UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 20-F



(Mark One)



| |  ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION
12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ----------------------------------------------------------------------------------------------



OR



| | x | ANNUAL REPORT PURSUANT TO SECTION 13 OR
(15d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ------------------------------------------------------------------------------------

For the fiscal year ended
December 31, 2014



OR



| |  ̈ | TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ----------------------------------------------------------------------------------------



OR



| |  ̈ | SHELL COMPANY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | -------------------------------------------------------------------------------------------

Date of event requiring
this shell company report________________



For the transition period
from __________________ to __________________



Commission file number 001-32468



MOUNTAIN PROVINCE DIAMONDS INC.

(Exact name of Registrant as specified in
its charter)



Not Applicable

(Translation of Registrant’s name
into English)



Ontario

(Jurisdiction of incorporation or organization)



161 Bay Street, Suite 2315, PO Box 216,
Toronto, Ontario Canada M5J 2S1

(Address of principal executive offices)



Bruce Ramsden – 416-361-3562

Fax: 416-603-8565; Email: b.ramsden@mountainprovince.com

161 Bay Street, Suite 2315, PO Box 216,
Toronto, Ontario Canada M5J 2S1

(Name, Telephone, E-mail and/or Facsimile
number and Address of Company Contact Person)



Securities registered or to be registered
pursuant to Section 12(b) of the Act.

|Title of each class        |  | Name of each exchange on which registered
|-------------------------- |  | -----------------------------------------
|Common Shares no par value |  | NASDAQ                                   











Securities registered or to be registered
pursuant to Section 12(g) of the Act.



Not
Applicable

(Title of Class)



Securities for which there is a reporting
obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)



Indicate the number
of outstanding shares of the issuer’s classes of capital or common stock as of the close of the period covered by the annual
report.

135,204,550



Indicate by check
mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

 ̈YesxNo



If this report is
an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934.

 ̈YesxNo



Note – Checking the box above will
not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from
their obligations under those Sections.



Indicate by check
mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.

xYes ̈No



Indicate by check
mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to file such reports)

 ̈Yes ̈No



Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):



|Large accelerated filer ̈ | Accelerated filerx | Non-accelerated filer ̈
|------------------------ | ------------------ | ----------------------



Indicate by check
mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:



|U.S. GAAP ̈ |  | International Financial Reporting Standardsx |  | Other ̈
|---------- |  | -------------------------------------------- |  | ------
|           |  | as issued by the International Accounting    |  |       
|           |  | Standards Board                              |  |       











If “Other”
has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has
elected to follow.

 ̈Item 17 ̈Item 18



If this is an annual report, indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 ̈YesxNo



(APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)



Indicate by check
mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

 ̈Yes ̈No



Not Applicable











TABLE OF CONTENTS



|GLOSSARY                                  | vii  
|----------------------------------------- | -----
|                                          |      
|GLOSSARY OF TECHNICAL TERMS               | xii  
|                                          |      
|NOTE REGARDING FORWARD LOOKING STATEMENTS | xviii
|                                          |      
|PART I                                    |      
|                                          |      
|Item 1                                    |      
|                                          |      
|Item 2                                    |      
|                                          |      
|Item 3                                    |      
|                                          |      
|A.                                        |      
|                                          |      
|B.                                        |      
|                                          |      
|C.                                        |      
|                                          |      
|D.                                        |      
|                                          |      
|Item 4                                    |      
|                                          |      
|A.                                        |      
|                                          |      
|B.                                        |      
|                                          |      
|C.                                        |      
|                                          |      
|D.                                        |      
|                                          |      
|Item 4A                                   |      
|                                          |      
|Item 5                                    |      
|                                          |      
|Item 6                                    |      
|                                          |      
|A.                                        |      
|                                          |      
|B.                                        |      
|                                          |      
|C.                                        |      
|                                          |      
|D.                                        |      
|                                          |      
|E.                                        |      
|                                          |      
|Item 7                                    |      
|                                          |      
|A.                                        |      
|                                          |      
|B.                                        |      



iv







|C.      |  | Interests of experts and counsel.                           | 72
|------- |  | ----------------------------------------------------------- | --
|        |  |                                                             |   
|Item 8  |  | Financial Information.                                      | 72
|        |  |                                                             |   
|A.      |  | Consolidated Statements and Other Financial Information.    | 72
|        |  |                                                             |   
|B.      |  | Significant Changes.                                        | 72
|        |  |                                                             |   
|Item 9  |  | The Offer and Listing.                                      | 73
|        |  |                                                             |   
|A.      |  | Offer and Listing Details.                                  | 73
|        |  |                                                             |   
|B.      |  | Plan of Distribution.                                       | 74
|        |  |                                                             |   
|C.      |  | Markets.                                                    | 74
|        |  |                                                             |   
|D.      |  | Selling Shareholders.                                       | 74
|        |  |                                                             |   
|E.      |  | Dilution.                                                   | 74
|        |  |                                                             |   
|F.      |  | Expenses of the Issuer.                                     | 74
|        |  |                                                             |   
|Item 10 |  | Additional Information.                                     | 74
|        |  |                                                             |   
|A.      |  | Share capital.                                              | 74
|        |  |                                                             |   
|B.      |  | Memorandum and articles of association.                     | 74
|        |  |                                                             |   
|C.      |  | Material contracts.                                         | 78
|        |  |                                                             |   
|D.      |  | Exchange controls.                                          | 78
|        |  |                                                             |   
|E.      |  | Taxation.                                                   | 81
|        |  |                                                             |   
|F.      |  | Dividends and paying agents.                                | 90
|        |  |                                                             |   
|G.      |  | Statement by experts.                                       | 90
|        |  |                                                             |   
|H.      |  | Documents on display.                                       | 90
|        |  |                                                             |   
|I.      |  | Subsidiary Information.                                     | 91
|        |  |                                                             |   
|Item 11 |  | Quantitative and Qualitative Disclosures About Market Risk. | 91
|        |  |                                                             |   
|Item 12 |  | Description of Securities Other than Equity Securities.     | 91



v









|PART II       |  |                                                                               |   
|------------- |  | ----------------------------------------------------------------------------- | --
|              |  |                                                                               |   
|Item 13       |  | Defaults, Dividend Arrearages and Delinquencies.                              | 91
|              |  |                                                                               |   
|Item 14       |  | Material Modifications to the Rights of Security Holders and Use of Proceeds. | 91
|              |  |                                                                               |   
|Item 15       |  | Controls and Procedures.                                                      | 92
|              |  |                                                                               |   
|Item 16A      |  | Audit Committee Financial Expert.                                             | 93
|              |  |                                                                               |   
|Item 16B      |  | Code of Ethics.                                                               | 93
|              |  |                                                                               |   
|Item 16C      |  | Principal Accountant Fees and Services.                                       | 94
|              |  |                                                                               |   
|Item 16D      |  | Exemptions from the Listing Standards for Audit Committees.                   | 95
|              |  |                                                                               |   
|Item 16E      |  | Purchases of Equity Securities by the Issuer and Affiliated Purchasers.       | 95
|              |  |                                                                               |   
|Item 16F      |  | Change in Registrant’s Certifying Accountant.                                 | 95
|              |  |                                                                               |   
|Item 16G      |  | Corporate Governance                                                          | 95
|              |  |                                                                               |   
|Item 16H      |  | Mine Safety Disclosure                                                        | 96
|              |  |                                                                               |   
|PART III      |  |                                                                               |   
|              |  |                                                                               |   
|Item 17       |  | Financial Statements.                                                         | 96
|              |  |                                                                               |   
|Item 18       |  | Financial Statements.                                                         | 96
|              |  |                                                                               |   
|Item 19       |  | Exhibits.                                                                     | 96
|              |  |                                                                               |   
|SIGNATURES    |  |                                                                               | 97
|              |  |                                                                               |   
|EXHIBIT INDEX |  |                                                                               | 98
|              |  |                                                                               |   
|APPENDIX      |  | Item 18. Financial Statements                                                 | 99



vi







GLOSSARY



2002 Agreementor Gahcho
Kué Joint Venture Agreementormeans the joint venture agreement entered into by Mountain Province
Diamonds Inc., Camphor Ventures Inc., and De Beers Canada Exploration Inc. on October 24, 2002, but which took effect from January
1, 2002, and which was amended and restated on July 3, 2009;



2009 AgreementorGahcho
Kué Amended and Restated Joint Arrangement-Agreementmeans the Gahcho Kué Joint Venture Agreement as amended
and restated, and entered into by Mountain Province Diamonds Inc., Camphor Ventures Inc., and De Beers Canada Inc. on July 3, 2009;



2009 Technical Report means
the Technical Report dated as of April 20, 2009 entitled "Gahcho Kué Kimberlite Project NI 43-101 Technical Report,
Northwest Territories, Canada" prepared for the Company by AMEC Americas Limited;



2010 Technical Report, Definitive
Feasibility Study,orFeasibility Studymeans the “Gahcho Kué Project, Definitive Feasibility
Study, National Instrument (“NI”) 43-101 Technical Report” dated December 1, 2010 (with Information effective
as of October 15, 2010) as prepared and completed by JDS Energy and Mining Inc., and filed by the Company on SEDAR on December
3, 2010;



2013 Technical Report, Update of
the Mineral Resource Estimate for the Tuzo Kimberlite,means the “Gahcho Kué Project, Update of the Mineral
Resource Estimate for the Tuzo Kimberlite, National Instrument (“NI”) 43-101 Technical Report” dated July 2,
2013 as prepared and completed by Mineral Services Canada Inc., and filed by the Company on SEDAR on August 14, 2013;



2014 Technical Report or 2014 Feasibility
Studymeans the “Gahcho Kué Project, 2014 Feasibility Study Report NI 43-101 Technical Report” dated
May 13, 2014 as amended May 27, 2014 (with Information effective as of March 31, 2014) as prepared and completed by JDS Energy
and Mining Inc. and Hatch Ltd, and filed by the Company on SEDAR on May 28, 2014;



2014 Feasibility Study or 2014 Technical
Reportmeans the “Gahcho Kué Project, 2014 Feasibility Study Report NI 43-101 Technical Report” dated
May 13, 2014 as amended May 27, 2014 (with information effective as of March 31, 2014) as prepared and completed by JDS Energy
and Mining Inc. and Hatch Ltd, and filed by the Company on SEDAR on May 28, 2014;



Affiliate has the meaning
given to affiliated bodies corporate under theBusiness Corporations Act (Ontario);



AK Property means the claims
known as the "AK claims" held by the Gahcho Kué Arrangement;



AK-CJ Propertiesmeans, collectively,
the AK Property and CJ Property;



AMECmeans AMEC Americas
Limited;



AMEX or NYSE AMEXmeans the
American Stock Exchange prior to the take-over of the American Stock Exchange LLC by the New York Stock Exchange, and subsequently
renamed NYSE Amex, then renamed NYSE MKT;



CJ Property means the claims
known as the "CJ claims", which have now lapsed, previously held by MPV;



Arrangement means the arrangement
between the Company and Glenmore which was effected as of June 30, 2000;



vii







Arrangement Agreementmeans the Arrangement Agreement dated as of May 10, 2000, and made between MPV and Glenmore, including the Schedules to that
Agreement;



Business Corporations Act (Ontario)
means the R.S.O. 1990, CHAPTER B.16, as amended from time to time;



CDNX means the Canadian Venture
Exchange Inc., formerly the Vancouver Stock Exchange, and now known as the TSX Venture Exchange;



Camphor or Camphor Venturesmeans Camphor Ventures Inc.;



Canadian National Instrument 43-101means the National Instrument 43-101 (Standards of Disclosure for Mineral Projects)adopted by the Canadian Securities
Administrators;



Code means the United States
Internal Revenue Code of 1986, as amended;



Company, MPVor
Registrant means Mountain Province Diamonds Inc.;



De Beers means De Beers Consolidated
Mines Ltd.;



De Beers Canada or Monopros
means De Beers Canada Inc., formerly known as De Beers Canada Exploration Inc., and before that as Monopros Limited, a wholly-owned
subsidiary of De Beers;



Desktop Study means the preliminary
technical assessment of the Gahcho Kué resource conducted by De Beers Consolidated Mines Ltd. in 2000 (and updated in 2003,
2005, 2006, and 2008) and the Independent Qualified Persons’ review of the Desktop Study provided by AMEC;



Definitive Feasibility Study, Feasibility
Study,or2010 Technical Reportmeans the “Gahcho Kué Project, Definitive Feasibility Study,
National Instrument (“NI”) 43-101 Technical Report” dated December 1, 2010 (with Information effective as of
October 15, 2010) as prepared and completed by JDS Energy and Mining Inc., and filed by the Company on SEDAR on December 3, 2010;



Exchange Act means the U.S.
Securities Exchange Act of 1934, as amended;



Feasibility Study, Definitive Feasibility
Study,or2010 Technical Reportmeans the “Gahcho Kué Project, Definitive Feasibility Study,
National Instrument (“NI”) 43-101 Technical Report” dated December 1, 2010 (with Information effective as of
October 15, 2010) as prepared and completed by JDS Energy and Mining Inc., and filed by the Company on SEDAR on December 3, 2010;



GAAP means Canadian generally
accepted accounting principles;



Gahcho Kué Amended and Restated
Joint Arrangement-Agreementor2009. Agreementmeans the Gahcho Kué Joint Venture Agreement as amended
and restated, and entered into by Mountain Province Diamonds Inc., Camphor Ventures Inc., and De Beers Canada Inc. on July 3, 2009;



Gahcho Kué Joint ArrangementorJoint Arrangementmeans the joint Arrangement between Mountain Province Diamonds Inc., Camphor Ventures
Inc., and De Beers Canada, for the Gahcho Kué Project, and as currently governed by the 2009 Agreement;



Gahcho Kué Joint Arrangement-Agreementor2002 Agreementmeans the joint arrangement agreement entered into by Mountain Province Diamonds Inc.,
Camphor Ventures Inc., and De Beers Canada Exploration Inc. on October 24, 2002, but which took effect from January 1, 2002, and
which was amended and restated on July 3, 2009;



viii







Gahcho KuéProject,located on Kennady Lake, also referred to as the “Kennady Lake Project”, and comprising four mineral leases that
are 100% owned by De Beers Canada Inc. (“De Beers Canada”), which holds them on behalf of the Gahcho Kué Joint
Arrangement. The participating interest of each of the joint venture parties is governed by the 2009 Agreement;



Glenmore means Glenmore Highlands
Inc., a company incorporated under the Business Corporations Act (Alberta) and which, pursuant to the Arrangement,
amalgamated with the Company's wholly-owned subsidiary, Mountain Glen Mining Inc., to form an amalgamated company, also known as
Mountain Glen Mining Inc.;



Glenmore Shares means the
common shares of Glenmore, as the same existed before the Arrangement took effect and "Glenmore Share" means any of them;



Glenmore Shareholder means
a holder of Glenmore Shares;



IFRSmeans International
Financial Reporting Standards, as issued by the International Accounting Standards Board - a system of generally accepted accounting
principles, as applied to Mountain Province’s financial statements beginning with its transition effective January 1, 2010;



JDSmeans JDS Energy and
Mining Inc.;



Joint Information Circular
means the joint information circular of the Company and Glenmore dated May 10, 2000 for the Extraordinary General Meeting and Special
Meeting of the Company and Glenmore respectively to approve the Arrangement;



Joint ArrangementorGahcho Kué Joint Arrangementmeans the joint arrangement between Mountain Province Diamonds Inc., Camphor Ventures
Inc., and De Beers Canada, for the Gahcho Kué Project, and as currently governed by the 2009 Agreement;



Kennady Arrangementmeans
the arrangement between the Company and Kennady Diamonds Inc. which was effected as of July 6, 2012;



Kennady Arrangement Agreementmeans
the Kennady Arrangement Agreement dated as of March 12, 2012, and made between the Company and Kennady Diamonds Inc., including
the schedules to that agreement;



Kennady North Projectmeans
the mining leases (4330, 4466, 4467, and 4468) and eight mineral claims staked in 2010 (Kwezi 01 to Kwezi 08) which were 100% owned
by Mountain Province in the area around the Gahcho Kué Project and Kennady Lake, and which were transferred to Kennady Diamonds
Inc. under the plan of arrangement between Kennady Diamonds Inc. and Mountain Province effective July 6, 2012;



Letter Agreement means the
letter agreement dated March 6, 1997 among Mountain Province Mining Inc., Camphor Ventures Inc., Glenmore Highlands Inc., 444965
B.C. Ltd. and Monopros as amended or supplemented by: an agreement dated April 10, 1997 among Mountain Province Mining Inc., Camphor
Ventures Inc., Glenmore Highlands Inc., 444965 B.C. Ltd. and Monopros; an assurance given to De Beers by the other parties., dated
July, 1997; an agreement given to De Beers by the other parties dated November 1, 1997 and two agreements each dated December 17,
1999 among the parties;



ix







Monopros or De Beers
Canada means De Beers Canada Inc., formerly known as Monopros Limited, a wholly-owned subsidiary of De Beers and also formally
known as De Beers Canada Exploration Inc.;



Mountain Glen means Mountain
Glen Mining Inc., a wholly-owned subsidiary (now dissolved) of the Company;



MPV, Mountain Province, Company
or Registrantmeans Mountain Province Diamonds Inc.;



MPV Sharesmeans the
common shares of MPV, and MPV Share means any of them;



NASDAQmeansthe
National Association of Securities Dealers Automatic Quotation System, now the Nasdaq Stock Exchange;



NYSE MKTmeans the New York
Stock Exchange MKT, renamed from NYSE Amex;



Old MPVmeans MPV prior to
its amalgamation with 444965 B.C. Ltd.;



OTCBB means the OTC bulletin
board;



PFIC means Passive Foreign
Investment Company under the Code;



Qualified Personas defined
by Canadian National Instrument 43-101 (Standards of Disclosure for Mineral Projects), means an individual who:



(1)	is an engineer or geoscientist
with a university degree, or equivalent accreditation, in an area of geosciences, or engineering, relating to mineral exploration
or mining;



(2)	has at least five years
of experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these,
that is relevant to his or her professional degree or area of practice;



(3)	has experience relevant
to the subject matter of the mineral project and the technical report; and



(4)	is in good standing
with a professional association; and



(5)	in the case of a professional
association in a foreign jurisdiction, has a membership designation that:

(i) requires attainment of a position of responsibility
in their profession that requires the exercise of independent judgment; and

(ii) requires:

A. a favourable confidential peer evaluation of
the individual’s character, professional judgment, experience, and ethical fitness; or

B. a recommendation for membership
by at least two peers, and demonstrated prominence or expertise in the field of mineral exploration or mining;



x







Except where
specifically indicated otherwise, scientific and technical information included in this report on Form 20F regarding the Company’s
mineral projects has been reviewed by Carl Verley, a Director of the Company and a Qualified Person as defined by National
Instrument 43-101.



TSX means the Toronto Stock
Exchange;



VSE means the Vancouver Stock
Exchange, subsequently renamed the Canadian Venture Exchange, and now known as the TSX Venture Exchange.



xi









GLOSSARY OF TECHNICAL TERMS



|Adit              |  | A horizontal or nearly horizontal passage driven from the surface for the working of a mine.                                                                                                                                                                                                                                                                                                                                                                             
|----------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Archean           |  | The earliest eon of geological history or the corresponding system of rocks.                                                                                                                                                                                                                                                                                                                                                                                             
|                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Area of Interest  |  | A geographic area surrounding a specific mineral property in which more than one party has an interest and within which new acquisitions must be offered to the other party or which become subject automatically to the terms and conditions of the existing agreement between the parties. Typically, the area of interest is expressed in terms of a radius of a finite number of kilometers from each point on the outside boundary of the original mineral property.
|                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Bulk Sample       |  | Evaluation program of a diamondiferous kimberlite pipe in which a large amount of kimberlite (at least 100 tonnes) is recovered from a pipe.                                                                                                                                                                                                                                                                                                                             
|                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Carat             |  | A unit of weight for diamonds, pearls, and other gems. The metric carat, equal to 0.2 gram or 200 milligram, is standard in the principal diamond-producing countries of the world.                                                                                                                                                                                                                                                                                      
|                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Caustic Fusion    |  | An analytical process for diamonds by which rocks are dissolved at temperatures between 450-600°C. Diamonds remain undissolved by this process and are recovered from the residue that remains.                                                                                                                                                                                                                                                                          
|                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Craton            |  | A stable relatively immobile area of the earth's crust that forms the nuclear mass of a continent or the central basin in an ocean.                                                                                                                                                                                                                                                                                                                                      
|                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Diabase           |  | A fine-grained rock of the composition of gabbro but with an ophitic texture.                                                                                                                                                                                                                                                                                                                                                                                            
|                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Dyke              |  | A body of igneous rock, tabular in form, formed through the injection of magma.                                                                                                                                                                                                                                                                                                                                                                                          
|                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Feasibility Study |  | As defined by Canadian National Instrument 43-101, means a comprehensive study of a deposit in which all geological, engineering, operating, economic and other relevant factors are considered in sufficient detail that it could reasonably serve as the basis for a final decision by a financial institution to finance the development of the deposit for mineral production.                                                                                       
|                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Gneiss            |  | A banded rock formed during high grade regional metamorphism. It includes a number of different rock types having different origins. It commonly has alternating bands of schistose and granulose material.                                                                                                                                                                                                                                                              
|                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Indicator mineral |  | Minerals such as garnet, ilmenite, chromite and chrome diopside, which are used in exploration to indicate the presence of kimberlites.                                                                                                                                                                                                                                                                                                                                  



xii







|Jurassic        |  | The period of the Mesozoic era between the Triassic and the Cretaceous or the corresponding system of rocks marked by the presence of dinosaurs and the first appearance of birds.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Kimberlite      |  | A dark-colored intrusive biotite-peridotite igneous rock that can contain diamonds. It contains the diamonds known to occur in the rock matrix where they originally formed (more than 100 km deep in the earth).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Macrodiamond    |  | A diamond, two dimensions of which exceed 0.5 millimeters (mm).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Microdiamond    |  | Generally refers to diamonds smaller than approximately 0.5 mm, which are recovered from acid dissolution of kimberlite rock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Mineral Reserve |  | Means the economically mineable part of a Measured Mineral Resource or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined.                                                                                                                                                                                                                                              
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                |  | THE TERMS "MINERAL RESERVE," "PROVEN MINERAL RESERVE" AND "PROBABLE MINERAL RESERVE" USED IN THIS REPORT ARE CANADIAN MINING TERMS AS DEFINED IN ACCORDANCE WITH NATIONAL INSTRUMENT 43-101 - STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS WHICH INCORPORATES THE DEFINITIONS AND GUIDELINES SET OUT IN THE CANADIAN INSTITUTE OF MINING, METALLURGY AND PETROLEUM (THE "CIM") DEFINITION STANDARDS FOR MINERAL RESOURCES AND MINERAL RESERVES (THE “CIM DEFINITION STANDARDS”) AS ADOPTED BY THE CIM COUNCIL ON DECEMBER 11, 2005. IN THE UNITED STATES, A MINERAL RESERVE IS DEFINED AS A PART OF A MINERAL DEPOSIT WHICH COULD BE ECONOMICALLY AND LEGALLY EXTRACTED OR PRODUCED AT THE TIME THE MINERAL RESERVE DETERMINATION IS MADE.
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                |  | Under United States standards:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                |  | "Reserve" means that part of a mineral deposit which can be economically and legally extracted or produced at the time of the reserve determination.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                |  | "Economically," as used in the definition of reserve, implies that profitable extraction or production has been established or analytically demonstrated to be viable and justifiable under reasonable investment and market assumptions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                |  | "Legally," as used in the definition of reserve, does not imply that all permits needed for mining and processing have been obtained or that other legal issues have been completely resolved. However, for a reserve to exist, there should be a reasonable certainty based on applicable laws and regulations that issuance of permits or resolution of legal issues can be accomplished in a timely manner.                                                                                                                                                                                                                                                                                                                            



xiii







|                 |  | Mineral Reserves are categorized as follows on the basis of the degree of confidence in the estimate of the quantity and grade of the deposit.                                                                                                                                                                                                                                                                                                                                                                                                                                           
|---------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                 |  | "Proven Mineral Reserve" means, in accordance with CIM Definition Standards, the economically viable part of a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate at the time of reporting, that economic extraction is justified.                                                                                                                                                                             
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                 |  | The definition for "proven mineral reserves" under CIM Definition Standards differs from the standards in the United States, where proven or measured reserves are defined as reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geographic character is so well defined that size, shape, depth and mineral content of reserves are well established.
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                 |  | "Probable Mineral Reserve" means, in accordance with CIM Definition Standards, the economically mineable part of an Indicated, and in some circumstances a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.                                                                                                                                 
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                 |  | The definition for "probable mineral reserves" under CIM Definition Standards differs from the standards in the United States, where probable reserves are defined as reserves for which quantity and grade and/or quality are computed from information similar to that of proven reserves (under United States standards), but the sites for inspection, sampling, and measurement are further apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Mineral Resource |  | Under CIM Definition Standards, a Mineral Resource is a concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extractions.  The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge.    



xiv







| |  | THE TERMS "MINERAL RESOURCE", "MEASURED MINERAL RESOURCE", "INDICATED MINERAL RESOURCE", "INFERRED MINERAL RESOURCE" USED IN THIS REPORT ARE CANADIAN MINING TERMS AS DEFINED IN ACCORDANCE WITH NATIONAL INSTRUMENT 43-101 - STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS UNDER THE GUIDELINES SET OUT IN THE CIM DEFINITION STANDARDS. THE COMPANY ADVISES U.S. INVESTORS THAT WHILE SUCH TERMS ARE RECOGNIZED AND PERMITTED UNDER CANADIAN REGULATIONS, THE U.S. SECURITIES AND EXCHANGE COMMISSION DOES NOT RECOGNIZE THEM. THESE ARE NOT DEFINED TERMS UNDER THE UNITED STATES STANDARDS AND MAY NOT GENERALLY BE USED IN DOCUMENTS FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION BY U.S. COMPANIES. AS SUCH, INFORMATION CONTAINED IN THIS REPORT CONCERNING DESCRIPTIONS OF MINERALIZATION AND RESOURCES MAY NOT BE COMPARABLE TO INFORMATION MADE PUBLIC BY U.S. COMPANIES SUBJECT TO THE REPORTING AND DISCLOSURE REQUIREMENTS OF THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | "Inferred Mineral Resource" means, under CIM Definition Standards, that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. U.S. INVESTORS ARE CAUTIONED NOT TO ASSUME THAT ANY PART OR ALL OF AN INFERRED RESOURCE EXISTS, OR IS ECONOMICALLY OR LEGALLY MINEABLE.                                                                                                                                                                                                                                                                                                                                                                                              
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | "Indicated Mineral Resource" means, under CIM Definition Standards, that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed. U.S. INVESTORS ARE CAUTIONED NOT TO ASSUME THAT ANY PART OR ALL OF THE MINERAL DEPOSITS IN THIS CATEGORY WILL EVER BE CONVERTED INTO RESERVES.                                                                                                                                                     
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | "Measured Mineral Resource" means, under CIM Definition standards that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drillholes that are spaced closely enough to confirm both geological and grade continuity. U.S. INVESTORS ARE CAUTIONED NOT TO ASSUME THAT ANY PART OR ALL OF THE MINERAL DEPOSITS IN THIS CATEGORY WILL EVER BE CONVERTED INTO RESERVES.                                                                                                                               



xv







|Operator                      |  | The party in a joint venture which carries out the operations of the joint venture subject at all times to the direction and control of the management committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|----------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Ordovician                    |  | The period between the Cambrian and the Silurian or the corresponding system of rocks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Overburden                    |  | A general term for any material covering or obscuring rocks from view.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Paleozoic                     |  | An era of geological history that extends from the beginning of the Cambrian to the close of the Permian and is marked by the culmination of nearly all classes of invertebrates except the insects and in the later epochs by the appearance of terrestrial plants, amphibians, and reptiles.                                                                                                                                                                                                                                                                                                                                                                                      
|                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Pipe                          |  | A kimberlite deposit that is usually, but not necessarily, carrot-shaped.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Preliminary Feasibility Study |  | Under the CIM Definition Standards, means a comprehensive study of the viability of a mineral project that has advanced to a stage where the mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, has been established, and which, if an effective method of mineral processing has been determined, includes a financial analysis based on reasonable assumptions of technical, engineering, operating, economic factors and the evaluation of other relevant factors which are sufficient for a Qualified Person acting reasonably, to determine if all or part of the Mineral Resource may be classified as a Mineral Reserve.
|                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Proterozoic                   |  | The eon of geologic time or the corresponding system of rocks that includes the interval between the Archean and Phanerozoic eons, perhaps exceeds in length all of subsequent geological time, and is marked by rocks that contain fossils indicating the first appearance of eukaryotic organisms (as algae).                                                                                                                                                                                                                                                                                                                                                                     
|                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Reverse Circulation Drill     |  | A rotary percussion drill in which the drilling mud and cuttings return to the surface through the drill pipe.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Sill                          |  | Tabular igneous rock that parallels the bedding or foliation of the country rock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Stringers                     |  | The narrow veins or veinlets, often parallel to each other, and often found in a shear zone.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Tertiary                      |  | The Tertiary period or system of rocks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



xvi







|Till Sample |  | A sample of soil taken as part of a regional exploration program and examined for indicator minerals.
|----------- |  | -----------------------------------------------------------------------------------------------------
|            |  |                                                                                                      
|Xenolith    |  | A foreign inclusion in an igneous rock.                                                              



xvii







NOTE REGARDING FORWARD-LOOKING STATEMENTS



This report contains forward-looking statements
within the meaning of the United States Private Securities Litigation Reform Act of 1995 concerning the Company's exploration,
operations, planned acquisitions and other matters. These statements relate to analyses and other information that are based on
forecasts of future results, estimates of amounts not yet determinable and assumptions of management.



Statements concerning mineral resource
estimates may also be deemed to constitute forward-looking statements to the extent that they involve estimates of the mineralization
that will be encountered if the property is developed, and based on certain assumptions that the mineral deposit can be economically
exploited. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects"
or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans",
"estimates" or "intends", or stating that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact
and may be "forward-looking statements." Forward-looking statements are subject to a variety of risks and uncertainties
which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without
limitation:



| | § | risks and uncertainties relating to the
interpretation of drill results, the geology, grade and continuity of mineral deposits;
| | - | -------------------------------------------------------------------------------------------------------------------------------



| | § | results of initial feasibility, pre-feasibility
and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with
the Company's expectations;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | § | mining exploration risks, including risks
related to accidents, equipment breakdowns or other unanticipated difficulties with or interruptions in production;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| | § | the potential for delays in exploration
activities or the completion of feasibility studies;
| | - | --------------------------------------------------------------------------------------------



| | § | risks related to the inherent uncertainty
of exploration and cost estimates and the potential for unexpected costs and expenses;
| | - | --------------------------------------------------------------------------------------------------------------------------------



| | § | risks related to foreign exchange fluctuations
and prices of diamonds;
| | - | ----------------------------------------------------------------------



| | § | risks related to commodity price fluctuations;
| | - | ----------------------------------------------



| | § | the uncertainty of profitability based
upon the Company's history of losses;
| | - | ----------------------------------------------------------------------------



| | § | risks related to failure of the Company
and/or its joint venture partner to obtain adequate financing on a timely basis and on acceptable terms, particularly given recent
volatility in the global financial markets;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | § | development and production risks including
and particularly risks for weather conducive to the building and use of the Tibbitt to Contwoyto Winter Road;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------



| | § | risks related to environmental regulation,
permitting and liability;
| | - | --------------------------------------------------------------------



| | § | political and regulatory risks associated
with mining and exploration;
| | - | ----------------------------------------------------------------------



| | § | geological and technical conditions at
the Company’s Gahcho Kué Project being adequate to permit development;
| | - | -------------------------------------------------------------------------------------------------------------



| | § | the ability to develop and operate the
Company’s Gahcho Kué Project on an economic basis and in accordance with applicable timelines;
| | - | -------------------------------------------------------------------------------------------------------------------------------------



xviii







| | § | aboriginal rights and title;
| | - | ----------------------------



| | § | failure of plant, equipment, processes
and transportation services to operate as anticipated;
| | - | ---------------------------------------------------------------------------------------------



| | § | possible variations in ore grade or recovery
rates, permitting timelines, capital expenditures, reclamation activities, land titles, and social and political developments,
and other risks of the mining industry; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | § | other risks and uncertainties related
to the Company's prospects, properties and business strategy.
| | - | ---------------------------------------------------------------------------------------------------



Some of the important risks and uncertainties
that could affect forward-looking statements are described further in this Annual Report under the headings "Risk Factors",
"History and Development of Company," "Business Overview," "Property, plants and equipment," and
"Operating and Financial Review and Prospects". Should one or more of these risks and uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements.
Forward -looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made,
and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other
circumstances should change. Investors are cautioned against attributing undue certainty to forward-looking statements.



Forward-looking information is based on
certain factors and assumptions regarding, among other things, exploration, permitting, construction, mining, and production at
the Gahcho Kué Project and any other property as well as world and U.S. economic conditions and the future worldwide demand
for diamonds. Specifically, in making statements regarding expected mineral recovery, diamond prices and expectations concerning
the diamond industry, the Company has made assumptions regarding, among other things, foreign exchange rates, continuing recovery
of world and U.S. economic conditions, our ability to successfully implement our exploration, construction and mining plans, the
success of permitting the Gahcho Kué Project, and overall demand for diamonds. While the Company considers these assumptions
to be reasonable based on the information currently available to it, they may prove to be incorrect. See “Risk Factors”.



CAUTIONARY NOTE TO U.S. INVESTORS REGARDING
RESOURCE AND RESERVE ESTIMATES – MINING PROPERTIES



This Annual Report on Form 20-F has been
prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements of
United States securities laws. The terms “mineral reserve”, “proven mineral reserve” and “probable
mineral reserve” are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 – Standards
of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the
“CIM Definition Standards”) - CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM
Council, as amended. These definitions differ from the definitions in United States Securities and Exchange Commission (“SEC”)
Industry Guide 7 (the “SEC Guidelines”) under the United States Securities Act of 1993, as amended (the “Securities
Act”). Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required
to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves
and the primary environmental analysis or report must be filed with the appropriate governmental authority.



xix







In addition, the terms “mineral resource”,
“measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are
defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and
are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to
assume that any part or all of mineral deposits in these categories will ever be converted into reserves. “Inferred mineral
resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category.
Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies,
except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically
or legally mineable. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations;
however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC
Industry Guide 7 standards as in place tonnage and grade without reference to unit measures.



