De Beers, Mountain Province Sign New Gahcho Kue JV Agreement

De Beers and Mountain Province Diamonds Inc. signed an amended and joint venture agreement that replaces their Gahcho Kue diamond project agreement from 2002, the sides announced Monday.

According to the new agreement, De Beers will continue to hold a 51 percent and Mountain Province 49 percent of the Northwest Territories project, with Mountain Province's share no longer subject to the dilution provisions in the 2002 agreement.

Each will market their own proportionate share of diamond production, contribute a proportionate share to the future project development costs, and material strategic and operating decisions will be made by consensus as long as each has at least a 40 percent interest in the project.

The two have agreed that the sunk historic costs until December 31, 2008 will be reduced and limited to C$120 million (US$103.5 million). Mountain Province will also repay De Beers C$59M (US$50.87 million), representing 49 percent of C$120 million.

The two firms agreed to conduct a feasibility study on the Gahcho Kue diamond project to be commissioned as soon as possible, which Mountain Province will pay the full cost.

"Conclusion of the 2009 Agreement represents a key milestone in the development of the Gahcho Kue project," said Mountain Province President and CEO, Patrick Evans.

"Mountain Province and De Beers are jointly committed to advancing the development of the Gahcho Kue project as expeditiously as possible. The 2009 Agreement provides a solid foundation for our renewed joint venture," he added.