material, review all aspects of the technical work and QA/QC being carried out on the Project (i.e. LDD and underground sampling and processing, geological core logging, etc.) and to undertake data verification reviews.

67

Howe also carried out several site visits to review the operation of Shore’s process plant and examine the kimberlite material. Howe conducted regular visits in order to review all aspects of the technical work and QA/QC being carried out on the Project (i.e. LDD and underground sampling and processing, geological core logging, etc.) and to complete data verification reviews. Howe determined that the Company had a well operated and documented operation of the treatment of bulk samples and that there were no issues of sample integrity (Coopersmith, 2009).

� AMEC Bulk Sample Processing Audit (2006): A processing audit utilizing random periodic spiking (which can substitute for continuous spiking), was performed in March, 2006 (Coopersmith, 2006). Twenty natural diamond tracers were placed in mini-bulk samples from the Star LDD hole LDD-011. The tracer diamonds were natural diamond crystals with at least one polished face with the tracer number and weight in carats laser-etched onto the polished face. The tracers had known luminosity properties for x-ray recovery, and were of a variety of weights and shapes similar to what might be expected to occur naturally in a bulk sample. The tracers were placed at random intervals into the raw sample feed just as it exited from the feed hopper and before it dropped onto the primary feed belt.

All diamond tracers placed in sample LDD-011-03 were recovered from the x-ray concentrate by Shore’s BSP.

� Howe Bulk Sample Processing Audit (2008): A second processing audit utilizing

random periodic spiking, was performed in September and December, 2008 at Shore’s plant. These audits were completed while Orion South Kimberlite was in the processing stream. Two samples (one LDD, and one underground) were chosen by Howe for auditing and securely shipped to SGS Saskatoon (LDD sample) and MSC (underground sample). Four natural and 14 synthetic diamond tracers were placed in the LDD sample and 16 natural and 99 synthetic diamond tracers were added to the underground bulk sample. SGS Saskatoon routinely performs all x-ray and grease concentrate processing and diamond sorting (selection) of LDD samples, audit samples, and in the past had treated underground samples. MSC had been routinely treating the underground samples and audit samples. The procedures at each of the above laboratories were largely similar.

Howe was present for the diamond sorting of the two audited samples at their respective laboratories. Procedures, operations, security and documentation were reviewed and observed. No issues were noted by Howe. All natural diamond tracers placed in the samples were recovered by Shore’s bulk sample plant, and all from the x-ray concentrate. The synthetic tracers were mostly recovered, with the loss of three 2 mm and one 4 mm tracers. The three 2 mm tracers were recovered on the grease table. In the opinion of Howe, this shows acceptably good recovery efficiency.

According to Howe, the audit exercise revealed a well-operated and documented operation of the treatment of bulk samples. There were no issues of sample integrity. Audit results indicated a high efficiency of diamond recovery. The bulk sampling plant facility established and operated by Shore conformed to industry standards. The

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audit results for the recovery plant tailings were good, as expected, and tailings data were accepted with no problems. Based on the review of the historical density tracer tests of the DMS cyclone as well as results obtained by Howe during its audit, Howe was satisfied with the DMS circuit efficiency.

In the 2009 and 2010 technical reports (Orava et al., 2009 and 2010), P&E considered that the QA/QC program and results obtained were adequate to ensure quality data to support Mineral Reserve Estimation work. They were of the opinion that the sampling and processing procedures and QA/QC program for the underground bulk sampling, LDD mini-bulk sampling and diamond processing program has been well documented by Shore, and meets industry standards. For the current Mineral Reserve estimation work, the QPs have reviewed all the relevant reports and data and concur with previous assessments that the QA/QC programs and results are adequate for Mineral Reserve Estimation work. 12.3 DATA BASE VERIFICATION P&E imported all collar, geology and LDD sample data into an Access format Gemcom database. LDD batch sample intervals were then back-tagged against the geological wireframes supplied by Shore and compared to the Shore geology logs. A small number of discrepancies were noted by P&E. The database had a very low rate of error overall and those discrepancies noted by P&E were resolved by Shore. Having reviewed the Project database, P&E believed it to be suitable for Mineral Reserve Estimation purposes (Orava et al., 2009 and 2010). 12.4 BULK DENSITY VALIDATION Shore has undertaken a number of comprehensive bulk density programs on diamond drill hole core, and a total of 4,215 bulk density values were available for the Mineral Reserve Estimate. P&E reviewed the bulk density data and believed it to be suitable for Mineral Reserve estimation purposes (Orava et al., 2009 and 2010).

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13.0 MINERAL PROCESSING AND METALLURGICAL TESTING 13.1 STAR UNDERGROUND BULK SAMPLING PROGRAM Upon completion of the underground bulk sampling program on the Star Kimberlite, a combined total of 10,966 carats of commercial sized diamonds greater than 0.85 mm were recovered from a total of 75,435.68 dry tonnes of kimberlite material (Figure 13.1) that was processed through Shore’s batch sampling process plant from both Shore’s 100 % owned Star Kimberlite and the FALC-JV Star West bulk sampling programs. Tonnages include sampling of drift material, underground resource evaluation (RE) samples, geotechnical test samples and clean-up samples. Carat totals include 101.23 carats recovered from grease tailings and picked concentrate audits and 3.59 carats from float tailings audits. Total production and sampling results are summarized in Table 13.1 and presented in detail by batch in Eggleston et al. (2008). Figure 13.1: Star Kimberlite Underground Batch and Geology Map

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Table 13.1: Summary of Combined Production and Sample Results (Underground, RE, Geotech and Clean-Up) for Star Kimberlite (including Star West)

Sample Type

Property No. of Batches

Metric Tonnes (dry)

processed

Total Stones

Total Carats*

Grade (cpht)

Drift Star 252 60,714.68 76,428 9,557.98 15.74 Drift Star West 15 4,173.74 3,440 747.40 17.91 RE Star 53 1,471.88 1,455 224.47 15.25 RE Star West 6 161.10 91 14.51 9.01

Geotech Star 4 23.69 21 3.51 14.83 Clean-up combined 12 8,890.59 2,776 418.13 4.70 TOTAL 342 75,435.68 84,211 10,966.00 14.54

* includes carats from grease tailings and picked concentrate audits (101.23 carats) and 3.59 carats from float tailings audits. Utilizing all underground batch sample results, the average run-of-mine (ROM) grade obtained from the processed batches from the Star Kimberlite was 14.54 cpht; however, if the clean-up data is removed, the ROM grade is 15.85 cpht. The average ROM grade of the various Star Kimberlite units is presented in Table 13.2. Table 13.2: Summary of Underground ROM Diamond Grades from the Various Star Kimberlite Units

Kimberlite Phase Grade (cpht) LJF 2 MJF 7 EJF 18 Pense 13 Cantuar 18

P&E (Orava et al., 2010) reviewed the geological model produced by Shore and compared it with the sampling of the kimberlite through underground bulk sampling. P&E considered the underground samples within the LJF, MJF, EJF, Pense and Cantuar Kimberlite to be representative of the kimberlite (Orava et al., 2010). In particular, the underground sampling of the EJF corresponds to the “Inner area” of the unit that represents the cinder cone and crater fill material that makes up the bulk of the EJF.

13.2 ORION SOUTH UNDERGROUND BULK SAMPLING PROGRAM After final processing of 75 underground batches (78 samples) from 25,468 dry tonnes of kimberlite (Figure 13.2) in March, 2009, there was a total recovery of 2,346 carats from the Orion South bulk sample. The largest stone recovered was a 45.95 carat stone.

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Figure 13.2: Geological Map of the Underground Drifts on Orion South

The final Orion South underground bulk sampleresults, on a per unit basis, are listed in Table 13.3.

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Table 13.3: Underground Bulk Sampling Results on a Per Kimberlite Unit Basis – FalC-JV Orion South Kimberlite

Kimberlite Unit Dry Tonnes

Number of

Stones

Total (carats)

Grade (cpht)

Largest Stone

(carats) LJF 115.8 90 6.96 6.01 0.38 EJF 8,040.9 7,794 1,414.00 17.59 32.96 Mixed Pense/EJF 3,154.8 2,218 334.85 10.61 3.61 Pense 12,046.8 5,116 586.32 4.87 45.95 Clean-up 109.7 30 4.14 3.78 1.19 Total 23,468.0 15,248 2,346.27 10.00

As with the Star Kimberlite, the EJF is the dominant kimberlite unit within Orion South in terms of volume and grade. The EJF grade, as determined from the underground bulk samples from Orion South, is approximately 18 cpht. 13.3 LDD SAMPLING PROGRAMS 13.3.1 STAR LDD PROGRAM Utilizing the entire LDD sampling (103 LDD holes) (Figure 10.1) and processing (96 LDD holes processed) dataset a total of 1,416.61 carats were recovered from 11,662.8 processed tonnes (19,977.6 theoretical tonnes) of kimberlite.Table 13.4 shows the tonnages and carats recovered from the LDD processing on a kimberlite unit basis. Table 13.4: Summary of Star Kimberlite LDD Processing and Total Carat Recovery on a Per Kimberlite Unit Basis

Kimberlite Unit

Number of Sample Batches

Processed Dry

Tonnes

Theoretical Tonnes

TotalStones

TotalCarats*

Processed Grade(cpht)

Theoretical Grade(cpht)

UKS 11.0 187.1 189.4 4.0 0.1 0.1 0.1 Other 19.0 214.1 339.8 30.0 1.9 0.9 0.6 LJF-S 41.0 653.6 1,099.9 29.0 1.4 0.2 0.1 LJF 86.0 906.0 2,069.9 225.0 11.2 1.2 0.5 MJF-S 8.0 100.6 200.2 40.0 1.5 1.5 0.7 MJF 89.0 1,306.5 2,158.0 1,039.0 67.0 5.1 3.1 EJF 523.0 7,019.9 11,782.7 12,858.0 1,133.3 16.1 9.6 PENSE 40.0 561.2 959.4 986.0 87.7 15.6 9.1 JLRPK 9.0 91.8 181.1 113.0 11.0 11.9 6.1 CANTUAR 44.0 622.1 997.2 661.0 101.5 16.3 10.2 Total 870.0 11,662.8 19,977.6 15,985.0 1,416.6 12.1 7.1 * includes carats recovered from audit process 13.3.2 ORION SOUTH LDD PROGRAM Upon completion of the LDD drilling program on Orion South (Figure 10.2), 882 samples totalling 1,039.7 carats were recovered from 9,579.6 processed tonnes (16,213.2 theoretical

1 Includes carats recovered in audit processes.

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tonnes) of kimberlite. The results for each principal kimberlite unit sampled by the LDD mini-bulk sampling are shown in Table 13.5. These results include both the 1.20 m diameter LDD holes drilled by the current joint venture and those from twenty-four 0.914 and 0.609 metre diameter LDD holes completed by the previous joint venture operators prior to 2006. Table 13.5: Diamond Results from Orion South LDD Mini-bulk Samples on a Per Unit Basis

Kimberlite Unit

Number of Sample Batches

Processed Dry

Tonnes

Theoretical Tonnes

Total Stones

Total Carats*

Processed Grade(cpht)

Theoretical Grade(cpht)

Other 32 277.4 416.6 62.0 4.2 1.5 1.0 Viking 24 233.9 401.8 127.0 8.0 3.4 2.0 LJF 101 1,057.9 1,818.8 241.0 20.8 2.0 1.1 EJF 500 5,206.8 9,038.7 7,747.0 779.0 15.0 8.6 Pense 211 2,618.7 4,261.2 2,138.0 223.5 8.5 5.2 Cantuar 14 184.8 276.2 41.0 4.3 2.3 1.6 Total 882 9,579.6 16,213.2 10,356.0 1,039.7 10.9 6.4 * includes carats recovered from audit process

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14.0 MINERAL RESOURCE ESTIMATES Mineral Resources have been developed on the property and are detailed in previous technical reports (i.e., Orava et al., 2010; Orava et al., 2009; Ewert et al., 2009a; Ewert et al., 2009b; and Eggleston et al., 2008). Updated Mineral Reserve estimates are detailed in Section 15.0 and are based on grade models developed for Star and Orion South. 14.1 STAR GRADE MODEL The Star Mineral Resource Estimate was derived from data that included underground drift bulk sampling comprising 66,545 t of kimberlite (75,436 t including clean-up), 321 surface diamond core drill holes, 213 underground diamond core drill holes and 96 LDD drill holes. Seven additional LDD drill holes did not sample kimberlite due to drilling difficulties (e.g. hole collapse or deviation). Topographic control was provided by two separate regional airborne laser and digital camera surveys. Kimberlite unit 3D wireframes for the LJF, MJF, EJF, Pense and Cantuar kimberlite were developed by Shore geologists using sectional interpretation of diamond drilling. The EJF kimberlite unit has been further subdivided by Shore into proximal and distal units. Where not defined by drilling, the distal limits of the Star Kimberlite deposit were defined by EM signature. The kimberlite units have been modelled to a lower limit of 70 masl (approximately 350 m below surface). Recovered diamond grades from LDD batch samples were adjusted upwards to compensate for diamond breakage and loss during drilling. The ratio of the average middle-fraction diamond grade between the LDD samples and the underground (UG) samples within the EJF Inner Zone was used to compensate for the observed diamond damage. A calculated adjustment factor of 1.62 was applied across the model for all units. Mineral Resources were estimated in accordance with guidelines established by the CIM. Weighting of samples by linear Ordinary Kriging of adjusted LDD sample data was used for the estimation of block grades, and kriging parameters were derived from the global EJF variography. Two interpolation passes were used for diamond grade estimation. During the first pass, a minimum of four and a maximum of six samples from two or more LDDs within 170 m (the isotropic semi-variogram range) of the block centroid were required. All block grades estimated during the first pass were classified as Indicated. During the second pass, blocks not populated during the first pass were estimated. A minimum of three and a maximum of six samples from one or more LDDs within 340 m (twice the isotropic semi-variogram range) of the block centroid were required. All block grades estimated during the second pass were classified as Inferred. 14.2 ORION SOUTH GRADE MODEL The Mineral Resource Estimate was derived from data that included 174 surface diamond core drill holes, 78 underground bulk samples (25,468 t) and 62 LDD drill holes with kimberlite processing. Five additional LDD drill holes did not sample kimberlite due to drilling difficulties (e.g. hole collapse). From the LDD sampling program, 882 batch samples

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were available for resource estimation. Topographic control was provided by two separate regional airborne laser and digital camera surveys. Kimberlite unit 3D wireframes for the Viking, LJF, EJF, Pense, and Cantuar kimberlites were developed by Shore geologists using sectional interpretation of diamond drilling. The kimberlite units have been modelled to a lower limit of 20 masl (approximately 430 m below surface). Recovered diamond grades from LDD batch samples were adjusted upwards to compensate for diamond breakage and loss during drilling. The ratio of the average middle-fraction diamond grade between the LDD samples and the UG samples within the EJF Inner Zone was used to compensate for the observed diamond damage. A calculated adjustment factor of 1.41 was applied to the Pense Inner and Outer zones, with LDD samples in the EJF Inner and Outer zones adjusted by 1.74 across the model. P&E believes the adjustment factors to be reasonable and appropriate for the Orion South Mineral Resource, but also note that there remain deficiencies in larger stones reported for the LDD data (Orava et al., 2010). Mineral Resources were estimated in accordance with guidelines established by the CIM (2005). Two interpolation passes were used for estimation. During the first pass, six samples within 120 m (the isotropic semi-variogram range) of the block centroid were required, with a maximum of two samples from any single LDD. All block grades estimated for the EJF and Pense kimberlite units during the first pass were classified as Indicated. Other kimberlite units estimated during the first pass were classified as Inferred due to a lack of diamond parcel valuation. During the second pass, blocks not populated during the first pass were estimated. Three samples from 240 m (twice the isotropic semi-variogram range) of the block centroid were required. All block grades estimated during the second pass were classified as Inferred. 14.3 DIAMOND VALUATION Diamond prices used in this FS are based on valuations by WWW using their February 2011 price book. While High Model prices were used in the August 2009 reserve estimate for the Star Kimberlite, the September 2009 resource estimate for Orion South and the February 2010 combined Star and Orion South reserve estimate, the Base Case FS uses the more conservative Model prices plus 15 percent for each kimberlite unit within Star and Orion South. WWW is in agreement with the use of the Model Prices plus 15 percent for the FS. The Case 1 FS uses High Model prices for comparative purposes. The details of the February 2011 valuation of the Star and Orion South diamond parcels were published in Shore News Release dated March 2, 2011 and the parcel and model prices for the Star and Orion South diamonds used in this FS are listed in Table 14.1. According to WWW, as of July 14, 2011, current rough diamond prices are on average some 30 to 35 percent higher than the February 2011 pricebook.

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Table 14.1: The Parcel and Model Price Details for the Star and Orion South Kimberlites (February, 2011 pricebook)

DepositKimberlite Lithology

Model Price (US$/ct)

Model Price plus 15 % (US$/ct)

Minimum Price

(US$/ct)High Price

(US$/ct)Star MJF-LJF $198 $225 $106 $290

EJF $225 $259 $176 $296Pense $175 $201 $131 $224Cantuar $355 $408 $281 $499

Orion South EJF $192 $221 $149 $258Pense $129 $148 $94 $177

Weighted average diamond prices calculated using the carat proportions of the Star and Orion South Mineral Reserve estimates (see Table 14.1) result in the values listed in Table 14.2. Table 14.2: Weighted Average Model and High Diamond Prices for the Star and Orion South Kimberlites

Kimberlite Weighted Average Model Price (US$/carat)

Weighted Average Model Price plus 15 %

(US$/carat)

Weighted Average High Model Price

(US$/carat) Star $230 $264 $306 Orion South $182 $209 $245 Combined Star - Orion South

$210 $242 $281

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15.0 MINERAL RESERVE ESTIMATES The Star – Orion South Diamond Project updated Mineral Reserve Estimate was derived from the recent Mineral Resource dollar value per tonne block models created for the Star and Orion South Kimberlite deposits. Utilizing feasibility-level operating costs for mining, processing and G&A, along with engineered pit slopes, pit optimizations were undertaken to derive pit shells for design purposes for each deposit. The phased pit designs developed include allowance for vehicle access ramps, conveyor ramps, and berms. The resulting open pit design surfaces for Star and Orion South were subsequently utilized to determine the mineralization contained within the resource models that was amenable for conversion to Mineral Reserves by dollar value-cut-off. Only material in the Indicated resource category was converted with dilution and losses applied to determine the Reserve. A summary of the Mineral Reserve for the Star – Orion South Diamond Project is shown in Table 15.1. Table 15.1: Probable Mineral Reserve Estimate Kimberlite Unit Detail for Star – Orion South Diamond Project, effective July 14, 2011

Deposit Kimberlite Unit Ore (Mt) Carats (M) Ore Grade (cpht)

STAR

LJF 4.078 0.093 2.3 MJF 22.403 1.057 4.7

EJF-Inner 88.364 13.554 15.3 EJF-Outer 33.783 3.039 9.0

Pense 7.802 1.203 15.4 Cantuar 9.460 1.440 15.2

STAR TOTAL 165.890 20.386 12.3

ORION SOUTH

EJF Inner 62.040 9.986 16.1 EJF Outer 17.362 1.680 9.7

Pense 33.688 2.328 6.9

ORION SOUTH TOTAL 113.090 13.994 12.4

TOTAL 278.980 34.380 12.3

Note: The Mineral Reserves have a 1 mm bottom screen size cut-off. 15.1 INFERRED RESOURCES In addition to the entire Mineral Reserve, an estimated total of 80 million tonnes of Inferred Resources containing a total of approximately 9.1 million carats are excavated by the FS pit designs for the Star and Orion South Kimberlites (Table 15.2). The cost of excavation of these Inferred Resources is included in the FS, however, processing costs and resultant revenue cannot be included as NI 43-101 only permits revenue derived from Indicated Resources and subsequently derived Probable reserves to be reported.

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Table 15.2: In Pit Inferred Mineral Resource Estimate for the Star – Orion South Kimberlite Units, effective July 14, 2011

Deposit Kimberlite Unit Ore (Mt) Carats (M) Grade (cpht)

STAR

LJF 0.053 0.001 1.8 MJF - - - Pense 0.534 0.076 14.2 EJF-Inner 1.821 0.294 16.1 EJF-Outer 9.210 0.790 8.6 Cantuar 0.003 0.0004 13.4

STAR TOTAL 11.621 1.161 10.0

ORION SOUTH

Viking 0.277 0.026 9.5 SAK 0.108 0.007 6.3 LJF 9.928 0.523 5.3 EJF Inner 21.790 4.231 19.4 EJF Outer 24.977 2.095 8.4 Pense Inner 10.963 1.021 9.3 Pense Outer 0.584 0.034 5.8 Cantuar 0.052 0.002 3.7

ORION SOUTH TOTAL 68.679 7.939 11.5 TOTAL 80.300 9.100 11.3

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16.0 MINING METHODS 16.1 SUMMARY The Project encompasses the sequenced mining of the Star and Orion South open pits, with the Star pit being the first to be mined. The Star pit contains an estimated 165.89 million diluted tonnes of ore in the Probable Mineral Reserve category and 545 Mbcm of waste material. The pit will be developed in phases as shown in Table 16.1 and Figure 16.1. Table 16.1: Star Open Pit Development Phases

Item Star Open Pit Development Phases Total 1a 1b 2 3 4

Diluted ore (Mt)1 29.46 25.76 45.18 49.45 16.02 165.89 Waste: Surficial zone sand (Mbcm) 18.9 11.7 19.3 3.3 9.4 62 Surficial zone clay (Mbcm) 21.0 10.5 10.0 6.6 12.8 61 Tills (Mbcm) 107.2 41.4 49.0 38.4 39.4 275 Waste rock (Mbcm)2 31.6 18.3 41.4 37.7 17.5 146 Total waste (Mbcm) 178.7 81.9 119.7 86.0 79.1 545 Total waste (Mt)1 343.6 154.7 225.2 166.1 148.9 1038 Stripping ratio (bcm waste: t ore) (t waste: t ore)

6.06:1 11.66:1

3.18:1 6.00:1

2.65:1 4.98:1

1.74:1 3.36:1

4.94:1 9.29:1

3.28:1 6.26:1

Totals may not sum exactly due to rounding. 1 Dry tonnes. Moisture is taken into account in equipment throughput and mine operating costs. 2 Includes Colorado Group and Mannville Group shale to sandstone and waste kimberlite.

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Figure 16.1: Plan View of Star Open Pit Phases 1a, 1b, 2, 3 and 4

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The Orion South open pit contains an estimated 113.09 million diluted tonnes of ore in the Probable Mineral Reserve category and 398 Mbcm of waste material. The pit will be developed in phases as shown in Table 16.2 and Figure 16.2. Table 16.2: Orion South Open Pit Development Phases

Item Orion South Open Pit Development Phases

Total

1a 1b 2Diluted ore (Mt)1 24.91 32.30 55.87 113.09 Waste: Surficial zone sand (Mbcm) 37.6 34.1 21.2 92.9 Surficial zone clays (Mbcm) 28.8 20.7 11.9 61.4 Tills (Mbcm) 49.0 63.0 52.4 164.4 Waste rock (Mbcm)2 5.5 34.7 38.6 78.8 Total waste (Mbcm) 120.9 152.5 124.1 397.5 Total waste (Mt)1 216.5 281.5 235.8 733.8 Stripping ratio (bcm waste: t ore) (t waste: t ore)

4.85:1 8.69:1

4.72:1 8.71:1

2.22:1 4.22:1

3.51:1 6.49:1

Totals may not sum exactly due to rounding. 1 Dry tonnes. Moisture is taken into account in equipment throughput and mine operating costs. 2 Includes Colorado Group and Mannville Group shale to sandstone and waste kimberlite.

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Figure 16.2: Plan View of Orion South Open Pit Phases 1a, 1b and 2

16.1.1 MINE PRE-PRODUCTION DEVELOPMENT It is assumed that the Project will attain regulatory approval to proceed in Q3, 2012. On this basis, the Process Plant will become functional in Q4, 2016. The Star Phase 1a pit will provide ore to the Process Plant for the first two years of its operation. The key activities required to ready the Star Phase 1a pit for ore production include:

� Pre-stripping of the surficial sand and clay layers. It is planned that at the start of the Project, most of the surficial sand and clay layers in the Phase 1a open pit will be stripped by Shore personnel using conventional earthmoving equipment such as excavators and trucks and scrapers.

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� The selection and ordering of long-delivery mine equipment including the IPCC system. Specialist supplier(s) will provide turnkey service including equipment-related EPCM services with overview and approvals by Shore.

� The construction of the 230 kV SaskPower transmission line to site. This is required

to power the IPCC system and mine services.

� The development and commissioning of the Star pit dewatering system.

� The commissioning of the in-pit crush and convey (IPCC) waste stripping system which will be used to strip the underlying tills and waste rock to expose ore.

� The construction and commissioning of the in-pit ore sizer and conveyor to the

Process Plant stockpile, and the in-pit waste rock sizer and transfer conveyors. 16.1.2 IN-PIT CRUSH CONVEY WASTE STRIPPING SYSTEM IPCC systems have been in development over the past few decades with several now in operation internationally. These systems typically involve the use of a face shovel that loads a mobile sizer / crusher and the conveying of the sized / crushed material to its destination. These systems offer high throughputs and reduced stripping costs in comparison to conventional truck and shovel operations. The proposed IPCC system will be used to excavate, size, convey and stack the overburden in the designated overburden stockpile. A 20,000 tph capacity IPCC system will be used to strip the till and underlying Colorado shale and occasional siltstone, sandstone and clay materials. The tonnages of material to be stripped by the IPCC system in each phase are shown in Table 16.3. The key IPCC system components are electrically-powered shovels, fully mobile sizers, transfer conveyors, and an overland conveyor and waste stacker. Once stripping is completed in Phase 1a, the IPCC in-pit equipment will move to the next scheduled phase for stripping.

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Table 16.3: Projected Tonnages of Material to be Stripped by The IPCC System in Each Pit Phase

Pit Phase Tonnage of tills and Lower Colorado formation materials scheduled to be stripped by the IPCC system.

Mdt1 Mwt2 Star 1a 254 285 Star 1b 117.8 132 Star 2 143.6 161 Star 3 118.2 132 Star 43 0 0

Orion South 1a 91.1 143 Orion South 1b 127.6 104 Orion South 2 142.7 160

Total 995 1,117 1 Million dry tonnes of material based on dry tonnage reported in the mine schedule. 2 Million wet tonnes of material based on dry tonnage reported in the mine schedule and projected moisture levels. 3 Star Phase 4 will be stripped using conventional equipment while the IPCC system is relocated to the Orion South pit. The IPCC system will be operated and maintained by Shore with the assistance of a maintenance contractor. Operations will be supported by drilling and blasting equipment, bulldozers and wheel dozers, the surficial sand and clay pre-stripping excavators and haul trucks, road graders, and field maintenance and service vehicles including all-terrain cranes.

� The proposed IPCC stripping system is a waste excavation / conveying / stacking system. It will initially include three electrically-powered shovels, each having a fully-mobile sizer and a fully-mobile transfer conveyor; two semi-mobile across-bench conveyor assemblies; twin inclined conveyors on the Star Phase 1a pit access ramp; an overland conveyor with conveyors and a waste stacker at the overburden stockpile; and an auxiliary waste stacker.

� The IPCC system will be progressively expanded as the pit is developed. IPCC in-pit

equipment will move between the Star and Orion South pits as required by the mine schedule. The overland conveyor between the Star pit and the overburden stockpile will be relocated to serve the Orion South pit.

� It is assumed that the tills to be excavated by the system will be free-digging material.

The IPCC system will commence operations in the Star Phase 1a pit and will then be relocated to the Star Phase 1b pit. The IPCC system will be used to sequentially strip Star pit phases 1a to 3 and Orion South pit phases 1a to 2. The tonnages of materials to be stripped by the IPCC system in years 2013 to 2031 are shown in Table 16.4. The IPCC system has a capacity of 117 Mwtpy.

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Table 16.4: Projected tonnages of material to be stripped by the IPCC system per year

Year Calendar Year Projected Tonnage of tills and Lower Colorado formation materials scheduled to be stripped by the IPCC system.

Pit Phase Mwt -4 2013 Star 1a 7 -3 2014 Star 1a 93 -2 2015 Star 1a 104 -1 2016 Star 1a 81 1 2017 Star 1b 76 2 2018 Star 1b 56 3 2019 Star 2 100 4 2020 Star 2 61 5 2021 Star 3 72 6 2022 Star 3 50 7 2023 Star 3 10 8 2024 IPCC relocated 9 2025 Orion South 1a 103

10 2026 Orion South 1a & 1b 40 11 2027 Orion South 1b 54 12 2028 Orion South 1b 50 13 2029 Orion South 2 42 14 2030 Orion South 2 90 15 2031 Orion South 2 28

Total 1,117 16.1.3 TRAFFICABILITY Information on equipment trafficability on the overburden and sub-overburden materials developed by Clifton and SRK was reviewed to assess the trafficability of the IPCC equipment. The trafficability of the IPCC equipment is subject to the properties of the underlying soils including: bearing strength, shear strength, clay and silt content, and moisture content; the machine characteristics such as track/wheel configurations and ground contact pressures; the number and frequency of load applications / passes; and field and ambient conditions. The trafficability database includes but is not limited to information on the stratigraphy and geotechnical units, natural moisture content, Unified Soil Classification descriptions, liquidity index, plastic limit, wet density, particle size distribution, undrained shear strength, estimated subgrade bearing capacity, and estimated allowable bearing capacities for factors of safety (FOS) of 2 and 3. The trafficability assessment included a subjective component that assessed operational aspects taking a range of field conditions and proposed engineered controls into consideration, and a technical component that included a comparison of projected equipment ground pressures to allowable bearing capacities of the various geotechnical units at a FOS of 3 and subsequently to the allowable bearing capacity at FOS of 2. As a general statement, the bearing capacity of a soil indicates its capacity to support trafficability. Consider that in foundation design, the load transmitted to the underlying soils needs to be less than the value that can result in the failure of the foundation with respect to bearing capacity, and the maximum safe load is a function of the ultimate bearing capacity and a suitable FOS. The ultimate bearing capacity is the loading intensity that causes failure and lateral displacement of the soil, and settlement of the loaded area. The results of the

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trafficability assessment were reviewed with IPCC suppliers and geotechnical engineering specialists on the FS project team. The ground pressures of the selected IPCC equipment are acceptable. The geotechnical trafficability data includes shear strength data for the Sutherland Group tills that was considered anomalously low due to sample disturbance. Potential trafficability issues may occur locally and would be expected to be manageable given the engineered controls and operational flexibility of the IPCC system. Selected trafficablity information is summarized in Tables 16.5 and 16.6. The results of the trafficabilty assessment are shown in Table 16.7.

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Table 16.5: Estimated Average Trafficability of Star and Orion South Overburden

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Table 16.6: Trafficability summary for sub-overburden domains

Geotechnical Domain1

Top elevation (masl)

Dominant lithology

Moisture(%)

Plasticity Index

%Fines

Cu (kPa)

Estimated bearing capacity

(kPa) [F0S=3]

Note

Orion South

Star

Lower Colorado Group LC1 335 330 Clay shale 30 108 81 >220 >367 Hard, brittle

clay shale, locally brecciated and slickensided. Slippery when wet.

LC2 290 N/A Clay shale 20 77 91 >220 >367

Manville Group Pense/Waseca/Sparky

266 240 Silstone, clay shale

20 38 87 >220 >367 Similar to LC domains. Slippery when wet.

Gen. Pet/Rex 230 205 Siltstone, sandstone

18 2 54 >220 >367 No trafficability issues expected.

1 Table includes selected data from Table 7.1 in SRK (2010) and updates received from SRK. Table 16.7: Ground pressure assessment

Item

Estimated Allowable Bearing Pressure

at FOS = 3

Estimated Allowable Bearing Pressure

at FOS = 2 Under average normal operating

conditions the FOS would be expected to be � 3.

Under short term event conditions, the projected FOS would be expected to be �2.

Geotechnical Unit 2-3 4 5 -10 2-3 4 5 -10 Estimated allowable bearing capacity 49 psi 25 psi �42 psi 74 psi 37 psi 64 psi Equipment Hydraulic shovels: Komatsu PC8000 OK OK OK Fully mobile sizers: TAKRAF TMCS 8400 OK OK OK Mobile conveyors: Mobile conveyor bridge Inclined conveying bridge

OK OK OK

16.1.4 ORE PRODUCTION Ore and associated waste rock will be mined by Shore using conventional hydraulic excavators, haul trucks and ancillary equipment. The ore and waste will be trucked to in-pit sizers and sized and conveyed from the pit. The ore and the waste rock that is scheduled to be conventionally mined will be drilled and lightly blasted. Pit dewatering will be carried out in advance so that mining occurs in the depressurized zone. 16.2 HYDROGEOLOGY AND PIT DEWATERING The hydrogeological investigations and modeling provide a basis for the projected mine dewatering requirements, local stream recharge, and post-mining pit lake formation. The FS includes cost allowances for pit perimeter dewatering wells, in-pit dewatering wells, in-pit

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pumps for the collection of surficial aquifer seepage, and for the general operation of the open pit dewatering system. The hydrogeology and pit dewatering program is reviewed in Appendix B. 16.3 GEOTECHNICAL AND PIT SLOPES The geotechnical investigations of the overburden and sub-overburden were completed by Clifton and SRK, respectively. The purpose of these investigations was to gather information to complete a slope stability analyses and provide engineering slope design parameters for mine planning purposes and mine equipment trafficability assessments.

16.3.1 PIT SLOPES IN THE OVERBURDEN SOILS Clifton carried out field and lab investigations to a FS level in 2008 and 2010 to provide a geotechnical assessment of the overburden which produced a slope stability evaluation for both the Star and Orion South pits. Clifton (2011) indicated that the slope stability of the proposed Star and Orion South pit walls in the glacial overburden is primarily controlled by:

� the low strength of glaciolacustrine clays in the surficial stratified drift; and, � the condition of the shale at the glacial drift – Colorado Group contact.

Clay layers in the surficial stratified drift (sand, silt and clay) control the stability of the upper 20 m to 45 m of the pit wall, while the overall stability of the pit wall throughout the overburden is controlled by the shear strength of the shale at the top of the Colorado Group. Based on stability analyses, Clifton assessed that the overall slope in the surficial stratified drift should be no steeper than 3.5:1 (H:V) and in the till should be no steeper than 2:1 (H:V) to maintain a FOS greater than 1.10; however, as the condition of the shale at the upper Colorado Group contact was the controlling factor in the overall stability of the final pit wall slopes the focus of the overburden slope stability analysis for the Star and Orion South pits would be on the most conservative case (i.e. the perimeter pit wall slope angles for slopes with the lowest residual shear strength). Various scenarios for the internal pit walls were also examined because of the use of various mining phases, however, for the purposes of this FS only the final pit wall configuration case is presented. Optimization using internal pit wall criteria can be further examined during future detailed design and engineering. Analyses of the pit slopes incorporated a number of the following design provisions:

� flattening of the overall slope geometry by leaving large benches (385 masl and 325 masl levels);

� reductions in pore water pressures and increases in shear strength with the excavation and replacement of in situ materials at the drift – bedrock contact (325 masl level) with a free draining granular (shear key) which has higher shear strength and better drainage properties than the in situ material;

� reduction in pore water pressures due to unloading during the pit excavation process; � the surficial sand and drift aquifers would be dewatered; and � piezometric levels in the bedrock aquifers would be maintained below the pit floor.

Material properties for the stability analyses were obtained from laboratory testing of samples obtained from the geotechnical investigations. Average shear strength properties and

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densities from samples taken around the pit perimeters were used to provide representative values. The soil properties used in the stability analyses for the Star and Orion South pits are included in Table 16.8 Table 16.8: Shear Strength Parameters Used in Star and Orion South Stability Analyses

Soil Type

Unit Weight(kN/m3)

Effective Cohesion, c' (kPa)

Effective Friction Angle (°)

Upper Sand (S1) 19.0 0 32Lower Sand (S2) 19.1 0 32Upper Clay (C1) Orion South 19.6 11 27Lower Clay (C2) (or Star Clay) 19.2 0 12Saskatoon Gp Till 22.6 40 34Sutherland Gp Till 20.9 60 33Sutherland Gp Clay (Orion South) 22.5 40 15.9Colorado Gp Shale (softened) 19.5 0 22.4Colorado Gp Shale (residual) 19.5 11 8Shear Key Granular 19.0 0 32Kimberlite 26.0 0 35 Star Pit Wall Stability

Results of the Star final perimeter pit wall slope stability analysis indicated that based on the lowest residual shear strength of the Colorado Group shale, an overall pit wall angle of 16.1 degrees was required to meet a FOS of 1.0 in the overburden materials. This conservative slope angle estimate is reinforced by the planned slope monitoring and warning system addressed in the capital and operating requirements for the pit. The perimeter of the Star pit has been zoned according to the condition of the intertill clay and the Colorado Group shale at the drift – shale contact. The perimeter pit slope angles applied to the Star pit zones are included in Table 16.9. The angles have been measured relative to north (or 0°) azimuth using the centre of the proposed pit as a measuring point. For all zones identified along the Star perimeter pit wall, the slope angle was 16.1 degrees. Table 16.9: Star Pit Wall Zonation and Pit Wall Slope Angles

Perimeter Pit Wall Angle from North (°) Zonation

Perimeter Pit Wall Slope Angle (°)

290 to 35 2 16.135 to 150 3 16.1150 to 255 1 16.1255 to 290 3 16.1

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Orion South Pit Wall Stability

Results of the Orion South final perimeter pit wall slope stability analysis (Table 16.10) indicated that based on the lowest residual shear strength of the Colorado Group shale, an overall pit wall angle of 16.1 degrees was required to meet a FOS of 1.0 in the overburden materials. This conservative slope angle estimate is reinforced by the planned slope monitoring and warning system addressed in the capital and operating requirements for the pit. Table 16.10: Orion South Pit Wall Zonation and Pit Wall Slope Angles

Perimeter Pit Wall Angle from North (°) Zonation

Perimeter Pit Wall Slope Angle (°)

345 to 45 4 19.545 to 75 6 21.9

75 to 130 3 16.1130 to 165 5 21.9165 to 205 2 16.1205 to 275 3 16.1275 to 315 2 16.1315 to 345 5 21.9

16.3.2 PIT SLOPES IN THE SUB-OVERBURDEN ROCK SRK (2010) characterized the sub-overburden stratigraphy as follows (typical thicknesses and depth intervals are shown in brackets):

� Colorado Group shale and mudstone (70 to 80 m thickness; typical depth interval: 110 m to 190 m);

� Mannville Group mudstone and sandstone (100 m to 110 m thickness; typical depth interval: 190 m to 300 m);

� kimberlite (thickness and depth are extremely variable); and � limestone.

The geotechnical assessment used for slope design at the Orion South and Star kimberlite deposits adopted a methodology to handle the weak country rock stratigraphy. The points listed below summarize the important parameters used in this assessment:

� Rock mass assessment and generation of geotechnical domains - A rock mass assessment was undertaken to review the variability of rock mass quality within the kimberlites and sub-overburden country rocks. Kimberlites have been isolated as separate domains to the country rock and have been assessed independently.

� Structural evaluation – A limited kinematic assessment has been undertaken on structural features derived from the oriented core evaluation and underground mapping.

� Analysis of geophysical data for physical rock properties – work has been done to refine the range of material properties of the major geotechnical domains; particularly intact rock strength, by using downhole geophysical data.

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� Hydrogeology – The relevant hydrogeological considerations such as permeability and pore pressures were applied to numerical models.

� Numerical modeling – Discrete element modeling (FLAC 2D) has been conducted on vertical sections based on the Orion South and Star geological and geotechnical models.

The results of the geotechnical assessment provide a range of physical and hydrogeological parameters for each identified geotechnical domain (geotechnical stratigraphic unit) used in the geotechnical model. Table 16.11 lists the most relevant physical and hydrogeological properties of the various geotechnical domains. Table 16.11: Material and Hydrogeological Properties per Geotechnical Domain

*Porosity = Vv/Vt, where Vv is void space volume (i.e. filled with water, air) and Vt is total volume Preliminary FLAC modeling included the evaluation of numerous slope geometry iterations with variable inter-ramp angles and geotechnical berm options (placement and width). Following preliminary modeling trials, two lower bound overall slope geometries were identified as likely candidates for final design. These geometries are referred herein as the Lower_bound_LC10 and Lower_bound_LC15 which represent the “lower bound”, yet the most confident, use of assessed geotechnical and hydrogeological properties. The suffixes “LC10” and “LC15” refer to inter-ramp angles of 10º and 15º, respectively, within the Colorado Group domains. Two additional, more aggressive slope geometries were evaluated in order to assess the sensitivity of material properties. These designs refer to 20º and 25º inter-ramp angle geometry for both the Colorado and Mannville Group domains. SRK (2011) concluded that the composite 25-20-15° country rock slope geometry is achievable (for the given properties and assumptions) for feasibility level design of the Orion South and Star pit slopes (model ID Lower_Bound_LC15). Recommended bench and inter-ramp scale slope design configurations are provided below in Table 16.12. For reference, other slope geometries are also provided including the composite 25-20-10°, and the 20 and 25° country rock slopes. For intermediate slopes and push backs excavated within kimberlite, structurally controlled and/or step path failure have been identified as the most probable failure mechanisms. For temporary slopes excavated in kimberlite, an inter-ramp slope angle of 45° is recommended.

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Table 16.12: Slope Configuration per Geotechnical Domain

In addition to the design criteria per geotechnical domain as listed in Table 16.12, the following design constraints are set:

� Individual bench heights should not exceed 15 m. Bench face angles should not exceed 65° in any domain.

� To achieve the desired inter-ramp angles, bench widths will be adjusted based on bench height and face angle criteria.

� Geotechnical stack heights (i.e. sets of benches between geotechnical safety berms or ramps) should not exceed 60 m (four standard 15 m benches). In particularly poor ground, geotechnical stacks should be limited to 45 m (three standard benches). Geotechnical safety berms or ramps should be a minimum of 8 m wider than the widths of adjacent benches.

Comprehensive monitoring programs will be required during excavation to ensure that slope deformation velocities are within acceptable limits, and that any accelerating trend can be identified early enough to allow excavation operations to be reviewed and remedial measures to be introduced, if required. 16.4 PIT DESIGN The Star and Orion South open pits will be conventional open pit mining operations encompassing a production rate of 14.3 Mtpa ore. The pits will be developed by Shore personnel using in-house equipment. Shore will be responsible for establishment of the pit haulage roads, dewatering, production, drilling and blasting, the excavation of ore to the primary crusher; excavation of overburden and waste rock to the overburden pile; boulder breakage; oversize breakage; haul road maintenance; and equipment maintenance. The pit designs incorporate 15 m high benches. The IPCC shovels (42 m3 capacity) will excavate 15 m high benches in overburden and waste rock. Komatsu PC4000 hydraulic excavator (22 m3 capacity) will develop 15 m high benches in ore and waste rock. The typical pit slope configuration for Star and Orion South is shown in Figure 16.3.

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Figure 16.3: Typical Pit Slope Configuration

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16.4.1 STAR PIT DESIGN Geotechnical design parameters based on the feasibility study reports provided by Clifton (Clifton, 2011) for the overburden materials and SRK (SRK, 2010) for the sub-overburden units were incorporated into the open pit design for Star. Haulage ramps were designed to accommodate both double and single lane traffic for 136 t capacity haulage trucks (operating width = 6.7 m). Double lanes were designed to be 32 m wide whereas single lanes were designed to be 18 m wide. Ramp gradients were held constant at 10 %. Figure 16.4 illustrates the relationship between the pit phases and the overburden stratigraphy. Figure 16.5 shows the ultimate pit configuration and Figure 16.6 shows the details of the pit phases. All three figures incorporate the recommendations of the geotechnical study, modified to accommodate the mining method for the phased approach. Figure 16.4: Star Pit Cross Section 514,600E Showing Surficial Sand and Clay Layers

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Figure 16.5: Ultimate Pit Design – Star Pit Phases 1a, 1b, 2, 3 & 4

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Figure 16.6: Star Open Pit Phases – Cross Section 514,600E

16.4.2 ORION SOUTH PIT DESIGN The Orion South pit design is comprised of three phases. Phases 1a and 1b are located in the south end of the deposit and Phase 2 is located to the north of Phase 1 (Figure 16.2). Most of the surficial waste will be stripped using conventional excavators, trucks, loaders, bulldozers and scrapers. Shore will utilize the IPCC system to strip the tills in Phase 1a to expose the ore. The ore and waste rock will be hauled to in-pit ore / waste sizers, sized and conveyed to the Process Plant ore stockpile / overburden pile. Once the IPCC equipment completes its work in Phase 1 it will be moved to Phase 2 for stripping. Geotechnical design parameters based on the FS reports provided by Clifton (Clifton, 2011) for the overburden materials and SRK (SRK, 2010) for the sub-overburden units were incorporated into the open pit design for Star. Haulage ramps were designed to accommodate both double and single lane traffic for 136 t capacity haulage trucks (operating width = 6.7 m). Double lanes were designed to be 32 m wide whereas single lanes were designed to be 18 m wide. Ramp gradients were held constant at 10 %. Figures 16.7 illustrate the relationship between the pit phases and the overburden stratigraphy. Figure 16.8 shows the ultimate pit configuration and Figure 16.9 shows the details of the pit phases. All three figures incorporate the recommendations of the geotechnical study, modified to accommodate the mining method for the phased approach.

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Figure 16.7: Orion South Pit Cross Section 5900800N Showing Surficial Sand and Clay Layers

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Figure 16.8: Orion South Ultimate Pit Design – Pit Phases 1 and 2

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Figure 16.9: Orion South Open Pit Phases – Cross Section 5900800N

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16.5 PIT OPTIMIZATION 16.5.1 STAR DEPOSIT PIT OPTIMIZATION To undertake the Star pit design exercise, an open pit optimization was completed using the Lerch-Grossman technique to create a pit shell that could be used as a guide for design purposes. The inputs to the optimization are in Table 16.13.

Table 16.13: Summary of Star pit optimization inputs

Diamond Price: Taken from WWW February 2011 valuation Waste Mining Cost (by unit):Sand C$3.01/ tonneClay C$3.01/ tonneTill C$0.80/ tonneColorado, Mannville, and Kimberlite C$1.63/ tonneOre Mining Cost C$1.96/ tonneProcessing Cost C$2.24/ tonneG&A Cost C$2.64/ tonneUltimate Pit Slopes varied by unit as follows:Sand, Clay, Till 16°Colorado Group 15°Upper Mannville (Pense, Waseca, Sparky) 20°Mannville/Kimberlite 25°

The resulting optimized pit shell was used to produce plan views to guide the pit design on a bench by bench basis from pit bottom to pit crest. A five phase pit design approach was taken in order to reduce the amount of pre-strip waste removal and to reduce the waste / ore ratio and pit equipment capital expenditures in the early years of pit production. The starter pit (Phase 1a) is developed on a high grade zone, located in the southern portion of the deposit. The pit is expanded to Phase-1b, Phase-2, Phase-3, and Phase-4 as shown in Figures 16.4 and 16.6. 16.5.2 ORION SOUTH DEPOSIT PIT OPTIMIZATION In order to undertake the Orion South pit design exercise, a pit optimization was undertaken using MineSight’s economic pit routine to create a pit shell that could be used as a guide for design purposes. The inputs to the pit optimization are shown in Table 16.14.

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Table 16.14: Summary of Orion South pit optimization inputs

Diamond Price: Taken from WWW February 2011 valuation Waste Mining Cost (by unit):Sand C$2.66/ tonneClay C$2.66/ tonneTill C$1.22/ tonneColorado, Mannville, and Kimberlite C$1.63/ tonneOre Mining Cost C$1.96/ tonneProcessing Cost C$2.24/ tonneG&A Cost C$2.64/ tonneUltimate Pit Slopes varied by unit and azimuth (for the OVB) as follows:Azimuth (345 to 45) Overall inter-ramp angle: 20°

Sand and Clay 16°Till 22°

Azimuth (45 to 75; 130 to 165; 315 to 345) Overall inter-ramp angle: 22°

Sand and Clay 16°Till 27°

Azimuth (75 to 130; 165 to 315) Overall inter-ramp angle: 16°Sand and Clay 16°

Till 16°Colorado Group 15°

Upper Mannville (Pense, Waseca, Sparky) 20°Mannville/Kimberlite 25°

The resulting optimized pit shell was applied in conjunction with MineSight’s pit design utility where plan views were developed to guide the pit design on a bench-by-bench basis from pit bottom to pit crest. While a three phase approach has been considered in this FS for the Orion South design, going forward a two phase approach should be evaluated, with the first phase in the south end of the deposit with the second phase expanding to the north and depth. Phase 1A, shown in Figures 16.7 and 16.8, is essentially internal to Phase 1B thereby creating difficulties for ramp placement and the like during stripping of Phase 1B. The Phase 1A design was created to evaluate the possibility of reducing the upfront stripping requirements for Orion South. The approach and schedule contained below should be reviewed as Star is mined and re-optimized for final mine design. The Orion South Phases designs are presented in Section in Figures 16.7 and 16.8. The pit phase ore tonnages and waste/ore ratios are shown in Table 16.15.

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16.6 PRODUCTION SCHEDULE The overall LOM production schedule is shown in Table 16.15. The schedule was developed taking into consideration the time line to procure the pit equipment and carry out the mine pre-production works including the pre-stripping of the surficial sand and clay layers within the Star Phase 1a pit; establishing mine services including electrical power; the 14.3 Mtpa ore processing rate; ore availability on benches; the phased pit development sequence; the waste stripping rate and IPCC waste system capacity; and inter-bench and inter-phase equipment moves. These and other aspects are incorporated in the detailed Project schedule. Table 16.15: LOM Open Pit Production Schedule

Year

Ore Production (Mt)

Waste Stripping (Mt) (Total tonnes of waste from pre-stripping, IPCC stripping, waste rock stripping during

mining)

Star Pit

Orion South

Pit

Star Pit Orion South Pit Phase

1a Phase

1b Phase 2 Phase 3 Phase 4 Phase

1a Phase

1bPhase 2

2012 5.955

2013 61.312

2014 100.917 4.347

2015 92.820 15.491

2016 0.416 72.906 15.280 3.156 5.482 5.615

2017 14.669 8.848 66.903 33.026 10.965 11.231

2018 14.966 1.243 50.933 16.258 11.231

2019 14.975 0.925 88.300 7.019 17.660

2020 15.145 0.277 57.801 21.735

2021 14.918 10.610 63.773 21.735 20.119

2022 14.897 10.138 44.751 6.995 21.735 20.119

2023 14.896 5.973 9.725 24.964 21.735 20.119

2024 14.745 8.460 8.641 4.076 20.119

2025 14.863 7.451 29.539 91.109 20.119 5.692

2026 15.674 0.248 15.544 32.647 3.874 34.904 17.012

2027 14.799 14.612 0.007 7.375 8.276 47.958 17.012

2028 0.925 10.0514 3.719 0.469 44.815 17.012

2029 3.2364 18.853 47.773

2030 15.103 15.791 80.114

2031 15.154 2.757 40.736

2032 15.170 19.035

2033 14.527 8.465

2034 15.346 2.118

2035 9.639 0.884

Total1,2 165.893 113.093 344 154 225 166 149 212 266 256 1 The tonnages are based on dry bulk densities. The pit equipment selection process and the mine operating cost

estimates take additional weight due to moisture into account. 2 Totals may not sum exactly due to rounding. 3 Dry tonnes of ore mined. 4 The Process Plant will continue to process 14.3 Mtpa ore in years 2028 and 2029. Ore reclaimed from a

stockpile will be fed to the plant at certain times in years 2028 and 2029 while the Orion South Phase 1b pit is being stripped and readied for ore production.

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16.7 MINING EQUIPMENT The mining equipment proposed for the Star and Orion South pits was selected based on: the ore production and waste stripping requirements; the pit phases; the overburden, ore and waste rock characteristics; the results of a trafficability assessment; scheduling requirements; equipment suitability and fabrication, delivery and assembly time lines; projected field conditions, including wet conditions; pit dewatering plans; pit slope stability; available operating hours and delays; equipment productivities; operational flexibility; environmental protection and health and safety; and costs and the projected time line to payback. In the proposed IPCC system, the IPCC shovels will excavate and load waste into fully mobile sizers. The sized waste will be conveyed via in-pit mobile conveyors and shiftable conveyors and up-ramp and overland conveyors to the waste stacker arrangement at the overburden stockpile. The main IPCC system components that will be used to strip the Star Phase 1a pit include:

� Three Komatsu PC8000 type electric-hydraulic shovels and three 8,400 tph fully mobile sizers. Each shovel will be paired with a fully mobile sizer.

� Mobile in-pit conveyors:

� Six 8,400 tph capacity conveying bridge conveyors. � Two 8,400 tph capacity inclined conveying bridge conveyors. � Two 16,800 tph capacity shiftable in-pit conveyors. Each shiftable

conveyor will be equipped with two hopper cars to enable one or two fully mobile sizers to discharge to an in-pit shiftable conveyor. The in-pit shiftable conveyors will discharge to the upramp conveyor feeding the overland waste conveyor.

� Overland conveyor:

� Two parallel 16,800 tph capacity inclined stationary conveyors will be installed on the southern side of the Star pit’s west access ramp.

� A 20,000 tph capacity overland conveyor will extend from the pit ramp to the top of the overburden stockpile.

� A shiftable 20,000 tph capacity conveyor will be used on top of the overburden

stockpile and will discharge to a 20,000 tph capacity waste spreader. An auxiliary waste conveyor and a single boom waste stacker will also be installed at the overburden stockpile.

The IPCC system will be progressively expanded over the life of the operation. As examples: 1) the Star pit access ramp conveyors will be extended as the pit is deepened; and 2) other waste conveyors and a semi-mobile waste sizer will be added to the IPCC system. The IPCC equipment including the overland conveyor to the overburden stockpile will be relocated to serve the Orion South pit in year 2024. The proposed IPCC system includes a number of engineered controls designed to reduce delays and help maintain IPCC system throughput. The ore will be mined using 15 m high benches. Blastholes will drilled in the ore and associated waste rock using in the hole production drills. The blastholes will be loaded using an emulsion blend and initiated using commercial blasting accessories. The blasted material

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will be excavated using a Komatsu PC4000 (22 m3 capacity) hydraulic excavator and Komatsu HD1500 (144 t capacity) haul trucks. The ore will be hauled to an in-pit sizer and then sized and conveyed to the ore stockpile. The waste will be hauled to an in-pit sizer, sized and conveyed to the overburden pile. In some phases, initial ore and waste are hauled to their destinations while the in-pit sizers are being relocated. 16.8 MAINTENANCE The mine will have a centralized maintenance management and planning group comprised of three departments to provide continuous 24-hour coverage to the pit mobile equipment, stationary equipment, and the Process Plant. The pit mobile equipment shop, light vehicle shop, fabrication / machine shop, electrical shop, wash bay and tire bay will be located in the main maintenance building. It is expected that the mine will optimize its equipment fleet to reduce component stocking costs and warehouse stocking requirements. In accordance with the planned preventative maintenance program, major components will be changed out according to oil analyses and on regular hour intervals. Major component rebuilds will be performed off-site. The maintenance shop will be equipped with overhead cranes, a central lubricant system, and shop tools including tire handling and mounting equipment, welding equipment, and other specialized tools. The pit maintenance department will also be equipped with field service vehicles. 16.9 OPERATIONS AND MAINTENANCE PERSONNEL REQUIREMENTS The open pits will operate on the basis of two 12 hour shifts per day using four rotating crews. The mine maintenance personnel will maintain the mine mobile and stationary equipment including the IPCC system, conveyors, mobile equipment and pit dewatering pumps. Typical maintenance labour requirements are shown in Appendix D. Mine and maintenance management personnel such as the general manager, mine manager, and other administrative and maintenance and technical services personnel are included in the annual G&A cost starting in Q1, 2017 (commencement of sustained commercial production). 16.10 MINE INFRASTRUCTURE 16.10.1 MINE ELECTRICAL POWER

The electrical power used in the Star and Orion South open pits will be obtained at 25 kV from the main substation to be located close to the main processing building. The mine power cable connection battery limit is the load terminal of the 25 kV vacuum breaker Nos. 25026, 25027, 25028 and 25029 located at the 25 kV switchgear No.SG-59-002. The power from the main substation will be distributed to the various mining substations via 25 kV dual circuit redundant overhead lines. There will be a 25 kV ring overhead distribution line around both of the Star and Orion South open pits for connections to the various portable substations serving mobile loads such as shovels, sizers and moveable conveyors. The area substations will stepdown 25 kV to 4.16 kV and 0.6 kV for secondary distribution. The mine substation includes a provision that will allow the mine to connect two emergency diesel

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generators (each rated at 5 MW). In the event that the main power is down for an extended period of time, the mine could used rented diesel generators to supply power to essential mine loads including the perimeter dewatering pumps. The projected mine electrical loads are summarized in Table 16.16.

Table 16.16: Projected Electrical Loads

Area Loads Normal Running Load (kW)

Peak demand Load (kW)

ConnectedLoad (kW)

Star Open Pit: Pit dewatering 8,288.09 10,909.66 12,204.74Overburden sizing and conveying 53,402.99 70,722.40 104,757.50

Ore sizing and conveying 8,163.65 10,222.59 11,304.26Total Loads Star Open Pit 69,854.73 91,854.65 128,266.50Orion South Open Pit: Pit dewatering 2,486.84 2,984.21 3,315.79Overburden sizing and conveying1 53,402.99 46,079.73 58,800.83Ore sizing and conveying2

9,597.86 11,583.64 12,409.53

Total Loads Orion South Open Pit 12,084.70 14,567.85 15,725.32Total Mining Loads 81,939.42 106,422.50 143,991.811 IPCC overburden stripping, sizing and conveying is not performed simultaneously at both pits, these loads are

considered only once. 2 Ore sizing and conveying operations are at times performed concurrently at both pits.

16.11 EXPLORATION POTENTIAL The FS does not include an estimated 80 Mt of Inferred Resource that is removed during mining but not processed, and a further 180 Mt to 220 Mt of kimberlite mineralization that are included in the block models for the Star and Orion South Kimberlite deposits and are physically located outside the current open pit designs. These potential mineral deposits are conceptual in nature, are not resource estimates, and it is uncertain if any additional exploration work would lead to the kimberlite presently included as mineralization, located outside the current pit designs, being upgraded to any resource category in future studies. This potential kimberlite mineralization cannot be relied upon for the economic assessment of the Project.

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17.0 RECOVERY METHODS 17.1 INTRODUCTION For the Star – Orion South Diamond Project FS, Shore collaborated with Metso Minerals (Metso) on the design of a diamond Process Plant that is best suited to treating the kimberlites at FalC. The FalC Kimberlites are generally categorised as “soft” and are amenable to autogenous grinding (AG) milling. The functions encompassed in the Process Plant are comminution, classifying of coarse kimberlite ore based on density and size, identifying and recovering diamonds and discharging processed kimberlite. The plant includes AG mills and spiral classifiers in the comminution section, 420 mm and 800 mm dense medium separation (DMS) cyclones in the DMS section, and in the recovery section the diamond sorting equipment includes magnetic separation, X-ray sorting, grease and laser Raman technology. Metso completed the 3D model of the Process Plant as seen in Figures 17.1 and 17.2 on November 25, 2010. The model facilitates assessments and inspections via 3D “walk through” software, and the downloading and drawing of all the required 2D cross-sections and floor-plans for the Process Plant. Metso provided a write-up on the Process Plant design as well as the following supporting documents:

� process flow diagrams; � a general mass balance; � process control diagrams; � an equipment list; � a plant electrical load list; � the plant single line diagram showing the electrical distribution; � plant general arrangements; � equipment general arrangements; � pipeline list for interfacing equipment; � electrical specifications; � instrumentation specifications; � cost estimate for the process equipment; � quotations on the process equipment; � cost estimate for Metso engineering and commissioning; � cost estimate for the process equipment assembly; � cost estimate for operations and maintenance; and � cost estimate for spares and wears.

Figure 17.1 is an image of the Process Plant and the kimberlite ore stockpile. The recovery section resides in the tallest building on the left, with an area for a helicopter pad on the roof, if required. The stockpile containing all the feed material to the plant is on the right. Under the stockpile are two conveyers that feed the -400 mm material to the two AG mills in the plant. Running parallel to the main Process Plant but at a lower elevation is the bulk sample plant (BSP). The ramp with the mine vehicle, illustrates how material will be fed to the BSP for processing.

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Figure 17.1: Process Plant and Stockpile

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Figure 17.2 is an image of the interior of the Process Plant showing the two AG mills on the left. The product from the AG mills is gravity fed to the spiral classifiers, which move the material to dewatering screens and then onto conveyers into the large DMS surge bins. The DMS cyclones are at the far right of the image and the recovery section is housed in the tall building at the back of the image. Projected requirements for energy and water are detailed in Section 18.7 and Appendix B respectively.