Accordingly, information contained in this
Annual Report on Form 20-F and the documents incorporated by reference herein contain descriptions of our mineral deposits that
may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements
under the United States federal securities laws and the rules and regulations thereunder.



NOTE REGARDING FINANCIAL STATEMENTS
AND EXHIBITS



The financial statements and exhibits referred
to herein are filed with this report on Form 20-F in the United States. This report is also filed in Canada as an Annual Information
Form. Canadian investors should also refer to the annual consolidated financial statements of the Company as at December 31,
2013, as filed with the applicable Canadian Securities regulators on SEDAR (the Canadian Securities Administrators' System for
Electronic Document Analysis and Retrieval) under "Audited Annual Financial Statements - English".



METRIC EQUIVALENTS



For ease of reference, the following factors
for converting metric measurements into imperial equivalents are provided:



|To Convert From Metric |  | To Imperial        |  | Multiply by
|---------------------- |  | ------------------ |  | -----------
|Hectares               |  | Acres              |  | 2.471      
|Metres                 |  | Feet (ft.)         |  | 3.281      
|Kilometres (km.)       |  | Miles              |  | 0.621      
|Tonnes                 |  | Tons (2000 pounds) |  | 1.102      
|Grams/tonne            |  | Ounces (troy/ton)  |  | 0.029      



xx







PART I



|Item 1. | Identity of Directors, Senior Management and Advisors
|------- | -----------------------------------------------------



Not Applicable



|Item 2. | Offer Statistics and Expected Timetable
|------- | ---------------------------------------



Not Applicable



|Item 3. | Key Information
|------- | ---------------



| | A. | Selected financial data.
| | -- | ------------------------



You should read the following
selected financial data together with Item 5, "Operating and Financial Review and Prospects", the Consolidated Financial
Statements in Item 18 and the other information in this Annual Report. The selected financial data presented below is derived from
our Consolidated Financial Statements.



The Company's consolidated financial
statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board (“IASB”).



The Company's financial statements
are set forth in Canadian dollars.



The consolidated financial information in the below
tables for the years ended 2012, 2013 and 2014 was prepared in accordance with IFRS as issued by the IASB.



|For the year ending (except as noted)                                          
|-------------------------------------------------------------------------------
|All in CDN$1,000's except Earnings
(loss) per Share and Number of
Common Shares
|Operating Revenue                                                              
|Working Capital                                                                
|Net Loss                                                                       
|Basic and diluted loss per share                                               
|Total Assets                                                                   
|Share Capital                                                                  
|Net Assets -                                                                   
|Number of Common Shares issued                                                 



No dividends have been declared
in any of the years presented above.











Exchange Rate Information



All dollar amounts set forth
in this report are in Canadian dollars, except where otherwise indicated. The following tables set forth, (i) for the five most
recent financial years, the average rate (the "Average Rate") of exchange for the Canadian dollar, expressed in U.S.
dollars, calculated by using the average of the U.S. noon exchange rates per the Bank of Canada for each trading day of the fiscal
year; and (ii) the high and low exchange rates for each of the previous six calendar months for the Canadian dollar, expressed
per the Bank of Canada.



The Average Rate is set out for
each of the periods indicated in the table below.



|Dec-14 |        |  | Dec-13 |     |        | Dec-12 |  |     | Dec-11 |  |  | Dec-10 |       
|------ | ------ |  | ------ | --- | ------ | ------ |  | --- | ------ |  |  | ------ | ------
|US$    | 0.8668 |  |        | US$ | 0.9402 |        |  | US$ | 0.9949 |  |  | US$    | 0.9891



The
high and low exchange rates for each month during the previous six months are as follows:



|Month          |  | High (US$) |        |  | Low (US$) | 
|-------------- |  | ---------- | ------ |  | --------- | 
|February 2015  |  |            | 0.8081 |  |           | 
|January 2015   |  |            | 0.8511 |  |           | 
|December 2014  |  |            | 0.8828 |  |           | 
|November 2014  |  |            | 0.89   |  |           | 
|October 2014   |  |            | 0.9006 |  |           | 
|September 2014 |  |            | 0.9196 |  |           | 



On March 25, 2015, the closing rate in Canadian
dollars as per the Bank of Canada (the "Exchange Rate") was $1 Canadian = US$0.7989.



2







| | B. | Capitalization and indebtedness.
| | -- | --------------------------------



Not Applicable



| | C. | Reasons for the offer and use of proceeds.
| | -- | ------------------------------------------



Not Applicable



| | D. | Risk factors.
| | -- | -------------



The Company, and thus the securities
of the Company, should be considered a highly speculative investment and investors should carefully consider all of the information
disclosed in this Annual Report prior to making an investment in the Company. In addition to the other information presented in
this Annual Report, the following risk factors should be given special consideration when evaluating an investment in any of the
Company's securities. Any or all of these risks could have a material adverse effect on the Company’s business, financial
condition, results of operations, cash flows and on the market price of its common stock.



a)	The
Company's limited operating history makes it difficult to evaluate the Company's current business and forecast future results.



The Company has only a limited
operating history on which to base an evaluation of the Company's current business and prospects, each of which should be considered
in light of the risks, expenses and problems frequently encountered in the early stages of growth of all companies, and in mining
companies in particular. The Company has not commenced mining operations and is still in the development stage of the Gahcho Kué
Project. The Company may not be able to obtain all of the permits which are necessary for it to commence operations. The Company’s
mining operations may not be successful. As a result of this limited operating history, period-to-period comparisons of the Company’s
operating results may not be meaningful and the results for any particular period should not be relied upon as an indication of
future performance.



(b) The diamond mining business is speculative and the Company may not be successful in implementing its plans to establish
a successful and profitable diamond mining business



Resource exploration and possible
development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable
efforts resulting not only from the failure to discover mineral deposits but from finding mineral deposits which, though present,
are insufficient in quantity and quality to return a profit from production. Diamonds acquired or discovered by the Company may
be required to be sold at a price which is reflective of the market at that time.



(c)
The Company has no significant source of operating cash flow and failure to generate revenues in the future could cause the Company
to go out business.



The
Company currently has no significant source of operating cash flow. The Company has limited financial resources. The Company's
ability to achieve and maintain profitability and positive cash flow is dependent upon the Company's ability to develop and achieve
profitable operations at the Gahcho Kué mine. The Company currently does not generate any cash flow. The Company’s
annual operating costs, excluding its share of costs of the development of the Gahcho Kué Project, are approximately $3.0
million.



3







| |  | (d) The Company is in the development stage for the Gahcho Kué Project and may never become
profitable.
| |  | -------------------------------------------------------------------------------------------------------



The Company's Gahcho Kué
Project is in the development stage. The Company’s future mining operation may never become profitable.



(e) The
preliminary process testing may not be accurate in predicting the actual presence and recoverability of diamonds on Company properties.



Process testing is limited to
small scale testing based on a number of laboratory test programs, trade-off studies and design evaluations. There can be no assurance
that diamonds recovered in small scale tests will be duplicated in large scale tests under on-site conditions or in production
scale. Difficulties may be experienced in obtaining the expected diamond recoveries when scaling up to a production scale process
plant.



(f) The
Company may not have adequate funds to explore properties other than the Gahcho Kué Project.



The Company may not have the
ability to pay for exploration or development costs on any other properties it may acquire. If such funds were available, there
is no assurance that expending such funds would result in discovery of any diamondiferous kimberlite.



(g)
The Company has a history of losses and is likely to continue to incur losses for the foreseeable future.



The Company has a history of
losses and is likely to continue to incur losses for the foreseeable future. During the fiscal years ended December 31, 2014, 2013,
and 2012, the Company incurred net losses.



| | · | $4.394 million loss for the year ended
December 31, 2014
| | - | --------------------------------------------------------



| | · | $26.604 million loss for the year ended
December 31, 2013; and
| | - | --------------------------------------------------------------



| | · | $3.338 million loss for the year ended
December 31, 2012.
| | - | ---------------------------------------------------------



As of December 31, 2014, the
Company had an accumulated deficit of $125.212 million. There can be no assurance that the Company will ever be profitable.



None of the Company's properties
have advanced to the commercial production stage, and the Company has no history of earnings or cash flow from operations and,
as an exploration and development company, has only a history of losses.



(h) The Company
may never recover the amounts it has capitalized for mineral property costs.



The recoverability of the amounts
capitalized for mineral properties in the Company's consolidated financial statements is dependent upon the ability of the Company
to complete exploration and development, the discovery of economically recoverable reserves, and, if warranted, upon future profitable
production or proceeds from disposition of some or all of the Company's mineral properties.



| |  | (i) The Company’s failure to raise required financing in the future could cause the Company
to go out of business.
| |  | ------------------------------------------------------------------------------------------------------------------



4







As of December 31, 2014, the Company
had cash and short-term investments of approximately $81.0 million and working capital of approximately $46.8 million. During the
past two fiscal years ended December 31, 2014 and December 31, 2013, the Company used approximately $39.4 million in cash flows
in operating activities including approximately $6.8 million during the year ended December 31, 2014, and $32.6 million during
the year ended December 31, 2013.



The Company's administrative
and other expenses are expected to be approximately $3.3 million for the next year, in addition to an estimated $223.4 million
for the Company’s proportional share of expenses for the Gahcho Kué joint Arrangement for 2015.



In order to advance the development
of the Gahcho Kué Project, the Company during 2014 raised $173,769,812 by way of private placements and anticipates finalizing
a project debt facility of US$370 million as well as a cost overrun facility of US$75 million to fund the Company’s proportional
share of expenses for the development of the Gahcho Kué Project by early April 2015, however there is no certainty that
this financing will be available.



If the Gahcho
Kué Project is delayed or the project debt facility of US$370 million is not completed, the cost overrun facility will not
be sufficient to complete the project and the Company may be required to raise additional capital through equity and/or debt financings
on terms that may be dilutive to its shareholders’ interests in the Company and the value of their common shares. The Company
may consider share offerings, private placements, rights offerings, credit and debt facilities, as well as the exercise of outstanding
options or other arrangements to meet its capital requirements in the future. Such arrangements may have a material adverse effect
on the Company’s business or results of operations. As well, there is no guarantee that the Company will be able to raise
additional capital, or to raise additional capital on terms and conditions which it finds acceptable. If the Company is not able
to raise sufficient capital, it may not be able to grow the Company, or it may be forced to cease doing business.



(j) Gahcho
Kué Project probable reserves.



The Gahcho Kué Project
is the Company’s only property and is in the development stage. The Gahcho Kué Project has probable reserves in three
of the four kimberlite bodies at Kennady Lake. See “Item 4D - Property, plants and equipment - Principal Properties”.
It is not guaranteed that these reserves when mined will be economic.



| |  | (k) If the Company does not hold good title to properties, its ability to explore and eventually
mine them could be prevented or restricted.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------



The Company’s business
depends upon having clear title to its properties and its ability to explore, develop and mine its properties without undue restriction.
If any of its properties are subject to prior unregistered agreements that restrict the use of the properties, or if it does not
hold title to the properties as it believes it does, its ability to explore, develop and mine on those properties could be limited
or prevented completely. This would have a material adverse effect on the Company and its results of operation.



5







(l)
Diamond prices can fluctuate significantly, and as a result, the Company’s results of operation may fluctuate significantly.



The market for rough diamonds
is subject to strong influence from demand in the United States, Japan, China and India, which are the largest markets for polished
diamonds, and supply from major producers such as Alrosa of Russia and Debswana of Botswana. The price of diamonds has historically
fluctuated.  The price of diamonds dropped sharply after September 11, 2001. Between 2003 and 2006 diamond prices increased
on average by approximately 15%.  In 2007, rough diamond prices increased by an average of 25%, and in the first five months
of 2008, by a further 11%.  From about mid-2008 to mid-April 2009, rough diamond prices fell sharply with concerns of the
global economic environment of the time.  By mid-April 2009, rough diamond prices rebounded to pre-global recession levels. 
During 2010, rough diamond prices increased by approximately 30%.  This strengthening continued through the first half of
2011 when diamond prices reached historic highs.  During the second half of 2011, diamond prices dropped sharply resulting
in an overall net increase for the twelve months of approximately 17%. According to industry leaders, in 2012 rough diamond prices
dropped by approximately 12 percent and remained largely unchanged through 2013. During 2014, rough diamond prices were generally
flat year over year. While the supply/demand fundamentals for diamonds would indicate good price support and steadily rising prices
in the future, such fluctuations make it difficult to predict future diamond prices with a high degree of certainty. To mitigate
against this, the Company uses conservative modeled diamond prices in its economic studies and mine planning. Nonetheless, the
Company’s future results of operation may fluctuate significantly if rough diamond price volatility continues into the future.



(m)
The Company may incur significant costs to comply with Environmental and Government Regulation



The current and anticipated future
operations of the Company, including development activities and commencement of production on its properties, require permits from
various federal, territorial and local governmental authorities and such operations are and will be governed by laws and regulations
governing prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal,
toxic substances, land use, environmental protection, mine safety and other matters. Companies engaged in the development and operation
of mines and related facilities generally experience increased costs, and delays in development, production and other schedules
as a result of the need to comply with applicable laws, regulations and permits. The Company's development activities and its potential
mining and processing operations in Canada are subject to various Canadian Federal and Territorial laws governing land use, the
protection of the environment, prospecting, development, production, exports, taxes, labour standards, occupational health, waste
disposal, toxic substances, mine safety and other matters.



Such exploration, development
and operation activities are also subject to substantial regulation under these laws by governmental agencies and may require that
the Company obtain permits from various governmental agencies. The Company believes it is in substantial compliance with all material
laws and regulations which currently apply to its activities. There can be no assurance, however, that all permits which the Company
may require for construction of mining facilities and conduct of mining operations will be obtainable on reasonable terms or that
such laws and regulations, or that new legislation or modifications to existing legislation, would not have an adverse effect on
any exploration, development or mining activities which the Company might undertake.



Further detail on governmental
regulation may be found in “Item 4 - Business Review - Government Regulation”, below.



6







Failure to comply with applicable
laws, regulations and permit requirements may result in enforcement actions thereunder, including orders issued by regulatory or
judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures,
installation of additional equipment or remedial actions. Parties engaged in mining operations may be required to compensate those
suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violation
of applicable laws or regulations. The amount of funds required to comply with all environmental regulations and to pay for compensation
in the event of a breach of such laws may exceed the Company's ability to pay such amounts.



Amendments to current laws, regulations
and permits governing operations and activities of mining companies, or more stringent implementation of existing or new laws,
could have a material adverse impact on the Company and cause increases in capital expenditures or production costs or reduction
in levels of production at producing properties or require abandonment or delays in development of new mining facilities.



(n)
Climate and transportation costs may increase and have a negative effect on the Company’s results of operation.



The Gahcho Kué Project
is subject to climate and transportation risks because of its remote northern location. Such factors can add to the costs of development
and operation, thereby increasing costs and negatively affecting profitability. The availability of weather conducive to building
and operating the Tibbitt to Contwoyto Winter Road is particularly critical to the development of the mine, and production.



(o)
The Company is dependent upon its joint arrangement partner for the success of the Gahcho Kué Project.



The Company, and the success of
the Gahcho Kué Project, are dependent on the efforts, expertise and capital resources of our joint arrangement partner,
De Beers Canada, and its parent De Beers. De Beers Canada is the project operator and is responsible for exploring, permitting,
developing and operating the Gahcho Kué Project. In addition, De Beers Canada is providing its share of financing for the
Gahcho Kué Project. The Company is dependent on De Beers Canada for accurate information about the Gahcho Kué Project,
and the proper and timely progress of permitting and development.



(p) Operating
Hazards and Risks



Diamond exploration and mining
involves many risks. Operations in which the Company has a direct or indirect interest will be subject to all the hazards and risks
(such as accidents, injuries, and hazardous waste) normally incidental to exploration, development and production of resources,
any of which could result in work stoppages, damage to property and possible environmental damage.



(q) There are numerous
factors beyond the control of the Company that may affect the marketability of any diamonds discovered.



Factors beyond the control of
the Company may affect the marketability of any diamonds produced. Significant price movements over short periods of time may be
affected by numerous factors beyond the control of the Company, including international economic and political trends, expectations
of inflation, currency exchange fluctuations (specifically, the U.S. dollar relative to the Canadian dollar and other currencies),
interest rates and global and/or regional consumption patterns. The effect of these factors on the prices of diamonds and therefore
the economic viability of any of the Company's projects cannot accurately be predicted.



7







(r)
The Company's expectations reflected in forward-looking statements may prove to be incorrect.



This Form 20-F includes "forward-looking
statements". A shareholder or prospective shareholder should bear this in mind when assessing the Company's business. All
statements, other than statements of historical facts, included in this annual report, including, without limitation, the statements
under and located elsewhere herein regarding industry prospects and the Company's financial position are forward-looking statements.
Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such expectations
may prove to be incorrect.



(s) The Mineral Resources
Industry is intensely competitive and the Company competes with many companies with greater financial means and technical facilities.



The resource industry is intensely
competitive in all of its phases, and the Company competes with many companies possessing greater financial resources and technical
facilities. Competition could adversely affect the Company's ability to acquire suitable producing properties or prospects for
exploration in the future.



(t)
Aboriginal Rights and Title



Governments
in Canada must consult with aboriginal peoples with respect to grants of mineral rights and the issuance of or amendment to project
authorizations. Consultation regarding rights or claimed rights of aboriginal people may require accommodations, including undertakings
with respect to employment and other matters. This may affect the Company’s timetable and costs of development of mineral
properties. Aboriginal rights or title claims could affect the Company’s existing operations, in addition to its future acquisitions.
These legal requirements, among other things, may affect the Company’s ability to develop the Gahcho Kué Project and
other mineral properties or may materially delay the development of such properties.



(u)
Future equity financings which the Company may undertake would cause shareholders’ interests in the Company to be diluted.



The Company intends to obtain
required financing for the development of the Gahcho Kue project through a senior secured term loan facility of up to US$370 million
(the “Facility”) and by issuing common shares by way of a rights offering for gross proceeds of $95 million. The Company
believes that on the completion of the project debt financing expected to take place by early April 2015, that together with the
equity, the Company will be able to fund its proportionate share of the development of the Gahcho Kué diamond mine and does
not expect to seek additional equity financing, however if the Company is required to seek additional equity financing, the issuance
of additional shares will dilute the interests of the Company's current shareholders. The amount of the dilution would depend on
the number of new shares issued and the price at which they are issued. The Company has raised funds in recent years through share,
option and warrant issuances. As of December 31, 2014, the Company had cash and short-term investments of approximately $81.0 million
and working capital of approximately $46.8 million. To develop the Gahcho Kué mine, and perform exploration on any other
properties acquired, the Company will need to investigate sources of additional liquidity to increase the cash balances required
in the future. These additional sources include, but are not limited to, share offerings, private placements, rights offerings,
credit and debt facilities, as well as the exercise of outstanding options. There can be no assurance that the Company will be
able to raise additional funds as needed, or that funds raised, if any, would be on terms and conditions acceptable to the Company.
The Company’s annual cash administrative operating costs, excluding the costs directly associated with the Gahcho Kué
Project, are approximately $3.0 million.



8







(v) If outstanding options
to buy Company stock are exercised, existing shareholders’ interests in the Company will be diluted.



As at March 26, 2015, there were
1,400,000 options (including options not fully vested) outstanding with exercise prices ranging from $4.06 to $6.13 (expiring at
various dates). The stock options, if fully exercised, would increase the number of shares outstanding by 1,400,000. Such options,
if fully exercised, would constitute about 0.01% (out of 135,204,550 shares (136,604,550 issued and outstanding, plus total outstanding
options)) of the Company's resulting share capital as at March 26, 2015. It is unlikely that outstanding options would be exercised
unless the market price of the Company's common shares exceeds the exercise price at the date of exercise. The exercise of such
options and the subsequent resale of such Common shares in the public market could adversely affect the prevailing market price
and the Company's ability to raise equity capital in the future at a time and price which it deems appropriate. The Company may
also enter into commitments in the future which would require the issuance of additional common shares and the Company may grant
new share purchase warrants and stock options. Any share issuances from the Company's treasury will result in dilution to existing
shareholders.



(w)  Members
of our Management and Board of Directors may have outside interests which conflict with the Company or its shareholders.



The President and CEO and Director,
Patrick Evans, and the Vice President Finance, CFO and Corporate Secretary, Bruce Ramsden, have Consulting Agreements with the
Company (see “Item 6C - Board Practices”). In addition, certain officers and directors of the Company are associated
with other natural resource companies that acquire interests in mineral properties. Such associations may give rise to conflicts
of interest from time to time.



(x)
If the Company is not able to attract and maintain qualified key management personnel, it may not be able to successfully implement
its planned business activities and growth.



The nature of the Company's business,
its ability to continue its exploration, development and permitting activities and to thereby develop a competitive edge in its
marketplace depends, in large part, on its ability to attract and maintain qualified key management personnel. Competition for
such personnel is intense, and there can be no assurance that the Company will be able to attract and retain such personnel. The
Company's development to date has depended, and in the future will continue to depend, on the efforts of Patrick Evans. See “Item
7B -Related party transactions” and “Item 6C - Board Practices”. Loss of the key person could have a material
adverse effect on the Company. The Company does not maintain key-man life insurance on Patrick Evans.



9







(y)   The
Company’s stock price is subject to significant fluctuations.



Prices for the Company's shares
on the TSX and on the NYSE MKT (formerly NYSE Amex) and NASDAQ, have been extremely volatile. The Company commenced trading on
the NASDAQ on December 31, 2014. The price for the Company's common shares on the TSX ranged from $4.85 (low) and $6.08 (high)
during the fiscal year ended December 31, 2014, and from $3.88 (low) to $5.87 (high) during the fiscal year ended December 31,
2013. The price on the NYSE MKT/NASDAQ ranged from $4.16 US (low) and $5.58 US (high) during the fiscal year ended December 31,
2014, and from $3.83 US (low) to $5.59 US (high) during the fiscal year ended December 31, 2013. Any investment in the Company's
securities is therefore subject to considerable fluctuations in value.



(z) The Company has not
paid dividends in the past and does not anticipate paying them in the foreseeable future.



Since
its inception, the Company has not paid any cash dividends on its common stock and does not anticipate paying any cash dividends
on its common stock until significant cash flow is generated. Without dividends on its common stock, shareholders will be able
to profit from an investment only if the price of the stock appreciates before the shareholder sells it.



(aa) Currency rate fluctuations
may have a material effect on our financial position, results of operations, and timing of the development of the Company’s
properties.



Feasibility and other studies
conducted to evaluate the Company's properties are typically denominated in U.S. dollars, and the Company conducts a significant
portion of its operations and incurs a significant portion of its administrative and operating costs in Canadian dollars. The exchange
rate for converting U.S. dollars into Canadian dollars has fluctuated in recent years. Accordingly, the Company is subject to fluctuations
in the rates of currency exchange between the U.S. dollar and the Canadian dollar, and these fluctuations in the rates of currency
exchange may materially affect the Company's financial position, results of operations and timing of the development of its properties. In
particular, a strong Canadian dollar relative to the US dollar would negatively impact the Gahcho Kué Project.



(bb)
Historically, the Company has been dependent on the support of De Beers and there is no assurance that their support will continue
in the future.



The exploration of the Gahcho
Kué Project has historically been funded by De Beers Canada. As well, De Beers Canada is the Operator of the Project, and
has an equity investment in the Company. With the execution of the 2009 Agreement, De Beers and the Company share funding responsibility
for the Gahcho Kué Project. Under the 2009 Agreement, the Company and De Beers are required to fund their share of costs
for future operations. As well, the Company is required to make certain repayments of agreed historic costs of the Gahcho Kué
Project, funded by De Beers, if and when certain events occur. If either party is unable to fund their share of historic costs,
or, if the Company defaults on its required payments of historic costs if and when they are due, in addition to interest on late
or defaulted payments, marketing rights can be diluted for the defaulting party. As well, there is no assurance that the Company
will have the required funds on hand when the payments are required to be made. Finally, there is no assurance that the level of
support provided by De Beers will continue in the future. In addition, during the development phase, if either party is unable
to fund its proportionate share, this party me be diluted.



10







(cc) It will be difficult
for any shareholder of the Company to commence legal action against the Company’s executives. Enforcing judgments against
them or the Company will be difficult.



As the Company is a Canadian
company, it may be difficult for U.S. shareholders of the Company to effect service of process on the Company or to realize on
judgments obtained against the Company in the United States.  Some of the Company’s directors and officers are residents
of Canada and a significant part of the Company’s assets are, or will be, located outside of the United States. As a result,
it may be difficult for shareholders resident in the United States to effect service of process within the United States upon the
Company, directors, officers or experts who are not residents of the United States, or to realize in the United States judgments
of courts of the United States predicated upon civil liability of any of the Company directors or officers under the United States
federal securities laws. If a judgment is obtained in the U.S. courts based on civil liability provisions of the U.S. federal securities
laws against the Company or its directors or officers, it will be difficult to enforce the judgment in the Canadian courts against
the Company and any of the Company's non-U.S. resident executive officers or directors. Accordingly, United States shareholders
may be forced to bring actions against the Company and its respective directors and officers under Canadian law and in Canadian
courts in order to enforce any claims that they may have against the Company or the Company’s directors and officers. Subject
to necessary registration, as an extra provincial company, under applicable provincial corporate statutes in the case of a corporate
shareholder, Canadian courts do not restrict the ability of non-resident persons to sue in their courts. Nevertheless it may be
difficult for United States shareholders to bring an original action in the Canadian courts to enforce liabilities based on the
U.S. federal securities laws against the Company and any of the Company's Canadian executive officers or directors.



(dd) The MPV Shares may be
delisted from NASDAQ, and if this occurs, shareholders may have difficulty converting their investment into cash efficiently.



NASDAQ has established certain
standards for the continued listing of a security on this exchange. If the MPV Shares were to be excluded from NASDAQ, the prices
of the MPV Shares and the ability of shareholders to sell such stock would be adversely affected. If the Company were to be delisted,
the Company would be required to comply with the initial listing requirements to be relisted on NASDAQ.



(ee)
The Company is likely a "passive foreign investment company" which may have adverse U.S. federal income tax consequences
for U.S. shareholders.



U.S. investors in the Common
Shares should be aware that the Company believes it was classified as a PFIC during the tax year ended December 31, 2014, and based
on current business plans and financial expectations, the Company believes that it will be a PFIC for the tax year ending December
31, 2015, and may be a PFIC in subsequent tax years. If the Company is a PFIC for any year during a U.S. shareholder’s holding
period, then such U.S. shareholder generally will be required to treat any gain realized upon a disposition of Common Shares, or
any so-called “excess distribution” received on its Common Shares, as ordinary income, and to pay an interest charge
on a portion of such gain or distributions, unless the shareholder makes a timely and effective "qualified electing fund"
election (“QEF Election”) or a "mark-to-market" election with respect to the Common Shares. A U.S. shareholder
who makes a QEF Election generally must report on a current basis its share of the Company's net capital gain and ordinary earnings
for any year in which the Company is a PFIC, whether or not the Company distributes any amounts to its shareholders. However, U.S.
shareholders should be aware that there can be no assurance that the Company will satisfy record keeping requirements that apply
to a qualified electing fund, or that the Company will supply U.S. shareholders with information that such U.S. shareholders require
to report under the QEF Election rules, in the event that the Company is a PFIC and a U.S. shareholder wishes to make a QEF Election.
Thus, U.S. shareholders may not be able to make a QEF Election with respect to their Common Shares. A U.S. shareholder who makes
the mark-to-market election generally must include as ordinary income each year the excess of the fair market value of the Common
Shares over the taxpayer’s basis therein. This paragraph is qualified in its entirety by the discussion below under the heading
“United States Federal Income Tax Consequences.” Each U.S. shareholder should consult its own tax advisor regarding
the PFIC rules and the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares.



11







|Item 4. | Information on the Company
|------- | --------------------------



| | A. | History and development of the company.
| | -- | ---------------------------------------



The Corporate Organization



Mountain Province Diamonds Inc.,
formerly Mountain Province Mining Inc., was formed on November 1, 1997 by the amalgamation (the "MPV Amalgamation") of
Mountain Province Mining Inc. ("Old MPV") and 444965 B.C. Ltd. ("444965") pursuant to an amalgamation agreement
(the "MPV Amalgamation Agreement") dated as of August 21, 1997.



Under the terms of the MPV Amalgamation
Agreement, as at November 1, 1997, each Old MPV share was exchanged for one MPV Share and each 444965 share was exchanged for approximately
0.80 of one MPV Share. The conversion ratios reflected the respective interests of Old MPV and 444965 in the AK-CJ Properties prior
to the date of the MPV Amalgamation.



Old MPV was incorporated under
the laws of British Columbia on December 2, 1986 under the British Columbia Company Actand was engaged in the exploration
of precious and base mineral resource properties until the date of the MPV Amalgamation. Prior to the date of the MPV Amalgamation,
Old MPV held an undivided 50% interest in the AK-CJ Properties and an interest in each of the other properties which are currently
held by MPV, as described below.



444965, a wholly-owned subsidiary
of Glenmore Highlands Inc., (Glenmore being a former controlling shareholder of the Company as defined under the Securities
Act, British Columbia) prior to the MPV Amalgamation, was incorporated under the laws of British Columbia on August 20, 1993.
Prior to the MPV Amalgamation, 444965's only material asset consisted of a 40% undivided interest in the AK-CJ Properties.



As of March 31, 2000, the Company
had one wholly-owned subsidiary, Mountain Province Mining Corp. (USA), which has since been voluntarily dissolved.



On April 4, 2000, the Company
incorporated a wholly-owned subsidiary, Mountain Glen Mining Inc. in Alberta. Pursuant to an arrangement agreement (the "Arrangement
Agreement") with Glenmore dated May 10, 2000, Glenmore was amalgamated with Mountain Glen effective as of June 30, 2000 to
form a wholly-owned subsidiary (also known as "Mountain Glen Mining Inc.") of the Company. All Glenmore Shares were exchanged
for common shares in the Company on the basis of 0.5734401 MPV Shares to one Glenmore Share, and Glenmore Shares were concurrently
cancelled. All of the assets of Glenmore became assets of Mountain Glen, including 16,015,696 MPV Shares previously held by Glenmore.



12







Glenmore had two wholly-owned
subsidiaries, Baltic Minerals BV, incorporated in the Netherlands, and Baltic Minerals Finland OY, incorporated in Finland. Pursuant
to the Arrangement Agreement, these companies became wholly-owned subsidiaries of the Company.



The Company changed its name
from Mountain Province Mining Inc. to Mountain Province Diamonds Inc. effective October 16, 2000. It commenced trading under its
new name on the TSX on October 25, 2000.



Pursuant to an Assignment and
Assumption Agreement dated March 25, 2004 between the Company and Mountain Glen, Mountain Glen distributed its property and assets
in specie to the Company with the object of winding up the affairs of Mountain Glen. The property transferred included Mountain
Glen's shares in Baltic Minerals BV and the 16,015,696 MPV Shares. On March 30, 2004, the 16,015,696 MPV Shares were cancelled
and returned to treasury.



Mountain Glen was voluntarily
dissolved on August 4, 2004.



Baltic Minerals BV and its subsidiary
Baltic Minerals Finland OY were voluntarily dissolved in 2006.



Pursuant to the repeal of the
British Columbia Company Act and its replacement by the British Columbia Business Corporations Act(the "New
Act"), the Company transitioned to the New Act and adopted new Articles of Incorporation. On September 20, 2005, the Company’s
shareholders approved a special resolution for the continuance of the Company into Ontario, and the Company amended its articles
and continued incorporation under the Business Corporations Act (Ontario), transferring from the Company Act (British Columbia).



On July 30, 2014 Camphor, incorporated
on May 9, 1986 (as Sierra Madre Resources Inc.), continued into Ontario, and Camphor amended its articles and continued incorporation
under the Business Corporations Act (Ontario), transferring from the Company Act (British Columbia).



On October 1, 2014, Camphor,
and the Company were amalgamated under the name “Mountain Province Diamonds Inc.”



On October 2, 2014, 2435386 Ontario
Inc. (“Newco”) was incorporated as a wholly owned subsidiary of the Company. At the request of the project debt facility
lenders, the participating interest of the Company in the Gahcho Kué Project was transferred to Newco in exchange for common
shares of Newco.



On October 3, 2014, 2435572 Ontario
Inc. was incorporated as a wholly owned subsidiary of the Company.



On October 3, 2014, the Company
transferred the shares of Newco to 2435572 Ontario Inc.



The Company is domiciled in Canada.



The names of the Company's subsidiaries,
their dates of incorporation and the jurisdictions in which they were incorporated as at the date of filing of this Annual Report,
are as follows:





13







|Name of Subsidiary   |  | Date of Incorporation |  | Juridiction of Incorporation
|-------------------- |  | --------------------- |  | ----------------------------
|2435386 Ontario Inc. |  | October 2, 2014       |  | Ontario Canada              
|2435572 Ontario Inc. |  | October 3, 2014       |  | Ontario Canada              



On February 27, 2012, the Company
incorporated a wholly-owned subsidiary named Kennady Diamonds Inc. under the Ontario Business Corporations Act. This subsidiary
was formed for the purpose of effecting the transfer of Mountain Province’s interest in the Kennady North Project in Northwest
Territories, Canada and operations to a new company as contemplated under a Mountain Province plan of arrangement which closed
July 6, 2012 (see “Kennady North” discussion under “Other Properties”). Until the completion of the plan
of arrangement, Kennady Diamonds Inc. was a wholly-owned subsidiary of Mountain Province. Upon completion of the plan of arrangement,
Mountain Province distributed the shares of Kennady Diamonds to Mountain Province shareholders on the basis of one Kennady Diamonds’
share for every five shares of Mountain Province held by shareholders.



The direct and indirect subsidiaries
of the Company, represented diagrammatically, are as follows:







The Company's registered, records,
administrative, and executive office is at 161 Bay Street, Suite 2315, PO Box 216, Toronto, Ontario, Canada M5J 2S1, the telephone
number is (416) 361-3562, and the fax number is (416) 603-8565.



