Mountain Province Retracts Gahcho Kue Report

Mountain Province Diamonds, a 49 percent joint venture partner with De Beers Canada in the Gahcho Kue diamond project, said that it is “retracting all references to the economics of the Gahcho Kue diamond project derived from the 2005 Study Report, a preliminary economic assessment produced by AMEC Americas Ltd. and De Beers Canada under the direction of the Gahcho Kue project operator De Beers.”

The unusual step was made at the request of the Ontario Securities Commission (OSC), which said a technical report was not prepared in the required format.

However, it seems that the issue is not just a technicality but has to do with the valuation of the diamonds expected to be mined at the project.

According to the 2005 report, the estimated values for the Gahcho Kue diamonds as provided by De Beers were $77 per carat for the indicated resource portion of the bulk sample and $71 p/c for the inferred portion of the diamonds based on the De Beers June 2005 price book.

A recent report prepared for Mountain Province in June 2006 by WWW placed the average price at $83 p/c.

The junior miner said in a release that at the present time, shareholders should not rely on the 2005 report.

De Beers is preparing an updated report with the aim of improving the project economics, due to be completed by the end of the year.

Located in Canada's Northwest Territories, Gahcho Kue is currently in the permitting and advanced exploration stage of development. De Beers is operating the project.