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Figure 17.2: The Mechanical Configuration of the Process Plant

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17.2 BASIS OF DESIGN The Process Plant design is based on specific laboratory test programs for quantifying various operating parameters and on extensive bulk sampling programs which processed underground samples collected from both the Star and Orion South deposits, in a BSP operated at FalC, Saskatchewan. The BSP was supplied by Bateman Engineering of South Africa (Bateman Reference Number M7007) and comprised of a comminution section (crushing and scrubbing), a DMS section, a thickening section and a recovery section which utilised both X-ray and grease technology. The BSP commenced operations in 2004 and ceased in February 2009. During this period, Process Plant design proposals and evaluations were carried out by OreProX, Metal Dog Minerals, AMEC and Metso Minerals (Petersen, 2007). 17.2.1 METALLURGICAL TESTING AND ORE DRESSING STUDIES FOR

STAR KIMBERLITE Shore began processing underground bulk samples from the Star Kimberlite in the BSP in 2004 and completed the sampling test work in 2007. During this period, a total of 75,436 dry tonnes of kimberlite were processed, from which 10,966 carats of diamonds were recovered. The operating and process data collected during this period have been used to develop the size distributions and mass balances for the Process Plant designs. An additional 11,663 dry tonnes of kimberlite from the large diameter drill (LDD) program were also processed through the BSP from which a further 1,416.6 carats of diamonds were recovered (Shore Gold, Internal database).

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Ore Dressing For the FS, samples of the EJF pyroclastic kimberlite were sent to SGS Lakefield (SGS, 2010) and Metso Minerals (Metso, 2010) for drop weight testing and for further autogenous milling characterisation to use in AG milling modelling software. Extensive ore characterization work was completed on the Star Kimberlite by SGS (SGS, 2006; 2007; 2009). A total of 540 samples were analysed for T10

2 (drop test) and Axb3

properties, 536 samples were submitted for abrasion tests also known as Ta4 tests and 1,008 samples were tested for their unconfined compressive strength (UCS) value. The results of both the Axb tests as seen in Table 17.1 and the results of the Ta tests as seen in Table 17.2, confirm that the Star Kimberlite is to be classified as soft to very soft5. Table 17.1: Star Axb Breakage Index Classification

Classification Axb Index No. of Samples

Percent

Very Soft >127 231 43 % Soft 56-127 308 57 % Medium 43-56 1 0 % Hard 30-43 0 0 % Very Hard <30 0 0 %

Table 17.2: Star Ta Abrasion Index Classification

Classification Ta Index No. of Samples

Percent

Very Soft >1.38 112 21 % Soft 0.54-1.38 358 67 % Medium 0.41-0.54 53 10 % Hard 0.24-0.35 13 2 % Very Hard <0.24 0 0 %

Large scale laboratory cone crushing tests were performed by Metso Minerals at their Mineral Research and Test Centre in Milwaukee, Wisconsin (Jacobson, 2007) to quantify size reduction and size distributions. Two different crusher speeds were used and note was taken of the amount of hang-ups from clogging due to the high moisture content of the kimberlites. Four kimberlite samples were tested as follows:

1. EJF (pyroclastic kimberlite) 2. EJF (kimberlite breccia) 3. Cantuar (combined breccias and pyroclastic kimberlite) 4. Pense (pyroclastic kimberlite)

2 The T10 test at 1 kWh/t represents the percentage of fragments that passes 1/10th of the original rock size after an impact of 1 kWh/t. 3 The Axb test is a measure of a rock’s impact breakage. 4 The Ta test represents the suitability of ore to comminute by abrasion. 5 JKMRC classification guide.

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Scrubbing and HPRC Laboratory scrubbing and HPRC tests were conducted at SGS Lakefield using samples from the two main kimberlite units: the EJF and the Pense kimberlites (SGS, 2007) as requested by AMEC. The scrubbing tests reported that longer scrubbing times resulted in a higher production of fines (-1 mm material) while the HPRC tests reported that a pressure of 45 bars is required to crush the material to -1 mm. Scrubbing tests to assess clay composition and heavy liquid separation (HLS) tests to evaluate various density cut-points to use in the DMS section were carried out on two EJF pyroclastic kimberlite samples at the Mintek laboratories, in Randburg, South Africa (Mailole, 2009). Scrubbing test work for the two Star samples resulted in only 5 % of the discharge reporting to the finer fraction (-1 mm). In the HLS tests, the mass yields to the sinks fraction at a cut density of 3.1 g/cm³ were 0.064 % and 0.129 % of the initial samples. The magnetic properties of the minerals reporting to the heavy fraction (+3.1 g/cm) of the HLS tests were then further investigated for the magnetic separation process in the recovery section. The results showed that in the DMS heavy fraction, magnetite occurs in amounts between 34 % and 56 %. Magnetic Susceptibility Dry and wet magnetic separation tests on DMS concentrate samples collected from the BSP were carried out by Shore (DesGagnes and Danoczi, 2010; DesGagnes and Danoczi, 2011). Magnetic susceptibility measurements were then carried out on the minerals reporting to the magnetic and non-magnetic fractions, at the University of Saskatchewan. Research concluded that using a rare earth magnetic roll, set at a magnetic cut point of 20 x10-6 cm3/g would be of sufficient intensity to remove approximately 35 % of the 1-8 mm concentrate reporting to the DMS circuit. Shore characterized a parcel of diamonds from the Star Kimberlite for their magnetic properties at the University of Saskatchewan. The results of these tests allowed Shore to assess the effects of setting different magnetic separation cut-points, on the diamond recovery efficiency when treating the Star Kimberlites units (Danoczi, 2010). The magnetic analysis revealed that diamonds from the Star Kimberlite had magnetic susceptibility values less than 15 x 10-6 cm3/g. Preceding the diamond analysis from FalC, a study conducted in 1998 showed that it is not economically viable to recover diamonds with magnetic susceptibilities higher than 15 x 10-6 cm3/g or 20 x 10-6 cm3/g since the low value of these included diamonds does not off-set the increase in processing equipment and their associated costs (Ennis, 1998). At Mineral Services Canada in Vancouver, the diamond concentrate material from the BSP was split into different magnetic fractions: a magnetic fraction; a paramagnetic fraction; and a non-magnetic fraction. The diamonds extracted from the concentrate were then analysed for size, colour and crystallography. This data has been captured in Shore’s internal data base (Shore Gold, Internal database). Diamond Breakage Studies of fresh diamond breakages, whereby over 5 % of the diamond is chipped and lost due to processing methods, have been conducted on various diamond parcels from the Star kimberlite by De Beers (Sergeant, 1999; Kelly and Viljoen, 2000; Kelly, 2001, 2002, 2003).

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These reports record fresh diamond breakages ranging from 12.8 % to 26.0 % for the different diamond parcels analysed. Shore conducted a study of the fresh diamond breakages at SGS Lakefield (Lawless, 2008). In this study, a total of 2,451 stones from the underground mining and 948 stones extracted from the LDD were examined for diamond damage. Table 17.3 documents the results of this investigation for the Star Kimberlite. Table 17.3: Star Diamond Breakage Results

EJF diamonds (%)

Cantuar diamonds(%)

Pense diamonds (%)

Underground 11.4 15.5 18.0 LDD 14.0 24.9 30.7

X-ray Luminescence At the Structural Sciences Centre at the University of Saskatchewan, measurements were taken of luminescence signals that were emitted from the Star diamonds when the diamonds were irradiated by X-rays (Danoczi, 2011). The results show that 88 % of Star diamonds and 86 % of Orion South diamonds can be recovered by the use of X-rays, but that there are a number of low luminescent diamonds that are not recoverable via this method and, as such, grease recovery technology will be required in the recovery section. Slurry Transport Slurry pumping tests were conducted by the Saskatchewan Research Council (SRC) to characterise flow behaviour over a range of solid concentrations (McKibben, 2010). These results were used in the design of the pipeline and in the pump section for transporting the slurry to the PKCF. Settling Test work for the PKCF Settling tests on Star -1 mm material using both surficial and Mannville water were conducted by Metso Minerals (Sala) in Sweden. These results showed that flocculants and coagulants are not required to settle Star sediments (Wallin, 2009) in the PKCF. Wallin noted that the Star tailings settled rapidly (2 m/h) without flocculation producing a clean overflow. Furthermore it was discovered that the linear settling rate was not affected by the type of water (Mannville or surficial) used. However, the addition of flocculant was found to increase the settling rate. Shore carried out additional settling tests on the -1 mm fraction collected from the tailings piles (Danoczi, 2010) and confirmed Metso’s results. The test work completed on the Star ultra fines (-106um) displayed settling properties producing a slurry with an underflow density of 1.4 g/ml. Analysis of the clarified water collected from the settling tests was carried out at the SRC and showed an increase in the total dissolved solids from 4420 mg/l to 5520 mg/l while the suspended solids decreased from 159 mg/l to 31 mg/l.. The characteristics of the -1 mm size fraction from all the Star Kimberlite units were analysed by SGS Lakefield to define the size distribution and the clay and mineral content. In this test, a total of 18 drill core samples were analysed (SGS, 2007).

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A summary of the metallurgical tests conducted on the Star Kimberlite and its diamonds are summarized in Table 17.4. Table 17.4: Summary of the Metallurgical Test Work Conducted on the Star Kimberlite

Test Location Tests Undertaken / Data Generated Fort à la Corne Project Site

� Bulk sample plant mass balances � Bulk sample feed size distribution � DMS concentrate yield � Tailings size distribution � Ore behaviour observations � DMS concentrate size distribution

Shore Gold Laboratory Test Work

� Dry magnetic separation tests on DMS concentrate � Wet magnetic separation tests on DMS concentrate � Settling tests of -1 mm material

SGS Mineral Services, Lakefield, Ontario

� Scrubbing testwork to determine the quantity of -1 mm material generated by the scrubbing process

� HPGR testwork to determine the product size distribution achievable from a laboratory scale machine.

� Ore characterization tests comprising of T10, Ta and UCS tests.

Metso Minerals, Milwaukee, USA

� Large scale cone crusher tests to predict crushing performance for production scale machine at different settings

� Paddle abrasion tests � Crushability tests � AG milling simulations

Mintek, Randburg, South Africa

� Scrubbing tests and HLS analysis � Magnetic tests on the heavy minerals reporting to

DMS concentrate SGS Mineral Services, Lakefield, Ontario

� Diamond recovery � Diamond size distributions � Magnetic sorting of DMS concentrate � Diamond damage investigations � Size distribution and crystalline mineral

assemblage analyses of the -1 mm size fraction from 18 drill core samples

Mineral Services Canada, North Vancouver, British Columbia

� Diamond recovery � Diamond size distributions � Magnetic sorting of DMS concentrate

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Test Location Tests Undertaken / Data Generated De Beers, Johannesburg, South Africa

� Diamond luminescence measurements � Magnetic susceptibility measurements of diamonds � Diamond damage investigations

University of Saskatchewan, Saskatoon, Saskatchewan

� Magnetic susceptibility of minerals in the DMS concentrate

� Magnetic susceptibility measurements of diamonds � Luminescence measurements of diamonds

irradiated by X-rays � Luminescence measurements of minerals from the

DMS concentrate, that were irradiated by X-rays � Fourier Transform Infrared measurements on

diamonds for diamond Typing Golder Laboratory, Saskatoon, Saskatchewan as directed by Paterson & Cooke and OreProx

� Slimes characterization � Thickener sizing

Metso Minerals (Sala), Sweden

� Settling tests on -1 mm material using surficial water and Mannville water.

SRC, Saskatoon � Pumping tests of tailings � Water quality tests of clarified water from settling

tests 17.2.2 METALLURGICAL TESTING AND ORE DRESSING STUDIES FOR

ORION SOUTH KIMBERLITE Shore began processing underground bulk samples from the Orion South Kimberlite, in the BSP, in 2007 and completed this sampling in 2009. During this period, a total of 23,468 dry tonnes of kimberlite were processed and 2,346 carats of diamonds were recovered. The operating and process data collected during this period have been used to develop size distributions, and mass and water balances for the design of the Process Plant. An additional 9,580 dry tonnes of kimberlite from the LDD program were also processed through the BSP from which a further 1,040.7 carats of diamonds were recovered (Shore Gold, Internal database). Ore Dressing Ore characterization work was carried out on the Orion South Kimberlite by SGS Lakefield (SGS, 2009). A total of 185 samples underwent T10 tests and Axb tests, 99 samples were analysed for abrasion properties (Ta tests) and 63 samples were tested for their UCS values. The results of both the Axb tests as seen in Table 17.5 and the results of the Ta tests as seen in Table 17.6, confirm that the Orion South Kimberlite is to be classified as a soft to very soft rock.

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Table 17.5: Orion South Axb Breakage Index Classification

Classification Axb Index No. of Samples

Percent

Very Soft >127 104 56 % Soft 56-127 80 43 %

Medium 43-56 1 1 % Hard 30-43 0 0 %

Very Hard <30 0 0 % Table 17.6: Orion South Ta Abrasion Index Classification

Classification Ta Index No. of Samples

Percent

Very Soft >1.38 27 27 % Soft 0.54-1.38 69 70 %

Medium 0.41-0.54 3 3 % Hard 0.24-0.35 0 0 %

Very Hard <0.24 0 0 % Scrubbing Scrubbing tests to assess clay composition and heavy liquid separation (HLS) tests to evaluate various density cut-points to use in the DMS section were carried out on two EJF kimberlite samples and a one Pense kimberlite sample from Orion South by Mintek in Randburg, South Africa (Mailole, 2009). The scrubbing test work resulted in 80 % of the discharge reporting to the finer fraction (-1 mm). In the HLS tests, the mass yields to the sinks fraction at a cut density of 3.1 g/cm³ were 0.14 % and 0.15 % of the initial samples for the EJF kimberlites while the mass yield to the sinks for the Pense sample was 0.08 % of the initial samples. The magnetic properties of the minerals reporting to the heavy fraction (+3.1 g/cm) of the HLS tests were then further investigated for the magnetic separation process in the recovery section. The results showed that magnetite did not occur within the selected Orion South, DMS concentrate samples. Magnetic Susceptibility Shore carried out dry and wet magnetic separation tests on the Orion South DMS concentrate samples collected from the BSP (DesGagnes and Danoczi, 2010, DesGagnes and Danoczi, 2011). Magnetic susceptibility measurements were then carried out on the minerals reporting to the magnetic and non-magnetic fractions at the University of Saskatchewan. A reduction in the DMS concentrate was most notable when the material was dried. The concentrate was screened to -3 mm and processed over a rare earth magnetic roll. Orion South concentrate produced a non-magnetic yield ranging from 11.24 % in the Pense kimberlite to 17.86 % in the EJF kimberlite breccia resulting in an average reduction of the total concentrate sample greater than 80 %. Shore characterized a parcel of diamonds from the Orion South Kimberlite for their magnetic properties at the University of Saskatchewan in 2010. These tests allowed Shore to analyse the effects of setting different magnetic separation cut-points on the diamond recovery

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efficiency when treating Orion South Kimberlite units (Danoczi 2010). The results showed that a significant percentage of magnetic material can be removed by a WHIMS with a magnetic cut-point of 15 x10-6 cm3/g. Although the sample was significantly smaller within Orion South, the inter-formation values were more tightly constrained than those observed in the Star Kimberlite giving an overall average yield of 34.62 % of non-mags. At Mineral Services in Canada, the diamond concentrate material from the BSP was split into different magnetic fractions: a magnetic fraction; a paramagnetic fraction; and a non-magnetic fraction. The diamonds extracted from the concentrate were analysed for size, colour and crystallography. This data has all been captured in Shore’s internal data base. Diamond Breakage Diamond simulant breakage tests were completed to understand the relationship between AG mill operating parameters and diamond breakage (Danoczi, 2009) during the pilot milling tests at SGS Lakefield. The amount of simulant breakage ranged from 0.0 % breakage at an AG mill volume loading of greater than 20 % and a speed of 60 % of critical speed to 20 % breakages at an AG mill volume loading of 16 % and a critical speed of 70 %. No fresh diamond breaks were observed on the 44 stones recovered which ranged in size from 1-9 mm. Preliminary diamond breakage investigations conducted by De Beers (Kelly 2001, 2002, 2003) from exploration samples obtained using reverse circulation drills, obtained from the Orion South Kimberlite calculated that anywhere from 12.8-18.5 % of stones contained broken crystal faces. X-ray Luminescence The X-ray excitation luminescence signals emitted from Orion South diamonds were measured by De Beers in Johannesburg, South Africa. The diamonds were also characterized for their magnetic susceptibilities. The analysis of 292 stones suggested that 6.46 % of the diamonds may be difficult to recover by X-ray irradiation, reinforcing the need for grease belts within the processing flow sheets (Ntjwane, 2002). Measurements were made of the Orion South diamonds luminescence signals that were emitted when the diamonds were irradiated by X-rays (Danoczi, 2011) at the University of Saskatchewan in the Structural Sciences Centre. These results showed that although most of the diamonds can be recovered by X-rays, there are a number of low luminescent diamonds that are not recoverable via this method and, as such, grease recovery technology would have to be used in the recovery section. Slurry Transport Slurry pumping tests were conducted by the SRC on -1 mm material from Orion South, in order to characterise flow behaviour over a range of solid concentrations (McKibben, 2010). These results were used in the design of the pipeline and in the pump selection to transport the slurry to the PKCF.

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Settling Test Work for the PKCF Settling tests on Orion South -1 mm material using both surficial and Mannville water were conducted by Metso Minerals (Sala) in Sweden. These results showed that settling of the Orion South sediments can be problematic. The Orion South tailings contain much more fines (-1 mm) and clays (-0.005 mm) than the Star tailings, and this makes the particles settle more slowly (0.1 m/h) if deposited in the PKCF (Wallin, 2009). Shore carried out additional settling tests on the -1 mm fraction collected from the Orion South tailings piles (Danoczi, 2010). These results confirmed the Metso results. Orion South ultra fines (-106 um) contained only 36 % clarified water. Analysis of the clarified water collected from the settling tests was also carried out at the SRC. The characteristics of the -1 mm size fraction from all the Orion South Kimberlite units were analysed by SGS Lakefield to define the size distribution and the clay and mineral content. In this test, a total of 9 drill core samples were analysed (SGS, 2010). Autogenous Milling Autogenous milling pilot tests were conducted on a 58 tonne sample of EJF kimberlite from Orion South, at SGS Lakefield, Ontario using a 1.83 m x 0.61 m mill (SGS, 2010). The tests were designed to provide suitable parameters for Metso’s modelling work, and to predict a production AG mill size and performance (Metso, 2009). A summary of the metallurgical tests conducted on the Orion South Kimberlite and its diamonds are summarized in Table 17.7.

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Table 17.7: Summary of the Test Work Conducted on the Orion South Kimberlite Test Location Tests Undertaken / Data Generated Fort à la Corne Project Site

� Bulk sample plant mass balances � Bulk sample feed size distribution � DMS concentrate yield � Tailings size distribution � Ore behaviour observations � DMS concentrate size distribution

Shore Gold Laboratory Test Work

� Dry magnetic separation tests on DMS concentrate � Wet magnetic separation tests on DMS concentrate � Settling tests of -1 mm material

SGS Mineral Services, Lakefield, Ontario

� Ore characterization tests comprising of T10, Ta and UCS tests

� Pilot plant tests in a continuous 6 ft x 2 ft autogenous mill with 58 tonnes of kimberlite (EJF) from Orion South

� Diamond simulant breakage tests in parallel with the milling tests above

� Size distribution and crystalline mineral assemblage analyses of the -1 mm size fraction from 9 drill core samples

Metso Minerals, Milwaukee, USA

� AG milling simulations

Mintek, Randburg, South Africa

� Scrubbing tests and HLS analysis � Magnetic tests on the heavy minerals reporting to DMS

concentrate. Mineral Services Canada, North Vancouver, British Columbia

� Diamond recovery � Diamond size distributions � Magnetic sorting of DMS concentrate

De Beers, Johannesburg, South Africa

� Diamond luminescence measurements � Magnetic susceptibility measurements of diamonds

University of Saskatchewan, Saskatoon, Saskatchewan

� Magnetic susceptibility of minerals in the DMS concentrate � Magnetic susceptibility measurements of diamonds � Luminescence measurements of diamonds irradiated by

X-rays � Luminescence measurements of minerals from the DMS

concentrate, that were irradiated by X-rays Metso Minerals (Sala), Sweden

� Settling tests using surface aquifer and Mannville water

SRC, Saskatoon, Saskatchewan

� Pumping tests of tailings � Water quality tests of clarified water from settling tests

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17.2.3 PROCESS DESIGN CRITERIA The Process Plant design criteria document for the FS stipulated the fundamental requirements for the Process Plant. The document drafted by Shore after reviewing a number of possible flowsheet designs and after discussions on the various flowsheet options with AMEC, Metso, OreProX and Metal Dog Minerals (Petersen, 2007). The Process Plant design criteria document collates the information gathered from the discussions as well as the information obtained from the metallurgical tests carried out in the various laboratories and the metallurgical information and experience gathered from the BSP. 17.2.4 DESIGN PRINCIPLES The Process Plant is designed to concentrate and recover diamonds in the size range from 45 mm to 1 mm. The concentration process (DMS section) is designed to achieve a diamond recovery efficiency of not less than 97 % by mass of liberated diamonds. The secure recovery section is designed to recover liberated diamonds from diamondiferous concentrates with a recovery efficiency of not less than 98 % by mass and greater than 99 % by value. Based on the above, the combined recovery efficiency of the comminution section, the DMS section and the recovery section should not be less than 95 % by weight for all liberated diamonds above 1 mm, resulting in an associated revenue recovery efficiency greater than 98 %. The original BSP, from which all grades for the project were determined, is assumed to have a recovery efficiency of 98%, consistent with bulk sample plants of this design used in other operations. Instead of factoring the original grades to account for this recovery efficiency, the main plant is designed to achieve this recovery factor as a minimum, and thus all diamond grades are reported as fully recovered. 17.2.5 DIAMOND DAMAGE Mechanical diamond damage and breakage (also referred to as “fresh” breakage) occurs during the mining, crushing, classifying and recovery processes in the plant. Diamond damage that can occur in a plant may be caused by: breakage; impact damage; abrasion; heat treatment; and colour changes. Fresh diamond damage is mitigated as much as possible through the following design features:

� Impact crushing has been minimised by the use of mineral sizers in the pit and AG mills in the plant.

� The AG mill rotational speed will be limited to a maximum 65 % of critical speed and the volumetric loading of the AG mills will not drop below 20 %. These parameters were determined during the pilot-plant milling tests using diamond-crushing simulants where simulant breakage was found to be a function of mill loading and speed. Hence both AG mills will be equipped with variable speed drives.

� There will be no pneumatic conveying or pumping of concentrate streams. � Diamond on diamond drops will be limited to 100 mm vertical drop and

400 mm at 45° in recovery. � X-ray diamond concentrate drying equipment will be limited to 350°C and, if

applicable, material will be allowed to cool to less than 50°C before X-ray treatment.

� Gravity flow in the recovery plant will be maximized with short drops between equipment.

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17.2.6 BOTTOM CUT-OFF SIZE Bottom cut-off relates to the smallest size diamond the plant is designed to recover. A bottom cut-off of 1.0 mm has been selected for the Process Plant. During the bulk sampling campaign, 98.03 % of the diamonds recovered by weight were greater than 1.15 mm (3 diamond sieve). The recovered diamonds above 1.15 mm represent 99.76 % of the value. In practice, slotted 0.85 mm screen panels will be selected and the panels allowed to wear to 1.15 mm hence some diamonds smaller than the 3 diamond sieve will be recovered. The plant design is sufficiently flexible to raise the bottom cut-off size if market requirements and prices become less favourable for small diamonds. 17.2.7 TOP CUT-OFF SIZE Top cut-off refers to the largest size diamond the plant is designed to recover, with the objective of maximizing large diamond recovery. For the Star EJF kimberlite, a total of 55,674 +1 mm diamonds were recovered with a total mass of 7,333.791 carats, the largest diamond recovered from this kimberlite weighed 19.702 carats. For the Star Cantuar kimberlite, a total of 9,850 +1 mm diamonds were recovered with a total mass of 1,688.409 carats. The largest diamond recovered from this kimberlite weighed 49.500 carats. For the Star Pense kimberlite, a total of 13,785 +1 mm diamonds were recovered with a total mass of 1,428.787 carats. The largest diamond recovered from this kimberlite weighed 14.634 carats (Shore Gold, internal database). An analysis to determine the plant top diamond size for the Star Kimberlite was completed by Metal Dog Minerals (Petersen, 2007) and was based on recovering all diamond sizes predicted to occur within five years. The top diamond size fitting this parameter was 45 mm and calculations on the longest frequency of occurrence are seen in Table 17.8. Table 17.8: Predicted Longest Occurrence of a 45 mm Diamond for each of the Three Main Kimberlite Lithologies for the Star Kimberlite

Kimberlite Lithology

Longest Occurrence (years)

EJF 16 Cantuar 5 Pense 30

A study of the top diamond sizes for the Orion South EJF and Pense kimberlite units was completed by Shore (Danoczi, 2011) based on recovery of all diamond sizes predicted to occur within one year. The number of diamonds recovered from the Orion South bulk sample is significantly less than the number recovered from Star due to the lower volumes of kimberlite mined and processed. The smaller diamond parcel means that the confidence for predicting the diamond top size on Orion South is less than that for Star. However, for the Orion South EJF Kimberlite, a total of 7,783, +1 mm diamonds were recovered with a total mass of 1,413.908 carats. The largest diamond recovered from the Orion South EJF Kimberlite weighed 32.960 carats. For the Orion South Pense Kimberlite, a total of 5,113 +1 mm diamonds were recovered with a total mass of 586.284 carats. The largest diamond

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recovered from the Orion South Pense Kimberlite weighed 45.950 carats (Shore Gold, internal database). The largest diamonds expected to occur yearly from Orion South are given in Table 17.9. Table 17.9: Predicted Occurrence of Large Diamonds and their Associated Period of Occurrence for the Orion South Kimberlite

Kimberlite Lithology

Large Diamond Size (mm)

Frequency (months)

EJF 45 6.0 Pense 45 10.5

From analysing the diamond size distributions and their frequency of occurrence, initially, the size range reporting for the DMS section will be -45 +1 mm. This product size range is broad and has been split into two size fractions for processing through the DMS section, the two size fractions being -45 +8 mm, and -8 +1 mm. 17.2.8 COMMINUTION AND DIAMOND LIBERATION Kimberlite is a mantle-derived volcanic rock that rarely contains diamond but does contains a variety of constituents (minerals and xenoliths) as seen in Figures 17.3 and 17.4. The diamonds (when present) and the minerals are all cemented together in a matrix material comprising of a mix of serpentine, carbonate and clay. Diamonds are generally not encapsulated in the minerals but preferentially occur alongside the minerals in the matrix material. No two kimberlites are the same, since the mineral constituents vary in size, type and frequency of occurrence (granulometery), the composition of the matrix material varies giving different colours to the kimberlites and the types of country rock entrapped in the kimberlite vary according to locality. Finally, the alteration of the kimberlite within the volcanic pipe largely dictates the hardness of the kimberlite. Therefore, different comminution methods are often required for processing different kimberlite units. Figure 17.3: Example EJF Kimberlite (PK) from the Star Diamond Deposit

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Figure 17.4: Example of EJF Kimberlite (KB) from the Orion South Diamond Deposit

Ideally when breaking up kimberlite in the AG mills, the kimberlite rock will be broken such that all the matrix material is less than the diamond bottom cut-off size while leaving all the minerals intact. Crushing the minerals in the comminution section of a diamond plant is a waste of energy since the minerals are significantly harder than the matrix material causing energy to be consumed with no beneficial gain. The most critical parameter in the design of a diamond Process Plant is the choice of size reduction(s) on the run of mine (ROM) material. Size reduction and liberation are interrelated. Understanding the diamond size distribution and the percentage clay material in the kimberlite is key in the design of the diamond Process Plant. The size reduction chosen for the AG mills is 45 mm based on the studies of the diamond distributions. The discharge grates on the AG mills will incorporate 45 mm and 50 mm apertures to ensure that large diamonds can exit the AG mills. Analysis of the 10.3 m x 7.2 m AG mill product, derived from scale-up AG mill simulations performed by Metso (Metso, 2009), on the Orion South Kimberlite units, indicates that with 60 % solids in the AG mill, operating at 40 % critical speed and 20 % volumetric fill, a total of 54 % of the product will be less than 1 mm. This percentage of -1 mm material is significantly lower than the percentage of -1 mm material measured in the core and indicates a relatively inefficient grind. Further simulations in the detailed design phase are to be carried out to improve the grind. However, by changing the discharge grate configuration and reducing the overall open area on the grates, the grind can be significantly improved. 17.2.9 RECRUSH – ELIMINATED

At this stage, no recrushing of the DMS floats or the recovery plant rejects is planned in the Process Plant design.

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17.2.10 PRIMARY CRUSHING Initial crushing of ROM kimberlite to -400 mm will be carried out by a mobile mineral sizer, placed at the mining site in the pit. The -400 mm ore will be conveyed to the stockpile that feeds the two AG mills. 17.2.11 THICKENING A thickening unit is only necessary if the water supply cannot meet plant requirements. This is not the case in the Project and therefore a thickening circuit is not required. 17.2.12 PROCESSED KIMBERLITE CONTAINMENT FACILITY (PKCF) The slurry (-1 mm material) produced by the Process Plant will be separated in the spiral classifiers in the comminution section into two size fractions, -0.25 mm and -1 +0.25 mm,. The -0.25 mm material will comprise mainly of clays that remain in suspension in the slurry under the continual agitation from the spiral classifiers while the more coarse (-1 +0.25 mm) material will settle in the spiral classifier along with the +1 mm material. The -1 +0.25 mm material will be screened off from the +1 mm material at the first dewatering screen within the plant. The two size fractions will then be pumped, with their associated water, at a velocity not less than 5 m/s as determined by the pipeline test work carried out at the SRC (McKibben, 2010), to the processed kimberlite containment facility (PKCF). The coarse -1 +0.25 mm fraction will be pumped to hydrocyclones situated on the berms of the PKCF where the water will be separated from the material and deposited into the PKCF. The dewatered coarse material will then be used as construction material for the berms, increasing the capacity of the PKCF as the demand for PKCF capacity increases. The -0.25 mm fraction of the slurry will be discharged directly into the PKCF. In winter, when the hydrocyclone operation becomes difficult, the hydrocyclones will be bypassed and all -1 mm material will be discharged into the PKCF. 17.2.13 SOLIDS SURGE CAPACITY To improve overall plant utilization, surge bins have been incorporated at strategic intervals allowing the plant to continue operating downstream of a blockage or failure. The following surge capacities are incorporated into the 14.31 Mtpa design:

� coarse ore stockpile holding 45,000 tonnes (1 day) of live feed and a total capacity of 116,000 tonnes (2.6 days);

� three DMS feed preparation surge bins with a total capacity of 5,000 tonnes which equates to an average of 9.5 hours of DMS operation;

� after the DMS feed preparation screens, two smaller DMS surge bins have been incorporated, one for the (1 – 8 mm) size fraction and one for the (8 - 45 mm) size fraction; and

� recovery feed surge bin into which all the DMS sinks report to. The recovery surge bin holds 72 hours (3 days) of recovery feed material.

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17.2.14 MASS BALANCE Primary crushing is carried out by an in-pit MMD® sizer, which is set up to produce a -400 mm product for feeding the AG mills. The function of the MMD sizer is to crush both kimberlite for the plant and overburden material for conveyance. The kimberlite is sent to the plant’s stockpile at a rate of 45,000 tpd while the overburden material is to be sent directly to the overburden stockpile at a rate of 27,000 tpd. The main Process Plant mass and water balance was completed by Metso using the Cantuar kimberlite characteristics in the simulations for predicting the highest DMS Feed. In these simulations, a 45 mm top size and a 1 mm bottom size was used. Table 17.10 provides a summary of the mass balance outputs and Table 17.11 provides a summary of the water balance outputs. Table 17.10: Mass Balance Summary – 45,000 tpd Operation (45 mm Top Size and 1 mm Bottom Size)

Stream Unit Average Primary Crusher Feed t/h 3,000 Autogenous Mill New Feed t/h 1,914 Autogenous Mill + 45 mm Recycle t/h 116 Spiral Classifiers t/h 1,914 -1 mm Tailings t/h 1,388 DMS Surge Bin t/h 526 DMS Sizing and Feed Prep Screens t/h 526 Fines (1 – 8 mm) DMS Surge Bin t/h 219 Fines DMS Feed Per Module t/h 73 Fines DMS Sinks to Recovery t/h 5 Fines DMS Floats to Tailings t/h 214 Coarse (8 – 45 mm) DMS Surge Bin t/h 307 Coarse DMS Feed Per Module t/h 154 Coarse DMS Sinks to Recovery t/h 7 Coarse DMS Floats to Tailings t/h 300 Average Recovery Feed t/h 12 Average Recovery Rejects t/h 12

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Table 17.11: Water Balance Summary – 45,000 tpd Operation (45 mm Top Size and 1 mm Bottom Size)

Water Addition Unit Average % solids Primary Crusher Feed m3/h 212 90 Autogenous Mill Feed m3/h 1352 60 Autogenous Mill + 45 mm Recycle m3/h 6 95 Spiral Classifiers m3/h 420 53 -1 mm Tailings m3/h 758 36 DMS Surge Bin m3/h 0 90 DMS Sizing and Feed Prep Screens, wash water

m3/h 590 92

Fines (1 – 8 mm) DMS Surge Bin m3/h 0 90 Fines DMS Sinks Wash Screen m3/h 47 88 Fines DMS Floats to Tailings m3/h 142 88 Coarse (8 – 45 mm) DMS Surge Bin m3/h 0 95 Coarse DMS Sinks Wash Screen m3/h 42 93 Coarse DMS Floats Wash Screen m3/h 126 93 Average Recovery Feed m3/h 0 97 Average Recovery Rejects m3/h 0 97

The DMS yield information calculated for 4,735 Star EJF kimberlite samples indicate that the DMS yield can vary between 0.1 % and 6.3 % of the ROM (Du Plessis, 2009) , with the mode of the DMS yield distribution being between 0.6 and 0.7 %. However, 3,978 of the 4,735 kimberlite samples (84 %) had DMS yields below 1.56 %. The recovery section was designed to handle a maximum throughput of 30 t/h or 720 tpd which equates to a maximum DMS yield of 1.56 % of ROM. The estimated mass balance for the recovery section was completed by Shore as seen in Table 17.12. The recovery flowsheet is shown in Figure 17.5.

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Table 17.12: Mass Balance Summary for the Recovery Section (30 t/h Operation)

Stream Unit Average WHIMS (1-2 mm) t/h 3.09 WHIMS (2-4 mm) t/h 4.33 WHIMS (4-8 mm) t/h 4.94 2 x Grease Belt -1st pass (1-2 mm) t/h 1.55 Double Pass X-ray (2-4 mm) t/h 2.16 Double Pass X-ray (4-8 mm) t/h 2.47 First Pass X-ray (8-18 mm) t/h 8.82 Second Pass X-ray (8-18 mm) t/h 8.47 First Pass X-ray (18-45 mm) t/h 8.82 Second Pass X-ray (18-45 mm) t/h 8.47 2 x Grease Belt – 2nd Pass (1-2 mm) t/h 1.54 Grease Belt (2-4 mm) t/h 2.05 Grease Belt (4-8 mm) t/h 2.35 Grease Belt (8-18 mm) t/h 8.13 Grease Belt (18-45 mm) t/h 8.13 6 x Laser Raman (1-2 mm) kg/h 1.54 IR Dryer and HIMS (2-4 mm) kg/h 108.15 IR Dryer and HIMS (4-8 mm) kg/h 123.60 2 x SPS X-ray (2-4 mm) kg/h 81.11 SPS X-ray (4-8 mm) kg/h 92.70 IR Dryer (8-18 mm) t/h 0.69 4 x SPS X-ray (8-18 mm) t/h 0.69 IR Dryer (18-45 mm) t/h 0.69 2 x SPS X-ray (18-45 mm) t/h 0.69 Glove Box (1-2 mm) kg/h 0.31 Glove Box (2-4 mm) kg/h 2.84 Glove Box (4-8 mm) kg/h 2.78 Glove Box (8-18 mm) kg/h 22.00 Glove Box (18-45 mm) kg/h 22.00

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17.2.15 PROCESS PLANT BUILDINGS The Process Plant building was designed by AECOM, AECOM (2011c) & AECOM (2010h), a Canadian engineering company to comply with the National Building Code of Canada 2005. The footprint of the Process Plant is approximately 123 m by 143 m and the recovery section is 53.7 m high. The Process Plant has been split into several areas as seen in Table 17.13. Table 17.13: The Various Sections of the Process Plant and their Corresponding Dimensions

Section FloorArea(m2)

Height (m)

Volume (m3)

Comminution 3630 36.2 131,406 Dense Medium Separation 2950 36.2 106,790 Recovery 855 53.7 45,914 Electrical 1300 32.5 42,250 Plant Security/Change house 1350 3.6 4,860 Bulk Sampling Plant 3024 24.2 73,181

The volume of the Process Plant building, excluding the BSP and change house, will be approximately 326,360 m3 for the 45,000 tpd operation. When Shore’s process building size is bench-marked against other Canadian diamond operations, as shown in Table 17.14, the plant design demonstrates an economical use of space. Table 17.14: Process Plant Building Size Comparison

Description Diavik Snap Lake *

Ekati * Victor Jericho Shore Gold

Nameplate Capacity (Mtpa)

1.5 1.17 3 2.67 0.7 16.4

Main Process Plant Building Volume (m3)

230,000 131,000 264,000 174,000 36,000 326,000

t/m3 6.5 8.9 11.3 15.3 19.4 50.3 * Ekati and Snap Lake buildings are designed to double nameplate capacity in the future by installing additional equipment within the existing building 17.2.16 PROCESS PLANT PRE-COMMISSIONING, COMMISSIONING AND

RAMP-UP Once the plant is built, a pre-commissioning period of approximately one month is planned. During this period, all the equipment will be pre-commissioned with water and overburden material, including reject material from the Star and Orion South bulk sample program, the equipment interfaced with the process control system, the start-up and shut-down sequences set into place and the emergency stops identified and specified. Security procedures will be optimized during the pre-commissioning period.

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Commissioning with ore will occur upon completion of pre-commissioning and the first occurrence of kimberlitic material from the pit pre-stripping operation. This full commissioning period, including the initial ore is planned to take 6 months with production ramping up to nameplate capacity of 1,350,000 tonnes/month. 17.3 PROCESS DESCRIPTION The following process description is based on the 45,000 tpd operation. Figure 17.6 is a block flowsheet of the Process Plant showing the mass balance and the water balance.

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17.3.1 RUN OF MINE (ROM) STOCKPILE Kimberlite from the pit is first crushed via the IPCC system to -400 mm by the MMD sizer situated in the pit and then conveyed to the ROM stockpile. The ROM stockpile will be conical in shape and designed so that the stockpile contains 45,000 tonnes of live material. In this configuration, the total load of the stockpile is estimated to be 116,000 tonnes, with a height of 41 m and a diameter of 109 m. Under the stockpile are six apron feeders, each 1.83 m wide and 6.10 m in length. The apron feeders are positioned in two streams with 3 apron feeders per stream, each set feeding material onto a conveyer that feeds directly into the AG mills. The AG mills are 21 m apart (centre to centre) and, as such the two streams of apron feeders are positioned 21 m apart (centre to centre) under the stockpile. The conveyors directly under the apron feeders will be located within heated and insulated tubular galleries. Once the conveyers have cleared the stockpile area, the conveyers will exit the tubular galleries and continue travelling to the AG mills under partially covered structures. 17.3.2 COMMINUTION SECTION The comminution section comprises two fully autogenous grinding (AG) mills, 10.97 m in diameter and 7.97 m in length (flange to flange). The function of the AG mills is to break up the kimberlite using a combination of attrition, abrasion, compression and impact forces within a wet environment while imparting minimal damage to the diamonds contained within the kimberlite. The AG mills are designed with variable speed drives to accommodate the efficient comminution of the different kimberlite rock strengths, with the maximum installed power of each AG mill being 8,000 kW. Each AG mill will be fitted with a 45 mm trommel screen at the discharge end. All -45 mm material will fall through the trommel screen and onto a chute leading to the spiral classifiers. The +45 mm material will be recycled via flexowells (bucket conveyers) back into the AG mills for further comminution. The discharge from the AG mills will report to spiral classifiers which are designed with a double pitch screw (SC 200 DP). The functions of the spiral classifiers are to:

� break up any clay balls that form in the AG mills; � wash off the loose clays from the rocks; � remove any contaminants such as vegetation and plastics; � float off the -250 micron material (mainly clays) at the rear of the spiral

classifier; and � transfer a clean product onto a 1 mm sizing screen.

The +1 mm material from the 1 mm sizing screen is transferred via conveyers and flexowells to the three DMS feed prep surge bins in the DMS section while the -1 mm material is transferred to the PKCF.

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Recycled process water will be used in the AG mill operation and for the spiral classifiers. Mannville water will be used for the sizing and fines removal screens through spray nozzles. A 50 t and a 30 t overhead crane will be installed in the milling and classification building, to service the AG mills, screens, spiral classifiers and ancillary equipment. 17.3.3 DMS SECTION The DMS section is split into two size fractions: -8 +1 mm and -45 +8 mm. The smaller size fraction (-8 +1 mm) is processed through three modules of 450 mm gravity fed cyclones, each module consisting of three DMS cyclones, two magnetic separators for the recovery and recycling of ferrosilicon, a demagnetising coil, a densifier and a nuclear densitometer. The 450 mm cyclones are required for the recovery of the +1 mm diamonds. The larger size fraction (-45 +8 mm) is processed through two modules of 800 mm gravity fed cyclones, each module consisting of one 800 mm DMS cyclone, two magnetic separators, a demagnetising coil, a densifier and a nuclear densitometer. DMS sinks (concentrates) are washed to remove any ferrosilicon adherence and then conveyed to the recovery section where both size fractions are combined in the recovery feed bin. DMS floats (rejects) are washed to remove any ferrosilicon adherence and then conveyed out the Process Plant to the coarse processed kimberlite pile. The two reject size fractions (1 - 8 mm) and (8 – 45 mm) are conveyed on separate conveyers and stored in separate piles. Ferrosilicon losses are incurred in all DMS circuits and are higher in the smaller DMS cyclones where a finer ferrosilicon is used. The ferrosilicon losses in the fines DMS cyclones is estimated to be 345 g/tonne of processed kimberlite and for the coarse DMS cyclones the estimate losses are 115 g/tonne of processed kimberlite. Each DMS module has a facility whereby dry ferrosilicon is added to the circuit using a controlled dossing method. Mannville water will be used in both the fines DMS modules and the coarse DMS modules. The Mannville water requirements for the three fines DMS modules is calculated at 219 m3/h and the Mannville water requirements for the two coarse DMS modules is calculated at 180 m3/h. Two overhead cranes, a 25 t and a 5 t will be installed in the DMS feed preparation area to service the primary and secondary feed preparation screens respectively. Two overhead cranes, both 5 t capacity, will be installed in the DMS cyclone area to service the cyclones and magnetic separators. Air compressors have been incorporated to provide air to agitate the ferrosilicon in the mixing boxes. 17.3.4 THE RECOVERY SECTION The process flow diagram of the recovery section is shown in Figure 17.5. The recovery section is designed to treat 30 t/h of DMS concentrate. The recovery section concentrates the diamonds by first using broad band technologies with high throughputs and then single particle sorters with

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low throughputs but high accuracy to produce a near diamond product to the glove boxes. The diamond recovery technologies identified for meeting the plant objectives are: wet and dry high intensity magnetic separators (WHIMS and HIMS) for the removal of heavy magnetic material; X-ray machines; both broad band and single particle sorters for the recovery of luminescent minerals; grease belts for the recovery of hydrophobic minerals; and laser Raman single particle sorters to uniquely identify the (-2 +1 mm) diamonds, this size fraction being the most difficult and tedious to hand-sort. To improve the recovery efficiency of each technology used in the recovery section, the recovery feed material is screened into a 1:2 size ratio for the smaller size fractions before being processed. The five size fractions resulting from the screening process are (-2 +1 mm), (-4 +2 mm), (-8 +4 mm), (-18 +8 mm) and (-45 +18 mm). Three different processing routes were then selected for the recovery section based on the ability of each technology to process the various size fractions. Figure 17.7 shows the technology selection for each size fraction processed in recovery. The recovery section will be as automated as possible and processing information will be monitored by the process control system. Hand sorters will be required to conduct the final sort on the diamond concentrate. The hand sorters will also be required to size the diamonds using Diamond Trading Company (DTC) sieves, weigh each size fraction and pack and prepare the diamonds for transport to the offsite sort house. Diamonds will be transported in a secure “Docklock” canister which has a “Moby E” transponder to store and transmit electronic information on its location and content. At the offsite sort house, the diamonds will be cleaned and valued. Waste from the hand sorting process will be continually audited to reduce the risk of diamond loss.

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Figure 17.7: The Three Methods Used to Recover Diamonds in the Recovery Section

Surficial water pumped from surface wells will be used in the recovery section at a rate of 428 m3/h. Water is required in the WHIMS, the main X-ray machines and for the grease belts. The water used in recovery will be recycled except for the water used in the grease belts, which will be fed to the tailings section for use in the transportation of the -1 mm material to the PKCF. One overhead crane with a 5 t capacity will be installed in the recovery section to assist in maintenance requirements. 17.3.5 THE -1 MM TAILINGS

Material less than 1 mm in size is classified as tailings since no economically valuable diamonds are in this size fraction. The -0.25 mm material contains mainly clays that are released from the kimberlite matrix material during comminution. This material is expected to remain suspended in the slurry within the spiral classifiers and float off the rear of the spiral classifiers along with any plastics and vegetation. Once the plastics and vegetation have been removed, the -0.25 mm material will be pumped directly to the PKCF, 2.5 km from the Process Plant. The -1 +0.25 mm material is expected to sink in the spiral classifiers and will be screened from the +1 mm material at the discharge end of the spiral classifier. The -1 +0.25 mm material will be pumped along a separate tailings line to hydro-cyclones situated on the berms of the PKCF. The hydro-cyclones will separate the water from the -1 mm material, allowing the -1 mm

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material to be used as construction material for the berms while depositing the water into the PKCF. 17.3.6 DMS REJECTS In the DMS section, the (-45 +8 mm) floats from the 800 mm DMS cyclones will be conveyed approximately 2 km from the Process Plant to a designated section of the Coarse PK pile closest to the plant. The (-8 +1 mm) floats from the 420 mm cyclones will be conveyed approximately 2.5 km from the Process Plant to its designated section of the coarse processed kimberlite pile. The DMS floats from the 800 mm DMS cyclone are positioned closest to the plant since the probability of further processing this fraction of material is the highest. 17.3.7 RECOVERY REJECTS The rejects from the recovery section will be kept in a secure enclosure just outside the recovery plant. The secure enclosure is designed to hold two years of recovery rejects where it can be audited and easily re-processed if necessary. After two years, the material will be sent to the coarse processed kimberlite pile and stored in two piles: a coarse (-45 +8 mm) pile and a fines (-8 +1 mm) pile. 17.4 CONTROL AND INSTRUMENTATION The Process Plant will be controlled from the process control system (PCS) situated in the main control room of the plant. The functions of the PCS are to operate and optimise the running of the plant, to record data for reporting as well as for analysis, and to provide protection to personnel and equipment. The PCS will be constructed so that instrument failures can be resolved by quick replacement of defective components or automatic transfer of control to installed spares. 17.5 PLANT LABOUR REQUIREMENTS The plant labour requirements are split into two divisions: the labour required to operate the plant and the labour required to maintain the plant. 17.5.1 OPERATIONAL LABOUR REQUIREMENTS In order to run the Process Plant, a number of operational personnel are required. An organogram of the envisaged operational personnel is provided in Figure 17.8. All supervisory positions are indicated in colour. All supervisors and above will operate on a 24 hour call-out basis.

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Figure 17.8: Operational Labour Requirements Org Chart

A summary of the number of plant operating personnel in each role and their required shifts are as follows (Table 17.15): Table 17.15: Summary of Plant Operating Personnel

Role Number ShiftManager, Processing 1 Day Plant General Foreman 2 Day & Night Plant Supervisor 4 Day & Night Plant Operator 12 Day & Night Plant Operator Trainee 4 Day & Night Plant Equipment Operator 4 Day & Night Metallurgist 1 Day Lab Technician 4 Day & Night Superintendent, Recovery 1 Day Recovery Supervisor 2 Day & Night Recovery Technician 8 Day & Night Recovery Trainee 4 Day & Night Sort House Supervisor 2 Day Sort House Sorter 10 Day Total per annum 59

17.5.2 MAINTENANCE LABOUR REQUIREMENTS The Process Plant must maintain above 88 % operational availability to meet production requirements. A team of maintenance personnel are required to ensure that the equipment in the Process Plant meets the operational requirements. An organogram of the required maintenance personnel is shown in Figure 17.9:

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Figure 17.9: Plant Maintenance Personnel Org Chart (Note: D = Day Shift; R = Rotational Shift)

A summary of the number of persons in each role and their associated shifts are documented in Table 17.16: Table 17.16: Summary of Plant Maintenance Personnel

Role Number Shift Process Plant Maintenance Supervisor

1 Day

Electrician 2 Day Electrician 4 Day & Night Industrial Mechanic 8 Day Industrial Mechanic 4 Day & Night Instrument Technician 3 Day Instrument Technician 4 Day & Night Welder 2 Day Lube Man 2 Day Pipefitter 2 Day Apprentice 4 Day Total per annum 36

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17.6 BULK SAMPLE (AUDIT) PLANT Attached to the main plant, Shore will have a bulk sample plant (BSP), for the purposes of:

� auditing future mining benches in the pit to provide information for mine planning; � auditing the Process Plant to determine plant efficiency; and � processing exploration bulk samples from other kimberlite bodies.

The BSP will be able to treat 30 t/h for either mined kimberlite samples, or bulk samples. After completing each sample, the BSP will be cleaned to limit any cross contamination of samples. For this reason, each unit operation will be accessible and provide little opportunity for material hang-up (AECOM (2010i)). The BSP will contain an AG circuit incorporating a 4.9 m x 2.1 m AG mill to simulate the milling technology in the Process Plant. The BSP top size will be 20 mm and all +20 mm mill discharge material will be recycled back to the mill via a secondary cone crusher. The +8 mm DMS floats and recovery rejects will be further crushed via a tertiary cone crusher until all product has passed -8 mm to the DMS floats. The DMS circuit will consist of a 420 mm diameter, pump fed cyclone, drain and rinse screens for the cyclone products, a magnetic separator for ferrosilicon reclamation, a densitometer and a demag coil. The Recovery circuit will contain a Double Pass Flow Sort X-Ray machine, a grease table, an Infra Red dryer, a WHIMS, a HIMS, a Laser Raman Sorter, a grease melting unit and a glove box. Sufficient instrumentation will be provided in the BSP to ensure all the necessary sample information will be captured. Security in the BSP will be equivalent to the security in the recovery section in the Process Plant. 17.7 PROCESS / RECOVERY PLANT SECURITY

The overall goal of the security program is to provide professional and efficient security to ensure appropriate safeguards are in place to protect Shore’s employees and assets. The security program will ensure that professionalism, mutual respect, cooperation and sensitivity are maintained throughout all security programs and initiatives. The Process/Recovery Plants will be equipped with a robust access control and monitoring system installed on all entry and exit points including all labs, offices, control and electrical rooms. The access control system will be continually monitored by security. Security officers will be present in the process and recovery plants. Only authorized persons will have access to the process, recovery or bulk sample plants. All critical and high risk areas of the Process Plant will be monitored and recorded by a security camera system. The Process Plant control room will also be equipped with video monitoring of critical process areas.

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The recovery plant and BSP concentrate storage area and concentrate conveyors will be separated from the Process Plant by suitable walls and barriers constructed from building materials that will not allow common ports or access between the plants. Access to the recovery plant and BSP area will be strictly controlled and restricted to authorized persons only. A strict policy of two party accountability will be maintained in these areas. At no time will one person be allowed to remain in the recovery plant or BSP without the presence of security or a plant operator. All handling or movement of material and any authorized access to any recovery plant or BSP process equipment must be done following the “two party” accountability policies and procedures. All recovery processes will be monitored by the security video camera system. All recovery and batch sample process equipment will be equipped with secure access control video monitoring that will be monitored by security and the security management system. The control rooms for the recovery plant and BSP processes will also have capabilities to monitor all critical process areas. Freight and materials required in the recovery plant or BSP will be delivered to designated secure plant access doors, under security supervision and video monitoring.

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18.0 INFRASTRUCTURE 18.1 SUMMARY The site infrastructure includes those components of the Project required to support the mining and processing operations. These consist of:

� site preparation; � plant site; � access and site roads; � electrical supply and distribution; � water supply and distribution; � natural gas supply and distribution; � telecommunications; � fuel supply and distribution; � explosives supply and storage; and � domestic and industrial waste disposal.

18.2 SITE PREPARATION In preparation for the facilities, overburden disposal areas, kimberlite stockpiles, fines/water management areas, pit construction and roadways the following site preparation activities will occur. 18.2.1 ORGANIC COVER REMOVAL AND STOCKPILING Organic cover from the site will be progressively removed and stockpiled and used for construction and reclamation. Organic cover may include a reclamation mix of topsoil and vegetation and, should the need arise, will be stockpiled separately. Any merchantable timber will be removed from the site by a selected contractor, or used in the construction phase, as identified in this FS. All stockpiled reclamation material is anticipated to be used in the reclamation processes throughout the Project’s life, and non-merchantable timber will be used in the construction of a perimeter boundary, which is detailed later in this section. Stockpiles will be located near the bases of the overburden disposal area and fines containment areas and will be used for progressive reclamation at those areas as they are constructed and developed over the mine life. Reclamation material salvage will target deeper organic soils for use in reclaiming the portion of the open pit, which will be above the final water level at closure. The final closure landforms of the open pits are expected to be lakes. Any excess reclamation material is intended to be removed by Nipawin Biomass and used in the manufacture of biofuels. 18.2.2 SITE ACCESS AND UTILITIES ROADWAYS During construction, a new road will be built to accommodate the large loads and heavy traffic that will travel to the Project location. Paralleling the main access way, the area will be cleared for installation of a gas and telecommunication line. The access way for the power line will also

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be prepared at this time. Reclamation materials will be stockpiled, or relocated, as appropriate, and merchantable timber (if present) will be harvested. The incoming electrical supply will be via overhead lines and, thus, will not require extensive groundwork (AECOM, 2010k). 18.2.3 SITE GRADING Once any reclamation material has been removed from the site infrastructure locations, grading will be completed to level the areas in preparation for construction. Grading will also be used in conjunction with ditching at various locations to improve drainage. Minimal grading will be required for the location of the overburden cell, PKCF and Coarse PK pile; however, some material may be used to start the overburden cell berms. Extensive grading will be required for the initial pads for the conveyor – stacker systems. The Process Plant and main facilities site will be graded to a relatively flat surface, maintaining the overall natural drainage in the area. The grading will extend to the outer topography such that all run off will drain around the plant site. A cut and fill approach will be employed to minimize material movement within the footprint of the site. The site electrical substation will require flattening with proper drainage and will include the installation of a grounding grid. A laydown area for incoming construction material will be provided near the site facilities. This area will eventually become the laydown and cold storage area for the ongoing pit operations. 18.2.4 PIT PRE-STRIPPING Grading is not required for the pit footprints, but there will be grade work done along the pit haul road alignment as part of the pre-strip operations and perimeter road where the pit dewatering wells are located and conveyors exit the pits. 18.2.5 SITE ROAD, UTILITIES, PIPELINES & CONVEYANCE WAYS Access road grading will employ cut and fill techniques to minimize material movement and improve road drainage. Similar techniques will also be utilized for the conveyor alignments to the plant, overburden pile, PKCF and Coarse PK pile and all access ways for utilities and pipelines (AECOM, 2011e). Pipe burials will be minimized wherever possible to reduce closure costs and improve maintenance and monitoring. Some locations will require culvert installations and burial for road access.

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18.2.6 PERIMETER BOUNDARY The entire site will be surrounded by a boundary created from non-merchantable material acquired from pre-stripping of the site. This boundary will restrict access to the site so that the only access point to the site will be via the main security entrance located on the site access road.

18.3 SITE PLAN DESCRIPTION 18.3.1 GENERAL SITE PLAN The general site plan with the principal facilities required for the Project is shown as Figure 18.1. These facilities consist of the following (AECOM, 2011e):

� Star open pit; � Orion South open pit; � processed kimberlite containment facility (PKCF); � coarse processed kimberlite (Coarse PK) pile; � overburden and waste rock disposal facility; � plant site including Process Plant and Project support buildings and facilities; � ore and waste conveyors from the open pits; and � access and site roads.

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Figure 18.1: General Site Plan (1 km grid)

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18.4 PLANT SITE LOCATION The plant site is located midway between the Star and Orion South Kimberlites, on high land between the East Ravine and the Duke Ravine. The site is approximately 1 km from each of the Star and Orion South Kimberlite deposits and provides a suitable location for processing of the Star and Orion South Kimberlite deposits. The plant site is located on high ground between the East Ravine and the Duke Ravine and has been planned to not encroach on them. In the north-south direction, it dips from a high of 452 masl at the north end to 442 masl at the southern limit. A grading plan was developed to level the site prior to construction of the facilities. The area to the north, which contains the entire mine, maintenance and administration facilities, is higher while the grade gradually drops to the south, where the Process Plant will be located. The internal site grading was designed to allow for surface run-off to drain to the east and west, or southern, limits of the plant site. The drainage that is not contained by the access road to the Star pit will run into the ravines. It is not anticipated that any significant flows to the ravines will be generated in any one area. 18.5 ACCESS ROAD 18.5.1 ROUTE SELECTION The selection of a permanent access route to the Project site was based on the consideration of a number of objectives and issues including (AECOM, 2010k):

� connect to and maximize the use of the existing paved highway system available in the area;

� minimize construction costs for the access road. This involves minimizing the quantity of new road construction, eliminating expensive stream or river crossings, and using existing forestry or grid roads to the full extent possible to reduce environmental impact;

� minimize disruptions of access to the site during road construction; � provide a good road connection to Prince Albert, which will serve as a main supply

center for the Project; � provide good access to local communities to accommodate numerous employees whom

are expected to choose to reside in these locations; � avoid a routing that involves a bridge over the Saskatchewan River due to cost and

permitting considerations; � consider safety as a key selection parameter –minimizing curves and reduction of non-

passing zones due to poor visibility from curves or hills; and � construct the road to provincial secondary highway grade standards similar to

Highway 55. Based on these selection criteria three options were identified for the access road routing:

� new road due north connecting to Highway 55 near Smeaton;

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� upgrade existing roads leading northwest to connect to Highway 55 near Shipman; or � new road due west connecting to Garden River road and Highway 55 near the Pulp Mill.

The three options are shown on Figure 18.2.

Figure 18.2: Star Diamond Project Access Road Options

Option 1, construct a new road due north to connect to Highway 55 at Smeaton, has a shorter length of road construction than Option 2, and was initially chosen as the preferred option, however; when the subsequent route investigation indicated the potential for high construction costs through low lying wet areas, the selection was changed to Option 2. Option 2, upgrade new roads to the northwest connecting to Highway 55 at Shipman, was selected as the preferred route for the FS. Option 3, a new road due west connecting to Garden River road and Highway 55 near the Pulp Mill, would provide the shortest route to Prince Albert but would have the longest road construction and highest construction cost and would not give good access to the towns along Highway 55. Option 2 was selected over Option 1 as it has better routing conditions than Option 1 and would provide good access to the communities located along Highway 55 while only adding 5 km to the drive to Prince Albert. 18.5.2 ACCESS ROAD DESIGN The road would be constructed along existing rural municipality rights of way, with approximately 9 km built over existing provincial grid roads, and 20.9 km built through the FalC forest. Through the FalC forest, the road would generally follow the existing forestry roads, which would marginally reduce construction costs and the environmental impact associated with new road development. Straightening of the existing route will be required in some areas due to the many curves on the existing forestry roads (AECOM, 2010k). Provincial secondary highway grade standards would be followed for the construction of this highway. The access corridor would cross an existing high-pressure natural gas line south of Highway 55, the White Fox River at the northern boundary of the forest and the west Ravine.