The Company's initial public
offering on the VSE was pursuant to a prospectus dated July 28, 1988 and was only offered to investors in British Columbia. The
Company listed its shares on the TSX (Trading Symbol "MPV") on January 22, 1999 and on the Nasdaq Smallcap Market (Trading
Symbol "MPVIF") on May 1, 1996. Its shares were delisted from the Vancouver Stock Exchange (now known as the TSX Venture
Exchange and prior to that, as the CDNX) on January 31, 2000 and from the Nasdaq Smallcap Market on September 29, 2000. Presently,
the Company's shares trade on the TSX under the symbol "MPV" and also on the NASDAQ under the symbol “MDM”.
Prior to December 31, 2014, the Company’s shares traded on the NYSE MKT (formerly NYSE Amex). Prior to April 4, 2005, the
Company's shares traded on the OTCBB under the symbol "MPVI". The Company is also registered extra-provincially in the
Northwest Territories, and is a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick,
Nova Scotia, Prince Edward Island, and Newfoundland.The Company files reports in the United States pursuant to Section
13 of the Securities Exchange Act.



14







The Company’s transfer
agent is Computershare Investor Services Inc. located at 100 University Avenue, 8th Floor, Toronto, Ontario, Canada, M5J 2Y1.



Principal Capital Expenditures
and Divestitures



There are no principal capital
expenditures and divestitures currently in progress.



Takeover offers



There were no public takeover
offers by third parties in respect of the MPV Shares or by the Company in respect of other companies' shares during the last and
current financial year.



Acquisitions and Dispositions



On October 10, 2002, the Company
granted an option for the acquisition by Vision Gate Ventures Limited (now known as Northern Lion Gold Corp.) of a 70% interest
in its Haveri Gold Property, which was not considered to be a property that was material to the Company. On October 4, 2004, the
Company agreed to exchange the Company's 30% interest in the Haveri Gold Property for 4,000,000 common shares of Northern Lion
Gold Corp. The shares were subject to a two-year hold period and there were volume restrictions on re-sale thereafter. The 4,000,000
common shares of Northern Lion Gold Corp. were sold in July 2007.



Acquisition of Camphor Ventures
Inc.



On July 5, 2006, the Company
announced that it had entered into an agreement with certain Camphor Ventures Inc. (“Camphor” or “Camphor Ventures”)
shareholders to acquire approximately 33.5 percent of the issued and outstanding shares of Camphor through a private agreement
exempt share exchange on the basis of 0.3975 MPV Shares for each Camphor share. The acquisition was completed on July 24, 2006.



On January 19, 2007, the Company
announced that Camphor had accepted an offer letter from the Company in terms of which the Company offered, subject to certain
conditions, to acquire all of the outstanding securities of Camphor Ventures on the basis of 0.41 MPV Shares, options or warrants
(as the case may be) per Camphor common share, option, or warrant. Offering documents and the Camphor Directors’ Circular
were mailed to Camphor shareholders on February 23, 2007, and the offer remained open until March 30, 2007, following which Mountain
Province took up the Camphor shares tendered into the offer increasing the Company’s interest in Camphor to over 90 percent.
The offer was subsequently extended until April 16, 2007, following which the Company’s interest in Camphor increased to
96% percent on a fully diluted basis. On April 19, 2007, the Company issued a Notice of Compulsory Acquisition to acquire the balance
of the outstanding shares of Camphor. The Notice expired June 19, 2007 and the Company took up the balance of the Camphor shares.
Camphor Ventures was de-listed in July 2007. On October 1, 2014, Camphor and the Company amalgamated under the name “Mountain
Province Diamonds Inc.”



15







Disposition of Kennady North
Project



On March 12, 2012, Kennady
Diamonds Inc. and Mountain Province entered into an arrangement agreement (the “Kennady Arrangement Agreement”) pursuant
to which Mountain Province agreed to would transfer its interest in the Kennady North Project, in the Northwest Territories in
Canada, including permits, mining claims, rights and title, to Kennady Diamonds Inc. in exchange for common shares of Kennady Diamonds
Inc.



Upon completion of the Kennady
Arrangement on July 6, 2012, Kennady Diamonds Inc. issued 16,143,111 shares to Mountain Province which was distributed along with
the one share held by Mountain Province to the Mountain Province shareholders in exchange for the assets and cash transferred,
as contemplated by the Kennady Arrangement. The transactions contemplated by the Kennady Arrangement was completed on July 6, 2012.
Kennady Diamonds Inc. began trading on the TSX Venture Exchange on July 10, 2012 under the ticker symbol “KDI”.



| | B. | Business overview.
| | -- | ------------------



1.1    
Introduction



The Company is a natural resource
property exploration and development company. At this time, the Company has interest in one natural resource property – its
49% interest in the Gahcho Kué Property located in the Northwest Territories of Canada. See "Item 4D - Property, plants
and equipment".



Bulk sampling and drilling on
the Gahcho Kué Project is complete, as is the Definitive Feasibility Study which demonstrates an economically viable project.
The Project is currently in the permitting and development stage. There are no revenues from the Company’s natural resource
property.



In July and November 2010, the
Company acquired eight (8) mineral claims just north and west of the Gahcho Kué Project mineral leases. The Company referred
to these eight claims and its five 100%-owned mineral leases as the Kennady North Project. During 2011, the Kennady North Project
underwent a desktop study to compile the historic exploration information in order to assess what exploration, if any, could be
done on these 13 claims and leases. In 2012, through a plan of arrangement, Mountain Province’s interest in the Kennady North
Project and cash were transferred to Kennady Diamonds Inc. See “Other Properties” for further information on the Kennady
North Project and Kennady Diamonds Inc.



1.2    
Historical Corporate Development



AK-CJ Properties, and the
Gahcho Kué Project



In August 1992, the Company acquired
a 100% interest in the AK-CJ Properties that encompassed approximately 520,000 acres. Pursuant to an agreement dated November 18,
1993 (as amended), the Company optioned 40% of its interest in the AK-CJ Properties to 444965, a subsidiary of Glenmore.



Pursuant to an agreement dated
August 16, 1994 (as amended), the Company also optioned 10% of its interest in the AK-CJ Claims to Camphor. Following the merger
of the Company with 444965, the Company held a 90% interest in the AK-CJ Claims, and Camphor, the remaining 10%. Exploration work
in the form of soil sampling, aerial geophysical surveys and geochemical and geophysical analysis were undertaken on these properties
during the period from 1992 to 1995.



16







During fiscal 1995, the Company
focused the majority of its attention on the AK Property. In February 1995, a diamondiferous kimberlite was discovered (the
"5034" kimberlite pipe) and a program of delineation drilling was undertaken. Activity during this period on the Company's
other properties was minimal because of the focus on the AK Property.



During 1996, the Company completed
a 104-tonne mini-bulk sample from the 5034 kimberlite pipe. The results indicated an average grade of 2.48 carats per tonne. During
1997, the Company concluded a joint venture agreement (the "Letter Agreement") with Monopros, a wholly-owned subsidiary
of De Beers now known as De Beers Canada Inc., Camphor Ventures Inc., and other parties, and further amended it (as the Gahcho
Kué Joint Venture Agreement) in 2002, to develop the AK-CJ Properties. The Letter Agreement granted De Beers the sole and
exclusive right and option to acquire a 51% ownership interest in the AK Property in consideration of incurring certain expenditures.



During the 1997 exploration season,
De Beers Canada discovered three new kimberlite pipes on the AK Property: Tesla, Tuzo and Hearne. All are diamondiferous.



During the spring of 1998, De
Beers Canada conducted mini-bulk sampling on the three new pipes as well as the 5034 kimberlite pipe, the original pipe discovery
on the AK Property. The results were positive enough for De Beers to commit to a major bulk sample in 1999.



During 1999, De Beers Canada
completed a major bulk sample of the four major pipes. For the 5034 kimberlite pipe, a total of 1,044 carats were recovered from
609 tonnes of kimberlite. For the Hearne pipe, a total of 856 carats were recovered from 469 tonnes of kimberlite. For the Tuzo
pipe, a total of 533 carats were recovered from 523 tonnes of kimberlite. For the Tesla pipe, 64 carats were recovered from 184
tonnes of kimberlite. The Tesla pipe was too low grade to be considered as part of a mine plan.



On March 8, 2000, the Company
agreed to extend the feasibility study decision date, and De Beers Canada agreed to carry all exploration, development and other
project costs.



On August 4, 2000, De Beers Canada
presented the Desktop Study to the Company. Upon presentation, De Beers Canada was deemed to earn a 51% interest in the AK-CJ Properties.
Consequently, the Company was left with a 44.1% interest and Camphor with a 4.9% interest in the AK-CJ Properties. The main conclusion
of the Desktop Study was that only a 15 percent increase in diamond revenues was needed for De Beers Canada to proceed to the feasibility
stage.



On May 4, 2001, De Beers Canada
completed the bulk sample program of the Hearne and 5034 pipes. A total of approximately 307 tonnes and 550 tonnes of kimberlite
were recovered from the Hearne and 5034 pipes respectively. The modeled values of the diamonds recovered from the Hearne and 5034
pipes were reported on December 18, 2001 and the results were encouraging enough for De Beers to commit to another bulk sample
during the winter of 2002. The main purpose was to recover more high quality, top color diamonds, like the 9.9-carat diamond recovered
in the 2001 program.



The CJ Property claims substantially
lapsed in November 2001 and the remaining CJ Property claims lapsed on August 17, 2002.



17







During 2002, the Company entered
into the Gahcho Kué Joint Venture Agreement. This agreement provided that De Beers Canada could have earned up to a 55%
interest in the project by funding and completing a positive definitive feasibility study. The agreement also provided that De
Beers Canada could have earned up to a 60% interest in the project by funding development and construction of a commercial-scale
mine. This Gahcho Kué Joint Venture Agreement was amended and restated in July 2009 (see “Description of Property
– Amended and Restated Joint Venture Agreement”).



The winter 2002 bulk sample program
of the 5034 and Hearne pipes was completed on April 20, 2002. The modeled grades and values per carat for both pipes were used
to update the Desktop Study. De Beers Canada's 2003 updated Desktop Study showed that, due to the decrease in diamond prices since
September 11, 2001 and a lower U.S. dollar against the Canadian dollar, the projected return on the project would be slightly less
than that obtained previously. As a result of the indicated internal rate of return, well below the agreed hurdle rate of 15%,
De Beers decided to postpone a pre-feasibility decision until the next year when the Desktop Study would be updated again.



At the end of July 2003, De Beers
notified the Company that they had started work on a detailed internal cost estimate study on the Gahcho Kué Project that
incorporated the Kennady Lake diamond deposits. They based their decision on their belief that the improving geo-political and
economic conditions supported confidence in longer-term diamond price projections. In November 2003, the Joint Venture’s
management committee approved a budget of approximately $25 million for the study which started in January 2004, and was completed
mid-2005.



The projected profitability levels
were sufficiently encouraging to the Joint Venture to support the Joint Venture’s decision to proceed to the next phase of
permitting and advanced exploration to improve the resource confidence and input data for mine design to support further study.
On July 11, 2005, De Beers reported an increase in the modeled value of the diamonds for the Gahcho Kué Project with the
modeled values increasing by approximately 6, 7 and 8 percent for the Tuzo, Hearne and 5034 pipes respectively.



During 2006, 2007 and the winter
of 2008, advanced exploration and permitting work continued on the AK Property. For further particulars, reference should be made
to “Item 4D - Property, plants and equipment - Principal Properties - Resource Properties”.



In July 2009 the Company entered
into an Amended and Restated Joint Arrangement Agreement with De Beers Canada of which details are provided below.



In October 2010 the Company announced
the results of the Definitive Feasibility Study. The full Technical report was filed on EDGAR on December 3, 2010 under Form 6K
and on the relevant Securities Commissions in Canada on the System for Electronic Document Analysis and Retrieval (“SEDAR”)
on December 3, 2010.



Based on the positive results
of the Definitive Feasibility Study, the Company and De Beers approved the development of the Gahcho Kué diamond mine in
June, 2011, subject to the successful permitting of the project.



18







On July 22, 2013 Mountain Province
and De Beers Canada announced that the Mackenzie Valley Environmental Impact Review Board (MVEIRB) had completed the Gahcho Kué
Environmental Impact Assessment and recommended approval of the proposed Gahcho Kué diamond mine subject to certain measures
and follow-up programs.



In October 2013 the Canadian Federal
Minister of Aboriginal Affairs and Northern Development approved the development of the Gahcho Kué diamond mine subject
to the measures and follow-up programs recommended by the MVEIRB.



On December 2, 2013 Mackenzie
Valley Land and Water Board approved a pioneer Land Use Permit for the Gahcho Kué diamond mine, which allowed for the commencement
of land-based site works in preparation for the start of full construction in 2014.



In May 2014 the 2014 Technical
report was filed on EDGAR under Form 6K and on the relevant Securities Commissions in Canada on SEDAR. The authors of the report
concluded that the Gahcho Kué Project is economically viable, technically credible, and environmentally sound.



On August 12, 2014,De
Beers and the Company announcedthat the Mackenzie Valley Land and Water Board had issued the Gahcho Kué Type A Land
Use Permit and sent the Type A Water License for final approval to the Minister of Environment and Natural Resources (of the Government
of the Northwest Territories.



On September 25, 2014,De
Beers and the Company announced that the Gahcho Kué Project had received approval of the Type A Water License by the Minister
of Environment and Natural Resources of the Government of the Northwest Territories (GNWT), the Hon. Michael J. Miltenberger.



Other Properties



The Company regards only the
AK Property (the “Gahcho Kué Project”) as material at this time. The Company’s former Kennady North Project
is discussed only briefly in this document. For further particulars, reference should be made to “Item 4D - Property, plants
and equipment - Other Properties”.



Kennady North

The Company (outside of the Joint
Arrangement with De Beers Canada) had the following five mining leases at Kennady Lake, adjacent or close to the Gahcho Kué
Project, with their respective lease numbers –4340, 4342, 4466, 4467, and 4468. These five mining leases represent about
12,755 acres. In late 2010, the Company also staked eight claims around Gahcho Kué – Kwezi 01 to Kwezi 08. These claims
represent approximately 17,619 acres, and together with the five mining leases, comprise 30,374 acres. This was known as the Company’s
Kennady North Project. These mining leases and claims were not part of the 2009 Gahcho Kué Joint Arrangement Agreement with
De Beers Canada and were not considered part of the Gahcho Kué Project. Historical exploration on the Kennady North Project
was done starting in 1992 and continued until about 12 years ago when the Company and De Beers Canada focussed exploration efforts
on the Gahcho Kué Project. In 2011, the Company undertook a desktop study of the exploration work done in the past on the
Kennady North Project, and in late 2011, undertook an airborne gravity gradiometer survey over the Kennady North Project leases
and claims.



19







On March 12, 2012, Kennady
Diamonds Inc. and Mountain Province entered into the Kennady Arrangement Agreement pursuant to which Mountain Province agreed to
would transfer its interest in the Kennady North Project, in the Northwest Territories in Canada, including permits, mining claims,
rights and title, to Kennady Diamonds Inc. in exchange for common shares of Kennady Diamonds Inc.



Upon completion of the Kennady
Arrangement on July 6, 2012, Kennady Diamonds Inc. issued 16,143,111 shares to Mountain Province which were distributed along with
the one share held by Mountain Province to the Mountain Province shareholders in exchange for the assets and cash transferred,
as contemplated by the Kennady Arrangement. The transactions contemplated by the Kennady Arrangement were completed on July 6,
2012. Kennady Diamonds Inc. began trading on the TSX Venture Exchange on July 10, 2012 under the ticker symbol “KDI”.



Foreign Assets



Until the Arrangement with Glenmore,
all of the Company's assets are and have been located in Canada (see Item 4D - Property, plants and equipment - Principal Properties).
Since the Arrangement, the Company has not generated any revenue from operations. Pursuant to the Arrangement, the assets of Glenmore,
were acquired by Mountain Glen, and are now held by the Company, having been distributed to the Company on the winding up of Mountain
Glen.



Government Regulation



The current and anticipated future
operations of the Company, including development activities and commencement of production on its properties, require permits from
various federal, territorial and local governmental authorities and such operations are and will be governed by laws and regulations
governing prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal,
toxic substances, land use, environmental protection, mine safety and other matters. Companies engaged in the development and operation
of mine-related facilities generally experience increased costs, and delays in production and other schedules as a result of the
need to comply with applicable laws, regulations and permits. The Company's exploration and development activities, as well as
future mining and processing operations in Canada, are subject to various laws governing land use, the protection of the environment,
prospecting, development, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances,
mine safety and other matters.



20







In most jurisdictions, mining
is regulated by conservation laws and regulations. In the Northwest Territories, the mining industry operates primarily under Canadian
federal law because the ownership of water, fisheries, and surface and sub-surface rights to land are vested in the federal government.
Accordingly, federal legislation governs prospecting, development, production, environmental protection, exports, and collective
bargaining. Matters of a purely local or territorial nature, such as mine safety standards, the establishment of a minimum wage,
education and local health services are matters for the Territorial government. With respect to environmental matters, the Company's
properties are subject to federal regulation under, inter alia,the Canadian Environmental Protection Act, the Fisheries
Act, the Canadian Environmental Protection Act,the Migratory Bird Act,the Northwest Territories Waters Act,
the Northwest Territories Wildlife Act,the Arctic Waters Pollution Prevention Act, the Navigable Waters Protection
Act, the Mackenzie Valley Resource Management Actand the Mackenzie Valley Land Use Regulations. Territorial
environmental legislation may also apply for some purposes. The Mackenzie Valley Land and Water Board established under the federal
Mackenzie Valley Resource Management Act has the responsibility to receive and to process applications for water licenses
under the Northwest Territories Waters Act in most areas of the Northwest Territories. Generally, these licenses outline
the volume of water the mine may use, how tailings will be treated, the quality and types of waste that may be deposited into the
receiving environment and how the quality and types of waste may be monitored and contain requirements regarding the restoration
of the tailings disposal and other affected areas. The water licence also has requirements for monitoring and reporting of water
and waste as well as determines reclamation and closure requirements. The Mackenzie Valley Land and Water Board also issues land
use permits applicable to most areas of the Northwest Territories under the Mackenzie Valley Land Use Regulations. Such
permits govern the manner in which various development activities on federal Crown and other lands may be undertaken. Applicable
territorial legislation and regulations include the Apprentice and Trade Certification Regulations, Archaeological Resources
Act, Boilers and Pressure Vessels Regulations, Business Licence Fire Regulations, Civil Emergency Measures Act, Environmental
Protection Act, Environmental Rights Act, Explosives Use Act, Explosives Regulations, Fire Prevention Act, Fire Prevention Regulations,
Labour Standards Act, Mine Health and Safety Act, Mine Health and Safety Regulations, Public Health Act, Research Act, Wildlife
Act,and Workers Compensation Act.



The Fisheries Act, Northwest
Territories Waters Act, Territorial Lands Act and Regulations, Territorial Quarrying Regulations, Mackenzie Valley Land Use Regulations,
Real Property Act, Transportation of Dangerous Goods Act,and the Canada Mining Regulations are federal legislation
or regulations. Failure to comply with territorial and/or federal legislation or regulations may result in cease work orders and/or
fines.



The Company's operations and
exploration activities are also subject to substantial regulation under these laws by governmental agencies. The Company believes
it is in substantial compliance with all material laws and regulations which currently apply to its activities. There can be no
assurance, however, that all permits which the Company may require for construction of mining facilities and conduct of mining
operations will be obtainable on reasonable terms or that such laws and regulations, or that new legislation or modifications to
existing legislation, would not have an adverse effect on any exploration, development or mining project which the Company might
undertake.



Portions of the Northwest Territories
will also be subject to the jurisdiction of the Tlicho Government, a First Nations government which will have certain powers of
regulation in respect of "Tlicho Lands" under the "Tlicho Agreement", a land claim agreement entered into between
the Tlicho First Nation and the federal and territorial governments.



Failure to comply with applicable
laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory
or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures,
installation of additional equipment or remedial actions. Parties engaged in mining operations may be required to compensate those
suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violation
of applicable laws or regulations.



21







Amendments to current laws, regulations
and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material
adverse impact on the Company and cause increases in capital expenditures or production costs or reduction in levels of production
at producing properties or require abandonment or delays in development of new mining properties.



On October 17, 2007, the Company
entered into an agreement with the Government of the Northwest Territories pursuant to which it agreed to make available 10% of
its share of the diamonds from the Gahcho Kué Project to the Northwest Territories diamond cutting and polishing facilities.



| | C. | Organizational structure.
| | -- | -------------------------



See “Item 4 A - History
and development of the Company - The Corporate Organization”.



22







| | D. | Property, plants and equipment.
| | -- | -------------------------------



Principal Properties



In this section on "Principal
Properties", the reader should note that where disclosures pertaining to mineral resources are made, these are not mineral
reserves and do not have demonstrated economic viability. The Company has only one principal property, the AK Property also known
as the Gahcho Kué Project, which is located in the Canada’s Northwest Territories. The Gahcho Kué Project is
in the development stage.



A "mineral resource"
as defined under the CIM Definition Standards, differs from the SEC Guidelines and means a concentration or occurrence of natural,
solid, inorganic or fossilized organic material in or on the Earth's crust in such form and quantity and of such a grade or quality
that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity
of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. See "Glossary of
Technical Terms" in this Report.



A "mineral reserve"
as defined under the CIM Definition Standards, which are different from the SEC Guidelines, means the economically mineable part
of a Measured Mineral Resource or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This study
must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at
the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances
for losses that may occur when the material is mined. See "Glossary of Technical Terms" in this Report.



In this Annual Report, because
the Company is a Canadian company with mining properties in Canada, the definitions and disclosures are made in accordance with
the CIM Definition Standards as required by Canadian law for disclosure of material facts. The CIM Definition Standards differ
from those adopted by the SEC in its SEC Guidelines. See “Glossary of Technical Terms” in this Report.



It should be noted that
the SEC Guidelines define "reserve" to mean "that part of a mineral deposit which could be economically and legally
extracted or produced at the time of the reserve determination". See the Mineral Reserves Section, below.



Description of Property



Administrative Offices



The Company's administrative
office is located at 161 Bay Street, Suite 2315, PO Box 216, Toronto, Ontario, Canada M5J 2S1. The Company considers these premises
suitable for its current needs.



Mineral Properties



The Company’s main property
is the Gahcho Kué Project.



23







Amended and Restated Joint
Venture Agreement



On July 3, 2009, the Company
entered the “2009 Agreement” with De Beers Canada (jointly, the “Participants”) with respect to the Gahcho
Kué Project that replaces the 2002 Agreement entered into by the Participants. Under the 2009 Agreement:



| | 1. | The Participants’ continuing interests in the Gahcho Kué Project will be Mountain
Province 49% and De Beers Canada 51%, with Mountain Province’s interest no longer subject to the dilution provisions in the
2002 Agreement except for normal dilution provisions which are applicable to both Participants. On October 2, 2014, Mountain Province
assigned its 49% interest to its wholly-owned subsidiary 2435386 Ontario Inc. to the same extent as if 2435386 Ontario Inc. had
been the original party to the Joint Venture Agreement;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | Each Participant will market their own proportionate share of diamond production in accordance
with their participating interest;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------

| | 3. | Each Participant will contribute their proportionate share to the future project development costs;
| | -- | ---------------------------------------------------------------------------------------------------

| | 4. | Material strategic and operating decisions will be made by consensus of the Participants as long
as each Participant has a participating interest of 40% or more;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | The Participants agreed that the sunk historic costs to the period ending on December 31, 2008
will be reduced and limited to $120 million;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | Mountain Province would repay De Beers Canada $59 million (representing 49% of an agreed sum of
$120 million) in settlement of the Company’s share of the agreed historic sunk costs on the following schedule:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

·$200,000
on execution of the 2009 Agreement (Mountain Province’s contribution to the 2009 Gahcho Kué Joint Arrangement expenses
to date of execution of the 2009 Agreement) (paid);

·Up
to $5.1 million in respect of De Beers Canada’s share of the costs of the feasibility study (paid $4,417,421 to December
31, 2013, capitalized as “Mineral Properties” in the Company’s financial statements – no further costs
expected);

·$10
million upon the completion of a feasibility study with at least a 15% IRR and approval of the necessary development work for a
mine (as defined in the 2009 Gahcho Kué Joint Arrangement Agreement – paid March 15, 2011);

·$10
million following the issuance of the construction and operating permits – paid October 27, 2014;

·$10
million following the commencement of commercial production; and

·The
balance of approximately $24.4 million plus approximately $25.0 million of accrued interest within 18 months following commencement
of commercial production. At December 31, 2014, accumulated interest of approximately $16.4 million is owing. Accumulated interest
is being calculated at the prevailing LIBOR rate plus 5%.



2435386 Ontario Inc. has agreed that the marketing
rights provided to the Company in the 2009 Agreement will be diluted if the Company defaults on certain of the payments described
above.



24







Extracts from Technical Report



Unless otherwise stated,
the technical information in this section from the sub-headings “Property Description and Ownership” to
“Conclusion” is based upon Independent Qualified Person's Technical Report dated May 13, 2014 as amended May 27,
2014 (with information effective as of March 31, 2014) (the "2014 Technical Report") entitled "Gahcho
Kué Project, 2014 Feasibility Study Report, NI 43-101 Technical Report " prepared for the Gahcho Kué
Project by JDS Energy and Mining Inc. and Hatch Ltd. by:



| | · | Daniel D. Johnson, P.Eng. (JDS)
| | - | -------------------------------

| | · | Kenneth Meikle, P.Eng. (JDS)
| | - | ----------------------------

| | · | Dino Pilotto, P.Eng. (JDS)
| | - | --------------------------

| | · | Kato Lone, Eng. (Hatch)
| | - | -----------------------



The details about the 2014
Technical Report were filed on EDGAR on May 28, 2014under Form 6K. The full Technical Report was also filed on SEDAR on May 28,
2014.



Portions of the following information
are based on assumptions, qualifications and procedures which are not fully described herein. Reference should be made to the full
text of the 2014 Technical Report.



The following are
the financial and project highlights from the 2014 Technical Report:



|· | Project IRR including sunk costs          |  | 21.9%*               
|- | ----------------------------------------- |  | ---------------------
|· | Project IRR excluding sunk costs          |  | 32.6%                
|· | Initial project capital                   |  | $858.5 million       
|· | Working capital                           |  | $80.1 million        
|· | Sustaining capital including mine closure |  | $92.7 million        
|· | Operating costs                           |  | $72.51 per tonne     
|· | Project mine life                         |  | 12 years             
|· | Average annual production                 |  | 3 million tonnes     
|· | Total diamond production                  |  | 53.4 million carats  
|· | Average annual diamond production         |  | 4.45 million carats  
|· | Diamond price                             |  | US$118.38 per carat**

*After taxes/royalties and unleveraged

**The base case model uses an
average realized diamond price of US$118.38 per carat derived from WWW (based on their February 2014 price books) over LOM. No
marketing fees has been assumed.



Property Description &
Ownership



The Gahcho Kué Project is a joint
venture of De Beers Canada and the Company, with ownerships of 51% and 49%, respectively. On October 2, 2014, 2235386 Ontario
Inc. Newco was incorporated and the participating interest of the Company in the Gahcho Kué Project was transferred to this
entity in exchange for common shares of Newco. On the same day, the Company assigned the shares of Newco to 2235386 Ontario Inc.
(“Holdco”), as acknowledged by De Beers Canada. The restructuring of the Company’s participating interest in
the Gahcho Kué Project was completed at the request of the Company’s project lenders.



25







The property is located in the Northwest
Territories (NWT) of Canada, in the District of Mackenzie, 300 km east-northeast of Yellowknife and 80 km east-southeast of the
existing Snap Lake Mine (operated by De Beers Canada). The site lies on the edge of the continuous permafrost zone in an area
known as the barren lands. The surface is characterised as heath/tundra, with occasional knolls, bedrock outcrops, and localised
surface depressions interspersed with lakes. A thin discontinuous cover of organic and mineral soil overlies primarily bedrock,
which, occurs typically within a few metres of surface. Some small stands of stunted spruce are found in the area. There are myriad
lakes in the area. Kennady Lake, under which the kimberlite pipes lie, is a local headwater lake with a minimal catchment area.



Access to the site is by floatplane in
the summer and by aircraft equipped with skis or wheels in the winter. During winter, larger aircraft such as a Dash-7 and Super
Hercules L100 Transport can operate from an artificially thickened ice landing strip on the lake. A gravel airstrip will be constructed
at the onset of the construction period to provide year round access for similar sized aircraft.



A winter road connects Yellowknife to the
Snap Lake, Ekati, and Diavik mines during February and March each year (Figure 1-1). The road is operated under a Licence of Occupation
by the winter road JV Partners who operate the Ekati, Diavik, and Snap Lake mines. The road passes within 70 km of the Gahcho
Kué site, at Mackay Lake. A 120 km winter road spur has been established from Mackay Lake to the project site, and
was open in 1999, 2001, 2002, 2006, 2013 and 2014. The 120 km winter road spur will be constructed each year to support the
mine construction and operation.



The Gahcho Kué kimberlite deposits
are located within a series of mineral leases as shown in Figure 1-2. Surface rights (land leases) have been applied for by De Beers
and are shown in Figure 1-3.



26







Figure 1-1: Location of
Gahcho Kué







27







Figure 1-2: Mineral Lease
Boundary Map







28







Figure 1-3: Permit Lease
Boundary







29







Geology, Resources & Reserves



Cautionary Note for U.S.
Investors



The SEC Guidelines define
the following with respect to mining operations:



Reserves. That part
of a mineral deposit which could be economically and legally extracted or produced at the time of reserve determination.



Proven (Measured) Reserves.
Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or
quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced
so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves is well-established.



Probable (Indicated)
Reserves. Reserves for which quantity and grade and/or quality are computed from information similar to that used for proved
(measured) reserves, but the sites for inspection, sampling, and measurements are farther apart or are otherwise less adequately
spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between
points of observation.



In Canada, a Mineral Reserve
is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility
Study. This Feasibility Study includes adequate information on mining, processing, metallurgical, economic, and other relevant
factors that demonstrate, at the time of reporting, that economic extraction is justified.



Mineral Reserves are those
parts of Mineral Resources which, after the application of all mining factors, result in an estimated tonnage and grade which is
the basis of an economically viable project. The project must take account of all relevant processing, metallurgical, economic,
marketing, legal, environmental, socioeconomic and governmental factors. Mineral Reserves are inclusive of diluting material that
will be mined in conjunction with the Mineral Reserves and delivered to the treatment plant or equivalent facility. The term ‘Mineral
Reserve’ need not necessarily signify that extraction facilities are in place or operative or that all governmental approvals
have been received. It does signify that there are reasonable expectations of such approvals.



Mineral Reserves are subdivided
in order of increasing confidence into Probable Mineral Reserves and Proven Mineral Reserves. A Probable Mineral Reserve has a
lower level of confidence than a Proven Mineral Reserve.



The reserve classifications
used in this report conform to the CIM classification of NI 43-101 resource and reserve definitions and Companion Policy 43-101CP
and are listed below.



30







A ‘Proven Mineral Reserve’
is the economically mineable part of a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This
Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate,
at the time of reporting, that economic extraction is justified. Application of the Proven Mineral Reserve category implies that
the Qualified Person has the highest degree of confidence in the estimate with the consequent expectation in the minds of the readers
of the report. The term should be restricted to that part of the deposit where production planning is taking place and for which
any variation in the estimate would not significantly affect potential economic viability.



A ‘Probable Mineral Reserve’
is the economically mineable part of an Indicated Mineral Resource, and in some circumstances a Measured Mineral Resource, demonstrated
by at least a Preliminary Feasibility Study. The study must include adequate information on mining, processing, metallurgical,
economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.



The baseline estimation and classification
of the mineral resources was completed by AMEC Americas Limited (“AMEC”), summarised in the 2009 Technical Report.
Additions /modifications to the AMEC mineral resource for the Tuzo Deep mineral resources deeper than 300 metres below surface
(mbs) elevation are summarised in the 2013 Technical Report,Update of the Mineral Resource Estimate for the Tuzo
Kimberlite prepared by Mineral Services Canada Inc. (“Mineral Services”) as a result of an additional ‘Tuzo deep’
drilling program undertaken in 2012.



The Gahcho Kué Project resources
are summarised in Table 1.1. JDS Energy and Mining Inc. (“JDS”) has reviewed both the 2009 Technical Report and 2013
Technical Report,Update of the Mineral Resource Estimate resource statements and has compiled the information into
a single resource estimate table for the Report. JDS is of the opinion that the resource estimates presented in Table 1.1 provide
an accurate and complete basis for the 2014 feasibility study. JDS determined the appropriate conversion of resources to reserves
through the mine design process and economic analysis described in the 2014 Technical Report. The optimization results and subsequent
mine design have determined the economic mineral reserve estimate for each pipe as summarised in Table 1.2.



Table 1.1: Mineral Resource
Summary (March 31, 2014)



|                                             |  |                |  | Volume |      |  | Tonnes |  |      | Carats |  |  | Grade | 
|-------------------------------------------- |  | -------------- |  | ------ | ---- |  | ------ |  | ---- | ------ |  |  | ----- | 
|Resource                                     |  | Classification |  | Mm3    |      |  | Mt     |  |      | Mct    |  |  | cpht  | 
|5034 - (Amec 2009)                           |  | Indicated      |  |        | 5.1  |  |        |  | 12.7 |        |  |  | 23.9  | 
|                                             |  | Inferred       |  |        | 0.3  |  |        |  | 0.8  |        |  |  | 1.2   | 
|Hearne - (Amec 2009)                         |  | Indicated      |  |        | 2.3  |  |        |  | 5.3  |        |  |  | 11.9  | 
|                                             |  | Inferred       |  |        | 0.7  |  |        |  | 1.6  |        |  |  | 2.9   | 
|Tuzo - (Amec 2009) (0-300 mbs)               |  | Indicated      |  |        | 5.1  |  |        |  | 12.2 |        |  |  | 14.8  | 
|Tuzo - (Mineral Services 2013) (300-564 mbs) |  | Indicated      |  |        | 1.5  |  |        |  | 3.6  |        |  |  | 6.0   | 
|                                             |  | Inferred       |  |        | 3.7  |  |        |  | 8.9  |        |  |  | 14.4  | 
|Summary                                      |  | Indicated      |  |        | 14.0 |  |        |  | 33.8 |        |  |  | 56.6  | 
|                                             |  | Inferred       |  |        | 4.7  |  |        |  | 11.3 |        |  |  | 18.5  | 



Notes:



(1) Mineral Resources are reported at a bottom cut-off
of 1.0 mm.
(2) Mineral Resources are not mineral reserves and do not have demonstrated economic viability.
(3) Volume, tonnes and carats are rounded to the nearest 100,000.