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The existing bridge on the White Fox River will require widening to meet provincial highway standards. Currently, the bridge consists of a 17.9 m by 4.9 m wide steel bridge manufactured by Armtec / Rapid-Span Solutions, constructed in 2007 based on a CS750 truck (CSA S6-88) standard. The bridge is supported by rubber bearing pads and precast concrete sills placed on steel bins containing compacted fill. To widen the existing bridge, one additional bin cell wall will be installed adjacent to each of the existing exterior bin walls at the abutments. The existing bin wall wingwalls will be removed and reconnected to the new exterior bin walls. The resulting abutments will be 15.2 m wide. The old bridge will be realigned and connected to the new bridge superstructure to create a clear width of 12 m between the rails, and a roadway width of 11.4 m. The bridge deck will be steel coated with an epoxy-bonded anti-skid deck-wearing surface by the manufacturer. W-beam guardrails will also be installed. This option will minimize in-stream works, and could be installed in the winter to further reduce potential environmental effects (AECOM, 2010f). The access road will be constructed for a 110 km/h design speed and will be posted to a speed limit of 80 km/h or 90 km/h, meeting Ministry of Highways and Infrastructure standards. Two 3.7 m driving lanes plus paved 2 m shoulders are proposed for additional safety and ease of maintenance. Back and side slopes will be 4H:1V, with a minimum ditch grade of 1 %. Right-of-way width will be an average of 46 m. Equalization culverts will be installed as needed. Ditches 5.0 m wide would be provided on either side of the roadway. 18.5.3 ACCESS CORRIDOR In addition to the main access road, the access road route will form an access corridor encompassing communication lines and potentially a railroad and/or natural gas pipeline. A power transmission line may also be routed along part of this corridor. Construction of the access corridor, approximately 30.9 km long, will commence as soon as the required permitting is in place, as completion will be necessary to support other construction activities. The new access corridor will occupy approximately 127 ha. Up to 19 small borrow areas (each one ha or smaller, used for supply of construction sand) are planned for kilometres 1 to 8, 11 to 20 and 23. The exact locations have not yet been determined, but will be identified in the construction permit applications. The estimated total borrow area is 15.8 ha. 18.6 RAILWAY SPUR Following a preliminary assessment of the benefits and costs of constructing the railway spur at the pre-feasibility level, it was decided not to include the spur in the feasibility study. In the absence of a rail spur to the site, rail will still be used to deliver material to Choiceland, and delivered to site by truck. 18.7 POWER SUPPLY AND DISTRIBUTION 18.7.1 POWER SUPPLY OPTIONS SaskPower will supply power to the site at 230 kV.

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SaskPower evaluated three main route options to provide electrical service to the Project (see Figure 18.3).

1. A new 230 kV power line running to the east of the site connecting to the Nipawin or Codette substations near Nipawin. The new 230 kV feeder will be approximately 65 km long and will run through the FalC provincial forest on the north side of the Saskatchewan River.

2. A new 230 kV power line running due south of the site connecting to the Beatty substation. The new 230 kV feeder will be approximately 45 km long and will involve a river crossing of the Saskatchewan River. This route crosses the James Smith Cree Nation Reserve, and will be pursued only if fully supported by the James Smith Cree Nation.

3. A new 230 kV power line running to the southeast of the site and tying to an existing 230 kV power line connecting the Codette and Beatty substations. This existing line is located in the FalC provincial forest on the south side of the Saskatchewan River. The new 230 kV feeder will be approximately 16 km long and will involve a river crossing of the Saskatchewan River.

Each route option has numerous advantages and disadvantages, including non-technical aspects such as cost, scheduling and permitting. As the transmission line will be owned and operated by SaskPower, SaskPower was responsible for the final route selection, which was Option 3.

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Figure 18.3: Power Transmission Line and Natural Gas Pipeline Options

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18.7.2 POWER SUPPLY REQUIREMENTS Table 18.1 provides the estimated demand and load profile for the Project site. Table 18.1: Estimated Demand and Load Profile for the Project Site

Area MW(1)

Mining and Pit Loads(2) 69.8 Process Plant 31.6 Infrastructure 8.1 Total 109.6

Notes: (1) Capacitors sized to 18 MVAr Are allowed for in the design for the mining and pit areas. (2) The mining loads reflect the start up loads at the Star Pit. Mining loads for Orion South are shown under the mining section.

Based upon the revised process and mining system designs the estimated electrical load for the Project is approximately 115 MVA with a power factor of approximately 100 %. An estimated Project load of 83 MVA at 95 % power factor was submitted to SaskPower as the basis of their study to determine the preferred option for electrical service to the Project. 18.7.3 SITE ELECTRICAL DISTRIBUTION The electrical system for the Project can be divided into three basic areas (AECOM, 2010m):

1. main substation: will be used to transform the incoming 230 kV SaskPower transmission line voltage into the primary identified site distribution voltage of 25 kV.

2. distribution network: The power distribution network of the Project utilizes two main voltage levels: i) 25 kV Power Distribution ii) 4.16 kV Power Distribution

3. utilization systems: The utilization systems will be used to distribute electrical services to various extraction plant and mining loads.

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18.8 NATURAL GAS AND GEOTHERMAL ENERGY SUPPLY As part of the FS, AECOM was contracted to investigate the use of natural gas and/or geothermal energy for the Project’s heating and cooling system requirements and to establish the peak demand loads for natural gas (AECOM, 2010g). The mine site will include multiple buildings with diverse requirements for space heating. While the administration and warehouse spaces have relatively low heating requirements, spaces such as shops, repair areas, wash bays and dry facilities will require high ventilation rates and thus have high heating loads. These buildings require approximately 82,945,000 kBtu (87,495 GJ) of heat energy annually. The only conventional energy sources considered viable for heating are natural gas, propane, and electricity. Based on equal heating quantities, natural gas is the conventional fuel of choice. Additional heating loads due to future mine expansion are not considered in this estimate but have been considered in distribution pipe sizing. The natural gas required at the mine site must be transported by pipeline from a TransGas trunk line. The corridor created by a new access road will be the route for a natural gas supply line. An analysis was completed exploring the option of utilizing ground source heat pumps to recover potential energy from the dewatering wells as a method of reducing natural gas consumption. This option was not accepted for reasons including economic, technical and operational complexity. 18.9 FUEL SUPPLY AND DISTRIBUTION Fuel will be stored on-site at a tank farm consisting of double walled above-ground tanks located within the plant footprint. Fuel will be transported to site by truck. There will be re-fuelling stations at both the plant site and in-pit to increase truck efficiency and to reduce fuel consumption. Transportation of fuel to the in pit equipment will be completed by tanker truck. 18.10 EXPLOSIVES SUPPLY AND DISTRIBUTION The emulsion blend and other explosives and blasting accessories that will be used to blast ore and waste rock will be supplied by a licensed explosive supplier. The explosive supplier will set-up its facility and explosive and detonator storage magazines in secure locations at safe distances from the overburden stockpile and other site activities. The locations of the explosive supplier's secure facility and storage magazines will be finalized in consultation with regulatory authorities. 18.11 TELECOMMUNICATIONS SaskTel will provide a dedicated communication line through a fibre optic cable from Highway 55 near Shipman, Saskatchewan to the mine site, which will be terminated in the IT room at the Administration Building. The SaskTel communication support will be served from the SaskTel office in Melfort. The bandwidth supplied from SaskTel will be 10 megabits per second (Mbps) for the WAN/LAN and IP telephony systems (AECOM, 2010j).

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The communications interfaces will include the following:

� Wireless � LAN/WAN � Ethernet.

18.12 EARTHWORKS Development of the open pits would require additional earthworks outside of the pit boundaries. This could include the development of an access ramp into the open pits, diversion of surface water, and contouring the grade of land between the southeastern Star pit boundary and the Saskatchewan River. The access ramp for the Star pit may use natural topographic features such as the East Ravine to reduce the overall Project footprint. Surface runoff currently flowing into the East Ravine would require diversion. The preliminary plan is to divert water flowing into the East Ravine further east of the proposed pit. Little surface run-off is expected from the remainder of the area due to the sandy soils. A perimeter drain around the pit is proposed to manage any additional surface water, with discharge into the Saskatchewan River. A small embankment across the outlet of the East Ravine is proposed to manage any potential for flood water from the Saskatchewan River into the open pit. Additional surface water diversions will be required for Orion South. 18.13 PROCESS WATER SUPPLY All process water will come directly from pit dewatering or from surface run-off collection. Current plant water use is estimated at 113,560 m3/d. In addition, water can be recirculated back from the polishing cell located in the PKCF. A barge with pumps and the required pipelines to the Process Plant will be constructed such that water collected in the PKCF can be fed back to the plant as required. Process water supply is discussed in more detail in Appendix B. 18.14 POTABLE WATER Supply of fresh water for the site will be provided from four water wells located south of the Process Plant. The well water will be treated using a combination of media and membrane prior to distribution for use. This is discussed further in Appendix B. 18.15 WASTE POTABLE WATER AND SEWAGE The potable waste water treatment system will consist of a gravity sewer main to collect all the sewage and discharge it into a two cell sewage lagoon to treat the sewage. It will be designed to handle 50 m3/day. The lagoon will be set up to continuously discharge treated sewage into the Duke Ravine.

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18.16 COMBUSTIBLE SOLID DOMESTIC WASTE MANAGEMENT FACILITIES AND RECYCLING

During construction and mining phases, it is proposed to handle all waste products without the use of an on-site landfill. Solid waste, depending on its nature will either be incinerated on site or hauled off site. Recycling will occur wherever operationally possible. 18.16.1 CONSTRUCTION PHASE During construction, combustible wastes will either be hauled to a suitable landfill or stored in waste bins until the incinerator is on-line, depending on volumes generated. If the waste bins become full, a waste management company would be contracted to haul wastes off-site so use of a temporary land fill can be avoided. All recyclables will be collected and recycled. 18.16.2 OPERATIONS PHASE Once in operations, all material exiting from the blue security zone to the green zone will have to be searched for security purposes. Searching of solid wastes is not considered feasible or effective. Therefore, Shore is proposing to incinerate solid wastes in the blue security zone to reduce the need for wastes to be transported from one security zone to another (AECOM, 2010b). The incinerator will be located on the main site, downwind from the main site infrastructure. A 179 kg/h capacity incinerator has been included in the FS. Non-combustible waste (e.g., waste metal) and other incombustible products will be stored onsite and may be transported offsite either upon final reclamation, or annually, depending on the quantities generated. Ash will be hauled periodically to the landfill in Prince Albert. As a general principle, wastes generated inside the green security zone will be recycled to the extent practical. Industrial wastes on site will be collected in a dedicated lined area or a building with adequate secondary containment, and shipped to an approved off-site location by a licensed waste contractor. 18.16.3 HAZARDOUS WASTE The management of hazardous substances and waste dangerous goods (HSWDG) at the Project is a priority. Shore is committed to implementing a plan, which will address the management, storage, and disposal of all HSWDG. In addition, the plan will put into place procedures and practices to prevent the accidental discharge of substances into the environment, as well as planning for efficient and thorough cleanup in case of an accidental discharge. Shore will have an official and posted HSWDG plan in place during all aspects of construction, production, and closure of the Project. This plan will include:

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� work instructions to provide staff with detailed information on proper handling, storage and disposal of all HSWDG;

� orientation of all staff and contractors on handling, storage and disposal of HSWDG; � clearly labelled and adequate storage facilities for all HSWDG (i.e., double walled

envirotanks, secondary containment, etc.); � spill contingency plan and a plan for adequate equipment strategically placed to be

available in the event of a spill (i.e., spill kits at fuel stations); � incident tracking system to monitor any unanticipated releases into the environment and

prevent similar occurrences in the future; � contact information and instructions on who to contact for information on HSWDG

management or in case of a spill; and � recycling of used HSWDG whenever possible.

18.17 INFORMATION TECHNOLOGY Information Technology (IT) will function as an extension of Shore’s Head Office. All accounts and account permissions will be generated, monitored, and audited at Head Office. Data storage, retention, and backup will take place at site and stored in combination at site and Head Office. All IT related equipment, i.e., routers, servers, etc, will be placed in a secure area with limited physical access. Physical access will be regulated electronically via a card lock system controlled at Head Office. The secure area will include air conditioning and humidity controls to prevent overheating and static build up.

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19.0 MARKET STUDIES AND CONTRACTS 19.1 SALES AND MARKETING Shore’s diamond sales and marketing efforts will focus on the sale of rough diamonds. Shore also aims to promote the profile of FalC diamonds from Saskatchewan. All diamond sales will comply with the regulations of the Kimberley Process, which ensures customers of the integrity of the chain of custody of diamonds between the producer and the final retail sale. Shore anticipates the establishment of an Antwerp-based marketing office that will either be operated by a diamond sales agent or Shore personnel. The costs of these services are expected to be approximately 2.0 % of gross revenue. Diamond industry consultants, WWW, have provided Shore with a preliminary diamond marketing strategy, diamond price projections and diamond price escalation values. In-house research has confirmed that the proposed diamond price escalation of 3.5 % is consistent with industry standards. Shore has reviewed the studies and analyses and the results support the assumptions in the Report. 19.2 CONTRACTS In March 2011, Shore executed a Construction Agreement with SaskPower to design and construct a 230 kV power line of 21 km to the Project by mid to late 2013. Shore is of the opinion that this agreement is consistent with other SaskPower contracts for similar projects. The Company does not foresee subcontracting third parties for any of the, mining or production tasks associated with the extraction of diamonds, but intends to undertake these activities using in-house personnel on market terms and conditions, as set out in Appendix D. The Company expects to conclude multiple contracts with various equipment and service providers for the construction and commissioning of mine and facilities and it is expected that these contracts will be on market terms and conditions applicable at the time the equipment is required. All anticipated contracts will be within industry norms for similar equipment and work. Periodically, Shore will utilize specialist contractors and suppliers, such as contractors to assist in IPCC equipment relocation / moves, and an explosive and blasting accessories supplier. A security company will be contracted to transport diamond concentrate from the Process Plant in the FalC area to the Sorthouse in Saskatoon. The security company will also be contracted to manage international shipments for diamond sales. Shore has reviewed the studies and analyses and the results support the assumptions in the Report.

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20.0 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT

The draft Environmental Impact Statement (EIS) for the Project was submitted in December 2010 to the Saskatchewan MOE and federal agencies for the Star – Orion South Diamond Project in consideration of the potential for a combined mining and processing project. The EIS is currently in the technical review phase. Comments from regulators and other reviewers have been considered in the FS relating to baseline studies, community engagement activities, potential impacts of the proposed Project, plans for the progressive reclamation and closure of the Project and the cumulative effects assessment. The Environmental Impact Assessment (EIA) for the Project is being carried out under the terms of the Saskatchewan Canada Harmonization Agreement whereby projects that require an environmental assessment by both the federal and provincial governments undergo a single assessment, administered cooperatively by both governments. The Project triggered a comprehensive study under the Canadian Environmental Assessment Act (CEAA). The government agencies with interest in the EIA for the Project include the Saskatchewan MOE, the Canadian Environmental Assessment Agency, Fisheries and Oceans Canada, Natural Resources Canada, Environment Canada and Transport Canada. The EIA for the Project is a rigorous assessment with a high level of technical and regulatory scrutiny and will include public consultation and opportunities for feedback. Based on technical feedback on the EIS from reviewers, and incorporation of comments received into the feasibility design, including alternatives, Shore is not aware any material environmental issues that would prevent the Project from proceeding. 20.1 PROJECT SCOPE The scope of the Project in the FS is consistent with the scope of the Project in the draft EIS.

� The draft EIS was based on the PFS (Orava et al., 2010) and includes contingencies in the dimensions of the facilities, and considers a Local Study Area which is large enough to incorporate small changes in footprint arising from the FS. These changes will be reflected in the Supplemental Information filing as part of the EIA process, and are not expected to cause a material delay in the EIA process.

20.2 EXISTING ENVIRONMENT The Project is located in the FalC Provincial Forest on the north side of the Saskatchewan River. The FalC Provincial Forest is an island forest surrounded by open agricultural land, with pockets of forested land and pasture. In general, the vegetation within the FalC forest consists of jack pine dominated ecosite phases on well drained sites with coarse soil texture, with black spruce, tamarack (larch) and trembling aspen found in areas that are poorly drained. Wetlands are often dominated by willows. Riparian vegetation (i.e. along the banks of the Saskatchewan River and neighbouring tributaries) can include balsam poplar and white spruce. There is a wide range in

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the seral stage of the vegetation communities due to frequent forest fires. A large portion of the Project area was burnt in the Henderson Fire of 1989 and contains open, immature jack pine. Detailed information on the existing environment is available in the draft EIS (Shore and AMEC, 2010). 20.3 SUBMISSION OF THE DRAFT EIS, REVIEW PROCESS UNDERWAY The EIA process for the Project is being undertaken under the terms of the Saskatchewan Canada Harmonization Agreement in which projects that require an environmental assessment by both the federal and provincial governments undergo a single assessment, administered cooperatively by both governments. The Project triggered a comprehensive study under the CEAA. The EIA study requirements were progressively developed as follows:

� Shore initiated the EIA process for the Project in November 2008 with the submission of its Project proposal to the Saskatchewan MOE and federal agencies for the Star – Orion South Diamond Project in consideration of the distinct potential of a combined mining and processing project.

� In November 2009, the Saskatchewan MOE, which is leading the assessment process,

released Final Project-Specific Guidelines, which outline the expectations of the EIS.

� In November 2009, it was determined that a comprehensive study of the Project would be required by the Federal government as the proposed volume of groundwater extraction falls within the class of undertaking listed in s.10 of the Comprehensive Study List Regulations under CEAA;

� In December 2010, Shore submitted the draft Star-Orion South Environmental Impact

Statement (Shore and AMEC, 2010) to Provincial and Federal reviewers. Shore received technical review comments in April and May 2011. These comments were analysed to identify potential changes to the Project for consideration in the FS, specifically regarding discharge water quality and potential impacts to fish bearing water bodies. Supplemental information will be submitted at the end of the 3rd quarter of 2011 to address those questions received.

The following are available on the Saskatchewan MOE website (www.environment.gov.sk.ca):

� the November, 2008 Project proposal for the Star – Orion South Diamond Project; � the EIA Notice for the Star – Orion South Diamond Project; and � the Final Project-Specific Guidelines for the Preparation of an EIS for the Star – Orion

South Diamond Project dated November, 2009. 20.4 PERMITTING The regulatory framework for the normal construction and operation of any mine site is subject to an ongoing process during which permits, licenses and approvals are requested, reported on, amended, expire and are renewed. Shore has licenses and permits for its current activities. The

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proposed diamond mine, when it is operational, will have regulatory obligations to both the federal and provincial governments that will be described in permits issued to Shore. The permits that will be required for the construction and operation of the proposed mine will be applied for following Ministerial approval of the EIA and EIS. In addition, appropriate lease agreements will be required prior to construction, as the Project is located on Crown land. These include a Surface Lease, lease agreements for portions of the access corridor in the FalC, a Mineral Lease to extract diamonds, and potentially others. In June 2010, the Province released the details of the royalty structure with regulations still to be drafted. 20.5 COMMUNITY ENGAGEMENT The final project specific guidelines for the preparation of an EIS for the Project issued by the Saskatchewan MOE, and comprehensive study requirements under CEAA, both require public consultation during the EIA process. The Crown has a constitutional obligation to consult with affected First Nations and Métis communities when making decisions that may adversely impact the exercise of Treaty or Aboriginal rights. The Crown will utilize the EIS to inform itself of the impacts of the development on traditional uses, and therefore on Treaty and Aboriginal rights. To the extent possible, mitigation proposed within the EIS may provide accommodation for rights impacted by the proposed Project. Consultation with First Nations and Métis communities will continue as required / needed throughout the regulatory phase of the Project, should the development be approved. Under CEAA, public participation is a mandatory component of a comprehensive study and opportunities for public participation must be provided during the conduct of an assessment. Public comments can assist in identifying concerns, environmental issues and appropriate mitigation measures. Shore has and continues to conduct community engagement activities to provide information to, and obtain feedback from, an array of interested individuals and organizations neighbouring the FalC site as well as Aboriginal communities, special interest groups (e.g. Saskatchewan Eco Network), provincial and federal governments and the Diamond Development Advisory Committee (DDAC) as described in the EIS (Shore and AMEC, 2010). The DDAC was established in January 2007 and includes representation from local urban and rural municipalities and elected Métis representation (Métis Nation Eastern Region II and Métis Nation Western Region II). Several First Nations are also members of the DDAC. Shore received general overwhelming support for its exploration activities at the FalC site and is finding a similar level of support for the proposed Project as expressed at open houses and other events. Shore has entered into various agreements with First Nations or Métis Nation -- Saskatchewan Regions. The agreements cover three topic areas. Information Gathering Agreements concerning the gathering of information respecting traditional land use by Aboriginal people are in place with respect to nine First Nations or Métis Regions, including Sturgeon Lake First

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Nation, Red Earth Cree Nation, Métis Nation -- Saskatchewan Eastern Region II and Western Region II, the three bands of James Smith Cree Nation, Muskoday First Nation and Wahpeton Dakota Nation. The subject matter of these agreements has almost entirely been carried out, with any remaining obligations expected to be completed shortly. Memoranda of Understanding (MOU) committing Shore and the Aboriginal party concerned to carry out discussions to seek ways to involve Aboriginal people in employment and contracts related to the Project are in place with four Aboriginal parties, namely Sturgeon Lake First Nation, Wahpeton Dakota Nation, Métis Nation -- Saskatchewan Eastern Region II and Western Region II. Discussions have commenced with one First Nation pursuant to the relevant MOU and have led to the negotiation of a Mutual Cooperation Agreement with another First Nation. The MutualCooperation Agreement, arrived at with Wahpeton Dakota Nation, sets out a process through which Shore and the First Nation will work together to attempt to involve its members in employment or contracting related to the Project. Shore intends to pursue discussions with Aboriginal parties with a view to arriving at further Mutual Cooperation Agreements or other similar agreements. At present, no discussions have been scheduled in this regard.

20.6 POTENTIAL FOR MATERIAL ISSUES Based on technical feedback on the EIS and incorporation of comments received into the feasibility design, including alternatives, Shore is not aware any of material environmental issues that would prevent the Project from proceeding. The draft EIS and subsequent technical review identified direct impacts to fish habitat and discharge water quality as key potential impacts as a result of the proposed Project. The following FS design changes were implemented as a result of economic, as well as environmental, analysis.

� Internal recycling of the decant water from the PKCF to the plant in order to manage metal concentrations in discharge water;

� Direct discharge of Mannville water through a diffuser into the Saskatchewan River; and � Re-alignment of Project facilities to avoid impacts to aquatic habitat where possible.

All Project aspects that have the potential for effects to the environment have been considered in the EIS, including, but not limited to: mine materials (i.e. overburden, rock, PK); mine water; drainage from mine materials; the open pits; and, groundwater removal and water level decline. Specific examples below, included in the PFS (Orava et al.., 2010), have been updated to reflect feasibility level design:

� Mine materials: Excavated overburden and rock will be placed in a designated overburden and rock pile to be located west of the Star open pit, and backfilled internally during Star Phase 4 into the Star pit. Additional geotechnical studies have been conducted, and the final surface of the overburden and rock storage pile would be progressively reclaimed over the life of the Project.

� Mine water: The water from the deeper aquifers (Mannville) was sampled from the prototype dewatering well pump test in 2010. Water quality from this pump test was

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consistent, and is considered representative of long term water quality of the Mannville aquifer. Based on these results, the Mannville water is expected to be brackish with a TDS of about 3,950 to 3,970 mg/L or about 10 % of the salinity of seawater. At a dewatering well pumping rate of about 130,800 m3/d, when the Star and Orion South open pits are both being dewatered, the deep well water would amount to only a small portion, less than 1 % of the expected low flow in the Saskatchewan River.

� Drainage from mine materials: Static testing of kimberlite from Star and Orion South

indicate that these materials are not acid generating and have excess neutralizing potential. Kinetic testing and leach testing of kimberlite are being conducted using a humidity cell and two test columns, and three field test plots. Test data, to date, suggest that as the materials weather, the concentrations of sulphate, iron, antimony, arsenic, chromium, molybdenum, nickel and selenium could increase. Testing, to date, also suggest that the Colorado Group (Westgate and Joli Fou Formation) shale material may represent a risk of sulphide oxidation with sulphur contents of up to 5 % for the shale and up to 2 % in closely adjacent kimberlite. The other mine materials do not appear to be acid generating. Mitigation measures considered in the FS to manage the Colorado Group shale are mine material segregation and encapsulation in till. Seepage water from the PKCF will be treated in natural wetlands, pumped back into the PKCF or discharged to the environment depending on water quality.

� Closure: The Project will be progressively reclaimed. At the completion of mining, the

pits will be allowed to naturally flood, the plant, equipment and infrastructure will be removed, and the Project site made physically stable and revegetated. The mine closure cost is reviewed in Section 22.3.12.

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21.0 CAPITAL AND OPERATING COSTS 21.1 CAPITAL COSTS 21.1.1 SUMMARY The capital costs for the Project are comprised of:

(1) pre-production stripping, mining, Process Plant, auxiliary equipment, infrastructure capital and pre-production construction indirect capital costs (shown in Table 21.1); and

(2) sustaining capital costs. The pre-production capital costs are summarised in Table 21.1 and include estimated provincial sales tax amounts for equipment, freight and service provision. Table 21.1: Pre-Production Capital Cost Summary

CAPITAL ITEM

Pre-Production Capital Cost (x$1,000)

TOTAL

Year

2011 2012 2013 2014 2015 2016Mine development $9,246 $90,887 $86,920 $82,392 $78,806 $348,250

Mine equipment $141,192 $235,344 $181,831 $2,372 $64,778 $625,519

Process Plant $23,173 $38,449 $99,031 $180,347 $341,000

Infrastructure Capital $31,845 $92,597 $17,530 $17,156 $48,436 $207,563

Auxiliary Site Equipment $3,724 $3,724 $7,448 Pre-production Construction Indirects $883 $51,726 $62,042 $38,275 $41,099 $53,120 $247,147

Contingency $88 $23,161 $32,373 $20,666 $26,767 $38,725 $141,779

Total by Year $971 $260,894 $540,140 $383,671 $268,817 $464,212 $1,918,706 Totals may not sum exactly due to rounding. The total pre-production and sustaining capital costs are summarized in Table 21.2 and primarily include pit and site services equipment. Plant sustaining capital is not included, as replacement spares are included in the operating cost estimates. The plant design is based on a 20 year operating life span, therefore, no capital upgrades are required for the life of the Process Plant. Table 21.2: Life of Mine Capital Costs Including Contingency AREA $MPre-Production Capital $1,919Sustaining Capital $590Total Project Capital 2,509

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21.1.2 BASIS OF ESTIMATE The capital cost estimate (± 15 % cost accuracy) for the Project was compiled from the following sources:

� Mining: P&E estimated the open pit equipment requirements based on the pit designs, mine schedule and proposed mine materials handling systems. The pit equipment costs are based on budgetary quotes received from suppliers for preliminary specifications for key pit equipment issued by P&E. Mine development cost estimates were developed from first principles, equipment hourly operating costs quoted from vendors, other quotes from contractors and suppliers, and supplier input, Shore provided hourly and annual labour costs per person by job classification.

� Processing and infrastructure: Metso designed the Process Plant (Mesto, 2010) and equipment based on the flow sheet developed by Metso and Shore, and provided the capital and operating cost for the primary process equipment. AECOM developed the infrastructure designs and, in conjunction with Shore, provided the capital costs for the construction of the site facilities, bulk sample plant and supporting structure and equipment for the Process Plant (AECOM, 2011g).

Currency

Equipment estimates obtained from foreign sources were converted to Canadian dollars using the currency conversion factors shown below.

� 1 Australian Dollar = 0.980 Canadian Dollars � 1 British Pound = 1.635 Canadian Dollars � 1 Canadian Dollar = 1.000 Canadian Dollars � 1 Euro = 1.347 Canadian Dollars � 1 South African Rand = 0.147 Canadian Dollars � 1 Swedish Krona = 0.146 Canadian Dollars � 1 United States Dollar = 1.058 Canadian Dollars

21.1.2.1 LABOUR WAGE RATES

The labour wage rate estimates for Shore mine personnel were compiled from salary surveys of local mines in Saskatchewan, as well as published wage rates from the Saskatchewan Mining Association and various collective agreements. Hourly wage rates used were based on Saskatchewan Labour Relations Building Trades Union Agreements. All Agreements and Wage Summaries may be viewed at The Construction Labour Relations Association of Saskatchewan Inc. website at http://clrsk.sasktelwebhosting.com/. The mining department will operate on a two 12 hour shifts per day basis with four rotating crews.

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The estimate for the processing and infrastructure scope is based on a stable construction labour force working 10 hours per day, 7 days per week, with an allowance for 10 % casual overtime.

Special considerations regarding the wage rates used in the estimate are set out below. a. Initial and Terminal Transportation

Initial and Terminal Transportation expense was included in the wage rate for each trade. b. Rotational Transportation

Rotational transportation expense does not apply because the Project is less than three hundred (300) kilometres from Saskatoon, the dispatch point.

c. Shift Premium Shore’s current Project execution plan calls for two construction shifts. Generally speaking, the Saskatchewan Building Trades labour agreements dictate that for shifts preceding and following the day shift, workers shall receive a shift premium of $3.00 for every hour worked.

d. Crew Mixes Wage Rates were determined for various crew mixes taken from Richardson’s Cost Data Online estimating handbook (AECOM, 2011g).

21.1.2.2 LABOUR EFFICIENCY FACTORS

It is generally accepted that the optimum labour efficiency attainable is 70 % for all trades (AECOM, 2011g). This means that, under ideal conditions, the best that can be expected is that the worker is productive 70 % of the day.

In order to determine an appropriate productivity factor for this Project, the six major factors that affect labour productivity were considered. They are:

a. General economy b. Project supervision c. Labour relations d. Job conditions e. Equipment f. Weather

After considering the above factors, a project specific efficiency factor of 54 % was calculated. This factor equates to multiplying the standard labour hours by 1.30 to account for less than standard conditions.

21.1.2.3 PROCESSING (MAIN PROCESS PLANT AND BULK SAMPLE PLANT)

21.1.2.3.1 TAGGED PROCESS, MECHANICAL AND ELECTRICAL EQUIPMENT QUANTITIES AND COSTS

Process equipment quantities were taken from Metso’s equipment list. Costs for this equipment (mills, classifiers, screens, pumps, bucket elevators, etc.) were sole sourced by Metso. Quantities

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and costs for specialized diamond processing equipment, such as grease belts, X-ray machines, lasers, etc., were provided by Shore. Equipment that is not directly utilized in the ore processing (i.e. non-process equipment) was taken from AECOM’s equipment list (AECOM, 2011c). This equipment consists of material handling and pumping systems down-stream of the recovery area, utilities, heating and ventilation, electrical power distribution and control. Costs for equipment specified by AECOM were obtained through Shore, and / or by AECOM. Quotes were generally requested from multiple suppliers for equipment greater in value than $50,000. In some cases, quotes for equipment less than $50,000 was obtained from suppliers; however, in general, these costs were based on AECOM’s and ENGCOMP’s knowledge and experience.

21.1.2.3.2 TAGGED EQUIPMENT INSTALLATION HOURS Installation hours for Metso-designed process equipment, process control and instrumentation were provided by Metso, based on their knowledge and experience. Installation hours for process, non-process and heating and ventilation equipment specified by AECOM was based on commercially available cost estimating handbooks such as RS Means, Richardson’s, Compass International, J.S. Page and Marshall & Swift, or ENGCOMP’s knowledge and experience. 21.1.2.4 BULK MATERIAL QUANTITIES, INSTALLATION HOURS AND COSTS

Bulk material quantities were based on material estimates provided by AECOM and ENGCOMP.

� CivilExcavation, backfill and compaction, quantities were estimated by AECOM using Revit 3D structural design software. Costs were based on unit pricing obtained from P&E.

Unless indicated otherwise, installation hours and material costs were based on RS Means, Richardson’s, budget quotes from suppliers or ENGCOMP’s knowledge and experience.

� Piling AECOM’s equipment list was utilized to identify piling quantities. Cost for the supply and installation of pilings were based on a unit price quote from AGRA Foundations, including mobilization and demobilizations.

� ConcreteConcrete quantities were quantified by AECOM using Revit 3D structural design software.

Rebar quantities were provided by AECOM’s structural engineer based on an average mass of rebar per m3 of concrete for each type of concrete element. Rebar costs were based on a unit price quote from Harris Rebar.

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Concrete supply costs were based on having a concrete supplier set-up a batch plant on site.

Formwork costs were based on ENGCOMP’s knowledge and experience.

� StructuralBuilding and equipment support structural steel quantities were quantified by AECOM using Revit 3D structural design software. Steel supply costs were based on a unit price quote from a steel fabricator and delivered to site ready for erection. No allowance was made to fabricate structural steel on site.

� ArchitecturalArchitectural quantities such as wall cladding and roofing systems, man doors, overhead doors, interior offices, washrooms, control rooms and change rooms and miscellaneous items such as bollards and concrete aprons were determined from architectural drawings.

� MechanicalAn allowance for miscellaneous bulk materials required for tagged equipment installation, estimated at 5 % of the equipment costs, was included as a materials cost type. Labour was not included as it is assumed that the installation of the miscellaneous bulk material is included in the installation of the equipment.

� PipingLarge bore process piping and material conducting hose (above 3-inch diameter) quantities were provided by Metso. Installation hours and costs were based on Compass International 2010 Front End/Conceptual Estimating Handbook.

Small bore process piping was not estimated in detail. Instead, these costs were estimated as a percentage of the process equipment costs within the area. The percentages used to estimate small bore piping are different for each area depending on the type of equipment found in a particular area.

Large bore non-process piping (above 4-inch diameter) quantities were provided by AECOM. Small bore piping was estimated as percentage of equipment costs within the area. Installation hours and costs were based on Compass International 2010 Front End/Conceptual Estimating Handbook. Pipe fittings, valves, and supports were not estimated in detail because the design is not advanced enough to do so. Instead, the labour and material costs of these items were accounted for in the unit cost of piping. Similarly, ductwork quantities do not include fittings or supports.

� Fabricated Platework and Chutework Platework and chutework generally consist of feed chutes, discharge chutes, head boxes, trap baskets, flood wash boxes, etc., specified by Metso as part of the process equipment list.

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Quantities were obtained from Metso’s equipment list and budget quotes obtained from local Saskatchewan suppliers. Labour costs to install this equipment were based on man-hours per unit mass of the chutework.

� HVACHVAC equipment and material generally consists of air handling units, boilers, condensing units, exhaust fans, terminal units, unit heaters, ductwork and control dampers.

Within the main Process Plant and bulk sample plant, all heating and ventilating equipment was specified by AECOM. Material and equipment quantities were obtained from AECOM’s equipment list.

Multiple quotes were received from vendors and suppliers for all HVAC equipment and materials. Installation hours were based on commercially available estimating handbooks or ENGCOMP’s knowledge and experience.

� ElectricalExcept for plant electrical and BSP electrical, electrical power distribution costs were based on a factor of 5 % of the process / mechanical equipment within the area. Allowances were also made for area lighting and emergency lighting based on a per square meter cost.

In plant electrical and BSP electrical, bulk materials such as cable, cable tray and busway, smoke and heat detectors, break glass pull stations, telephone handsets, pull boxes, switches, etc. were based on detailed estimates by AECOM’s knowledge and experience.

Installation hours were based on commercially available estimating handbooks or ENGCOMP’s knowledge and experience. Equipment and material costs were based on budget quotes from suppliers.

� Instrumentation and Controls Instrumentation and controls equipment were based on preliminary designs by Metso and AECOM as well as plant flow sheets to determine the equipment lists for cost estimating that resulted in various equipment lists.

21.1.2.5 INFRASTRUCTURE 21.1.2.5.1 TAGGED MECHANICAL AND ELECTRICAL EQUIPMENT QUANTITIES

AND COSTS AECOM was responsible for the design of all systems within the infrastructure scope of the Project. Costs for tagged equipment were obtained through, and / or by AECOM. Quotes were generally requested from multiple suppliers for equipment greater in value than $50,000. In some cases quotes for equipment less than $50,000 were obtained from suppliers; however, in general, these costs were based on AECOM’s and ENGCOMP’s knowledge and experience.

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21.1.2.5.2 TAGGED EQUIPMENT INSTALLATION HOURS

Labour hours to install equipment were estimated by referring to commercially available cost estimating handbooks such as RS Means, Richardson’s, Compass International, J.S. Page and Marshall and Swift, or based on ENGCOMP’s knowledge and experience.

21.1.2.5.3 BULK MATERIAL QUANTITIES, INSTALLATION HOURS AND COSTS a. Civil

Earthwork and surfacing quantities for the site access road were determined using EMXS computer software. Culvert lengths were determined from the roadway cross section templates generated by the EMXS software.

Quantities for site clearing, grubbing, levelling, cuts and fills, imported and native backfill, site internal roads and surfacing materials, were all determined using AutoCad Land Desktop modelling software.

HDPE liners, and geotextiles, riprap, grubbing/tree clearing and other miscellaneous materials were estimated using linear measurements off design drawings. Culverts to be used on the mine site are going to be few in number and, as a result, costs for some were only approximated.

b. Piling AECOM’s equipment list was utilized to identify piling quantities. Piling costs were based on a unit price quote from AGRA Foundations, including mobilization and demobilizations costs.

c. ConcreteConcrete quantities were estimated by AECOM using Revit 3D structural design software.

Rebar quantities were provided by AECOM’s structural engineer based on an average mass of rebar per m3 of concrete for each type of concrete element. Rebar costs were based on a unit price quote from Harris Rebar.

Concrete supply costs were based on having a concrete supplier set up a batch plant on site. Formwork costs were based on ENGCOMP’s knowledge and experience.

d. StructuralIn general, structural quantities provided by AECOM include the following: excavation and backfill, pile foundations, pile caps, grade beams, retaining walls, tunnels, slabs on grade, elevated slabs, pits and trenches, building structural steel, crane beams, access platforms and stairs.

The above structural elements were designed to a preliminary level to ensure a good estimate of the quantities. This information was modelled in Revit modelling software. The software was then used to extract the quantities of the modelled elements. This process did not make allowances for waste materials or connection requirements. Connections for structural steel were included as an allowance at 10 % of the mass of steel.

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The mass of reinforcing steel per cubic meter of concrete was determined through both calculations during the preliminary design phase and ENGCOMP’s experience.

e. ArchitecturalIn some cases architectural quantities were provided by ENGCOMP’s design group. In other cases, quantity takeoffs were performed by estimating. All quantities were based on architectural drawings.

f. MechanicalBulk material, such as piping and ductwork for non-process facilities, was provided by AECOM, based on the engineer’s knowledge and experience and forced detail takeoffs. Pipe fittings, valves, and supports were not taken off because the design is not advanced enough to do so. Instead the cost of these items was accounted for in the unit cost of piping. Similarly, ductwork quantities do not include fittings or supports.

Some quantities were determined from preliminary drawings and from modelling software. However, in some cases, the level of project definition was insufficient to permit quantities to be measured. This is usual at the feasibility study stage. In these cases forced detailed take offs were performed based on the engineer’s or designer’s experience. Below we will explain where measured take offs were performed and where forced detailed take offs were made.

g. PipingPiping quantities were based on detailed estimates by ENGCOMP. Quantities were provided to estimating as a total length of straight run pipe. Allowances were made in the labour hours and materials to account for fittings, valves and supports.

Budget quotes were obtained from multiple vendors and suppliers for material costs. Installation man-hours were based on J.S. Page Estimator’s Piping Manhour Manual.

h. Fabricated Platework and Chutework Not applicable in non-process areas.

i. HVACHVAC equipment and material generally consists of air handling units, boilers, condensing units, exhaust fans, terminal units, vehicle exhaust systems, welding fume exhaust systems, unit heaters, ductwork and control dampers.

Multiple quotes were received from vendors and suppliers for all HVAC equipment and materials. Installation hours were based on commercially available estimating handbooks or ENGCOMP’s knowledge and experience.

j. ElectricalElectrical equipment was based on preliminary designs by AECOM engineering that resulted in various equipment lists.

Bulk materials such as cable, cable tray and busway, smoke and heat detectors, break glass pull stations, telephone handsets, pull boxes, switches, etc. were based on forced detailed takeoffs or the engineer’s knowledge and experience.

k. Instrumentation and Controls Instrumentation and controls equipment was based on preliminary designs by AECOM engineering that resulted in various equipment lists.

170

21.1.3 MINING 21.1.3.1 MINE CAPITAL COST SUMMARY The mine capital cost, which includes pre-production stripping and mine equipment costs incurred in years 2011 to 2016, is shown in Table 21.3. Table 21.3: Mine Capital Cost Summary

ITEM Capital CostMine pre-production development $348.3 M Mine equipment cost $625.5 M Total $973.8 M The mine pre-production capital cost estimate was developed from first principles taking into consideration the following:

� the mine schedule, mine equipment design, procurement and commissioning and production ramp-up time lines;

� sand and clay pre-stripping quantities and projected pre-stripping throughput; � till stripping requirements and IPCC system throughput capacity; � milestone events such as the energization of the power line to site and the main substation

in Q3-2013; and � the start of sustained ore production in Q1-2017.

The pre-production development cost includes the cost of pre-stripping the surficial sand and clay layers, and stripping the tills and rock to expose ore in the Star Phase 1a open pit. The mine equipment cost encompasses the costs of the IPCC waste stripping system, the ore sizing and conveying system, and conventional mining and ancillary equipment. 21.1.3.1.1 MINE EQUIPMENT COSTS The projected mine capital equipment expenditure totals $625.5 M including 5 % Saskatchewan provincial sales tax for relevant items (Table 21.4). This cost encompasses purchasing, installation and commissioning of: the conventional pre-stripping equipment, the IPCC waste stripping system, the ore sizing and conveying system, the pit ancillary equipment, the open pit electrical power distribution system, and associated manufacturer-supplied EPCM services for the waste stripping and ore IPCC systems. Shore will evaluate mine equipment available from other established suppliers as part of its equipment evaluation and procurement process.

171

Table 21.4: Mine Capital Equipment Cost

Item

Mine Capital Equipment Cost (x$1,000)

Year ��Mine Pre-production Capital Equipment 2012 2013 2014 2015 2016 Totals Mine pre-strip and ore mining equipment $114,917

$ -

$ -

$ - $25,120 $140,037

IPCC waste sizing & conveying equipment

$ - $205,428 $126,633

$ -

$ - $332,061

IPCC waste shovels, loader, dozers

$ - $19,964 $47,582

$ -

$ - $67,546

Ore sizing and conveying equipment

$ -

$ -

$ -

$ - $27,783 $27,783

Mine Electrical Equipment and Installations $26,275 $8,894

$ -

$ - $9,532 $44,701

Ancillary mine equipment $ - $1,058 $7,616 $2,372 $2,344 $13,391

Total Capital including PST $141,192 $235,344 $181,831 $2,372 $64,779 $625,519 Notes:

- Totals may not sum exactly due to rounding. - All values in thousands of $CAD - All equipment will be purchased new.

Shore will pre-strip the surficial sand and clay layers using its own labour force and conventional earthmoving equipment such as Komatsu PC4000 hydraulic excavators and HD1500 type haul trucks. The equipment will be maintained by the equipment supplier’s maintenance personnel under a maintenance and repair contract. Shore maintenance personnel will be responsible for tire maintenance and maintenance items not covered by a maintenance and repair contract(s). Shore will strip the till sequences and waste rock to expose ore using its own labour force and the proposed 20,000 tph capacity waste stripping IPCC system. The proposed IPCC system will include three electrically powered Komatsu PC8000 type hydraulic shovels, three fully mobile sizers, and transfer conveyors, an overland conveyor, tripper, main stacker arrangement, and an auxiliary waste stacker. The ore IPCC system will include a semi-mobile ore sizer, transfer conveyor and conveyor to the Process Plant stockpile. The waste stripping IPCC system will be supported by ancillary equipment such as bulldozers and wheel dozers. These systems will be maintained by Shore. The IPCC supplier will erect and commission the IPCC systems and provide training to Shore’s operations and maintenance personnel. Shore will mine the ore and associated waste rock using its own labour force and conventional mining equipment such as Komatsu PC4000 hydraulic excavators and HD1500 type haul trucks, and ancillary equipment including in-the-hole production drills. The equipment will be maintained by the equipment supplier’s maintenance personnel under maintenance and repair contract(s). Shore maintenance personnel will be responsible for tire maintenance and maintenance items not covered by a maintenance and repair contract(s). Shore will also use specialist contractors and suppliers to assist in IPCC equipment relocation / moves, and an explosives and blasting accessories supplier.

172

Pre-production equipment: The pit mobile equipment and ancillary equipment to be procured in years 2012 to 2016 is shown in Table 21.5.

Table 21.5: Timing of Mining Equipment Capital Expenditures

Item 2012 2013 2014 2015 2016

Star IPCC Equipment IPCC Komatsu PC8000E hydraulic shovels 1 2 IPCC Mobile Crushers 1 2 IPCC Mobile Conveyors 2 4 IPCC Mobile Inclined Conveyors 1 1 IPCC Waste Conveyor System 1 1 IPCC Tripper Car 1 IPCC Main Stacker / Spreader 1 IPCC Auxiliary Tripper Car 1 IPCC Auxiliary Stacker 1 IPCC Komatsu WA1200 wheel loader 1 IPCC Terex TC 550 wheel dozer compactor 1 4 IPCC Semi Mobile Ore Crusher 1 IPCC Ore Conveyor System 1 Star Pre-Strip and Ore Conventional Equipment PC4000-6 Diesel Shovel (Pre-Strip) 3 PC4000-6 Electric Shovel (Ore Mining) 2 Komatsu HD1500-7 haul trucks. 24 2 Caterpillar16M Grader 2 Komatsu D275AX Bulldozer 5 Ancillary Mine Equipment Sandvik D55SP production blasthole drill 1 2800 Morooka geotechnical drill 1 Mine water truck c/w wash nozzle 1 Road sander 1 Heavy service truck 1 2 Light service truck 2 1 1 Lubrication truck 1 Weld truck 1 Hiab truck 1 Tire truck 1 Electrical service truck 1 Flat bed and tractor 1 Backhoe 420E cable reel 1 115 t capacity rough terrain crane 1 Caterpillar 390D hydraulic excavator 1 Equipment tire manipulator (at shop) 1 Mine field office & washcars (lot) 1 In-pit pumps 6 Lighting towers 1 1

173

The mine electrical capital costs include: � Costs for supply and install of a 25 kV overhead distribution line from the main site

transformer station, � Costs for the installation of transformer substations and electrical control buildings, � Distribution around the pits for perimeter dewatering and mine operations, � Distribution to the overburden pile for the overland conveyor and stacker system, � Distribution and transformation in the pit for the IPCC conveyors and shovels, as well as

the in pit pumps and ancillary equipment supply (offices, fuel station), and � Process control software and monitoring systems for operation of the IPCC systems.

The main overhead supply will be at 25 kV, 60 Hz 3Phase, and will be transformed to 4,160 V for the shovels, IPCC and deep dewatering wells, or 600 V for the smaller ancillary equipment (Figure 21.1). The mine power distribution system includes a provision to allow rented generator sets to be connected and used to power the deep dewatering well pumps should the need arise. Figure 21.1: Site Layout with Electrical Distribution Network

174

21.1.3.2 MINING PRE-PRODUCTION DEVELOPMENT COSTS The mining pre-production development costs include:

� Costs for the conventional stripping of the sand and clay in Phase 1a and a portion of Phase 1b of the Star pit;

� Direct supervision for the pre-strip and till stripping operations; � Costs for the IPCC stripping of tills prior to encountering the first ore bench; � Power costs for the pre-production stripping; � Initial ore encountered during the last quarter of 2016 (approximately 79,000 tonnes); � In-pit dewatering; and � Support equipment costs for the pre-stripping, including road maintenance,

equipment maintenance, and conveyor moves. The costs are summarized in Table 21.6. Table 21.6: Pre-Production Development Costs Summary (X $1,000)

Item 2012 2013 2014 2015 2016 Total

Sand and Clay Prestrip $9,246 $85,853 $35,530 $24,943 $29,687 $185,259

IPCC Till Stripping $ - $3,483 $31,585 $35,188 $30,239 $100,495

Ore mining $ -

$ -

$ -

$ - $1,035 $1,035

Waste rock mining $ -

$ -

$ -

$ - $271 $271

Mine electrical power cost (excludes dewatering)

$ - $1,433 $19,673 $22,119 $17,028 $60,253

Pit Deep Dewatering & Inpit sumps power

$ - $25 $39 $48 $114 $226

Deep Well Maintenance & Repair $ -

$ -

$ -

$ - $340 $340

In Pit Sumps Maintenance & Repair $ - $93 $93 $93 $93 $371

Total $9,246 $90,887 $86,920 $82,392 $78,806 $348,250 Totals may not sum exactly due to rounding.

175

21.1.3.3 MINE SUSTAINING CAPITAL The timing of the mine sustaining capital expenditures is shown in Table 21.7.

176

Tab

le 2

1.7:

Tim

ing

of M

ine

Sust

aini

ng C

apita

l Exp

endi

ture

s ove

r th

e L

OM

Item

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

Star

IPC

C E

quip

men

t IP

CC

Kom

atsu

PC

8000

E hy

drau

lic

shov

els

12

IPC

C M

obile

Cru

sher

s

IPC

C M

obile

Con

veyo

rs

IPC

C M

obile

Incl

ined

Con

veyo

rs

IPC

C W

aste

Con

veyo

r Sys

tem

1

IPC

C T

rippe

r Car

IPC

C S

prea

der

IPC

C A

uxili

ary

Trip

per C

ar

IPC

C S

tack

er

Extra

was

te c

onve

yor f

or P

hase

1b

11

Add

ition

al w

aste

con

veyo

rs fo

r Orio

n So

uth

1

1Se

mi-m

obile

was

te si

zer

1

IPC

C K

omat

su W

A12

00 w

heel

load

er

1IP

CC

Ter

ex T

C 5

50 w

heel

doz

er

com

pact

or

13

IPC

C S

emi M

obile

Ore

Cru

sher

IPC

C O

re C

onve

yor S

yste

m

O/S

ore

con

veyo

r & si

zer

11

1Sa

ndvi

k D

55SP

pro

duct

ion

blas

thol

e dr

ill

1

1

Min

e w

ater

truc

k c/

w w

ash

nozz

le

1 R

ebui

ld

Bac

khoe

1

Reb

uild

177

Fuel

stor

age

(pit)

1

Fuel

truc

k 1

Hea

vy se

rvic

e tru

ck

1

1 1

Ligh

t ser

vice

truc

k

1

1

Lube

truc

k

2

Wel

d tru

ck

1

1

Hia

b tru

ck

1

1

Elec

trica

l ser

vice

truc

k

1

1

Bac

khoe

420

E ca

ble

reel

1

Mob

ile g

ense

t

2

115

t rou

gh te

rrai

n cr

ane

1

Reb

uild

Cat

erpi

llar 3

90D

hyd

raul

ic e

xcav

ator

1 R

ebui

ld

Min

e fie

ld o

ffic

e &

was

hcar

s

1

Rep

air

Pit s

lope

mon

itorin

g eq

uipm

ent

1

1 1

1

1 U

pgra

de

1

Upg

rade

1

Upg

rade

Ligh

ting

tow

ers

1

1

1

PC40

00-6

Die

sel S

hove

l (Pr

e-St

rip)

2

2

PC40

00-6

Ele

ctric

Sho

vel (

Ore

M

inin

g)

2

3

2

Kom

atsu

HD

1500

hau

l tru

ck

8 1

4 5

5 7

6

6 14

C

ater

pilla

r 16M

Gra

der

1

2

Kom

atsu

D27

5AX

Bul

ldoz

er

1

4 5

1

3

178

The mine sustaining capital costs for the Project include costs for additional capital equipment as the mine progresses to deeper benches, as well as for equipment replacement. Deep well dewatering is also included for the later phases of Star and the initial phases of Orion South. Sustaining capital expenditures with contingency are shown in Table 21.8.

179

Tab

le 2

1.8:

Min

e Su

stai

ning

Cap

ital (

with

con

tinge

ncy)

Cos

ts (x

1,00

0) th

roug

h LO

M

20

17

2018

20

19

2020

20

21

2022

20

2320

2420

2520

2620

2720

2820

2920

30

2031

20

32

2033

20

3420

3520

36To

tal

Pit D

e-w

ater

ing

$227

$3

,004

$8

,924

$1

2,15

5

IPC

C S

yste

m S

usta

inin

g C

apita

l $3

4,59

3

$8,4

00

$19,

425

$1

,017

$3

,051

$6

5,09

7

$37,

894

$1

69,4

77

Ore

IPC

C S

yste

m S

usta

inin

g C

apita

l $1

5,43

5

$5,2

50

$2,1

00

$22,

785

Min

e el

ectri

cal i

tem

s $9

,263

$5,7

03

$4,4

74

$1

,575

$2

,061

$2

3,07

7

Min

e m

obile

equ

ipm

ent

$27,

049

$2

1,73

9

$15,

379

$1

6,90

6

$38,

792

$5

5,81

8

$23,

073

$4

1,25

0

$65,

693

$3

05,6

98

Aux

iliar

y pi

t equ

ipm

ent

$3,2

43

$396

$3

96

$396

$3

96

$238

$6

68

$1,1

60

$1,2

26

$2,4

79

$155

$1

,806

$4

2

$238

$4

81

$42

$1

3,36

1

Tot

al B

efor

e C

ontin

genc

y $6

4,88

4

$30,

534

$1

5,77

5

$17,

528

$5

8,61

3

$57,

072

$2

6,79

1

$75,

521

$8

0,37

1

$92,

314

$9

,880

$3

,906

$1

,617

$1

1,22

3

$481

$4

2

$546

,552

Con

tinge

ncy

on S

usta

inin

g C

apita

l $8

,313

$2

,313

$2

,313

$2

,313

$2

,313

$2

,313

$2

,313

$2

,313

$2

,313

$2

,313

$2

,313

$2

,313

$2

,313

$2

,313

$2

,313

$2

,313

$4

3,00

0

Tot

al M

ine

Sust

aini

ng

Cap

ital w

ith C

ontin

genc

y $7

3,19

6

$32,

847

$1

8,08

7

$19,

841

$6

0,92

5

$59,

384

$2

9,10

4

$77,

833

$8

2,68

3

$94,

627

$1

2,19

2

$6,2

19

$3,9

30

$13,

536

$2

,794

$2

,355

$5

89,5

52

Tota

ls m

ay n

ot su

m e

xact

ly d

ue to

roun

ding

180

21.1.4 PROCESS PLANT CAPITAL The total direct estimated cost to construct and install the Process Plant with the associated BSP described in this report is $341.00 M. Contingency for the Process Plant direct costs is estimated by AECOM at $34.10 M. Indirect costs associated with design, construction and pre-commissioning are presented in Section 21.1.7. All costs are expressed as 2nd quarter (Q2) 2011, with no allowance for interest or financing fees, escalation, taxes or duties and working capital during construction. The Process Plant capital includes the costs associated with the construction of the main plant, BSP, fine and coarse reject movement, and fine and coarse reject storage. 21.1.4.1 PROCESS EQUIPMENT Major process equipment was priced as new equipment, as of the 2nd quarter, 2011 and also based on preliminary design specifications. Major equipment was priced by Metso for the Process Plant. Freight costs to site were included in the indirect costs. Mechanical & electrical tagged pieces were priced by one of the following methods:

� budgetary quotation from at least one qualified vendor; � phone quotation with fax confirmation; � in-house historical prices; and � quotes were obtained for all of the value of the mechanical equipment.

Table 21.9 shows capital costs for the main Process Plant and BSP broken down by discipline.

181

Table 21.9: Summary of Process Plant and BSP Capital Costs

Process Plant Capital (Includes PST) Total Costs Processing Process Plant General $93,202,799 Stockpile Feeder $42,557,855 AG Milling Area (Includes Classifiers) $67,589,961 DMS $19,196,359 Recovery $37,215,063 Plant Electrical $9,506,885 Plant Hvac $1,995,586 Fine PK (Tails) Collection & Delivery $11,047,849 Fine PK Storage & Containment $11,447,561 Fine PK Storage & Containment (Mining Supplied Material) $4,746,232 Coarse PK Handling & Storage $16,242,333 Process Plant Total $314,748,482

Bulk Sample Plant Capital (Includes PST) BSP General $10,217,515 BSP Feed Area $1,033,666 BSP Ag Milling $7,361,945 BSP Secondary Crushing $1,128,580 BSP Tertiary Crushing $998,777 BSP DMS $964,606 BSP Recovery $2,697,934 BSP Rejects Handling (Fines, Coarse) $215,622 BSP Electrical $1,632,896 BSP Total $26,251,541 Total Direct Capital Process Plant $341,000,023

21.1.5 INFRASTRUCTURE CAPITAL The total direct estimated cost to construct and install the site facilities described in this report is $207.56 M (Table 21.10). Contingency for the Infrastructure direct costs is estimated by AECOM at $20.8 M. Indirect costs associated with design, construction and pre-commissioning are presented in Section 21.1.7. All costs are expressed Q2 2011, with no allowance for interest or financing fees, escalation, taxes or duties and working capital during construction.

182

Table 21.10: Summary of Infrastructure Capital Costs INFRASTRUCTURE COST Pit Dewatering (Includes Dewatering Wells & Collector Pipeline) $34,325,012 Infrastructure General $7,501,906 Administration $6,440,059 Interpretive Centre $1,234,751 Main Warehouse $3,499,674 Cold Storage / Equipment Laydown $2,573,581 Fuel / Lube System $3,164,112 Maintenance Facility $37,606,820 Wash Bay / Emergency Response Building $6,539,709 Utilities To Site (Power, Natural Gas) $7,290,500 Site Electrical Distribution $33,759,912 Site Water Distribution $5,066,349 Site Incinerator $509,815 Site Fire Systems $1,340,062 Potable Water & Waste Water Systems $3,418,541 Access Roads & Highways $24,859,994 Access Roads - Bridges $479,939 Site Internal Roads $7,551,478 Site Natural Gas Distribution $100,650 Environmental General $1,006,919 Security And It $10,648,662 Sort House $8,644,922 Direct Costs Subtotal $207,563,368

21.1.6 AUXILIARY EQUIPMENT Costs are provided for the supply of site sevrices support equipment to be purchased in 2012 and 2013. This equipment will be used by Site Services during construction and into production. Total costs are summarized in operating costs Section 21.2.4.1.3.

21.1.7 CAPITAL INDIRECTS

Indirect costs are shown in Table 21.11.

183

Table 21.11: Summary of Indirect Capital Costs

Surface lease costs are developed from the current rates provided by the Saskatchewan MOE for mining leases on Crown land, which provide for two different rates depending on the intensity of land use. The lease costs change over time to reflect Shore’s estimate of the intensity of land use as the Project proceeds. Municipal tax assessments will vary with time, increasing as value is added to the land and infrastructure assessments. Insurance is also expected to increase over time as the equipment fleet and buildings are completed. Engineering charges cover the costs associated with detailed engineering for the mine, plant and infrastructure. Detailed mine planning will be conducted by in-house staff, covered under construction management during the capital period, with an initial amount that will be consultant based to allow Shore to build the appropriate staff component. Plant and infrastructure engineering costs were provided by AECOM and Metso. Engineering costs also include allowances for construction QA/QC testing, site survey support and geotechnical investigations. Construction services consist of construction waste removal, potable water supply during construction, temporary power maintenance and operation, fencing, building heat, fuel during construction and construction equipment rental. Construction management covers the costs associated with construction camp supply and operation, Shore in-house and contract construction management personnel, and Health Safety and Environmental protection during the construction period.

Capital Indirect Costs 2011 2012 2013 2014 2015 2016 Total Surface Lease Costs $582,447 $1,246,641 $1,296,327 $1,331,630 $1,587,698 $6,044,743

Municipal Taxes $199,644 $1,347,208 $3,014,751 $3,034,963 $7,596,566

Insurance $257,168 $1,139,068 $1,760,620 $1,804,054 $2,244,345 $7,205,255

Engineering $882,421 $10,793,146 $29,592,470 $590,777 $4,438,971 $637,579 $46,935,365 Construction Services $2,595,800 $2,985,000 $2,714,133 $2,542,033 $2,547,033 $13,384,000 Construction Management $36,411,026 $24,953,653 $21,977,924 $22,565,553 $18,112,995 $124,021,152

Owner's Costs $487,416 $500,000 $1,612,443 $2,599,859

Commissioning $4,000,000 $19,908,431 $23,908,431

Freight $480,498 $1,748,890 $4,093,037 $4,583,784 $2,340,990 $13,247,199 PST On Construction Services to Commissioning $95,000 $90,000 $290,000 $90,000 $976,722 $1,541,722

PST On Freight $24,025 $87,445 $204,652 $229,189 $117,049 $662,360

TOTAL $247,146,652

184

Commissioning costs address the costs associated with Metso and other contract commissioning of the Process Plant, first fills of lubricants, initial critical spares inventory, wear parts for the first year of plant operation and pre-operation testing and labour. Owner’s costs cover land acquisition for the offsite sort house, borrow pits for highway construction and right of way purchase for the access highway and utility corridors, as well as enterprise software and the overall process control system. Costs associated with process control on mining are included in the mine capital. Freight costs are included for offshore components of the main Process Plant. All other costs for equipment and bulk supplies were quoted as delivered to site. Provincial sales tax was applied at the full rate for offshore and out of province freight, with an estimate provided on PST for construction services. PST on engineering services is estimated at 30 % of 5 %.

21.1.8 PROJECT CONTINGENCY

A total amount of $141.78 M is provided in the capital costs, sub-divided into contingency for: the mining cost estimate, and the Process Plant and infrastructure estimate. Mining contingency is estimated at $63.24 M. This contingency amount is made to allow for potential increased costs during the mine pre-production period, IPCC engineering costs from multiple vendors, and potential costs to replace the landfill compactors with large dozers if landfill compactors prove to be unsuitable. Plant and infrastructure contingency is estimated at 10 % of total direct and indirect costs (less the PST component) for a total of $78.54 M.

21.2 OPERATING COSTS 21.2.1 BASIS OF ESTIMATE

The operating cost estimate covers mining, ore processing (including fines and coarse reject storage), general and administration costs, and sorting, evaluation, sales and marketing costs. Operating costs for the Project were developed using a combination of first principle estimates, vendor quotes and direct site costs that were incurred during the bulk sampling programs at Star and Orion South. Key parameters used in developing the operating costs are presented in Table 21.12.

185

Table 21.12: Key Parameters Used in Developing the Operating Costs

Parameter Unit Cost / Amount per Unit Process Plant nameplate capacity Mtpa 16.4 Mine and Process Plant throughput

Mtpa 14.3

Mine availability days per year Days 350 Plant operating hours Hours per year 7,632 Diesel fuel cost $/L $1.00 Electrical power cost $/kWh $0.048 Electrical demand surcharge $/kVA/month $5.82 The mine operating cost estimates contained in the FS were developed from first principles taking into consideration:

� the pit production schedule; � the pit layout and projected field conditions and moisture levels; � estimated equipment cycle times and productivities; � regional labour cost information and shift rotations; � equipment vendor input; projected pit dewatering requirements; � contractor budget quotes for stripping surficial drift materials; and � IPCC system developments.

Vendor quotations for mobile equipment included hourly operating costs based on a maintenance and repair contract (MRC) basis where materials and maintenance are bundled into the operating cost. Shore has carried a smaller maintenance group for tires and equipment repairs not covered by the MRC in the overall cost estimate. The processing operating costs include operating and maintenance labour, direct supervision, electrical power, diesel fuel and equipment parts and consumables for ore processing, coarse reject and fines deposition. The plant operating cost estimates were developed from first principles, using estimated manpower levels and flow sheet feed rates to the various plant circuits. Plant consumables estimates were provided based on vendor experience in providing these materials to other processing operations using the same or equivalent equipment. Electrical cost estimates were based on equipment sizing and building designs from the FS plant designs and detailed models. General and Administration covers all costs associated with management, security, administration, health and safety, human resources, information systems, technical services, enginneering, road and building maintenance, public relations, materials management (including freight) and accounting / finance. Sorting, evaluation, sales and marketing include the costs of shipping diamond concentrate from the mine site to the off-site sort house, cleaning, third party evaluations, and direct marketing costs.

186

21.2.1.1 PERSONNEL COSTS

Personnel costs are based on direct salary and hourly rates with the following factors for salaries and indirects:

� Canadian Pension Plan (CPP), employment insurance (EI) fees are based on established

values with maximum payable EI and CPP at $3,036.81 per employee per year. � Workers Compensation Board (WCB) rates are estimated based on $1.27 per $100 of

payroll, calculated on total payroll to a maximum of $55,000 per year per employee. � Health and dental benefits are set at a fixed amount of $1,841 per year per employee. � Employee and family life insurance is set at $0.33 per $1,000 of gross income. � A company provided defined contribution pension plan is envisaged, at a cost of 6 % of

salary. � A personal health allowance, an employee family assistance plan, a drug and alcohol

treatment plan, boot and glass allowances and criminal background checks are planned, totalling $804.75 per employee-year and allocated in the payroll burdens.

� A tool allowance of $0.75 per hour is allocated for trade persons. � An overtime allowance for employees on a continuous shift rotation is estimated based

on approximately 8 hours of overtime per month for hourly paid employees. � Vacation pay is based on 7.7 % of annual pay. � Unscheduled overtime is estimated at 7 % of total salary for hourly paid workers.

21.2.2 MINE OPERATING COSTS

The estimated direct mine operating cost for each pit phase is shown in Table 21.13. Additional information on the sand and clay pre-stripping, the IPCC system operating cost and the cost of mining ore and waste rock is provided in Sections 21.2.1 through 21.2.4. Pit operating costs incurred during pit pre-production development in years 2012 to 2016 are included in the capital development costs. The mining cost breakdown includes direct operating costs for each component of the stripping and mining sequences, mine-wide electrical costs, and mining indirects comprised of costs for mine supervision, clerical support, IPCC planning, in-pit facilities, dewatering maintenance and contractor support. Contractor support includes maintenance crews for IPCC relocations, as well as explosives crew and rental equipment. All summary costs include PST, but not operating contingency. Operating contingency of $3.72 M per operating year was included in the financial model. Table 21.14 summarizes LOM indirect costs while Table 21.15 shows the total of direct and indirect LOM costs.

187

Tab

le 2

1.13

: Life

of M

ine

Mat

eria

l Pro

duct

ion

Dir

ect C

osts

M

ine

Dir

ect

Min

ing

Cos

ts

2017

20

18

2019

20

20

2021

20

22

2023

20

24

2025

20

26

2027

20

28

2029

20

30

2031

20

32

2033

20

34

2035

Sa

nd a

nd C

lay

Pre-

Strip

(C

onve

ntio

nal)

$

53,1

86,7

94

$

37,0

86,0

31

$

61,9

69,8

34

$

57,5

65,7

85

$

91,5

16,5

73

$

83,5

85,6

18

$

70,3

67,3

55

$

40,7

79,7

24

$

46,4

73,1

85

$

37,4

26,6

58

$

37,4

26,6

58

$

37,4

26,6

58

$

21,7

80,5

96

$

-

$

-

$

-

$

-

$

-

$

-

Ove

rbur

den

Till

Rem

oval

(I

PCC

) $

30

,703

,749

$

24

,389

,193

$

35

,275

,729

$

25

,893

,080

$

27

,509

,550

$

22

,958

,038

$

5,59

6,50

0

$

5,

567,

706

$

28

,142

,248

$

17

,640

,237

$

25

,082

,675

$

24

,521

,101

$

20

,452

,632

$

35

,404

,290

$

5,38

7,85

4

$

-

$

-

$

-

$

-

Ore

Min

ing

&

Hau

lage

$

19

,028

,029

$

19

,947

,374

$

19

,680

,050

$

20

,483

,199

$

17

,643

,812

$

19

,701

,580

$

21

,154

,799

$

17

,169

,288

$

18

,263

,455

$

23

,118

,363

$

51

,403

,916

$

23

,682

,959

$

11

,479

,362

$

16

,984

,109

$

19,2

66,5

12

$

20

,572

,235

$

18

,748

,086

$

21

,466

,359

$

14,2

94,8

84

Was

te R

ock

Min

ing

and

Hau

lage

$

8,

572,

816

$

1,28

6,73

3

$

1,

108,

645

$

2,78

3,42

3

$

11,2

01,1

57

$

23,2

48,2

19

$

47,1

86,3

33

$

22,6

80,8

85

$

57,7

80,0

38

$

88,1

21,3

32

$

44,1

11,4

43

$

5,

509,

847

$

31

,005

,064

$

18

,472

,247

$

31,2

41,0

98

$

25

,981

,127

$

11

,348

,404

$

3,08

8,48

2

$

1,34

6,05

2

Tot

al D

irec

t M

inin

g C

osts

�$�������

111,49

1,38

8��$�����

82,709

,331�

�$���

118,03

4,25

7��$���

106,72

5,48

7��$���

147,87

1,09

2��$���

149,49

3,45

5��$���

144,30

4,98

7��$�����

86,197

,603�

�$���

150,65

8,92

6��$���

166,30

6,58

9��$���

158,02

4,69

1��$�����

91,140

,564�

�$�����

84,717

,653�

�$�����

70,860

,647�

�$������

55,895

,463�

�$������

46,553

,362�

�$���������

30,096

,490�

�$�����������

24,554

,841�

�$��������

15,640

,936�

Not

es:

Prod

uctio

n or

e to

nnag

es d

o no

t acc

ount

for o

re in

terc

epte

d du

ring

pre-

strip

pha

se in

201

6, a

mou

ntin

g to

416

,117

tonn

es m

ined

an

d st

ockp

iled.

Prod

uctio

n To

nnag

es d

o no

t acc

ount

for o

re p

roce

ssed

dur

ing

year

201

6 of

79,

292

tonn

es.

Min

ing

cost

s no

t app

lied

in Y

ear

2036

, as

proc

essi

ng d

eple

tes

ore

stoc

kpile

. Sto

ckpi

le r

ehan

dle

cost

s ar

e co

vere

d un

der

final

pr

oces

sing

in 2

036.

Tab

le 2

1.14

: Life

of M

ine

Indi

rect

Cos

ts

Min

e In

dire

ct

Cos

ts20

17

2018

20

19

2020

20

21

2022

20

23

2024

20

25

2026

20

27

2028

20

29

2030

20

31

2032

20

33

2034

20

35

Min

e in

dire

ct

supp

ort p

erso

nnel

$1

,800

,367

$1

,800

,367

$1

,800

,367

$2

,403

,254

$2

,403

,254

$2

,403

,254

$2

,403

,254

$2

,403

,254

$2

,403

,254

$2

,403

,254

$2

,403

,254

$2

,403

,254

$2

,403

,254

$1

,800

,367

$1

,197

,480

$1

,077

,797

$9

58,1

14

$958

,114

$6

38,7

43

Min

e in

dire

ct

supp

lies

$3,8

15,9

43

$3,8

15,9

43

$4,3

85,4

63

$4,3

75,0

15

$4,6

12,2

10

$4,6

12,2

10

$4,0

58,9

65

$4,0

58,9

65

$7,1

83,7

65

$4,3

75,0

15

$4,4

36,9

65

$3,8

05,4

95

$3,8

05,4

95

$3,8

05,4

95

$2,6

83,5

77

$2,3

56,3

45

$1,9

18,7

39

$1,9

18,7

39

$670

,680

C

ontra

ctor

s/

supp

liers

$2

,746

,808

$6

,498

,992

$2

,746

,808

$4

,314

,176

$4

,456

,664

$2

,746

,808

$2

,319

,344

$2

,319

,344

$1

8,08

8,01

6 $2

,746

,808

$4

,884

,128

$7

,163

,936

$3

,364

,256

$6

,261

,512

$2

,746

,808

$9

,776

,216

$6

58,9

87

$366

,104

$3

66,1

04

Min

e El

ectri

cal

Pow

er:

M

ine

elec

trica

l po

wer

cos

t (e

xclu

des

dew

ater

ing*

) $1

9,48

4,06

6 $1

5,31

6,90

2 $2

4,81

7,05

3 $1

6,32

5,72

8 $1

8,73

7,25

4 $1

3,81

6,73

5 $5

,232

,725

$4

,709

,684

$1

7,89

6,28

4 $1

1,57

4,36

8 $1

7,94

6,74

7 $1

3,93

1,46

6 $1

0,58

9,19

5 $2

3,15

1,59

6 $9

,273

,279

$3

,285

,969

$3

,285

,969

$3

,285

,969

$2

,253

,236

Min

e de

wat

erin

g *

Pi

t Dee

p D

ewat

erin

g &

In

pit s

umps

pow

er

$1,8

55,8

19

$2,0

14,2

06

$2,1

17,5

25

$2,2

93,5

03

$2,3

22,7

00

$2,3

40,6

71

$2,4

06,7

43

$2,4

17,6

20

$2,3

85,9

36

$2,4

47,8

78

$3,0

18,0

17

$2,7

15,9

03

$2,9

30,8

96

$2,4

88,5

15

$3,3

73,9

07

$3,0

49,4

80

$2,9

45,3

16

$2,9

12,6

49

$2,8

27,9

89

Dee

p W

ell

Mai

nten

ance

&

Rep

air

$339

,911

$3

39,9

11

$339

,911

$3

39,9

11

$339

,911

$3

39,9

11

$339

,911

$3

39,9

11

$339

,911

$5

04,4

55

$504

,455

$5

04,4

55

$504

,455

$9

10,3

54

$745

,811

$7

45,8

11

$745

,811

$7

45,8

11

$745

,811

In

Pit

Sum

ps

Mai

nten

ance

&

Rep

air

$92,

851

$92,

851

$92,

851

$185

,703

$1

85,7

03

$185

,703

$1

85,7

03

$185

,703

$1

85,7

03

$185

,703

$1

85,7

03

$185

,703

$9

2,85

1 $9

2,85

1 $9

2,85

1 $9

2,85

1 $9

2,85

1 $9

2,85

1 $9

2,85

1 T

otal

Min

e In

dire

ct C

osts

$3

0,13

5,76

5 $2

9,87

9,17

3 $3

6,29

9,97

9 $3

0,23

7,29

0 $3

3,05

7,69

6 $2

6,44

5,29

2 $1

6,94

6,64

6 $1

6,43

4,48

1 $4

8,48

2,86

9 $2

4,23

7,48

1 $3

3,37

9,26

9 $3

0,71

0,21

2 $2

3,69

0,40

2 $3

8,51

0,69

0 $2

0,11

3,71

4 $2

0,38

4,46

9 $1

0,60

5,78

6 $1

0,28

0,23

6 $7

,595

,413

Not

es:

Prod

uctio

n or

e to

nnag

es d

o no

t acc

ount

for o

re in

terc

epte

d du

ring

pre-

strip

pha

se in

201

6, a

mou

ntin

g to

416

,117

tonn

es m

ined

an

d st

ockp

iled.

Prod

uctio

n To

nnag

es d

o no

t acc

ount

for o

re p

roce

ssed

dur

ing

year

201

6 of

79,

292

tonn

es.

Min

ing

cost

s no

t app

lied

in Y

ear 2

036,

as

proc

essi

ng d

eple

tes

ore

stoc

kpile

. Sto

ckpi

le re

hand

le c

osts

are

cov

ered

und

er fi

nal

proc

essi

ng in

203

6.

188

Tab

le 2

1.15

: Life

of M

ine

Tot

al C

osts

2017

20

18

2019

20

20

2021

20

22

2023

20

24

2025

20

26

2027

20

28

2029

20

30

2031

20

32

2033

20

34

2035

T

otal

Min

ing

Cos

ts ($

) 14

1,62

7,15

3 11

2,58

8,50

4 15

4,33

4,23

6 13

6,96

2,77

7 18

0,92

8,78

8 17

5,93

8,74

8 16

1,25

1,63

3 10

2,63

2,08

4 19

9,14

1,79

5 19

0,54

4,07

0 19

1,40

3,96

0 12

1,85

0,77

6 10

8,40

8,05

5 10

9,37

1,33

7 76

,009

,177

66

,937

,831

40

,702

,276

34

,835

,078

23

,236

,349

Not

es:

Prod

uctio

n or

e to

nnag

es d

o no

t acc

ount

for o

re in

terc

epte

d du

ring

pre-

strip

pha

se in

201

6, a

mou

ntin

g to

416

,117

tonn

es m

ined

and

st

ockp

iled.

Pr

oduc

tion

Tonn

ages

do

not a

ccou

nt fo

r ore

pro

cess

ed d

urin

g ye

ar 2

016

of 7

9,29

2 to

nnes

. M

inin

g co

sts

not

appl

ied

in Y

ear

2036

, as

pro

cess

ing

depl

etes

ore

sto

ckpi

le.

Stoc

kpile

reh

andl

e co

sts

are

cove

red

unde

r fin

al

proc

essi

ng in

203

6.

189

21.2.2.1 SAND AND CLAY PRE-STRIPPING

The surficial sand and clay will be pre-stripped primarily using Komatsu PC4000 hydraulic excavators, HD1500 haul trucks and D275AX crawler dozers. It is expected that Shore will compare and assess new equipment available from several established suppliers prior to purchase. The pre-stripping operating costs include the costs of supervision, equipment operators, equipment operating and maintenance, and runoff and seepage collection and pumping. The main equipment and labour requirements and associated direct costs to be incurred in example year 2020 (production year 4) are summarized in Table 21.16. Table 21.16: Sand and Clay Pre-strip Equipment and Labour Requirements in Year 2020

Item Sand and clay pre-stripping work Star Phase 4 Orion South Phase 1a

Main sand and clay pre-stripping equipment:

1 Komatsu PC4000 hydraulic excavators 9 Komatsu HD1500 haul trucks 2 Komatsu D275AX bulldozers

2 Komatsu PC4000 hydraulic excavators 14 Komatsu HD1500 haul trucks 4 Komatsu D275AX bulldozers

Haul truck cycle time: 29.7 minutes / truckload1 26.5 minutes / truckload1 Daily operating cost:

Supervision $1,437 $1,776 Direct labour $15,8442 $28,8062 Equipment operating cost $40,3913 $71,2833 Pumping $4224 $8464 Total $58,0945 $102,7115

1 The typical haulage cycle times include 180 seconds truck loading time and 90 seconds dump time. Truck is four pass loaded by a Komatsu PC4000 hydraulic excavators hydraulic face shovel. It is projected that during the Star Phase 4 pre-stripping work, the Komatsu HD 1500 haul trucks (144 tonne nominal capacity, 78 m3 2:1 heap capacity) will carry 123 wet tonne (wt) / truckload. The haul trucks are projected to carry 131 wt / truckload when used to pre-strip the Orion South Phase 1a pit.

2 The direct labour cost for the Star Phase 4 pre-strip work is based on 11 equipment operators per 12 hour shift or 44 persons (4 excavator operators, 36 haul truck drivers and 4 bulldozer operators) on the payroll at a cost of $123,666 per person-year. The direct labour cost for the Orion South Phase 1a pre-strip work is based on 20 equipment operators per 12 hour shift or 80 persons (8 excavator operators, 56 haul truck drivers and 16 bulldozer operators) on payroll at a cost of $123,666 per person-year.

3 The equipment operating costs include equipment fuel, lubricants, parts, ground engagement tools, tires, repair reserve, and maintenance labour.

4 Run-off and seepage collection during sand and clay pre-stripping work. 5 Total daily cost excludes mine indirect costs.

The ore mining equipment fleet also uses Komatsu PC4000 hydraulic excavators and HD1500 haul trucks. This equipment fleet will be progressively incorporated over the mine life to meet additional equipment demands and for normal equipment replacement.

190

21.2.2.2 IPCC WASTE STRIPPING

The IPCC operating costs include IPCC operating and maintenance labour, and parts and consumables for the IPCC system and ancillary mobile equipment. The IPCC operating costs for example year 2020 are summarized in Table 21.17. Table 21.17: IPCC Operating Costs in Year 2020 (Production year 4)

Item IPCC operating cost ($/yr in Year 2020)

Unit cost ($ / wt)

Operating labour $5.95M1 $0.10 Maintenance labour $3.56M2 $0.06 IPCC shovel operating costs $5.62M3 $0.09 IPCC sizers, conveyors and stacker $8.31M4 $0.13 Dozer operating costs $2.13M $0.03 Electrical power cost elsewhere5 elsewhere5 Total cost in year 2020 $25.57M $0.41 / wet tonne

1 Cost for IPCC operating labour based on a two 12 hour shifts per day, IPCC waste stripping operation with 44 persons on payroll: 4 IPCC stripping supervisors; 4 overburden stockpile supervisors; 16 shovel operators; 4 belt tenders; 4 stacker operators and 12 dozer operators. The mine will use rotating shifts with two crews /day on-site while two other crews are off on rotation.

2 Cost based on the equivalent of 25.6 mechanics and electricians. The maintenance supervisor, planner and clerk are included in the mine indirect costs. See also items C and D.

3 Cost of parts and consumables including ground engagement tools, and maintenance labour for the Komatsu PC8000 electric hydraulic shovels. Excludes electrical power cost.

4 Cost of parts and consumables for the IPCC waste sizers, conveyors and stacker. Excludes electrical power cost. 5 See the annual mine electrical power cost.

21.2.2.3 ORE AND WASTE ROCK MINING

The ore mining operating costs include drilling, blasting, loading and haulage, ore sizing and conveying costs and, when required, ore reclaim costs. The projected operating costs for the mining of ore on the 250 m bench in the Star Phase 1b pit in example year 2020 are summarized in Table 21.18.

191

Table 21.18: Ore Mining Operating Cost in Year 2020

Item Ore mining operating cost ($/day) ($/ tonne ore)

Drilling and blasting:

Drilling labour and consumables $6,7081 Blasting consumables $6,7302 Explosive facility & equipment and blasters elsewhere 3 Subtotal $13,438 $0.33 / t ore

Loading and haulage:

Supervision elsewhere 4 Direct labour $9,3625 Equipment operating costs $23,8576 Subtotal $33,219 $0.81 / t ore

Ore sizing and conveying:

Operating and maintenance labour $2,8267 Ore sizer and conveyor consumables $5,5158 Electrical power cost elsewhere 9 Subtotal $8,341 $0.20 / t ore

Total $54,998 $1.34 / t ore10

1 Drilling cost per day includes two drillers per 12 hour shift, two shifts per day at a labour cost of $136,310 / person-year; one drill mechanic per day at a labour cost of $142,101 / person-year; and drill fuel, lubricants, parts and drill string and bit costs.

2 The blasting consumables cost includes emulsion blend, detonating system and stemming material costs. 3 Explosive supplier and blasting personnel costs (total of nine persons on payroll) and explosive supplier’s explosive storage

facility including explosive and detonator magazines and equipment costs are included in the mine indirect costs. 4 Ore mining supervision is included in the mine indirect costs. 5 Based on two twelve hour shifts with 7 operators on day shift and 6 operators on night shift. Labour cost is $123,663 /

person-year. 6 The equipment operating costs include equipment fuel, lubricants, parts, ground engagement tools, tires, repair reserve, and

maintenance labour. 7 Based on 4 persons on-site per day. 8 For ore sizer and conveyor maintenance parts and consumables. 9 The cost of electrical power consumed by ore sizer and conveyors is included in the annual mine electrical operating costs. 10 This daily cost is based on mining ore in the Star Phase 1b, 250 bench, in year 2020. In this example, the trucks have a

relative short haul (e.g. 10 minute haul cycle) and haul ore up-gradient from the 250 bench to the ore sizer situated on the 280 bench. The ore is then sized and conveyed to the stockpile at the Process Plant. The cost per tonne of ore excludes the associated cost of mining waste rock in year 2020.

The cost of mining waste rock includes the costs of drilling and blasting, loading and haulage, waste sizing and conveying and stacking. The costs of mining waste rock on the 250 m bench in the Star Phase 1b pit in example year 2020 are summarized in Table 21.19.

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Table 21.19: Waste Rock Mining Cost in Year 2020

Item Waste rock mining cost ($/ t waste)

Drilling and blasting $0.33 Loading and haulage $0.811 Waste sizing, conveying and stacking $0.102 Electrical power cost elsewhere 3 Total $1.24

1 This unit cost is based on hauling waste up-gradient from the 250 m bench and dumping into a hopper feeding a semi-mobile waste sizer located on the 280 m bench.

2 This is additional to waste sizing, conveying and stacking costs included in the IPCC operating costs. 3 See the annual mine electrical power cost.

21.2.2.4 MINE INDIRECT COSTS

The mine indirect operating costs include mine operating costs that are common to several mining activities and are not included in the mine direct costs or the general and administration costs. The mine indirect costs for year 2020 are summarized in Table 21.20. Table 21.20: Mine indirect operating costs for year 2020

Item Mine indirect operating cost ($/yr)

Mine administration and supervision:

Mine Superintendent (1) $195,440 Mine clerks (2) $159,787 Mine supervisors / lead hands (12) $1,808,661 IPCC planning coordinators (2) $239,366 Indirect operating costs:

In-pit office and wash car $48,375 Mine road graders ( 3 Cat 16M graders) $1,627,200 Wheel loader (Komatsu WA 1200) $472,000 Fuel and lube truck $96,000 Water truck $248,000 Road sander $37,200 Mine pick-up trucks $230,256 Mine maintenance vehicles $1,376,150 Maintenance portable heat and lighting $31,500 Contractors and suppliers:

Explosive supplier labour and equipment and blasters $1,464,416 Contractor-assisted IPCC extension / move $2,849,760 Total cost per year in year 2020 $10,884,111

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21.2.2.5 MINE POWER COSTS

The mine power costs are estimated from the energy charge at $0.04774 per kWh and a monthly demand charge of $5.82 per kVA. Costs are separated for the mining equipment and the pit dewatering charges (Table 21.21). Pit dewatering charges include in pit pumping and deep well dewatering costs. Table 21.21: Annual Mine Power Costs

AnnualMine Power Costs Mining Dewatering Total Cost PST @ 5 %

Total Annual Cost

2013 $1,364,914 $23,739 $1,388,653 $69,433 $1,458,086 2014 $18,735,871 $37,149 $18,773,020 $938,651 $19,711,671 2015 $21,066,100 $45,882 $21,111,982 $1,055,599 $22,167,581 2016 $16,216,821 $108,205 $16,325,026 $816,251 $17,141,277 2017 $18,556,253 $1,767,446 $20,323,699 $1,016,185 $21,339,884 2018 $14,587,526 $1,918,292 $16,505,818 $825,291 $17,331,109 2019 $23,635,289 $2,016,690 $25,651,979 $1,282,599 $26,934,578 2020 $15,548,312 $2,184,289 $17,732,601 $886,630 $18,619,231 2021 $17,845,004 $2,212,095 $20,057,099 $1,002,855 $21,059,954 2022 $13,158,795 $2,229,211 $15,388,006 $769,400 $16,157,406 2023 $4,983,547 $2,292,137 $7,275,684 $363,784 $7,639,468 2024 $4,485,412 $2,302,495 $6,787,907 $339,395 $7,127,302 2025 $17,044,080 $2,272,320 $19,316,400 $965,820 $20,282,220 2026 $11,023,208 $2,331,313 $13,354,521 $667,726 $14,022,247 2027 $17,092,141 $2,874,302 $19,966,443 $998,322 $20,964,765 2028 $13,268,062 $2,586,575 $15,854,637 $792,732 $16,647,368 2029 $10,084,948 $2,791,329 $12,876,277 $643,814 $13,520,091 2030 $22,049,139 $2,370,014 $24,419,153 $1,220,958 $25,640,111 2031 $8,831,694 $3,213,245 $12,044,939 $602,247 $12,647,186 2032 $3,129,494 $2,904,267 $6,033,761 $301,688 $6,335,449 2033 $3,129,494 $2,805,063 $5,934,557 $296,728 $6,231,285 2034 $3,129,494 $2,773,952 $5,903,446 $295,172 $6,198,618 2035 $2,145,939 $2,693,322 $4,839,261 $241,963 $5,081,225 Total $327,864,868 $16,393,243 $344,258,111

Note: Totals may not sum exactly due to rounding. 21.2.3 PROCESS PLANT OPERATIONAL COSTS The operational costs for the Process Plant are based on the running costs of the plant for one year. Unless otherwise stated, all costs are in Canadian Dollars. The costing was divided into 11 areas for easy clarification as follows:

1. Site Services Water Treatment 2. Software Requirements 3. Personnel Salaries (Operational) 4. Personnel Salaries (Maintenance)

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5. Process Plant Power Consumption 6. Processing Consumables and Wear Replacements 7. Processed Kimberlite Confinement Facility (PKCF) Operational Requirements 8. Coarse Reject Stockpiles Operational Requirements 9. Recovery Rejects Stockpiles Operational Requirements 10. Light Vehicle Requirements 11. Laboratory Requirements

21.2.3.1 SITE SERVICES WATER TREATMENT The potable water requirements for site will be supplied by relatively shallow (surficial) wells. These wells will supply 600 m3/h to site and the majority of this water will be used “as is” (with no further treatment) in the recovery section. The remaining water will be treated and used for operating the gland seals on the pumps and AG mill as well as by site personnel for drinking and washing. The estimated power requirement for running the pumps on the surficial wells is 559 KW and the estimated power requirement on the additional pumps used to distribute the surficial water around site is 119 KW. The costs for operating these pumps are shown below in Table 21.22. Table 21.22: Pump Operational Costs

Pumps Power (KW)

AnnualElectrical

Costs

AnnualDemand

Costs

Total Cost

Surficial Well Pumps 559 $233,755 $43,330 $277,105 Plant Surficial Water Pumps

119 $49,766 $9,224 $58,990

Total per annum 678 $336,095 Filtration will be used to treat the surficial water. The filtration process will require 2 cartridges every 2 months totalling 12 cartridges per year; media for the media filters will need to be changed every 5 years and membranes will need to be changed every 3 years. Chemicals and powders will also be added to eliminate any bacteria. The associated costs for water purification and treatment are shown in Table 21.23.

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Table 21.23: Water Purification and Treatment Costs

Description Numberper annum

Cost each Cost per annum

PST Total Cost

Cartridge Filters 12 $75 $900 $45 $945Media – Media Filters 0.2 x 2

filters $3,500 $1,400 $70 $1,470

Membranes 0.33 $4,000 $1,320 $66 $1,386Chemicals and Powders

365 days $4.5/day $1,642 $82 $1,724

Labour 24hrs+20hrs +19.8hrs

$100 $6,380 $6,380

Total per annum $11,905Totals may not sum due to rounding 21.2.3.2 SOFTWARE REQUIREMENTS Software will be required for automating and controlling the plant (the expert system). Microsoft Office will be required for general administration purposes as well as for managers and supervisors to analyze the data generated by the plant. The software platform for the expert system is Visio Rock, which uses a combination of cameras and monitoring devices to record the plant’s performance. The process control system (PCS) and historian will be programmed for Shore’s specific needs using this platform. This software will be used to automate the AG mills, conveyers, screens, screw classifiers and DMS process. Cameras are an integral part of the automation system. It is also envisaged that the expert system will monitor the recovery section, which will facilitate further automation at a later stage. All managers and above will have either a laptop or a desktop computer. Computers will also be placed in a “clean” area for use by technicians for general data capture or queries. It is envisaged that a total of 18 laptops and 3 desktop computers will be required for personnel in the plant. All laptops and computers will come with Microsoft Office tools. All software is associated with annual license fees as well as updates and modifications fees. The annual costs for running the required software packages are shown in Table 21.24.

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Table 21.24: Processing Software Costs

Software Number of Units

Annual Fees PST Total

Visio Rock/Expert System 1 $3,500 $175 $3,675Process Control System and Historian

1 $10,000 $500 $10,500

Cameras 73 $8,530 $426 $8,956Microsoft Office Tools 21 $4,200 $210 $4,410Total per annum $27,541

Totals may not sum due to rounding 21.2.3.3 PERSONNEL SALARIES (OPERATIONAL) In order to run the Process Plant, a number of operational personnel are required. An organogram of the envisaged operational personnel is shown as Figure 21.2. All Supervisors and above will operate on a 24 hour call out basis.

Figure 21.2: Operational Personnel

The roles of each operations person are as follows: Manager, Processing – Oversees the entire operation of the plant at site. Liaises with mining and ensures that production is on schedule. Plant General Foreman – Oversees the daily operation of the comminution section and the dense medium separation (DMS) section. Operational problems in these two sections will be directly managed by the general foreman. The equipment in these areas will include the stockpile and apron feeders, AG mills, horizontal conveyers, flexowells (vertical conveyers), screw classifiers, DMS cyclones, magnetic separators, densitometers, densifiers, screens, pumps, bins, valves, weightometers, flow meters etc. The General Foreman reports directly to the Manager.

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Plant Supervisor - Oversees all work in the comminution and DMS sections. There will be a number of routine tasks, checks and data capture activities that will have to be carried out around the plant and the function of the supervisor is to ensure that these are done correctly. Any changes to tasks or new routines added to a task, as directed by the General Foreman will be issued by the Plant Supervisor. The Plant Supervisor must have a comprehensive understanding of the expert system software and be able to adjust or reset operational parameters/set points where necessary. The Plant Supervisor reports directly to the General Foreman. Plant Operator – Monitors the expert system and the TV monitor screens. The expert system will display readings from the meters and these must be compared with the images on the screens to ensure that monitors are not faulty. Periodic inspections of apron feeders, conveyer belts, idlers, chutes, bins and pumps have to be carried out as well as measurements on wear items such as liners, screens, belts and the spiral screw. The Plant Operator will also be required to carry out density tracer tests on the DMS cyclones and draw up tromp curves (partition curves) from the collected data. The Plant Operators will be responsible to sort out blockages, to clean up spillages and leaks, and to react in emergency stops such as a belt tear. The Plant Operators report to the Plant Supervisor. Plant Operator Trainee – Have the same functions as the Plant Operators, the difference being that they are in a learning capacity and are assisting the Plant Operators in their various tasks. The Plant Operator trainees report to the Plant Supervisors. Plant Equipment Operator – Mainly the plant dozer drivers, to undertake the following: repositioning of the hydrocyclones on the berms, compacting the berms to the required porosity, clearing settling ponds, maintaining the coarse stockpiles, clearing loose boulders from pathways and maintaining routes for the conveyers and stacker. The Plant Equipment Operator reports directly to the Plant Supervisor. Metallurgist – Collates the metallurgical information generated by the plant and advises the Manager on the metallurgical performance of the plant. Records the plant’s mass balances and water balances. The metallurgist identifies potential bottlenecks that could occur through processing the various kimberlite units and understands the limitations of the various set-points on plant equipment. The Metallurgist would also be able to operate the equipment in recovery and have an understanding of each physical separation process. The Metallurgist would be responsible for equipment and processing audits, will have an in-depth understanding of the expert system and be able to make queries on the system’s historian. The Metallurgist reports directly to the Manager. Lab Technician – Assists the Metallurgist in collecting metallurgical information and in conducting plant audits. The Lab Technician will be based in the Laboratory where the majority of the sizing, weighing, sorting and measurements on the kimberlite samples will occur. The Lab Technician reports directly to the Metallurgist. Superintendent of Recovery – Oversees the operation of the recovery section and the operation of the diamond sorting room (onsite sorthouse). The Superintendent of Recovery is responsible for daily monitoring and reporting to the Manager of changes in grade and changes in the

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diamond size frequency distribution (SFD) for different kimberlite bodies and the overall recovery efficiency of the recovery section and sorthouse. The Superintendent of Recovery reports directly to the Manager. Recovery Supervisor – Oversees the running of the recovery section, and will be required to know how to operate each piece of equipment in the recovery section (scalping magnets, wet high intensity separation magnets, X-ray machines, grease belts, Laser Raman units, dry high intensity magnetic separators, infrared dryers, screens and tubular feeder). This position will also be required to know how to operate each piece of equipment in recovery, know the set-points and how to change the set-points for each piece of equipment. The Recovery Supervisor will also have an in-depth understanding of the expert system for the recovery section and be able to check readings displayed by the expert system with actual images captured on the TV screens. The Recovery Supervisor reports directly to the Superintendent Recovery. Recovery Technician – Monitor the expert system for the recovery section and the TV monitor screens. The expert system will display readings from each piece of equipment in recovery and these must be compared with the images on the TV monitors. Periodic inspections of all recovery equipment must be carried out to ensure screens, belts and feeders are operating with a monolayer of feed. Splitter plate positions have to be checked and if necessary reported on. Tracer tests have to be carried out on each unit to ensure that detectors have not burnt out, X-ray tubes are still functioning, ejectors are not sticking and electronic settings (intensity and timing) have not drifted. Recovery Technicians will be responsible to oil and grease equipment in recovery, sort out blockages, clean up spillages and leaks and to react in emergency stops such as an overloading of a feeder. The Recovery Technician reports directly to the Recovery Supervisor. Recovery Trainee – Same functions as the Recovery Technicians, the difference being is that they are in a learning capacity and are assisting the Recovery Technicians in their various tasks. The Recovery Trainees report directly to the Recovery Supervisors. Sort House Supervisor – Oversees the final sorting of the diamond concentrate in glove boxes, calibrates the scales and diamond counters and ensures that all the diamond sizing screens are true and correct. This position also determines which glove-box tailings need to be audited or resorted, collates all the information collected from the sorters and compiles the diamond size frequency distribution (SFD) curves, and co-ordinates the movement of diamonds from site to the off-site sort-house (the actual movement of diamonds from site will be arranged directly with the Manager). The Sort House Supervisor reports directly to the Superintendent Recovery. Sort House Sorter – The recovery section will be set up so that the final concentrate from each recovery machine reports to a sealed matlock canister. The sorter will sort the concentrate contained in sealed matlock canisters in a glove box, manually removing all non-diamond material, and then sizing, weighing, counting, documenting and packaging all diamonds. At the end of a shift, these canisters will be collected by the recovery technicians and security and handed to the Recovery Supervisor. The Sort House Sorter reports directly to the Sort House Supervisor.

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Ongoing Training and Recruiting – The Company will offer ongoing training to enhance employees in their careers. The costs associated with this training are based on 1.91 % of payroll. As with any mining career, general turnover of employees is anticipated and a figure of 7 % of the workforce complement has been used. The costs associated with advertising, recruitment and screening of new employees is estimated to be $1,000.00 per person replaced. Summary The number of persons in each role, the shifts and remuneration for each, including bonuses, perquisites, training costs and general turnover costs, are shown in Table 21.25. Table 21.25: Operations Personnel Summary Information and Costs

Role Number Shift RemunerationManager, Processing 1 Day $192,777Plant General Foreman 2 Day & Night $316,354Plant Supervisor 4 Day & Night $622,603Plant Operator 12 Day & Night $1,401,880Plant Operator Trainee 4 Day & Night $361,511Plant Equipment Operator 4 Day & Night $437,731Metallurgist 1 Day $149,725Lab Technician 4 Day & Night $471,669Superintendent, Recovery 1 Day $156,685Recovery Supervisor 2 Day & Night $307,491Recovery Technician 8 Day & Night $934,586Recovery Trainee 4 Day & Night $361,511Sort House Supervisor 2 Day $311,301Sort House Sorter 10 Day $1,168,233Training and Recruitment $142,406Total per annum 59 $7,336,472

Totals may not sum due to rounding 21.2.3.4 PERSONNEL SALARIES (MAINTENANCE) The Process Plant has to maintain above 88 % operational availability to meet production requirements. A team of maintenance personnel are required to ensure that the equipment in the Process Plant meets the operational requirements. An organogram of the required maintenance personnel is shown as Figure 21.3.

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Figure 21.3: Maintenance Personnel

D: Day R: Rotational (24-hour coverage) As with the operational personnel, the supervisory position has a double line and is coloured. Of the maintenance staff, 4 Electricians, 4 Industrial Mechanics and 4 Instrument Technicians will be designated to the Process Plant. These employees will operate on a 24 hour rotational shift basis and will be based in the Process Plant. These personnel will be designated to Process Plant operational tasks and will report to the Plant Supervisor. The remaining maintenance personnel will be located in the workshop and will repair, rebuild and maintain all equipment that is “changed-out” of the Process Plant. The repaired equipment will then become the spare. High wear equipment such as the spiral classifiers will also require continual rebuilding which will be carried out in the workshop. Specialised maintenance jobs such as liner changes on the AG mills will be carried out by the AG mills suppliers. However, the maintenance staff may be required to support these contractors at various times. Ongoing Training and Recruiting – The Company will offer ongoing training to enhance employees in their careers. The costs associated with this training are based on 1.91 % of payroll. As with any mining career, general turnover of employees is anticipated and a figure of 7 % of the workforce complement has been used. The costs associated with advertising, recruitment and screening of new employees is estimated to be $1,000.00 per person replaced.

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Summary

The number of persons in each role, the shifts and remuneration, including bonuses, perquisites, training costs and general turnover costs, are shown in Table 21.26. Table 21.26: Maintenance Personnel Summary Information and Costs

Role Number Shift RemunerationProcess Plant Maintenance Supervisor

1 Day $123,347

Electrician 2 Day $234,061Electrician 4 Day & Night $556,491Industrial Mechanic 8 Day $936,244Industrial Mechanic 4 Day & Night $556,491Instrument Technician 3 Day $351,091Instrument Technician 4 Day & Night $556,491Welder 2 Day $234,061Lube Person 2 Day $179,644Pipefitter 2 Day $234,061Apprentice 4 Day $340,657Training and Recruitment $85,180Total per annum 36 $4,387,825

Totals may not sum due to rounding 21.2.3.5 PROCESS PLANT POWER CONSUMPTION A schematic of the Process Plant is shown as Figure 21.4. The Process Plant contains both large and small machinery that will be connected to the electrical circuit. Freshly mined kimberlite is placed on the stockpile (seen in the upper left of the figure) which is fed to the Process Plant via 6 apron feeders (under the stockpile) connected to two large conveyers. Each conveyer feeds an AG mill where the ore is crushed to -45 mm. The crushed product reports to spiral classifiers to remove the -250 micron material. The material is then passed over screens to remove the -1 mm material. The +1 mm material is sized into two fractions: (-8 +1 mm) and (-45 +8 mm) which are then processed in the appropriate DMS section according to the size fraction. The DMS sinks (concentrate) then reports to the recovery section where the diamonds are separated from the remaining kimberlite via the following physical properties:

� magnetism; � luminescence; � hydrophobicity; and � the Raman shift.

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Figure 21.4: A Schematic of the Stockpile and the Process Plant with the Walls Removed

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The annual operating power for each process is generally calculated at 80 % of the peak output requirements of the equipment, taken over a year (Metso document 600-002, Sept 3, 2010). Table 21.27 details the expected annual power consumption of the equipment categories in the Process Plant. Table 21.27: The Expected Annual Power Consumption of the Equipment Categories in the Process Plant

Process Plant Equipment

Power (KW)

AnnualElectrical Costs

Annual Demand Costs

Total Cost

Apron Feeders 176 $73,603 $13,642 $87,246 Feed conveyers 211 $88,240 $16,355 $104,596 AG Mills 17,666 $7,387,963 $1,369,360 $8,757,324 Pumps 5,190 $2,170,470 $402,297 $2,572,767 Spirals and DMS 3,799 $1,588,750 $294,475 $1,883,226 Recovery 1,478 $618,103 $114,566 $732,669 Dry/Security - Lighting and HVAC 99 $41,402 $7,674 $49,076 Stockpile - Lighting and HVAC 62 $25,928 $4,806 $30,734 AG Milling - Lighting and HVAC 285 $119,187 $22,091 $141,279 DMS - Lighting and HVAC 145 $60,639 $11,240 $71,879 Electric Area - Lighting and HVAC 167 $69,839 $12,945 $82,785 Recovery - Lighting and HVAC 201 $84,058 $15,580 $99,639 BSP Area - Lighting and HVAC 100 $41,820 $7,751 $49,572 Compressors 611 $255,521 $47,361 $302,883 Cranes (Overhead, jib, lift beams) 301 $125,878 $23,332 $149,211 Overhead Doors 8 $3,345 $620 $3,966 Elevators 83 $34,710 $6,434 $41,144 Laundry Equipment 2.4 $1,003 $186 $1,190 Other (screens, Flexowells) 996.3 $416,655 $77,227 $493,882 Total per annum 31,580.7 $13,207,124 $2,447,942 $15,655,067

Totals may not sum due to rounding 21.2.3.6 PROCESSING CONSUMABLES AND WEAR REPLACEMENTS There are a number of consumable commodities that will be required annually for the Process Plant. Apron Feeders Parts – Apron feeders experience high wear since they are required to process the entire stockpile feeding the AG mills. Components on the apron feeders will require continual replacement. The annual replacement cost associated with the apron feeders is $71,807.40.

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Run of Mine (ROM) Conveyers - The idlers on the ROM conveyers will require ongoing maintenance and continual repair or replacement, as will the conveyer belts. The annual replacement cost associated with the ROM conveyers is $7,942.20. AG mill Liners – It is estimated that the AG mill liners will require annual replacement (Metso Document 600-002, October 20th, 2010). There is one liner handler that is used to change the liners on both AG mills. The liner handler will experience high wear and spares will have to be purchased for the liner handler. The annual replacement cost associated with the AG Liners is $4,826,304.00. Spiral Classifier - The spiral classifiers experiences high wear on the toes of the screw flights and will require continual adjustments. Once the screw flight toes are completely worn, the entire screw component will require replacement. The annual replacement cost associated with the screw classifiers is $140,414.40. Pumps – Pumps experience continual wear and parts will requirement continual replacement. The annual replacement cost associated with the pumps is $648,375.00. Belt Magnets – Belt magnets are self cleaning and have a number of moving parts. Components of the belt magnets will require periodic replacement. The annual replacement cost associated with the belt magnets is $3,843.00. Dense Medium Separation (DMS) Cyclones – The DMS cyclones are manufactured in sections. Once in operation, the spigots and the vortex finders on the DMS cyclones will experience high wear and will require regular replacement. The annual replacement cost associated with the DMS cyclones is $220,500.00. Densifiers – As with the DMS cyclones, the densifier cyclones will experience high wear, and sections on these cyclones will require regular replacement. The annual replacement cost associated with the densifiers is $33,774.30. Ferrosilicon - The main consumable used in the Process Plant is ferrosilicon (FeSi) which is used in the dense media separation (DMS) section. The correct characteristics and grade of the FeSi is critical in obtaining the correct density cut-point for a specific size fraction being processed. Two types of FeSi will be used; a finer FeSi, 270D, used in the DMS cyclones treating the (-8 +1 mm) size fraction and a coarser FeSi, 150D, used in the larger DMS cyclones treating the (-45 +8 mm) size fraction. The majority of the FeSi will be reclaimed through the magnetic separation process and then recycled. However, FeSi will be lost in the magnetic separators due to small processing inefficiencies (it becomes locked in electrical plastic tubes and similar contaminants that fall on the stockpile, and small quantities will get caught in crevices in the kimberlite itself). It is estimated that 345g of 270D FeSi will be lost with each tonne of (-8 +1 mm) material processed through DMS and that 115g of 150D FeSi will be lost with each tonne of (-45 +8 mm) material processed through DMS (Email: Metso Sept 28, 2010). When the kimberlite is associated with high quantities of clay as found in the breccia kimberlite units, the clays bind and lock the FeSi particles so changing their characteristics. In this event,

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the only option will be to replace the FeSi with a new batch. The probability of having to replace the 270D FeSi has been estimated at 66 % while the probability of having to replace the 150D FeSi is lower at 50 %. The cost of the 270D FeSi is $1,672.00 per tonne, while the cost for 150D FeSi is $1,408.00 per tonne. The estimated annual consumption of FeSi and the associated costs are shown in Table 21.28. Table 21.28: Estimated Annual Consumption of FeSi and the Associated Costs

FeSi Operational

(Tonnes)

Dumped

(Tonnes)

Yearly (Tonnes)

Yearly Cost PST Total

270D 598.4 219.4 817.8 $1,367,362 $68,368 $1,435,730 150D 285.2 180.3 465.5 $655,424 $32,771 $688,195 $2,022,786 $101,139 $2,123,925

Totals may not sum due to rounding Grease – In the recovery section, a total of 8 grease belts will be used to recover the hydrophobic diamonds not recovered by the X-ray machines. The majority of the grease is recycled; however, small quantities of the grease will become contaminated with fine particles and will need to be removed/purged from each machine. The rate at which the grease becomes contaminated is dependent on how rapidly the kimberlite breaks down due to handling. Generally, kimberlite breccias break down more rapidly than hypabyssal kimberlites. It is anticipated that 10 litres of grease should be purged for every 100 tonnes of kimberlite processed. The recovery plant is designed to treat a maximum of 30 t/h of which 23.75 t/h would be processed over the grease belts. However, the average throughput of the recovery section is less than 20 t/h with approximately 15.8 t/h of the kimberlite concentrate being processed over the grease belts. On average, it is expected that the recovery section will process 380 tonnes of kimberlite per day over grease, leading to an estimated daily grease consumption of 38 litres per day or 13,870 litres per year. The grease is supplied by Oblique Engineering, based in South Africa, thus the price will be dependent on the South African/Canadian exchange rate. The price of one bucket (25 litres) of grease is estimated to be $357.14 with an additional cost of CAD$500.00 for shipping per lot. The estimated annual cost of grease is shown in Table 21.29.

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Table 21.29: Estimated Annual Cost of Grease

Description Number Cost per unit

Yearly cost PST Total

Purchase price 555 buckets* $357 $198,214 $9,911 $208,125

Shipping costs 4 shipments $500 $2,000 $100 $2,100 Total per annum $200,214 $10,011 $210,225 *13,870 litres � 25 = 554.8 (or 555 buckets of grease per year) Ortanol 90 – Ortanol 90 is an environmentally friendly powder form of degreaser used in the diamond cleaning circuit. Each grease belt has a degreasing process internal to the machine to clean any residue grease from the diamond surface. The cost of a bag of Ortanol 90 is $163.88 and it is estimated that one bag should last a grease belt 2 months. Ortanol 90 is presently sourced from Oblique in South Africa and thus shipping costs would be associated with this product. The estimated annual cost for Ortanol 90 is shown in Table 21.30. Table 21.30: Estimated Annual Cost for Ortanol 90 Description Number Cost per unit Yearly cost PST Total

Ortanol 90 48 bags $164 $7,866 $393 $8,259 Shipping costs 6 shipments $500 $3,000 $150 $3,150 Total per annum $10,866 $543 $11,409 Totals may not sum due to rounding Wet High Intensity Magnetic Separators (WHIMS) – There are 6 WHIMS in the recovery section, all with moving belts and motors that experience wear. Components on these units will require periodic replacement. The annual operational cost associated with the WHIMS is $13,230.00. Photo Multiplier Tubes (PMT) – PMT are optical detectors used in the X-ray machines to detect the luminescence signal emitted by the diamonds when they are irradiated with X-rays. PMTs are also used in the Laser Raman machine to detect the optical signal given off by diamonds when subjected to laser excitation. A PMT will last, on average, 6 months. The price of a PMT is approximately $2,000.00. The number of PMTs required for the recovery section at any one time is 78, as detailed in Table 21.31.

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Table 21.31: The Number of PMTs Required for the Recovery Section

Equipment No. of Units

No. of X-ray

Tubes in each

No. of PMTs in

each

TotalX-rayTubes

TotalPMTs

Double Pass X-ray machine 2 2 12 4 24 SJ12 X-ray machine 4 1 3 4 12 Single Particle X-ray Sorter 9 1 4 9 36 Laser Raman machine 6 0 1 0 6 Total 17 78 Totals may not sum due to rounding It is therefore expected that the recovery section would need 78 x 2 = 156 PMTs per year (based on an average PMT life of 6 months) at a total cost as shown in Table 21.32. Table 21.32: Annual cost of PTMs Description Number Cost per unit Yearly cost PST Total

PMT 156 $ 2,000 $ 312,000 $ 15,600 $ 327,600 X-ray Tubes – X-ray tubes will be used in the X-ray machine as the excitation source of electromagnetic radiation. A total of 17 X-ray tubes is required for the 15 X-ray machines installed in the recovery section. Each X-ray tube costs approximately $5,200.00 and will last, on average, 1 year. It is anticipated that 17 new X-ray tubes will be required annually for the recovery section. The associated costs are shown in Table 21.33. Table 21.33: Annual Costs of X-ray tubes

Description Number Cost per unit

Yearly cost PST Total

X-ray Tube 17 $5,200 $ 88,400 $ 4,420 $ 92,820 Lasers – The excitation source in the Laser Raman machines will be lasers, which will require annual replacement. There are 6 Laser Raman machines in the recovery section and each machine has one laser that will require annual replacement. The cost of a new laser is $11,428.57. The annual costs for 6 new lasers each year is shown in Table 21.34. Table 21.34: Annual Costs of Lasers

Description Number Cost per unit

Yearly cost PST Total

Laser Source 6 $11,429 $68,571 $3,429 $72,000 Grease Belts – There are 8 grease belts in the recovery section all fitted with fireball pumps to recirculate the grease. The seals on the fireball pumps will require weekly changing and the

208

entire pump should be replaced annually. The annual replacement cost on the grease belts is estimated at $16,800.00. Screen Media – There are a total of 34 screens in the plant each fitted with polydeck screen media. The polydeck screen media continually wears and has to be rotated. However, the polydeck wear rate is such that it should be replaced twice a year. There is also significant wear on the motors, springs and belts, which have to be maintained. The annual replacement cost associated with maintaining sizing screens is shown in Table 21.35. Table 21.35: Annual Costs of Screen Media

Description Number Cost per unit

Yearly cost PST Total

Screen media x 2 34 $15,500 $1,054,000 $52,700 $1,106,700 Motors, belts 34 $20,000 $680,000 $34,000 $714,000 $1,734,000 $86,700 $1,820,700 Conveyers & Flexowell – Idlers on conveyers are generally low maintenance items whereas flexowell conveyers experience moderate wear. The maintenance and replacement cost on these two items is estimated as a percentage of the capital costs. The Capex for the conveyers and flexowells is $2,064,998.00 and a 5 % annual operating cost associated with these items is shown in Table 21.36. Table 21.36: Annual Operating Cost of Conveyers & Flexowell Description Number Capex Yearly Opex

costs PST Total

Conveyers 4 $267,898 $13,395 $670 $14,065 Flexowells 6 $1,797,100 $89,855 $4,493 $94,348 Total per annum

$103,250 $5,163 $108,412

Totals may not sum due to rounding Tracers (Diamond Simulants) – Tracers are used to simulate various diamond characteristics and are needed to test, set recovery parameters on diamond recovery machines and to evaluate diamond processing equipment. Crushing simulants are used in the comminution section to measure diamond retention time in AG mills and to assess the amount of diamond damage. These simulants will be supplied by De Beers in South Africa. Density tracers are used in the DMS section to measure the density cut-point in the DMS cyclones and to quantify the amount of misplaced material in the sinks and floats. These tracers are supplied by Bateman Engineering N.V. (Bateman) in South Africa.

209

Magnetic susceptibility tracers could be used in the recovery section on the WHIMS to verify the magnetic cut-point on the magnetic separators. Shore has the ability to develop and manufacture these tracers if required. Luminescence tracers are used in the recovery section in the X-ray machines to verify that the luminescence threshold setting is correct, that the optical detectors (PMTs) are not blinded by highly luminescent minerals and to set the timing on the ejectors (both the delay and duration parameter need to be optimised). Luminescent tracers are supplied by De Beers in South Africa or by Partition Enterprises in Australia. Hydrophobic tracers are used in the recovery section to confirm that the conditions on the grease belts are correct for diamond recovery. The water flow rate, the grease hardness (due to temperature settings) and the tenacity of the grease (due to its composition) have to be set for each size fraction being processed. Hydrophobic tracers are supplied by Oblique Engineering in South Africa. Raman tracers are used in the recovery section to ensure that the laser Raman machines are functioning properly. Raman tracers verify that the detectors are operational and that the timing on the ejectors is correct. Shore has the ability to develop and manufacture these tracers if required. Tracers and simulants are lost through general test work and will require replacement. The number of tracers and simulants that will require replacement yearly are shown in Table 21.37. Table 21.37: Tracer Consumption and Costs

Description Number(Units)

Cost PST Total

Crushing simulants 3640 $16,635 $832 $17,467 Density tracers 9984 $6,989 $349 $7,338 Luminescence tracers 7488 $5,242 $262 $5,504 Hydrophobic tracers 832 $998 $50 $1,048 Total per annum $29,864 $1,493 $31,357

Totals may not sum due to rounding Gloves (for Glove Boxes) – Long sleeve gloves are fitted to glove boxes to restrict direct contact with the diamonds, ensuring that no sorted diamonds are removed from the concentrate. A photograph of a typical glove box is seen in Figure 21.5. The gloves are made from a light material and will require annual replacement. There are 10 sorting stations each fitted with a glove and a securing ring. The expected replacement cost is $100.00 each which totals $1,000.00 ($1,050.00 with PST).

210

Figure 21.5: A Photograph of a typical Glove Box for Sorting Diamonds Fitted with Gloves and the Secure Matlock Canister Above.

General Equipment – General equipment not specifically identified, such as cables, gratings, handrails, bollards, etc. will have to be replaced periodically. It is estimated that $1,000,000.00 yearly will be sufficient to cover these costs as well as the replacement cost for equipment that unexpectedly breaks down. Summary The total operational costs for the major consumable and wear items in the Process Plant are estimated to be $11,281,624.81 ($11,845,706.05 inclusive of PST). 21.2.3.7 PROCESSED KIMBERLITE CONTAINMENT FACILITY (PKCF)

OPERATIONAL REQUIREMENTS The PKCF is the area where all the -1 mm material and process water will be deposited. The Process Plant will be producing, on average, 10,578,226 tonnes of -1 mm material per year and 20,546,755 m3 of water per year. The area of the PKCF will be roughly 3.4 km2 with a perimeter of 7 km. The centre of the PKCF is approximately 2.5 km from the Process Plant and a series of pumps and booster pumps will be required to transport the large quantities of slurry to the PKCF.

211

The -1 mm material and water will be pumped to the PKCF via two pipelines. The first pipeline will transport the -250 micron material suspended in water and will deposit the slurry into the centre of the PKCF. The second pipeline will transport the -1 mm +250 micron material suspended in water to six hydrocyclones situated on the crest of the berms surrounding the PKCF. The hydrocyclones will then separate the water from the (-1 mm +250 micron) material. The separated water will then be deposited inside the PKCF while the (-1 mm +250 micron) material will be placed on the berm as construction material for increasing the height of the berm. The height of the berms will be continually increased with processed kimberlite as the need for PKCF storage increases over the life of the mine. The size of the PKCF has been optimized such that the processed kimberlite from the plant will provide adequate material for PKCF berm construction. A Dozer (CAT10) will be used at the PKCF for spreading the -1 mm material and compacting the berms. The Dozer will also be used to clear and grub the area around the PKCF when necessary. A total of 8 hours a day of dozer time has been allocated for the maintenance and continued construction of the PKCF. The dozer operator is already covered in the personnel organogram. Within the PKCF, the -250 micron material will settle, leaving clarified water, which will then be pumped to polishing ponds where it will filter into the surrounding area. The environmental monitoring of the water quality will be managed by the environmental department. The annual operating costs for the pumps associated with maintaining the PKCF are shown in Table 21.38. Table 21.38: Annual Operating Costs for the Pumps Associated with Maintaining the PKCF

Description Power (KW)

AnnualElectrical Costs

AnnualDemand

Costs

Total Cost

Tailings pumps 2614 $1,093,181 $202,621 $1,295,802 Booster pumps 1852 $774,511 $143,556 $918,067 Polishing pond pumps 112 $46,839 $8,682 $55,520 Gland seal and Feeder pumps 48 $20,074 $3,721 $23,794 Total per annum 4626 $1,934,604 $358,579 $2,293,183 Totals may not sum due to rounding The annual costs for general maintenance on the PKCF are shown in Table 21.39.

212

Table 21.39: Annual Costs for general Maintenance on the PKCF

Description Unit Costs PST Total Cost Material for dyke construction 36,000 m3 $297,000 $7,425 $304,425 Hydrocyclone maintenance 6 $6,242 $156 $6,398 Dozer maintenance 1 $379,600 $9,490 $389,090 Total per annum $682,842 $17,071 $699,913 Totals may not sum due to rounding 21.2.3.8 COARSE REJECT STOCKPILES OPERATIONAL REQUIREMENTS The +1 mm kimberlite rejected from the DMS section (DMS floats), will be transported to the coarse reject stockpiles. Two size fractions are produced by the DMS section: (-8 +1 mm) and (-45 +8 mm) kimberlite. A conveyer dedicated to each size fraction will transport this kimberlite to the coarse reject area, which will be situated 2 km from the plant. The two size fractions will be stacked into two separate piles, the larger size fraction (-45 +8 mm) being stacked closer to the plant. A Dozer (CAT10) will be available for 2 hours per day to carry out general maintenance and control on the coarse reject stockpiles. The environmental monitoring of the coarse reject stockpiles will be managed by the environmental department. The annual costs associated with maintaining the coarse reject stockpiles are shown in Table 21.40. Table 21.40: Annual Costs Associated with Maintaining the Coarse Reject Stockpiles

Description Unit Costs PST Total Cost Power for conveyers 104 kW $51,554 $51,554 Conveyer maintenance 2 $15,900 $795 $16,695 Stacker maintenance 1 $87,600 $2,190 $89,790 Dozer maintenance 1 $94,900 $2,373 $97,273 Total per annum $249,954 $7,548 $257,502 Totals may not sum due to rounding 21.2.3.9 RECOVERY REJECTS STOCKPILES OPERATIONAL REQUIREMENTS The +1 mm kimberlite rejected from the recovery section will be transported to the recovery reject stockpiles situated 150 m from the recovery section. As with the DMS rejects, the recovery rejects will be split into two size fractions: (-8 +1 mm) and (-45 +8 mm). A conveyer dedicated to each size fraction will transport this kimberlite to the secure, enclosed, recovery reject area. The two size fractions will then be stacked into two separate piles. A Dozer (CAT10) would be available 2 hours per day, for general maintenance to the recovery reject stockpiles. The environmental monitoring of the coarse reject stockpiles will be managed by the environmental department.