31







(4) Tuzo volume and tonnes exclude 0.6 Mt of a
granite raft and CRX_BX.
(5) Resources have been reported in this report to remain consistent with previous technical reports.



Table 1.2: Mineral Reserve
Estimate



|Pipe   |  | Classification |  | Tonnes (Mt) |      |  | Carats  (Mct) |  |      | Grade (cpt) | 
|------ |  | -------------- |  | ----------- | ---- |  | ------------- |  | ---- | ----------- | 
|5034   |  | Probable       |  |             | 13.4 |  |               |  | 23.2 |             | 
|Hearne |  | Probable       |  |             | 5.6  |  |               |  | 11.7 |             | 
|Tuzo   |  | Probable       |  |             | 16.4 |  |               |  | 20.6 |             | 
|Total  |  | Probable       |  |             | 35.4 |  |               |  | 55.5 |             | 



The economic viability presented in Sections
13 to 15 of the 2014 Technical Report confirms that the probable reserve estimates meet and comply with CIM definitions and NI
43-101 standards. The authors of the 2014 Technical Report conclude that the project is economically viable using current diamond
prices and prevailing long-term price estimates. Detailed mine planning and economic evaluation have been performed on a sub-set
of the results summarised in Table 1.2.



This 2014 Feasibility Report did not identify
any mining, metallurgical, infrastructure or other relevant factors that may materially affect the estimates of the mineral reserves
or potential production.



Mining



The mine design and consequent mine plan
considers indicated and inferred mineral resources of the 5034, Hearne, and Tuzo kimberlite pipes. Conventional truck/shovel mining
utilising 29 m3 bucket diesel hydraulic front shovels, a 17 m3 front-end loader and 218 t class haulage trucks
will be employed to mine the kimberlite and waste quantities. This large fleet will be augmented by 12 m3 bucket
front-end loaders and excavators and 90 t haul trucks.



Pit designs were developed using optimised
Whittle shells as a basis, and these were used to develop the mine production plan and schedule. The plans were optimised to smooth
waste stripping requirements, while ensuring adequate kimberlite exposure to meet kimberlite feed requirements, as well as waste
storage considerations within the Hearne and 5034 throughout the mine life.



Pre-stripping began on land in the northern
half of the 5034 pit in 2014, with the majority of the granite waste used for road, dyke and infrastructure pad construction. Unsuitable
overburden material will be placed in the South mine rock pile. Mining continues in the northern portion of 5034 until 2015, when
mining in the southern half of the 5034 pit begins. Full production capacity of approximately 250,000 tonnes of kimberlite
per month is expected to be reached by 5034 in January 2017.



Pre-stripping/pioneering of Hearne pit
is scheduled to start in January 2017. Approximately half of kimberlite production will be sourced from Hearne from 2017 to 2019,
slowing in 2020 as Hearne reaches the final deepest benches. Priority has been placed on mining Hearne in these years in order
to open up waste storage capacity within the pit as soon as it has been completed. Hearne will be mined with no internal phases.
During 2020, as Hearne is completed, equipment will begin stripping the first phase of Tuzo. Processed kimberlite will be diverted
to the mined-out Hearne pit. Once dewatering is complete in 2022, Phase 1 of Tuzo will also be completed and the expansion to Phase
2 will begin. In 2023, the 5034 pit is scheduled to be completed. From this point on, mine rock from Tuzo will be placed in the
mined-out 5034 pit. Tuzo mining continues at 3 Mt/a until 2028.



32







Recovery Methods



The Gahcho Kué Project will mine
kimberlite resources from three different deposits: 5034, Hearne, and Tuzo. In the process plant, this material will be treated
via crushing, screening, dense media separation and x-ray sorting, to produce a diamond rich concentrate that will be hand sorted
on site with the resulting diamond product sent to Yellowknife for final cleaning and Northwest Territories Government valuation.
The processing plant is targeting the recovery of liberated diamonds in the 1 to 28 mm size range. The processing plant is designed
for efficient diamond recovery over the plant’s 12-year life. The Gahcho Kué Plant processes will be automated to
allow high-quality production with minimal human intervention.



Site & Infrastructure



The Gahcho Kué site is typical of
many northern Canadian mining operations that lack local and regional infrastructure such as permanent road access, navigable shipping
routes and ports, and external utilities. Therefore, the Gahcho Kué site requires extensive infrastructure to sustain operations,
including power generation, sewage and water treatment, personnel accommodation, storage facilities for materials delivered on
the limited annual winter ice road, and an aerodrome to provide year-round cargo, food and passenger aircraft access. The overall
site plan is shown in Figure 1-4.



The majority of supplies during construction
and operation will be shipped to site during a ten-week winter road season. A 120 km winter access spur road will be constructed
each year to connect the project site to the Tibbitt-to-Contwoyto winter road at km 271, just north of Lake of the Enemy.



The layout of the site is based on several
criteria:



| | o | all major structures to be founded on bedrock
| | - | ---------------------------------------------

| | o | compact footprint for minimal land disturbance and maximum site operations efficiency
| | - | -------------------------------------------------------------------------------------

| | o | compact building sizes and layout for maximum energy efficiency
| | - | ---------------------------------------------------------------

| | o | efficient facility access for personnel and vehicles during construction and operations
| | - | ---------------------------------------------------------------------------------------

| | o | minimal impact of winter road truck traffic around the site.
| | - | ------------------------------------------------------------



33







Figure 1-4: Overall Site
Plan







Environmental & Socioeconomic



Baseline biophysical information has been
collected since 1996. In recent years, there has been a concerted effort to obtain information that will provide an appropriate
basis for use in the future monitoring programs to identify potential effects and to evaluate impact predictions and monitor the
efficacy of mitigation.



Multiple environmental monitoring and management
plans have been prepared to track and mitigate any impact that the project has on the environment. Water management plans are adaptations
of plans used successfully at other NWT diamonds mines. At Gahcho Kué, all potentially contaminated water is kept within
a controlled management basin formed by natural drainage patterns. Excess storage capacity allowances created by initial lake dewatering
activities provide for operational flexibility and contingencies. Normal mine operations incorporate a program of progressive reclamation
that minimizes costs and allows timely monitoring of performance. The mined-out 5034 and Hearne pits are used for waste storage
during the later years of the mine life providing ample time for completion of the reclamation of the waste storage areas used
during the years.



34







De Beers Canada has prepared an Environmental
Impact Statement (EIS) for the project. Based on the EIS the Project has completed an Environmental Impact Review (EIR) process
with the Mackenzie Valley Environmental Impact Review Board (MVEIRB). The MVEIRB process was completed in 2013 and based on Review
Panel’s recommendation, the Federal Minister approved the project on October 22, 2013, and the project entered into the permitting
and licensing phase.



The Mackenzie Valley Land and Water Board
(MVLWB) issued a Land Use Permit (LUP) on November 29, 2013 to undertake preliminary (early or pioneer work associated with camp,
airstrip, fuel storage, equipment mobilization, etc) in preparation for the development of the Gahcho Kué diamond mine.
On November 28, 2013, De Beers submitted an application for the Type A Land Use Permit (LUP) and Type A Water Licence (WL) for
the Gahcho Kué diamond mine.



On August 12, 2014,De Beers and
the Company announcedthat the Mackenzie Valley Land and Water Board has issued the Gahcho Kué Type A Land Use Permit
and sent the Type A Water License for final approval to the Minister of Environment and Natural Resources of the Government of
the Northwest Territories (GNWT).



On September 25, 2014,De Beers
and the Company announced that the Gahcho Kué Project had received approval of the Type A Water License by the Minister
of Environment and Natural Resources of the Government of the Northwest Territories, the Hon. Michael J. Miltenberger.



De Beers received approval from the Department
Fisheries and Oceans Canada (DFO) under the Fisheries Act to undertake the necessary activities that impact fish habitat.
These permits/authorizations were received in 2014 to allow the fish out to commence. An application was submitted for authorization
of dykes and dams under the Navigation Protection Act. These permits/authorizations were received in Q4 of 2014 to allow
the mine to begin full-scale construction.



A Socioeconomic Agreement (SEA) for the
project was signed with the Government of the Northwest Territories (GNWT) on June 28, 2013. The SEA establishes hiring priorities
and employment incentives for the project, training and employment objectives, business procurement objectives and it outlines
how De Beers and the GNWT will work together to ensure the health and cultural well-being of NWT Residents. The mine will create
close to 1,000 jobs during the two-year construction phase and some 450 permanent jobs during the 12-year operational phase.



Additional employment will be created by
the multitude of service providers to the project. Territorial taxes, federal taxes, and royalties are estimated to be approximately
$1,500 M during the life of the operation. In addition, property and payroll taxes will add significant tax revenues to the
local municipality. Impact and Benefit Agreements (IBAs) are in place or under final stages of negotiations for the First Nation
groups in the vicinity.



Project Execution



Project execution for the Gahcho Kué
Project is based on tested and proven principles utilised in the development of diamond mines in the Canadian Arctic.



35







The only road access to site will be an
ice road that will be used to transport all heavy and bulky material. The ice road is open for two months every year, generally
in February and March. The execution strategy has been developed around this constraint. People and goods for the camp will be
flown into the site area along with smaller and lighter equipment and material required for the construction work that can be mobilised
by air. Until the airstrip is operational, personnel will be flown in via small aircraft during the summer and large fixed-wing
aircraft landing on an ice airstrip during winter.



Procurement activities started in the fall
of 2013 for packages critical to the 2014 winter road. All future activities have taken into consideration lead time for equipment,
bulks and fabrication as well as quality inspection requirements and the need for on-site expediting. Lead times were established
through contact with potential bidders during the fall of 2013.



Engineering activities have been well advanced
in the feasibility study phase. All long lead equipment has been purchased and the early works packages to be constructed in 2014
have been developed so that construction can be well planned and executed in a safe manner. Engineering has been sequenced from
construction and procurement activities so that equipment and facilities are designed in time to order and deliver components and
materials to site as scheduled.



Table 1.3 highlights the key project milestones of the project.



Table 1.3: Key Period Milestones



|Milestone                                |  | Start      |  | Finish    
|---------------------------------------- |  | ---------- |  | ----------
|Pioneer Works Permit Issued / Start work |  | Dec. 2013  |  | Dec. 2013 
|2014 Ice Road                            |  | Feb. 2014  |  | Feb. 2014 
|Air Strip Operational                    |  | May 2014   |  | Dec. 2014 
|Permanent Camp Installation              |  | June 2014  |  | Nov. 2014 
|Land Use Permit/Water Licence Issued     |  | Oct. 2014  |  | Oct. 2014 
|2015 Ice Road                            |  | Feb. 2015  |  | Feb. 2015 
|Concrete Works                           |  | April 2015 |  | April 2015
|Mechanical Works                         |  | May 2015   |  | May 2016  
|Emulsion Plant Completed                 |  | Dec. 2015  |  | Dec. 2015 
|Truck Shop Completed                     |  | Dec. 2015  |  | Dec. 2015 
|2016 Ice Road                            |  | Feb. 2016  |  | Feb. 2016 
|Process Plant Mechanical Completion      |  | May 2016   |  | May 2016  
|Commissioning Commence                   |  | May 2016   |  | May 2016  
|First Kimberlite in Plant                |  | Sept. 2016 |  | Sept. 2016
|Ramp Up To Full Production               |  | Sept. 2016 |  | Jan. 2017 



Capital Cost Estimate



The capital cost estimate is based on:



| | o | Contingency established via Quantitative Risk Analysis (QRA).
| | - | -------------------------------------------------------------

| | o | A combination of committed and firm bid prices for major mobile mining equipment
| | - | --------------------------------------------------------------------------------

| | o | Budget prices for the minor mobile equipment.
| | - | ---------------------------------------------

| | o | Firm and budget proposals for select equipment packages.
| | - | --------------------------------------------------------

| | o | Material Take-Offs (MTOs)
| | - | -------------------------

| | o | Labour rates were from the general contractor (Ledcor Projects Inc.)
| | - | --------------------------------------------------------------------



36







| | o | Committed unit labour rates for earthworks equipment operators
| | - | --------------------------------------------------------------

| | o | Labour productivity based on historical project experience with cold environment projects.
| | - | ------------------------------------------------------------------------------------------

| | o | Freight cost calculations.
| | - | --------------------------

| | o | The project schedule outlined in 2014 Technical Report execution plan.
| | - | ----------------------------------------------------------------------

| | o | Detailed estimates of indirect costs.
| | - | -------------------------------------



Applying
escalation to costs scheduled to be spent beyond 2013.



The capital cost for the project is C$1,019
million including C$75.6 million of contingency.



Table 1.4 summarizes the capital cost by
Work Breakdown Structure (WBS).



Table 1.4: Capital Cost
Estimate by WBS



|WBS                                |  | Description                  |  | CAD (M) |        
|---------------------------------- |  | ---------------------------- |  | ------- | -------
|1000                               |  | Mine Operations              |  |         | 188.8  
|2000                               |  | Site Development & Roadworks |  |         | 10.3   
|3000                               |  | Process Facilities           |  |         | 134.4  
|4000                               |  | Utilities                    |  |         | 48.9   
|5000                               |  | Ancillary Buildings          |  |         | 51.8   
|6000                               |  | Waste & Water Management     |  |         | 6.1    
|7000                               |  | Off-site Facilities          |  |         | 0.4    
|Subtotal - Direct Costs =          |  |                              |  |         | 440.7  
|8000                               |  | Owner’s Management Costs     |  |         | 100.2  
|9000                               |  | Indirect Costs               |  |         | 360.5  
|Subtotal – Owners + Direct Costs = |  |                              |  |         | 460.7  
|9900                               |  | Contingency                  |  |         | 75.6   
|9910                               |  | Escalation                   |  |         | 42.0   
|Total - Projects                   |  |                              |  |         | 1,019.0



The $1,019 M capital costs figure
shown in Table 1.4 includes Sunk Costs for 2011, 2012 and 2013 totalling $118.6 M. The capital cost includes escalation during
construction the construction phase $42.0 M; but excludes initial working capital ($80.1M) and operating costs during the
ramp up phase ($81.9). Excluding the sunk costs the total capital required (in 2013 dollars) prior to commercial production is
$1,020.5 M.



Operating Cost Estimate



The operating cost estimate was developed
by JDS based on first principles and by applying direct applicable project experience and avoiding the use of general industry
factors. JDS is of the opinion that the operating cost estimate is an accurate representation of the mine operating costs based
on the reasonable inputs and assumptions made at the time.



Operating cost estimate inputs were provided
by De Beers, based on operating experience at the Snap Lake Mine in the NWT and the Victor Mine in Northern Ontario. The operating
cost estimates use the labour classification and wage scales currently employed by Snap Lake, and much of the G&A cost estimate
details were derived from actualcost data from the Snap Lake mine.



37







Certain sectors of the operating costs
begin during the construction phase (mining, power generation, freight, and G&A) and continue through the life of the mine.
All costs incurred during the construction phase have been capitalised and are part of the capital cost estimate.



The target accuracy of the operating cost
estimate is -5%/+15%, which represents a Feasibility Study Budget/Class 3 Estimate. The average annual operating cost estimate
and average LOM unit costs for the Gahcho Kué project are summarised in Table 1.5 in Q3 2013 Canadian dollars.



Table 1.5: Operating Cost
Estimate Summary



|WBS |  | Description    |  | Average Annual Cost ($) |             |  | Average Mined ($/t) |  |      | Average Processed ($/t) | 
|--- |  | -------------- |  | ----------------------- | ----------- |  | ------------------- |  | ---- | ----------------------- | 
|A   |  | Mine           |  |                         | 98,505,321  |  |                     |  | 3.49 |                         | 
|B   |  | Process        |  |                         | 22,118,252  |  |                     |  | 0.78 |                         | 
|C   |  | Power          |  |                         | 17,886,381  |  |                     |  | 0.63 |                         | 
|D   |  | Freight        |  |                         | 18,646,525  |  |                     |  | 0.66 |                         | 
|E   |  | G&A            |  |                         | 41,701,193  |  |                     |  | 1.48 |                         | 
|F   |  | Contingency    |  |                         | 7,198,648   |  |                     |  | 0.26 |                         | 
|G   |  | Management Fee |  |                         | 6,361,794   |  |                     |  | 0.23 |                         | 
|-   |  | Total          |  |                         | 212,418,114 |  |                     |  | 7.54 |                         | 



Note: Unit costs per tonne mined are presented against materials
mined in the operational phase only. Cleaning/Sorting cost at $0.546/ct ($0.83/t processed) is in addition to the $71.68/t processed
($72.51/t processed).



Financial Analysis



The financial evaluation of the project
has been undertaken on an after-tax, unleveraged, real rate of return to the GK Project JV partners as a whole. The analyses assumed
that three kimberlite bodies will be developed, with production on the first pipe (5034) starting in September 2016 as part of
the scheduled plant ramp up. Mill feed, derived from indicated reserves with modelled carats plus limited additional material at
zero carat grade (as mill feed dilution), was used in the 2014 FS. Production, including ramp up, extends over roughly 12 years.
All production, costs and revenues are based on calendar fiscal years.



The project provides a real rate of return
to the partners of 32.6% and a real net present value (NPV) at 10% of C$1,004.8 M in calendar 2013 Canadian dollars, excluding
all sunk costs to the end of 2013. In the scenario of including sunk costs incurred to end of 2013, the project provides a real
rate of return of 21.9% and a real NPV at 10% of C$747.3 M. In the sunk cost excluded scenario, the project is most sensitive
to changes in diamond prices, with real dollar returns decreasing the IRR by 4.5% for a 10% reduction in prices and increasing
the IRR by 4.2% for a 10% increase in prices. The project shows a lesser sensitivity to capital with IRR figure changing by +3.1%/-2.7%
for a ±10% change in capital. The sensitivity to operating cost is ±1.4% for a ±10% change in the operating
costs.



Data Verification



JDS has reviewed Data Verification processes
undertaken in the previous Technical Reports. JDS is of the opinion that the Data Verification is adequate for use in the Report.
A summary of data verification from these reports is provided below. Independent data verifications were undertaken on a number
of occasions between 1999 and 2012:



38







| | o | 1999, 2004, 2007 – independent consultants made site visits to review quality assurance/quality
control (QA/QC)
| | - | ---------------------------------------------------------------------------------------------------------------

| | o | 1999 – external consultant audit of the 1999 evaluation program
| | - | ---------------------------------------------------------------

| | o | 2000 – geology (petrological) peer review
| | - | -----------------------------------------

| | o | 2004 – geotechnical and hydrogeology consultants QA/QC site visit, internal and external
mineral resource evaluation data base audits, geology (petrological) peer review, Gemcom® three-dimensional (3D)
model peer review
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | 2007 – internal and external petrological peer reviews; external verification of macro-diamond
resource evaluation data set
| | - | ---------------------------------------------------------------------------------------------------------------------------

| | o | 2008 – external review of 2003 Technical Report resource estimation and density (rock density)
models.
| | - | ------------------------------------------------------------------------------------------------------

| |  | 2012 – peer review of updated geological models and Mineral Resource estimates; external
consultant reviews of geological solid models and zonal estimate for Tuzo Deep Lower.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Resource evaluation database verification
included the following:



| | o | audits of drill collar locations and lengths
| | - | --------------------------------------------

| | o | down-hole survey data
| | - | ---------------------

| | o | geological logs
| | - | ---------------

| | o | bulk density data
| | - | -----------------

| | o | macro-diamond data.
| | - | -------------------



Data storage and verification procedures
are adequate to support the geological interpretations and mineral resource estimation. Data are stored digitally using appropriate
database management software (Microsoft Access®), are being migrated into a diamond sampling workflow-based repository
running on a SQL server located in Toronto, and are backed up periodically to ensure against loss of data due to failure of a single
computer or hard drive. Original data are properly stored as paper and/or digital files with appropriate backups. Most paper files
were scanned and stored digitally. The project database undergoes periodic internal verification as well as periodic audits by
external reviewers.



39







Diamond Valuations



JDS has relied on WWW International Diamond
Consultants (WWW) for diamond valuation. WWW are recognised international leaders in this field, and are the valuers to the Federal
Government of Canada for the Canadian diamond mines in the Northwest Territories. This information was used in support of the financial
analysis noted above. JDS has also relied on De Beers (DTC marketing division) for diamond valuation along with the WWW diamond
valuations in support determining the reserves. JDS believes it is reasonable to rely on De Beers valuations, as the Diamond
Trading Company (DTC) is the rough diamond distribution arm of the De Beers Companies and is the world’s largest supplier
of rough diamonds.



Similarly, JDS has relied on De Beers
and MPV for the diamond price escalation estimate. De Beers and MPV conducted their own market analysis and determined that
a 1.5% real growth rate in USD diamond prices be used in the financial analysis which has been accepted as reasonable for the current
market.



For the financial analysis, the diamond
prices reference a non-public report: Re-Price & Modelling of the Average Price of Diamonds from the Gahcho Kué Diamond
Project – February 2014(WWW 24-Feb-2014), which JDS has reviewed and accepts as reasonable.



In February 2014 Mountain Province Diamonds
(MPV) retained the services of WWW International Diamond Consultants (WWW) to re-price diamonds recovered from bulk sampling of
the Gahcho Kué Project and update the modelled values of average price (AP = dollars per carat). WWW last valued these diamonds
in April 2011 and carried out a re-pricing and re-modelling exercise in March 2012



The re-pricing and modelling exercise are
based on the WWW price book as at 24 February 2014. (Non-public Report: Re-Price & Modelling of the Average Price of Diamonds
from the Gahcho Kué Diamond Project – February 2014)



WWW valued 8,317.29 carats from four separate
bulk samples in April 2011. These samples have been re-priced using WWW’s proprietary price book as at 24 February 2014 giving
a total value of US$1,445,068 and a combined AP of US$174 per carat.



These models are based on the SFD models
produced by De Beers based on a 1.00mm bottom cut off, and are based on the diamond market as at 24 February 2014.



De Beers produced the SFD models from their
micro-macro grade models and apply modifying factors for recovery efficiencies and bottom cut off if applicable (see description
in Item 14- Mineral Resource Estimates).



The terms “minimum” and “high”
have been used deliberately and are explained as follows:



| | o | Based on analysis of the bulk samples, WWW believes it is highly unlikely that the average price
for the four zones will be lower than the minimum values shown in Table 19.1.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | In the larger sizes the modelled values could be higher than those used in the “high”
models. (i.e. the high values are not maximum values.)
| | - | --------------------------------------------------------------------------------------------------------------------------------------------

| | o | For mine feasibility studies WWW recommends using the base case models for defining the resource/reserve.
The “minimum” and “high” models are included for sensitivity analysis.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



40







Table 19.1: Summary of WWW
February 2014 Diamond Prices



|Pipe        |  | Sample |     |  | High Model |  |     | Model |  |  | Min Model | 
|----------- |  | ------ | --- |  | ---------- |  | --- | ----- |  |  | --------- | 
|5034 Centre |  |        | 196 |  |            |  | 167 |       |  |  | 132       | 
|5034 West   |  |        | 102 |  |            |  | 172 |       |  |  | 131       | 
|5034 NE     |  |        | 196 |  |            |  | 194 |       |  |  | 142       | 
|Hearne      |  |        | 88  |  |            |  | 137 |       |  |  | 107       | 
|Tuzo        |  |        | 298 |  |            |  | 134 |       |  |  | 101       | 

| | o | Note: All prices in $US/carat
| | - | -----------------------------



The primary case for the economic analysis
is based on the Model prices in $US for 2014 as summarised in Table 19.2. To clarify the naming conventions used elsewhere and
reflect the prices assigned to the pit/facie combinations referred to in the mine schedule and described/determined in the reserves
section, note the following:



|5034 Centre | 5034-CP            
|----------- | -------------------
|            |                    
|5034 West   | 5034-WP and 5034-ST
|            |                    
|5034 NE     | 5034-NE and 5034-NT
|            |                    
|Hearne      | Hearne             
|            |                    
|Tuzo        | Tuzo               



Table 19.2: Summary of Diamond
Prices Used in Economic Analysis



|Pit (and zone) |  | WWW Price |       
|-------------- |  | --------- | ------
|5034-CP        |  |           | 132.00
|5034-WP        |  |           | 131.00
|5034-NE        |  |           | 142.00
|5034-NT        |  |           | 142.00
|5034-ST        |  |           | 131.00
|Hearne         |  |           | 107.00
|Tuzo           |  |           | 101.00



JDS has reviewed the WWW diamond valuation
report and made comparisons to the latest diamond pricing information provided by De Beers and as such, it is JDS’ opinion
that the WWW diamond values represent a “reasonable price level’ to use as a basis for the economic analysis. Notwithstanding
the “reasonable price level”, JDS notes that diamond price estimates represent a viewpoint at a given point in time
and may not accurately reflect realised prices over the life of the mine operation.



Conclusions



The authors of the 2014 Technical Report
are of the opinion that the Gahcho Kué Project is economically viable, technically credible, and environmentally sound.



41







The Gahcho Kué Project is economically
viable, generating C$7,720.8 M in RV (realised value) revenues over a 12-year mine life resulting in a 32.6% IRR (real rate
of return) and a $1,004.8 M NPV (net present value) at 10% excluding sunk costs of $259.5 M incurred prior to Dec 31,
2013. Including sunk costs of the project yields a 21.9% IRR and $747.3 M NPV. Total life of mine (LOM) capital costs
are estimated at $1,290.8 M consisting of: $140.9 M sunk costs (pre-2011); $118.6 M sunk costs (2011-2013); $858.5 M
initial capital; $80.1 M working capital; and $92.7 M sustaining and closure costs. Total LOM pre-tax cash operating
costs are estimated at $2,542.8 M, which equates to $72.51/t processed or $47.62/ct recovered. Operating costs incurred during
the initial ramp up phase are estimated at $81.9 M.



The Gahcho Kué Project is technically
credible, utilising designs and practices that are proven in the Canadian diamond industry. The project design is based on the
open pit mining of the 5034, Hearne and Tuzo deposits in a concurrent/sequential fashion (5034 and Hearne mined initially followed
by Tuzo). Mine plans call for the extraction of 315 Mt of waste and 35.1 Mt of mill feed over a 15-year period (including construction/pre-production)
utilising industry standard drill/blast equipment, truck/shovel equipment and pit designs that are similar to other open pit diamond
mines operating in the area. The kimberlite processed includes Mineral Reserves, as well as an additional 1.2 Mt of dilution that
will be processed through the mill. This added tonnage is at zero grade and does not provide any additional revenue, and is comprised
of external waste at depth that is included in the pit design and is not classified as an Indicated Resource. Kimberlite will be
fed to a 3.0 Mt/a processing plant with three stages of crushing, DMS, and X-ray/grease diamond recovery circuits. Process plant
designs and equipment selections are based on experience from other De Beers operations and utilize proven suppliers. Security
measures and designs are based on current De Beers’ standards and practices.



Permitting



In November 2005, De Beers Canada, as Operator
of the Gahcho Kué Project, applied to the Mackenzie Valley Land and Water Board for a Land Use Permit and Water License
to undertake the development of the Gahcho Kué diamond mine. On December 22, 2005, Environment Canada referred the applications
to the Mackenzie Valley Environmental Impact Review Board (“MVEIRB”), which commenced an Environmental Assessment ("EA").
On June 12, 2006, the MVEIRB ordered that an Environment Impact Review (“EIR”) of the applications should be conducted.



The EIR was designed to identify all of
the key environmental issues that could be impacted by the development of the Gahcho Kué diamond mine and to facilitate
participation by key stakeholders in addressing these issues.



The
Environmental Impact Statement (EIS) for the Gahcho Kué mine was submitted to the Gahcho Kué Environmental Impact
Review Panel (the “Panel”) of the MVEIRB in December 2010. The EIS detailed the construction and operation of the proposed
mine and was assembled to meet the rigorous Terms of Reference established by the Panel for the Gahcho Kué Project.



The feasibility study commissioned in August
2009 was expected to impact the final project description and the Project Operator, De Beers Canada, had previously advised the
MVEIRB that submission of the EIS would be further deferred pending the completion of an updated project description.



42







The final Gahcho Kué
Project description was presented to the Gahcho Kué Joint Arrangement partners, and was incorporated into the EIS to be
submitted to the MVEIRB before the end of 2010. Key elements of the project description include the following:



·Average
annual production rate of approximately 3 million tonnes of ore;

·Life
of mine from the open-pit resource of approximately 11 years; and

·Average
annual production rate of approximately 4.45 million carats.



On November 5, 2010, the Company
announced that the Operator of the Gahcho Kué Joint Arrangement, De Beers Canada, had notified the MVEIRB on November 3,
2010 that the Gahcho Kué EIS was on track for completion and submission before the end of 2010. The Company also announced
that the submission of the EIS would result in the resumption of the environmental impact review by the independent administrative
tribunal established under the Mackenzie Valley Environmental Resource Management Act.



On
December 23, 2010, the Company, in a joint news release with De Beers Canada, announced that the EIS for the Gahcho Kué
mine had been submitted to the Gahcho Kué Environmental Impact Review Panel (the “Panel”) of the MVEIRB. The
EIS detailed the construction and operation of the proposed mine.



On August 2, 2011, the Company
announced that the Panel had informed the Gahcho Kué Project Operator, De Beers Canada that the EIS conformed to the terms
of reference set by the Panel, thus clearing the way for the EIR to commence.



On January 8, 2013, the Company
announced that the MVEIRB closed the public record for the Gahcho Kué environmental impact review on January 3, 2013 and
that the MVEIRB is expected to complete their report by July 2013.



On
July 22, 2013, De Beers and the Company announced that the MVEIRB on July 19, 2013 had concluded the Gahcho Kué Environmental
Impact Assessment and had recommended approval of the proposed Gahcho Kué diamond mine subject to measures and follow-up
programs. The Gahcho Kué Panel recommended, pursuant to sub-section 134(2) of the Mackenzie Valley Resource Management Act,
that the development be allowed to proceed subject to implementation of the measures and follow-up programs described in its ‘Report’
which are necessary to prevent potentially significant adverse impacts on the environment. A full copy of the Report of Environmental
Impact Review and Reasons for Decision is available atwww.reviewboard.ca.



On October 22, 2013 Mountain
Province and De Beers Canada announced that the Minister of Aboriginal Affairs and Northern Development Canada, the Hon. Bernard
Valcourt, had approved the development of the Gahcho Kué diamond mine as recommended by the Mackenzie Valley Environmental
Impact Review Board.



On December 2, 2013 Mountain
Province and De Beers Canada announced that Mackenzie Valley Land and Water Board approved a pioneer Land Use Permit for the Gahcho
Kué diamond mine. The pioneer Land Use Permit allowed land-based site works to commence in preparation for deliveries planned
for the 2014 winter road season.



On August 12, 2014,De
Beers and the Company announcedthat the Mackenzie Valley Land and Water Board has issued the Gahcho Kué Type A Land
Use Permit and sent the Type A Water License for final approval to the Minister of Environment and Natural Resources of the Government
of the Northwest Territories.



43







On September 25, 2014,De
Beers and the Company announced that the Gahcho Kué Project has received approval of the Type A Water License by the Minister
of Environment and Natural Resources of the Government of the Northwest Territories, the Hon. Michael J. Miltenberger.



Project Costs to Date



The 2009 Agreement contains the
following key terms with respect to the Gahcho Kué Project costs:



| | 1. | Each Joint Venture partner will contribute their proportionate share to the future project development
costs;
| | -- | -------------------------------------------------------------------------------------------------------------

| | 2. | The Joint Venture partners have agreed that the sunk historic costs to the period ending on December
31, 2008 will be reduced and limited to $120 million;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Mountain Province will repay De Beers Canada $59 million (representing 49% of an agreed sum of
$120 million) in settlement of the Company’s share of the agreed historic sunk costs on the following schedule:
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

·     $200,000
on execution of the 2009 Agreement (Mountain Province’s contribution to the 2009 Joint Arrangement expenses to date of execution
of the 2009 Agreement – paid);

·     Up
to $5.1 million in respect of De Beers Canada’s share of the costs of the feasibility study commissioned in August 2009 (paid
$4,417,421 to December 31, 2013, recorded as “sunk cost repayment” in the Company’s financial statements);

·     $10
million upon the completion of the feasibility study with at least a 15% IRR and approval of the necessary development work for
a mine (as defined in the 2009 Gahcho Kué Joint Arrangement Agreement – paid March 15, 2011);

·     $10
million following the issuance of the construction and operating permits – paid October 27, 2014;

·     $10
million following the commencement of commercial production; and

·     The
balance of approximately $24.4 million plus approximately $25.0 million of accrued interest within 18 months following commencement
of commercial production. At December 31, 2014, accumulated interest of approximately $16.4 million is owing. Accumulated interest
is being calculated at the prevailing LIBOR rate plus 5%.