213

The annual costs associated with maintaining the recovery reject stockpiles are shown in Table 21.41. Table 21.41: Annual Costs Associated with Maintaining the Recovery Reject Stockpiles

Description Unit Costs PST Total Cost Power for conveyers 38 kW $18,837 $18,837 Conveyer maintenance 2 $1,920 $96 $2,016 Stacker maintenance 1 $87,600 $2,190 $89,790 Dozer maintenance 1 $94,900 $2,373 $97,273 Total per annum $203,257 $6,849 $210,106 Totals may not sum due to rounding 21.2.3.10 LIGHT VEHICLE REQUIREMENTS A total of two general purpose trucks will be required to transport personnel around site when necessary. A zoom boom for transporting tote bags and large kimberlite samples around the plant will also be required. The annual maintenance costs on these vehicles are shown in Table 21.42. Table 21.42: Annual Maintenance Costs for Plant Vehicles

Description Unit Costs PST Total Cost General purpose trucks 2 $4,380 $110 $4,490 Zoom Boom 1 $10,950 $274 $11,224 Total per annum $15,330 $383 $15,713 Totals may not sum due to rounding 21.2.3.11 LABORATORY REQUIREMENTS A small laboratory facility will be available on site for carrying out a number of metallurgical and environmental tests. Typical equipment in this facility will include a sieve shaker, sieves, an oven, mass balances, beakers, settling flasks, pH EC TDS meters, Field CI meter, a magnetic susceptibility meter, density scale, a digital camera, microscope, stopwatches, buckets, test tubes (polypropylene), sample trays, tape measures, magnets, a computer and stationery. This equipment will require ongoing maintenance and periodic replacement. It is estimated that the annual operating cost for maintaining the equipment in the laboratory facility will be $5,510.00 ($5,785.50 inclusive of PST).

214

21.2.3.12 SUMMARY The operational costs for annual processing are summarized in Table 21.43. Table 21.43: Summary of Annual Processing Operation Costs

Area Total Cost (CAD$) Site Services Water Treatment $346,801 Software requirements $27,542 Personnel Salaries (Operational) $7,336,472 Personnel Salaries (Maintenance) $4,387,825 Process Plant Power Consumption $15,655,067 Process Plant Consumables $11,845,706 PKCF Operational Requirements $2,993,097 Coarse Reject Stockpiles Operational Requirements $257,502 Recovery Rejects Stockpiles Operational Requirements $210,106 Light Vehicle Requirements $15,713 Laboratory Requirements $5,786 Total per annum $43,086,026

Totals may not sum due to rounding 21.2.4 GENERAL AND ADMINISTRATION The general and administration (G&A) costs address components that support the overall mine and are not directly related to mining or processing. Table 21.44 shows the overall components of the G&A costs. The G&A costs consist of fixed and variable cost components. The fixed costs are assumed to be stable over the life of mine, with slight reductions in some areas toward the end of mine life. The variable costs cover areas that are known to change during the LOM.

215

Table 21.44: General and Administration Costs

Fixed G&A Components Cost Per Year Cost Per Ore Tonne Processed

G&A Personnel $16,288,650 $1.14 Building Utilities $3,212,140 $0.22 Site Services Mobile Equipment $1,690,461 $0.12 Health & Safety $1,189,815 $0.08 Employee / Public Relations $873,170 $0.06 Consumables $652,140 $0.05 Janitorial $517,920 $0.04 Light Vehicles $486,096 $0.03 Bulk Sample Plant Operation $383,280 $0.03 Software $332,535 $0.02 Reclamation Credit Facility $301,000 $0.02 Environmental Supplies and Compliance $153,625 $0.01 Licenses and Fees $200,790 $0.01 Communications $175,616 $0.01 Legal Services $175,000 $0.01 Waste Management $91,455 $0.01 Fixed G&A Total $26,723,963 $1.87 Variable G&A Components Range Per Year Range per Ore

Tonne Processed Surface Lease Costs $1.5M - $2.1M $0.10 - $0.15 Municipal & Education Taxes $4.0M - $4.7M $0.28 - $0.33 Insurance $2.62M - $2.63M $0.17 – $0.18 Variable G&A Total $8.1M - $9.4M $0.55 - $0.66 Total G&A Costs $35.0M - $36.1M $2.42 - $2.53

Table 21.45 shows the details of the G&A cost estimate by year.

216

Tab

le 2

1.45

: G

ener

al a

nd a

dmin

istr

atio

n C

ost E

stim

ate

by Y

ear

Tot

al G

&A

Sum

mar

y (I

nclu

ding

Fix

ed a

nd V

aria

ble

Com

pone

nts)

20

17

2018

20

19

2020

20

21

2022

20

23

2024

20

25

2026

Fixe

d G

&A

Com

pone

nts

$26,

723,

963

$2

6,72

3,96

3 $2

6,72

3,96

3 $2

6,72

3,96

3 $2

6,72

3,96

3 $2

6,72

3,96

3 $2

6,72

3,96

3 $2

6,72

3,96

3 $2

6,72

3,96

3 $2

6,72

3,96

3 V

aria

ble

G&

A

Com

pone

nts

Surf

ace

Lea

se C

osts

$1

,645

,263

$1

,688

,167

$1

,733

,649

$1

,840

,355

$1

,873

,223

$1

,926

,641

$1

,979

,442

$2

,012

,311

$2

,045

,179

$2

,102

,828

Mun

icip

al T

axes

$

4,00

8,20

5

$4,

301,

858

$4,

652,

537

$4,

680,

123

$4,

675,

867

$4,

684,

285

$4,

683,

681

$4,

695,

480

$4,

696,

733

$4,

701,

578

Insu

ranc

e $

2,62

8,48

3

$2,

630,

929

$2,

630,

929

$2,

630,

929

$2,

630,

929

$2,

630,

929

$2,

630,

929

$2,

630,

929

$2,

630,

929

$2,

630,

929

Tot

al V

aria

ble

G&

A

$8,

281,

951

$

8,62

0,95

4 $

9,01

7,11

5 $

9,15

1,40

7 $

9,18

0,01

9 $

9,24

1,85

5 $

9,29

4,05

3 $

9,33

8,72

0 $

9,37

2,84

1 $

9,43

5,33

5

Tot

al G

&A

per

Yea

r $

35,0

05,9

14

$35

,344

,917

$

35,7

41,0

78

$35

,875

,369

$

35,9

03,9

82

$35

,965

,818

$

36,0

18,0

15

$36

,062

,683

$

36,0

96,8

04

$36

,159

,298

Ton

nes P

roce

ssed

1

4,31

0,00

0

14,

310,

000

14,

310,

000

14,

310,

000

14,

310,

000

14,

310,

000

14,

310,

000

14,

310,

000

14,

310,

000

14,

310,

000

Tot

al P

er T

onne

Pr

oces

sed

$2.

45

$2.

47

$2.

50

$2.

51

$2.

51

$2.

51

$2.

52

$2.

52

$2.

52

$2.

53

Tot

al G

&A

Sum

mar

y (I

nclu

ding

Fix

ed a

nd V

aria

ble

Com

pone

nts)

20

27

2028

20

29

2030

20

31

2032

20

33

2034

20

35

2036

Fixe

d G

&A

Com

pone

nts

$26

,723

,963

$

26,7

23,9

63

$26

,723

,963

$

26,7

23,9

63

$26

,723

,963

$

26,7

23,9

63

$26

,723

,963

$

26,7

23,9

63

$26

,723

,963

$

26,7

23,9

63

Var

iabl

e G

&A

C

ompo

nent

s

Surf

ace

Lea

se C

osts

$

1,64

2,67

0

$1,

642,

670

$1,

480,

826

$1,

480,

826

$1,

480,

826

$1,

480,

826

$1,

480,

826

$1,

480,

826

$1,

480,

826

$1,

364,

404

Mun

icip

al T

axes

$

4,70

3,49

5

$4,

697,

552

$4,

695,

044

$4,

616,

981

$4,

615,

187

$4,

612,

668

$4,

610,

626

$4,

610,

350

$4,

610,

788

$4,

611,

019

Insu

ranc

e $

2,63

0,92

9

$2,

630,

929

$2,

630,

929

$2,

630,

929

$2,

630,

929

$2,

630,

929

$2,

630,

929

$2,

630,

929

$2,

630,

929

$2,

630,

929

Tot

al V

aria

ble

G&

A

$8,

977,

094

$

8,97

1,15

2 $

8,80

6,79

9 $

8,72

8,73

7 $

8,72

6,94

3 $

8,72

4,42

4 $

8,72

2,38

1 $

8,72

2,10

6 $

8,72

2,54

4 $

8,60

6,35

2

Tot

al G

&A

per

Yea

r $

35,7

01,0

57

$35

,695

,114

$

35,5

30,7

62

$35

,452

,700

$

35,4

50,9

05

$35

,448

,387

$

35,4

46,3

44

$3,

546,

068

$35

,446

,507

$

26,1

99,0

49

Ton

nes P

roce

ssed

1

4,31

0,00

0

14,

310,

000

14,

310,

000

14,

310,

000

14,

310,

000

14,

310,

000

14,

310,

000

14,

310,

000

14,

310,

000

7,01

0,71

2

Tot

al P

er T

onne

Pr

oces

sed

$2.

49

$2.

49

$2.

48

$2.

48

$2.

48

$2.

48

$2.

48

$2.

48

$2.

48

$1.

83

217

21.2.4.1 FIXED G&A COMPONENTS 21.2.4.1.1 LABOUR This includes all manpower related to administrative, human resources and training, purchasing, maintenance supervision, health and safety, environmental, technical services, site services and security functions. The BSP personnel are included under technical services. Labour costs include all burdens, specifically wages, overtime allowances, night shift premiums, bonuses, vacation pay, EI, CPP, health, dental and life insurance, pension allowances, company / employee savings plans, Health care spending accounts, WCB, employee family assistance, boot and tool allowances, training allowances and pension administration costs. The overall average payroll burden for indirect costs is 13 % of total compensation. Labour costs for the FS were derived from averages of recent union contract awards in the potash industry, average wage rates from the northern Saskatchewan uranium industry and published wage tables from the Saskatchewan Mining Association. Details of the estimated G&A labour cost are shown in Table 21.46.

218

Tab

le 2

1.46

: E

stim

ated

G&

A L

abou

r C

ost

SIT

E P

RO

DU

CT

ION

G

&A

WO

RK

FOR

CE

N

o. o

f Po

sitio

nsFo

reca

stA

nnua

lSa

lary

Tot

al C

ost

per

EE

/Ann

ual

Tot

al C

ost

All

Em

ploy

ees

Tot

al O

verh

ead

per

EE

/Ann

ual

Tot

al O

verh

ead

All

Em

ploy

ees

Tot

al C

omp

Cos

t per

E

E/A

nnua

l

Tot

al C

omp

Cos

t A

ll E

mpl

oyee

s O

verh

ead

Cos

ts

Per

EE

as a

% o

f Sa

lary

Gen

eral

Man

ager

1

197,

645

229,

574

22

9,57

4

22,4

28

22,4

28

252,

002

25

2,00

2

9.77

%

Adm

inis

trativ

e A

ssis

tant

1

66,0

06

69,5

60

69,5

60

11,3

75

11,3

75

80,9

35

80,9

35

16.3

5%

Hum

an

Res

ourc

es

Supe

rinte

nden

t 1

117,

756

136,

780

13

6,78

0

15,7

20

15,7

20

152,

500

15

2,50

0

11.4

9%

HR

Co-

ordi

nato

r 1

96,6

14

107,

019

10

7,01

9

13,9

45

13,9

45

120,

965

12

0,96

5

13.0

3%

Trai

ning

Su

perin

tend

ent

1 11

7,75

6 13

6,78

0

136,

780

15

,970

15

,970

15

2,75

0

152,

750

11

.68%

Trai

ning

C

o-or

dina

tor

(Pla

nt)

1 89

,182

98

,787

98

,787

13

,571

13

,571

11

2,35

8

112,

358

13

.74%

Trai

ning

C

o-or

dina

tor

(Hea

vy E

quip

) 1

89,1

82

98,7

87

98,7

87

13,5

71

13,5

71

112,

358

11

2,35

8

13.7

4%

Trai

ning

/HR

Cle

rk

1 58

,823

65

,159

65

,159

10

,772

10

,772

75

,931

75

,931

16

.53%

Man

ager

, A

dmin

istra

tion

1 14

9,43

2 17

3,57

3

173,

573

18

,380

18

,380

19

1,95

3

191,

953

10

.59%

Site

Con

trolle

r / S

enio

r A

ccou

ntan

t 1

118,

134

130,

857

13

0,85

7

15,7

52

15,7

52

146,

609

14

6,60

9

12.0

4%

Acc

ount

ant

1 83

,930

10

5,62

4

105,

624

13

,820

13

,820

11

9,44

5

119,

445

13

.08%

Acc

ount

s Pa

yabl

e A

dmin

istra

tor

2 57

,546

72

,421

14

4,84

2

11,3

10

22,6

19

83,7

31

167,

461

15

.62%

Payr

oll A

dmin

istra

tor

1 57

,546

72

,421

72

,421

11

,310

11

,310

83

,731

83

,731

15

.62%

IS S

uper

viso

r 1

98,5

10

123,

973

12

3,97

3

15,4

58

15,4

58

139,

430

13

9,43

0

12.4

7%

IS T

echn

icia

n 2

63,0

84

79,3

90

158,

781

12

,087

24

,173

91

,477

18

2,95

4

15.2

2%

Rec

eptio

nist

1

43,6

80

52,6

18

52,6

18

9,96

0

9,96

0

62,5

78

62,5

78

18.9

3%

Supp

ly C

hain

Man

ager

1

141,

779

164,

683

16

4,68

3

17,9

87

17,9

87

182,

671

18

2,67

1

10.9

2%

Purc

hasi

ng A

gent

1

93,2

44

103,

287

10

3,28

7

13,9

12

13,9

12

117,

199

11

7,19

9

13.4

7%

War

ehou

se S

upv

/ In

v C

ontro

l Adm

in

1 93

,078

11

7,13

7

117,

137

14

,941

14

,941

13

2,07

8

132,

078

12

.76%

Buy

er /

Expe

dito

r 1

76,2

74

95,9

89

95,9

89

13,3

42

13,3

42

109,

331

10

9,33

1

13.9

0%

Ship

per /

Rec

eive

r 2

64,2

00

77,3

38

154,

675

12

,193

24

,386

89

,530

17

9,06

1

15.7

7%

War

ehou

se F

loor

4

76,8

40

106,

162

42

4,64

9

14,4

06

57,6

23

120,

568

48

2,27

2

13.5

7%

Man

ager

, Env

ironm

ent

1 13

8,37

1 16

0,72

5

160,

725

17

,701

17

,701

17

8,42

6

178,

426

11

.01%

Envi

ronm

enta

l En

gine

er

1 13

0,41

8 14

4,46

4

144,

464

17

,033

17

,033

16

1,49

8

161,

498

11

.79%

219

Envi

ronm

ent

Co-

ordi

nato

r 1

94,3

38

118,

723

11

8,72

3

15,0

61

15,0

61

133,

784

13

3,78

4

12.6

9%

Envi

ro T

ech

2

82,0

32

10

3,23

6

20

6,47

1

13

,890

27

,779

11

7,12

5

234,

251

13

.45%

Envr

ionm

ent

Lab

Tech

nolo

gist

2

72,4

24

91

,144

182,

288

12,9

75

25,9

51

104,

120

20

8,23

9

14.2

4%

Man

ager

, Mai

nten

ance

1

147,

456

17

1,27

8

17

1,27

8

18

,464

18

,464

18

9,74

2

189,

742

10

.78%

Mai

nten

ance

G

ener

al

Fore

man

2

118,

714

13

1,49

9

26

2,99

9

16

,051

32

,102

14

7,55

0

295,

100

12

.21%

Mai

nten

ance

Eng

inee

r 1

109,

820

12

1,64

7

12

1,64

7

15

,304

15

,304

13

6,95

1

136,

951

12

.58%

Mai

nten

ance

Pla

nner

2

92,6

70

11

6,62

4

23

3,24

7

14

,902

29

,804

13

1,52

6

263,

051

12

.78%

Mai

nten

ance

C

lerk

/

Sche

dule

r 2

58,8

23

70

,860

141,

721

11,6

81

23,3

62

82,5

42

165,

083

16

.48%

Fab

Shop

Sup

ervi

sor

1 10

0,25

4

126,

168

126,

168

17,1

84

17,1

84

143,

351

14

3,35

1

13.6

2%

Elec

trica

l Sup

ervi

sor

1 10

0,25

4

126,

168

126,

168

17,1

84

17,1

84

143,

351

14

3,35

1

13.6

2%

Site

Se

rvic

es

Supe

rvis

or

2 97

,056

122,

143

244,

286

15,3

19

30,6

39

137,

462

27

4,92

5

12.5

4%

Site

Ser

vice

s Ope

rato

r 8

76,9

76

10

6,34

7

85

0,77

9

14

,420

11

5,36

2

120,

768

96

6,14

2

13.5

6%

Pipe

fitte

r 1

87,1

77

10

5,01

6

10

5,01

6

15

,939

15

,939

12

0,95

5

120,

955

15

.18%

Car

pent

er

1 87

,177

105,

016

105,

016

15,9

39

15,9

39

120,

955

12

0,95

5

15.1

8%

Was

h B

ay A

ttend

ant

2 59

,192

80,4

20

16

0,84

0

12

,393

24

,787

92

,814

18

5,62

7

15.4

1%

Man

ager

, Te

chni

cal

Serv

ices

1

144,

988

16

8,41

1

16

8,41

1

18

,257

18

,257

18

6,66

8

186,

668

10

.84%

Tech

nica

l Se

rvic

es

Cle

rk

1 58

,823

74,0

28

74

,028

11,6

81

11,6

81

85,7

09

85,7

09

15.7

8%

Seni

or M

ine

Engi

neer

1

125,

260

13

8,75

0

13

8,75

0

16

,600

16

,600

15

5,35

1

155,

351

11

.96%

Min

e En

gine

er

1 94

,558

104,

742

104,

742

14,0

23

14,0

23

118,

764

11

8,76

4

13.3

9%

Proj

ect E

ngin

eer

1 10

3,35

9

114,

491

114,

491

14,7

62

14,7

62

129,

253

12

9,25

3

12.8

9%

Geo

tech

nica

l Eng

inee

r 1

94,5

58

10

4,74

2

10

4,74

2

14

,023

14

,023

11

8,76

4

118,

764

13

.39%

Surv

eyor

4

91,6

77

12

9,49

3

51

7,97

2

15

,856

63

,425

14

5,34

9

581,

397

12

.24%

Seni

or M

ine

Geo

logi

st

1 10

9,33

5

121,

111

121,

111

15,2

63

15,2

63

136,

374

13

6,37

4

12.6

0%

Min

e G

eolo

gist

1

87,8

37

124,

069

12

4,06

9

15,4

47

15,4

47

139,

517

13

9,51

7

12.4

5%

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e G

eolo

gica

l 4

84,0

95

120,

548

48

2,19

3

15,1

79

60,7

17

135,

727

54

2,90

9

12.5

9%

220

Tech

nolo

gist

Man

ager

, Pr

oces

s D

esig

n 1

154,

288

179,

213

17

9,21

3

19,0

38

19,0

38

198,

251

19

8,25

1

10.6

2%

Bul

k Sa

mpl

e Pl

ant

Gen

eral

For

eman

1

115,

745

128,

210

12

8,21

0

15,8

01

15,8

01

144,

012

14

4,01

2

12.3

2%

BSP

Ope

rato

r 2

76,9

31

92,6

73

185,

347

13

,404

26

,809

10

6,07

8

212,

155

14

.46%

Indu

stria

l Mec

hani

c 1

91,5

78

110,

317

11

0,31

7

16

,437

16

,437

12

6,75

4

126,

754

14

.90%

Man

ager

, H

ealth

&

Sa

fety

1

141,

779

164,

683

16

4,68

3

17

,987

17

,987

18

2,67

1

182,

671

10

.92%

Hea

lth &

Saf

ety

Cle

rk

1 58

,823

74

,028

74

,028

11,6

81

11,6

81

85,7

09

85,7

09

15.7

8%

Hea

lth &

Saf

ety

Co-

ordi

nato

r (Pl

ant)

1 89

,182

11

2,23

4

112,

234

14,5

70

14,5

70

126,

804

12

6,80

4

12.9

8%

Hea

lth &

Saf

ety

Co-

ordi

nato

r (M

ine)

1

89,1

82

112,

234

11

2,23

4

14

,570

14

,570

12

6,80

4

126,

804

12

.98%

Occ

upat

iona

l Hea

lth &

W

elln

ess N

urse

2

91,1

72

128,

780

25

7,56

0

15

,803

31

,605

14

4,58

3

289,

165

12

.27%

Man

ager

, Sec

urity

1

141,

779

164,

683

16

4,68

3

17

,987

17

,987

18

2,67

1

182,

671

10

.92%

Supe

rinte

nden

t, Te

chni

cal S

ecur

ity

1 11

7,75

6 13

6,78

0

13

6,78

0

15

,970

15

,970

15

2,75

0

152,

750

11

.68%

Inve

stig

ator

1

100,

408

111,

222

111,

222

14,5

14

14,5

14

125,

735

12

5,73

5

13.0

5%

Secu

rity

Supe

rvis

or

2 10

0,40

8 14

1,82

5

28

3,65

0

16

,787

33

,574

15

8,61

2

317,

224

11

.84%

Secu

rity

Team

Lea

ds

4 84

,002

10

2,95

4

41

1,81

8

14

,208

56

,833

11

7,16

3

468,

650

13

.80%

Secu

rity

Off

icer

s 24

69

,140

95

,701

2,29

6,82

0

13

,585

32

6,03

9

109,

286

2,

622,

859

14

.20%

Secu

rity

Cle

rk

1 58

,823

70

,860

70,8

60

11

,681

11

,681

82

,542

82

,542

16

.48%

Secu

rity

Off

icer

s -

Surv

eilla

nce

8 87

,311

12

0,38

9

96

3,10

8

15

,522

12

4,17

6

135,

911

1,

087,

284

12

.89%

Sum

of C

osts

12

8

14

,140

,668

1,86

4,08

4

16

,004

,751

Pens

ion

Adm

inis

trat

ion

Fees

13,8

12

13

,812

Tra

inin

g, L

earn

ing

&

Dev

elop

men

t (1

.91%

of

pay

roll)

27

0,08

7

2

70,0

87

Tot

al

G&

A

Em

ploy

ees

128

14,4

10,7

55

1,

877,

895

16,2

88,6

50

13.0

3%

221

21.2.4.1.2 BUILDING UTILITIES This includes only the costs for heating, power and maintenance materials for all site buildings. Manpower for building maintenance requirements is covered under personnel costs. 21.2.4.1.3 SITE SERVICES MOBILE EQUIPMENT This category includes operation and maintenance costs for mobile equipment related to site services functions. Total annual costs are estimated at $7.448 M. Hourly operating costs were estimated based on previous site operation costs incurred during exploration. Total costs were extrapolated by estimating the average usage per day. Site Services Equipment is listed below in Table 21.47. Table 21.47: Site Services Mobile Equipment

Site Services Equipment QuantityFuel truck (20,000 L) 1 Rough Terrain crane 35 Ton 1 980K Wheel Loader 2 938H Wheel Loader 2 Telehandler 2 Vac/Water Truck 1 Pick up trucks 2500 series 39 Crane 115 ton 1 Skid steer 2 Fire truck 1 Ambulance/Medical equipment 1 Bucket Truck 1 Forklift warehouse (inside) 5,000 lbs 1 Forklift warehouse (outside) 8,000 lbs 1 Forklift warehouse (outside) 12,000 lbs

1

Yard Sander 1 Busses 4 Crawler D8 LGP 2 Grader 16M 2 Geotechnical Drill 2800 Morooka 1 Light Service Truck 1

21.2.4.1.4 HEALTH & SAFETY This category includes components for coverage of health personnel during vacation, allowances for emergency response, Return to Work fitness medicals, safety awards, and general average costs for the site-wide safety program. These were either calculated from first principles or averaged from current costs supplied by potash and uranium operations in the province.

222

21.2.4.1.5 EMPLOYEE / PUBLIC RELATIONS Employee Relations costs include allowances for employee social functions, work related employee travel, benefits and compensation consultants, drug and alcohol testing, and employee recruitment and relocation. Public Relations costs include allowances for site tours, scholarships, regular community open houses, and periodic meetings of the Diamond Development Advisory Committee (DDAC). These costs were derived from previous site operations budgets, or first principles. 21.2.4.1.6 CONSUMABLES These costs include costs for office supplies, computer equipment, security system maintenance, and consumables freight. Freight points of origins are Prince Albert, Saskatoon, or Edmonton, as the quoted costs for all materials are provided as FOB to those locations. 21.2.4.1.7 JANITORIAL Janitorial costs were calculated from first principles based on contractor costs taken from historical annual exploration budgets. 21.2.4.1.8 LIGHT VEHICLES Company light vehicle costs were derived from first principles, using an average allotment of kilometres per year (variable mileage for different departments), at a fixed cost per kilometre covering insurance, fuel and maintenance. 21.2.4.1.8 BULK SAMPLE PLANT OPERATION These costs include any costs for the operation of the Bulk Sample Plant not related to personnel or building utilities, primarily costs relating to materials and maintenance. 21.2.4.1.9 SOFTWARE These costs include costs for office productivity software, technical services software, security, dispatch, environmental monitoring and enterprise software. 21.2.4.1.10 RECLAMATION CREDIT FACILITY This item incorporates the carrying cost of the credit facility, estimated at 0.35 % of the estimated closure cost of $86 M. 21.2.4.1.11 ENVIRONMENTAL SUPPLIES AND COMPLIANCE These costs include costs for anticipated regulatory sampling requirements and are based on budgets from previous operations. These costs also include allowances for annual consultant charges for dam monitoring, noise and dust emissions, and plant and animal surveys.

223

21.2.4.1.12 LICENSES AND FEES These costs include costs for Saskatchewan Watershed Authority water use, the licensing of trades, business permits, professional association fees and professional development. 21.2.4.1.13 COMMUNICATIONS Communications costs include costs for fixed land line telephones, fax service, internet connections, management and supervisor cell phones and site radios. 21.2.4.1.14 LEGAL SERVICES These costs represent an estimate for annual legal services that may be required during operation, including review of purchasing contracts, filing of regulatory documents, and other legal requirements. 21.2.4.1.15 WASTE MANAGEMENT Waste management costs include costs for the maintenance of the incinerator building, recycling and HSWDG handling and disposal, exclusive of fuel and manpower costs. 21.2.4.2 VARIABLE G&A COSTS The variable G&A components encompass those costs that change on a yearly basis beyond any price or cost escalation. The key areas are surface leases, municipal taxation and site insurance. 21.2.4.2.1 SURFACE LEASES Surface leasing of Crown land in Saskatchewan falls under two categories, depending whether the land is undeveloped or developed. It is estimated that the total surface lease area required for mining will be 7,077 hectares. The ratio of developed to undeveloped area will vary with time as mining progresses and portions of the land move between developed and undeveloped status through mine development and progressive reclamation. 21.2.4.2.2 MUNICIPAL TAXATION Municipal taxation is based on the assessed values of buildings, mobile equipment and land at the end of every calendar year and applied the following year. Municipal assessments on land are based on three categories: high, medium and low usage. The majority of the land under assessment will be in the low usage category. It is anticipated that current mining areas at the end of each year will be assessed as medium usage, as will be the current working area of the overburden pile, the PKCF and the Coarse PK piles. Land areas with site buildings will be assessed in the high category. Off road equipment on site and operating at the end of every calendar year will also be assessed at 50 % of its original capital value. 21.2.4.2.3 INSURANCE Insurance will be a fixed cost for the majority of the mine life, with the majority of annual variability during construction (covered under the capital indirect costs). However, it is

224

anticipated that there will be increases during the first two years of production before this becomes a fixed cost, and accordingly, this is considered to be a variable G&A cost. 21.2.5 OFFSITE SORTHOUSE AND SITE INTERPRETIVE CENTRE

OPERATIONAL COSTS 21.2.5.1 SORTHOUSE The Sorthouse provides an offsite facility for the secure washing, sorting and grading of the goods recovered from the Star and Orion South kimberlite units. The Sorthouse will be located in Saskatoon approximately 250 km from the mine site, and will be a two storey building with a footprint of 769 m2 and a total floor space of 1,509 m2. The facility will include an area for diamond sales. The Sorthouse will handle all production from the mine, expected to be approximately 800,000 stones per month. Once at the Sorthouse, the stones will first be subjected to an acid wash followed by a neutralizing rinse. The cleaned diamonds will then be moved to the sorting and grading area for valuation. The operational costs for the Sorthouse are based on the operational costs of the facility for one year. The operational costing was divided into 5 areas as follows:

1. Consumables and Wear Replacements; 2. Electrical Maintenance and Software Requirements; 3. Manpower Salaries (Operational and Security); 4. Building Costs and Municipal Fees; and 5. Transportation Costs and Commission on Sales.

21.2.5.1.1 CONSUMABLES AND WEAR REPLACEMENTS The diamonds will require cleaning with a variety of acid mixes. Accordingly, a section of the Sorthouse will be set up for handling and disposal of acids in an environmentally friendly manner. Personal protective equipment (PPE) (gloves, face masks and safety suits) will be worn by staff members involved in the cleaning of the diamonds. All PPE will require periodic replacement. Significant quantities of calcium gluconate gel, an acid neutralizer, will be required with first aid supplies and will require regular replacement on expiry. The sorting equipment consists mainly of a colour sorter, electronic diamond counters and scales. Grading of diamonds will be carried out manually with optical head loupes, tweezers, scoops, special paper pads etc. The sorting equipment will require maintenance while the items used for grading will have to be replaced periodically. The annual operating costs associated with expenditures on consumables and general wear items are detailed in Table 21.48.

225

Table 21.48: Operating Costs Associated with Expenditures on Consumables and General Wear Items

Consumables and Wear Items

Quantity Annual Fees PST Total Cost

False diamond disposal 117 kg $1,825 $91 $1,916 Acid diluted water (1:300) 93,600 ltr $163 $8 $172 Acids (3 types) 312 ltr $24,252 $1,213 $25,464 PPE – Gloves, shield, apron Set/yr $200 $10 $210 PPE – safety suit 0.25 suit/yr $125 $6 $131 Calcium Gluconate Gel 1 $100 $5 $105 Machinery parts $300 $15 $315 Sorting consumables 3 % of

Capex $81,780 $4,089 $85,869

Office supplies $6,000 $300 $6,300 Total per annum $114,745 $5,737 $120,482

Totals may not sum due to rounding 21.2.5.1.2 ELECTRONIC MAINTENANCE AND SOFTWARE REQUIREMENTS The majority of the electronic equipment will be required for security purposes and will include a body scanner, luggage scanners, metal detectors and a drug detector. The surveillance system will be comprised of closed circuit television (CCTV) cameras and viewing monitors which will record the activities in the Sorthouse. Twelve desktop computers will be needed for Sorthouse operational requirements. These computers will be configured with MicroSoft (MS) tools. Annual license fees on the software will apply. In addition, an allowance for 15 telephone connections and 2 facsimile connections from SaskTel has been made. The security system software will be similar to that used at site. Annual license fees, maintenance and upgrades on this software will be approximately $50,000.00 per annum. The annual operating costs associated with the maintenance of the electronic scanners, surveillance equipment and software are detailed in Table 21.49. Table 21.49: Annual Operating Costs Associated with the Maintenance of the Electronic Scanners, Surveillance Equipment and Software

Maintenance and Software Annual Fees

PST Total

Maintenance of Scanners 3 % of capital $18,120 $906 $19,026 Maintenance of surveillance system

3 % of capital $1,650 $83 $1,733

Microsoft Office Tools 12 $2,400 $120 $2,520 Rent Fees - Fax, Copier, Phone 15 phones & 2

Faxes $19,630 $982 $20,612

Security software fees $50,000 $2,500 $52,500 Total per annum $91,800 $4,590 $96,390

Totals may not sum due to rounding

226

21.2.5.1.3 MANPOWER SALARIES In order to operate the Sorthouse, a personnel complement of 18 persons trained in evaluating diamonds is required. Additional personnel that will be required include a clerk for administration purposes, a statistician and a janitor. A part time information technician (IT) would also be required from head office when necessary. A team of nine personnel will be responsible for overseeing the security aspects of the Sorthouse. An organogram of the envisaged Sorthouse personnel is shown as Figure 21.6. All supervisory positions have a double line and are coloured. Figure 21.6: Sorthouse Personnel

The number of persons in each role, the shifts and the annual compensation for each, including bonuses and perquisites, are shown in Table 21.50.

227

Table 21.50: Sorthouse Roles, Shifts, Annual Compensation, Including Bonuses and Perquisites

Role Number Shift Remuneration Manager, Offsite Sorthouse 1 Day $200,742 Sorthouse Clerk 1 Day $72,763 Statistician 1 Day $129,003 Superintendent, Sorthouse 1 Day $160,851 Acid digestion diamond cleaner 2 Day $200,893 Diamond Grader Supervisor 1 Day $120,185 Diamond Sorter 12 Day $1,263,111 Diamond Sorter Trainee 2 Day $190,876 Information Technician 0.4 Day $35,132 Sorting Facility Totals 21.4 $2,373,555 Superintendent, Security 1 Day $152,500 Security Officer 2 Day $161,512 Security Officer 6 Day & Night $654,215 Janitor 1 Day $54,861 Sorthouse Security Totals 10 $1,023,087 Ongoing training and recruitment 31 $67,455 Annual Staff Entertainment $30,000 Total per annum $3,494,098

Totals may not sum due to rounding 21.2.5.1.4 BUILDING COSTS AND MUNICIPAL FEES The Sorthouse will be classified as a commercial property and will require electrical, natural gas and water utilities. Annual electrical requirements are estimated at 30 kWh for a 24 hour operation to power the necessary electrical equipment. Natural gas will be required for general heating purposes. Water will be required in the diamond cleaning facility, for building usage and for general human usage. Building insurance costs are estimated at 0.1 % of valuables, building maintenance costs are estimated at 1.5 % of the building costs, and municipal and educational taxes based on the building’s construction costs will be paid annually. A general operating business license will have to be purchased annually. The building and municipal costs and calculations are shown in Table 21.51.

228

Table 21.51: Building Costs and Municipal Fees

Utility Quantity Annual Fees PST Total Cost Electricity and service charges

30 kWh $29,439.24 $1,471.96 $30,911

Water and services charges 360,000 ltr $1,979.86 $99.00 $2,079 Municipal and Education Taxes

$111,285.20 $111,285

Gas and Heating $4,200.00 $210.00 $4,410 Insurance $50,000.00 $50,000 Building Maintenance $44,724.74 $44,725 Business Licence $70.00 $3.50 $74 Total per annum $241,699.04 $1,784.46 $243,484

Totals may not sum due to rounding 21.2.5.1.5 TRANSPORTATION COSTS AND COMMISSIONS A security company will be contracted to transport diamond concentrate from the Process Plant in the FalC area to the Sorthouse in Saskatoon. Trips will be carried out in a random fashion. The security company will also transport the graded diamonds from the Sorthouse to Antwerp where they will be sold. Sales in Antwerp are expected to occur 10 times per year and will proceed by way of tender held by WWW or a similar organization. Two persons from the Company will be expected to attend each sale. It is anticipated that the Company will pay commission on the sale of the diamonds at a rate of 1.75 % for the first $200 M of sales and at a rate of 0.75 % for any sales over $200 M. The commission and transportation costs for these high value goods are detailed in Table 21.52. Table 21.52: Transportation Costs and Commission on Sales

Transportation Costs Annual Fees PST Total Cost Brinks (FalC to Saskatoon) $52,000 $2,600 $54,600 Brinks (Saskatoon to Antwerp) $386,096 $19,305 $405,401 Travel costs (2 persons, 10 trips) $289,000 $14,450 $303,450 Commission on Sales $6,537,500 $6,537,500 Total per annum $7,264,596 $36,355 $7,300,951

Totals may not sum due to rounding 21.2.5.2 THE INTERPRETIVE CENTRE The interpretive centre will be located at site. It will feature parcels of rough and polished diamonds and will be equipped with a vault, surveillance cameras and scanners, all of which will require regular maintenance. These costs are included under site maintenance. General office equipment such as computers and phones would also be available in the centre. The costs associated with running the interpretive centre include the general operational costs as well as salaries for the personnel running the centre and are detailed in Table 21.53.

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Table 21.53: Interpretive Centre Costs

Description Annual Fees PST Total Cost Interpretive Centre Co-ordinator $70,916 $70,916 Interpretive Centre Guide $15,626 $15,626 Office Supplies and Stationary $2,000 $100 $2,100 MS Office for computers $400 $20 $420 Phones and Fax machines $2,116 $106 $2,222 Maintenance of surveillance Equipment $300 $15 $315 Maintenance of security Equipment $4,216 $211 $4,426 Total per annum $95,574 $452 $96,026

Totals may not sum due to rounding 21.2.5.3 SUMMARY The operational costs for the various sections of the Sorthouse and Interpretive Centre are summarized in Table 21.54. Table 21.54: Summary of Sorthouse and Interpretive Centre Costs

Area Total Cost (CAD$) Consumables and wear items $120,482 Electrical maintenance and software requirements $96,390 Manpower Salaries (Operational and Security) $3,494,098 Municipal fees $243,484 Transportation and Commission costs $7,300,951 The Interpretive Centre $96,026 Total per annum $11,351,430

Totals may not sum due to rounding 21.2.6 SALES AND MARKETING

Shore’s diamond sales and marketing efforts will focus on the sale of rough diamonds. Shore also aims to promote the profile of FalC diamonds from Saskatchewan. All diamond sales will comply with the regulations of the Kimberley Process, which ensures customers of the integrity of the chain of custody of diamonds between the producer and the final retail sale. Shore anticipates the establishment of an Antwerp-based marketing office that will either be operated by a diamond sales agent or Shore personnel. The costs of these services are expected to be approximately 2.0 % of gross revenue. Diamond industry consultants, WWW, have provided Shore with a preliminary diamond marketing strategy, diamond price projections and diamond price escalation values. In-house research has confirmed that the proposed diamond price escalation of 3.5 % is consistent with industry standards. Shore has reviewed the studies and analyses and the results support the assumptions in the Report.

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22.0 ECONOMIC ANALYSIS The Project has been valued using a discounted cash flow analysis. The effects of changes in key cash flow inputs on the economic viability of the Project have also been assessed. 22.1 SUMMARY The Base Case presented herein considers the February 2011 price book Model diamond prices plus 15 percent; Case 1 utilizes the February 2011 price book High Model diamond prices. The pre-tax and royalty results of the cash flow analysis for the Base Case and Case 1 are summarized in Table 22.1. The after-tax and royalty results of the cash flow analysis for the Base Case and Case 1 are summarized in Table 22.2. Table 22.1: Pre-Tax and Royalty Results of the Cash Flow Analysis

1 The Project schedule includes an estimated 5 year pre-production period and a 20 year long mine production phase followed by mine closure.

2 The projected gross annual revenues from rough diamond sales have been estimated taking into consideration the mining and processing schedule; Model diamond parcel values by kimberlite unit presented in the WWW February 2011 re-pricing of samples of Star and Orion South diamonds; a US$0.945=CAD$1.00 exchange rate; and Shore’s current perception of the future diamond market.

3 The cash flow model for the Project estimates future federal, provincial and local government taxes. 4 The estimated capital and operating costs (± 15 % estimation) were derived from first principles and supported by

budget quotations and/or cost information derived from relevant cost databases and/or contractor quotations, and assumptions. The models include $253 million of contingency estimates on both capital and operating costs.

5 The results of the FS presented in this Report assess the economic viability of the following mining sequence: Star pit - Phases 1 to 4, followed by Orion South pit - Phases 1 and 2.

Item

Base Case (Model Price + 15

%)1,2,3,4,5 Case 1

(High Model Price)1,2,3,4,5

Pre-tax and royalty IRR 16.4 % 19.3 % Pre-tax and royalty undiscounted total cash flow

$8,307 M $10,737 M

Pre-tax and royalty NPV (5 %) $3,199 M $4,377 M Pre-tax and royalty NPV (7 %) $2,136 M $3,041 M

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Table 22.2: After-Tax and Royalty Results of the Cash Flow Analysis

1 The Project schedule includes an estimated 5 year pre-production period and a 20 year long mine production phase followed by mine closure.

2 The projected gross annual revenues from rough diamond sales have been estimated taking into consideration the mining and processing schedule; Modeled diamond parcel values by kimberlite unit presented in the WWW February re-pricing of samples of Star and Orion South diamonds; a US$0.945=CAD$1.00 exchange rate; and Shore’s current perception of the future diamond market.

3 The cash flow model for the Project estimates future federal, provincial and local government taxes. 4 The estimated capital and operating costs (± 15 % estimation) were derived from first principles and supported by

budget quotations and/or cost information derived from relevant cost databases and/or contractor quotations, and assumptions. The models include $253 million of contingency estimates on both capital and operating costs.

5 The results of the FS presented in this Report assess the economic viability of the following mining sequence: Star pit - Phases 1 to 4, followed by Orion South pit - Phases 1 and 2.

Pre-tax and royalty and after-tax and royalty results of the cash flow model for the Base Case are shown in Table 22.3. Table 22.3: Economic Analysis Results of Discounted Cash Flow Model for the Base Case

Item Pre-Tax & Royalty Basis After-Tax & Royalty Basis Undiscounted net cash flow $8,307 M $5,558 M NPV (4 %) $3,887 M $2,494 M NPV (5 %) $3,199 M $2,014 M NPV (6 %) $2,622 M $1,612 M NPV (7 %) $2,136 M $1,272 M NPV (8 %) $1,725 M $985 M NPV (9 %) $1,378 M $742 M NPV (10 %) $1,084 M $535 M IRR 16.4 % 13.7 % Payback (years) 5.3 5.3

Item

Base Case ( Model Price + 15

% )1,2,3,4,5Case 1

(High Model Price)1,2,3,4,5

After-tax and royalty IRR 13.7 % 16.3 % After-tax and royalty undiscounted total cash flow

$5,558M $7,141 M

After-tax and royalty NPV (5 %) $2,014 M $2,796 M After-tax and royalty NPV (7 %) $1,272 M $1,879 M Payback 5.3 years 3.9 years

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22.2 CASH FLOW MODEL The cash flow models for the Base Case and Case 1 are summarized in Tables 22.4 and 22.5 respectively. The cash flow model was developed by Shore and is based on the same cash flow model that was reviewed in detail by P&E for the PFS. The discounted cash flow analysis is conventional and utilizes annual cash flow inputs (annual revenues) and annual costs (i.e. operating costs, capital costs, taxes) based on the mine plan and ore processing schedule, and assumes 100 % equity (0 % debt). The annual net cash flows are discounted back to present value at the date of evaluation (assuming a 2012 start date) using a range of discount rates and summed to determine the after-tax NPV of the Project. The IRR, the discount rate at which the NPV equals zero, was determined using the cash flow model. The cash flow inputs including the key economic criterion and assumptions are reviewed in Table 22.6.

233

Tab

le 2

2.4:

Bas

e C

ase

Cas

h Fl

ow (M

odel

Pri

ce +

15

%)

234

Tab

le 2

2.5:

Cas

e 1

(Hig

h M

odel

Pri

ce)

235

22.3 ECONOMIC CRITERIA AND ASSUMPTIONS The economic criteria utilized in the Base Case and Case 1 are summarized in Table 22.6 and reviewed in the following subsections. Table 22.6: Economic Criteria Utilized in the Cash Flow Models

Area Criterion Base Case (Model Price + 15 %)

Case 1 (High Model Price)

Project Start Date

Assumed date of corporate approval to proceed with the Project

Q4, 2011 Q4, 2011

Production Parameters

Process plant functional Q4, 2016 Q4, 2016 Projected start of ore production Q4, 2016 Q4, 2016 No. of operating days per year 350 days per year 350 days per year Process plant availability 87 % 87 % Processing rate 45,000 tpd ore 45,000 tpd ore Estimated LOM total plant feed 279 Mt ore at a weighted

average 12.3 cpht grade 279 Mt ore at a weighted average 12.3 cpht grade

Diamond recovery 100 % 100 % Revenue Source of revenue Rough diamond sales Rough diamond sales

Revenue per tonne of ore processed (includes escalation)

$54.24 $63.12

Net revenue per tonne of ore processed after capital cost recovery

$19.92 $25.60

Weighted average diamond price per carat (February 2011 valuation)

US$210 plus 15% = US$242

US$281

Escalation Projected diamond price escalation 3.5 % 3.5 % Cost Assumptions

Cost escalation 0 % 0 % Exchange rate $1.00=US$0.945 $1.00=US$0.945 Marketing costs 2 % of gross revenue 2 % of gross revenue Royalties Based on Saskatchewan

royalty regime Based on Saskatchewan royalty regime

Operating Costs Mining (includes waste removal cost) $8.58 / tonne processed $8.58 / tonne processed Ore processing $3.01 / tonne processed $3.01 / tonne processed General and Administration $2.48 / tonne processed $2.48 / tonne processed

Capital Costs Capital over LOM $8.99 / tonne processed $8.99 / tonne processed Marketing Marketing cost $1.08 / tonne processed $1.26 / tonne processed Royalties Royalties cost $2.87 / tonne processed $3.81 / tonne processed Closure Mine closure cost $0.31 / tonne processed $0.31 / tonne processed Taxes Tax cost $6.98 / tonne processed $9.08 / tonne processed Contingency Applied to pre-production and mining

operating expenditures; mine, plant and facilities capital costs

$253 million $253 million

Level of Accuracy

+/- 15 % +/- 15 %

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22.3.1 PROJECT SCOPE The cash flow model is based on developing the Star and Orion South open pits, the Process Plant and infrastructure. The Project has a 5-year on-site works pre-production development period followed by a 20 year production period. 22.3.2 100 % BASIS The Project includes the 100 % Shore owned Star Kimberlite, as well as the Star West Kimberlite and the Orion South Kimberlite, which fall within the adjacent FALC-JV (66 % Shore and 34 % Newmont). The Mineral Resource Statement for the Star Kimberlite deposit, which includes Star and Star West, and the Mineral Resource Statement for the Orion South Kimberlite deposit are shown in Tables 15.1 and 15.2. The financial evaluation in the FS is done on a 100 % basis and does not separate the cash flows of the joint venture partners. 22.3.3 MINERAL RESERVE The cash flow is based on mining the Mineral Reserve, which includes mining dilution and mining loss allowances. 22.3.4 PLANT THROUGHPUT It is planned that the plant will process ore at the rate of 14.3 Mtpa or at 87 % of the 16.4 Mtpa plant design (nameplate) capacity to allow for production interruptions due to IPCC equipment moves. 22.3.5 EIS, PERMITTING, AND FS COSTS The Environmental Impact Statement for the Star-Orion South Diamond Project was submitted to Provincial and Federal regulators in December, 2010. Technical review comments have been received and incorporated into the FS as appropriate. Permitting is expected to follow potential approval of the EIS as is described in the Project schedule. The cash flow includes an allowance for costs incurred during 2012 for the completion of the EIS and costs associated with construction and operating permits. 22.3.6 BASIS OF GROSS REVENUE ESTIMATES The projected annual gross revenues from the sale of rough diamonds are based on the ore release and processing schedule and a diamond valuation carried out by WWW. The projected annual gross revenues were converted to Canadian dollars and escalated as described in Section 22.3.6.3.

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22.3.6.1 DIAMOND VALUATION The diamond prices used in the cash flow model for the Star – Orion South Diamond Project are based on valuations by WWW using their February 2011 price book. While High Model prices were used in the August 2009 reserve estimate for the Star Kimberlite, the September 2009 resource estimate for Orion South and the February 2010 combined Star and Orion South reserve estimate, the Base Case FS uses the more conservative Model prices plus 15 % for each kimberlite unit within Star and Orion South. WWW is in agreement with the use of the Model Prices plus 15 % for the FS. The Case 1 FS uses High Model prices for comparative purposes. The details of the February 2011 valuation of the Star and Orion South diamond parcels were published in Shore News Release dated March 2, 2011 and the parcel and model prices for the Star and Orion South diamonds used in this FS are listed in Table 22.7. According to WWW, current rough diamond prices are on average some 30 to 35 % higher than the February 2011 price book. WWW noted that the High Price scenario does not represent maximum values, and that, for modelling purposes, the same average price was applied to all stones of 6 ct or higher. Table 22.7: WWW Modeled Diamond Price by Kimberlite Unit

Deposit Kimberlite Lithology

ModelPrice

(US$/ct)

MinimumPrice

(US$/ct)High Price

(US$/ct)Star CANTUAR $355 $281 $499

PENSE $175 $131 $224 EJF $225 $176 $296

MJF-LJF $198 $106 $290 Orion South EJF $192 $149 $258

PENSE $129 $94 $177 22.3.6.2 CURRENCY EXCHANGE RATE The projected exchange rate (CAD$1.00=US$0.945) approximates the 60 month trailing average exchange rate. 22.3.6.3 PRICE ESCALATION The Base Case and Case 1 cash flows shown in Tables 22.4 and 22.5 utilize a 3.5 % annual compound diamond price escalation rate starting in year 2011 to year 2036. Shore anticipates that diamond prices will increase at a rate faster than costs due to long-term diamond supply / demand fundamentals. The 3.5 % escalation is based on price escalation forecasts obtained by Shore from WWW as well as a review of the industry. 22.3.7 CAPITAL COST The capital cost estimates utilized in the cash flow are described in Section 21.

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22.3.8 OPERATING COSTS The operating costs utilized in the cash flow are described in Section 21. 22.3.9 MARKETING COST It is assumed that Shore will enter into an arrangement with a diamond marketer (e.g. in Antwerp) for the sale and promotion of its rough diamonds and that marketing costs will amount to 2.0 % of gross revenue. 22.3.10 INDIRECT COSTS The following indirect costs are included in the cash flow. 22.3.10.1 EPCM COSTS The estimated mine and plant and infrastructure costs are presented in Section 21. 22.3.10.2 INDIRECT COSTS DURING THE PRE-PRODUCTION PHASE The plant and infrastructure indirect costs are detailed in Section 21.1.7. The mine indirect operating costs include:

� The pre-production Project management team including the general manager and accounting, payroll, purchasing, shipping / receiving, human resources and security personnel; the mine manager; and the maintenance manager and maintenance planner; the mine planning engineer, geotechnical engineer and surveyors; the health and safety co-ordinator and nurses.

� Site office set-up and operating costs, and the costs of operating and maintaining Shore’s light vehicles, and training, health and safety, and waste management costs.

� Estimated Project-specific insurance, legal, and surface lease costs. The cash flow excludes Shore’s corporate staff and corporate operating costs with the exception of those corporate costs included in the mine EPCM and mine pre-production indirect operating costs. 22.3.10.3 G&A COSTS The average G&A cost is $2.48 per ore tonne, incurred over the operating LOM. Pre-production G&A costs are in addition to the average indicated above and are included in pre-production capital costs.

239

22.3.10.4 PIT DEWATERING AND CRANE COSTS Pit dewatering costs incurred during the pre-production phase are included in the pit capital cost. The pit dewatering cost over the operating LOM amounts to approximately $61 M. The annual mine operating cost also includes the cost of operating and maintaining two mobile cranes that will be used for inter-bench conveyor moves and equipment maintenance. 22.3.11 WORKING CAPITAL The working capital is based on 25 % of the mining, processing and G&A costs in year 2017. 22.3.12 MINE CLOSURE COST The cash flow model includes $86 M for closure costs. 22.3.13 SALVAGE VALUE The cash flow model does not include salvage value. 22.3.14 TAXES AND ROYALTIES The cash flow model takes Federal and Provincial corporate income taxes, the Federal Goods and Services Tax (GST), Saskatchewan Provincial Sales Tax (PST), and Municipal property and education taxes and projected royalties into consideration. There are currently no producing diamond mines in the Province of Saskatchewan, but in anticipation of the development of a diamond mine, the Province has developed its diamond sector royalty structure. The FS uses that diamond royalty structure and includes the estimated royalties in total cash costs, as indicated in Tables 22.4 and 22.5. As part of the work to estimate the diamond royalties, Shore consulted with authorities at various Saskatchewan government ministries, which allowed Shore to do a detailed model of how the royalty structure would react to Shore’s specific circumstances. The diamond royalty structure adopted by the Government of Saskatchewan is competitive with those in other Canadian jurisdictions and includes two components; an ad valorem component which is 1 percent of gross revenue and a profit component, which is based on a graduated system up to a maximum 10 percent of profit. The ad valorem component has a five year royalty holiday from the date of commercial production. Detailed regulations regarding the royalty structure are still being finalized by the Saskatchewan government. Based on current legislation, the projected combined federal and provincial income tax rates applicable at the time of anticipated production are 27 % of net income, the federal component being 15 % of net income and the provincial component being 12 % of net income. Net income for tax purposes allows for the deduction of normal operating costs, capital development and previous exploration work. The cash flow model assumes Canadian exploration expenses (CEE) and Canadian development expenses (CDE) tax pools incurred to the end of 2008 by Shore and its subsidiaries are available as a tax deduction to the Project. CEE are generally exploration expenses incurred to determine the existence of a Mineral Resource in Canada while CDE are, in Shore’s case, payments for interests in

240

Canadian resource properties. Where tax pool deductions are limited as a percentage on an annual basis, the cash flow model assumes the Company will claim deductions to generate non-capital losses, which will maximize the present value of such tax pools. All other tax pools currently available to Shore and its subsidiaries, such as non-capital losses, capital cost allowance (CCA), and cumulative eligible capital, have been excluded from the cash flow model. All goods and services are subject to the Federal GST at rate of 5 %. This tax is refundable to Shore and is therefore not included in the analysis. Certain goods and services are subject to a Saskatchewan PST at a rate of 5 %. Capital and operating costs that are estimated to be subject to PST have been included in the cash flow model with an additional 5 % of the estimated costs to account for the PST. Municipal property tax and education taxes have been included in the G&A expense line of the cash flow model and have been estimated based on anticipated mill rates to be in effect and estimated assessable property values as determined by Saskatchewan Assessment Management Agency (SAMA). Estimated property taxes payable during the pre-production phase have also been included in capital. 22.3.15 CONTINGENCY The $253 million contingency included in the models is allocated to the following areas as presented in Table 22.8 and in Table 22.9 over the LOM: Table 22.8: Summary of Contingency included in Base Case and Case 1 pre-production capital (years 2012 – 2016) Area Capital Contingency TotalProcess Plant $504 M $49 M $553 MSite Facilities $300 M $29 M $329 MPre-strip of sand and clay $349 M $19 M $368 MIn Pit Crush and Convey System ("IPCC") $472 M $ 6 M $478 MMobile Equipment $147 M $44 M $191 MTotal $1,772 M $148 M $1,919 M

Table 22.9: Summary of Contingency included in Base Case and Case 1 during production (years 2017-2036) Area Timeframe ContingencyProcess Plant 2017 $1 M Mining Costs Over 2017-2034 $67 M Mobile Equipment Over 2017-2034 $37 M Total $105 M

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22.4 SENSITIVITY ANALYSIS Economic risks were assessed using Base Case cash flow sensitivities to recovered grade, diamond prices, CAD$/US$ exchange rate, capital expenditure (CAPEX), and operating expenditure (OPEX). Each of the sensitivity items were independently adjusted up and down by 10 %, 20 % and 25 % to project the impact it would have on the NPV at a 7 % discount rate. The NPV of the Project after each sensitivity item was adjusted by 75 %, 80 %, 90 %, 110 %, 120 % and 125 % of the base case. The results are presented in Table 22.10. Table 22.10: Sensitivity Analysis Results (Pre-Tax and Royalty Basis, NPV (7 %))

75 % 80 % 90 % 100 % 110 % 120 % 125 %

Recovered Grade (cpht) $730 M $1,011 M $1,573 M $2,136 M $2,698 M $3,260 M $3,541 M

Diamond Price $730 M $1,011 M $1,573 M $2,136 M $2,698 M $3,260 M $3,541 M CAD$/US$ Exchange rate $3,984 M $3,522 M $2,752 M $2,136 M $1,632 M $1,211 M $1,027 M

CAPEX $2,596 M $2,504 M $2,320 M $2,136 M $1,952 M $1,768 M $1,676 M OPEX $2,576 M $2,488 M $2,312 M $2,136 M $1,960 M $1,783 M $1,695 M As depicted in Figure 22.1, the Star – Orion South Diamond Project is most sensitive to CAD$/US$ exchange rate fluctuations to the positive and Recovered Grade and Diamond Price to the negative. Capital costs and operating costs have a similar impact and are the least sensitive items in the model.

242

Figure 22.1: Sensitivity Analysis (Pre-Tax and Royalty Basis, NPV (7 %))

0

500

1000

1500

2000

2500

3000

3500

4000

4500

0.7 0.8 0.9 1 1.1 1.2 1.3

NPV

�@�7%�After�Tax�($

M�CAD)

Per�Cent�of�Value

Sensitivity�Graph�at�7%�NPV

Recovered�Grade�(cpht)

Diamond�Price

CAD/US$�exchange�rate

Capital�Expenses

Operating�Expenses

243

23.0 ADJACENT PROPERTIES

The Star – Orion South Diamond Project is located within the 50 km long by 30 km wide FalC kimberlite province. At least 69 kimberlitic bodies have been drilled to date in this province, but there is no current production from any of the kimberlites.

244

24.0 OTHER RELEVANT DATA AND INFORMATION

24.1 FEASIBILITY STUDY Further details of the subjects considered in the FS are provided in the following Appendices.

� Appendix A: Processed Kimberlite and Water Management Structures � Appendix B: Hydrogeology and Water Management � Appendix C: Ancillary Buildings and Facilities � Appendix D: Workforce, Health, Safety and Security � Appendix E: Construction and Development

24.2 ENVIRONMENTAL IMPACT STATEMENT

The federal-provincial harmonized EIA process for the Project, led by the Saskatchewan MOE, is underway. The EIS (Shore and AMEC, 2010) was submitted in December 2010, and is currently in the technical review stage. Environmental and socio-economic information was obtained from the EIS for this report. 24.3 UPDATED DIAMOND VALUATION In July, 2011, WWW noted that there has been significant rough diamond price increases relative to the start of the year. As such, Shore retained WWW to complete an updated valuation of the diamond parcels from the Star and Orion South Kimberlites. In this updated valuation exercise, WWW applied its July 18, 2011 price book to parcels from Star and Orion South. Importantly, the Parcel Prices showed increases between 31 and 46 % above the February, 2011 prices. In addition, according to WWW, diamond prices continued to rise approximtely 10 % during the month of July. All price Figures are expressed in US dollars. The Parcel and Model price details for each of the kimberlite units in the Star Kimberlite are listed in Table 24.1.

245

Table 24.1: The Parcel and Model Price Details for the Star Kimberlite units (July 18, 2011 pricebook)

StarKimberlite

Unit

Carats ParcelPrice

($/carat)

Model

Price

($/carat)

Minimum

Price

($/carat)

High

Price

($/carat)

Parcel Price Percentage Increase from February, 2011

Cantuar 1,667.96 376 456 347 651 31 Pense 1,410.47 185 237 181 298 39 EJF 7,124.74 218 293 230 382 34 MJF-LJF 91.28 256 263 142 388 33

The Parcel and Model price details for each of the kimberlite units in the Orion South Kimberlite are listed in Table 24.2.

Table 24.2: The Parcel and Model Price Details for the Orion South Kimberlite units (July, 2011 pricebook)

Orion South Kimberlite

Unit

Carats ParcelPrice

($/carat)

Model

Price

($/carat)

Minimum

Price

($/carat)

High

Price

($/carat)

Parcel Price Percentage Increase from February, 2011

EJF 1,400.01 204 249 194 332 37 Pense 581.47 106 172 130 228 46

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25.0 INTERPRETATION AND CONCLUSIONS The FS has assessed the economic viability of developing the Star – Orion South Diamond Project based on sufficient levels of technical, environmental, and financial information, and stated assumptions and has allowed the calculation of an updated Mineral Reserve Estimate. 25.1 PREVIOUS RECOMMENDATIONS In the combined Star – Orion South Diamond Project PFS (Orava et al., 2010) several recommendations were presented. Table 25.1 is a summary of the status of those recommendations. Table 25.1: Summary and Status Update of Recommendations Presented in the Star – Orion South Diamond Project PFS (Orava et al., 2010) Section Recommendation Status Mining IPCC productivity revision Annual bench plans tracing bench and IPCC system

layouts were prepared during the FS. The overburden stripping and mining sequence was scheduled in detail.

Complete designs for pit slopes, pit dewatering, water management

Detailed pit slopes were finalized by SRK Consulting (sub-overburden) and Clifton Associates (overburden) and included pit dewatering and water management plans.

Finalize OVB pile design Overburden pile layout incorporates updated geotechnical criterion provided by Clifton Associates.

Refine Star pre-production and Phase 1a schedules

The Star pit pre-production and Phase 1a schedules were re-assessed and refined during the FS.

Financial evaluation once diamond royalty structure is issued

The Saskatchewan government’s royalty regime has been included in the FS financial evaluation.

Water Management Refine water balance The refined water balance accounts for monthly, seasonal and yearly variability and has confirmed assumptions made in the PFS, and been included in design of the water management system.

Finalize the design of the water distribution to the Saskatchewan River

A diffuser design has been completed for release of water into the Saskatchewan River, including far field modeling of water dispersion.

Processing Develop a detailed plant layout A detailed 3D plant layout has been generated by Metso and reviewed.

Conduct slimes pumping tests Slimes pumping tests were conducted at the SRC to determine the rheology of the -1 mm material from both the Star and the Orion South kimberlites. This assisted with proper slimes pump selection and pipeline design.

Conduct tests using wet magnetic separator machines

Wet magnetic separator testwork verified throughputs, product splits and yields.

Conduct grease belt testwork Testwork using grease from Canadian suppliers was conducted.

Conduct x-ray testwork X-ray testwork results have established expected diamond recovery efficiencies and yields.

247

Develop a complete plant mass and water balance

A complete plant mass and water balance was completed.

Review the selection of cyclones for the coarse DMS

Cyclone section was reviewed and confirmed the selection of 800 mm diameter cyclones with nominal capacities of 250 t/h as the best choice for the +8 -45 mm material

Review the application of spiral classifiers in the grinding circuit for clay control

Simulations were conducted and approved by Metso for use in the FS.

Infrastructure Complete a detailed assessment of the heating requirements

A detailed analysis and design for the HVAC system requirements was completed by AECOM and incorporated into the FS.

Complete a detailed road routing and design study for the main access road

A detailed design for the main access road to site has been completed by AECOM and incorporated into the FS.

Other Complete detailed designs for: Power transmission lines and

substations Detailed designs were completed for the site power distribution system (AECOM). Agreements are in place with SaskPower for detailed design of the main transmission line.

IPCC system The IPCC capacity; detailed design requirements; manufacturing, delivery and commissioning time lines; and equipment and personnel requirements were assessed in consultation with major IPCC suppliers during the FS.

25.2 MINERAL RESERVES Utilizing feasibility-level operating costs for mining, processing and G&A, along with engineered pit slopes, pit optimizations were undertaken to derive pit shells for design purposes for each deposit. The phased pit designs developed include allowance for vehicle access ramps, conveyor ramps, and berms. The resulting open pit design surfaces for Star and Orion South were subsequently utilized to determine the mineralization contained within the resource models that was amenable for conversion to Mineral Reserves by dollar value-cut-off. In total, 279 million tonnes of ore has been defined in the updated Mineral Reserve estimate. This ore has an average grade of 12.3 cpht defining a reserve of 34.4 million carats. An opportunity for improvement is to conduct additional exploration with a view to converting a portion or all of the Project’s estimated 80 million tonnes Inferred Resources to the Probable Mineral Reserve category. 25.3 PROCESS PLANT The FS determined that the plant will process 14.3 Mtpa of ore which is equivalent to 87 % of the 16.4 Mtpa plant’s nameplate capacity. This 87 % of plant availability results from possible mine and processing interruptions. Increasing the plant’s throughput reduces the mine production schedule while decreasing some indirect and operating costs. The facility is designed to treat 45,000 tonnes of kimberlite per day employing AG milling as the primary diamond liberation method, followed by spiral classifiers and dense media separation. The

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recovery section employs magnetic separation and x-ray technology with grease as the scavenging technology to recover the low luminescence diamonds. Single particle sorters using both x-ray technology and laser Raman are used to further concentrate the material before hand-sorting. Extensive ore dressing investigations on drill core samples and pilot scale testing on underground bulk samples, coupled with detailed computer simulations, show that AG milling of the Star and Orion South Kimberlites offers the most efficient and cost effective method of diamond liberation. Furthermore, when the AG mills are operated within the simulated design specifications, diamond breakage and damage is minimal. There is an opportunity to improve ore stockpiling and increase the processing rate to 16.4 Mtpa ore, correspondingly reducing some of the indirect and operating costs utilized in the cashflow. 25.4 DIAMOND PRICES The diamond prices used in the cash flow model for the Star – Orion South Diamond Project are based on valuations by WWW using their February 2011 price book. In July, 2011, WWW noted that there had been significant rough diamond price increases relative to the start of the year. As such, Shore retained WWW to complete an updated valuation of the diamond parcels from the Star and Orion South Kimberlites. In this updated valuation exercise, WWW applied its July 18, 2011 price book to parcels from Star and Orion South. Importantly, the Parcel Prices showed increases between 31 and 46 % above the February, 2011 prices. In addition, according to WWW, diamond prices continued to rise approximately 10 % during the month of July. All price figures are expressed in US dollars. Expectations are that Shore will sell its rough diamonds through a sales arrangement (e.g. in Antwerp) at an estimated marketing cost of 2.0 % of gross value. 25.5 ROYALTIES The Government of Saskatchewan has developed its diamond royalty structure, and, as such, the financial analysis in the FS utilizes this structure. The government of Saskatchewan’s diamond royalty regime features:

� a one percent base royalty on the value of mine production, with an initial five-year holiday; � a stepped royalty rate on profits to a maximum of 10 % once capital investment is fully

recovered; and, � full-cost recognition including a 100 % depreciation rate of capital costs and a processing

allowance. 25.6 OVERBURDEN STRIPPING Shore will pre-strip the surficial sand and clay using conventional equipment and its own labour force and equipment supplier maintenance personnel. The Komatsu PC4000 hydraulic excavators and HD1500 haul trucks to be used in the pre-stripping program are similar to those to be used to mine ore. Shore will strip the till and waste rock using the 20,000 tph capacity IPCC system and its own operating and maintenance labour force with the assistance of a contractor primarily to assist during IPCC equipment moves and relocation.

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Potential opportunities for improvement include: employing the IPCC equipment to assist in the sand and clay pre-stripping, and increasing the use of straight wall faces in intermediate pits. 25.7 MINING The proposed Star and Orion South open pits will be conventional open pit mining operations. Shore will mine the ore using its own labour force along with equipment supplier maintenance personnel and conventional mining equipment. Shore personnel will operate and maintain the ore sizing and conveying system. 25.8 DEWATERING Dewatering wells will depressurize the deep groundwater flow system to restrict the amount of water that seeps and flows into the pit through the Mannville aquifer. Eighteen pumping centres at Star would be installed for dewatering purposes during the first 14 years of operation (with a pumping rate of 98,100 m3/d), with an additional five in-pit dewatering wells planned for the years 15 to 17. For mining of Orion South, an additional 7 perimeter wells are needed for years 19 to 24. It is estimated that a peak of approximately 130,800 m3/d of water may have to be pumped to lower water levels sufficiently for safe mining in year 19 while operations are ongoing in the Orion South pit. Throughout the LOM, deep aquifer water pumped to the surface would be used as make up water in the process plant or placed directly in the Saskatchewan River through the diffuser. 25.9 ENERGY SaskPower will supply power to the site through a new 230 kV power line running to the southeast of the site and tying into an existing 230 kV power line connecting the Codette and Beatty substations. This existing line is located in the FalC provincial forest on the south side of the Saskatchewan River. The new 230 kV feeder will be approximately 16 km long and will involve a river crossing of the Saskatchewan River. 25.10 TRANSPORTATION During construction, a new road will be built to accommodate the large loads and heavy traffic that will travel to the Project location. The road would be constructed along existing rural municipality rights of way, with approximately 9 km built over existing provincial grid roads, and 20.9 km built through the FalC forest. The section of road through the FalC forest would generally follow the existing forestry roads, which would marginally reduce construction costs and the environmental impact associated with new road development. There is an opportunity to provide a rail spur to the site, although for the FS, no extension of the current line from Choiceland to site was utilized.

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25.11 ENVIRONMENT The draft Environmental Impact Statement (EIS) process for the Project was submitted in December 2010 to the Saskatchewan MOE and federal agencies for the Star – Orion South Diamond Project in consideration of the potential for a combined mining and processing project. The EIS is currently in the technical review phase. Comments from regulators and other reviewers have been considered in the FS relating to baseline studies, community engagement activities, potential impacts of the proposed Project, plans for the progressive reclamation and closure of the Project and the cumulative effects assessment. The EIA for the Project is being carried out under the terms of the Saskatchewan Canada Harmonization Agreement where projects that require an environmental assessment by both the federal and provincial governments undergo a single assessment, administered cooperatively by both governments. The EIA will follow the process for a comprehensive study under the Canadian Environmental Assessment Act (CEAA). The government agencies with interest in the EIA for the Project include the Saskatchewan MOE, the Canadian Environmental Assessment Agency, Fisheries and Oceans Canada, Natural Resources Canada, Environment Canada and Transport Canada. The EIA for the Project is a rigorous assessment with a high level of technical and regulatory scrutiny and will include public consultation and opportunities for feedback. Based on technical feedback on the EIS from reviewers, and the incorporation of comments received into the feasibility design, including alternatives, Shore is not aware of any material environmental issues that would prevent the Project from proceeding.

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26.0 RECOMMENDATIONS The FS has demonstrated the potential of the Project to become a significant diamond producer. As such, and assuming both a positive production decision by the Company’s board of directors and the FalC-JV, and the securing of financing, it is the opinion of the Company that the Project warrants being advanced to the detailed design phase, which will support the necessary construction permits to allow for the construction of a mine and process facility at FalC. It is recommended that the permitting applications adhere to the engineering plans developed as part of the FS. 26.1 MINING It is recommended that Shore develops a detailed operational mine plan and revises the Project schedule with the preparation of a Project Implementation Plan including engineering and procurement for the development and operation of the mine. This plan should be monitored and regularly updated during the development stage. The development and production schedule for the Project should include milestone events such as the early award of IPCC detailed engineering contract(s), the early award of a contract to fabricate long delivery IPCC components, and the target date for the availability of utility electrical power on site. The detailed mine plan should also investigate alternatives for the overburden stripping in an effort to maximize IPCC throughput, and potentially reduce conventional stripping costs. Further geotechnical investigations should be conducted to assess the sectorization of the pit slopes, especially for intermediate pit phases, to reduce the capital cost pre-stripping in the development stage. This geotechnical program should consist of 3-D seismic methods coupled with cone penetrometer and core recovery programs. Bench plans for the intermediate pits should be reviewed to provide additional straight faces for the IPCC waste stripping system. The orientation and designs for the mine conveyor and access ramps between the Star pit and the overburden pile and the Orion South pit and the overburden pile, including their interfaces with the pit ramps, should also be revised and finalized in consultation with operations, maintenance and safety planning personnel. Shore should promptly initiate advanced discussions with candidate mine equipment suppliers and ensure the following topics are addressed:

� equipment specifications; � relevant standards and legal and other requirements; � engineering, fabrication and delivery time lines; � quality assurance, quality control and client review and approval processes; � Shore and supplier responsibilities; � parts supply system; � critical components including tires; � spares; � contingency planning; � technical capabilities;

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� supplier performance on other projects; � environmental, health and safety; � maintenance support; � training support; � operation and maintenance manuals; � software and system interfacing; � equipment performance; � capacity and availability; � costs including the cost of equipment, charges, duties and taxes; � owner supplied items and services; � warranty and claims process; � costs and currency(ies); and � commercial terms.

Shore should also initiate advanced discussions with other key suppliers for bulk commodities such as fuel, lubricants and explosives. 26.2 GEOTECHNICAL It is recommended that the updated hydrogeological model be validated against the current slope design. Following the generation of optimized slopes, it is recommended that slopes be checked against recommendations and that the modeling of intermediate (internal) and push back slopes with regard to the phased mining approach be included in further pit design. Further comprehensive geotechnical investigations of the overburden will be required to collect and test undisturbed samples of all strata to provide reliable data for engineering design of the mine and surface facilities. Specific laboratory testing was not conducted for the purposes of assessing trafficability; thus certain assumptions have been made to produce a trafficability matrix to be used for engineering exercises. The trafficability matrix should be reassessed and updated as additional data become available through future subsurface investigations. 26.3 PROCESS KIMBERLITE MANAGEMENT

It is recommended that additional characterization of the tailings material properties should be performed to improve estimates of the following parameters:

� hydraulic conductivity of fine fines (-0.25 mm) tailings; � consolidated density of fine fine and coarse fine (+0.25 mm – 1.0 mm) tailings; and � stacked density of Coarse PK tailings.

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Additional characterization of the shallow soils should be performed to obtain geotechnical descriptions of the shallow and surficial soils to determine the thickness of topsoil and organic soils and to quantify site foundation conditions beneath all structures. Information related to shallow soils in the tailings management area needs to be expanded to improve the accuracy of the stability analysis, as the permeabilty and compressibility of the shallow clay layers affect the stability of the design structure. Stability analyses will be required to confirm that ditch and settling pond construction will not impact overall stability. Optimization of the surface water collection system including ditch design is required to reduce the incidence of erosion yet allow sensible diversion of surface water flow.

26.4 WATER MANAGEMENT It is recommended that Shore determine water quality cut off values for the potential management of seepage water from the PKCF and to determine when direct discharge, wetland treatment or recycling is appropriate. In addition, loading capacities of natural wetlands in the Project area to assimilate metals should be determined. Further work examining the economic potential to recover metals from the PKCF should also be explored. 26.5 PROCESSING AG milling simulations on the harder pyroclastic kimberlites It is recommended that further mill simulations be conducted using the properties of the harder pyroclastic kimberlites. The additional data would be used to ensure that the design of the AG mills can account for the variability in ore characteristics, while minimize diamond breakage. Assess the optimum throughput for the AG mills It is recommended that throughput simulations be run simultaneously with practical AG milling tests whereby the AG mill speed is varied, the grate design is varied, and different moisture contents are considered. The throughput of the AG mills will vary due to characteristics of the kimberlite unit such as hardness and clay content. The diamond size frequency distribution within the kimberlite can influence the grate design used when processing that specific kimberlite unit. The chosen grate design will, in turn, affect the throughput of the AG mills. DMSDuring detailed plant design the use of a pump fed DMS circuit versus a gravity fed circuit should be investigated to reduce capital and operating costs, and potentiantially reduce diamond damage that may otherwise be caused by the significant drops required in the gravity fed circuit. Variable diamond top size The processing plant has been designed to recover diamonds with a top size of 45 mm. In order to liberate a 45 mm diamond without damaging it, the amount of grinding in the comminution section needs to be minimised. However, not all the kimberlite units at Star and Orion South, based on the

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diamond distributions, are expected to yield diamonds as coarse as 45 mm. These kimberlite units can accommodate greater degrees of grinding so increasing the liberation factor. The grinding factor in the AG mills is largely controlled by the grate design. The grates are changed periodically during operations, and it is recommended that different grate designs be used when processing different kimberlite units to optimise liberation and minimise diamond damage for each kimberlite unit. Diamond bottom size cut-off The current bottom size cut off is 1 mm. Recovering diamonds this small has a significant effect on recovery costs. Using the current FS cost structure, an evaluation should be conducted, considering the size cut off, current market conditions for small diamonds and any potential capital or operations savings with a view to maximizing project NPV. Marketing of the DMS sinksThe DMS sinks ejected by the recovery section generally contain a number of semi-valuable minerals such as garnets ilmenite and magnetite. As these minerals leave the plant in a concentrated form, it is recommended that assessment of the potential economic benefit is warranted. Reduction of the throughput in the recovery section Based on the current test work and results of the bulk sampling program at Star and Orion South, there is a potential to reduce the design recovery throughput. The plant detailed design should address the variability of DMS yield from the various kimberlite units and assess the options of larger surge buns or a separate recovery stockpile to reduce initial capital requirements. Assess the optimum throughput for the processing plant The nameplate capacity for the processing plant was determined in the FS using results in the PFS which relied on several assumptions based on the availability of water, power, operating resources, expected grade, ore dilution and equipments sizes. The FS has determined these inputs with a greater degree of certainty, and it is recommended that the nameplate capacity of the plant be re-examined to determine the optimum plant throughput. 26.6 INFRASTRUCTURE

Several opportunities exist to reduce capital requirements through negotiations with the Province of Saskatchewan and the Rural Municipality of Torch River by way of a cost sharing program for the development of the site access highway. It is recommended that the Company continue with these negotiations to conclude the potential cost sharing program. Support facility designs should be revised during the detailed engineering phase to ensure that these facilities meet the requirements identified for the operation. 26.7 COSTS The costs for Project development are detailed in Section 22 (Economic Analysis). It is recommended that the Company continue to identify and consider opportunities for further cost reductions as detailed design and construction proceed.

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268

28.0 CERTIFICATES CERTIFICATE OF QUALIFIED PERSON GEORGE H. READ, P. GEO I, George H. Read, P.Geo., residing at 12411 – 204th Street Maple Ridge, British Columbia, V2X 9R9, do hereby certify that: 1. I am a Professional Geoscientist and Senior Vice President, Exploration and Development for Shore Gold Inc., and have provided

consulting services to Shore Gold Inc. since October 2, 2003. 2. This certificate applies to the technical report titled “Technical Report on the Feasibility Study and Updated Mineral Reserve for the

Star – Orion South Diamond Project Fort à la Corne, Saskatchewan, Canada” (the “Technical Report”), with an effective date of July 14, 2011.

3. I graduated from the University of Cape Town with Bachelor of Science (Honours) in 1983. I am a member of the Association of

Professional Engineers and Geoscientists of Saskatchewan (APEGS #12665) and British Columbia (APEGBC #24070), a Fellow of the Geological Association of Canada and a member of the American Geophysical Union.

4. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my

education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

5. I have practiced my profession continuously for over 27 years. I practiced for 12 years with De Beers on projects in both Africa and

Canada, and since early 1997, have worked as a diamond exploration consultant on projects across Canada, in Greenland and in Brazil.

6. As consultant of Shore Gold Inc., I regularly visit the Star-Orion South Diamond Project and over the past 8 years, have made more

than 50 site visits.

7. I am responsible for authoring Sections Summary, 14.3, 16.11, 17.0, 17.6 to 17.7, 18.11, 18.17, 19.0 to 19.2, 21.0, 22.0 to 22.4, 24.0, 24.3, 25.0, 25.4 to 25.5, 25.9 to 25.10, 26.0 to 26.7, Sub-sections 21.1.1 to 21.1.2, 21.1.6 to 21.1.8, 21.2.1, 21.2.4 to 21.2.6, Appendices C.10, D.0 to D.8 and E.0 to E.8 and co-authoring Section 18.7 of the Technical Report.

8. As I am a consultant for Shore Gold Inc., I am not independent of Shore Gold Inc. as independence is described by Section 1.5 of NI

43–101.

9. I have provided technical assistance to the Star – Orion South Diamond Project, during the period October 2003 to present, and continue to be involved with the Project.

10. I have read NI 43-101 and Form 43-101F1 and Sections Summary, 14.3, 16.11, 17.0, 17.6 to 17.7, 18.11, 18.17, 19.0 to 19.2, 21.0,

22.0 to 22.4, 24.0, 24.3, 25.0, 25.4 to 25.5, 25.9 to 25.10, 26.0 to 26.7, Sub-sections 21.1.1 to 21.1.2, 21.1.6 to 21.1.8, 21.2.1, 21.2.4 to 21.2.6, Appendices C.10, D.0 to D.8 and E.0 to E.8 and co-authoring Section 18.7 of the Technical Report and those sections have been prepared in compliance therewith.

11. As of the date of this certificate, to the best of my knowledge, information and belief, the sections referenced above contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Effective Date: July 14, 2011 Signing Date: August 25, 2011

{SIGNED AND SEALED} George H. Read

__________________________ George H. Read, P.Geo.

269

CERTIFICATE OF QUALIFIED PERSON SHAWN E. HARVEY, P. GEO I, Shawn E. Harvey, P.Geo., residing at 806 Pezer Crescent, Saskatchewan, S7S 1J8, do hereby certify that: 1. I am a Professional Geoscientist and Geology Manager for Shore Gold Inc., and have been so employed since May, 2005. 2. This certificate applies to the technical report titled “Technical Report on the Feasibility Study and Updated Mineral Reserve for the

Star – Orion South Diamond Project Fort à la Corne, Saskatchewan, Canada” (the “Technical Report”), with an effective date of July 14, 2011.

3. I graduated from the University of Regina with Bachelor of Science (Honours) in 1998 and a Masters of Science in 2004. I am a

member of the Association of Professional Engineers and Geoscientists of Saskatchewan (APEGS #11778). 4. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my

education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

5. I have practiced my profession since 1998. I worked in oil exploration for one year with Shell Canada limited, followed by four years

as an industrial minerals geologist with Saskatchewan Energy and Mines. Since 2005, I have worked for Kensington Resources and Shore Gold Inc. on diamond exploration and evaluation.

6. As an employee of Shore Gold Inc., I regularly visit the Star-Orion South Diamond Project and over the past 6 years, have made

more than 50 site visits.

7. I am responsible for authoring Sections 2.0 to 2.3, 3.0, 4.0 to 4.1, 5.0 to 5.2, 6.0, 7.0 to 7.4, 8.0 to 8.2, 9.0 to 9.2, 10.0 to 10.2, 11.0 to 11.4, 12.0 to 12.4, 13.0 to 13.3, 16.2 to 16.3, 23.0, 24.1, 27.0 and 28.0 and Appendices A.5 and B.2 of the Technical Report. I was assisted by SRK Consulting and Clifton Associates Ltd.

8. As I am employed by Shore Gold Inc., I am not independent of Shore Gold Inc. as independence is described by Section 1.5 of NI

43–101.

9. I have provided technical assistance to the Star – Orion South Diamond Project, during the period May 2005 to present, and continue to be involved with the Project.

10. I have read NI 43-101 and Form 43-101F1 and Sections 2.0 to 2.3, 3.0, 4.0 to 4.1, 5.0 to 5.2, 6.0, 7.0 to 7.4, 8.0 to 8.2, 9.0 to 9.2,

10.0 to 10.2, 11.0 to 11.4, 12.0 to 12.4, 13.0 to 13.3, 16.2 to 16.3, 23.0, 24.1, 27.0 and 28.0 and Appendices A.5 and B.2 of the Technical Report and those sections have been prepared in compliance therewith.

11. As of the date of this certificate, to the best of my knowledge, information and belief, the sections referenced above contain all

scientific and technical information that is required to be disclosed to make the Technical Report not misleading. Effective Date: July 14, 2011 Signing Date: August 25, 2011

{SIGNED AND SEALED} Shawn E. Harvey

__________________________ Shawn E. Harvey, P.Geo.

270

CERTIFICATE OF QUALIFIED PERSON ETHAN RICHARDSON, P. ENG. I, Ethan Richardson, P.Eng., residing at P.O. Box 776, Martensville, Saskatchewan, S0K 2T0 do hereby certify that:

1. I am a Professional Engineer and the Manager of Environment for Shore Gold Inc., and have been so employed since August, 2007.

2. This certificate applies to the technical report titled “Technical Report on the Feasibility Study and Updated Mineral Reserve for

the Star – Orion South Diamond Project Fort à la Corne, Saskatchewan, Canada” (the “Technical Report”), with an effective date of July 14, 2011.

3. I graduated from the University of Saskatchewan with a Bachelor of Science in 1995, and a Master of Science in 2001. I am a

member of the Association of Professional Engineers and Geoscientists of Saskatchewan (#09541).

4. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

5. I have practiced my profession continuously since 1997. My summarized career experience is as follows: 1997 to 2007 I worked as a consultant with Golder Associates Limited as an Environmental Engineer and Soil Scientist. During that period, I worked on various projects, including 12 environmental impact assessments for large scale mining and oil sands projects. I joined Shore Gold Inc. in 2007 as Environment Manager.

6. As an employee of Shore Gold Inc., I regularly visit the Star-Orion South Diamond Project and over the past 4 years, have

made over 35 site visits.

7. I am responsible for authoring Sections 20.0 to 20.6, 24.2, 25.8, 25.11 and Appendices A.0 to A.4, A.6 to A.8, B.0 to B.1 and B.3 to B.8 of the Technical Report. I was assisted by Klohn Crippen Berger Ltd. and SRK Consulting.

8. As I am employed by Shore Gold Inc., I am not independent of Shore Gold Inc. as independence is described by Section 1.5 of NI 43–101.

9. I have provided technical assistance to the Star – Orion South Diamond Project, during the period 2007 to present, and continue to be involved with the Project.

10. I have read NI 43-101 and Form 43-101F1 and Sections 20.0 to 20.6, 24.2, 25.8, 25.11 and Appendices A.0 to A.4, A.6 to A.8, B.0 to B.1 and B.3 to B.8 of the Technical Report and those sections have been prepared in compliance therewith.

11. As of the date of this certificate, to the best of my knowledge, information and belief, the sections referenced above contain all

scientific and technical information that is required to be disclosed to make the Technical Report not misleading. Effective Date: July 14, 2011 Signing Date: August 25, 2011

{SIGNED AND SEALED} Ethan Richardson

__________________________ Ethan Richardson, P. Eng.

271

CERTIFICATE OF QUALIFIED PERSON HUGH RUDOLF, P. ENG.

I, Hugh Rudolf, P.Eng., residing at 522 Peters Cove, Saskatoon Saskatchewan, S7N 4T5, do hereby certify that:

1. I am employed by AECOM Canada Ltd as the Manager of Industrial Services and Senior Project Manager in their Saskatoon office.

2. This certificate applies to the technical report titled “Technical Report on the Feasibility Study and Updated Mineral Reserve for

the Star – Orion South Diamond Project Fort à la Corne, Saskatchewan, Canada” (the “Technical Report”), with an effective date of July 14, 2011.

3. I am a graduate of the University of Saskatchewan located in Saskatoon, Saskatchewan, Canada at which I earned my Bachelor

of Science Degree in Mechanical Engineering in 1969. I have practiced my profession continuously since graduation. I am licensed by the Association of Professional Engineers of Saskatchewan (Certificate No. 4433).

4. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason

of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101 having lead and participated in many mining feasibility and costs studies including:

Relevant experience includes:

� Sr. Project Engineer for the Potash Company of America plant expansion study and subsequent detailed engineering. � Lead Mechanical Engineer for the Zinc plant modernization basic engineering and cost study for Hudson Bay Mining and

Smelting Ltd as well as subsequent detailed engineering. � Senior Mechanical Engineer for the McClean Lake uranium mine for Total Minatco Ltd (Now Areva Resources Canada

Inc.) � Lead Mechanical Engineer for the McArthur River mine feasibility study completed for Cameco Corporation. � Study Manager for the evaluation of reprocessing of Key Lake tailings to recover Nickel and Cobalt. � Engineering Lead for the evaluation of strong acid stripping at their Key Lake and modernization of the processing facility. � Project Manager for Polar River mine relocation study and detailed engineering for Manalta Coal Ltd at Coranach Sask. � Project Manager for mine hoisting and back fill cost studies for Inco Ltd. � Project Manager for the Midwest Project for Areva Resources Canada Inc. all mine site infrastructure, facilities, haul road,

power supply and pipelines. � Study Manager or Lead mechanical Engineer on numerous mining studies in base metals, gold, uranium and industrial

minerals.

5. I have visited the Star – Orion South Diamond Project on December 1, 2009 and September 27th, 2010. 6. I am responsible for authoring Sections 18.0 to 18.6, 18.8 to 18.9, 18.12 to 18.16, Sub-section 21.1.5, Appendices C.0 to C.9,

C.11 to C.13 and co-authoring Section 18.7 of the Technical Report. 7. I am independent of the issuer applying the test in Section 1.5 of NI 43-101. 8. I have not had any prior involvement with the Project that is the subject of this Technical Report. 9. I have read NI 43-101 and Form 43-101F1 and Sections 18.0 to 18.6, 18.8 to 18.9, 18.12 to 18.16, Sub-section 21.1.5,

Appendices C.0 to C.9, C.11 to C.13 and co-authoring Section 18.7 of the Technical Report and those sections have been prepared in compliance therewith.

10. As of the date of this certificate, to the best of my knowledge, information and belief, the sections referenced above contain all

scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Effective Date: July 14, 2011 Signing Date: August 25, 2011

{SIGNED AND SEALED} Hugh Rudolf __________________________ Hugh Rudolf, P.Eng.

272

CERTIFICATE OF QUALIFIED PERSON DAVID A. ORAVA, P. ENG.

I, David A. Orava, M.Eng., P.Eng., residing at 19 Boulding Drive, Aurora, Ontario, L4G 2V9 do hereby certify that:

1. I am an Associate Mining Engineer at P&E Mining Consultants Inc. and President of Orava Mine Projects Ltd. 2. This certificate applies to the technical report titled “Technical Report on the Feasibility Study and Updated Mineral Reserve for

the Star – Orion South Diamond Project Fort à la Corne, Saskatchewan, Canada” (the “Technical Report”), with an effective date of July 14, 2011.

3. I am a graduate of McGill University located in Montreal, Quebec, Canada at which I earned my Bachelor Degree in Mining Engineering (B.Eng. 1979) and Masters in Engineering (Mining - Mineral Economics Option B) in 1981. I have practiced my profession continuously since graduation. I am licensed by the Professional Engineers of Ontario (License No. 34834119).

4. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

My summarized career experience is as follows: � Mining Engineer – Iron Ore Company of Canada. .................................................................... 1979-1980 � Mining Engineer – J.S Redpath Limited / J.S. Redpath Engineering. ....................................... 1981-1986 � Mining Engineer & Manager Contract Development – Dynatec Mining Ltd. ........................... 1986-1990 � Vice President – Eagle Mine Contractors ............................................................................................ 1990 � Senior Mining Engineer – UMA Engineering Ltd. .............................................................................. 1991 � General Manager - Dennis Netherton Engineering ................................................................... 1992-1993 � Senior Mining Engineer – SENES Consultants Ltd. .................................................................. 1993-2003 � President – Orava Mine Projects Ltd. ................................................................................. 2003 to present � Associate Mining Engineer – P&E Mining Consultants Inc. .............................................. 2006 to present 5. I visited the Star – Orion South Diamond Project on October 1, 2009. 6. I am responsible for authoring Sections 16.0 to 16.1, 16.4 to 16.9, 18.10, 25.6 to 25.7, Sub-sections 21.1.3 and 21.2.2 of the

Technical Report. 7. I am independent of the issuer applying the test in Section 1.5 of NI 43-101.

8. I have had prior involvement with the Project that is the subject of this Technical Report. The nature of my involvement is as a

co-author of the technical reports titled “Technical Report and Preliminary Feasibility Study on the Star Diamond Project, Fort à la Corne, Saskatchewan, Canada” dated August 17, 2009 and “Technical Report and Updated Preliminary Feasibility Study on the Star – Orion South Diamond Project, Fort à la Corne, Saskatchewan, Canada” with an effective date of January 31, 2010.

9. I have read NI 43-101 and Form 43-101F1 and Sections 16.0 to 16.1, 16.4 to 16.9, 18.10, 25.6 to 25.7, Sub-sections 21.1.3 and 21.2.2 of the Technical Report and those sections have been prepared in compliance therewith.

10. As of the date of this certificate, to the best of my knowledge, information and belief, the sections referenced above contain all

scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Effective Date: July 14, 2011 Signing Date: August 25, 2011

{SIGNED AND SEALED} David Orava __________________________ David Orava, M.Eng., P.Eng.

273

CERTIFICATE OF QUALIFIED PERSON EUGENE J. PURITCH, P. ENG.

I, Eugene J. Puritch, P. Eng., residing at 44 Turtlecreek Blvd., Brampton, Ontario, L6W 3X7, do hereby certify that:

1. I am an independent mining consultant and President of P & E Mining Consultants Inc. 2. This certificate applies to the technical report titled “Technical Report on the Feasibility Study and Updated Mineral Reserve for

the Star – Orion South Diamond Project Fort à la Corne, Saskatchewan, Canada” (the “Technical Report”), with an effective date of July 14, 2011.

3. I am a graduate of The Haileybury School of Mines, with a Technologist Diploma in Mining, as well as obtaining an additional year of undergraduate education in Mine Engineering at Queen’s University. In addition I have also met the Professional Engineers of Ontario Academic Requirement Committee’s Examination requirement for Bachelor’s Degree in Engineering Equivalency. I am a mining consultant currently licensed by the Professional Engineers of Ontario (License No. 100014010), Association of Professional Engineers and Geoscientists of Saskatchewan (License No. 16216), Professional Engineers and Geoscientists Newfoundland and Labrador (License No. 05998) and registered with the Ontario Association of Certified Engineering Technicians and Technologists as a Senior Engineering Technologist. I am also a member of the Canadian Institute of Mining and Metallurgy.

4. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

I have practiced my profession continuously since 1978. My summarized career experience is as follows: Mining Technologist - H.B.M.& S. and Inco Ltd., .................................................................... 1978-1980

Open Pit Mine Engineer – Cassiar Asbestos/Brinco Ltd., ......................................................... 1981-1983

Pit Engineer/Drill & Blast Supervisor – Detour Lake Mine, ..................................................... 1984-1986

Self-Employed Mining Consultant – Timmins Area, ................................................................ 1987-1988

Mine Designer/Resource Estimator – Dynatec/CMD/Bharti, .................................................... 1989-1995

Self-Employed Mining Consultant/Resource-Reserve Estimator, ............................................. 1995-2004

President – P & E Mining Consultants Inc, ............................................................................ 2004-Present 5. I have visited the Star – Orion South Diamond Project on October 27-28, 2008 and October 1, 2009. 6. I am responsible for authoring Sections 15.0 and 25.2 and co-authoring Sections 14.0 to 14.2, 16.0 to 16.1, and 16.4 to 16.10 of

the Technical Report. 7. I am independent of the issuer applying the test in Section 1.5 of NI 43-101.

8. I have had prior involvement with the Project that is the subject of this Technical Report. The nature of my involvement is as a

co-author of four technical reports titled: “Technical Report and Resource Estimate Update on The Star Diamond Project, Fort à la Corne Area, Saskatchewan, Canada, NI 43-101 Technical Report” dated March 2, 2009; “Technical Report and Preliminary Feasibility Study on the Star Diamond Project, Fort à la Corne, Saskatchewan, Canada” dated August 17, 2009; “Technical Report and Resource Estimate on the Fort à la Corne Joint Venture, Orion South Diamond Project, Fort à la Corne Area, Saskatchewan, Canada” dated September 25, 2009; and “Technical Report and Updated Preliminary Feasibility Study on the Star – Orion South Diamond Project, Fort à la Corne, Saskatchewan, Canada” with an effective date of January 31, 2010.

9. I have read NI 43-101 and Form 43-101F1 and Sections 15.0 and 25.2 and co-authoring Sections 14.0 to 14.2, 16.0 to 16.1, and 16.4 to 16.10 of the Technical Report and those sections have been prepared in compliance therewith.

10. As of the date of this certificate, to the best of my knowledge, information and belief, the sections referenced above contain all

scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Effective Date: July 14, 2011 Signing Date: August 25, 2011

{SIGNED AND SEALED} Eugene Puritch __________________________ Eugene Puritch, P.Eng.

274

CERTIFICATE OF QUALIFIED PERSON ALFRED S. HAYDEN, P. ENG.

I, Alfred S. Hayden, P.Eng., residing at 284 Rushbrook Drive, Newmarket, Ontario, L3X 2C9, do hereby certify that:

1. I am President of EHA Engineering Ltd., Consulting Metallurgical Engineers Box 2711, Postal Stn. B. Richmond Hill, Ontario, L4E 1A7.

2. This certificate applies to the technical report titled “Technical Report on the Feasibility Study and Updated Mineral Reserve for

the Star – Orion South Diamond Project Fort à la Corne, Saskatchewan, Canada” (the “Technical Report”), with an effective date of July 14, 2011.

3. I graduated from the University of British Columbia, Vancouver, B.C. in 1967 with a Bachelor of Applied Science in

Metallurgical Engineering. I am a member of the Canadian Institute of Mining, Metallurgy and Petroleum and a Professional Engineer and Designated Consulting Engineer registered with Professional Engineers Ontario. I have worked as a metallurgical engineer for a total of 44 years since my graduation from university.

4. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason

of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

5. I have not visited the Star – Orion South Diamond Project. 6. I am responsible for authoring Sections 17.1 to 17.5 and 25.3, and Sub-sections 21.1.4 and 21.2.3 of the Technical Report. 7. I am independent of the issuer applying the test in Section 1.5 of NI 43-101. 8. I have had prior involvement with the Project that is the subject of this Technical Report when I was a co-author of the technical

report titled “Technical Report and Updated Preliminary Feasibility Study on the Star – Orion South Diamond Project, Fort à la Corne, Saskatchewan, Canada” with an effective date of January 31, 2010.

9. I have read NI 43-101 and Form 43-101F1 and Sections 17.1 to 17.5 and 25.3, and Sub-sections 21.1.4 and 21.2.3 of the

Technical Report and those sections have been prepared in compliance therewith. 10. As of the date of this certificate, to the best of my knowledge, information and belief, the sections referenced above contain all

scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Effective Date: July 14, 2011 Signing Date: August 25, 2011

{SIGNED AND SEALED} [Alfred Hayden] __________________________ Alfred S. Hayden, P.Eng.

275

CERTIFICATE OF QUALIFIED PERSON FRED H. BROWN, CPG, PrSciNat

I, Fred H. Brown, residing at Suite B-10, 1610 Grover St., Lynden WA, 98264 USA, do hereby certify that:

1. I am an independent geological consultant and have worked as a geologist continuously since my graduation from university in 1987.

2. This certificate applies to the technical report titled “Technical Report on the Feasibility Study and Updated Mineral Reserve for

the Star – Orion South Diamond Project Fort à la Corne, Saskatchewan, Canada” (the “Technical Report”), with an effective date of July 14, 2011.

3. I graduated with a Bachelor of Science degree in Geology from New Mexico State University in 1987. I obtained a Graduate Diploma in Engineering (Mining) in 1997 from the University of the Witwatersrand and a Master of Science in Engineering (Civil) from the University of the Witwatersrand in 2005. I am registered with the South African Council for Natural Scientific Professions as a Professional Geological Scientist (registration number 400008/04), the American Institute of Professional Geologists as a Certified Professional Geologist (certificate number 11015) and the Society for Mining, Metallurgy and Exploration as a Registered Member (#4152172).

4. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

I have practiced my profession continuously since 1978. My summarized career experience is as follows:

This report is based on my personal review of information provided by Shore Gold Inc. and on discussions with its representatives. My relevant experience for the purpose of the Technical Report is:

Underground Mine Geologist, Freegold Mine, AAC ................................................................. 1987-1995

Mineral Resource Manager, Vaal Reefs Mine, Anglogold ........................................................ 1995-1997

Resident Geologist, Venetia Mine, De Beers ............................................................................ 1997-2000

Chief Geologist, De Beers Consolidated Mines ......................................................................... 2000-2004

Consulting Geologist ................................................................................................................. 2004-2008

5. I visited the Star – Orion South Diamond Project between May 4 - 7, 2008. 6. I am responsible for authoring Sections 14.0 to 14.2, and co-authoring Section 15.0 and 15.1 of the Technical Report. 7. I am independent of the issuer applying the test in Section 1.5 of NI 43-101.

8. I have had prior involvement with the Project that is the subject of this Technical Report. The nature of my involvement is as a

co-author of four technical reports titled: “Technical Report and Resource Estimate Update on The Star Diamond Project, Fort à la Corne Area, Saskatchewan, Canada, NI 43-101 Technical Report” dated March 2, 2009; “Technical Report and Preliminary Feasibility Study on the Star Diamond Project, Fort à la Corne, Saskatchewan, Canada” dated August 17, 2009; “Technical Report and Resource Estimate on the Fort à la Corne Joint Venture, Orion South Diamond Project, Fort à la Corne Area, Saskatchewan, Canada” dated September 25, 2009; and “Technical Report and Updated Preliminary Feasibility Study on the Star – Orion South Diamond Project, Fort à la Corne, Saskatchewan, Canada” with an effective date of January 31, 2010.

9. I have read NI 43-101 and Form 43-101F1 and Sections 14.0 to 14.2, and co-authoring Section 15.0 and 15.1 of the Technical Report and those sections have been prepared in compliance therewith.

10. As of the date of this certificate, to the best of my knowledge, information and belief, the sections referenced above contain all

scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Effective Date: July 14, 2011 Signing Date: August 25, 2011

{SIGNED AND SEALED} Fred H. Brown

__________________________ Fred H. Brown CPG, PrSciNat

276

CERTIFICATE OF QUALIFIED PERSON HARNAM TREHIN, P.ENG. I, Harnam Trehin., P. Eng., residing at 261 Kingsdale Ave., North York, Ontario M2N 3X3, do hereby certify that: 1. I am an independent professional Electrical Engineer contracted by P & E Mining Consultants Inc.

2. This certificate applies to the technical report titled “Technical Report on the Feasibility Study and Updated Mineral Reserve for the Star – Orion South Diamond Project Fort à la Corne, Saskatchewan, Canada” (the “Technical Report”), with an effective date of July 14, 2011.

3. I am a graduate of Concordia University at Montreal, Quebec with a M.Eng. in Electrical Engineering (1977). I am a Professional Engineer currently licensed by the Professional Engineers Ontario (License No. 46912507 ). I have worked as an Electrical Engineer for a total of 32 years since obtaining my M.Eng., degree.

4. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

My relevant experience for the purpose of the Technical Report is:

� Aker Solutions (Supervisor Electrical Engineering) ....................................................................................... 2007-2009 � Stone and Webster (Senior Electrical Engineer) ............................................................................................. 2005-2007 � Acers International (Senior Electrical Engineer) ............................................................................................ 2001-2003

5. I have not visited the Star – Orion South Diamond Project.

6. I am responsible for authoring Section 16.10 of the Technical Report.

7. I am independent of the issuer applying the test in Section 1.5 of NI 43-101.

8. I have had prior involvement with the Project that is the subject of this Technical Report. The nature of my involvement is as a co-author of two technical reports titled “Technical Report and Preliminary Feasibility Study on the Star Diamond Project, Fort à la Corne, Saskatchewan, Canada” dated August 17, 2009; and “Technical Report and Updated Preliminary Feasibility Study on the Star – Orion South Diamond Project, Fort à la Corne, Saskatchewan, Canada” with an effective date of January 31, 2010.

9. I have read NI 43-101 and Form 43-101F1 and Section 16.10 of the Technical Report and those sections have been prepared in compliance therewith.

10. As of the date of this certificate, to the best of my knowledge, information and belief, the sections referenced above contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Effective Date: July 14, 2011 Signed Date: August 25, 2011 {SIGNED AND SEALED} [Harnam Trehin] ____________________________________ Harnam Trehin, P. Eng.

277

CERTIFICATE OF QUALIFIED PERSON WAYNE D. EWERT, P.GEO.

I, Wayne D. Ewert, P. Geo., residing at 10 Langford Court, Brampton, Ontario, L6W 4K4, do hereby certify that: 1. I am a principal of P & E Mining Consultants Inc. who has been contracted by Shore Gold Inc. 2. This certificate applies to the technical report titled “Technical Report on the Feasibility Study and Updated Mineral Reserve for the

Star – Orion South Diamond Project Fort à la Corne, Saskatchewan, Canada” (the “Technical Report”), with an effective date of July 14, 2011.

3. I graduated with an Honours Bachelor of Science degree in Geology from the University of Waterloo in 1970 and with a PhD degree in Geology from Carleton University in 1977. I have worked as a geologist for a total of 41 years since obtaining my B.Sc. degree. I am a P. Geo., registered in the Province of Saskatchewan (APEGS No. 16217), British Columbia (APEGBC No. 18965), the Province of Ontario (APGO No. 0866) and the Province of Newfoundland and Labrador (PEGNL No. 06005).

4. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

My relevant experience for the purpose of the Technical Report is:

� Principal, P&E Mining Consultants Inc. .................................................................................................. 2004 – Present � Vice-President, A.C.A. Howe International Limited ................................................................................... 1992 – 2004 � Canadian Manager, New Projects, Gold Fields Canadian Mining Limited ................................................ 1987 – 1992 � Regional Manager, Gold Fields Canadian Mining Limited ......................................................................... 1986 – 1987 � Supervising Project Geologist, Getty Mines Ltd. ........................................................................................ 1982 – 1986 � Supervising Project Geologist III, Cominco Ltd.......................................................................................... 1976 – 1982

5. I visited the Star – Orion South Diamond Project on October 27-28, 2008.

6. I am responsible for co-authoring Section 15.1 of the Technical Report.

7. I am independent of the Issuer applying all of the tests in section 1.5 of National Instrument 43-101.

8. I have had prior involvement with the Project that is the subject of this Technical Report. The nature of my involvement is as a co-author of four technical reports titled: “Technical Report and Resource Estimate Update on The Star Diamond Project, Fort à la Corne Area, Saskatchewan, Canada, NI 43-101 Technical Report” dated March 2, 2009; “Technical Report and Preliminary Feasibility Study on the Star Diamond Project, Fort à la Corne, Saskatchewan, Canada” dated August 17, 2009; “Technical Report and Resource Estimate on the Fort à la Corne Joint Venture, Orion South Diamond Project, Fort à la Corne Area, Saskatchewan, Canada” dated September 25, 2009; and “Technical Report and Updated Preliminary Feasibility Study on the Star – Orion South Diamond Project, Fort à la Corne, Saskatchewan, Canada” with an effective date of January 31, 2010.

9. I have read NI 43-101 and Form 43-101F1 and Section 15.1 of the Technical Report and those sections have been prepared in compliance therewith.

10. As of the date of this certificate, to the best of my knowledge, information and belief, the sections referenced above contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Effective Date: July 14, 2011 Signing Date: August 25, 2011

{SIGNED AND SEALED} [Wayne Ewert]________________________________ Dr. Wayne D. Ewert P. Geo.

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APPENDICES A.0 PROCESSED KIMBERLITE AND PROCESSED WATER MANAGEMENT A.1 INTRODUCTION The objectives of the feasibilty work presented in this section are to:

� outline the mine production plan with respect to the current assumptions regarding processed kimberlite (PK) production;

� define the potential layout and location of the processed kimberlite containment facility (PKCF);

� outline the feasibility design for the management of process water; � generate quantities of material removed or added for use in estimating both start-up and

operating costs at a feasibility level; and � develop recommendations and opportunities for further improvement in the detailed

design stage of the Project. A.2 MINE PLAN Details of the proposed mining operations are discussed in Section 16. The mine plan for the Project calls for the construction of two open pits using a phased approach whereby each pit is developed consecutively. Mining will commence after a 4-year waste stripping start up period with the first phase (Phase 1a) of the Star pit allowing for approximately 3 years of kimberlite production. It is estimated that the mine will produce 279 Mt of diluted ore over a mine life of 20 years. Diluted ore tonnage incorporates kimberlite that is defined as waste (below economic cut off grade but is extracted with ore as part of the mining and processing operations). Diluted ore will be processed through the Process Plant. Table A.1 outlines the diluted tonnage distribution throughout the various mining phases. Table A.1: Phased Pit Production

Phase Diluted Ore Waste Tonnes Total Tonnes (Mt) (Mt) (Mt)

Star 1a 29.46 344.00 373.46 1b 25.77 154.16 179.93 2 45.19 225.26 270.45 3 49.45 166.16 215.61 4 16.02 148.98 165.00

Orion S 1a 24.91 212.40 237.31

1b 32.3 265.67 297.97 2 55.87 255.85 311.72

Total 278.98 1772.48 2,051.46

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A.3 PROCESSED KIMBERLITE PRODUCTION Details of the design for a Process Plant to treat the 279 Mt of ore are discussed in Section 17. The Process Plant will receive approximately 45,000 tonnes per day of kimberlite ore from a stockpile and using a conveyer system will feed the ore into an autogenous grinding (AG) mill and trommel screen which will reduce the ore to a -45 mm size fraction. Oversized material will be recycled back into the AG mill for further breakdown. The AG mill product will then pass to the comminution section to undergo washing and separation through spiral classifiers which will separate the kimberlite material into two size fractions, (-45 mm +0.25 mm and -0.25 mm). The -0.25 mm fraction containing mainly clays that remain in suspension in the slurry and other floating contaminants such as vegetation and plastics will be discharged directly into the PKCF. A dewatering screen with a ±1 mm cutoff will then separate the spiral classifier product (-45 mm +0.25 mm) to produce both a Fine (-1.0 mm + 0.25 mm) and a Coarse (+1.0 mm – 45 mm) processed kimberlite (PK) product. The Fine (-1 +0.25 mm) PK product will then be pumped to hydrocyclones situated on the berms of the PKCF where the water will be separated from the material and deposited into the PKCF. The dewatered material will then be used as construction material for the berms. In winter, when the hydrocyclone operation becomes difficult, the hydrocyclones will be bypassed and all -1 mm material will be discharged into the PKCF. The Coarse PK material from the comminution process, still containing the diamonds, will pass to the Dense Media Separation (DMS) process that separates the material by density with the lighter material (or floats) becoming the Coarse PK waste. The Coarse PK waste will be dewatered and then conveyed to a dedicated Coarse PK waste stockpile. The Process Plant will maintain the option to separate the Coarse PK waste into a -45 mm +8 mm fraction for possible re-crushing (Coarse Recrush) and a -8 mm + 1 mm (Coarse Reject) size fraction both of which are stockpiled separately in the Coarse PK management area. The heavier material (or sinks) from the DMS will then pass to the diamond recovery process where the diamonds will be separated from the other heavy minerals using magnetic sorting, x-ray sorting, grease belts and Laser Raman spectroscopy (i.e. a technique that measures the unique changes in light wave characteristics as it interacts with a particular material). Once the diamonds are extracted from the DMS concentrate this will become the recovery tailings and will be sent to a separate secure recovery tailings stockpile area. All process water required in the plant will be supplied from pit dewatering and recycling and managed through the PKCF for ultimate disposal into the Saskatchewan River depending on water quality. When the Star pit is complete, Fine PK and process water from Orion South, and potentially overburden, will be used to backfill into the Star pit, thus reducing the environmental impact. The projected average splits between the coarse and fine sized PK particles are summarized below in Table A.2 and Table A.3.

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Table A.2: Star Tailings Split Percentages

StorageArea

Component Size Percentage of Total ore (mm)

PKCF PKCF Fine -0.25 42.04 % PKCF Coarse -1+0.25 31.63 %

Coarse PK Pile

Reject Stockpile -8 +1 10.96 % Coarse Recrush -45 + 8 15.37 %

Table A.3: Orion South Tailings Split Percentages

StorageArea

Component Size Percentage of Total ore (mm)

Star Pit Fine Fine -0.25 44.25 % Coarse Fine -1+0.25 32.97 %

Coarse PK Pile

Reject Stockpile -8 +1 9.90 % Coarse Recrush -45 + 8 12.90 %

A.4 KIMBERLITE GEOCHEMISTRY A.4.1 ACID ROCK GENERATION POTENTIAL Metal leaching and acid rock drainage (ML/ARD) characterization of kimberlite at the Project was initiated in 2008. Acid base accounting (ABA) on 61 drill core samples from one drill hole tested the acid generation potential of seven kimberlite facies following the recommendations outlined in the MEND 5.10 report List of Potential Information Requirements in Metal Leaching/Acid Rock Drainage Assessment and Mitigation Work (MEND, 2005). The results indicated that the kimberlite facies at the Project are not acid generating with all samples having net potential ratios greater than two. Experience at other diamond mine sites and projects in Canada (e.g. Ekati and Diavik) have shown that the country rock is more frequently the source of acid generation rather than the kimberlite. Processed material from the Project is expected to be mostly kimberlite, with very little country rock processed. The amount of dilution to account for mixing of ore with low grade kimberlite and other material is considered in the mine planning. To increase the spatial coverage of geochemical characterization, surrogates were developed using the existing exploration drill core geochemistry database. Investigation of the relationship between ABA sulphide sulphur and Leco furnace total sulphur concentrations indicate that it is reasonable and conservative to estimate the kimberlite acid potential from either the ABA testing or the kimberlite geochemistry of the exploration drill core database.

281

A.4.2 METAL LEACHING Metal leaching studies, to date, based on standard waste extraction procedure (SWEP) testing of weathered processed kimberlite indicate that metals including chromium and nickel may be elevated in leachate, although the test is not a direct indication of potential site drainage. A.4.3 ML/ARD CONSIDERATIONS Static testing of kimberlite from Star and Orion South indicate that these materials are not acid generating and have excess neutralizing potential. Kinetic testing and leach testing of kimberlite is being conducted using a humidity cell and two test columns, and three field test plots. Data, to date, suggests that as the materials weather, the concentrations of sulphate, iron, antimony, arsenic, chromium, molybdenum, nickel and selenium could become elevated. Testing, to date, also suggests that the Colorado Group shale material may represent a risk of sulphide oxidation with sulphur contents of up to 5 % for the shale and up to 2 % in closely adjacent kimberlite. The other mine materials do not appear to be acid generating. As mitigation, mine material segregation and encapsulation of the shale in till is incorporated into overburden management. A.5 SITE GEOTECHNICAL CHARACTERIZATION It was recognised that as part of the FS a thorough review of the overburden geological model was required at the proposed sites of the Fine PKCF and the Coarse PK stockpile. As support to this, a subsurface site investigation program was conducted involving a detailed geotechnical and hydrogeological investigation to confirm the foundation conditions and the geotechnical characteristics of the subsurface soils in the immediate vicinity of the proposed structures. To provide the required data, the site investigation program included:

� drilling a select number of drill holes in the overburden (confirmatory test holes) to include soil sampling (Shelby tube, split spoon and drill chip sampling), and various in situ geotechnical testing (cone penetrometer tests (CPT) and standard penetration tests (SPT)) of the main stratigraphic units;

� installing standpipe piezometers to measure the static water levels within the surficial sand units (S1 and S2) and perform slug tests to obtain hydraulic conductivity values for those units; and,

� laboratory testing to characterize both the construction materials to be used and the foundation soils at the proposed location of each facility.

Based on the site investigation the area can be characterised as follows:

� the surficial stratified deposits are underlain by glacial till and shale country rock; � the stratified deposits range between 25.8 m and 37.5 m thick; � the glacial till is between 74.2 m and 83.8 m thick; � the stratified deposits can be subdivided into the following sequence; upper sand (S1);

upper clay (C1); lower sand (S2); and, lower clay (C2); � standard Penetration Test N values in the S1 layer range from 4 blows per 300 mm (very

loose/loose) and 35 blows per 300 mm (dense);

282

� the average undrained shear strength (using a laboratory vane) was 48 kPa (firm) for the C1 layer and 93 kPa (stiff) for the C2 layer;

� 21 laboratory vane tests were also performed on the S1 and S2 layers. The level of these units, below 12.5 m depth, that were logged as sand were identified as having undrained shear strengths (using a laboratory vane) of 34 kPa (S1) and 45 kPa (S2);

� the CPT traces showed that all of the layers beneath a surficial sand layer contained a significant silt component. The base of the sand unit ranged from 4.9 m to 8.3 m; and

� the average permeabilities of the S1 and S2 layers were 7.85 x 10-5 m/s and 1.96 a 10-6 m/s respectively.

A.6 COARSE PK MANAGEMENT This section outlines the management considerations and summarizes the feasibility design of the Coarse PK management facility. A.6.1 COARSE PK MANAGEMENT CONSIDERATIONS The management criteria for the feasibility Coarse PK management facility include:

� to create a Coarse PK facility to separately store as stockpiles: Coarse Recrush (8 mm to 45 mm); and Coarse Reject (1 mm to 8 mm) from the Process Plant;

� to minimize capital and operating costs; � to create a facility that can be successfully and safely constructed, operated and

closed/reclaimed; and � to minimize risks and environmental issues.

All Coarse PK will be transferred from the Process Plant using belt conveyors and deposited as a stockpile on a dedicated site. The Coarse Recrush material may contain diamonds, and could be re-processed in the future. The Coarse Reject material, however, is not expected to contain diamonds of appreciable size or quantity, and therefore is not expected to be re-processed. The Coarse PK facility will contain sufficient capacity to store all Coarse PK from both Star and Orion South. A.6.2 COARSE PK DESIGN CRITERIA The criteria summarized in Table A.4 were used to design the feasibility level Coarse PK facility.

283

Table A.4: Coarse PK Design Criteria

Parameter Value

Specific Gravity 2.27 t/m3

Dry Bulk Density (in-situ) 1.42 t/m3

Gradation Distribution 1 mm - 8 mm and

8 mm - 45 mm

Operational Side Slope 3H:1V

Closure Side Slope 3H:1V

Pile Height Max 50 m

Coarse Recrush volume 35.1 Mm3

Coarse Reject volume 25.6 Mm3

Total Coarse PK volume 60.7 M m3

A.6.3 COARSE PK FACILITY A primary site for the Coarse PK facility was selected on the east side of the Star pit and the Process Plant between the Duke Ravine and English Creek (Figure A.1). A secondary alternative site was also identified northeast of the Process Plant site between the access road and the headwaters of the Duke Ravine. The following considerations were used in the positioning and layout of the Coarse PK facility:

� limit the number of watersheds impacted by the facility and ensure runoff will not interfere with the open pit;

� minimize footprint, but provide sufficient storage; � minimize distance to the Process Plant site; � maintain a minimum separation of 55 m from the PKCF berm slope; � maintain a minimum offset distance of 1 km from the ultimate Star open pit rim; � maintain a minimum offset distance of 1.2 km from the Saskatchewan River; and � maintain a minimum offset distance of 100 m from the crest of any drainage gullies (i.e.,

English Creek and Duke Ravine).

284

Figure A.1: General Site Plan (1 km grid) with Coarse PK Pile and PKCF

285

The Coarse PK pile design characteristics are summarized in Table A.5. Site preparation is required and includes the removal of all merchantable timber; however, the removal of brush and topsoil is not expected. If, however, during the design stage, when field conditions are assessed in detail, should significant deposits of organic soil be identified then stripping of this topsoil may be required.

Table A.5: Coarse PK Pile Design Characteristics

Parameter Value

Top Elevation 465.5 m ASL

Height 49.5 m maximum above existing ground

Side Slopes 3H:1V

Footprint Area 168.5 ha

Storage Volume 60.7 M m3

The external slopes of 3H:1V provide a factor of safety greater than 1.3. Coarse Reject will be stacked on the south part of the pile, and Coarse Recrush on the north part of the pile. Material will be initially stacked with side slopes at the angle of repose (37 degrees) and will be reworked using a bulldozer to approximately 18.4 degrees. The stockpile will be constructed in four lifts aligned in north- south rows, starting at the east side of the pile and working west. A.6.4 WATER MANAGEMENT FOR COARSE PK FACILITY Perimeter ditch design is based on a 1:10 and 1:100 year, 24 hour storm event. The ditching is offset about 5 m from the ultimate toe of the Coarse PK pile and slope directions are dictated by natural topography. Runoff from the Coarse PK pile will collect in these ditches and be discharged into a pond located south of the Coarse PK pile (the South Settling Pond). This settling pond will allow for suspended solids in the runoff to settle prior to release to the lower Duke Ravine or be directed to natural wetlands depending upon water quality. In the event that flow velocities in the drainage system need to be controlled to minimise erosion within the ditches, the Company has provided for the design of drop chute structures. A.6.5 COARSE PK RECLAMATION AND CLOSURE The Coarse PK stockpile covers 168.5 ha of which approximately 33 ha is covered with merchantable timber, which will be logged out. It will then be constructed over the existing topography without stumping or grubbing of the non-merchantable timber; however, standing vegetation may be knocked down to create a working surface for the stacker. The materials at the perimeter of the Coarse PK stockpile will be pushed to create a security berm and to act also as a reclamation material stockpile. It will remain an active facility throughout operations and may undergo reprocessing at various phases of mining, so progressive reclamation is not feasible. If it is determined that the Coarse PK will not be reprocessed then a cap of at least 100 cm of sand or other suitable reclamation material will be placed along with any other treatments required as a result

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of ongoing environmental studies. The perimeter berm will then be rolled back to cover the lower slopes of the pile and then revegetated to a dry-poor site.

A.7 FINE PK MANAGEMENT This section outlines the management considerations and summarizes the feasibility design for the PKCF, which will be used to contain the fines slurry generated during processing. A.7.1 FINE PK MANAGEMENT CONSIDERATIONS The management criteria for the feasibility Fine PK management facility include:

� to design a facility able to accept all of the processed Fine PK from the Star deposit produced at the Process Plant;

� to minimize capital and operating costs; � to design a facility that can be successfully constructed, operated and closed/reclaimed; � to minimize risks and environmental issues.