The following table outlines
the Gahcho Kué Project costs (at 100%) to date:



|Period of Time                                                                                     |  | Amount |            
|-------------------------------------------------------------------------------------------------- |  | ------ | -----------
|Agreed historic sunk costs to December 31, 2008                                                    |  | $      | 120,000,000
|Expenditures January 1, 2009 to December 31, 2009                                                  |  |        | 1,612,115  
|Costs for Feasibility Study from August 2009 to December 2009 (of approved budget of $10 million)  |  |        | 2,531,056  
|Total Costs to December 31, 2009                                                                   |  | $      | 124,143,171
|Expenditures January 1, 2010 to December 31, 2010                                                  |  |        | 10,810,895 
|Costs for Feasibility Study from January 2010 to December 2010 (of approved budget of $10 million) |  |        | 5,664,026  
|Total Costs to December 31, 2010                                                                   |  | $      | 140,618,092
|Expenditures January 1, 2011 to December 31, 2011                                                  |  |        | 16,834,887 
|Costs for Feasibility Study from January 1, 2011 to December 31, 2011                              |  |        | 466,526    
|Total Costs to December 31, 2011                                                                   |  | $      | 157,919,505
|Expenditures January 1, 2012 to December 31, 2012                                                  |  |        | 21,698,473 
|Costs for Feasibility Study from January 1, 2012 to December 31, 2012                              |  |        | 98,034     
|Total Costs to December 31, 2012                                                                   |  | $      | 179,716,012
|Expenditures January 1, 2013 to December 31, 2013                                                  |  |        | 79,849,858 
|Costs for Feasibility Study from January 1, 2013 to December 31, 2013                              |  |        | Nil        
|Total Costs to December 31, 2013                                                                   |  | $      | 259,565,870
|Expenditures January 1, 2014 to December 31, 2014                                                  |  | $      | 285,835,764
|Costs for Feasibility Study from January 1, 2014 to December 31, 2014                              |  |        | Nil        
|Total Costs to December 31, 2014                                                                   |  | $      | 545,401,634
|Budget January 1, 2015 to December 31, 2015                                                        |  | $      | 443,000,000



44









|Item 4A. | Unresolved Staff Comments
|-------- | -------------------------



None



|Item 5. | Operating and Financial Review and Prospects
|------- | --------------------------------------------



MOUNTAIN PROVINCE DIAMONDS INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE YEAR ENDED DECEMBER 31, 2014



This Management’s Discussion and
Analysis (“MD&A”) provides a review of the financial performance of Mountain Province Diamonds Inc. (the “Company”
or “Mountain Province” or “MPV”) and should be read in conjunction with the audited consolidated financial
statements and the notes thereto as at December 31, 2014 and 2013 and for the years ended December 31, 2014, 2013 and 2012.



The Company’s audited consolidated
financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as
issued by the International Accounting Standards Board (“IASB”).



All amounts are expressed in Canadian dollars
unless otherwise stated.



Technical information included in this
MD&A regarding the Company’s mineral property has been reviewed by Carl Verley, a Director of the Company and a Qualified
Person as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Properties (“NI 43-101”).



Additional information, related to the
Company is available on SEDAR at http://sedar.com/ and on EDGAR at http://www.sec.gov/edgar.shtml , and on the Company’s
website at www.mountainprovince.com



COMPANY HIGHLIGHTS



On March 26, 2015, the Company announced
that primary syndication of the US$370M term loan facility has been successfully completed.



On February 18, 2015,the Company
announced the diamond recovery results from the 2014 Tuzo Deep drill program. The 2014 Tuzo Deep drill program successfully confirmed
the continuity of the Tuzo kimberlite to a depth of more than 740 meters below surface.



45







On February 18, 2015, the Company
announced that it is undertaking a $95 million rights offering (the “Offering”) in order to fund a US$75 million cost
overrun facility, the arrangement of which is a condition precedent to drawdown of the previously announced US$370M term loan facility.
The Company’s major shareholder, Mr. Dermot Desmond, has advised the Company that he intends to fully exercise his rights
under the Offering. In addition, the Company has entered into a standby agreement with Mr. Desmond in terms of which Mr. Desmond
has undertaken to fully subscribe for those rights not otherwise subscribed for under the Offering. Mr. Desmond will receive a
3% stand by fee.



The Company will issue to registered holders
of outstanding Common Shares as at February 27, 2015 being the Record Date, one Right for each Common Share held. Under the terms
of the Offering, every 5.69 Rights will entitle the holder thereof to purchase one Common Share at a subscription price of $4.00
per Common Share. Shareholders who fully exercise their Rights may subscribe pro rata for any additional Common Shares not otherwise
subscribed for before the Expiry Date. The subscription price of $4.00 per Common Share is equal to a discount of approximately
16.1% from the volume weighted average trading price of the common shares on the TSX for the 5 day period ending on February 17,
2015.



On February 3, 2015,the Company
received credit approval for the previously announced US$370M term loan facility.

For reasons unrelated to the specifics
of the transaction or the Gahcho Kué project Deutsche Bank A.G. was replaced as a mandated lead arranger by the Bank of
Nova Scotia (“Scotiabank”). Natixis S.A. and Nedbank Limited remain joint mandated lead arrangers with Scotiabank.



On December 24, 2014,De Beers Canada
Inc. as Operator (“Operator”) of the Project, and the Company announced that an Impact Benefit Agreement (“IBA”)
has been entered into with the Deninu Kué First Nation. During the year ended December 31, 2014, IBA’s were signed
with the Tłı̨chǫ Government, the Yellowknives Dene First Nation, the Lutsel K’e Dene First Nation and
the NWT Métis Nation. Six IBA’s have been finalized and no further IBA’s are required.



On October 16, 2014, the Company
announced the closing of its previously announced bought-deal private placement of common shares, for gross proceeds of $75 million.



Scotia Capital Inc., on behalf of a syndicate
including RBC Capital Markets and BMO Capital Markets (the “Underwriters”), sold 15,000,000 common shares of the Company
at a price of $5.00 per share, by way of a bought-deal private placement. The Underwriters received a cash commission of 5% of
the gross proceeds.



The Company also announced the closing
of a concurrent non-brokered private placement of common shares at a price of $5.00 per share, for gross proceeds of $25 million.



The net proceeds of the private placements
are being used to fund the continued development of the Company's Gahcho Kué project and for general corporate purposes.



On September 25, 2014,De Beers
and the Company announced that the Gahcho Kué Project received final approval of the Type A Water License by the Minister
of Environment and Natural Resources (ENR) of the Government of the Northwest Territories (GNWT).



On June 27, 2014, the Company announced
the closing of the previously announced non-brokered private placement (“Placement”) of common shares for gross proceeds
of $45.5 million.



The Company issued 9,105,028 common shares
at a price of $5.00 per share. The shares issued under the Placement are subject to a four month hold period. The Company’s
major shareholder Bottin (International) Investments Ltd. subscribed for two million shares under the Placement.



Proceeds of the private placement were
used to support the Company’s share of ongoing capital expenditures at the Gahcho Kué project and for general corporate
purposes. A finder’s fee in the amount of $755,250 was paid in relation to the private placement, of which $300,000 was settled
on July 14, 2014 by the issuance of 60,000 common shares at a price of $5.00 per share and the balance was settled in cash.



46







On April 2, 2014, the Company announced
the results of an updated “2014 Feasibility Study NI 43-101 Technical Report” dated March 31, 2014, on the Gahcho Kué
diamond project. JDS Energy and Mining Inc. (“JDS”) and Hatch Ltd. compiled and prepared the feasibility study NI 43-101
technical report for Mountain Province. The report was filed on May 13, 2014 and an amended report was filed on May 28, 2014.



On March 28, 2014, the Company announced
the closing of its previously announced bought-deal private placement of common shares, for gross proceeds of $17.85 million.



BMO Capital Markets, on behalf of a syndicate
including RBC Dominion Securities Inc. (the “Underwriters”), sold 3,500,000 common shares of the Company at a price
of $5.10 per share, by way of a bought-deal private placement. The Underwriters received a cash commission of 5% of the gross proceeds.



The Company also announced the closing
of a concurrent non-brokered private placement of common shares at a price of $5.10 per share, for gross proceeds of $10.39 million.



The net proceeds of the private placements
were used for the continued development of the Company's Gahcho Kué project and for general corporate purposes.



Financial
position



As at December 31, 2014, Mountain Province
had cash and short-term investments of $81,041,749 and a working capital balance of $46,796,338. See Financial Position and Liquidity
below.



Overview



Mountain Province was incorporated on December
2, 1986 under the British Columbia Company Act. The Company amended its articles and continued incorporation under the Ontario
Business Corporation Act effective May 8, 2006. The Company’s registered office and its principal place of business is 161
Bay Street, Suite 2315, PO Box 216, Toronto, ON, Canada, M5J 2S1. The Company’s shares are listed on the Toronto Stock Exchange
under the symbol ‘MPV’ and on the NASDAQ under the symbol ‘MDM’.



Mountain Province is a Canadian resource
company and through its wholly owned subsidiaries 2435572 Ontario Inc. and 2435386 Ontario Inc. holds a 49% interest in the Gahcho
Kué Project, located in the Northwest Territories of Canada and De Beers holds the remaining 51% interest. The Arrangement
between the Company and De Beers is governed by the 2009 Agreement. The Company’s primary asset is its 49% interest in the
Project.



Drilling, bulk sampling, environmental
and engineering studies have been completed. A definitive feasibility study demonstrated an economically viable project. Major
construction and operating permits have been issued and full-scale construction is underway. At this time there are no revenues
from the Project.



OUTLOOK



The development of the Project remains
the Company’s key focus. The Project feasibility study (“GK Feasibility Study”, “Feasibility Study”)
of December 3, 2010 has been updated and a NI 43-101 compliant technical report was posted on SEDAR and EDGAR in May 2014.



On July 28, 2014, the Company announced
the appointment of three leading international banks to arrange and underwrite a senior secured term loan facility of up to US$370M
and on February 3, 2015, the Company announced that for reasons unrelated to the specifics of the transaction or the Gahcho Kué
diamond mine Deutsche Bank A.G. has been replaced as a mandated lead arranger by the Bank of Nova Scotia (“Scotiabank”).
Natixis S.A. and Nedbank Limited remain joint mandated lead arrangers with Scotiabank.



In addition to the planned US$370M loan
facility the Company raised equity of $100 million in October 2014 by way of a private placement and on February 18, 2015 as discussed
above, the Company announced that it is undertaking a $95 million rights offering in order to fund a US$75 million cost overrun
facility which is a condition precedent to drawdown of the US$370M term loan facility. The proceeds of the equity financing and
proposed debt facility will be used to fund the Company’s share of the construction cost of the Gahcho Kué diamond
mine, associated fees, general and administrative costs, interest cost and repayment of $20 million of sunk costs owing to De Beers.
Of the sunk costs, $10 million was paid on October 27, 2014 following the issuance of the construction and operating permits. The
final $10 million payment is due on achievement of commercial production, which is expected in 2017.



47







As at December 31, 2014, the Company incurred
financing fees of $2,570,914 (December 31, 2013 - $Nil). This consists primarily of legal, advisory fees and other financing expenses
in relation to the loan facility.



JOINT
VENTURE AGREEMENT



The Gahcho Kué Project is an unincorporated
Joint Arrangement between De Beers (51%) and Mountain Province (49%) through its wholly owned subsidiaries. The Company accounts
for the Project as a joint operation in accordance with IFRS 11. Mountain Province holds an undivided 49% ownership interest in
the assets, liabilities and expenses of the Project.



On July 3, 2009, the Company entered into
an amended and restated Joint Arrangement Agreement with De Beers (jointly, the “Participants”) under which:



| | (a) | The Participants’ continuing interests in the Gahcho Kué Project will be Mountain
Province 49% and De Beers 51%, except for normal dilution provisions which are applicable to both Participants. On October 2, 2014,
Mountain Province assigned its 49% interest to its wholly-owned subsidiary 2435386 Ontario Inc. to the same extent as if 2435386
Ontario Inc. had been the original party to the Joint Venture Agreement;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Each Participant will market their own proportionate share of diamond production in accordance
with their participating interest;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------

| | (c) | Each Participant will contribute their proportionate share to the future project development costs;
| | --- | ---------------------------------------------------------------------------------------------------

| | (d) | Material strategic and operating decisions, including plans and budgets, will be made by consensus
of the Participants as long as each Participant has a participating interest of 40% or more;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (e) | The Participants have agreed that the sunk historic costs to the period ending on December 31,
2008 will be reduced and limited to $120 million;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------

| | (f) | The Company will repay De Beers $59 million (representing 49% of an agreed sum of $120 million)
plus accrued interest in settlement of the Company’s share of the agreed historic sunk costs on the following schedule:
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | $200,000 on execution of the 2009 Agreement
(the Company’s contribution to the 2009 Arrangement expenses to date of execution of the 2009 Agreement) – paid and
expensed;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Up to $5.1 million in respect of De Beers’
share of the costs of the feasibility study (paid - $4,417,421 to December 31, 2012, included in “Mineral Properties”;
no further payments required);
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | $10 million upon the completion of a feasibility
study with at least a 15% IRR and approval of the necessary development work for a mine (as defined in the 2009 Agreement) - paid
March 15, 2011;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | $10 million following the issuance of
the construction and operating permits expected during 2014 (paid on October 27, 2014);
| | - | -----------------------------------------------------------------------------------------------------------------------------

| | · | $10 million following the commencement
of commercial production (commencement of commercial production means the first day of the calendar month following the first thirty
consecutive days (excluding maintenance days) that the relevant Mine has achieved and maintained 70% of rated Production specified
in the relevant Feasibility Study); and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The balance of approximately $24.4 million
plus accumulated interest of approximately $25 million within 18 months following commencement of commercial production, which
is expected to take place by January 2017. At December 31, 2014, accumulated interest of approximately $16.4 million is owing.
Accumulated interest is being calculated at the prevailing LIBOR rate plus 5%.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Since these payments are contingent upon
certain events occurring, and/or work being completed, they will be recorded as the payments become due or are made.



2435386 Ontario Inc. has agreed that the
Company’s marketing rights under the 2009 Agreement may be diluted if the Company defaults on the remaining repayments described
above, if and when such payments become due.



48







The 2009 Agreement’s provision for
consensus decision-making for material strategic and operating decisions provides the Company with joint control of the Project
with De Beers and the Company accounts for the Project as a joint operation.

The underlying value and recoverability
of the amounts shown for the Company’s Mineral Properties is dependent upon the ability of the Project to complete the successful
funding and construction of the mine, and future profitable production. Failure to achieve the above will require the Company to
write-off costs capitalized to date.



GAHCHO KUÉ PROJECT



The Project is located in the Northwest
Territories, about 300 kilometers northeast of Yellowknife. The Project covers approximately 10,353 acres, and encompasses four
mining leases (numbers 4341, 4199, 4200, and 4201) held in trust by the Operator, De Beers. The Project hosts four primary kimberlite
bodies – Hearne, Tuzo, Tesla, and 5034. The four main kimberlite bodies are within two kilometers of each other.



Independent Feasibility Study



On April 2, 2014, the Company announced
the results of the updated “2014 Feasibility Study NI 43-101 Technical Report” on the Gahcho Kué diamond project
dated March 31, 2014. JDS and Hatch Ltd. compiled and prepared the feasibility study NI 43-101 technical report for Mountain Province.



The following are the financial and project
highlights from the 2014 Feasibility Study Revision and Update for both Participants share of the Project.



|• | IRR excluding sunk costs                             | 32.6%*                
|- | ---------------------------------------------------- | ----------------------
|• | NPV @ 10%                                            | $1.005B               
|• | Capital to completion (2013$ unescalated)            | $858.5M**             
|• | Working capital                                      | $80.1M                
|• | Ramp up operating costs through Jan 2017             | $82.0M                
|• | Sustaining capital LOM (including closure cost)      | $92.7M                
|• | Operating costs (per tonne processed, incl. sorting) | $72.51                
|• | Mine operational life                                | 12 years              
|• | Average annual production                            | 3 million tonnes      
|• | Total diamond production                             | 53.4 million carats   
|• | Average annual diamond production                    | 4.45 million carats   
|• | Diamond revenue                                      | US$149.66 per carat***



*After taxes/royalties and unleveraged

**Including $75.6M contingency

***Diamond revenue for the Feasibility
Study is derived from the modeled diamond price estimate provided by WWW International Diamond Consultants (February 2014 price
book) exclusive of any marketing fees post government valuation. Price forecasting is inclusive of a real 1.5% escalation over
LOM. Average modeled diamond price in 2014 is US$118.38



The average annual production for the first
three years of full production (2017 – 2019) is estimated at 5.6 million carats. The ramp up costs of $82.0M noted above
does not take into consideration the revenue expected from the estimated production of approximately one million attributable carats
during the production ramp-up period between September 2016 through January 2017.



Gahcho Kué Mineral Reserve



On April 2, 2014, Mountain Province announced
a Mineral Reserve estimate for the Project. The Mineral Reserve is the Indicated Resource contained in the proposed open pit mine
that can be mined and processed profitably and is scheduled for treatment in the feasibility study life of mine plan. The Gahcho
Kué mineral reserve estimate is summarized in Table 1 below.



49







Table 1

Gahcho Kué Mineral Reserve Estimate

(JDS, March 2014 FS)



|Pipe   |  | Classification |  | Tonnes(Mt) |      |  | Grade (carats per tonne) |  |      | Carats(Mct) | 
|------ |  | -------------- |  | ---------- | ---- |  | ------------------------ |  | ---- | ----------- | 
|5034   |  | Probable       |  |            | 13.4 |  |                          |  | 1.74 |             | 
|Hearne |  | Probable       |  |            | 5.6  |  |                          |  | 2.07 |             | 
|Tuzo   |  | Probable       |  |            | 16.4 |  |                          |  | 1.25 |             | 
|Total  |  | Probable       |  |            | 35.4 |  |                          |  | 1.57 | *           | 

* Fully
diluted mining grade



Independent Diamond Valuation



WWW International Diamond Consultants Ltd.
(“WWW”) provided an updated independent valuation of the diamonds recovered from the Project. All diamond values presented
below are based on the WWW Price Book as at August 8, 2014.

Table 2 below reflects the actual price
per carat for the parcel of 8,317.29 carats of diamonds recovered from the Project.



Table 2

|Actual Price US$/carat
|----------------------
|Pipe                  
|5034                  
|                      
|Hearne                
|Tuzo                  
|Total                 

Note: Total Dollars are the result of
rounding.



In their report WWW stated: "The most
valuable stone is in the Tuzo sample. This 25.13 carat stone is the largest stone in all of the bulk samples. The stone is an octahedron
of H/I colour which WWW valued at $20,000 per carat giving a total value of $502,600”.



WWW added: “The stone with the highest
value per carat in the sample is a 9.90 carat stone in the 5034 C/E sample. This is a makeable stone of high colour (D/E) which
WWW valued at $23,000 per carat giving a total value of $227,700”.



Besides the high-value 25.13 and 9.9 carat
diamonds, several other large high-value diamonds of gem quality have been recovered from Gahcho Kué, including 7.0 carat,
6.6 carat and 5.9 carat diamonds from the 5034 kimberlite and 8.7 carat, 6.4 carat and 4.9 carat diamonds from the Hearne kimberlite.
The presence of larger diamonds is an important driver of overall diamond value at Gahcho Kué.



Table 3 below presents models of the August
2014 average price per carat (US$/carat) for each kimberlite. The modeled price per carat is determined using statistical methods
to estimate the average value of diamonds that are likely to be recovered from future production at Gahcho Kué.



50







Table 3

|Pipe            |  | High Model |     |  | Base Model |   |     | Low Model | 
|--------------- |  | ---------- | --- |  | ---------- | - | --- | --------- | 
|5034 Centre     |  |            | 177 |  |            |   | 139 |           | 
|5034 West       |  |            | 181 |  |            |   | 138 |           | 
|5034 North/East |  |            | 204 |  |            |   | 149 |           | 
|Hearne          |  |            | 144 |  |            |   | 112 |           | 
|Tuzo            |  |            | 141 |  |            |   | 105 |           | 
|Average         |  | $          | 163 |  |            | $ | 123 |           | 

Note: 1 mm nominal
square mesh

Diamond values
are in US Dollars



For mine feasibility studies, WWW recommends
using the base case models for defining the resources and reserves. The “high” and “low” models are included
for sensitivity analysis.



The WWW averaged modeled price per carat
for the Gahcho Kué kimberlites is US$123, which represents an approximate 40 percent increase over the WWW April 2010 average
modeled price, which was the base case used in the 2010 feasibility Study. The WWW models use size distribution models (carats
per size class) developed by De Beers.



Permitting



On July 22, 2013,De Beers and the
Company announced that the Mackenzie Valley Environmental Impact Review Board had concluded the Gahcho Kué Environmental
Impact Review and recommended approval of the proposed Gahcho Kué diamond mine subject to measures and follow-up programs.



On October 22, 2013 the Minister of Aboriginal
Affairs and Northern Development Canada, the Hon. Bernard Valcourt, approved the development of the Gahcho Kué diamond mine
as recommended by the Mackenzie Valley Environmental Impact Review Board and on December 2, 2014, the Mackenzie Valley Land and
Water Board has approved a pioneer Land Use Permit for the Gahcho Kué diamond mine, which allowed land-based site works
to commence in preparation for deliveries planned for the 2014 winter road season.



On August 12, 2014, De Beers and the Company
announced that the Mackenzie Valley Land and Water Board (“MVLWB”) has issued the Gahcho Kué Type A Land Use
Permit and sent the Type A Water License for final approval to the Minister of Environment and Natural Resources (“ENR”)
of the Government of the Northwest Territories (“GNWT”).



On September 25, 2014,De Beers
and the Company announced that the Gahcho Kué Project has received approval of the Type A Water License by the ENR of the
GNWT.



Gahcho Kué Development



The first blast in the quarry at Gahcho
Kué occurred on December 13, 2013. Production of aggregate material for infrastructure foundations, roads and the landing
strip is underway. Deliveries of machinery, equipment, fuel tanks, the main camp and other supplies were completed by the end of
March 2014. Approximately 800 truckloads were delivered to Gahcho Kué on the 2014 ice road. Approximately 2,183 truckloads
will be delivered on the 2015 ice road, which will include the diamond plant, mining equipment, explosives and fuel. As at March
2015 the overall project development is progressing according to plan. Construction of the Gahcho Kué mine is expected to
be completed by early 2016, following which commissioning of the diamond plant will commence. Production is expected to commence
during the second half of 2016.



Tuzo Deep Project



Following completion of the Tuzo Deep drill
program in 2012, which was managed by the Operator, an updated National Instrument (NI) 43-101 resource estimate for Tuzo Deep
(Table 4 below) was prepared by Mineral Services Canada Inc. This estimate incorporates information from geological data updates
completed since the previous NI 43-101 Technical Report released in 2009. The 2009 resource estimate for Tuzo Deep is included
for reference purposes.



51







Table 4

|Pipe      |  | Year |  | Resource Classification |  | Volume (Mm3) |     |  | Tonnes (Mt) |  |     | Carats (Mct) |  |  | Grade (cpht) | 
|--------- |  | ---- |  | ----------------------- |  | ------------ | --- |  | ----------- |  | --- | ------------ |  |  | ------------ | 
|Tuzo Deep |  | 2009 |  | Inferred                |  |              | 1.5 |  |             |  | 3.5 |              |  |  | 6.2          | 
|Tuzo Deep |  | 2013 |  | Indicated               |  |              | 1.5 |  |             |  | 3.6 |              |  |  | 6.0          | 
|Tuzo Deep |  | 2013 |  | Inferred                |  |              | 3.7 |  |             |  | 8.9 |              |  |  | 14.4         | 



Notes:
1) Mineral Resources are reported at a bottom cut-off of 1.0 mm

2) cpht = carats per hundred tonnes
3) Volume, tonnes, and carats are rounded to the nearest 100,000

4) Tuzo volumes and tonnes exclude 0.6Mt of a granite raft

Table 4 above reflects the updated Tuzo
Deep mineral resource. There has been no change in the geological data for the Tuzo Upper, 5034 and Hearne kimberlites since the
2009 Technical Report.



Table 5 below incorporates the updated
Tuzo Deep mineral resource estimate into the existing Gahcho Kué mineral resource estimate.

Table 5

|Pipe    |  | Resource Classification |  | Volume (Mm3) |         |  | Tonnes (Mt) |  |          | Carats (Mct) |  |  | Grade (cpht) | 
|------- |  | ----------------------- |  | ------------ | ------- |  | ----------- |  | -------- | ------------ |  |  | ------------ | 
|5034    |  | Indicated Inferred      |  |              | 5.10.3  |  |             |  | 12.70.8  |              |  |  | 23.91.2      | 
|Hearne  |  | Indicated Inferred      |  |              | 2.30.7  |  |             |  | 5.31.6   |              |  |  | 11.92.9      | 
|Tuzo    |  | Indicated Inferred      |  |              | 6.63.7  |  |             |  | 15.88.9  |              |  |  | 20.814.4     | 
|Summary |  | Indicated Inferred      |  |              | 14.04.7 |  |             |  | 33.811.3 |              |  |  | 56.618.5     | 



The updated Tuzo Deep resource estimate
indicates an approximate 12% percent increase in the Gahcho Kué indicated resource from 30.2 million tonnes to 33.8 million
tonnes and an approximate 90% increase in inferred resource from 6 million tonnes to 11.3 million tonnes. The diamond content of
the indicated resource increased by approximately 12% from 50.5 million carats to 56.6 million carats and the diamond content of
the inferred resource increased by approximately 80% from 10.3 million carats to 18.5 million carats. The reasons for these increases
are the upgrading of the 300 to 360 meter zone in Tuzo from inferred resource to indicated resource and also the inclusion of the
newly defined Tuzo inferred resource from a depth of 360 meters to 564 meters below surface, which was delineated during the 2011/12
Tuzo Deep drill program.



The Tuzo Deep resource update released
in mid-2013 defined a resource at the Tuzo kimberlite to a depth of 560 meters, with the kimberlite remaining open to depth. A
follow-up deep drilling program commenced in February 2014 to test the Tuzo kimberlite to a depth of at least 750 meters. On June
30, 2014,the Company announced the results of the 2014 Tuzo Deep drill program, which confirmed the continuation of kimberlite
to a depth of more than 740 meters below surface. On March 4, 2015, the Company announced the diamond recovery results from the
2014 Tuzo Deep drill program.



52







Table 6 below summarizes the diamond recovery
results from the 2014 Tuzo Deep drill program.



Table 6 – Tuzo Deep Caustic Fusion
Diamond Recovery Results

|                   |  | Number and Weight of Diamonds According to Sieve
    Size Fraction (mm) |      |  |               | 
|------------------ |  | ----------------------------------------------------------------------- | ---- |  | ------------- | 
|                   |  | +0.106 -0.150                                                           |      |  | +0.150 -0.212 | 
|Number of Diamonds |  |                                                                         | 946  |  |               | 
|Weight (carats)    |  |                                                                         | 0.02 |  |               | 

*Total sample weight 0.434 tonnes

*Total weight of recovered diamonds greater
than 0.85mm: 2.46 carats

*Sample grade of diamonds greater than
0.85mm: 5.67 carats per tonne



Qualified Person

The Qualified Person for the updated Tuzo
Deep estimate is Mr. Tom Nowicki, PhD, P Geo, a Mineral Services employee. The estimation and classification of the mineral resources
conform to industry-best practices and meet the requirements of CIM (2005).



Gahcho Kué Capital Program



As mentioned above, an update of the 2010
feasibility study was completed on March 31, 2014, which incorporates agreed revisions and clarifications, design refinements and
cost adjustments to reflect changes since completion of the 2010 feasibility study. The expected capital cost from January 2014
to complete the development and commissioning of the mine is $858.5 million (unescalated in 2013 dollars), as discussed above under
‘Independent Feasibility Study’.



The capital budget for 2014 was approximately
$211 million of which the Company was responsible for approximately $103.7 million excluding a management fee payable to the Operator.
The 2014 capital program was focussed on completing detailed engineering design, final permitting, site preparation, construction
and procurement for the 2015 winter road. The capital budget for 2015 is $442.72 million of which the Company is responsible for
$216.9 million plus a management fee payable to the Operator. The 2015 capital program is focussed on the construction of the mine.



Results of operations



The financial results for the years ended
December 31, 2014, 2013 and 2012 are reported under IFRS as issued by the IASB, as well as for the quarterly interim periods.



The Company’s only project is held
through its wholly owned subsidiaries 2435572 Ontario Inc. and 2435386 Ontario Inc. The Company holds a 49% interest in the Gahcho
Kué Project, located in the Northwest Territories of Canada and De Beers holds the remaining 51% interest. At March 26,
2015, the Company and De Beers are in the process of constructing the Gahcho Kué diamond mine, which is expected to be completed
in early 2016. The total construction of the mine is expected to cost $1,019 million and at March 26, 2015 remains on time and
on budget. At December 31, 2014, the Participants had spent approximately $330 million and committed approximately $280 million.
The Company has no other sources of income and in order to fund its 49% share of the remaining construction costs of the Gahcho
Kué diamond mine, the Company has raised equity and is in the process of finalizing a loan facility and the $95 million
rights offering as mentioned above.



53







Selected Annual Information



|                                 |  | December 31, 2014 |             |   | December 31, 2013 |   |             | December 31, 2012 | 
|-------------------------------- |  | ----------------- | ----------- | - | ----------------- | - | ----------- | ----------------- | 
|Interest income                  |  | $                 | 458,659     |   |                   | $ | 355,428     |                   | 
|Operating expenses               |  |                   | (4,636,839  | ) |                   |   | (26,935,484 | )                 | 
|Other expenses                   |  |                   | (214,211    | ) |                   |   | (23,882     | )                 | 
|Net loss for the period          |  |                   | (4,394,079  | ) |                   |   | (26,603,938 | )                 | 
|Basic and diluted loss per share |  |                   | (0.04       | ) |                   |   | (0.28       | )                 | 
|Cash flow from operations        |  |                   | (8,858,684  | ) |                   |   | (32,619,536 | )                 | 
|Cash, end of year                |  |                   | 3,779,907   |   |                   |   | 11,344,472  |                   | 
|Total assets                     |  |                   | 300,994,512 |   |                   |   | 110,367,203 |                   | 
|Long-term liabilities            |  |                   | 7,996,825   |   |                   |   | 5,224,662   |                   | 
|Dividend declared                |  |                   | Nil         |   |                   |   | Nil         |                   | 



FINANCIAL REVIEW



Three Months and Year ended December
31, 2014 compared to the Three Months and Year ended December 31, 2013



For the three months ended December 31,
2014, the Company recorded a net loss of $458,431 or $0.00 per share, compared to $6,839,466 net loss or $0.07 per share for the
three months ended December 31, 2013. For the year ended December 31, 2014, the Company recorded a net loss of $4,394,079 or $0.04
per share, compared to $26,603,938 net loss or $0.28 per share for the year ended December 31, 2013.



Three Months and Year ended December
31, 2013 compared to the Three Months and Year ended December 31, 2012



For the three months ended December 31,
2013, the Company recorded a net loss of $6,839,466 or $0.07 per share, compared to $3,089,892 net loss or $0.04 per share for
the three months ended December 31, 2012. For the year ended December 31, 2013, the Company recorded a net loss of $26,603,938
or $0.28 per share, compared to $3,337,610 net loss or $0.04 per share for the year ended December 31, 2012.



Quarterly financial information for the past eight quarters
is shown in Table 1.

54







SUMMARY OF QUARTERLY RESULTS



Table 1 - Quarterly Financial Data



|                                    |  | Three months ended |             
|----------------------------------- |  | ------------------ | ------------
|                                    |  | December 31        |             
|                                    |  | 2014               |             
|                                    |  | $                  |             
|Earnings and Cash Flow              |  |                    |             
|Interest income                     |  |                    | 260,229     
|Operating expenses                  |  |                    | (658,851    
|Net loss for the period             |  |                    | (458,431    
|Basic and diluted loss per share    |  |                    | (0.00       
|Cash flow from operations           |  |                    | (4,387,710  
|Cash flow from investing activities |  |                    | (100,645,017
|Cash flow from financing activities |  |                    | 94,767,451  
|Balance Sheet                       |  |                    |             
|Total assets                        |  |                    | 300,994,512 





|                                            |  | Three months ended |            
|------------------------------------------- |  | ------------------ | -----------
|                                            |  | December 31        |            
|                                            |  | 2013               |            
|                                            |  | $                  |            
|Earnings and Cash Flow                      |  |                    |            
|Interest income                             |  |                    | 60,810     
|Operating expenses                          |  |                    | (6,894,257 
|Net income (loss) for the period            |  |                    | (6,839,466 
|Basic and diluted earnings (loss) per share |  |                    | (0.07      
|Cash flow from operations                   |  |                    | (17,625,994
|Cash flow from investing activities         |  |                    | (6,186,388 
|Cash flow from financing activities         |  |                    | 29,366,941 
|Balance Sheet                               |  |                    |            
|Total assets                                |  |                    | 110,367,203





COSTS AND EXPENSES



The costs and expenses for the three
months and years ended December 31, 2014, December 31, 2013 and December 31, 2012 are comparable except for the following:



Consulting fees



Consulting fees for the three months ended
December 31, 2014, 2013, and 2012 respectively were $538,171, $509,589 and $316,101. For the years ended December 31, 2014, 2013
and 2012 consulting fees respectively were $1,536,292, $2,459,140 and $1,434,917. Included in these amounts for the years ended
December 31, 2014, 2013 and 2012 respectively were $316,018, $1,240,821 and $463,500 relating to stock based compensation. Certain
amounts charged in 2013 were not incurred in 2014.



55







Exploration and evaluation expenses



Exploration and evaluation expenses for
the three months ended December 31, 2014, 2013 and 2012 respectively were ($179,813), $5,456,405 and $2,617,266. For the years
ended December 31, 2014, 2013 and 2012 exploration and evaluation expenses respectively were $1,508,329, $21,837,083 and $10,651,622.
The increase from 2013 compared to 2012 is a result of additional work being conducted by various engineering companies in preparation
for the construction of the mine at Gahcho Kué. The decrease from 2014 compared to 2013 and 2012 are as a result of all
Gahcho Kué development costs being capitalized, effective, December 2013.



Gahcho Kué Project management fees



Gahcho Kué Project management fees
for the three months ended December 31, 2014, 2013 and 2012 respectively were $Nil, $460,104 and $80,663. For the years ended December
31, 2014, 2013 and 2012 Gahcho Kué Project management fees respectively were $Nil, $1,113,848 and $311,076. The decrease
for the same period in 2014 is as a result of all Gahcho Kué development costs being capitalized, effective, December 2013.



Professional fees



Professional fees for the three months
ended December 31, 2014, 2013 and 2012 respectively were $118,738, $74,115 and ($43,288). For the years ended December 31, 2014,
2013 and 2012 professional fees respectively were $423,752, $344,701 and $664,878. The increase from 2014 compared to 2013 relates
to various legal and audit related matters. The decrease from 2013 compared to 2012 is a result of professional fees incurred relating
to the spin-out of Kennady Diamonds Inc.



Interest income



Interest income for the three months ended
December 31, 2014 respectively were $260,229, $60,810 and $44,313. For the years ended December 31, 2014, 2013 and 2012 interest
income respectively were $458,659, $355,428 and $147,762. The increase in 2014 is as a result of the private placements that took
place during the year and the increased amount invested in short-term investments.



INCOME AND RESOURCE TAXES



The Company is subject to income and mining
taxes in Canada with the statutory income tax rate at 26.5%.