With little topographic relief in the Project area and no significant valleys close to the proposed Process Plant site, or within the pit watershed, a self-contained management facility (i.e. using a ring dyke) is the preferred layout for the PKCF. In order to reduce the need for using borrowed construction material, a centreline construction method using dewatered coarser fine PK (i.e., 0.25 mm to 1 mm size fraction) was selected as the preferred construction method. The PKCF was sized based on the estimated amount of Fine PK material generated from processing the Indicated ore at Star, as well as an allowance for the storage of Fine PK from the processing of the Inferred and Other kimberlite in the event that these other kimberlite ores prove to be economic. Fine PK from Orion South will be placed as backfill into the Star pit. A.7.2 FINE PK FACILITY DESIGN CRITERIA The following is a summary of the criteria for the feasibility design of the PKCF:

� minimum storage volume of 135.8 Mm3 to accommodate Fine PK from the Star pit; � maximum coarse Fine PK (0.25 mm to 1 mm) available for construction is 28.5 Mm3; � maximum height of the PKCF above foundation is 60 m; � downstream slopes of 4H:1V; � crest width 15 m; and � beach slope of 0.75 %.

The starter dyke construction was based on:

� a minimum storage volume, within the starter dyke, of 16.3 Mm3 (i.e., 1.5 years of operations);

� dyke slopes of 3H:1V; and � crest width of 10 m.

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A.7.3 FINE PK CONTAINMENT FACILITY The proposed location for the PKCF is northeast of the plant directly upstream of Duke Ravine (Figure A.1). An alternative location was identified between the Duke Ravine and English Creek. The following considerations were used in the positioning and layout of the Fine PK facility:

� limit the number of watersheds impacted by the facility and make sure runoff can flow away from the open pit (all runoff is currently directed to discharge into Duke Ravine);

� minimize footprint; � minimize distance to Process Plant site; � maintain a minimum offset distance of 1 km from the ultimate Star open pit rim; � maintain a minimum offset distance of 1 km from the Saskatchewan River; � maintain a minimum offset distance of 100 m from English Creek; � aim to balance cut/fill requirements; and � optimize dyke heights for minimum construction costs and to conform to the natural

topography. A starter dyke was designed to contain 1.5 years worth of production. The starter dyke will be constructed of available fill material with an upstream clay blanket to control pore water pressure. All construction material for the starter dyke will be sourced from the Star pit pre-strip. The starter dyke will be progressively raised in steps using underflow material from the dewatered tailings. The 0.25 mm to 1 mm Fine PK will be cycloned at the berm site using six 26” cyclones to remove water, and then placed on the upstream slope, where it will be reworked and compacted as required. The fine size fraction (less than 0.25 mm) will then be placed directly into the PKCF. Cyclone operations will generally occur from mid-March through to mid-November. During the winter, all tailings will be placed in the PKCF. Table A.6 summarizes the calculated details for the PKCF. Table A.6: Calculated Design Parameters for the PKCF

Property Value

Starter Dyke Construction Material Volume (M m3) 2.09

PKCF Storage Capacity (M m3) 135.82

PKCF Dam Volume (M m3) 28.50

PKCF Dam Crest Elevation (masl) 480.3

PKCF Dam Crest centreline Perimeter (m) 7,009

PKCF Ultimate Footprint Perimeter (m) 8,220

PKCF Ultimate Footprint Area (ha) 486.3

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A.7.4 WATER MANAGEMENT FOR FINE PK FACILITY Perimeter ditch costing is based on a 1:10 and 1:100 year, 24 hour storm event. The ditches are offset about 5 m from the ultimate toe of the PKCF, and slope directions are dictated by natural topography. The majority of the runoff and seepage will be directed to the PKCF polishing pond for settling then discharged or recycled into the Process Plant depending on water quality. Due to topography, some runoff and seepage will also be directed south to link with the Coarse PK pile drainage system. Since this runoff water may contain suspended sediments, a pond is designed south of the Coarse PK pile (the South Settling Pond) to settle runoff prior to release to the lower Duke Ravine, or directed to natural wetlands depending upon water quality. Drop chute structures are designed as needed to reduce flow velocities. The ditch system is designed to convey approximately 1,000 m3 per day of seepage from the PKCF, precipitation and runoff. A reclaim barge is required to pump water from the PKCF to the settling pond. The barge area is designed with a clay core in the berms to provide stability adjacent to the open water. A.7.5 PKCF RECLAMATION AND CLOSURE The area of the PKCF is 486 ha, of which approximately one ha is merchantable timber. Stumping, grubbing and removal of all organic material will be required under the starter berm, and under the outer berm as it is being constructed with the dewatered Fine PK. Approximately 25 % (about 0.11 M m3) of the organic material is planned to be pushed to the outer boundary of the PKCF using bulldozers to create a perimeter security berm. The remainder will be used for direct placement, disposed of within the overburden pile, or pushed into the PKCF. Due to the proposed center line construction method using the dewatered Fine PK, progressive reclamation is not possible on the outside slopes. At closure, the perimeter berms will be rolled back onto the toe slope of the PKCF. Assuming a 15 cm depth, about 73 ha will be covered. The remaining exposed Fine PK will be mixed with a top dressing of at least 30 cm of sand or other overburden material, and/or mixed with suitable soil amendment (composted biosolids or other) based on the results of ongoing research. A.8 RECOVERY TAILINGS STOCKPILES During the processing of the Star kimberlite, the recovery section contained within the Process Plant will treat on average 315 t/d of heavy mineral concentrate generated from the DMS section. Once the diamonds have been removed from the DMS concentrate, the +1 mm kimberlite rejected from the recovery section will be conveyed outside to a secure area as recovery tailings separated into two size fractions (-8 +1 mm) and (-45 +8 mm) and stockpiled separately north and south of the stacker as shown in Figure A.2. The secure area has been designed to hold at least two years worth of recovery rejects, of which, 95,740 tonnes will be the finer material (-8 +1 mm) resulting in a pile 10.7 m high and 134,210 tonnes will be coarser material (-45 +8 mm) resulting in a pile 12.6 m high. The recovery tailings stockpile will be built along a natural slope feature with the sides at a 3H:1V slope. The ground under the recovery tailings stockpile will be excavated to form a slightly convex mound with the centre being 1.5 m higher than the circumference. The area under the recovery

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stockpile (approximately 21,388 m2) will be lined with 0.5 m of either clay or till sourced from the overburden material. Placed above the clay/till layer will be a 2 m layer of coarse reject kimberlite sourced from the DMS floats. A drainage ditch will be dug around the outside of the recovery stockpile (approximately 520 m) to capture any leached liquids from the stockpile. The drainage ditch will be sloped to allow the leached liquids to collect in one area for easy removal. The overall footprint is estimated to extend 170 m from east to west and 160 m from north to south. During operations, potential business opportunities for the recovery tailings stockpile will be explored. If potential uses are not feasible, the recovery tailings will be moved to the Coarse PK pile as needed. Figure A.2: Proposed Layout of the Process Plant, Stockpile and Recovery Tailings Stockpile

When processing the Orion South kimberlite, the recovery section will process a significantly less amount of DMS concentrate than was the case for the Star kimberlite. On average, 135 t/d will be treated which will result in a significant reduction in the recovery tailings generated and hence reporting to the tailings stockpile. The recovery stockpile therefore has been designed based on the production parameters obtained from processing the Star kimberlite which has the greater impact. Responsibility for the environmental monitoring of the recovery reject stockpiles will be managed through the mine’s Environmental Department.

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B.0 WATER MANAGEMENT B.1 INTRODUCTION The objectives of the work presented in this section are to:

� present the regional geological framework, using existing information to show how the Star and Orion South kimberlites relate to the regional hydrogeological setting;

� define the potential layout and location of the water management facilities; � outline the feasibility design of the water management facilities; � highlight water quality testing and parameters; and � highlight any issues or opportunities for further improvement to be addressed in the

detailed design stage of the Project. B.2 REGIONAL GEOLOGY A typical stratigraphic column for the area is shown below as Figure B.1. B.2.1 BEDROCK GEOLOGY The lower boundary of the bedrock geology for this section has been set at a depth equivalent to current sea level within the Upper Devonian carbonates of the Souris River Formation, a depth from surface of approximately 420 m. Details of the bedrock geology are described below in ascending order. B.2.1.1 SOURIS RIVER FORMATION The Upper Devonian Souris River Formation of the Manitoba Group is described as an argillaceous cryptocrystalline and fragmental fossiliferous limestone, dolomitic limestone, and dolostone, with red and green calcareous shale. The Souris River Formation typically has a thickness of less than 210 m and in the Project area has a thickness of approximately 100 m.

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Figure B.1: Schematic Stratigraphic Column for the Fort à la Corne Area

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B.2.1.2 MANNVILLE GROUP An erosional unconformity exists where the early Cretaceous-aged Mannville Group directly overlies the Upper Devonian Souris River Formation. The erosional contact at the base of the Mannville Group is situated at a depth of approximately 340 m as interpreted from the existing Shore drill hole data. From a water management perspective, the Mannville Group is arguably the most important group of sediments at the site due to the potential of the formations within the group to transmit groundwater. The Mannville Group consists of two formations: the Cantuar and the Pense. The Cantuar Formation consists of marine quartzose sandstones, mudstones and shales, intercalated with estuarine and fluviatile channel deposits, pedosols and coal deposits. The Cantuar Formation has a typical thickness of less than 170 m and is composed of the following members: Dina, Cummings, Lloydminster, Rex, General Petroleum, Sparky and Waseca Members. The lowest member of the Cantuar Formation, the Dina Member, is comprised of well sorted very fine grained quartzose sandstones, laminated with dark grey shales, mudstones and poorly sorted medium grained quartzose sand. The Dina Member is overlain by the Cummings Member, which consists of very fine grained well sorted sandstones, mudstones and silty shales with abundant carbonized plant fragments and occasional pyrite concretions. The Lloydminster Member is comprised of sandstone units with intermittent low energy clay and shale partings. The Rex Member consists of very fine grained, silty, weakly-cemented quartzose sandstones with carbonaceous plant fragments. Overlying the Rex Member is the General Petroleum Member which consists of a lower unit of unconsolidated fine to medium grained quartz sandstone, overlain by grey silts and shales with coal beds and partings, and an upper unit of alternating very fine grained silty, weakly cemented quartz sandstones and carbonaceous clay. The Sparky Member contains argillaceous sandstones, shales, carbonaceous mudstones, and laminated sands, silts and carbonaceous clays. The top of the unit sometimes contains a thin coal unit, or off white to light grey argillaceous sandstone or siltstone with interceded coals. The uppermost member, the Waseca Member, consists of mudstones or shales, with interbeds of silty fine grained sandstone, with carbonaceous shale at the base. The contact between the Cantuar Formation and the overlying Pense Formation is disconformable and represents a transition from fluvio-deltaic to transgressional tidal flat and estuarine environments. The Pense Formation consists of fine grained current-bedded quartzose sandstone, interstitial kaolinitic clay, and shaly siltstone with carbonaceous shale. The Pense Formation becomes progressively more glauconitic toward the upper contact with the overlying Joli Fou formation. The Pense Formation has a typical thickness of less than 15 m and is composed of the McClaren and Colony Members. The Pense Formation immediately underlies the Colorado Group at the Star, Orion South and 147 (Orion North) sites, but is absent at the 148 Kimberlite (10 km to the northeast) and at the Gronlid sites (25 km to the southeast). The Star and the Orion South kimberlites were emplaced contemporaneously with the Mannville and Colorado group sedimentary rocks. B.2.1.3 COLORADO GROUP The Colorado Group unconformably overlies the Mannville Group at a depth of approximately 180 m. The Colorado Group consists of the Joli Fou, Newcastle, Westgate, Fish Scales, and Belle Fourche formations. In the Project area, only the Joli Fou and Westgate formations have been reported from this

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group but it is possible that small erosional remnants of the other formations are present (i.e. Newcastle and Fish Scales) but are not described further. The Colorado Group has a thickness of 70 to 95 m in the Project area. The Joli Fou Formation consists of dark grey shale with mudstone and thin laminated sandstone, minor bentonite, pelecypod coquinas, concretionary calcite, siderite and pyrite. In the Project area, the Joli Fou Formation is directly overlain by either the Westgate Formation shale, the Empress Group or Quaternary glacial drift. B.2.2 OVERBURDEN GEOLOGY The overburden geology consists of Tertiary- and Quaternary-aged deposits that are divided into the Empress Group, Sutherland Group and Saskatoon Group (Whitaker and Christiansen, 1972; Christiansen, 1992). The Empress Group contains both pre-glacial Tertiary-aged materials and proglacial Quaternary materials. The Quaternary deposits (Sutherland and Saskatoon groups) are the result of repeated periods of glaciation and the related deposition of till, outwash, lacustrine or glaciofluvial materials. In the Project area, it is difficult to visually differentiate between the various till units within the two groups because their lithologies are similar being generally composed of well-graded mixtures of sand, silt and gravel embedded in a clay matrix and with various amounts of interbedded sand, silt and clay. Glacial overburden thickness generally ranges from 90 m to 130 m but closer to the Saskatchewan River the overburden thickness decreases to approximately 60 m. B.2.2.1 EMPRESS GROUP The Empress Group has been defined as the stratified deposits occurring between the oldest till and bedrock. The Empress Group consists of a lower preglacial unit containing chert and quartzite gravel, as well as a younger upper pro-glacial unit containing igneous, metamorphic and carbonate clasts (Whitaker and Christiansen, 1972). The lower Empress occurs exclusively in preglacial valleys, while the upper unit may be found in preglacial valleys and as laterally extensive units of sand and gravel deposited on bedrock highs. Across both the Star and Orion South kimberlites, the Empress Group appears as a rare and non-continuous sand and gravel unit or as a boulder lag deposit. Where present across the Star Kimberlite, the upper contact of the Empress Group occurs between 335 and 345 masl and ranges from 1 m to 5 m thick. On the Orion South Kimberlite, the upper contact of the Empress Group, where present, occurs at approximately 345 masl. Generally it is only 1 m to 5 m thick but is particularly well developed on the northeastern edge of the Orion South Kimberlite where it is approximately 10 m thick, occurring as a fining up sequence of interbedded clay, silt, sand and gravel. At both the Star and Orion South sites, the Colorado and Sutherland groups bound the Empress Group unconformably at its base and top, respectively.

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B.2.2.2 SUTHERLAND GROUP The Sutherland Group is defined as that part of the glacial drift lying between the base of the lowermost till and the overlying Saskatoon Group. The contact at the base of the Sutherland Group is unconformable with either the Empress Group, where present, or, more commonly, with the Colorado Group. In the immediate area of the kimberlites the Sutherland Group is locally in direct contact with the kimberlite. The upper contact with the Saskatoon Group is disconformable and commonly has a recognizable oxidized zone and is also generally marked by a pronounced decrease in carbonate content. The Sutherland Group contains the Mennon, Dundurn, and Warman formations (Figure B.1). All three of these formations were identified at the Star site, while only the Mennon and Dundurn Formations were identified at the Orion South site. The Mennon Formation, the lowest formation of the group, consists of a very hard till composed of some silt and sand with a clay (montmorillonite, illite, and kaolinite) matrix and characterized by a boulder lag deposit at its base and a low carbonate content (Barendegt, 1998). In the Project area, the thickness of the Mennon Formation varies from 5 m to 15 m. The Dundurn Formation consists of a very hard silty clay till with some sand, scattered cobbles and gravel and occasional interbedded clays. At both the Star and Orion South sites, large selenite crystals were observed lining open fractures in the till. At the Orion South site, the Dundurn Formation includes a thick interbedded sand and gravel unit that contains thin till beds. This sand and gravel unit was found at the upper contact with the Saskatoon Group and was underlain by 5 m to 15 m of hard silty clay till. Across the Project area the thickness of the Dundurn Formation is quite variable ranging from 10 m to 35 m. The Warman Formation consists of a very hard oxidized silty clay till with fining downward sand. The distribution of this formation is variable across the Star site but, where present, is generally less than 10 m. thick. The Warman Formation was not identified at the Orion South site.

At the Orion South site, a thin highly plastic intertill clay unit, generally less than 5 m thick, but showing some evidence of shearing was reported at the contact between the Sutherland and Saskatoon groups. The Sutherland Group is laterally continuous in the regional area with thicknesses of 4 m to 60 m. B.2.2.3 SASKATOON GROUP The Saskatoon Group (Christiansen, 1992) is defined as that part of the glacial drift lying between the Sutherland Group and the land surface and where the contact at the base of the Saskatoon Group is unconformable. The Saskatoon Group includes the Floral and Battleford formations (Figure B.1) and the upper glacial stratified deposits and surficial soil (proglacial). In the Project area, the till deposits of the Saskatoon Group are laterally continuous ranging between 12 m and 48 m in thickness. The Saskatoon Group is differentiated from the underlying Sutherland Group on the basis of carbonate content, single-point electrical resistance on E-logs, texture and geochemistry. Typically, tills of the

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Sutherland Group have lower carbonate contents, lower electrical resistance and higher clay contents than tills of the Saskatoon Group. The Floral Formation consists of coarser grained tills than those of the Sutherland Group. It is very hard and fines downward to a silty, sandy till with a clay matrix at the base. Tills of the Floral Formation are hard and, when oxidized, are characterized by joints, which are clearly visible when stained by iron and manganese. In contrast, till of the Battleford Formation is usually soft and unstained when it is oxidized (Sauer and Christiansen, 1991). Up to three distinct intertill sand and gravel units each ranging from 2 m to 6 m in thickness were identified. The lateral continuity of these units varies throughout the area. There is also a large unit of intra-till sand and gravel existing between the Star and Orion South sites of variable thickness but possibly greater than 20 m. To date, the presence of the Battleford Formation has not been conclusively identified at either the Star or Orion South sites. B.2.2.3.1 SURFICIAL STRATIFIED DEPOSITS The term ‘surficial stratified deposits’ is an informal designation for all pro-glacial and alluvial sands and clays between the Battleford Formation and the present land surface. The contact between the Saskatoon Group tills and the Saskatoon Group surficial stratified drift is generally conformable and gradational as the lacustrine deposits of the overlying drift are generally interbedded with the tills of the Battleford Formation. The stratified surficial deposits are composed of materials of Holocene age and include lacustrine clays, deltaic and outwash sand deposits. In addition, recent reworked glacial material from the post-glacial period is present including materials deposited by alluvial, colluvial and eolian processes. At the Star Kimberlite site, the pro-glacial deposits range between 15 m and 40 m in thickness. They are composed of a series of coarsening up stratified clay, silt and sand deposits. The typical assemblage for these deposits is as follows:

� A basal clay unit 10 m to 15 m thick overlain by 10 m of a transitional clayey silt that coarsens up to sandy silt; and

� A fine silty sand unit 5 m to 10 m thick which forms the local ground surface. At the Orion South site area, the pro-glacial deposits ranged between 35 m and 47 m in thickness and are composed of upper and lower deltaic sand and upper and lower glaciolacustrine clay deposits. The assemblage for these deposits is:

� A lower lacustrine clay unit (C2) that ranges from 5 m to 8 m, thinning toward the east; � A lower deltaic sand unit (S2) that ranges from 8 m to 13 m in thickness and thickens towards

the east; � An upper lacustrine clay unit (C1) that ranges from 5 m to 13 m in thickness; � An upper deltaic sand unit (S1) that ranges between 10 m to 20 m in thickness, generally

becoming thicker towards the east.

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B.3 HYDROLOGY AND HYDROGEOLOGY B.3.1 Surface Water Hydrology The Project is located north of the Saskatchewan River in an area containing several small watercourses that generally drain in a southerly direction towards the Saskatchewan River. The upland surface is forested and has many poorly-drained wet areas. Generally, the soils under the forest are relatively permeable sand and silt to a depth of 20 to 30 m. Below the permeable soils there are relatively low permeability tills. The surface of the tills roughly parallels the surface slope toward the river valley. Therefore, the surface runoff and shallow ground water generally flow towards the Saskatchewan River valley. The largest creeks in the immediate Project area (Figure B.2) are Caution Creek (with a drainage area of 108 km² located to the west of the site) and English Creek (with a drainage area of 85 km² located to the north and east of the site). Stream flows in both watercourses vary seasonally and may cease during periods of low rainfall. Most of the Project activity will be in the area drained by smaller ephemeral streams located in the Duke, East and West ravines which have drainage basins ranging in size from 3.1 km2 to 24.1 km² and which only flow intermittently mainly during periods of high rainfall and snowmelt. The White Fox River defines the northern boundary of the FalC forest and was evaluated in 2007 as part of a bridge installation on Shipman Trail. For the White Fox River at the Shipman Trail crossing, the peak daily mean flow for a 1:25 year return period was 6.6 Mm3/day or 76.8 m3/s, and the 1:10 year -3 day flow was 3.6 Mm3/day or 41.6 m3/s. The Saskatchewan River lies immediately south of the Star Kimberlite and is a major waterway in Western Canada. Based on provincial monitoring data, the calculated seven day average low flow with a 20 year return period (7Q20) for the Saskatchewan River near the Project site was estimated to be 12.9 Mm3/day or 149 m3/s with average yearly flow of 567 m3/s.

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Figure B.2: Project Area Watercourses (from Shore and AMEC, 2010)

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B.3.2 HYDROGEOLOGY Hydrogeological investigations at the Star and Orion South sites have been conducted by Hydrologic Consultants, Inc. (HCI) and SRK since 2005 and have led to the development of a feasibility-level groundwater flow model to predict possible inflows to the proposed open pits and the associated impacts to water levels and groundwater discharge to the nearby waterways. This model utilizes hydraulic property data obtained from testing during hydrogeological investigations of the Project area in 2005, 2006, 2008 and 2010. These investigations included:

� construction, testing, and sampling of pumping wells and monitoring wells at various sites;

� construction, testing and analysis of a prototype dewatering test well; � analysis of the hydrogeologic data obtained in conjunction with stratigraphic data

interpreted by Clifton; � continuous refinement to the simulation of the groundwater regime using the 3-

dimensional ground-water flow model; � use of the revised model to predict:

a) the dewatering requirements for the proposed pits, b) drawdown in the groundwater systems, and c) the potential impacts to nearby streams due to the dewatering and associated

groundwater discharges; and � cost estimates of the proposed dewatering system.

The hydrostratigraphy of the area has been defined in detail by SRK and Clifton on the basis of boreholes drilled at various test sites. The hydrogeology from ground surface down through the top portion of the Souris River Formation can be described as three systems:

� a shallow groundwater system comprised of the surficial sands, silts, and clays, the till, intra-till gravels and basal boulder/gravel units;

� a confining layer of low permeability (sometimes referred to as an “aquitard”) consisting of the Westgate and Joli Fou shales (also referred to as the Colorado Group); and

� a deep groundwater system comprised of the Mannville Group sediments (Pense and Cantuar formations which have variable sand, silt, and clay content) and the upper portion of the underlying carbonates of the Souris River Formation.

These three systems are described in more detail below.

B.3.2.1 SHALLOW GROUNDWATER SYSTEM The shallow groundwater system includes three distinct units: � Surficial sand – unconsolidated, silty to fine-grained sand which covers most of the Project area.

This unit consists of the upper and lower sand layers separated by surficial silt/clay. The upper sand layer averages 10 m – 15 m in thickness. It receives recharge from precipitation and is in direct hydraulic connection with surface water bodies. Measured horizontal hydraulic conductivity values (Kh) from slug tests in piezometers range from 0.8 m/d to 28.5 m/d with average Kh of about 12 m/d (geomean Kh of 9.4 m/d). The lower sand layer averages 7 m – 12 m in thickness and, although

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not in direct hydraulic connection with surface water bodies, it is assumed that recharge occurs through precipitation and infiltration from surface sources. The hydraulic conductivity of the lower surficial sand was measured during slug tests and ranged between 0.008 m/d and 0.3 m/d with an average Kh of 0.2 m/d (geomean Kh of 0.1 m/d);

� Surficial silt – a highly variable unit consisting primarily of silt, and mostly interbedded with very fine-grained sand and clay. The sequence usually lies below the surficial sand and is separated into two layers by the lower sand layer in the northern part of the Star site and at Orion South. It has a combined thickness of 15 m – 28 m at various sites. Hydraulic conductivity values measured during slug tests range from 0.009 m/d to 0.025 m/d with an average Kh of 0.06 m/d (geomean Kh of 0.03 m/d) which is significantly lower than the Kh of the overlying sand; and

� Till – a glacially deposited silt and clay containing variable amounts of sand and gravel-sized

particles of overall relatively low Kh. This unit also contains interbedded sand and/or gravel with locally higher Kh. Horizontal hydraulic conductivity values were measured during piezometer and pump testing and recorded values that differed by five orders of magnitude (3 x 10-5 m/d to 1.5 m/d) indicating that the hydraulic properties of the till are locally quite variable. These data also indicate that the upper part of the till unit is slightly more permeable than the lower part as two pump tests that were conducted that tested the upper till section yielded higher average Kh values of 0.03 m/d and 0.4 m/d, respectively.

It should be noted that the vertical hydraulic conductivity values (Kv) of all hydrogeological units within the shallow groundwater system have not been evaluated in the field, and were defined during groundwater model calibration to the measured water levels. The water level elevations significantly decrease with depth, indicating a high vertical anisotropy ratio for the silt and till units (Kh>>Kv).

B.3.2.2 CONFINING LAYER The confining layer (Colorado Group) is an approximately 80 m thick (ranging from 73 to 90 m) sequence of interbedded marine shales and siltstones which overlie the Mannville Group. Associated with these sediments are kimberlite “fingers” (from 3 m to 15 m thick) that have been emplaced within or during the deposition of the Colorado Group sediments. Hydraulic conductivity measured from pump tests and slug tests in the Colorado shale gave average Kh value of 0.003 m/d (geomean value of 0.0004 m/d) but varied from 4 x 10-5 m/d in the areas away from the kimberlite to 0.015 m/d in areas where kimberlite “fingers” were present. This indicates that the “fingers” may provide local zones of variation for Kh and Kv. Laboratory testing to measure Kh values on three samples from the Colorado Group shale were completed at the University of Saskatchewan. Laboratory measured values of 3 x 10-6 m/d to 2 x 10-5

m/day with an average of 8 x 10-6 m/d are orders of magnitude lower than those measured from field testing and therefore may require further investigation. The University of Saskatchewan has been contracted to conduct a multiyear study into the characteristics of the Colorado Group shale, including its permeability and hydraulic conductivity. A large east-west trending subsurface paleochannel (Figure B.3) in which the Colorado shale has been been replaced by fluvial layers of sand and gravel and which is located approximately 10 km north of

300

the Star Kimberlite has been defined. This paleochannel has been accounted for in the groundwater flow model. B.3.2.3 DEEP GROUNDWATER SYSTEM The deep groundwater system, as defined for this investigation, is comprised of the Mannville Group and the uppermost part of the Souris River Formation. The Mannville Group is comprised of seven sandstone members of highly variable amounts of sand and silt (and minor clay) and also has differences in cementation and occurrences of interbeds of mudstone and coal. Comprehensive hydraulic testing of the Mannville Group was completed by pump testing wells that screened off the entire Mannville Group and monitored changes in water level in numerous multilevel piezometers. Results of the tests indicated significant transmissivity of the Mannville Group sediments, varying from 185 m2/d to 263 m2/d at the Star site (tested intervals were 125 m and 157 m respectively). Measured average Kh values of the entire Mannville Group were 1.5 m/d and 1.7 m/d. Testing also indicated that the lower 30 m to 40 m of the Mannville Group (Lloydminster, Cummings, and Dina members) is much more permeable than the remainder of the group. The upper part of the Mannville Group (Waseca, Sparky, General Petroleum, and Rex Members) was tested also and recorded lower than average Kh values. Horizontal hydraulic conductivity values for the upper part of the Mannville Group ranged from 0.0001 m/d to 0.08 m/d with an average Kh = 0.01 m/d. There is significant variability in the thickness of the Mannville Group sandstone members particularly the more permeable lower part of the group. For example, the thickness of the lowermost Dina member of the Cantuar Formation varies from 74 m in the Orion South area to 14 m in the Star Kimberlite area. Figure B.3 shows the location of the test pumping and monitoring sites used in the development of the groundwater model.

301

Figure B.3: Groundwater Testing and Monitoring Network

302

B.4 WATER QUALITY B.4.1 SURFACE WATER QUALITY Water has been sampled from a number of sites around the Project area including the Saskatchewan River. Local surface water sampling only dates from 2006 but historical Saskatchewan River sampling extends back to at least the early 1980s. However, because of the significantly different detection limits used in the earlier data, direct comparison with modern water quality results is not possible. This section focuses on parameter concentrations that naturally exceeded Saskatchewan surface water quality objectives (SSWQO) (SE, 2006) and/or Canadian water quality guidelines (CWQG) (CCME, 2007), as well as potential parameters of interest for possible environmental impact. The frequency of water quality exceedances within the Local Study Area (LSA), as defined in the EIS (Shore and AMEC, 2010), varied between watersheds and is shown in Table B.1.

303

Tab

le B

.1: S

umm

ary

of E

xcee

danc

es o

f SSW

QO

1 and

/or

CW

QG

2 Gui

delin

es fo

r Su

rfac

e W

ater

Qua

lity

Sam

ples

in S

trea

ms

with

in L

SA, 2

006

to 2

009

% E

xcee

danc

es

Para

met

ers

Cau

tion

Cre

ek

101

Rav

ine

Wes

tPe

rim

eter

R

avin

eW

est

Rav

ine

Eas

tR

avin

eD

uke

Rav

ine

FalC

Rav

ine

Wap

itiR

avin

eE

nglis

hC

reek

Sa

skat

chew

an

Riv

er (L

SA)

Sask

atch

ewan

R

iver

(RSA

) Fi

eld

and

Con

vent

iona

lPa

ram

eter

s

pH

Fi

eld

28

0 0

16

12

15

0 0

5 5

6 La

b 0

0 0

0 0

0 0

0 0

0 0

Dis

solv

ed o

xyge

n (f

ield

) 0

17

20

33

17

33

0 33

33

42

49

N

utri

ents

Nitr

ate

0 0

0 2

3 8

0 0

4 0

0 N

itrite

0

0 0

- 0

- -

- 0

0

Met

als

A

lum

inum

Tota

l 8

50

43

22

24

23

67

33

19

45

36

Dis

solv

ed

0 0

0 0

0 10

-

- 0

0 -

Ars

enic

Tota

l 12

0

0 9

10

0 0

0 48

0

0 D

isso

lved

0

0 0

0 2

10

- -

14

0 -

Cad

miu

m

To

tal

4 13

14

15

13

8

33

33

11

41

7 D

isso

lved

0

0 0

7 0

10

- -

7 22

-

Chr

omiu

m5

To

tal

20

25

29

21

20

31

33

67

26

37

14

Dis

solv

ed

88

50

50

75

74

80

- -

71

78

- C

oppe

r

Tota

l 4

0 14

7

6 8

0 33

0

17

14

Dis

solv

ed

4 0

50

0 0

10

- -

7 0

- Ir

on

To

tal

67

88

57

85

82

46

67

67

96

57

43

Dis

solv

ed

13

50

0 18

0

10

- -

14

0 -

Lead

304

Tota

l 0

0 14

1

0 0

0 0

0 0

0 D

isso

lved

0

0 50

4

0 0

- -

0 0

- M

ercu

ry6

To

tal

13

0 50

69

5

0 -

- 0

0 2

Dis

solv

ed

0 0

0 0

0 -

- -

17

0 -

Mol

ybde

num

Tota

l 0

0 0

0 0

0 0

0 0

0 0

Dis

solv

ed

0 0

0 0

0 0

- -

0 0

- N

icke

l

Tota

l 0

0 0

0 0

0 0

0 0

0 0

Dis

solv

ed

0 0

0 4

0 0

- -

0 0

- Se

leni

um

To

tal

4 0

0 2

1 0

0 0

4 0

0 D

isso

lved

0

0 0

0 0

0 -

- 0

0 -

Silv

er

To

tal

0 0

0 1

1 0

33

0 0

3 0

Dis

solv

ed

0 0

0 4

0 0

- -

0 0

- Th

alliu

m

To

tal

0 0

0 0

1 0

0 0

0 0

0 D

isso

lved

0

0 0

0 0

0 -

- 0

0 -

Ura

nium

Tota

l 0

0 0

0 0

0 0

0 0

0 0

Dis

solv

ed

0 0

0 4

0 0

- -

0 0

- Zi

nc

To

tal

2 0

0 9

7 8

0 0

4 0

7 D

isso

lved

0

0 0

0 4

10

- -

14

0 -

Not

es:

1 SSW

QO

= S

aska

tche

wan

surf

ace

wat

er q

ualit

y ob

ject

ives

for t

he p

rote

ctio

n of

aqu

atic

life

(SE,

200

6).

2 CW

QG

= C

anad

ian

wat

er q

ualit

y gu

idel

ines

for t

he p

rote

ctio

n of

aqu

atic

life

(CC

ME,

200

7).

3 Num

ber o

f sam

ples

(N) �

ana

lytic

al d

etec

tion

limit

(DL)

. 4 G

uide

lines

(GL)

for d

isso

lved

com

pone

nts o

f par

amet

ers a

re n

ot a

vaila

ble;

ther

efor

e, c

once

ntra

tions

wer

e co

mpa

red

with

gui

delin

es fo

r tot

al c

once

ntra

tions

to

eval

uate

exc

eeda

nces

of b

ioav

aila

ble

conc

entra

tions

. 5 S

SWQ

O c

onta

in a

gui

delin

e fo

r onl

y he

xava

lent

chr

omiu

m (C

r VI)

; com

paris

ons o

f tot

al c

hrom

ium

con

cent

ratio

ns w

ith th

is g

uide

line

are

cons

erva

tive.

6 M

ercu

ry g

uide

line

is fo

r ino

rgan

ic m

ercu

ry, r

athe

r tha

n to

tal m

ercu

ry; t

here

fore

, exc

eeda

nces

err

on

the

side

of c

autio

n.

305

Metals Only those metals that naturally exceed provincial (SSWQO) and/or Canadian (CWQG) guidelines are discussed in this section. Several guideline exceedances were observed in all streams and in the Saskatchewan River within both the LSA and Regional Study Area (RSA) for baseline conditions (Shore and AMEC, 2010). Exceedances of total metals were particularly frequent in West and East ravines; in each, concentrations of 11 metals exceeded guidelines at one or more sampling events. Exceedances were also relatively common in Caution Creek (nine metals), West Perimeter Ravine (seven metals) and English Creek (seven metals). Concentrations of aluminum, cadmium, chromium, and iron exceeded guidelines in all nine streams. The dissolved fraction of these metals was also high and reflects the bioavailable component. Total iron concentrations were most frequently greater than guidelines, with 46 % to 96 % of samples exceeding guidelines in each stream. Exceedances of the chromium guideline were also frequent; however, because the guideline is for hexavalent chromium rather than total chromium, exceedances are likely lower than those reported. Copper concentrations exceeded guidelines in seven streams, and arsenic, mercury, and zinc guidelines were each exceeded in five streams. Rarely, selenium, silver, lead, and thallium also exceeded guidelines. Of the four streams that had adequate data from multiple seasons, most exceedances for total metals were found in winter and summer. In the Saskatchewan River within the LSA and the RSA, total concentrations of aluminum, cadmium, chromium, copper, and iron exceeded guidelines on at least one occasion. In addition, silver exceeded guidelines once in the LSA, and mercury (once) and zinc (twice) exceeded guidelines in the RSA. Iron displayed the highest percentage of guideline exceedances in the Saskatchewan River LSA (57 % of the samples). Incidences of guideline exceedances were higher in the LSA (aluminum, 45 % of samples; cadmium, 41 %; chromium, 37 %; copper, 17 %; iron, 57 %; and silver, 3 %) than in the RSA (aluminum, 36 %; cadmium, 7 %; chromium, 14 %; copper, 14 %; iron, 43 %; mercury, 2 %; and zinc, 7 %). Dissolved cadmium (22 % of samples) and dissolved chromium (78 % of samples) concentrations exceeded the guidelines for total concentrations in the LSA on several occasions. Dissolved metals were not analyzed for water samples collected from the RSA, thus data are not available. Within the LSA, no winter water samples were collected, and the most total metal and dissolved metal parameters exceeded guidelines in summer (six total metals and two dissolved metals), followed by spring (five total metals and one dissolved metal), and fall (four total metals and one dissolved metal). Within the RSA, exceedances of guidelines were observed for the most total metals in winter (six), followed by summer (four), fall (three), and spring (two). Nutrients This section focuses on ammonia, nitrate and nitrite, and other nutrients for which there are guidelines (CWQG; CCME, 2007). Ammonia concentrations were higher in Caution Creek (median = 0.10 mg/L), West Ravine (median = 0.09 mg/L), English Creek (median = 0.08 mg/L), and East Ravine (median = 0.06

306

mg/L) than in the other streams, in which median values ranged from 0.005 mg/L (Duke Ravine) to 0.04 mg/L (101 Ravine). Nitrate showed infrequent exceedances of the guideline (13 mg/L, CCME, 2007) in four of the streams: West, East, and Duke ravines and English Creek. All exceedances of nitrate, except one, occurred during winter. The single exception was in East Ravine during fall sampling. No exceedances of the nitrite guideline (0.06 mg/L) were observed in any stream. In the Saskatchewan River within the LSA and RSA, ammonia levels were similar to those in the streams (median values of 0.04 mg/L and 0.01 mg/L, respectively). No exceedances of the nitrate and nitrite guidelines were observed in the Saskatchewan River within the LSA. For the RSA stations, total nitrate and nitrite were not analyzed; dissolved nitrate was instead compared with the nitrate guideline and no exceedances occurred. B.4.2 GROUNDWATER QUALITY The current groundwater monitoring network (those wells that are sampled for groundwater quality) consists of 24 wells constructed in the various hydrostratigraphic units and located at four separate locations (Star, Orion South, Orion North and Gronlid). The Star monitoring cluster is located approximately 2 km southwest of the Star Kimberlite, the Orion South monitoring cluster is located directly on Orion South, and the Orion North monitoring cluster is located approximately 10 km to the north and northwest of Star Kimberlite. The Gronlid sites are 25 km to the southeast of Star Kimberlite. Table B.2 details the groundwater monitoring network by hydrostratigraphic unit and the well construction details for the Project. The monitoring locations are shown on Figure B.3. Groundwater samples were collected from the network of pumping wells during a series of aquifer tests conducted in 2007 (PW-1, PW-2U, and PW-2L (Star site), PW-3 and PW-4 (148 site)). Groundwater samples were also collected from selected piezometers during 2007 and 2008 and from the prototype dewatering well in 2010. Groundwater sample results were compared to the SSWQO for the Protection of Aquatic Life (MOE, 2006), the CWQG for the Protection of Aquatic Life (CCME, 2007), and to the Mineral Industry Environmental Protection Regulations (MIEPR) (Saskatchewan Environment, 1996). Groundwater quality exceedances are summarized in Table B.3. To date, the water quality results are reflective of natural or background water quality in these aquifers. The comparison to the guidelines presented in Table B.3 is only for discussion purposes. Note that exceedances for total metals account for sedimentation within the groundwater samples. Proper screening and/or settling of this water would remove suspended solids.

307

Tab

le B

.2:

Sum

mar

y of

the

Gro

undw

ater

Mon

itori

ng N

etw

ork

Coo

rdin

ates

Scre

ened

Inte

rval

Det

ail

Po

int I

D

Site

E

astin

g N

orth

ing

Wel

l In

stal

latio

nD

ate

Gro

und

Ele

vatio

n T

OR

Ele

vatio

n T

opE

leva

tion

Top

Dep

th

Bot

tom

Ele

vatio

n B

otto

mD

epth

Sc

reen

L

engt

h(m

)

Scre

ened

Inte

rval

Str

atig

raph

y

Shal

low

Wel

l Net

wor

k - S

urfic

ial S

and

- 2 W

ells

PZ-5

U

Star

51

2646

58

9580

9 1/

25/2

007

431.

31

432.

26

425.

2 6.

1 42

2.2

9.1

3 Su

rfic

ial S

and

PZ-1

5U

148

5110

84

5903

213

1/6/

2007

45

0.16

45

0.9

444.

6 5.

6 44

1.5

8.7

3.1

Surf

icia

l San

d

Min

imum

43

1.31

43

2.26

42

5.2

5.6

422.

2 8.

7

Max

imum

45

0.16

45

0.9

444.

6 6.

1 44

1.5

9.1

Shal

low

Wel

l N

etw

ork

- Su

rfic

ial

Silt

– 3

Wel

ls

PZ-5

L St

ar

5126

46

5895

809

1/25

/200

7 43

1.31

43

2.21

40

8.7

22.6

40

4.2

27.1

4.

5 Su

rfic

ial S

ilt

PZ-8

U

147

5134

66

5903

501

5/17

/200

7 44

9.65

45

0.7

418

31.7

41

3.4

36.3

4.

6 Lo

wer

Sur

ficia

l Silt

PZ-1

5L

148

5110

84

5903

213

1/6/

2007

45

0.16

45

1.01

41

8.2

32

413.

6 36

.6

4.6

Surf

icia

l Silt

Min

imum

43

1.31

43

2.21

40

8.7

22.6

40

4.2

27.1

Max

imum

45

0.16

45

1.01

41

8.2

32

413.

6 36

.6

Inte

rmed

iate

Wel

l Net

wor

k - C

onfin

ing

Lay

er -

9 W

ells

PZ-4

U

Star

51

2672

58

9583

2 2/

15/2

007

430.

89

431.

66

371.

2 59

.7

361.

8 69

.1

9.4

Cen

ter T

ill

PZ-4

L St

ar

5126

72

5895

832

2/15

/200

7 43

0.89

43

1.55

34

2.6

88.3

33

3.1

97.8

9.

5 Lo

wer

Till

/Em

pres

s Gro

up

PW-1

St

ar

5126

28

5895

793

3/31

/200

7 43

2.53

43

3.12

40

2.9

29.6

33

5 97

.5

67.9

Ti

ll

PZ-6

AU

G

ronl

id

NA

N

A

4/3/

2007

N

A

NA

N

A

73.1

N

A

91.4

18

.3

Till

PZ-6

AL

Gro

nlid

N

A

NA

4/

3/20

07

NA

N

A

NA

10

7.6

NA

11

0.6

3 Lo

wer

Till

/Em

pres

s Gro

up

PZ-8

L 14

7 51

3466

59

0350

1 5/

17/2

007

449.

65

450.

55

408.

9 40

.8

390.

6 59

.1

18.3

U

pper

Till

PZ-1

4 14

8 51

1138

59

0318

8 12

/9/2

006

450.

35

451.

27

383.

4 67

37

8.8

71.6

4.

6 C

ente

r Till

PZ-1

4A

148

5111

47

5903

184

12/8

/200

6 45

0.39

45

1.43

34

8.6

101.

8 33

9.5

110.

9 9.

1 Lo

wer

Till

/Em

pres

s Gro

up

PW-3

14

8 51

1102

59

0320

4 2/

12/2

007

450.

12

450.

75

415.

3 34

.8

341.

6 10

8.5

73.7

Ti

ll/In

ter-

Till

Sand

s

Min

imum

43

0.89

43

1.55

34

2.6

29.6

33

3.1

59.1

Max

imum

45

0.39

45

1.43

41

5.3

107.

6 39

0.6

110.

9

Dee

p W

ell N

etw

ork

- Bed

rock

- 10

Wel

ls

PZ-3

U

Star

51

2637

58

9580

1 3/

6/20

07

431.

86

432.

55

179

252.

9 17

4.4

257.

5 4.

6 G

ener

al P

etro

leum

s Mem

ber

308

PZ-3

L St

ar

5126

37

5895

801

3/6/

2007

43

1.86

43

2.35

12

4.1

307.

8 11

5 31

6.9

9.1

Lloy

dmin

ster

/Cum

min

gs M

embe

rs

PW-2

U

Star

51

2621

58

9578

6 3/

24/2

007

432.

62

432.

99

245.

5 18

7.1

90.8

34

1.8

154.

7 M

annv

ille

Gro

up

PW-2

L*1

Star

51

2621

58

9578

6 3/

24/2

007

432.

62

NA

90

.8

341.

8 44

.3

388.

3 46

.5

Sour

is R

iver

For

mat

ion

PZ-6

U

Gro

nlid

53

3705

58

8896

1 4/

12/2

007

NA

N

A

NA

22

4.9

NA

22

9.2

4.3

Gen

eral

Pet

role

ums M

embe

r

PZ-6

L G

ronl

id

5337

05

5888

961

4/12

/200

7 N

A

NA

N

A

274.

9 N

A

284.

1 9.

2 Ll

oydm

inst

er M

embe

r

PZ-1

3U

148

5111

29

5903

192

12/1

9/20

06

450.

65

451.

25

193.

7 25

7 18

9.2

261.

5 4.

5 G

ener

al P

etro

leum

s Mem

ber

PZ-1

3L

148

5111

29

5903

192

12/1

9/20

06

450.

65

451.

35

151.

1 29

9.6

141.

7 30

9 9.

4 Ll

oydm

inst

er M

embe

r

PW-4

U

148

5110

89

5903

209

2/14

/200

7 44

9.86

45

0.22

26

0.9

189

130.

9 31

9 13

0 M

annv

ille

Gro

up

PW-4

L 14

8 51

1089

59

0320

9 2/

14/2

007

449.

86

NA

13

0.9

319

77.9

37

2 53

So

uris

Riv

er F

orm

atio

n

Min

imum

43

1.86

43

2.35

90

.8

187.

1 44

.3

229.

2

Max

imum

45

0.65

45

1.35

26

0.9

341.

8 18

9.2

388.

3

Tot

al W

ell N

etw

ork

- 24

Wel

ls

Not

es: *

1 - S

cree

n pl

ugge

d fr

om 3

44.2

m (8

8.4

mas

l) to

388

.3 m

; 2.4

m sc

reen

inte

rval

ope

n to

form

atio

n TO

R -

Top

of R

iser

Pip

e N

/A –

Not

App

licab

le

Ele

vatio

ns a

re in

met

ers a

bove

mea

n se

a le

vel (

mas

l) an

d de

pths

in m

bgs

309

B.4.2.1 SHALLOW GROUNDWATER SYSTEM (SURFICIAL SAND AND SILT) A groundwater sample collected from the surficial sand unit from piezometer PZ-15U (148 site) in 2007 showed that the shallow surficial sand groundwater is very hard (1,980 mg/L) with a high salt content (Total Dissolved Solids (TDS) of 3,040 mg/L and a chloride concentration of 1,190 mg/L. The elevated TDS and chloride concentrations at PZ-15U (which is 5.6 m deep) are likely anomalous and may be due to past activities (e.g. drilling) at this site (147). Additional readings in the surficial sand show TDS less than 400 mg/L, which is considered representative of this aquifer. Four groundwater samples were collected from the surficial silt unit from piezometers PZ-8U (147 site) and PZ-15L (148 site) in 2007 and 2008. Water quality data from these two piezometers (PZ-8U and PZ-15L) also showed that the groundwater in this unit is hard to very hard (291 to 348 mg/L) with a moderate salt content (TDS of 348 to 471 mg/L). Nutrient levels (i.e., nitrogen and phosphorus) are also relatively low (ammonia, 0.68 mg/L; nitrate, non-detectable or less than the method detection limit; phosphorous, up to 1.7 mg/L). The phosphorous and ortho-phosphate concentrations from PZ-15L were relatively high during the first groundwater sampling event, but decreased substantially for the second and third sampling events. Metals levels are generally low with many at concentrations that are less than the method detection limits. Some exceedances of the SSWQO and CWQG have occurred in samples including the total metals, aluminum, arsenic, copper, iron, lead, nickel, selenium, and zinc. Note that total metal concentrations in this data set includes suspended sediments produced from sampling, and would not likely be present in the production scenario. Dissolved arsenic concentration from PZ-8U also exceeded the SSWQO and CWQGs. The total zinc concentration detected in groundwater sampled from PZ-15U (surficial sand unit) and PZ-15L (surficial silt unit) also exceeded the MIEPR criteria.

310

Table B.3: Saskatchewan Environment Water Quality Guideline and MIEPR Exceedances, Groundwater

Parameter

Shallow (Surficial Sand)

Shallow (Surficial Silt)

Intermediate(Confining Layer)

DeepFlowSystem

Pumping Wells Aluminium, Total No Data No Data X Arsenic, Total No Data No Data X Copper, Total No Data No Data X Iron, Total No Data No Data X X Piezometers Aluminium, Total X X X X Aluminium, Dissolved X X Arsenic, Total X X X Arsenic, Dissolved X Copper, Total X X X X Iron, Total X X X X Iron, Dissolved X Lead, Total X X X Lead, Dissolved X Nickel, Total X X Selenium, Total X X X Zinc, Total X X X Zinc, Dissolved X

Notes: 1) “X” – generally indicates exceedance of the Saskatchewan Environment, SSWQO. There was only one exceedance of the MIEPR water quality standard which was from PZ-15L at 148 site, which was completed into the deep system. 2) Blank cells indicate no exceedance of these standards from monitoring wells completed into this unit. B.4.2.2 CONFINING LAYER A total of nine groundwater samples were collected from the wells and/or piezometers completed into hydrostratigraphic units within the confining layer (i.e. tills, Empress Group and/or Colorado Group shale). There are a total of seven piezometers and two pumping wells completed within the confining layer. Groundwater samples were collected from the Star site pumping well PW-1 in 2007 and piezometers PZ-4U and PZ-4L in 2007 and 2008 respectively. Samples were also collected from the 148 site from pumping well PW-3 in 2007 and from piezometers PZ-14 and PZ-14A also in 2007. One piezometer at the 147 site, PZ-8L, was sampled several times in 2007 and 2008. The wells and piezometers completed within the confining layer show that groundwater within this system is slightly hard to very hard (162 mg/L to 740 mg/L). The salt content in the groundwater also varies from moderate (TDS of 367 mg/L) to high (TDS of 4,460 mg/L at PZ-14A). Nutrient concentrations (i.e., nitrogen and phosphorus) are generally low with the exception of ammonia at PZ-4L (2.5 mg/L), PW-3 (2.9 mg/L) and PZ-14A (4.3 mg/L). Metals concentrations in the groundwater from this system are generally low, with many at concentrations that are below method detection limits. Some exceedances of SSWQO and CWQG have occurred in groundwater collected at the PW-1 location, including the total metals

311

aluminum, arsenic, copper, iron lead, nickel, selenium, and zinc as well as dissolved aluminum at PZ-4L and dissolved arsenic at PZ-8L. B.4.2.3 DEEP GROUNDWATER SYSTEM A total of fifteen groundwater samples were collected from six piezometers and two pumping wells that were completed into various hydrostratigraphic units within the deep groundwater system. The sampling dates and locations sampled include:

� Star pumping well, PW-2U - two samples (sampled in 2007); � Star pumping well, PW-2L - one sample (sampled in 2007); � Star piezometers PZ-3U and PZ-3L (Star site) - sampled in 2007 (PZ-3L only) and 2008

(PZ-3U and PZ-3L); � Orion South (Gronlid) piezometers, PZ-6U and PZ-6L – sampled in 2007 and 2008; � The 148 site pumping well, PW-4U - sampled in 2007; � The 148 site piezometers PZ-13U and PZ-13L - sampled in 2007; and � Orion South Prototype dewatering well pump test – sampled in 2010.

The samples from most of these wells and piezometers indicate that the deep groundwater is hard to very hard varying from 135 mg/L (PZ-6U) to 658 mg/L (PZ-3L). The total dissolved solids content in the groundwater from these locations was generally of the order of 2,000 to 4,500 mg/L but varied from 309 mg/L (PZ-6U) to 4,630 mg/L. Nutrient concentrations (i.e., nitrogen and phosphorus) were very low in groundwater sampled from the deep groundwater system during pump tests however, ammonia concentrations in some of the samples from the piezometers were elevated (e.g. 3.0 mg/L to 3.4 mg/L from PZ-3U). The metals concentration in these groundwater samples were generally low with only aluminum, copper, iron, lead, and selenium exceeding their respective SSWQO and/or CWQG from one or more locations. Note that sample results however were influenced by sediment resulting from pumping during well development, as is evident by the difference between the dissolved and total values measured. Data from the 2010 prototype dewatering well pump test are presented in Table B.4. This data is very consistent, was sampled from a fully designed and developed source, and is the most representative data of water quality from the Mannville aquifer that will likely be encountered during open pit mining operations.

312

Tab

le B

.4. R

epre

sent

ativ

e M

annv

ille

Wat

er C

hem

istr

y fr

om th

e 20

10 P

roto

type

Dew

ater

ing

Wel

l Pum

p T

est

Sam

ple

#

#1

0064

#1

0065

#1

0066

#1

0067

#1

0068

#1

0071

#1

0072

#1

0073

#1

0074

D

ate

26-O

ct-

10

29-O

ct-1

0 02

-Nov

-10

04-N

ov-1

0 07

-Nov

-10

11-N

ov-1

0 12

-Nov

-10

14-N

ov-1

0 14

-Nov

-10

Ana

lyte

U

nits

M

IEPR

R

esul

ts

Res

ults

R

esul

ts

Res

ults

R

esul

ts

Res

ults

R

esul

ts

Res

ults

R

esul

ts

Alu

min

um

mg/

L

0.02

1

0.00

5

0.00

21

0.

0024

A

ntim

ony

mg/

L

<0.0

02

<0

.002

<0.0

002

<0

.000

2 A

rsen

ic

ug/L

50

0 <1

<1

0.

3

0.2

Bar

ium

m

g/L

0.

013

0.

011

0.

01

0.

01

Ber

ylliu

m

mg/

L

<0.0

01

<0

.001

<0.0

001

<0

.000

1 B

icar

bona

te

mg/

L

473

476

477

477

474

474

47

4

Bor

on

mg/

L

2.1

2

2

1.

9 C

adm

ium

m

g/L

<0

.000

1

<0.0

001

0.

0000

1

0.00

001

Cal

cium

m

g/L

13

8 13

6 13

3 13

3 13

6 13

4

134

C

arbo

nate

m

g/L

<1

<1

<1

<1

<1

<1

<1

C

hlor

ide

mg/

L

1600

16

00

1600

15

60

1600

17

00

17

00

C

hrom

ium

m

g/L

<0

.005

<0.0

05

<0

.000

5

<0.0

005

Cob

alt

mg/

L

0.00

1

<0.0

01

0.

0001

0.00

01

Cop

per

mg/

L 0.

3 0.

01

0.

005

0.

0032

0.00

24

Fluo

ride

mg/

L

2.2

2.2

2.3

2.2

2.2

2.3

2.

5

Hyd

roxi

de

mg/

L

<1

<1

<1

<1

<1

<1

<1

Iron

m

g/L

0.

36

0.

29

0.

24

0.

23

Lead

m

g/L

0.2

<0.0

01

<0

.001

0.00

05

0.

0003

M

agne

sium

m

g/L

47

46

45

45

46

45

45

M

anga

nese

m

g/L

0.

099

0.

092

0.

087

0.

086

Mol

ybde

num

m

g/L

<0

.001

<0.0

01

0.

0002

0.00

01

Nic

kel

mg/

L 0.

5 0.

002

<0

.001

0.00

05

0.

0005

N

itrat

e m

g/L

<0

.04

<0.0

4 <0

.04

<0.0

4 <0

.04

<0.0

4

<0.0

4

P. A

lkal

inity

<1

<1

<1

<1

<1

<1

<1

pH

pH

un

its

7.

82

7.82

7.

82

7.88

7.

79

7.74

7.73

313

Phos

phor

us

mg/

L

0.06

0.06

0.05

0.05

Po

tass

ium

m

g/L

57

57

58

58

57

56

56

Se

leni

um

mg/

L

<0.0

01

<0

.001

0.00

03

0.

0002

Si

lver

m

g/L

<0

.000

1

<0.0

001

<0

.000

01

<0

.000

01

Sodi

um

mg/

L

1190

12

10

1270

12

50

1210

12

10

12

20

Sp

ecifi

c co

nduc

tivity

μS

/cm

6420

65

30

6470

65

30

6450

61

60

61

80

Stro

ntiu

m

mg/

L

2.6

2.

5

2.5

2.

48

Sulfa

te

mg/

L

740

750

740

750

750

740

74

0

Sum

of i

ons

mg/

L

4240

42

80

4320

42

70

4270

43

60

43

70

Th

alliu

m

mg/

L

<0.0

02

<0

.002

<0.0

002

<0

.000

2 Ti

n m

g/L

<0

.001

<0.0

01

<0

.000

1

<0.0

001

Tita

nium

m

g/L

<0

.002

<0.0

02

0.

0002

<0.0

002

Tota

l alk

alin

ity

mg/

L

388

390

391

391

389

389

38

9

Tota

l di

ssol

ved

solid

s m

g/L

39

60

3960

39

70

3960

39

50

3950

3950

Tota

l har

dnes

s m

g/L

53

7 52

8 51

7 51

7 52

8 51

9

519

U

rani

um

ug/L

25

00

<1

<1

<0.1

<0.1

V

anad

ium

m

g/L

<0

.001

<0.0

01

0.

0002

0.00

02

Zinc

m

g/L

0.5

0.16

0.02

1

0.01

4

0.01

1

314

B.5 LOCAL CLIMATIC CONDITIONS In this section, the results for meteorology are reported in terms of the parameters at the FalC weather station which were used to develop wind rose statistics and climate normals for the region. Meteorological Parameters at Fort à la Corne Weather Station The annual mean values of the monitored meteorological parameters at the FalC weather station are summarized in Table B.5. The overall mean values were calculated for years 2002 to 2005 as the annual parameters include all hours in each year. The eight-year (2000 to 2007) historical data set for the study area is included in the EIS (Shore and AMEC, 2010).

Table B.5: Annual Meteorological Parameters at Fort à la Corne Weather Station

Year Period Total Hours

Temp °C

Dew Pt°C

R H%

Wind Dir°

Wind Spd km/h

Wind Gstkm/h

2000 1/28-9/30 4614 11.1 4.8 69 192 10.4 20.4 2001 4/01-12/31 6589 8.0 1.3 69 185 11.3 20.9 2002 Year 8749 1.5 - 3.7 N/A 205 11.5 20.8 2003 Year 8760 2.1 - 3.3 73 197 11.2 20.4 2004 Year 8784 1.0 - 3.8 75 191 10.5 19.7 2005 Year 8761 2.7 - 1.9 76 207 10.2 19.8 2006 1/01-10/01 7363 6.6 0.8 72 184 10.4 19.8 2007 2/28-9/18 4818 10.3 3.5 68 179 11.2 21.1 Annual Average 2002-2005 1.8 - 3.4 75 200 10.8 20.2 Notes: Temp Temperature

Dew Pt Dew Point R H Relative Humidity Wind Dir Wind Direction (from) Wind Spd Wind Speed Wind Gst Wind Gust N/A Not Available

Wind Rose Statistics Wind speed rose statistics depicting the frequency of occurrence of winds in each of the specified wind direction sectors for FalC for 2003 to 2007 period (the most recent 5-year data available) are shown in Figure B.4 and wind class frequency distribution is given in Figure B.5.

315

Figure B.4: Project Area Wind Rose

316

Figure B.5: Wind Class Frequency Distribution

Climate Normals The summary data for the Prince Albert area for the 1971-2000 period are provided in Table B.6. Climate parameters shown in Table B.6 include temperature, rainfall and snowfall, wind speed and direction, solar radiation, humidity and atmospheric pressure recorded over a time period of 40 years. The climate of the area (which includes Prince Albert and FalC) is continental subhumid, characterized by extreme summer and winter temperatures and fairly low annual precipitation. Throughout the area, the mean annual temperature is 0.9 °C varying from -19.1 °C in January to 17.5 °C in July. Monthly average precipitation varies throughout the year with the wettest month being July while the driest month is February. The annual precipitation (as liquid water) is about 42.4 cm of which rainfall comprises 32.4 cm and the snow water equivalent is 10 cm or 111.3 cm of snow. Monthly average wind speeds stay relatively constant at around 12.1 km/h blowing from west and east. Monthly relative humidity varies from 61 % in May to 75 % in November, with the annual average humidity being 68 %. Most of the sunshine hours occur during long summer days while winter sunny hours are short (only 74 hours in December). The atmospheric pressure stays relatively constant over the year with the annual average of 101.6 kPa which is slightly higher than normal atmospheric pressure of 101.3 kPa.