No deferred tax asset has been recorded
in the financial statements as a result of the uncertainty associated with the ultimate realization of these tax assets.



The Company is subject to assessment by
Canadian authorities, which may interpret tax legislation in a manner different from the Company. These differences may affect
the final amount or the timing of the payment of taxes. When such differences arise the Company makes provision for such items
based on management’s best estimate of the final outcome of these matters.



FINANCIAL POSITION AND LIQUIDITY



Since inception, the Company’s capital
resources have been limited. The Company has had to rely upon the sale of equity securities to fund property acquisitions, exploration,
capital investments and administrative expenses, among other things.



The Company reported working capital of
$46,796,338 at December 31, 2014 ($35,133,368 as at December 31, 2013), including cash and short-term investments of $81,041,749
($35,687,694 at December 31, 2013). The short-term investments reflected in the December 31, 2014 and December 31, 2013 figures
were guaranteed investment certificates held with a major Canadian financial institution with nominal counter party credit risk
associated with the bank.



56







The Company had no long-term debt at December
31, 2014 and December 31, 2013. The Company’s required payment to De Beers, described under the Joint Venture Agreement above
for December 31, 2014, are contingent on commercial production.



The Company is in the process of developing
the Gahcho Kué project (“Gahcho Kué Project”) in conjunction with De Beers Canada Inc. The underlying
value and recoverability of the amounts shown as “Property and Equipment” are dependent upon the successful development
and commissioning, and upon future profitable production or proceeds from disposition of the Company’s mineral properties.
Failure to meet the obligations for the Company’s share in the Gahcho Kué Project may lead to dilution of the interest
in the Gahcho Kué Project and may require the Company to write off costs capitalized to date.



As at December 31, 2014, the Company has
not achieved profitable operations and continues to be dependent upon its ability to obtain external financing to meet the Company’s
liabilities as they become payable and to fund the Company’s share of the construction of the Gahcho Kué Project.



The Company currently has no source of
revenues. In the years ended December 31, 2014, 2013 and 2012, the Company incurred losses, had negative cash flows from operating
activities, and will be required to obtain additional sources of financing to complete its business plans going into the future.
Although the Company had working capital of $46,796,338 at December 31, 2014, including $81,041,749 of cash and short-term investments
the Company has insufficient capital to finance its operations including the Company’s share of development costs of the
Gahcho Kué Project.



The Company intends to obtain the required
financing through a senior secured term loan facility of up to US$370 million (the “Facility”) and by issuing common
shares by way of a rights offering for gross proceeds of $95 million (Note 18). Finalization of the Facility remains subject to
agreement on Facility documentation, the arrangement of a cost overrun facility of US$75 million, which is being arranged by way
of the rights offering, and certain other matters and conditions.



However, there is no certainty that the
Company will be able to obtain financing from any of those sources. These conditions indicate the existence of a material uncertainty
that results in substantial doubt as to the Company’s ability to continue as a going concern.



On February 18, 2015, the Company announced
that it is undertaking a $95,047,132 rights offering in order to fund a US$75 million cost overrun facility, the arrangement of
which is a condition precedent to drawdown of a proposed US$370 million term loan facility (Note 1). The Company will be issuing
a maximum of 23,761,783 common shares under the rights offering. The Company’s major shareholder, Mr. Dermot Desmond, has
advised the Company that he intends to fully exercise his rights under the rights offering. In addition, the Company has entered
into a standby agreement with Mr. Desmond whereby Mr. Desmond has undertaken to fully subscribe for those rights not otherwise
subscribed for under the rights offering. Mr. Desmond will be paid 3% or $2,851,414 as a standby fee. Subscription under the standby
agreement is subject to certain conditions.



Off-Balance
Sheet Arrangements



The Company has no off-balance sheet arrangements.



SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES
AND ASSUMPTIONS



The preparation of the Company’s
audited consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting
period. Actual outcomes could differ from these estimates. These audited consolidated financial statements include estimates, which,
by their nature, are uncertain and may require accounting adjustments based on future occurrences. Revisions to accounting estimates
are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future
periods. These estimates are based on historical experience, current and future economic conditions, and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.



57







| | i) | Significant Judgments in Applying Accounting Policies
| | -- | -----------------------------------------------------

The areas which require management
to make significant judgments in applying the Company’s accounting policies in determining carrying values include, but are
not limited to:



a)	      Impairment analysis
– mineral properties



As required under IAS 36 –
Impairment of Assets (“IAS 36”), the Company reviews its mineral properties for impairment based on results to date
and when events and changes in circumstances indicate that the carrying value of the assets may not be recoverable. The Company
is required to make certain judgments in assessing indicators of impairment. The Company’s assessment is that as at December
31, 2014 and 2013, no indicator of an impairment in the carrying value of its mineral properties had occurred.



| | ii) | Significant Accounting Estimates and Assumptions
| | --- | ------------------------------------------------



The areas which require management
to make significant estimates and assumptions in determining carrying values include, but are not limited to:



a)	      Mineral reserves and
resources



Mineral reserve and resource
estimates include numerous uncertainties and depend heavily on geological interpretations and statistical inferences drawn from
drilling and other data, and require estimates of future price for the commodity and future cost of operations. The mineral reserve
and resources are subject to uncertainty and actual results may vary from these estimates. Results from drilling, testing and production,
as well as material changes in commodity prices and operating costs subsequent to the date of the estimate, may justify revision
of such estimates. Changes in the proven and probable mineral reserves or measured and indicated and inferred mineral resources
estimates may impact the carrying value of the properties.



b)	      Impairment analysis
- mineral properties



As required
under IAS 36, the Company reviews its mineral properties for impairment based on results to date and when events and changes in
circumstances indicate that the carrying value of the assets may not be recoverable. If indicators of impairment are identified,
IAS 36 requires the Company to make certain estimates in respect of recoverability of the asset, including estimated development
costs, life of mine, discount rates and diamond prices.



c)	      Provision for decommissioning
and restoration



The decommissioning and restoration
liability and the accretion recorded are based on estimates of future cash flows, discount rates, and assumptions regarding timing.
The estimates are subject to change and the actual costs for the decommissioning and restoration liability may change significantly.



d)	      Stock options



The stock option pricing model
requires the input of highly subjective assumptions including the expected life and volatility. Changes in the subjective input
assumptions can materially affect the fair value estimate.



e)	      Deferred taxes



Deferred income tax
assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities
and on unused losses carried forward, and are measured using the substantively enacted tax rates that are expected to be in effect
when the differences are expected to reverse or losses are expected to be utilized. Deferred tax assets are recorded to recognize
tax benefits only to the extent that, based on available evidence, including forecasts, it is probable that they will be realized.
The Company has not recorded the benefit of tax losses or deductible temporary differences.



58







STANDARDS, AMENDMENTS AND INTERPRETATIONS
TO EXISTING STANDARDS



At the date of authorization of these financial
statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective,
and have not been adopted early by the Company. The Company anticipates that all of the relevant pronouncements will be adopted
by the Company in the first period beginning after the effective date of the pronouncement. Information on new standards, amendments
and interpretations that are expected to be relevant to the Company’s financial statements is provided below. Certain other
new standards and interpretations have been issued but are not expected to have a material impact on the Company’s financial
statements and are therefore not discussed below.



Financial instruments

In July 2014, the IASB issued the final
version of IFRS 9 Financial Instruments (“IFRS 9”) bringing together the classification and measurement, impairment
and hedge accounting phases of the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS
9 is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. The extent of the impact
of adoption of IFRS 9 has not yet been determined.



Property, plant and equipment and
intangible assets

In May 2014, the IASB issued amendments
to IAS 16 Property, plant and equipment (“IAS 16”) and IAS 38 Intangible assets (“IAS 38”). The amendments
are effective for annual periods beginning on or after January 1, 2016 and are to be applied prospectively. The amendments clarify
the factors in assessing the technical or commercial obsolescence and the resulting depreciation period of an asset and state that
a depreciation method based on revenue is not appropriate. The amendments to IAS 16 and IAS 38 are effective for annual periods
beginning on or after January 1, 2016. The extent of the impact of adoption of the amendments to IAS 16 and IAS 38 has not yet
been determined.



The following are new accounting amendments
and interpretations which the Company adopted and are effective for the Company’s interim and annual consolidated financial
statements commencing January 1, 2014.



IFRIC 21 - Levies

IFRIC 21 Levies (“IFRIC 21”)
was issued in May 2013 and is an interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets (“IAS
37”), on the accounting for levies imposed by governments. IAS 37 sets out criteria for the recognition of a liability, one
of which is the requirement for the entity to have a present obligation as a result of a past event. IFRIC 21 clarifies that the
obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers
the payment of the levy. The adoption of IFRIC 21 did not have a material effect on the consolidated financial statements.



IAS 32 – Offsetting Financial
Assets and Liabilities

IAS 32 Financial Instruments: Presentation
was amended to clarify that an entity currently has a legally enforceable right to set-off if that right is not contingent on a
future event; and enforceable both in the normal course of business and in the event of default, insolvency or bankruptcy of the
entity and all counterparties. This amendment also clarifies when a settlement mechanism provides for net settlement or gross settlement
that is equivalent to net settlement. The adoption of the amended standard did not have an impact on the consolidated financial
statements.



RELATED PARTY TRANSACTIONS



The Company’s related parties include
the operator of the Gahcho Kué Project, Bottin (International) Investments Ltd. (“Bottin”), key management and
their close family members, and the Company’s directors. Kennady Diamonds Inc. (“Kennady Diamonds”) is also a
related party since the Company and Kennady Diamonds have common members of key management.



None of the transactions with related parties
incorporate special terms and conditions, and no guarantees were given or received. Related party transactions are recorded at
their exchange amount, being the amount agreed to by the parties. Outstanding balances are settled in cash.



The Company had the following transactions
and balances with its related parties including key management personnel and the Company’s directors, Bottin, the operator
of the Gahcho Kué Project, and Kennady Diamonds. The transactions with key management personnel are in the nature of remuneration.
The transactions with the operator of the Gahcho Kué Project relate to the funding of the Company’s interest in the
Gahcho Kué Project for the current year’s expenditures, capital additions and management fee. The transactions with
Kennady Diamonds are for a monthly management fee charged by the Company and reimbursement of expenses paid on behalf of Kennady
Diamonds.



59







|                                                                 |  | December 31, |           |  | December 31, |   |           | December 31, | 
|---------------------------------------------------------------- |  | ------------ | --------- |  | ------------ | - | --------- | ------------ | 
|                                                                 |  | 2014         |           |  | 2013         |   |           | 2012         | 
|The total of the transactions:                                   |  |              |           |  |              |   |           |              | 
|Bottin - Stand-by Fee under Stand-by Agreement                   |  | $            | -         |  |              | $ | -         |              | 
|Kennady Diamonds                                                 |  |              | 90,000    |  |              |   | 152,500   |              | 
|Remuneration to key management personnel                         |  |              | 1,426,256 |  |              |   | 2,457,759 |              | 
|                                                                 |  |              |           |  |              |   |           |              | 
|Management fee charged by the operator of the Gahcho Kué Project |  |              | 4,067,683 |  |              |   | 1,113,848 |              | 
|Payable to the operator of the Gahcho Kué Project                |  |              | 1,345,183 |  |              |   | 5,647,892 |              | 
|Payable to key management personnel                              |  |              | 398,895   |  |              |   | 357,967   |              | 



The remuneration expense of directors and
other members of key management personnel for the years ended December 31, 2014, 2013 and 2012 were as follows:



|                                                                    |  | December 31 |           |  | December 31, |   |           | December 31, | 
|------------------------------------------------------------------- |  | ----------- | --------- |  | ------------ | - | --------- | ------------ | 
|                                                                    |  | 2014        |           |  | 2013         |   |           | 2012         | 
|Consulting fees, director fees, bonus and other short-term benefits |  | $           | 1,110,238 |  |              | $ | 1,216,938 |              | 
|Share-based payments                                                |  |             | 316,018   |  |              |   | 1,240,821 |              | 
|                                                                    |  | $           | 1,426,256 |  |              | $ | 2,457,759 |              | 



In accordance with IAS 24 Related Parties,
key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities
of the Company directly or indirectly, including any directors (executive and non-executive) of the Company.



CONTRACTUAL OBLIGATIONS



The Company has consulting agreements with
the President and CEO and the VP Finance, CFO and Corporate Secretary for their services in these capacities.

For the year ended December 31, 2014, the
Company’s proportional interest (49%) of purchase commitments relevant to project expenditure by the operator of the Gahcho
Kué Project to date is $136,972,262.



|                               |  | 2015 |             |  | 2016 |   |            | Total | 
|------------------------------ |  | ---- | ----------- |  | ---- | - | ---------- | ----- | 
|Gahcho Kué Project commitments |  | $    | 123,225,388 |  |      | $ | 13,746,874 |       | 



The total future minimum lease payments
for office space by the Company under non-cancellable operating leases are as follows:



|                              |  | 2015 |         |  | 2016 |   |         | 2017 |  |   | Total  | 
|----------------------------- |  | ---- | ------- |  | ---- | - | ------- | ---- |  | - | ------ | 
|                              |  |      |         |  |      |   |         |      |  |   |        | 
|Future minimum lease payments |  | $    | 142,256 |  |      | $ | 142,256 |      |  | $ | 11,855 | 



Other
Management Discussion and Analysis Requirements



RISKS



Mountain Province’s business of exploring,
permitting and developing mineral resources involves a variety of operational, financial and regulatory risks that are typical
in the mining industry. The Company attempts to mitigate these risks and minimize their effect on its financial performance, but
there is no guarantee that the Company will be profitable in the future, and investing in the Company’s common shares should
be considered speculative.



Mountain Province’s business of exploring,
permitting and developing mineral properties is subject to a variety of risks and uncertainties, including, without limitation:



| | § | risks and uncertainties relating to the
interpretation of drill results, the geology, grade and continuity of mineral deposits;
| | - | -------------------------------------------------------------------------------------------------------------------------------

| | § | results of initial feasibility, pre-feasibility
and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with
the Company's expectations;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



60









| | § | mining
                                         exploration risks, including risks related to accidents, equipment breakdowns or other
                                         unanticipated difficulties with or interruptions in production;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | § | the
                                         potential for delays in exploration activities or the completion of feasibility studies;
| | - | -------------------------------------------------------------------------------------------------------------------------------------

| | § | risks
                                         related to the inherent uncertainty of exploration and cost estimates and the potential
                                         for unexpected costs and expenses;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | § | risks
                                         related to foreign exchange fluctuations and prices of diamonds;
| | - | ---------------------------------------------------------------------------------------------------------------

| | § | risks
                                         related to commodity price fluctuations;
| | - | ---------------------------------------------------------------------------------------

| | § | the
                                         uncertainty of profitability based upon the Company's history of losses;
| | - | ---------------------------------------------------------------------------------------------------------------------

| | § | risks
                                         related to failure of the Company and/or its joint venture partner to obtain adequate
                                         financing on a timely basis and on acceptable terms, particularly given recent volatility
                                         in the global financial markets;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | § | development
                                         and production risks including and particularly risks for weather conducive to the building
                                         and use of the Tibbitt to Contwoyto Winter Road;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | § | risks
                                         related to environmental regulation, permitting and liability;
| | - | -------------------------------------------------------------------------------------------------------------

| | § | risks
                                         related to legal challenges to construction and/or operating permits that are approved
                                         and/or issued;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | § | political
                                         and regulatory risks associated with mining, exploration and development;
| | - | ----------------------------------------------------------------------------------------------------------------------------

| | § | geological
                                         and technical conditions at the Company’s Gahcho Kué Project being adequate
                                         to permit development;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | § | the
                                         ability to develop and operate the Company’s Gahcho Kué Project on an economic
                                         basis and in accordance with applicable timelines;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | § | aboriginal
                                         rights and title;
| | - | ---------------------------------------------------------------------

| | § | failure
                                         of plant, equipment, processes and transportation services to operate as anticipated;
| | - | --------------------------------------------------------------------------------------------------------------------------------------

| | § | possible
                                         variations in ore grade or recovery rates, permitting timelines, capital expenditures,
                                         reclamation activities, land titles, and social and political developments, and other
                                         risks of the mining industry; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | § | other
                                         risks and uncertainties related to the Company's prospects, properties and business strategy.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------



As well, there
can be no assurance that any further funding required by the Company will become available to it, and if so, that it will be offered
on reasonable terms, or that the Company will be able to secure such funding. Furthermore, there is no assurance that the Company
will be able to secure new mineral properties or projects, or that they can be secured on competitive terms.



Disclosure
of Outstanding Share Data



The Company’s
common shares are traded on the Toronto Stock Exchange (TSX) under the symbol MPV and on the New York Stock Exchange MKT under
the symbol MDM.



At March 26,
2015, there were 135,204,550 shares issued and 1,400,000 stock options outstanding. There were no warrants outstanding.



There are an
unlimited number of common shares without par value authorized to be issued by the Company.



Controls
and Procedures



Disclosure
Controls and Procedures



The Company's
Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company's disclosure controls and
procedures (as such term is defined in Rules 13(a)-15(e) and 15(d)-15(e) under the "Exchange Act" as of December 31,
2014 (the "Evaluation Date"). Based on such evaluation, such officers have concluded that, as of the Evaluation Date,
the Company's disclosure controls and procedures are effective. Such disclosure controls and procedures are designed to ensure
that the information required to be disclosed by the Company in reports that it files or submits to the Securities and Exchange
Commission under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable
rules and forms, and includes controls and procedures designed to ensure information relating to the Company required to be included
in our reports filed or submitted under the Exchange Act is accumulated and communicated to the Company’s management to
allow timely decision regarding disclosure.



61







INTERNAL
CONTROL OVER FINANCIAL REPORTING



The Company’s
management, under the supervision of the Chief Executive Officer and Chief Financial Officer, are responsible for establishing
and maintaining the Company’s Internal Control Over Financial Reporting. Management has conducted an evaluation of internal
control over financial reporting based on the framework established in “Internal Control – Integrated Framework (1992)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) as at December 31, 2014. There
have not been any changes in the Company’s Internal Control Over Financial Reporting or in other factors that occurred during
the year ended December 31, 2014, that has materially affected, or is reasonably likely to materially affect, the Company’s
Internal Control Over Financial Reporting.



Management’s
Annual Report on Internal Control Over Financial Reporting



Management
of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.
Management has designed such internal control over financial reporting to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board.



Because of
its inherent limitations, the Company’s internal control over financial reporting may not prevent or detect all possible
misstatements or frauds. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.



To evaluate
the effectiveness of the Company’s internal control over financial reporting, Management has used the Internal Control –
Integrated Framework (1992), which is a suitable, recognized control framework established by the Committee of Sponsoring Organizations
of the Treadway Commission (“COSO”). Management has assessed the effectiveness of the Company’s internal control
over financial reporting and concluded that such internal control over financial reporting is effective as of December 31, 2014.
The Company's independent auditors, KPMG LLP, have issued an attestation report on the effectiveness of the Company's internal
control over financial reporting as of December 31, 2014.



CAUTIONARY
NOTE ON FORWARD-LOOKING STATEMENTS



Certain
of the statements made and information contained herein is “forward-looking information” within the meaning of the
Ontario Securities Act. Forward-looking information may include, but is not limited to, statements with respect to the success
of exploration activities, future mineral exploration, permitting time lines, requirements for additional capital, sources and
uses of funds, the estimation of mineral reserves and mineral resources, the realization of mineral reserve and mineral resource
estimates, future remediation and reclamation activities, the timing of activities and the amount of estimated revenues and expenses. 
Forward-looking information is based on various assumptions including, without limitation, the expectations and beliefs of management,
the assumed long term price of diamonds; that the Company can access financing, appropriate equipment and sufficient labour and
that the political environment where the Company operates will continue to support the development and operation of mining projects.
Should underlying assumptions prove incorrect, or one or more of the risks and uncertainties described below materialize,
actual results may vary materially from those described in forward-looking statements. Accordingly, readers are advised not to
place undue reliance on forward-looking statements.



Forward-looking
information is subject to a variety of risks and uncertainties which could cause actual events or results to differ from those
reflected in the forward-looking information, including, without limitation, risks and uncertainties relating to foreign currency
fluctuations; risks inherent in mining including environmental hazards, industrial accidents, unusual or unexpected geological
formations, ground control problems and flooding; delays or the inability to obtain necessary governmental permits or financing; 
risks associated with the estimation of mineral resources and reserves and the geology, grade and continuity of mineral deposits;
the possibility that future exploration, development or mining results will not be consistent with the Company’s expectations;
the potential for and effects of labor disputes or other unanticipated difficulties with or shortages of labor or interruptions
in production; failure of plant, equipment or processes to operate as anticipated; actual ore mined varying from estimates of
grade, tonnage, dilution and metallurgical and other characteristics; the inherent uncertainty of production and cost estimates
and the potential for unexpected costs and expenses, diamond price fluctuations; uncertain political and economic environments;
changes in laws or policies, and other risks and uncertainties, including those described under Risk Factors.



62







Historical
results of operations and trends that may be inferred from the following discussions and analysis may not necessarily indicate
future results from operations. The Company undertakes no obligation to publicly update or review the forward-looking statements
whether as a result of new information, future events or otherwise, other than as required under applicable securities laws.



Cautionary
Note to U.S. Investors – Information Concerning Preparation of Resource Estimates



This MD&A
has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements
of United States securities laws.  Unless otherwise indicated, all resource and reserve estimates included in this MD&A
have been prepared in accordance with NI 43-101 and the Canadian Institute of Mining and Metallurgy Classification System. 
NI 43-101 is a rule developed by the Canadian Securities Administrators which establishes standards for all public disclosure
an issuer makes of scientific and technical information concerning mineral projects.



Canadian
standards, including NI 43-101, differ significantly from the requirements of Industry Guide 7 promulgated by the United States
Securities and Exchange Commission (“SEC”) under the United States Securities Act of 1933, as amended, and resource
and reserve information contained herein may not be comparable to similar information disclosed by U.S. companies.  In particular,
and without limiting the generality of the foregoing, the term “resource” does not equate to the term “reserves”. 
Under U.S. standards, mineralization may not be classified as a “reserve” unless the determination has been made that
the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. 
The SEC's disclosure standards under Industry Guide 7 do not define the terms and normally do not permit the inclusion of information
concerning “measured mineral resources”, “indicated mineral resources” or “inferred mineral resources”
or other descriptions of the amount of mineralization in mineral deposits that do not constitute “reserves” by U.S.
standards in documents filed with the SEC.  U.S. Investors should also understand that “inferred mineral resources”
have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. 
It cannot be assumed that all or any part of an “inferred mineral resource” will ever be upgraded to a higher category. 
Under Canadian rules, estimated “inferred mineral resources” may not form the basis of feasibility or pre-feasibility
studies except in rare cases.  Investors are cautioned not to assume that all or any part of an “inferred mineral resource”
exists or is economically or legally mineable.



Disclosure
of “contained ounces” (or “contained carats”) in a resource is permitted disclosure under Canadian regulations;
however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC
standards as in place tonnage and grade without reference to unit measures.  The requirements of NI 43-101 for identification
of “reserves” are also not the same as those of the SEC’s Industry Guide 7, and reserves reported by the Company
in compliance with NI 43-101 may not qualify as “reserves” under Industry Guide 7 standards.  Accordingly, information
concerning mineral deposits set forth herein may not be comparable with information made public by companies that report in accordance
with U. S. standards.



|Item
    6. | Directors,
    Senior Management and Employees
|----------- | ----------------------------------------------



| | A. | Directors
                                         and Senior management.
| | -- | -------------------------------------------------------------------------



Each
director of MPV is elected by the shareholders to serve until close of the next annual meeting of shareholders or until a successor
is elected or appointed, unless such office is earlier vacated in accordance with the Corporation's by-laws. The following table
sets forth certain information regarding the current directors and executive officers of MPV, as of March 25, 2014.



63







|Name               |  | Position
    with Company                       |  | Date
    of First Appointment                                                                      
|------------------ |  | ----------------------------------------------- |  | ---------------------------------------------------------------------------------------------------
|Jonathan Comerford |  | Chairman and Director(2)(3)                     |  | Chairman of the Company since May 11, 2006 and Director
    since September 21, 2001               
|Patrick Evans      |  | President, Chief Executive Officer and Director |  | President and Director of the Company since November
    15, 2005                                  
|Bruce Ramsden      |  | Vice-President Finance and CFO                  |  | Vice President Finance since February 1, 2013 and
    Chief Financial Officer effective May 1, 2013
|Bruce Dresner      |  | Director(1)                                     |  | Director since March 11, 2013                                                                      
|Peeyush Varshney   |  | Director(1) (2)                                 |  | Director since April 13, 2007                                                                      
|Carl Verley        |  | Director(1)(3)                                  |  | Director of Old MPV since December 2, 1986 and Director
    of the Company since November 1, 1997  
|David E. Whittle   |  | Director(2)(3)                                  |  | Director since November 1, 1997                                                                    



(1)    
Member of the Company's Corporate Governance Committee.

(2)    
Member of the Company's Audit Committee.

(3)    
Member of the Company's Compensation Committee.



The
following is a description of the Company's directors and senior management. The information provided is not within the knowledge
of the management of the Company and has been provided by the respective directors and senior officers.



Jonathan
Christopher James Comerford, B.A. (Econ.), M.B.S. (Finance)



Mr.
Jonathan Comerford has been a director of the Company since September 2001 and Chairman since April 2006. Mr. Comerford is resident
in Dublin, Ireland. He obtained his Masters in Business from the Michael Smurfit Business School in 1993 and his Bachelor of Economics
from University College, Dublin in 1992. Mr. Comerford has been Investment Manager at IIU since August 1995. He serves as a director
of Kennady Diamonds Inc. since February 2012.



Patrick
C. Evans, B.A., B.Sc.



Mr.
Patrick C. Evans has been President, CEO and a director of Mountain Province Diamonds Inc. since November 2005. He is a resident
of Arizona, USA.  Mr. Evans is a graduate of the University of Cape Town where he received his Bachelor of Arts degree in
1977 and Bachelor of Science degree in 1978. In 1999 he was appointed a Vice President of Placer Dome Inc. (a major gold mining
company) and a non-executive director of SouthernEra Resources Ltd. (a diamond and platinum exploration, development and mining
company).  In 2001, he was appointed President and CEO of SouthernEra Resources Ltd. and Messina Limited (a platinum mining
company). In 2004, he was appointed President, CEO and a director of Southern Platinum Corp. (a platinum mining company), which
was acquired by Lonmin Plcin June 2005. In September 2005, he was appointed President, CEO and a director of Weda
Bay Minerals Inc. (a nickel exploration and development company), which was acquired by Eramet S.A. in May 2006.   Mr. Evans
was appointed the CEO and a director of Norsemont Mining Inc. (a copper exploration and development company) in June 2007 which
was taken over by Hudbay in the March 2011.  He also served as a non-executive director of Anvil Mining Limited (a copper
mining company) from March 2009 to February 2012 when Anvil Mining was acquired by Minmetals. Mr. Evans has served as the President
and CEO and a director of Kennady Diamonds Inc. since February 2012.



64







Bruce
C. Ramsden, B.Comm, A.C.I.S.



Mr.
Bruce Ramsden has been the Company’s Vice President Finance and Chief Financial Officer since May 2013. Mr. Ramsden is also
Vice President Finance and Chief Financial Officer for Kennady Diamonds Inc., since May 2013. He has been a resident of Ontario,
Canada since February 1996 and prior to that resided in South Africa where he graduated by correspondence with a Bachelor of Commerce
degree from the University of South Africa and gained through correspondence a C.I.S through the Institute of Chartered Secretaries
and Administrators. Mr. Ramsden worked for a number of large companies in South Africa, including Mobil Oil, Philips South Africa
and Castrol Oil South Africa prior to immigrating to Canada in 1996. Since 1996, Mr. Ramsden has provided financial consulting
services to Vaaldiam Resources Ltd. (May 1996 to December 2001) and in addition to his CFO and Corporate Secretary roles was also
a Director. Mr. Ramsden was also a Director and Chief Financial Officer of Sierra Minerals Inc. (January 1998 to September 2006).
Mr. Ramsden also consulted to St Andrew Goldfields Ltd. (January 2002 to June 2005) and was VP Finance, CFO and Corporate Secretary.
Mr. Ramsden was also CFO and a Director for Heritage Exploration Ltd. (January 2005 to June 2005). Mr. Ramsden joined Vaaldiam
Mining Inc., formerly Tiomin Resources Inc. (June 2005 to June 2010) as VP Finance, CFO and Corporate Secretary. Mr. Ramsden was
also a Director of Freegold Ventures Limited (October 2009 to April 2011). Mr. Ramsden consulted to Andean American Gold Corp.
(July 2010 to October 2012), which was acquired by Lupaka Gold Corp. (October 2012) and Southern Legacy Minerals Inc., formerly
Sinchao Metals Corp. (July 2010 to June 2012) where in addition to his VP Finance, CFO and Corporate Secretary roles, he also
provided financial and administrative services to both companies.



Bruce
Dresner, MBA, BA



Mr.
Dresner has had a distinguished career as an investment professional, including Director of Investments and Chief Investment Officer
at Dartmouth College (1985-1990), Vice President for Investments and Chief Investment Officer at Columbia University (1990-2002),
Principal of Quellos Group LLC (2002-2007) and Managing Director, BlackRock Inc. (2007-2008). Since his retirement from BlackRock,
Mr. Dresner has held a number of board and advisory positions, including serving on the advisory board of Capstone Investment
Advisors (2008-2010), as a member of the strategic advisory board of Wilshire Private Markets at Wilshire Associates Inc. (2010-2014),
and a trustee of the Gottex Multi-Asset Endowment and Alternative Asset Funds (2011-present) aand as Senior Advisor to BlueLine
Advisors LLC (2014 – present). Bruce Dresner is a graduate of Dartmouth College Tuck School of Business (MBA, 1971) and
the University of Miami (BA Economics, 1969). Mr. Dresner also received his CFA (Chartered Financial Analyst) designation in 1980.
Mr. Dresner is a resident of Connecticut, USA. Mr. Dresner was appointed as a director of Mountain Province in March 2013. He
is also a director of the Sherman Fairchild Foundation (nonprofit).



Peeyush
Varshney, LL.B.



A
resident of British Columbia, Canada, Mr. Peeyush Varshney has been actively involved in the capital markets since 1996 and has
been a principal of Varshney Capital Corp., a private merchant banking, venture capital and corporate advisory firm since 1996.
Since September 2005, he has also been the Chief Executive Officer and a director of Canada Zinc Metals Corp., a resource exploration
company listed on the TSX Venture Exchange. Mr. Varshney obtained a Bachelor of Commerce degree (Finance) in 1989 and a Bachelor
of Laws in 1993, both from the University of British Columbia. He then articled at Farris, Vaughan, Wills & Murphy, a law
firm in Vancouver, British Columbia, from 1993 to 1994, and has been a member of the Law Society of British Columbia since September
1994. Mr. Varshney is also director of Afrasia Mineral Fields Inc., Mexigold Corp., Trigen Resources Inc., Minaean International
Corp., Open Gold Corp., Broome Capital Inc. and Margaret Lake Diamonds Inc., formerly JDV Capital Corp.



65









Carl G.
Verley, B.Sc., P. Geo.



Mr.
Carl Verley is a resident of British Columbia, Canada, and a graduate of the University of British Columbia where he received
his Bachelor of Science Degree in May of 1974. He worked for Cordilleran Engineering Ltd. from 1975 to 1982.  He has been
a self-employed geologist since 1982.  From August of 1990 to January 2002, he served on the Board of Directors of Gee-Ten
Ventures Inc., from May 2002 to July 2003 he was a director of Rome Resources Ltd., from July 2003 to December 2011, he was a
director of Alphamin Resources Corp., and from October 2007 to May 2012 he was a director of African Metals Corp. He was vice
president of exploration for Windstorm Resources Inc. from July 2011 to October 2012. Currently and since 1986 he has been a director
of Mountain Province Diamonds Inc. and since February 2012, he has been a director of Kennady Diamonds Inc.  He is the President
of Amerlin Exploration Services Ltd., a private company providing exploration services to the mineral industry, that he formed
1983.  He is a registered Professional Geoscientist with the British Columbia Association of Professional Engineers and Geoscientists
and Northwest Territories and Nunavut Association of Professional Engineers and Geoscientists.



David
E. Whittle, B.Comm., C.A.



Mr.
Whittle is a Chartered Accountant and is a resident of British Columbia, Canada.  He has been a director of Mountain Province
Diamonds Inc. since November 1997.  From 2004 to August 2007, Mr. Whittle was Chief Financial Officer of Hillsborough Resources
Limited, a public company in the mining business.  From October 2007 to December 2014, Mr. Whittle’s principal occupation
was Chief Financial Officer of Alexco Resource Corp., a public company both in the mining business and in the business of providing
consulting services to third parties in respect of environmental remediation and permitting. He is also a director of Kennady
Diamonds Inc. since February 2012.



| | B. | Compensation.
| | -- | -------------



The
Company has two executive officers (collectively, the "Executive Officers"): Patrick Evans, the President and CEO, and
Bruce Ramsden, Vice President Finance and CFO. For particulars on these executive officers, reference should be made to “Item
6A - Directors and Senior Management”.



The
compensation paid to the executive officers and details of management contracts and incentive options granted to the two executive
officers of the Company for the Company's most recently completed financial years is as follows:



| | · | Patrick
                                         Evans, President and Chief Executive Officer, earned other annual compensation of $499,500
                                         in the most recent fiscal year ending December 31, 2014. As at December 31, 2014, he
                                         had 300,000 stock options.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Grant date       |  | Number |         |  | Vesting |             | Exercise Price |   |      | Term
|---------------- |  | ------ | ------- |  | ------- | ----------- | -------------- | - | ---- | ----
|January 10, 2011 |  |        | 100,000 |  |         | Immediately |                | $ | 6.13 |     
|March 8, 2012    |  |        | 100,000 |  |         | Immediately |                | $ | 4.84 |     
|May 14, 2013     |  |        | 100,000 |  |         | Immediately |                | $ | 5.00 |     



66







| | · | Bruce
                                         Ramsden, Chief Financial Officer and Corporate Secretary, was paid $247,500 pursuant
                                         to a consulting agreement for his services as CFO and Corporate Secretary for the year
                                         ended December 31, 2014. As at December 31, 2014, he has 150,000 stock options as follows:
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Grant date       |  | Number |         |  | Vesting |                                                        | Exercise Price |   |      | Term
|---------------- |  | ------ | ------- |  | ------- | ------------------------------------------------------ | -------------- | - | ---- | ----
|February 1, 2013 |  |        | 100,000 |  |         | 1/3 immediately, 1/3 after year 1 and 1/3 after year 2 |                | $ | 4.08 |     



Effective
January 1, 2014, compensation for the directors was approved at the following levels: Chairman of the Board receives $40,000 per
annum, the Chairman of the Audit Committee receives $35,000 per annum, the Director acting as Qualified Person receives $35,000,
and all other Directors receive $30,000 per annum. These amounts continue to be paid semi-annually, in advance. Effective January
1, 2015 , compensation for the directors was approved at the following levels: Chairman of the Board receives $40,000 per annum,
the Chairman of the Audit Committee receives $35,000 per annum, the Director acting as Qualified Person receives $35,000, and
all other Directors receive $30,000 per annum. These amounts continue to be paid semi-annually, in advance.



For
the year ended December 31, 2013, the compensation for the directors was approved and paid at the following levels: Chairman of
the Board - $40,000, the Chairman of the Audit Committee - $35,000, the director acting as Qualified person receives $35,000 and
all other Directors- $30,000 per annum. These amounts were paid semi-annually, in advance.



During
each of the years ended December 31, 2014, December 31, 2013, and December 31, 2012, director fees were earned by the following
directors:



|Director/Position                             |  | December 31, 2014 |        |  | December 31, 2013 |   |        | December 31, 2012 | 
|--------------------------------------------- |  | ----------------- | ------ |  | ----------------- | - | ------ | ----------------- | 
|Jonathan Comerford Chairman of the Board      |  | $                 | 40,000 |  |                   | $ | 30,000 |                   | 
|David Whittle Chairman of the Audit Committee |  | $                 | 35,000 |  |                   | $ | 25,000 |                   | 
|Bruce Dresner(1) Director                     |  | $                 | 30,000 |  |                   | $ | 16,082 |                   | 
|Patrick Evans Director                        |  | $                 | Nil    |  |                   | $ | 6,667  |                   | 
|Carl Verley Director                          |  | $                 | 35,000 |  |                   | $ | 25,000 |                   | 
|Peeyush Varshney Director                     |  | $                 | 35,000 |  |                   | $ | 20,000 |                   | 

| | (1) | Mr.
                                         Dresner joined the board on March 18, 2013.
| | --- | ----------------------------------------------------------------------------------------



During
2014, the Company established a Finance Committee to oversee the arranging of a Project Finance Facility and at December 31, 2014,
fees were earned by the following directors:



67







|Director/Position                               |  | December 31, 2014 |        |  | December 31, 2013 |   |   | December 31, 2012 | 
|----------------------------------------------- |  | ----------------- | ------ |  | ----------------- | - | - | ----------------- | 
|Jonathan Comerford Director                     |  | $                 | 25,000 |  |                   | $ | - |                   | 
|David Whittle Chairman of the Finance Committee |  | $                 | 35,000 |  |                   | $ | - |                   | 
|Bruce Dresner Director                          |  | $                 | 25,000 |  |                   | $ | - |                   | 



The
Company has no Long-Term Incentive Plan ("LTIP”) in place and therefore there were no awards made under any long-term
incentive plan to the Executive Officers during the Company's most recently completed financial year. A "Long-Term Incentive
Plan" is a plan providing compensation intended to motivate performance over a period of greater than one financial year,
other than a plan for options, SARs (stock appreciation rights) or compensation through shares or units that are subject to restrictions
on resale.



The
following table sets out incentive stock options exercised by the Executive Officers during the most recently completed financial
year, as well as the financial year end value of stock options held by the Executive Officers. During this period, no outstanding
SARs were held by the Executive Officers.





|Name          |  | Securities,Acquired onExercise(#) |  | Aggregate ValueRealized ($)(1) |  | Unexercised Options atFinancial Year-EndExercisable /Unexercisable (#) |  | Value of Unexercised In-the-
Money Options at FinancialYear-End Exercisable /Unexercisable ($)(2)
|------------- |  | --------------------------------- |  | ------------------------------ |  | ---------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------
|Patrick Evans |  | Nil                               |  | Nil                            |  | 400,000                                                                |  | $1,000/$0                                                                                        
|Bruce Ramsden |  | Nil                               |  | Nil                            |  | 116,666/33,334                                                         |  | $51,333/$25,666                                                                                  



(1)   
Based on the difference between the option exercise price and the closing market price of the Company's shares on the date of
exercise.

(2)   
In-the-Money Options are those where the market value of the underlying securities as at the most recent financial year end exceeds
the option exercise price. The closing market price of the Company's shares as at December 31, 2014, (i.e. financial year end)
was $4.85.



There
were no options or freestanding SARs held by the Executive Officers that were re-priced downward during the most recently completed
financial year of the Company.



The
Company does not have a defined benefit/actuarial plan, under which benefits are determined primarily by final compensation and
years of service of the Company's officers and key employees.



In
addition to the foregoing, some of the executive officers of the Company are also entitled to medical and dental benefits, reimbursement
of all reasonable business expenses and, from time to time, the grant of stock options.



No
plan exists, and no amount has been set aside or accrued by the Company or any of its subsidiaries, to provide pension, retirement
or similar benefits for directors and officers of the Company, or any of its subsidiaries.



68







| | C. | Board
                                         practices.
| | -- | ---------------------------------------------------------



The
directors of the Company are elected annually and hold office until the next annual general meeting of the shareholders of the
Company or until their successors in office are duly elected or appointed. The Company does not have an executive committee. All
directors are elected for a one-year term. All officers serve at the pleasure of the Board. None of the directors, with the exception
of Patrick Evans, who serves as the Company’s President and CEO, have any service agreements with the Company. Mr. Evans’
agreement contains a termination clause that would provide him with 24 months of compensation if there is a change of control
of the Company plus benefits and full incentive compensation for the same period, all payable within 30 days of termination. In
addition, the Company will fully fund Mr. Evans RBC life insurance policy to maturity through a lump sum payment, estimated at
approximately $400,000 based on term of the policy and prevailing interest rates. All stock options held by Mr. Evans will vest
upon the Change of Control.



The
next Annual General Meeting of the shareholders of the Company has been scheduled for June 17, 2014.



The
Board has adopted a Charter under which it and the Board's committees operate. The Company's board of directors has three committees-
the Audit Committee, the Nominating/Corporate Governance Committee and the Compensation Committee.



Audit
Committee



The
members of the Audit Committee do not have any fixed term for holding their positions and are appointed and replaced from time
to time by resolution of the Board of Directors. It is composed of at least three directors, and the Board has determined that
David Whittle, C.A. of the Audit Committee meets the requirement of an "audit committee financial expert" as defined
in Item 16A of Form 20-F. Each member of the Audit Committee has the financial ability to read and understand a balance sheet,
an income statement and a cash flow statement. All three members of the Audit Committee are independent.



The
current members of the Audit Committee are Jonathan Comerford, Peeyush Varshney and David Whittle. Except for the chairman, David
Whittle, the Audit Committee members receive no separate remuneration for acting as such and their appointments are not for any
fixed term.



The
Audit Committee is appointed by the Board to assist the Board in fulfilling its oversight responsibilities. Its primary duties
and responsibilities are to:



| | a. | identify
                                         and monitor the management of the principal risks that could impact the financial reporting
                                         of the Company;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. | monitor
                                         the integrity of the Company's financial reporting process and system of internal controls
                                         regarding financial reporting and accounting compliance;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c. | make
                                         recommendations regarding the selection of the Company's external auditors (by shareholders)
                                         and monitor their independence and performance;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | d. | provide
                                         an avenue of communication among the external auditors, management and the Board;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------



| | e. | handle
                                         complaints regarding the Company's accounting practices; and
| | -- | ------------------------------------------------------------------------------------------------------------



| | f. | administer
                                         and monitor compliance with the Company's Ethics and Conflict of Interest Policy.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------



Corporate
Governance Committee



The
members of the Corporate Governance Committee are Peeyush Varshney (Chair), Carl Verley and Bruce Dresner. They are unrelated.



69







The
Corporate Governance Committee is responsible for assessing directors on an ongoing basis and for developing the Company's approach
to governance issues and for the Company's response to the Sarbanes-Oxley Act of 2002, as implemented by the U.S. Securities and
Exchange Commission, and the Toronto Stock Exchange's governance guidelines.



Compensation
Committee



The
Compensation Committee is composed of Carl Verley (Chair), David Whittle, and Jonathan Comerford, all of whom are independent.
The Committee, in consultation with the Chairman and CEO of the Company, makes recommendations to the Board on the Company's framework
of executive remuneration and its cost and on specific remuneration packages for each of the executives. The remuneration of non-executives,
including members of the Compensation Committee, is determined by the Board.



| | D. | Employees.
| | -- | ----------



As
at the end of the fiscal years ended December 31, 2014, 2013, and 2012, the Company had no full-time employees. The President
and CEO, Patrick Evans, and the VP Finance, CFO and Corporate Secretary, Bruce Ramsden, have consulting agreements with the Company.
The Toronto administrative and executive office uses outsourced administrative assistance on an as-needed, part-time basis. De
Beers Canada employs personnel who conduct the development, permitting and other activities for the Gahcho Kué Project.



| | E. | Share
                                         ownership.
| | -- | ---------------------------------------------------------



The
following table sets forth, as of March 26, 2015, the number of the MPV Shares beneficially owned by (a) the directors and members
of senior management of the Company, individually, and as a group, and (b) the percentage ownership of the outstanding common
shares represented by such shares. The security holders listed below are deemed to be the beneficial owners of common shares underlying
options which are exercisable within 60 days from the above date.



|Name of Beneficial Owner            |  | Amount and Nature |           |  | Percentage(9)(10)of Class | 
|----------------------------------- |  | ----------------- | --------- |  | ------------------------- | 
|Patrick C. Evans(1)                 |  |                   | 1,738,655 |  |                           | 
|Bruce Dresner(2)                    |  |                   | 474,148   |  |                           | 
|Carl G. Verley(3)                   |  |                   | 396,640   |  |                           | 
|Jonathan Comerford(4)               |  |                   | 273,500   |  |                           | 
|Peeyush  Varshney(5)                |  |                   | 212,622   |  |                           | 
|David E. Whittle(6)                 |  |                   | 236,600   |  |                           | 
|Bruce Ramsden(7)                    |  |                   | 116,667   |  |                           | 
|Officer and Directors as a Group(9) |  |                   | 3,448,832 |  |                           | 



*    
less than 1%



| | (1) | Includes
                                         1,338,655 MPV Shares and 400,000 options. 100,000 options are exercisable at a price
                                         of $6.13 per MPV Share, and expire on January 9, 2016. 100,000 options are exercisable
                                         at a price of $4.84 per MPV share, and expire on March 7, 2017. 100,000 options are exercisable
                                         at a price of $5.00 per MPV share, and expire on May 13, 2018. 100,000 options are exercisable
                                         at a price of $5.29 per MPV share, and expire on February 13, 2019.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Includes
                                         324,148 MPV Shares and 150,000 options. 100,000 options are exercisable at a price of
                                         $4.06 per MPV Share, and expire on March 10, 2018. 50,000 options are exercisable at
                                         a price of $5.28 per MPV share, and expire on July 2, 2018.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Includes
                                         343,890 MPV Shares and 100,000 options. 100,000 options are exercisable at a price of
                                         $5.28 per MPV share, and expire on July 2, 2018.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | Includes
                                         123,500 MPV Shares and 150,000 options. 150,000 options are exercisable at a price of
                                         $5.28 per MPV share, and expire on July 2, 2018.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | Includes
                                         112,622 MPV Shares and 100,000 options. 100,000 options are exercisable at a price of
                                         $5.28 per MPV share, and expire on July 2, 2018.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | Includes
                                         136,600 MPV Shares and 100,000 options. 100,000 options are exercisable at a price of
                                         $5.28 per MPV share, and expire on July 2, 2018.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



70







| | (7) | Includes Nil MPV Shares,
and 116,666 options. 66,666 options are exercisable at a price of $4.08 per MPV Share and expire on January 1, 2018. 50,000 options
exercisable at a price of $5.29 per MPV share, and expire on February 13, 2019.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (8) | Includes
                                         1,400,000 options outstanding, of which 1,116,666 are held by the directors and senior
                                         management (exercisable). The calculation does not include stock options that are not
                                         exercisable presently or within 60 days (of which there are 33,333).
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (9) | Total
                                         issued and outstanding capital as at the close of March 26, 2015 was 135,204,550 shares.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------



| | (10) | The
                                         Company has no actual knowledge of the holdings of each individual. The above information
                                         was provided by the respective individuals to the Company.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
Company has a stock option plan pursuant to which stock options may be granted to its directors, officers and employees. Stock
options are awarded by resolution of the board of directors.



|Item 7. | Major Shareholders
    and Related Party Transactions
|------- | -----------------------------------------------------



| | A. | Major
                                         shareholders.
| | -- | ------------------------------------------------------------



A
major shareholder is a shareholder beneficially owning more than 5% of the issued shares of the Company.



As
at March 26, 2015, the Company's issued and outstanding capital was 135,204,550 MPV Shares.



The
Company is a publicly-owned corporation the majority of the MPV Shares of which are owned by persons resident outside the United
States. To the best of the Company's knowledge, the Company is not directly owned or controlled by another corporation or any
foreign government. As at March 26, 2015, the Company believes that approximately 17,985,000 of the MPV Shares were held by 67
shareholders with addresses in the United States. A number of these shares are held in "street" name and may, therefore,
be held by several beneficial owners.



The
following table shows, to the best knowledge of the Company, the number (as at March 26, 2015) and percentage of MPV Shares, warrants
and options held by the Company's major shareholders:



|Name of Shareholder(1)                                                  |  | No. of MPV Shares Held(2) |            |  | Percentage of issued and outstanding share capital of 135,205,550 shares (as at March 26, 2015) | 
|----------------------------------------------------------------------- |  | ------------------------- | ---------- |  | ----------------------------------------------------------------------------------------------- | 
|Bottin (International) Investments Ltd.  (controlled by Dermot Desmond) |  |                           | 30,896,681 |  |                                                                                                 | 
|De Beers Canada Inc.                                                    |  |                           | 3,045,543  |  |                                                                                                 | 



| | (1) | The
                                         Company has no actual knowledge of the above shareholdings. The above information was
                                         provided to the Company by the named shareholders.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | There
                                         are no options or warrants held by these shareholders.
| | --- | -----------------------------------------------------------------------------------------------------



Major
shareholders of the Company do not have any special voting rights.



| | B. | Related
                                         party transactions.
| | -- | --------------------------------------------------------------------



The
Company is not directly or indirectly controlled by any enterprise and does not control, directly or indirectly, any other enterprises
other than its subsidiaries, other than that listed under “Item 4A. Bottin (International) Investments Ltd.” (“Bottin”).
Bottin is controlled by Dermot Desmond and has significant influence over the Company because it is currently the Company’s
largest single shareholder with 22.85% of the outstanding shares: see “Item 7A - Major shareholders”, above.



71







The
Company’s related parties include the operator of the Gahcho Kué Joint Project, Bottin, key management and their
close family members, and the Company’s directors. Kennady Diamonds Inc. (“Kennady Diamonds”) is also a related
party since the Company and Kennady Diamonds have common members of key management.



None
of the transactions with related parties incorporate special terms and conditions, and no guarantees were given or received. Related
party transactions are recorded at their exchange amount, being the amount agreed to by the parties. Outstanding balances are
settled in cash.



Key
management personnel of the Company are Patrick Evans, who is President and CEO, and Bruce Ramsden, who is VP Finance, Chief Financial
Officer and Corporate Secretary. Patrick Evans is also a director of the Company. See “Item 6B – Compensation”.
Both Mr. Evans and Mr. Ramsden have consulting agreements with the Company.



There
are no debts owing directly or indirectly to the Company or its subsidiaries by any director or officer of the Company or vice
versa other than normal accounts payable for timing of payments of fees.



| | C. | Interests
                                         of experts and counsel.
| | -- | --------------------------------------------------------------------------



Not
Applicable



|Item 8. | Financial
    Information
|------- | -------------------------



| | A. | Consolidated
                                         Statements and Other Financial Information
| | -- | ------------------------------------------------------------------------------------------------



Listed
in Item 19 hereto are audited consolidated financial statements as at December 31, 2014 and 2013, and for the years ended December
31, 2014 and 2013 and 2012, accompanied by the report of our independent registered accounting firm, including:



| | · | Report
                                         of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



| | · | Report
                                         of Independent Registered Public Accounting Firm on Consolidated Financial Statements.
| | - | --------------------------------------------------------------------------------------------------------------------------------------



| | · | Consolidated
                                         Balance Sheets as of December 31, 2014 and 2013.
| | - | ------------------------------------------------------------------------------------------------------



| | · | Consolidated
                                         Statements of Equity for the years ended December 31, 2014, 2013, and 2012.
| | - | ---------------------------------------------------------------------------------------------------------------------------------



| | · | Consolidated
                                         Statements of Comprehensive Loss for the years ended December 31, 2014, 2013, and 2012.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------



| | · | Consolidated
                                         Statements of Cash Flows for the years ended December 31, 2014 and 2013 and 2012.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------



| | · | Notes
                                         to the Consolidated Financial Statements.
| | - | ----------------------------------------------------------------------------------------



There
are no legal proceedings currently pending.



The
Company has not paid dividends in the past and does not expect to pay dividends in the near future.



| | B. | Significant
                                         Changes.
| | -- | -------------------------------------------------------------



There
have been no significant changes to the Company since the end of last fiscal year, other than the granting of options as disclosed
in the financial statements included in this Form 20-F.



72







|Item 9. | The Offer and Listing.
|------- | ----------------------



| | A. | Offer and listing
details.
| | -- | --------------------------



The
MPV Shares were listed and posted for trading on TSX on January 22, 1999. The MPV Shares were delisted from the VSE on January
31, 2000, and from the Nasdaq Smallcap Market on September 29, 2000. The MPV Shares traded on the OTC-Bulletin Board ("OTCBB")
under the symbol "MPVI" until June 1, 2005. Commencing on April 4, 2005, the MPV Shares were listed for trading on the
NYSE MKT under the symbol "MDM". Commencing December 31, 2014, the MPV shares were listed for trading on the NASDAQ
under the symbol “MDM”.



The
following tables set forth the reported high and low prices of the MPV Shares on the TSX, and for the NYSE MKT/NASDAQ,for
(a) the five most recent fiscal years; (b) each quarterly period for the past two fiscal years, and (c) for the most recent six
months.



|High and Low Prices for the Five Most Recent Fiscal Years
|---------------------------------------------------------
|Fiscal Year Ended                                        
|                                                         
|December 31, 2014                                        
|December 31, 2013                                        
|December 31, 2012                                        
|December 31, 2011                                        
|December 31, 2010                                        



The
MPV Shares were listed on the Nasdaq Smallcap Market on May 1, 1996 and delisted from the Nasdaq Smallcap Market on September
29, 2000, at which time they commenced trading on the OTCBB and continued through April 1, 2005. On April 4, 2005, the MPV Shares
began trading on the AMEX. AMEX was taken over by NYSE Euronext which then rebranded to NYSE Amex, and subsequently to NYSE MKT.
On December 31, 2014, the MPV shares began trading of the NASDAQ.



|High and Low Prices for Each Quarterly Period for the
|-----------------------------------------------------
|Past Two Fiscal Years                                
|                                                     
|Period Ended:                                        
|December 31, 2014                                    
|September 30, 2014                                   
|June 30, 2014                                        
|March 31, 2014                                       
|December 31, 2013                                    
|September 30, 2013                                   
|June 30, 2013                                        
|March 31, 2013                                       



|High and Low Prices for the Most Recent Six Months
|--------------------------------------------------
|                                                  
|Month Ended                                       
|February 2015                                     
|January 2015                                      
|December 2014                                     
|November 2014                                     
|October 2014                                      
|September 2014                                    



(1)On December 31, 2014, the closing price of the MPV Shares on the TSX was $4.85 and on March 25, 2015 was $4.28. The
closing price of MPV Shares on NASDAQ on December 31, 2014 was US$4.18 per share. The closing price on March 25, 2015 on the NASDAQ
was US$3.42 per MPV Share.



73







B.
Plan of distribution.



Not
Applicable.



C.
Markets.



The
MPV Shares are listed on the TSX under the symbol "MPV" and were also quoted on the over-the-counter (OTC) Bulletin
Board pursuant to Rule 6530(a) of the NASD's OTC Bulletin Board Rules under the symbol "MPVI.OB" until April 1, 2005.
Commencing April 4, 2005, the Company's shares commenced trading on the AMEX (subsequently NYSE Amex and now NYSE MKT) under the
symbol "MDM". Commencing December 31, 2014, the Company’s shares commenced trading on the NASDAQ under the symbol
“MDM”. The Common Shares are not registered to trade in the United States in the form of American Depository Receipts
or similar certificates.



D.
Selling shareholders.



Not
Applicable.



E.
Dilution.



Not
Applicable.



F.
Expenses of the issue.



Not
Applicable.



|Item 10. | Additional
    Information.
|-------- | ---------------------------



| | A. | Share
                                         capital.
| | -- | -------------------------------------------------------



Not
applicable.



| | B. | Memorandum
                                         and articles of association.
| | -- | --------------------------------------------------------------------------------



Incorporation



The
Company was amalgamated in British Columbia under incorporation number 553442 on November 1, 1997 under the name of Mountain
Province Mining Inc. The Company changed its name to Mountain Province Diamonds Inc. on October 16, 2000. The Company was amalgamated
under the British Columbia Company Act, which has now been replaced by the Business Corporations Act (British Columbia)(the "BCA"). The BCA came into effect on March 29, 2004. The Company has completed its transition from the Company
Act to the BCA and adopted new Articles which reflect the provisions of the BCA. The Company's Memorandum of Articles has been
replaced by a Notice of Articles. Pursuant to the Shareholders special resolution on September 20, 2005 approving the continuance
of the Company into Ontario, the Company continued under the laws of the Province of Ontario pursuant to Articles of Continuance
dated May 8, 2006.



The
Company is also registered as an extra-territorial corporation in the Northwest Territories (Registration no. E 6486, on February
25, 1998, amended October 16, 2000 for the name change).



74







The
Company does not have any stated "objects" or "purposes" as such are not required by the corporate laws of
the Province of Ontario. Rather, the Company is, by such corporate laws, entitled to carry on any activities whatsoever, which
are not specifically precluded by other statutory provisions of the Province of Ontario.



Powers,
functions and qualifications of Directors



The
powers and functions of directors are set forth in the Ontario Securities Act and in theBylaws of the Company.



With
respect to the voting powers of directors, the Ontario Securities Act provides that a director (or senior officer) has a disclosable
interest in a contract or transaction if the contract or transaction is material to the Company and the director has a material
interest in the contract.



The
Bylaws provide that a director or senior officer who has, directly or indirectly, a material interest in an existing or proposed
material contract or transaction of the Company or who holds any office or possesses any property whereby, directly or indirectly,
a duty or interest might be created to conflict with his duty or interest as a director or senior officer, has to disclose the
nature and extent of this interest or conflict with his duty and interest as a director or senior officer, in accordance with
the provisions of the Ontario Securities Act. A director is also prohibited from voting in respect of any such proposed material
contract or transaction and if he does so, his vote shall not be counted, but he shall be counted in the quorum at the meeting
at which such vote is taken. Notwithstanding this, if all of the directors have a material interest in a proposed material contract
or transaction, any or all of those directors may vote on a resolution to approve the contract or transaction. However, in this
case the directors must have the contract or transaction approved by special resolution of the shareholders to avoid accountability
for any profits.



The
Bylaws further provide that, subject to the provisions of the Ontario Securities Act, no disclosure is required of a director
or senior officer, and a director need not refrain from voting in respect of the following types of contracts and transactions:



| | a) | A
                                         contract or transaction where both the Company and the other party to the contract or
                                         transaction are wholly owned subsidiaries of the same corporation;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | A
                                         contract or transaction where the Company is a wholly owned subsidiary of the other party
                                         to the contract or transaction;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | A
                                         contract or transaction where the other party to the contract or transaction is a wholly
                                         owned subsidiary of the Company;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | d) | A
                                         contract or transaction where the director or senior officer is the sole shareholder
                                         of the Company or of a corporation of which the Company is a wholly owned subsidiary;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | e) | An
                                         arrangement by way of security granted by the Company for money loaned to, or obligations
                                         undertaken by, the director or senior officer, or a person in whom the director or senior
                                         officer has a material interest, for the benefit of the Company or an affiliate of the
                                         Company;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | f) | A
                                         loan to the Company, which a director or senior officer or a specified corporation or
                                         a specified firm in which he has a material interest has guaranteed or joined in guaranteeing
                                         the repayment of the loan or any part of the loan;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



75







| | g) | Any
                                         contract or transaction made or to be made with, or for the benefit of a corporation
                                         that is affiliated with the Company and the director or senior officer is also a director
                                         or senior officer of that corporation or an affiliate of that corporation;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | h) | Any
                                         contract by a director to subscribe for or underwrite shares or debentures to be issued
                                         by the Company or a subsidiary of the Company;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | i) | Determining
                                         the remuneration of the director or senior officer in that person's capacity as director,
                                         officer, employee or agent of the Company or an affiliate of the Company;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | j) | Purchasing
                                         and maintaining insurance to cover a director or senior officer against liability incurred
                                         by them as a director or senior officer; or
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | k) | The
                                         indemnification of any director or senior officer by the Company.
| | -- | --------------------------------------------------------------------------------------------------------------



The
Ontario Securities Act provides that a contract or transaction with a company is not invalid merely because a director or senior
officer of the company has an interest, direct or indirect, in the contract or transaction, a director or senior officer of the
company has not disclosed an interest he or she had in the contract or transaction, or because the directors or shareholders of
the company have not approved the contract or transaction in which a director or senior officer of the company has an interest.



The
Ontario Securities Actalso provides that a director or senior officer with a "disclosable interest" in a contract
or transaction with the Company is liable to account for any profit made from the contract or transaction unless disclosure of
the director's interest in such contract or transaction had been made and the director abstained from voting on the approval of
the transaction.



Subject
to the provisions of the Ontario Securities Act, the directors may vote on compensation for themselves or any members of their
body. A contract relating primarily to a fiduciary's remuneration as a director, officer, employee or agent of the Company or
its affiliates is a permitted conflict of interest under the Company's Corporate Governance Policy.



There
are no limitations on the exercise by the board of directors of the Company's borrowing powers.



There
are no provisions for the retirement or non-retirement of directors under an age limit.



There
is no requirement for any director to hold any shares in the Company.



Rights
and Restrictions Attached to Shares



As
all of the authorized and issued MPV Shares are of one class, there are no special rights or restrictions of any nature or kind
attached to any of the shares. All authorized and issued shares rank equally in respect of the declaration and receipt of dividends,
and the rights to share in any profits or surplus on liquidation, dissolution or winding up of the Company. Each MPV Share has
attached to it one vote.



Alteration
of Share Rights



To
alter the rights of holders of issued shares of the Company, such alteration must be approved by a vote of not less than two-thirds
of the shareholders voting in person or by proxy at a meeting of the shareholders of the Company.



76







Annual
General Meetings



Annual
general meetings are called and scheduled upon decision by the board of directors. The directors may also convene a general meeting
of shareholders at any time. There are no provisions in the Company's Bylaws for the requisitioning of special meetings by shareholders.
However, the Ontario Securities Act provides that the holders of not less than 5% of the issued shares of the Company may requisition
the directors to call a general meeting of the shareholders for the purposes stated in the requisition. All meetings of the shareholders
may be attended by registered shareholders or persons who hold powers of attorney or proxies given to them by registered shareholders.



On
June 13, 2013 the shareholders of the Company adopted an Advance Notice Policy for director nominations to the Board of the Company
prior to any meeting of Shareholders where directors are to be elected.



Foreign
Ownership Limitations



There
are no limitations prohibiting shares being held by non-residents, foreigners or any other group.



Change
of Control



There
are no provisions in the Company's Bylaws that would have the effect of delaying, deferring or preventing a change in the control
of the Company, or that would operate with respect to any proposed merger, acquisition or corporate re-structuring of the Company.



At
the November 18, 2010 Annual and Special Meeting of the shareholders, a Shareholder Rights Plan dated September 9, 2010 (the “Shareholder
Rights Plan”) was approved, ratified, confirmed and adopted by the shareholders of the Company in accordance with and subject
to its terms and conditions. The objectives of the Shareholder Rights Plan are to ensure, to the extent possible, that all shareholders
of the Company are treated equally and fairly in connection with any take-over bid for the Company.



The
Shareholder Rights Plan is designed to discourage discriminatory or unfair take-over bids for the Company and gives the Board
of Directors time, if appropriate, to pursue alternatives to maximize shareholder value in the event of an unsolicited (or "hostile")
take-over bid for the Company. The Shareholder Rights Plan will encourage a person proposing to make, or who has made, a take-over
bid for the Company (an "Offeror") to proceed by way of a Permitted Bid or to approach the Board with a view to negotiation,
by creating the potential for substantial dilution of the Offeror's position. The Permitted Bid provisions of the Shareholder
Rights Plan are designed to ensure that, in any take-over bid, all shareholders are treated equally, receive the maximum value
for their investment and are given adequate time to properly assess the take-over bid on a fully informed basis.



The
Shareholder Rights Plan may, however, increase the price to be paid by a potential Offeror to obtain control of the Company and
may discourage certain transactions, including a take-over bid for less than all the common shares of the Company. Accordingly,
the Shareholder Rights Plan may deter some take-over bids.



In
addition, the Shareholder Rights Plan Agreement provides that the continued existence of the Shareholder Rights Plan must be ratified
by a majority of the shareholders of the Company at a meeting of the shareholders at or prior to the annual meeting of the shareholders
in the year 2014.



77







Share
Ownership Reporting Obligations



There
are no provisions in the Company's Bylaws requiring share ownership to be disclosed. The securities laws of the Province of Ontario
and other provinces in Canada having jurisdiction over the Company require disclosure of shareholdings by:



b)	insiders
who are directors or senior officers of the Company; and



c)	a
person who has direct or indirect beneficial ownership of, control or direction over, or a combination of direct or indirect beneficial
ownership of and of control or direction over securities of the Company carrying more than 10% of the voting rights attached to
all the Company's outstanding voting securities.



The
threshold of share ownership percentage requiring disclosure of ownership is higher in the home jurisdiction of Ontario than in
the United States where United States law prescribes a 5% threshold for ownership disclosure.



| | C. | Material
                                         contracts.
| | -- | ------------------------------------------------------------



The
Company did not enter into any material contracts in the last two fiscal periods, up to the date of this Form 20-F other than
a plan of arrangement agreement (the “Kennady Arrangement Agreement), which was executed on March 12, 2012. The Kennady
Arrangement Agreement was between the Company and its subsidiary company, Kennady Diamonds Inc., and was the agreement for the
spin-out of the Company’s Kennady North Project to Kennady Diamonds Inc. It included various terms and conditions for the
parties, and was included in an information circular mailed to shareholders of the Company for a special shareholder meeting held
April 25, 2012. The plan of arrangement was concluded on July 6, 2012 with court, regulatory and shareholder approval.



De
Beers Canada, as Operator of the Gahcho Kué Project, has entered into purchase agreements relating to the Gahcho Kué
Project. As at December 31, 2014, the Company’s proportional interest (49%) of the commitments made by the Operator is $136,972,262.
The commitments are in the course of normal development of the Gahcho Kué Project.



| | D. | Exchange
                                         controls.
| | -- | -----------------------------------------------------------



Exchange
Controls and Investment Canada Act



Canada
has no system of exchange controls. There are no exchange restrictions on borrowing from foreign countries nor on the remittance
of dividends, interest, royalties and similar payments, management fees, loan repayments, settlement of trade debts, or the repatriation
of capital. Any such remittances to United States residents, however, may be subject to a withholding tax pursuant to the Canadian
Income Tax Act as modified by the reciprocal tax treaty between Canada and the United States. See "Item 10E, Taxation".



78









Subject
to certain exemptions, every "acquisition of control"1 by a "non-Canadian"2of a "Canadian business",3 even where such business is
already controlled by a non-Canadian, requires either notification (essentially a post-closing administrative formality) or detailed
review under the Investment Canada Act (the “ICA”). Whether a transaction is subject to notification or review
depends upon whether certain asset thresholds are satisfied, which thresholds generally depend on (1) the transaction structure
(direct or indirect acquisition),4 (2) whether the purchaser (referred to as
the "investor" under the ICA) and/or current owner of the Canadian business is a "WTO investor"5,
(3) whether the Canadian business is a "cultural business"6, and (4)
whether the value of the Canadian assets and assets of the Canadian entities being acquired exceeds 50% of the value of all assets
being acquired. The table below provides a summary of the relevant asset thresholds.



|Transaction
    Structure |                                     | Status
    of Investor/ Vendor |    | Cultural
    Business                |  | Threshold
    for Review
|------------------------- | ----------------------------------- | ------------------------------ | -- | ------------------------------------ |  | ------------------------
|Direct                    |                                     | WTO Investor or Vendor         |    | No                                   |  | ≥C$330 million7         
|                          |                                     | Yes                            |    | ≥C$5 million(book value of assets)  
|                          | Non-WTO Investor and Non-WTO Vendor |                                | No |                                     
|                          |                                     | Yes                            |   
|Indirect                  |                                     | WTO Investor or Vendor         |    | No                                   |  | Exempt from review      
|                          |                                     | Yes                            |    | ≥C$50 million*(book value of assets)
|                          | Non-WTO Investor and Non-WTO Vendor |                                | No |                                     
|                          |                                     | Yes                            |   



* Note that
a C$5 million threshold (rather than C$50 million) applies to indirect acquisitions where the value of the assets of the entity
carrying on the Canadian business and of all other entities in Canada being acquired exceeds 50% of the value of all the assets
acquired.



Where
the ICA applies and a transaction is not reviewable, a notification (containing certain prescribed information about the purchaser,
the transaction and the Canadian business) is required to be filed by the investor with the Investment Review Division of Industry
Canada any time prior to closing the transaction or within thirty (30) days thereafter. However, in the case of an investment
in a Canadian business that has activities related to Canada's cultural heritage or national identity (as prescribed), the Governor
in Council has the option of ordering a review, if notice of same is provided to the investor within 21 days of the filing of
the completed notification. (Note that notification under the ICA is also required with respect to the establishment of a new
Canadian business.)