317

Table B.6: Climate Normals for the Prince Albert SK Area for the 1971-2000 Period

Parameter Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year Daily Average (°C) 19.1 14.6 -7.5 3.1 10.5 15.2 17.5 16.3 10.2 3.4 -7.6 -16.2 0.9

Rainfall (mm) 0.5 0.2 1 16.6 44.3 72.5 76.8 58 37.5 13.5 2.4 0.5 323.7

Snowfall (cm) 19.2 13 16.7 10.9 3.2 0 0 0 2 10.9 15.8 19.6 111.3

Precipitation (mm) 16.3 11.6 16.2 27.1 47.7 72.6 76.8 58 39.5 24.1 16.5 17.9 424.3

Speed (km/h) 10.4 10.9 11.9 14 14.3 13.4 12 11.1 12.6 12.4 11.3 10.6 12.1

Most Frequent Direction W E E E E W W W W W E W E

Wind Gust (km/h) 102 93 98 129 129 121 117 163 113 87 113 89 ---

Sunshine Total Hours 96 125 169 225 270 279 300 281 177 141 81 74 2217

Relative Humidity (%) 69 69 69 63 61 65 69 68 67 67 75 72 68

Sea Level Pressure (kPa) 102 102 101.8 101.6 101.4 101.2 101.3 101.4 101.5 101.5 101.7 101.8 101.6

B.6 WATER MANAGEMENT INFRASTRUCTURE The main objective of the Project water management strategy is to manage the flow of groundwater, surface water and runoff which will then allow for in-pit mining activities, provide sufficient water to the Process Plant, and reduce the environmental impacts. The strategy accounts for design to alleviate sediment loading and to minimize the potential impacts to the Saskatchewan River from site operations. The use of water from the water management system as process water is also designed to reduce the potential environmental impact. The water management system will therefore need to accomplish the following tasks: • dewater the overburden soils/tills and the rock mass to maintain pit wall stability; • drain water and prevent water pressures from building up behind the pit walls; • control surface water and runoff and prevent it from entering the pit; • capture precipitation and drain it away from roads and active mining areas; • remove surface water within the pit to prevent flooding of the working areas; and • provide water to the Process Plant. Achieving these goals requires several different measures working together to form an effective mine water management system. The main components and the expected water flows from the water management system are shown schematically in Figure B.6 (AECOM, 2011f). The water management system includes both in-pit and well dewatering activities, the construction of holding and polishing ponds, and a pipeline and diffuser into the Saskatchewan River. For the dewatering of the Star open pit, two separate groundwater collection systems are required due to the differing natures of the shallow and deep groundwater systems. There will be the in-pit system to collect precipitation and groundwater that seeps into the pit from both the shallow groundwater system and from the confining layer. In addition, there will be deep dewatering wells to depressurize the deeper Mannville aquifer. The Mannville aquifer is a large regional aquifer that is heterogeneous, has a large areal extent and has been shown to have hydraulic conductivities that are suited to it being dewatered by

318

pumping from wells. The aquifers within the shallow groundwater system and the confined layer are generally either much more local in nature than the Mannville aquifer, are of limited vertical extent and/or have only moderate hydraulic conductivities. As a result, the use of wells to dewater the shallow groundwater flow system or the confining layer is not preferred.

319

Figu

re B

.6:

Site

Wat

er M

anag

emen

t Sch

emat

ic

320

B.6.1 WATER MANAGEMENT The Process Plant is estimated to have a water requirement of 68,900 m3 per day, all of which is expected to be sourced from recycling, pit dewatering wells, surface wells or from surface run-off collection. Up to 64,704 m3/d of water would be pumped to the PKCF with the fine PK. This water (minus losses due to seepage and evaporation) would be recycled to the Process Plant from the PKCF polishing pond and supplemented with groundwater supply. Pit Dewatering There will be two separate sources of groundwater that need to be controlled through the pit dewatering system:

� higher quality shallow groundwater in the overburden (with TDS <1,000 mg/L); and � lower quality groundwater from bedrock aquifers (mainly the Mannville aquifer with

TDS approximately 3,950 mg/L). The overburden containing the better quality groundwater will be dewatered separately from the Mannville aquifer by using an in-pit water collection system (estimated to be approximately 10,000 m3 per day) to collect seepage and groundwater inflow. The lower quality groundwater from the deeper aquifer will be sourced from the Mannville Group sediments and from groundwater contained within the kimberlite and will be dewatered using a system of pumping centres located around the pits perimeter. The deep aquifer also needs to be depressurized to improve the stability of the pit slopes and to reduce or remove the passive inflow of Mannville water through the kimberlite and into the pit during mining. In-Pit Dewatering The in-pit dewatering system will collect and manage any in-pit precipitation, all groundwater seepage from pit walls, and potentially any drainage that may be required for geotechnical stability. Groundwater from the shallow groundwater system and from the confining layer will seep into the pit from its walls. The location of these water discharge points into the pit will vary over time as the flow regime changes with shallower aquifers drying out and other deeper aquifers becoming exposed. There will also be changes in the amount of water handled by this system in response to seasonal precipitation events and during the spring freshet. The in-pit dewatering system will consist of a series of temporary and permanent ditches and sumps which can be easily modified to maintain flexibility as the pit is expanded during mining. In order to address any water pressure build up behind pit walls or to manage any significant, sustained inflow to the pit from gravel horizons, additional horizontal and/or vertical drains or wells may need to be installed. If required, the length, spacing and angle of inclination of these holes or wells will be determined during operations according to requirements. In general, these drains will be a secondary measure to reduce the groundwater pore pressures and transport the water away from the pit walls as quickly as possible. These drains will pipe the water directly to the nearest sump and/or a ditch network.

321

The in-pit water will be pumped to a small polishing pond, where sediment will settle out. Depending upon water quality, this settled water would then be used for site activities (e.g., dust suppression, fire control etc), used for supplementing flows into local ravines, or be directly discharged into the Saskatchewan River via the diffuser. Dewatering Wells Dewatering wells will depressurize the deep groundwater system to restrict the amount of water that seeps and flows into the pit through the Mannville aquifer. Eighteen pit perimeter pumping centres at Star will be installed for dewatering during the first 14 years of operation (with a pumping rate of 98,100 m3/d) with an additional five in-pit dewatering wells planned for the years 15 to 17. For mining of Orion South, an additional 7 perimeter wells are needed for years 19 to 24. It is estimated that a peak of approximately 130,800 m3/d of water may have to be pumped to lower water levels sufficiently for safe mining in year 19 while operations are ongoing in the Orion South pit. Deep aquifer water pumped to the surface would be used as make up water in the Process Plant or placed directly in the Saskatchewan River through the diffuser. Process Water Management Water used in the Process Plant to treat the kimberlite will be recycled from decant water obtained from the PKCF and placed back in the Process Plant to be used in the AG milling circuit. Make up water, to account for seepage (1,000 m3/d), process losses (4,128 m3/d) and evaporation (variable) within the PKCF, will be taken from the Mannville pit dewatering system. Water used in the recovery section of the Process Plant will be sourced from surficial groundwater wells as better quality water is required for use in the recovery process. Seepage from the PKCF will be treated by using a natural wetland system, or pumped back into either the PKCF or the PKCF polishing pond. The system used will depend upon the water quality at the time. Outfall Design The outfall is located in the Saskatchewan River, approximately 40 km downstream of the confluence of the North and South Saskatchewan Rivers near the FàlC Ravine. The diffuser would consist of a 1,200 mm diameter standard wall steel pipe that is buried beneath the low flow width of the Saskatchewan River, with discharge points every 10 m along this pipe. For the purposes of dispersion modeling, this outfall was treated as a single pipe although a multi-pipe manifold system could also be used. Excess Mannville water not used for processing will be transported to the diffuser structure in a 1.37 m diameter high density polyethylene pipe which will come directly from the pit dewatering ring pipeline which connects the pit perimeter pumping centres. B.7 ADDITIONAL WATER MANAGEMENT REQUIREMENTS B.7.1 SURFACE WATER RUNOFF MANAGEMENT In addition to the in-pit and well dewatering systems, additional controls will be required for the diversion of surface waters and for the collection of runoff from around the pit, waste dumps and

322

roadways. These controls will be in the form of a constructed diversion ditch system throughout the site as mining and construction activities progress. Additional sumps and drainage ditches will be constructed in association with the Coarse PK pile and the PKCF areas. Details of this management will be developed in detailed design, however costs were captured based on the assumption that all water would be managed through settling/polishing ponds. The ditches are designed based on the 1:100 year, 24 hours storm event with a 2 m base width and 2H:1V side slopes. Elevation drops are accommodated through riprap chute drop structures, with aggregate sourced from the Star pit. Runoff from the PKCF and north edge of the Coarse PK pile will be collected and placed in the Duke Ravine, north polishing pond, or placed back into the PKCF, depending on water quality. The remainder of the Coarse PK pile runoff would route to the South Settling Pond to reduce TDS prior to discharge into the Duke Ravine. B.7.2 POTABLE WATER SUPPLY The water treatment system will be located south of the proposed Process Plant building site and will allow for the provision of potable water for hygiene and fire protection during the construction phase. A 25 m3 potable water storage tank will provide enough water for one 12-hour shift. The treatment system assumes a 50 m3/day water requirement based on peak loading expected from two 250 person shifts per day, and 50 L per person per shift. As the only source of potable water on site, complete redundancy will be built in (AECOM, 2011b). A combination of media and membrane filtration will be used to treat shallow groundwater in compliance with the Saskatchewan Drinking Water Quality Standards and Objectives. Iron, manganese and arsenic will be removed using chemical oxidation followed by media filtration and then ultra / nano filtration. Wastes from the media filters and membranes will be placed in the Process Plant pump box for disposal in the PKCF. B.7.3 SEWAGE HANDLING AND DISPOSAL Waste water treatment will consist of a gravity sewer main to collect sewage and a two cell sewage lagoon to treat effluent, and is designed to handle 50 m3 of waste per day. The lagoon is designed according to Environmental Protection Branch Report No. 203 Guidelines for Sewage Works Design (SMOE, 2008). The primary cell (1.27 ha) will receive a biological oxygen demand 5-day (BOD5) loading of 30 kg/ha-day from a BOD5 contribution of 77 g/capita-day and the secondary cell will hold 180 days of water (9,000 m3). Both cells will be lined either with a synthetic liner or suitable low permeability soil. The lagoon will be fenced and posted, located on the west side of the Duke Ravine (Figure 18.1), and continuously discharge into the Duke Ravine. Continuous discharge will maximize dilution and minimize any environmental effects (AECOM, 2011b). Portable sanitary units will be deployed during construction, at in-pit operations, and at other remote areas where personnel are located. The number and locations of the units will be variable based on the number of personnel at the site at any given time. As mining activities progress in the pit this approach allows for additional units to be added as needed. These units would be serviced using vacuum trucks, with disposal of the raw sewage in the sewage lagoon.

323

324

B.8 SITE WATER BALANCE Site water balances were calculated in order to estimate capacity of the various water handling equipment mentioned throughout Appendix B. The following sections summarize the key components of the water balance. B.8.1 GROUNDWATER (DEWATERING WELLS) WATER BALANCE SRK (2011) developed volume estimates for in-pit dewatering and active groundwater pumping. These volumes are presented in Table B.7. Table B.7: Daily Dewatering Values by Year

Star Orion South

Yr

PerimeterWells

(m3/day)

In pit wells

(m3/day)

Residual Passive Inflow

(m3/day) Total

PerimeterWells

(m3/day) In pit wells

(m3/day)

Residual Passive Inflow

(m3/day) Total 0 0 0 0 0 0 0 0 0 1 0 0 6,022 6,022 0 0 0 0 2 0 0 7,539 7,539 0 0 0 0 3 0 0 7,759 7,759 0 0 0 0 4 0 0 10,979 10,979 0 0 0 0 5 98,118 0 6,835 104,953 0 0 0 0 6 98,118 0 5,851 103,969 0 0 0 0 7 98,118 0 4,940 103,058 0 0 0 0 8 98,118 0 11,426 109,544 0 0 0 0 9 98,118 0 10,207 108,325 0 0 0 010 98,118 0 8,846 106,964 0 0 3,357 3,357 11 98,118 0 10,091 108,209 0 0 6,384 6,384 12 98,118 0 8,724 106,842 0 0 5,951 5,951 13 98,118 0 5,437 103,555 0 0 6,180 6,180 14 98,118 0 6,148 104,266 0 0 7,358 7,358 15 98,118 17,723 5,203 121,044 0 0 5,422 5,422 16 93,363 7,587 7,406 108,355 0 0 4,870 4,870 17 91,239 6,882 18,738 116,859 0 0 4,129 4,129 18 83,632 11,783 0 95,416 0 0 9,592 9,592 19 81,830 10,829 0 92,659 38,158 0 12,778 50,935 20 81,942 0 0 81,942 34,444 0 12,103 46,547 21 81,923 0 0 81,923 32,512 0 9,030 41,542 22 80,537 0 0 80,537 31,474 0 10,173 41,648 23 79,341 0 0 79,341 30,663 0 8,244 38,907 24 78,060 0 0 78,060 29,284 0 8,223 37,507

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B.8.2 IN-PIT WATER BALANCE Major flows into the open pits include precipitation and seepage. All major inflows are subsequently removed from the pit using the in-pit dewatering system as described above. Precipitation is expected to contribute between 500,000 and 1,800,000 m3 per year to the site water management system. These flows, as well as the residual passive inflow calculated in section B.8.1, were used to size facilities. Following the completion of mining in the Star pit, Orion South fine PK, process water and potentially overburden, will be used to backfill the Star pit. At this point, the water balance is expected to change. The total volume of Orion South fine PK and process water stored in the Star pit is calculated at 183.2 Mm3. Further inputs into the Star pit include groundwater seepage and precipitation. Seepage in the pit, relative to pit lake elevation, is presented in Figure B.7. Figure B.7: Seepage Rate into Star Pit vs. Pit Lake Elevation

Overflow of the Star pit lake would occur once levels were raised above 387 masl, where the southern edge of the Star pit intersects the East Ravine. Backfilling with overburden may alter this drainage, should water quality be an issue.

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B.8.3 PROCESSED KIMBERLITE CONTAINMENT FACILITY (PKCF) WATER BALANCE

The anticipated water inputs for the PKCF include water contained in the Fine PK slurry piped to the PKCF, precipitation, and runoff from the inner beach and berm slopes. Outputs from the PKCF include evaporation, seepage, construction water loss, water locked in settled tailings and decanted supernatant water. The water balance calculations led to the determination of a constant decant rate from the PKCF to maintain pond volume at less than 3 Mm3. The calculated decant rate was 1,540 m3/h for the duration of mining at Star. This flow would be decanted from the PKCF into the North Settling Pond for recycle into the Process Plant using a barge pump system. This rate assumes a constant ore processing rate of 1,630 t/h. Once Orion South ore is processed, inputs into the PKCF will end, and process water will be deposited in the Star pit. A stage-storage curve for the PKCF is presented in Figure B.8. Figure B.8: PKCF Pond Water Volume vs. Surface Area Relationship

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C.0 ANCILLARY BUILDINGS AND FACILITIES C.1 SUMMARY The Process Plant, administrative building, interpretive center, maintenance shop, warehouse, and support buildings and facilities will be located within the plant site footprint (AECOM, 2011e). The Process Plant is detailed in Section 17. The ancillary buildings are summarized in Table C.1. Table C.1: Proposed Ancillary Buildings

Structure Type Style Floor Area (m2)

Administration / Security Building Pre-engineered Steel Frame

Metal Siding, Commercial Finish 2050

Interpretive centre Engineered Steel Building

Metal Siding, Commercial Finish 460

Warehouse Pre-engineered Steel Frame

Metal Siding, Commercial Finish 2,970

Maintenance Shop / Dry / Office Custom design steel building

Metal Siding, no interior finish commercial finish in Dry/Office areas

11,980

Fuel & Lube Building Pre-engineered Steel Frame

Metal Siding, no interior finish 805

Vehicle Wash / Emergency Response Building

Pre-engineered Steel Frame

Metal Siding, no interior finish 1,830

Cold Storage Building Pre-engineered Steel Frame

Metal Siding, no interior finish 1,290

Security Gatehouse Steel Frame, Site Built

Metal Siding, Commercial Finish 120

C.2 ANCILLARY BUILDING SITE LAYOUT The plant site plan has been designed to contain the Process Plant and the major ancillary buildings and facilities within one integrated area as shown in Figure C.1. This minimizes the overall footprint of the site facilities area, which is approximately 37 ha. Additional area to the immediate south of the site is available for future expansion of the Process Plant if required (AECOM, 2011e). The Process Plant will be located in the southern portion of the site while the support buildings and infrastructure are located in the northern portion of the site (Figure C.1). Road access to the Project site is from the northeast corner where the warehouse and administration buildings will be located. The maintenance shops and technical office building will be located a short distance to the west of the warehouse.

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Figure C.1: General Plant Site Layout (1 km grid)

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C.3 ADMINISTRATION AND SECURITY BUILDING The Administration Building located as indicated in Figure C.1, will provide a health centre and offices, meeting and lunch rooms, IT, medical and security personnel facilities. The main entrance to the Administration building will serve as the security area and all staff, visitors and contractors will be required to enter and exit through this area. The security area features a five storey tower structure that will house IT personnel (second floor), lunchroom (third floor), mechanical and electrical room (fourth floor), and the main security operations and observation centre on the fifth floor. The tower is serviced by stairways and an elevator. The administration building will be connected to the Maintenance Facility and to the Process Plant by exterior covered walkways (AECOM, 2010e). The main floor will be the administration floor containing offices for senior staff and support personnel. Support facilities will include two conference rooms, a lunch room, a filing room, and washrooms. Change facilities for all office staff will be comprised of locker areas, showers and washrooms. In addition, a separate change room will be provided for visitors. An operations area has also been integrated into building plans and will include a health center, training room, and conference room. This building will be constructed as a pre-engineered steel frame building with metal siding and a commercial finish. The building superstructure will be supported on piled foundations, pile caps, and grade beams. An auxiliary generator will be provided for emergency lighting, fire alarms, security systems and other defined loads. C.4 INTERPRETIVE CENTRE The Interpretive Centre, located as indicated in Figure C.1, will be in the Green Security Zone adjacent to the Administration Building and will accommodate up to 50 persons. The building will have a “diamond shaped” appearance and be complete with washrooms, a large exhibit area for presentations and will include a display and boutique area (AECOM, 2011e). C.5 MAINTENANCE / DRY AND TECHNICAL SERVICES BUILDING The Maintenance / Dry and Technical Services building is shown in Figure C.1. The Maintenance area of the structure comprises an area of 7,330 m² on plan. The Dry/Office area (including service areas) of the structure is 4,650 m² on plan (AECOM, 2010d). The Project will require maintenance facilities for a fleet of heavy mobile equipment, a Process Plant and other mine site infrastructure. The maintenance facility is classified as Blue Zone for security definitions, as the services provided and the personnel assigned here will be in contact with diamond-bearing kimberlite on an ongoing basis throughout their workshift. The Maintenance Facility building will provide:

� heavy equipment repair bays; � a heavy equipment drive through repair bay; � a welding shop large enough to accommodate spiral classifier components and truck

boxes; � a Process Plant maintenance shop;

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� machine shop; � electrical and instrumentation shops; � light vehicle repair bays; � tire repair shop; � dry changehouse facilities; and � mine offices and general muster area.

C.6 WAREHOUSE AND COLD STORAGE BUILDING The Main Warehouse is proposed to be constructed with a pre-engineered, steel framed and metal sheet clad building 56 x 45 m (2,520 m2) on plan with headroom at the eaves of approximately 12 m. The structure will be located at the northeast area of the Project main site, as shown in Figure C.1, and is connected to the maintenance shops via a 6.6 m wide x 18.0 m long, exterior corridor to accommodate pedestrian and forklift traffic (AECOM, 2010l). The warehouse building will provide storage for parts and supplies as well as shipping and receiving services for all materials entering or leaving the site. Loading and unloading of transport vehicles will occur at a dock installation capable of accommodating two semi-trailers simultaneously. The loading docks are recessed below general grade to allow level access to the trucks from the warehouse floor. The loading dock structure will be made of concrete retaining walls and a concrete base slab and will be equipped with two electric dock levelers having a minimum capacity of 13,600 kg. Inside the warehouse, the dock area will be accessed through the Secure Loading Room. Access to this room will be restricted during loading or unloading of trucks. A service counter with communication services will be in place to allow shipping documents to be signed without the driver having to pass through security. Off-loaded goods and materials will remain in the Secure Loading Room until trucks have departed and the loading dock overhead doors have been closed and secured. At that point, all doors from the Secure Loading Room to the Main Warehouse will become unrestricted. This process will be reversed when shipping goods and materials off site. A magnetic stripe card locking system will be installed for locking and unlocking the overhead doors to the Secure Loading Room and all other warehouse doors with the exception of personal offices, meeting and lunch room doors and emergency exit doors. For deliveries and shipments by flat bed semi-trailers, an outdoor, fenced compound will be installed adjacent to the dock area as shown in Figure C.1. Chain link gating will be used for securing this area.

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Cold Storage Building The cold storage building will be located adjacent to the warehouse as shown in Figure C.1 and will be used to store engines, electric motors, differentials, rims, conveyor idlers, conveyor belting, bucket-teeth steel plate and tube, pumps, reagents, screens, etc (AECOM, 2011l). C.7 BULK FUEL AND LUBRICANT SYSTEMS Bulk Fuel The main surface diesel and gasoline tanks will be located in the Blue Security Zone with delivery occurring from the Green Security Zone across the fenced boundary. A 2 m x 1.5 m x 2 m fully enclosed weather proof valve station with entrance/exit door and spill containment will be located in the Green Security Zone for this purpose. A skid mounted diesel storage container with high flow dispensing capability will be used for the in-pit refueling of heavy equipment (AECOM, 2010a). The plant site to pit fuel line will not be utilized for refilling the in-pit storage tank; instead, fuel will be delivered to the pit by tanker truck. The in-pit storage tank will be semi-mobile allowing for regular relocation within the pit. A high flow diesel fuel dispensing system along with regular flow dispensing system will be located near the main surface diesel storage facility. The in-pit re-fuelling facility will provide high flow dispensing only. A gasoline storage tank and dispensing unit for light vehicles will be located in the general area of the main surface diesel fuel storage tanks. Storage capacity for both fuel types will be optimized for delivery costs and mine operations. Storage Building

The lubrication facility will be housed in a storage building. Parking space will be provided to house the Fuel/Lube truck in this building. Bulk Oil, Coolant and Grease

Storage tanks for new and used oil along with portable totes for coolant and grease will be housed in a suitable structure within Blue Security Zone that will also accommodate delivery from the Green Security Zone. A 2 m x 1.5 m x 2 m fully enclosed weather proof valve station with entrance/exit door, and spill containment will be located in the Green Security Zone for this purpose. Suitable pump and piping systems will be installed for the transfer of fluids, oils, coolant and greases from the bulk lubricant building to multiple locations in the maintenance shops. The maintenance shops will be equipped with pumping equipment and piping to transfer used fluids, oils and coolant back to the lubricant building. The lubricant building will be equipped with a separate pumping system to transfer used fluids to the valve station in the Green Security Zone. The storage tank for used coolant will be located outside, adjacent to the lubricant building. Bulk Lubricants Building

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The bulk lubricant building and systems will be constructed to facilitate maintaining cleanliness (i.e. absence of grit and contaminants that could migrate into equipment). A mobile fuel and lubricant truck will be housed in the facility. Parking space, washdown facilities and equipment for filling this truck will be installed. The structure will be heated and ventilated. Fuel/Oil Management System All storage tanks will be equipped for integration with bulk fuel/oil management software, to allow local and remote monitoring for level and usage as well as external remote monitoring for supplier managed inventory and automatic refill order placement. C.8 VEHICLE WASH FACILITY, WARM-UP SHED AND FIRE AND EMERGENCY

RESPONSE BUILDING The vehicle wash facility, warm-up shed and fire and emergency response building location is shown in Figure C.1. The building will house the wash bay, wash bay sump, mechanical rooms, heated parking for emergency response vehicles, an office, meeting and training rooms, washrooms with showers and storage rooms for emergency response equipment (AECOM, 2010c). C.9 MINE YARD LAYOUT Space has been provided within the Blue security zone for new and used tire storage for the pit trucks, heavy equipment parking, and mine bus dispatch parking. C.10 SECURITY There will be three levels of security zones for the Project: Green, Blue and Red (Table C.2). Green is low level with deer fencing and security gate, Blue is mid level with chain link fence and security checking and monitoring of all entry and exit, and Red is high level limited to the recovery plant area, BSP and recovery rejects pile. Table C.2: Site Security Zoning

Security Level Area Green Main security gate, Parking lot, Interpretive centre,

Security/reception at Administration Building

Blue All areas where people can be in contact with kimberlite. All areas which are not zoned Green or Red

Red All areas where people can be in contact with diamonds.Recovery room, BSP, Process Plant red zone Dry, Helipad, Recovery rejects pile

The main access road approaches from the north and accesses the plant site in the northeast corner where a Green level gatehouse will be located. In the northeast corner of the plant site the administration and changehouse building, primary substation, fuel and bulk lube storage and

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dispensing facilities, warehouse and parking lot will be situated. All these facilities will be located in the Green zone. The maintenance and mine operating facilities, technical offices and Process Plant will be contained within the blue security area. These facilities have been planned such that the maintenance and mine operation facilities will be located in the northern half of the blue zone and the Process Plant will be located in the southern half. A red zone secure helipad will be located adjacent to the red zone Process Plant recovery building. Entry to the blue zone will be through a security gate located between the administration building and the warehouse. Materials will be unloaded at the warehouse in the green zone and then checked through security before delivery into the blue zone. All supplies leaving the blue zone will be checked through a security inspection area in the warehouse before being released for pick-up. The only other entrance to the blue area will be the road to the open pit which will be regulated by a remote controlled gate. Generally all heavy open pit equipment will remain in the pit except when returning to the maintenance shop for service. The majority of the traffic to and from the open pit and blue zone will be personnel vehicles or light service trucks. C.11 FIRE PROTECTION SYSTEMS All buildings will be equipped with fire protection sprinkler systems and heat and smoke detectors. A continuously charged fire pipe loop (air or water) will be provided throughout the site. All applicable fire codes and regulations will be followed in design and construction of the site facilities. C.12 BULK SAMPLE PLANT (BSP) The BSP building location at the plant site is shown in Figure C.1. A new BSP will be constructed adjoining the main Process Plant to support continued exploration activities in the FalC area, to serve as an audit facility and to process kimberlites from other projects located outside of the FalC area (AECOM, 2010i). The BSP will be licensed as a commercial operation to allow Shore the flexibility to process material from other (current and future) exploration projects, joint ventures, and other operators. The BSP will use the same PKCF as the production plant. Coarse PK may be stockpiled separately for auditing purposes, and eventually either placed in the production Coarse PK pile or returned to the owner depending on specific requirements of the batch. C.13 AUXILIARY FACILITIES OUTSIDE OF THE PLANT SITE C.13.1 SORTING FACILITY A diamond sorting facility will be custom-designed and constructed at an off-site location in Saskatoon. All sorting operations will be done on the second floor which will be provided with large windows to provide daylight, which is necessary for sorting. Changehouse, cafeteria and security facilities will be located on the first floor (AECOM, 2011d).

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Two elevators (freight and passenger) will be installed in the Sort House. The Sort House will have both green and red security zones. The boundary between the green and red security zones will occur at the security in and security out. The main floor, comprising the main entrance and change rooms, will be within the designated green zone. The remainder of the building, including freight receiving, main floor amenity area, the entire second floor and the roof, will be designated red zone. Employees will enter and exit the building only through the main entrance; all other doors will be for emergency exit only. Security staff will monitor and inspect all persons at the main entrance and suitable facilities for that purpose will be integrated into the building layout. Carried items will be X-ray screened and all persons exiting the building will be subject to full body scans. C.13.2 STAGING AREA A temporary staging area may be required during construction. If required, it will be located outside the FalC forest near Highway 55, likely close to the town of Shipman.

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D.0 WORKFORCE, HEALTH, SAFETY AND SECURITY D.1 SUMMARY Shore is committed to developing a workforce which is representative of the diversity of both the skills required to advance its Project and the geographic areas in which it operates, including communities and cultural groups surrounding its projects. Health, safety and security programs are integral to the success of the Project. Shore’s health and safety program will be continuously monitored for effectiveness, and improved when necessary to provide the measures required to ensure a safe workplace. Furthermore, Shore will work with all Company personnel to develop and promote a sense of security awareness as a shared responsibility for all employees. D.2 MANAGEMENT ORGANIZATION The Mine General Manager will be responsible for the overall operation of the mine. Department managers will be responsible for the following areas:

� Administration — Finance, Information Systems, Human Resources and Training � Environment — all aspects of environmental management � Health, Safety and Wellness — all aspects of Health and Safety, including Health and

Safety training, employee wellness, on-site first aid and medical aid, and emergency response teams.

� Maintenance — all maintenance at the Star-Orion South site. Maintenance is divided into Process Plant maintenance, in-pit maintenance and site maintenance

� Supply Chain Management — all aspects of materials procurement, warehousing of materials and inventory management

� Mining — all operational aspects of mining � Processing — processing, recovery and sort house operations � Security — all site-based security and off-site surveillance (performed in Saskatoon) � Technical Services — engineering, geology and the bulk sample plant

Each department’s organizational structure will depend on the size and scope of the department. D.3 WORKFORCE TRANSPORTATION AND SHIFT SCHEDULES

Shore employees will reside in communities neighbouring the Project. Work schedules will be set to balance work and personal life, which is emphasized through the ability of employees to be home each night with family and friends. Given the close proximity of the site to various local communities offering a variety of local amenities, employees will be responsible for their transportation to and from the work site. Travel distances from the Project site to the three major communities in the area are as follows:

� The City of Prince Albert – 100 kms � The Town of Nipawin – 103 kms � The City of Melfort – 142 kms

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All distances are based on accessing the Project site from Highway 55 near the hamlet of Shipman. Work schedules are as follows:

� 40 hour work week — for management, administration and other positions where seven day per week coverage is not required.

� 12 hour work day / 84 hours over two weeks — for positions where 24 hour or 12 hour coverage is required daily. This rotation includes a day and night shift schedule for certain positions.

Shift start times will be set to maximize production and operational efficiency. D.4 RECRUITMENT, TRAINING AND DEVELOPMENT Shore’s recruitment efforts will focus on establishing a representative and diverse workforce with the skills to develop the Project. Shore’s goal is to maximize local employment where possible; however, there are specific skills required to operate a diamond mine that are not traditionally found in the FalC area. To help address the skills gap that may exist and to maximize local employment opportunities, Shore has engaged local post-secondary institutions to determine course offerings they provide and compare them to Shore’s operational needs. Shore will continue to work with local post-secondary institutions and government agencies in identifying skill shortages and support training programs to enable local residents to acquire the necessary skills to help advance the Project. First Nations and Métis Groups There are Aboriginal people living in the region of the Project site. Shore is committed to hiring local employees when possible and to have a representative workforce reflective of the population living within commuting distance of the Project site. In Saskatchewan, there is a gap between the average skill and education level of Aboriginal people and that of the rest of the province’s population. This lower level of skill and educational attainment by Aboriginal people is linked with lower levels of workforce participation. Shore is participating in a number of initiatives to address these gaps to enable local Aboriginal people access to training opportunities which will, in turn, enhance employment opportunities related to the Project. Northern Career Quest (NCQ) was initiated in 2008 with a four year mandate to run until 2012. The program is jointly funded by federal, provincial and industry partners, with an objective to provide training and skill development opportunities to 1,500 Aboriginal people, leading to long term employment in Saskatchewan’s resource sector including Shore’s Project. NCQ continues to receive strong support from the provincial government and industry. Shore’s Director of Community Relations serves as Vice Chair of NCQ’s Board of Directors. The Aboriginal Skills and Employment Program, through the Fort a la Corne Employment Development Inc., is helping improve employment opportunities for Aboriginal people by

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providing skills development, on-the-job work experience and long-term employment opportunities in the Saskatchewan construction industry. Through this project, participants will receive the skills training they need to take part in construction activities in the area including Shore’s Project. The Government of Canada is contributing $7.5 million towards this project through the Aboriginal Skills and Employment Partnership program. An Aboriginal Employment Development (AED) program workplace partnership agreement was signed in Melfort, on August 29, 2008, between the provincial Ministry of First Nations and Métis Relations, local business and training institutions and First Nations and Métis groups. The partnership was established to meet the unique needs and challenges of Saskatchewan’s resource sector. Its goal is to create a more representative workforce in the FalC area, while providing sustainable economic growth and permanent benefits. Through the AED, the partners work to remove barriers preventing First Nations and Métis people from achieving job participation in proportion to their population numbers. In turn, provincial education and training institutions offer programs to give people the skills they need to participate in the workforce. Although the provincial government is no longer a party to the agreement, the remaining parties continue with the partnership. Shore participates in this program in anticipation of Project approval and in an effort to secure qualified and trained individuals for the future. The Partnership program provides advance notice of upcoming Project employment opportunities with Shore and its contractors. Four Memoranda of Understanding (MOU) and a Memorandum of Cooperation have been signed with several Aboriginal groups and commit the parties to a process of discussions intended to arrive at arrangements concerning ways to involve First Nations and Métis people in training, employment and contract opportunities. These discussions could lead to further agreements containing specific processes or measures to promote such opportunities. Recruitment Process All potential hires will go through:

� pre-employment skills and behavior assessment (the level of assessment will be determined by the position);

� pre-employment alcohol and drug testing; � background checks, including but not limited to criminal record checks, to determine

suitability for employment; � an in-person interview; and � reference checks.

All new hires will go through Shore’s orientation program, which will encompass:

� Occupational Health, Safety and Wellness — an introduction to the Company’s health, safety and wellness program and required training;

� Security — an introduction to the Company’s security policy, procedures, area access and all other security requirements and protocol;

� Human Resources — an introduction to the Company policies, procedures and practices; and

� Training — job specific requirements and training.

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Shore’s Training and Development program will focus on:

� creating an awareness of health safety and wellness as described in Section D.7; � encouraging a representative and diverse workforce; � developing a skilled workforce through on-the-job training, apprenticeships, job rotation,

workshops, professional development, etc; � realizing employee potential through career development, management development,

sensitivity training, interactive skills development, etc; and � increasing employee motivation and dedication through performance feedback, coaching,

rewards, job enrichment, employee engagement measures, etc. A training matrix will be developed by the Human Resource and Training department for each position to ensure that employees receive proper training in job specific, site-wide and leadership development (if necessary) areas. The annual budget for training and development will be 1.9 % of payroll expenditures.

D.5 EMPLOYEE RELATIONS The Employee Relations program will focus on building a respectful workplace, offer opportunities for growth and success, support performance excellence and foster continuous improvement in all areas of work. The Employee Relations program will be implemented through:

� Effective training and development programs (as described in D.4) � Performance management, including annual performance evaluations � Employee engagement practices including feedback opportunities for work site

improvements � Career and succession planning to ensure employees are provided with professional

challenges and support, as well as leadership continuity for the Company Shore has developed extensive human resource policies and procedures, designed to address the employee relations function of a mining operation. These policies and procedures were developed through a detailed review of operating mines across Canada but primarily in Saskatchewan. Human resource policies will be developed and based upon “best practices” in the mining industry and other industrial sectors. D.6 WORKFORCE SUMMARIES BY AREA Table D.1 provides a breakdown of the Projects workforce by area. The mining personnel requirements change throughout the life of mine. Table D.1 reflects the 2020 workforce, when the Star Kimberlite mining is near completion and the Orion South Kimberlite is commencing pre-strip. This represents the maximum worksforce through the LOM.

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Table D.1: Project Workforce by Area (2020)

“Management & Support” includes Managers, Superintendents, General Foreman and administrative personnel (i.e.: clerks) which support the department

Area NumberOperations Management Mine General Manager 1 Administrative Support 1 Administration (Finance, Information Systems, HR and Training) Management and Support (including Finance, Info Systems, HR & Training) 5 Finance and Accounting 4 Information Systems 3 Human Resources 1 Training 3 Environment Management and Support 1 Environmental 6 Health, Safety & Wellness Management and Support 2 Health & Safety 2 Occupational Health and Wellness Nurse 2 Maintenance Management and Support 5 Engineering and Planning 3 Fabricating Shop 1 Electrical 1 Mobile Shop (Mining Maintenance) 147 Process Plant Maintenance 36 Site Services 14 Materials and Warehousing Management and Support 1 Buyer / Expeditor / Shipper / Receiver 5 Warehousepersons 4 Mining Management and Support 21 Production 299 Technical Services Management and Support 3 Engineering and Geology 14 Bulk Sample Plant 4 Processing Management and Support 4 Engineering and Metallurgy 1 Processing Operations 20 Recovery Operations 14 Sort House 12 Equipment Operators 4 Lab Technicians 4 Security Management and Support 3 Security 39 Off Site Sorthouse 31 TOTAL 721

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D.7 OCCUPATIONAL HEALTH, SAFETY AND WELLNESS Shore’s Occupational Health, Safety and Wellness program seeks to:

� identify, assess, and manage health and safety risks; � educate employees in compliance with applicable health and safety rules and regulations; � educate employees in best health and safety practices; and � investigate incidents promptly and thoroughly, determine the root cause and prevent

recurrence. These objectives will be achieved through an initial focus on health and safety practices in the following areas:

Health, Safety and Wellness (HSW) Orientation: All employees will receive an extensive health, safety and wellness orientation prior to starting their role with the Company. The orientation will cover the objectives and philosophy of the HSW program, identify Shore’s accountability for the HSW program and emphasize each individual’s responsibility in maintaining a safe and healthy workplace. The goal of the orientation is to ensure employees place health, safety and wellness at the forefront of all tasks and activities. Work Procedures and Job Hazard Analysis (JHA): Work procedures and Job Hazard Analysis (JHA) sheets will be developed to ensure that the safe and proper way to perform a task, as well as any health and safety hazards associated with the task, are documented. Training: Employees will receive training on how to perform a particular task in a safe and responsible manner. This will include training on the physical performance associated with the task, such as how to operate a piece of equipment and what tools are needed to perform the job. As well, training on any health and safety hazards associated with the task (JHAs) will be given. Personal Protective Equipment (PPE): Employees will be educated on the appropriate PPE required throughout the operation through orientation and on-going health and safety training.

Shore has developed an extensive set of health and safety policies and practices, designed to address various aspects of a mining operation. These policies and practices were developed through a detailed review of operating mines in Saskatchewan and Canada, including potash, uranium, diamond, gold and base metals. Health and safety policies will be updated on a regular basis consistent with “best practices” in the mining industry and across industrial sectors. Emergency Response Team An Emergency Rescue Team (ERT) will be developed for surface rescue and emergency response situations. The ERT will actively participate in training initiatives and annual provincial competitions to ensure they are properly prepared to handle any emergency or rescue scenario.

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Drug, Alcohol and Impairing Substance Policy Shore seeks to maintain a safe, healthy and secure work environment by implementing a zero-tolerance approach to drug, alcohol or any other impairing substance abuse in the workplace, which could otherwise pose a risk to the health, safety and security of all persons associated with the Project and the Project itself It is Shore’s goal that continued application of this policy will establish:

� a work environment which is free from drug, alcohol and impairing substance abuse; � an environment which promotes the prevention and early detection of drugs, alcohol and

impairing substances in the workplace; � a process to mitigate the potential for drugs, alcohol and impairing substances to be

present in the workplace; and � a process to manage individuals under the influence or in possession of drugs, alcohol or

impairing substances in the workplace. The Drug, Alcohol and Impairing Substance policy will apply to all employees, contractors and other persons associated with the Project. D.8 SECURITY

Shore’s security program will provide professional and efficient security to ensure appropriate safeguards are in place to protect Shore’s employees and assets. The security of Shore’s employees will be paramount and Shore will seek to ensure a safe and secure work environment. In order to develop a secure work environment, it will be essential to develop and promote an inherent sense of security awareness as a shared responsibility by all employees and contractors. Shore’s security program will ensure that professionalism, mutual respect, cooperation and sensitivity are maintained throughout all security programs and initiatives. Because the diamond industry and markets are global in nature, extraordinary security standards and protocols must be consistently maintained at every level of the mine-to-market chain. The nature of diamonds (highly valued, easily transportable, small size) and world demand for rough and finished diamonds will require that all employees and contractors adhere to these enhanced security measures to ensure their integrity and ensure the protection and security of Shore’s assets and market. The security program will conform with and operate according to proactive security initiatives and protocols that will be supported by intelligence, investigative and technical processes. The intelligence and investigative function will identify and investigate those security risks that may undermine the mine-to-market value chain. The application of accountability through each step of production and to all aspects of the mine-to-market value chain will enhance Shore’s security abilities to identify and appropriately respond to any potential or identified security risks. The enhanced security standards and protocols will be carried out by professional security personnel trained in appropriate diamond security methods and techniques. Some of these methods and techniques may include a physical and electronic search of employees, contractors and, parts and equipment exiting from any high security risk areas. Security personnel will also utilize the latest technologies within the diamond industry to ensure the highest levels of security

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to assist in monitoring, securing and protecting the most sensitive and high security risk areas. These technologies will include, but are not limited, to closed circuit television (CCTV), high resolution cameras, digital video recording, secure access programming and the latest in security management system software. The use of advanced security technologies will allow for the monitoring and analysis of all information and data from various aspects of production in order to detect any potential or actual losses or theft of diamonds. All areas of the Project site will be appropriately controlled and monitored. The security control measures will include standards for authorized access, focused monitoring and structured protocols for the work environment. Shore’s security program and operations will be subject to regular audit and physical reviews to identify and mitigate any potential or identified security risks such as theft or other criminal activities. The security program will also provide training and orientations to employees and contractors regarding site and work specific security protocols. Presentations on security awareness will also be integrated into a site and work orientation program with the ultimate goal of protecting the integrity and physical well being of all persons associated with the Project and their families and prevent the loss of company assets. Shore’s security program will strive to limit the possibility of theft and ensure the protection of all persons and assets by planning and coordinating consistent, effective and efficient security initiatives, fostering the overall confidence of our stakeholders and partners. Site Security The main access road will be from Highway #55 and will run directly to the Project’s security gate entrance facility. The main access road will be monitored by the Security department using high definition cameras and appropriate sensors to ensure access roadway security and safety for all persons accessing the Project site. Admittance and access to the Project site will be by prior authorization and approval only. Once admitted onto the Project site, all persons, including employees, contractors and guests, will be subject to security checks, video monitoring and area access tracking as required by the Project’s security process. Area access will be determined by electronic identification cards to ensure that only those persons authorized to enter an area have access to the area. All materials slated for operational use will be delivered to the warehouse where they will be inspected by Security personnel before being received by warehouse personnel. All supplies or materials leaving the Project site will be inspected and checked through a security inspection area in the warehouse prior to movement off site. Generally, all stationary and mobile equipment will remain in a secured zone except when shipped off site for maintenance or service. There will be three zones of security for the Project site, which will be determined by potential security risks. The three security zones at the Project site will be:

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� The Green Zone (low security risk): These areas will be secured with natural berm barriers, fencing with security gates and/or doors with access controls. These areas may also be monitored by security cameras and/or sensors.

� The Blue Security Zone (mid to moderate security risk): These areas will be secured

with chain link fence, walls or enclosures. Access gates and/or all entry and exit points will be controlled through authorized secure access control, full time video monitoring and Security personnel presence. Persons will be subject to a physical search of their person and a technical search of materials, on entry and exit of the area.

� The Red Security Zone (highest security risk): Authorized access to these areas is

limited and strictly controlled through secure barriers, doors and walls and will include security controlled access at all entry and exit points. Persons will be subject to a physical search of their person and a technical search of materials, on entry and exit of the area.

A helicopter landing area will be maintained within the Red Zone of the Project site. Helicopters landing at the Project site will require pre-authorization. Security will be responsible for monitoring all flight traffic in and out of the Project site. A mobile security entity will also be included in and around the Project site to allow for rapid response capability to any health, safety or security concerns that arise. Other Site Infrastructure Security All other areas of the Project site will be monitored by means suitable for the zone where they are located and will be integrated into the main Security management system in order to utilize appropriate secure access management, digital video monitoring and alarm systems.

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E.0 CONSTRUCTION AND DEVELOPMENT E.1 PROJECT ORGANIZATIONAL STRUCTURE Project development will utilize in-house expertise for the Engineering, Procurement and Construction Management (EPCM). Figure E.1 shows the Construction Organization Chart. Shore personnel will provide the overall management of project development, with the use of selected contract personnel working under Shore direction to fill specific or specialty rolls. Select positions from project development will evolve into operational positions upon completion of the construction phase through the handover period and into commissioning. This will provide operational continuity and reduce the commissioning period to commercial production. Project development will be subdivided into key departments reflecting the transition to operations (Table E.1). Table E.1: Project Development and Organization Department Responsibility Construction Operations Processing Process design

Manager Plant Construction Plant Operations

Accounting Project Controller Cost Control, Finance Accounting, Finance Procurement Procurement

Manager Primary Equipment Purchasing, Commissioning

Operations procurement

Human Resources

Human Resources Manager

Construction recruitment Operation Recruitment and personnel turn over

Health, Safety &Wellness

Project Safety Officer Project Safety, Contractor safety

Occupational Health and Safety, Emergency response

Environment Environment Manager

Construction Environment Monitoring

Operations Environment Monitoring

Engineering Engineering Manager Construction Engineering control

No equivalent position

Construction Construction Manager

Construction management, Area managers

No equivalent position

Security Project Security Chief

Construction Security, Loss Control

Site Security

Mining Mining Manager Pre-stripping, Pit Dewatering, Maintenance

Mining Operations

Maintenance Maintenance Manager

Construction Site Maintenance

Operations Site Maintenance

Technical Services

Technical Services Manager

Technical Services Construction

Technical Services Operations

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E.1.1 PROCESSING The Process Design Manager will be responsible for all aspects related to plant construction, starting from the installation of the coarse ore feed into the plant, through the grinding, DMS and recovery circuits, and out to the PKCF and Coarse PK piles. This position will provide technical guidance and support to the Construction Manager, as well as interface with Procurement and the equipment suppliers. Positions reporting directly to the Process Design Manager during construction and development are:

� Processing Manager: Has direct supervision over the construction of the different circuits of the plant. Also responsible for training and supervising employees as they are recruited.

� Plant General Foremen: Assists with the supervision over the construction of the different circuits of the plant. Also responsible for training and supervising employees as they are recruited.

E.1.2 ACCOUNTING The Project Controller is responsible for construction cost control and reporting, direct day by day accounting, overseeing the functions of the site accountant, accounts payable and payroll. The department will be responsible for project accounting, personnel payroll, and project cost control and forecasting. Positions reporting directly to the Project Controller are:

� Accounts Payable: Accounting functions related to payable amounts. � Cost Control: Reporting to the Project Controller, responsible for cost control analysis

and other financial requirements. � Payroll: Responsible for Shore site staff payroll.

E.1.3 PROCUREMENT The Procurement Department will be responsible for all large equipment purchases in conjunction with the various department requirements, as well as site warehousing and freight marshalling. Positions reporting directly to the Procurement Manager are:

� Procurement Specialists: Purchasing staff with specific expertise in processing, mining, electrical and mechanical systems.

� Contract Administrator Procurement: Responsible for administering and managing procurement contracts.

� Logistics Coordinator: Responsible for tracking deliveries. � Buyer: Responsible for day to day purchasing. � Expeditor: Responsible for delivery tracking and logistical support. � Material Handler/Receiver/Shipper: Responsible for receiving, inventory control. � Shipper: Responsible for shipping all goods.

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E.1.4 HUMAN RESOURCES The HR department will be responsible for all recruitment. The department will also be responsible for managing all employment concerns. Positions reporting to the Human Resources Manager are:

� Recruitment Coordinator: Assists manager in daily duties and directly oversees Recruitment Specialists.

� Recruitment Specialist: Recruitment persons specialising in specific recruitment disciplines such as mining and trades.

E.1.5 HEALTH, SAFETY AND WELLNESS Health and Safety on the Project shall be the direct responsibility of the Health, Safety and Wellness Manager. Reporting to this position will be:

� Safety Training coordinator: Responsible for managing and organising all site department training programs.

� Safety Officers: Individual safety officers for each of the areas of construction, plant and mine development.

� Nurse/EMT: Responsible for onsite emergency treatment and training. E.1.6 ENVIRONMENT The Environment Manager will be responsible for all the environmental aspects of the construction and permitting for the Project. Reporting to the Environment Manager are:

� Environment Coordinator: Responsible for the daily site environmental management overseeing all aspects of the Project compliance and monitoring.

� Environment Technician: Assists the Environment Coordinator and is primarily responsible for field work and daily monitoring of the site environment.

E.1.7 CONSTRUCTION The Construction Manager will have overall responsibility for the Process Plant and site infrastructure construction. Reporting to the Construction Manager are:

� Engineering Manager: Detailed in Appendix E.1.8. � Area Managers: Individual specialists in areas of civil, electrical and mechanical

engineering, overseeing day-to-day operations of the contractors and direct administration of the contracts.

� Scheduler: Responsible for regular updates of the construction schedule, as well as forecasting and schedule analysis.

� Contract Administrators: Responsible for generating contract documents and assisting the area managers with interpretation of the contracts.

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E.1.8 ENGINEERING The Engineering Manager shall be responsible for all technical aspects of Project development, including overseeing detailed design, document control, QA/QC, and generating contract scopes of work. The Engineering Manager reports to the Construction Manager. Reporting to the Engineering Manager are:

� Engineering Specialists: Individual contract-based engineers in each of the areas of electrical, civil, and mechanical engineering.

� Quality Control Technologist: Responsible for overseeing all quality control testwork and monitoring of contractor based sampling (e.g. concrete, welding, electrical, piping test work, non destructive tests).

� Document Control: Responsible for record keeping, filing, document transmittal and data management for engineering, construction and contract documents.

� Construction Surveyors: Responsible for overall survey control and QA/QC for all contractor and Shore construction tasks.

E.1.9 SECURITY Site security during Project development will be the responsibility of the Project Security Chief. Reporting to the security chief are:

� Superintendant Technical Security: Assists Project Security Chief and specialises in specific security procedures and protocols.

� Security Supervisors: Oversees and manages the day-to-day site security and contract personnel.

� Contract Security Officers: Monitoring and controlling all traffic and supplies into and off site, vehicle searches, personnel traffic control, camp surveillance. Patrolling the site facilities, perimeter monitoring, off site lay down monitoring, incident control and investigation.

� I.T. Specialists: Oversee the set-up, operation security of the site network, and external communications.

E.1.10 MINING The Mining Manager will be responsible for overseeing the construction and development of the pits, including tracking of the pre-strip advancement, company owned operations, and contractor based operations. Reporting to the Mining Manager are:

� Pit Supervisors: Direct supervision in the pit, overseeing all pit work. � Mine Clerk: Responsible for record tracking (e.g. time sheets). � Equipment Operators: Reporting to the Pit Supervisors, responsible for operation of in-

pit heavy equipment (e.g. shovels and ore trucks). � Maintenance Manager: Detailed in Appendix E.1.11.

E.1.11 MAINTENANCE

The Maintenance Manager is responsible for establishing maintenance procedures, and overseeing the maintenance of the company-owned pit fleet during pre-strip. This position is also

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responsible for site services and construction camp operations. Reporting to the Maintenance Manager are:

� Maintenance Personnel: Planning, supervising, mechanical and electrical personnel for company-based equipment and site maintenance of all mining equipment during pre-strip.

� Site Services: Site Services Supervisor and staff report to this position. They are responsible for general site work outside of the pit and plant, including cleaning and road maintenance.

� Camp Manager: Responsible for running the construction camp.

E.1.12 TECHNICAL SERVICES

Responsible for Technical aspects of the construction phase (pre-strip). The Technical Services Manager supervises:

� Mine Surveyors: Responsible for surveying and tracking pit development.� Mine Geologists: Responsible for geological control of the pits. � Mine Engineer: Responsible for pit control and development including geotechnical

aspects and mine planning.

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E.2 PROJECT PLANNING AND MOBILIZATION The Project plan is based on providing required facilities prior to their expected need, but timed to optimize pre-commissioning cash flow, thus improving net present value. Current Project planning is centered on the critical path tied to the production decision and Project permitting. Several aspects of the Project must commence prior to the final production decision to ensure the critical path would not be compromised. Following the FS completion, work will focus on filling identified gaps and progressing to detailed design for site infrastructure and the mine layout. The Process Plant design and procurement will follow as required by the schedule. Personnel identified in the FS will be recruited in the months following the production decision to ensure an adequate lead time for familiarity and planning prior to the site work commencing. Mobilization of equipment and contractors to site is planned to occur prior to the receipt of the construction permits, such that work may start as rapidly as possible once the approvals are in hand. Contractors and Shore personnel will mobilize on leased Crown or other land for the assembly of offices and equipment. Site activities in the latter part of 2011 and early part of 2012 include removal of the Star Process Plant, and relocation of a portion of the existing office complex to the Orion South shaft area. Current Shore facilities including seven office trailers, wash facilities and security shacks will stay at Star during initial setup and pre-strip and will move to the plant construction site once the required construction permits are in place. This area will be decommissioned upon completion of the main site facilities. Details of the mine pre-strip are presented in Section 16. E.3 ENGINEERING Detailed engineering of the Project will follow several phases at various levels of detail. Much of this work will be consultant based, with some components provided by local companies. Final mine design will be completed by Shore personnel. This design will be at an appropriate level to develop contracts and tender documents for the initial pre-strip. Following the FS, a mining engineer will be recruited to continue the planning, monitor the pre-strip program and detail the mine plan into commercial production. For design and construction, contract engineering personnel will be hired to oversee detailed design and construction drawings / documents in the areas of civil, electrical and mechanical engineering. Process plant and site facilities design will be consultant based. Existing Shore personnel, along with several recruited professionals, will be involved directly with the design to ensure that an operations perspective is maintained. Site power distribution will be designed via consultants, while the primary incoming power will be designed by SaskPower.

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TransGas, a division of SaskEnergy, will be responsible for the engineering design of the natural gas supply line to site. Engineering controls, including document control, QA/QC procedures and survey control will be established immediately following the production decision. This will be done with Shore personnel. E.4 PROCUREMENT Procurement will be completed through a combination of Shore and contract personnel. Procurement policies developed during the bulk sampling program will be expanded to address the scope of the larger equipment orders. Allowances for the tendering and ordering of equipment that require a long lead time to delivery have been introduced into the schedule. Tenders and evaluations have been estimated at 8 to 15 weeks depending on the complexity of equipment and communications from suppliers. Long delivery time items for the Project include:

� Main power transformers, 60 to 80 weeks � AG Mills, Spiral Classifiers, up to 80 weeks � Overburden Shovels, IPCC systems, up to 80 weeks, with additional 16 to 24 weeks for

pre-purchase engineering � Ore Shovels, trucks, 26 weeks � Electrical switch gear, up to 60 weeks � Ore IPCC systems, 52 weeks � DMS Modules, up to 26 weeks � Diamond recovery equipment, sorting equipment, up to 26 weeks.

In order to meet the schedule production milestones, the specifications for the longest lead items were developed during the FS, such that the tendering and order process may begin immediately following the production decision. All other equipment falls well within the timeframes above, and does not affect the Project schedule. E.5 CONTRACTING PLAN The majority of pre-production infrastructure work will be conducted by contractors, with the mining work completed by Shore personnel. Early stage contract work allows for mobilization of contractors in anticipation of the receipt of final construction approvals, utilizing existing surface facilities at the Star and Orion South sites. An overview of contractor based activities is listed in Table E.2. The dates shown reflect Shore’s current status of anticipated provincial and federal permit dates.

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Table E.2: Contractor Work Components Activity Project Start DateSite Detailed Geotech Investigation December, 2011Site Clearing, Grubbing, Phase 1 Pre-strip, Overburden Storage

August, 2012

Site Facilities Buildings August, 2012Site Access Highway August, 2012Site Primary Power Supply January, 2013Site Power Distribution, transformer station February, 2013Process Plant Construction April, 2013IPCC System, conveyors, stackers June, 2013Pit Dewatering System November, 2014Processed Kimberlite Containment Facility August, 2015Off Site Sort House October, 2015 The type of contract will be determined by suitability to the applicable tasks and local conditions. A mix of Lump Sum, Unit Rate and Cost Plus contracts will be used, with Shore providing certain portions of the equipment under installation contracts, and other components being supply and install. Contracting of the individual components under the broader categories above will be determined by contractor ability and availability. The contractor base for these items will be drawn from local, interprovincial and international firms. E.6 CONSTRUCTION The construction of site facilities to support the mining pre-stripping will commence immediately following receipt of the Construction Approval documents from the Saskatchewan MOE. Construction of facilities that support the Process Plant will commence in 2013. This allows for the larger scale processing equipment to be delivered after completion of the access highway, thus reducing cost and risk during delivery. It is proposed that areas currently held by Shore as surface leases will be used for contractor mobilization and lay down areas as a means to accelerate the construction schedule. Existing site buildings will be relocated and set up in an office complex format for Shore construction personnel. Extra office facilities will be sourced as needed to accommodate contractor personnel. The primary site facilities (security, maintenance building, fuel and lube building and warehouse, water treatment and power) are planned for earliest completion, and will be used for the remainder of construction and commissioning, prior to handing over to operations. A construction camp, located at the current exploration camp, will be provided to house all contractors. Shore EPCM staff will also utilise the camp. All contractors will be responsible for ensuring that their Safety, Health and Environmental programs meet or exceed Shore’s existing policies. Shore’s function will be monitoring and tracking to ensure these requirements are met. Shore will have a full complement of health and

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safety personnel on site prior to contractor start up to ensure compliance with the site safety programs.

E.7 COMMISSIONING AND START-UP Commissioning of the Project will occur as each component is complete, with final plant production commissioning occurring in late 2016 to early 2017. The main areas and systems are relatively independent of each other during construction and preliminary commissioning. These areas are listed in Table E.3. Table E.3: Commissioning Component Completion Targets Area Commissioning Completion

TargetAncillary Site Facilities November, 2011Overburden Truck and Shovel Fleet August, 2012Primary, Secondary Power Supply September, 2013Overburden IPCC systems October, 2013Ore IPCC System August, 2016Process Plant October, 2016Off Site Sort House October, 2016 The first low grade ore will be available from the pit in late 2016, and will be used to start commissioning of the Process Plant. Plant throughput is expected to increase to nameplate capacity by February, 2017, to coincide with regular ore flow from the pit. E.8 PROJECT IMPLEMENTATION SCHEDULE The master schedule is developed in four stages, as a pre-cursor for development. The stages are assigned based on distinct milestones that indicate elimination of key risks at the end of each stage. Stage 1: Stage 1 includes all tasks up to the receipt of permits, including:

� Detailed engineering for the IPCC; � Overburden pre-strip planning; � Initial Project recruitment; � Design engineering of facilities required for the Construction Approval (AECOM,

2011a); � Tendering and procurement of long lead items; � Procurement of the preliminary truck and shovel fleet; � Site set up; � Geotechnical investigations; and � Initial site security design and set up.

Stage 2: Stage 2 includes activities required prior to the commissioning of site power:

� Delivery of the initial equipment fleet for pre-stripping; � Set up of the security gate house, perimeter and security system; � Logging of merchantable timber;

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� Clearing and grubbing of the remaining non merchantable timber; � Commencement of sand and clay pre-stripping for the IPCC construction � IPCC construction; � Preliminary site buildings including the cold storage warehouse (to be used as a

temporary shop until the main shop is complete), laydown areas, fuel and lube station, emergency response building, access highway, main warehouse, main transformer substation, electrical distribution, potable water supply, fire water supply, main shop, sewage lagoon and site roads to the mine and overburden piles; and

� Recruitment for the IPCC personnel. Stage 3: Stage 3 includes activities up to mining of ore:

� Commissioning of the IPCC system; � Full scale stripping of overburden under Phase 1A of the feasibility mine plan for Star; � Commencement of stripping for Phase 1B of the feasibility mine plan for Star; � Commisioning of the ore and in pit waste IPCC system; � Construction of the Process Plant and bulk sample plant; � Site facilities including the PKCF, coarse reject pile, deep well dewatering system, water

discharge system, site incinerator, remaining site access roads, full site security system; and

� Recruitment for the final operations personnel. Stage 4: Stage 4 encompasses activities beyond first ore to the plant and include plant commissioning and full operations to the end of mine life:

� Commissioning of the main plant and bulk sample plant; � Construction of the off site sort house and interpretive centre; � Mining of all remaining phases of Star and Orion South; and � Site decommissioning.

Primary constraint dates are based on the production decision, acceptance of the EIS, receipt of surfaces eases, and receipt of the Construction Approval from the Saskatchewan MOE. All tasks are linked to one of these constraints. Secondary constraints to the Project are based on commissioning of primary site power, large equipment deliveries, and contractor availability. To achieve milestone dates for construction, commissioning and commercial production, several tasks will need to commence immediately upon a positive production decision. These tasks include commencement of detailed design engineering, hiring of key management personnel, site reconnaissance, geotechnical investigations, large equipment selection and tendering. Key tasks and milestones are shown in Table E.4 below.

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Table E.4: Key Tasks and Milestones Item Milestone Completion DateProduction Decision November, 2011Procurement of Long Lead Items February, 2012Ministerial Approval of EIS July, 2012Surface Leases Approval August, 2012Construction Permit Approval August, 2012Commence Pre-stripping, Site Construction August, 2012Primary Power to Site September, 2013Process Plant Construction Start April, 2013Overburden IPCC System Operational October, 2013Ore IPCC System Operational August, 2016Process Plant Functional October, 2016Commercial Production Achieved February, 2017 The feasibility summary schedule is shown in Figure E.2. The critical path for the Project is dictated by the environmental permitting. Following this is the shovel availability and power supply for the overburden stripping. The Process Plant construction is not on the critical path due to the large time frame required for overburden removal.

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