1What constitutes an "acquisition of control"
is set out in the ICA and includes the acquisition of all or substantially all of the assets used in carrying on the Canadian
business, or the acquisition of a majority of the voting interests of an entity, whether the entity is of corporate or some other
form (e.g., a partnership). The acquisition of less than one-third of the voting shares of a corporation is deemed not
to be an acquisition of control of that corporation, while the acquisition of less than a majority but one-third or more of such
shares is presumed to be an acquisition of control unless it can be established that the purchaser will not control the corporation
in fact through the ownership of voting shares. The acquisition of less than a majority of the voting interests of a non-corporation
is deemed not to be an acquisition of control.

2A "non-Canadian" is a purchaser the ultimate control of which resides outside
of Canada.

3A "Canadian business" is defined as a business carried on in Canada that has
(a) a place of business in Canada, (b) an individual or individuals in Canada who are employed or self-employed in connection
with the business, and (c) assets in Canada used in carrying on the business.

4A direct acquisition is the acquisition of assets or voting interests of an entity in
Canada that carries on the Canadian business, while an indirect acquisition is the acquisition of the voting shares of a non-Canadian
corporation that controls, directly or indirectly, an entity in Canada carrying on the Canadian business.

5A "WTO investor" is a purchaser that is controlled ultimately by nationals or
residents of a World Trade Organization (“WTO”) member country.

6A "cultural business" is one that (i) publishes, distributes or sells books,
magazines, periodicals or newspapers, (ii) produces, distributes, sells or exhibits film or video recordings or audio or video
music recordings, (iii) produces, distributes or sells music in print or machine readable form, or (iv) is a radio, television,
cable television or satellite broadcast undertaking.

7Note that the current C$330 million threshold is based on the book value of assets of
the Canadian business for the fiscal year immediately preceding implementation of the transaction. On a day that is to be fixed
by order of the Governor in Council (the federal Cabinet), the threshold for direct acquisitions by WTO investors will change
to one based on the “enterprise value” of the Canadian business. The enterprise value threshold will be established
at C$600 million for investments made in the first two-year period; and will increase to C$800 million in the following two years
and C$1 billion thereafter , subject to indexation to Canada’s GDP. The ICA does not define "enterprise value";
its manner of calculation will be set out in as yet to be promulgated regulations.



79







Where
a transaction is reviewable and is a direct acquisition, an application for review must be filed by the investor prior to closing
and the parties are prohibited from closing until the Minister of Industry and/or, in the case of acquisitions of "cultural
businesses", the Minister of Canadian Heritage, confirms to the purchaser that he/she is satisfied or is deemed to be satisfied
that the investment is likely to be of "net benefit to Canada", based on certain prescribed factors set out in the ICA
(set out below) and in view of any legally binding undertakings the purchaser is willing to make. Where a transaction is reviewable
and is an indirect acquisition, an application for review must be filed by the investor within 30 days after closing.



Once
an application for review has been filed, whether pre-or post-closing, and has been certified to be complete, the responsible
Minister has a 45-day period within which to make a "net benefit" determination, which period may be unilaterally extended
once by the Minister for an additional 30 days, and thereafter extended with the consent of the investor. (Where notices related
to a national security review are given to an investor (see below), the length of the initial 45-day review period and any subsequent
extension periods are deemed to expire five days after the expiry of certain time periods or the issuance of certain notices related
to the national security review.)



The
Minister will determine whether the investment is likely to be of net benefit to Canada, taking into account the information provided
and having regard to certain assessment factors. These factors include: (i) the effect of the investment on the level and nature
of economic activity in Canada, including the effect on employment, on resource processing, and on the utilization of parts, components
and services produced in Canada; (ii) the effect of the investment on exports from Canada; (iii) the degree and significance of
participation by Canadians in the Canadian business and in any industry in Canada of which it forms a part; (iv) the effect of
the investment on productivity, industrial efficiency, technological development, product innovation and product variety in Canada;
(v) the effect of the investment on competition within any industry or industries in Canada; (vi) the compatibility of the investment
with national industrial, economic and cultural policies taking into consideration industrial, economic and cultural objectives
enunciated by the government or legislature of any province likely to be significantly affected by the investment; and (vii) the
contribution of the investment to Canada's ability to compete in world markets.



Where
the Minister has advised the investor that he is not satisfied that the investment is likely to be of net benefit to Canada, the
investor has the right to make representations and submit undertakings within 30 days of the date of the notice (or any further
period that is agreed upon between the investor and the Minister). Within a reasonable time after the expiration of this 30 day
period (or the agreed extension), the Minister must notify the acquiror (i) that he is now satisfied that the investment is likely
to be of net benefit to Canada or (ii) that he is not satisfied that the investment is likely to be of net benefit to Canada.
In the latter case, the investor may not proceed with the investment or, if the investment has already been consummated, must
divest itself of control of the Canadian business.



Effective
February 6, 2009, every investment by a non-Canadian to (i) establish a new Canadian business, (ii) acquire control of a Canadian
business, or (iii) acquire in whole or in part (e.g., a minority interest) or establish an entity carrying on all or any
part of its operations in Canada (if the entity has a place of operations in Canada, employees or assets in Canada used in connection
with its operations) may be subjected to a national security review under the ICA, regardless of the value of the investment.
Investors that receive notice of a potential or actual national security review are prohibited from implementing a proposed investment
pending the outcome of the review. Where the Minister of Industry, after consultation with the Minister of Public Safety and Emergency
Preparedness, is satisfied that the investment would be "injurious to national security" (an undefined phrase), the
Governor in Council may "take any measures it considers advisable" to protect national security, including: (i) prohibiting
implementation of a proposed investment; (ii) authorizing the investment on terms and conditions or subject to written undertakings
from the investor; and (iii) in the case of completed investments, requiring the investor to divest control of the Canadian business
or its interest in the Canadian business.



80







Unless
a transaction is otherwise subject to notification or to review under the ICA, an investor is not required to notify Industry
Canada of transactions that may raise potential national security issues. Where, however, a national security review is ordered,
an investor is afforded the right to make representations to the Minister, and is required to provide any information considered
necessary by the Minister for purposes of the review. New National Security Review of Investments Regulations, in effect since
September 2009, set out timelines for each step of the national security review process. If the maximum prescribed periods are
fully utilized, a national security review could take 130 days (assuming a notice of possible review is issued), with the potential
for the Minister of Industry to request from the investor an extension of the review period.



| | E. | Taxation.
| | -- | ---------



A
brief description of certain provisions of the tax treaty between Canada and the United States, Canada-United States Tax Convention
(1980), as amended, (the "Convention"), is included below, together with a brief outline of certain taxes, including
withholding provisions, to which United States holders of common stock of the Company are subject under the Income Tax Act(Canada) and the regulations thereunder (the "Canadian Tax Act"). The consequences, if any, of provincial, territorial,
state, local or foreign taxes (other than Canadian federal income taxes) are not considered.



The
following information is of a general nature only and is not, and is not intended to be, legal or tax advice to any holder or
prospective holder of common stock of the Company and no representations with respect to the income tax consequences to any such
holder are made. Holders of common stock of the Company should seek the advice of their own tax advisors, tax counsel or accountants
with respect to the applicability or effect on their own individual circumstances of the matters referred to herein.



Certain
Canadian Federal Income Tax Consequences



The
discussion under this heading is a general summary of the principal Canadian federal income tax consequences pursuant to the Canadian
Tax Act of acquiring, holding and disposing of shares of common stock of the Company for a shareholder of the Company who, at
all relevant times and for purposes of the Canadian Tax Act and the Convention, is not, and is not deemed to be, a resident of
Canada, and is solely a resident of the United States, holds shares of common stock of the Company as capital property, deals
at arm's length and is not affiliated with the Company, and, does not use or hold, is not deemed to use or hold shares of the
common stock of the Company in, or in the course of, carrying on business in Canada. (a "U.S. Holder"). This summary
is based on the current provisions of the Canadian Tax and on the Company's understanding of the administrative policies and assessing
practices of Canada Revenue Agency, in effect as of the date hereof, and takes into account all specific proposals to amend the
Canadian Tax Act and regulations to it publicly announced by the Minister of Finance of Canada prior to the date hereof. No assurances
can be given that such proposed amendments will be enacted in the form proposed, or at all. This summary is not exhaustive of
all potential Canadian federal income tax consequences to a U.S. Holder and does not take into account or anticipate any other
changes in law or administrative policies or assessing practices, whether by judicial, governmental or legislative action or decision.
This discussion is general only and is not a substitute for independent advice from a shareholder's own Canadian and U.S. tax
advisors.



81









The
provisions of the Canadian Tax Act are subject to income tax treaties to which Canada is a party, including the Convention.



Dividends
on Common Shares and Other Income



Under
the Canadian Tax Act, a non-resident of Canada is generally subject to Canadian non-resident tax at the rate of 25 percent on
amounts that are paid or credited or deemed under the Canadian Tax Act to be paid or credited as, on account or in lieu of payment
of, or in satisfaction of dividends to a U.S. Holder by a corporation resident in Canada. The Convention limits the rate to 15
percent if the shareholder is a resident of the United States entitled to all of the benefits of the Convention and the dividends
are beneficially owned by and paid to such shareholder, and to 5 percent if the shareholder is a corporation entitled to all of
the benefits of the Convention that beneficially owns at least 10 percent of the voting stock of the Canadian payor corporation.



The
non-resident tax payable on dividends is to be withheld at source by the Company or people acting on its behalf.



Dispositions
of Common Shares



Under
the Canadian Tax Act, a U.S. Holder will generally not be subject to tax in respect of capital gains realized on the disposition
or deemed disposition of shares of the common stock of the Company unless, at the time of disposition, the shares constitute "taxable
Canadian property" (as defined in the Canadian Tax Act) of the U.S. Holder at the time of disposition and the U.S. Holder
is not entitled to relief under the Convention.



Provided
that shares are listed on a “designated stock exchange” (which includes the TSX) at the time of disposition, the shares
of common stock of the Company will not constitute taxable Canadian property of a U.S. Holder at a particular time unless (i)
at any time in the 60 months immediately preceding the disposition of such shares 25% or more of the issued shares of any class
or series in the capital stock of the Company were owned by one or more persons in a group comprising the U.S. Holder and persons
with whom the U.S. Holder did not deal at arm's length; and (ii) more than 50% of the fair market value of the common stock of
the Company was derived directly or indirectly from one or any combination of: (a) real or immoveable property situated in Canada;
(b) “Canadian resource properties” (as defined in the Canadian Tax Act), (c) “timber resource properties”
(as defined in the Canadian Tax Act), or (d) options in respect of, or interests in, or for civil law right in, any of the foregoing,
whether or not the property exists.



The
Convention generally relieves U.S. Holders from liability for Canadian tax on capital gains derived on a disposition of shares
that are "taxable Canadian property" unless



| | a) | the
                                         value of the shares is derived principally from "real property" situated in
                                         Canada, including the right to explore for or exploit natural resources and rights to
                                         amounts computed by reference to production, or
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | the
                                         shareholder was an individual resident in Canada for 120 months during any period of
                                         20 consecutive years preceding the disposition of the shares, and at any time during
                                         the 10 years immediately preceding the disposition of the shares the individual was a
                                         resident of Canada, and the shares were owned by the individual when he or she ceased
                                         to be resident in Canada.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



82







If
a U.S. Holder realizes a capital gain or capital loss from a disposition of a share of common stock of the Company which constitutes
taxable Canadian property for purposes of the Canadian Tax Act and is not otherwise exempt from Canadian tax under the Convention,
then the capital gain or capital loss is the amount, if any, by which the U.S. Holder's proceeds of disposition exceed (or are
exceeded by, respectively) the aggregate of the U.S. Holder's adjusted cost base of the share and reasonable expenses of disposition
as determined under the Canadian Tax Act. The capital gain or loss must be computed in Canadian currency using a weighted average
adjusted cost base for identical properties. Generally one-half of a capital gain (“taxable capital gain”) is included
in income for Canadian tax purposes in the year of the disposition, and one-half of a capital loss (“an allowable capital
loss”) must be deducted from taxable capital gains realized by the U.S. Holder in that year. Allowable capital losses in
excess of taxable capital gains for that year may generally be carried back three years or forward indefinitely and deducted against
net taxable capital gains in those years, in the manner permitted under the Canadian Tax Act.



United
States Federal Income Tax Consequences



The
following is a summary of certain U.S. federal income tax consequences to a U.S. Holder (as defined below) arising from and relating
to the acquisition, ownership, and disposition of shares of common stock of the Company ("Common Shares").



This
summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S.
federal income tax consequences that may apply to a U.S. Holder as a result of the acquisition, ownership, and disposition of
Common Shares. In addition, this summary does not take into account the individual facts and circumstances of any particular U.S.
Holder that may affect the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares.
Except as specifically set forth below, this summary does not discuss applicable tax reporting requirements. This summary is not
intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any U.S. Holder. Each
U.S. Holder should consult its own tax advisor regarding the U.S. federal, U.S. state and local, and foreign tax consequences
of the acquisition, ownership, and disposition of Common Shares.



No
legal opinion from U.S. legal counsel or ruling from the Internal Revenue Service (the “IRS”) has been requested,
or will be obtained, regarding the U.S. federal income tax consequences of the acquisition, ownership and disposition of Common
Shares. This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, and
contrary to, the positions taken in this summary. In addition, because the authorities on which this summary is based are subject
to various interpretations, the IRS and the U.S. courts could disagree with one or more of the conclusions described in this summary.



83







Circular
230 Disclosure



Any
statement made herein regarding any U.S. federal tax is not intended or written to be used, and cannot be used, by any taxpayer
for purposes of avoiding any penalties. Any such statement herein is written in connection with the marketing or promotion of
the transaction to which the statement relates. Each taxpayer should seek advice based on the taxpayer’s particular circumstances
from an independent tax advisor.



Scope
of this Disclosure



Authorities



This
summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations, published IRS
rulings, published administrative positions of the IRS, the Convention Between Canada and the United States of America with Respect
to Taxes on Income and on Capital, signed September 26, 1980, as amended (the "Canada-U.S. Tax Convention"), and U.S.
court decisions that are applicable as of the date of this Annual Report. Any of the authorities on which this summary is based
could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive basis. This
summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation or proposed changes
to the Canada-U.S. Tax Convention.



U.S.
Holders



For
purposes of this summary, a "U.S. Holder" is a beneficial owner of Common Shares that, for U.S. federal income tax purposes,
is (a) an individual who is a citizen or, or resident in, the U.S., (each as defined under U.S. tax laws),(b) a corporation,
or other entity classified as a corporation for U.S. federal income tax purposes, that is created or organized in or under the
laws of the U.S. or any state in the U.S., including the District of Columbia, (c) an estate if the income of such estate
is subject to U.S. federal income tax regardless of the source of such income, or (d) a trust if (i) such trust has
validly elected to be treated as a U.S. person for U.S. federal income tax purposes or (ii) a U.S. court is able to exercise
primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial
decisions of such trust.



Non-U.S.
Holders



A
"non-U.S. Holder" is a beneficial owner of Common Shares other than a U.S. Holder. This summary does not address the
U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares to non-U.S. Holders.



84









U.S.
Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed



This
summary does not address the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares
to U.S. Holders that are subject to special provisions under the Code, including but not limited to the following: (a) U.S.
Holders that are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts;
(b) U.S. Holders that are financial institutions, insurance companies, real estate investment trusts, regulated investment
companies or broker-dealers or dealers in securities; (c) U.S. Holders that have a "functional currency" other
than the U.S. dollar; (d) U.S. Holders that are subject to the alternative minimum tax provisions of the Code; (e) former
U.S. citizens or former long-term residents of the United States as defined in Section 877 of the Code; (f) U.S. Holders that
own Common Shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement
involving more than one position; (g) U.S. Holders that acquired Common Shares in connection with the exercise of employee
stock options or otherwise as compensation for services; (h) partners of partnerships that hold Common Shares or owners of
other entities classified as partnerships or "pass-through" entities for U.S. federal income tax purposes that hold
Common Shares, (i) U.S. Holders that hold Common Shares other than as a capital asset within the meaning of Section 1221
of the Code, and (j) U.S. Holders that own or have owned (directly, indirectly, or by attribution) 10% or more of the total combined
voting power of the outstanding shares of the Company. U.S. Holders that are subject to special provisions under the Code, including
U.S. Holders described immediately above, should consult their own tax advisors regarding the tax consequences of the acquisition,
ownership, and disposition of Common Shares.



Tax
Consequences Other than U.S. Federal Income Tax Consequences Not Addressed



This
summary does not address U.S. state, local or foreign tax consequences to U.S. Holders of the acquisition, ownership, and disposition
of Common Shares, nor does it address U.S. federal tax consequences other than income tax. Each U.S. Holder should consult its
own tax advisors regarding these and other tax consequences of the acquisition, ownership, and disposition of Common Shares.



U.S.
Federal Income Tax Consequences of the Acquisition, Ownership, and Disposition of Common Shares



Passive
Foreign Investment Company



The
Company generally will be a PFIC if, for a taxable year, (a) 75% or more of the gross income of the Company for such taxable
year is passive income or (b) 50% or more of the assets held by the Company either produce passive income or are held for
the production of passive income. “Gross income” generally includes all sales revenues less the cost of goods sold,
plus income from investments and from incidental or outside operations or sources. "Passive income" includes, for example,
dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from
commodities transactions.



For
purposes of the PFIC income and asset test described above, if the Company owns, directly or indirectly, 25% or more of the total
value of the outstanding shares of another foreign corporation, the Company will be treated as if it (a) held a proportionate
share of the assets of such other foreign corporation and (b) received directly a proportionate share of the income of such
other foreign corporation. If the Company is a PFIC, in addition to the rules discussed below, U.S. Holders generally may be required
to file certain information returns with the IRS. The PFIC rules are extremely complex, and U.S. Holders should consult their
own U.S. tax advisors concerning the application of the PFIC rules.



The
Company believes it was classified as a PFIC during the tax year ended December 31, 2014, and based on current business plans
and financial expectations, the Company believes that it will be a PFIC for the tax year ending December 31, 2015 and may be a
PFIC in subsequent tax years. The determination of whether any corporation was, or will be, a PFIC for a tax year depends, in
part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations. In addition,
whether any corporation will be a PFIC for any tax year depends on the assets and income of such corporation over the course of
each such year and, as a result, cannot be predicted with certainty as of the date of this document. There can be no assurance,
however, that the IRS will agree with a determination made by the Company concerning its PFIC status.



85







In
any year in which the Company is classified as a PFIC, U.S. Holders would be required to file an annual report with the IRS containing
such information as Treasury Regulations and/or other IRS guidance may require. U.S. Holders should consult their own tax advisors
regarding the requirements of filing such information returns under these rules, including the requirement to file a IRS Form
8621.



Default
PFIC Rules Under Section 1291 of the Code



If
the Company is a PFIC, the U.S. federal income tax consequences to a U.S. Holder of the acquisition, ownership, and disposition
of Common Shares will depend on whether such U.S. Holder makes an election to treat the Company as a "qualified electing
fund" or "QEF" under Section 1295 of the Code (a "QEF Election") or makes a mark-to-market election
under Section 1296 of the Code (a "Mark-to-Market Election"). A U.S. Holder that does not make either a QEF Election
or a Mark-to-Market Election will be referred to in this summary as a "Non-Electing U.S. Holder."



A
Non-Electing U.S. Holder will be subject to the rules of Section 1291 of the Code with respect to (a) any gain on the
disposition of Common Shares and any “excess” distribution paid on the Common Shares.



Under
Section 1291 of the Code, any gain recognized on the sale or other disposition of Common Shares, and any excess distribution
paid on the Common Shares, must be rateably allocated to each day in a Non-Electing U.S. Holder's holding period for the Common
Shares. The amount of any such gain or excess distribution allocated to prior years of such Non-Electing U.S. Holder's holding
period for the Common Shares will be subject to U.S. federal income tax at the highest tax applicable to ordinary income in each
such prior year. A Non-Electing U.S. Holder will be required to pay interest on the resulting tax liability for each such prior
year, calculated as if such tax liability had been due in each such prior year. The amount of any such gain or excess distribution
allocated to the current year of such Non-Electing U.S. Holder's holding period for the Common Shares will be treated as ordinary
income in the current year (but will not qualify for the preferential dividend rate previously discussed), and no interest charge
will be incurred with respect to the resulting tax liability for the current year.



If
the Company is a PFIC for any taxable year during which a Non-Electing U.S. Holder holds Common Shares, the Company will continue
to be treated as a PFIC with respect to such Non-Electing U.S. Holder, regardless of whether the Company ceases to be a PFIC in
one or more subsequent years. A Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to recognize gain (which
will be taxed under the rules of Section 1291 of the Code discussed above) as if such Common Shares were sold on the last
day of the last taxable year for which the Company was a PFIC.



QEF
Election



A
U.S. Holder that makes a QEF Election generally will not be subject to the rules of Section 1291 of the Code discussed above.
However, a U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax annually on such U.S. Holder's pro
rata share of (a) “net capital gain” of the Company, which will be taxed as capital gain to such U.S. Holder,
and (b) the “ordinary earnings” of the Company, which will be taxed as ordinary income to such U.S. Holder, regardless
of whether such amounts are actually distributed to such U.S. Holder by the Company. However, a U.S. Holder that makes a QEF Election
may, subject to certain limitations, elect to defer payment of current U.S. federal income tax on such amounts, subject to an
interest charge. In addition, a U.S. Holder that makes a QEF Election generally will recognize capital gain or loss on the sale
or other taxable disposition of Common Shares, as long as the U.S. Holder always had a QEF election in effect.



86







Each
U.S. Holder should consult its own U.S. tax advisors regarding the advisability of, and procedure for making, a QEF Election.
U.S. Holders should be aware that there can be no assurance that the Company will satisfy record keeping requirements so that
a U.S. Holder may make certain information returns to the IRS, or that the Company will supply U.S. Holders with information that
such U.S. Holders are required to report under the QEF rules, in the event that the Company is a PFIC and a U.S. Holder wishes
to make a QEF Election. Thus, U.S. Holders may not be able to make a QEF Election with respect to their Common Shares. Each U.S.
Holder should consult its own tax advisor regarding the availability of, and procedure for making, a QEF Election.



Mark-to-Market
Election



As
an alternative to the foregoing rules, a U.S. Holder may make a Mark-to-Market. A U.S. Holder that makes a Mark-to-Market Election
generally will not be subject to the rules of Section 1291 of the Code discussed above. However, if a U.S. Holder makes a
Mark-to-Market Election after the beginning of such U.S. Holder's holding period for the Common Shares and such U.S. Holder has
not made a timely QEF Election, the rules of Section 1291 of the Code discussed above will apply to dispositions of, and
certain distributions on, the Common Shares.



A
U.S. Holder that makes a Mark-to-Market Election will include as ordinary income, for each taxable year in which the Company is
a PFIC, an amount equal to the excess, if any, of (a) the fair market value of the Common Shares as of the close of such
taxable year over (b) such U.S. Holder's tax basis in such Common Shares. A U.S. Holder that makes a Mark-to-Market Election
will be allowed a deduction in an amount equal to the lesser of (a) the excess, if any, of (i) such U.S. Holder's adjusted
tax basis in the Common Shares over (ii) the fair market value of such Common Shares as of the close of such taxable year
or (b) the excess, if any, of (i) the amount included in ordinary income because of such Mark-to-Market Election for
prior taxable years over (ii) the amount allowed as a deduction because of such Mark-to-Market Election for prior taxable
years.



A
U.S. Holder that makes a Mark-to-Market Election generally also will adjust such U.S. Holder's tax basis in the Common Shares
to reflect the amount included in gross income or allowed as a deduction because of such Mark-to-Market Election. In addition,
upon a sale or other taxable disposition of Common Shares, a U.S. Holder that makes a Mark-to-Market Election will recognize ordinary
income or loss (not to exceed the excess, if any, of (a) the amount included in ordinary income because of such Mark-to-Market
Election for prior taxable years over (b) the amount allowed as a deduction because of such Mark-to-Market Election for prior
taxable years).



Each
U.S. Holder should consult its own tax advisors regarding the advisability of, and procedure for making, a Mark-to-Market Election.



Other
PFIC Rules



Under
Section 1291(f) of the Code, the IRS has issued proposed Treasury Regulations that, subject to certain exceptions, would
cause a U.S. Holder that had not made a timely QEF Election to recognize gain (but not loss) upon certain transfers of Common
Shares that would otherwise be tax-deferred (e.g., gifts and exchanges pursuant to corporate reorganizations).



An
individual U.S. Holder's estate may not receive a step-up in basis in the Common Shares at the U.S. Holder's death, if the Company
is or was a PFIC during the U.S. Holder's period of ownership of the Common Shares.



Certain
additional adverse rules will apply with respect to a U.S. Holder if the Company is a PFIC, regardless of whether such U.S. Holder
makes a QEF Election. For example under Section 1298(b)(6) of the Code, a U.S. Holder that uses Common Shares as security
for a loan will, except as may be provided in Treasury Regulations, be treated as having made a taxable disposition of such Common
Shares.



87







The
PFIC rules are complex, and each U.S. Holder should consult its own financial advisor, legal counsel, or accountant regarding
the PFIC rules and how the PFIC rules may affect the U.S. federal income tax consequences of the acquisition, ownership, and disposition
of Common Shares.



Distributions
on Common Shares



General
Taxation of Distributions



Generally,
and subject to the discussion above, concerning PFICs, a U.S. Holder that receives a distribution, including a constructive distribution,
with respect to the Common Shares will be required to include the amount of such distribution in gross income as a dividend (without
reduction for any Canadian income tax withheld from such distribution) to the extent of the current or accumulated "earnings
and profits" of the Company (as determined under U.S. tax principles). To the extent that a distribution exceeds the current
and accumulated "earnings and profits" of the Company, such distribution will be treated (a) first, as a tax-free
return of capital to the extent of a U.S. Holder's tax basis in the Common Shares and, (b) thereafter, as gain from the sale
or exchange of such Common Shares. (See more detailed discussion at "Disposition of Common Shares" below). However,
the Company may not maintain the calculations of earnings and profits in accordance with U.S. federal income tax principles, and
each U.S. Holder should therefore assume that any distribution by the Company with respect to the Common Shares will constitute
ordinary dividend income. Dividends received on Common Shares generally will not be eligible for the “dividends received
deduction”. Subject to applicable limitations and provided the Company is eligible for the benefits of the Canada-U.S. Tax
Convention, dividends paid by the Company to non-corporate U.S. Holders, including individuals, generally will be eligible for
the preferential tax rates applicable to long-term capital gains for dividends, provided certain holding period and other conditions
are satisfied, including that the Company not be classified as a PFIC in the tax year of distribution or in the preceding tax
year. The dividend rules are complex, and each U.S. Holder should consult its own tax advisor regarding the application of such
rules.



Disposition
of Common Shares



Subject
to the discussion of the PFIC rules, above, a U.S. Holder will recognize gain or loss on the sale or other taxable disposition
of Common Shares in an amount equal to the difference, if any, between (a) the amount of cash plus the fair market value
of any property received and (b) such U.S. Holder's tax basis in the Common Shares sold or otherwise disposed of. Any such
gain or loss generally will be capital gain or loss, which will be long-term capital gain or loss if the Common Shares are held
for more than one year.



Although
preferential tax rates currently apply to long-term capital gains of a U.S. Holder that is an individual, estate, or trust, such
preferential tax rates are not available if the Company is a PFIC, unless a “qualified electing fund” (“QEF”)
election is timely made, as described above. There are currently no preferential tax rates for long-term capital gains of a U.S.
Holder that is a corporation. Deductions for capital losses and net capital losses are subject to complex limitations.



Foreign
Tax Credit



A
U.S. Holder who pays (whether directly or through withholding) Canadian income tax with respect to the Common Shares generally
will be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax
paid. Generally, a credit is more advantageous because it will reduce a U.S. Holder's U.S. federal income tax liability on a dollar-for-dollar
basis, whereas a deduction will reduce a U.S. Holder's income subject to U.S. federal income tax. This election is made on a year-by-year
basis and applies to all foreign taxes paid (whether directly or through withholding) by a U.S. Holder during a year.



88







Complex
limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate
share of a U.S. Holder's U.S. federal income tax liability that such U.S. Holder's "foreign source" taxable income bears
to such U.S. Holder's worldwide taxable income. In applying this limitation, a U.S. Holder's various items of income and deduction
must be classified, under complex rules, as either "foreign source" or "U.S. source." Generally, dividends
paid by a foreign corporation should be treated as foreign source for this purpose, and gains recognized on the sale of stock
of a foreign corporation by a U.S. Holder should be treated as U.S. source for this purpose, except as otherwise provided in an
applicable income tax treaty, and if an election is properly made under the Code. In addition, this limitation is calculated separately
with respect to specific categories of income known as "baskets", and there are limitations under the basket rules also.
Unused foreign tax credits generally can be carried back one year and forward ten years. The foreign tax credit rules are complex,
and each U.S. Holder should consult its own tax advisors regarding the foreign tax credit rules.



Receipt
of Foreign Currency



The
amount of any distribution paid to a U.S. Holder in foreign currency, or on the sale, exchange or other taxable disposition of
Common Shares, generally will be equal to the U.S. dollar value of such foreign currency based on the exchange rate applicable
on the date of receipt (regardless of whether such foreign currency is converted into U.S. dollars at that time). A U.S. Holder
will have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Any U.S. Holder who converts
or otherwise disposes of the foreign currency after the date of receipt may have a foreign currency exchange gain or loss that
would be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes.
Each U.S. Holder should consult its own U.S. tax advisor regarding the U.S. federal income tax consequences of receiving, owning,
and disposing of foreign currency.



Additional Tax on Passive
Income



For
tax years beginning after December 31, 2012, certain individuals, estates and trusts whose income exceeds certain thresholds will
be required to pay a 3.8% Medicare surtax on “net investment income” including, among other things, dividends and
net gain from dispositions of property (other than property held in a trade or business). U.S. Holders should consult with their
own tax advisors regarding the effect, if any, of this tax on their ownership and disposition of Common Shares.



Information
Reporting; Backup Withholding Tax



Under
U.S. federal income tax law and Treasury Regulations, certain categories of U.S. Holders must file information returns with respect
to their investment in, or involvement in, a foreign corporation. For example, recently enacted legislation generally imposes
new U.S. return disclosure obligations (and related penalties) on individuals who are U.S. Holders that hold certain specified
foreign financial assets in excess of $50,000. The definition of specified foreign financial assets includes not only financial
accounts maintained in foreign financial institutions, but also, unless held in accounts maintained by a financial institution,
any stock or security issued by a non-U.S. person, any financial instrument or contract held for investment that has an issuer
or counterparty other than a U.S. person and any interest in a foreign entity. U.S. Holders may be subject to these reporting
requirements unless their Common Shares are held in an account at a domestic financial institution. Penalties for failure to file
certain of these information returns are substantial. U.S. Holders should consult with their own tax advisors regarding the requirements
of filing information returns under these rules, including the requirement to file an IRS Form 8938.



89







Payments
of dividends made on, and proceeds arising from certain sales or other taxable dispositions of, Common Shares generally will be
subject to information reporting and backup withholding tax, at the rate of 28%, if a U.S. Holder (a) fails to furnish such
U.S. Holder's correct U.S. taxpayer identification number (generally on Form W-9), (b) furnishes an incorrect U.S. taxpayer
identification number, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject
to backup withholding tax, or (d) fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct
U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it is subject to backup withholding
tax. However, U.S. Holders that are corporations generally are excluded from these information reporting and backup withholding
tax rules. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against a U.S. Holder's
U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS.
Each U.S. Holder should consult its own tax advisors regarding the information reporting and backup withholding tax rules.



| | F. | Dividend
                                         and paying agents
| | -- | -------------------------------------------------------------------



Not
Applicable



| | G. | Statement
                                         by experts.
| | -- | --------------------------------------------------------------



The
references herein to excerpts of or summaries from the “Gahcho Kué Project 2014 Feasibility Study NI 43-101 Technical
Report as Amended May 27, 2014, with effective date March 31, 2014” have been consented to by Daniel D. Johnson, P.Eng.,
Kenneth Meikle, P.Eng., Dino Pilotto, P. Eng., all of JDS at Suite 200 - 532 Leon Ave Kelowna, British Columbia V1Y 6J6 and Kato
Lone, Eng. at Hatch Ltd., 5 Place Ville Marie, Suite 1400, Montreal, QC, Canada, H3B 2G2 .



Documents
on display.



Any
statement in this Annual Report about any of the Company's contracts or other documents is not necessarily complete. If the contract
or document is filed as an exhibit to this Annual Report, the contract or document is deemed to modify the description contained
in this Annual Report. Readers must review the exhibits themselves for a complete description of the contract or document.



Readers
may review a copy of the Company's filings with the U.S. Securities and Exchange Commission ("the "SEC"), including
exhibits and schedules filed with it, at the SEC's public reference facilities at 100 F Street, N.E., Washington, D.C. 20549.
Readers may call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. The SEC maintains a Web site
(http://www.sec.gov) that contains reports, submissions and other information regarding registrants that file electronically with
the SEC. The Company has only recently become subject to the requirement to file electronically through the EDGAR system most
of its securities documents, including registration statements under the Securities Act of 1933, as amended and registration statements,
reports and other documents under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).



Readers
may read and copy any reports, statements or other information that the Company files with the SEC at the address indicated above
and may also access them electronically at the Web site set forth above. These SEC filings are also available to the public from
commercial document retrieval services.



90







The
Company is required to file reports and other information with the SEC under the Exchange Act. Reports and other information filed
by the Company with the SEC may be inspected and copied at the SEC's public reference facilities described above. As a foreign
private issuer, the Company is exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements
and the Company's officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery
provisions contained in section 16 of the Exchange Act. Under the Exchange Act, as a foreign private issuer, the Company is not
required to publish financial statements as frequently or as promptly as United States companies.



Any
of the documents referred to above can also be viewed at the offices of the Company's attorneys, Dorsey and Whitney LLP, 161 Bay
Street, Suite 4310, Toronto, Ontario M5J 2S1. All of the documents referred to above are in English.



| | H. | Subsidiary
                                         Information.
| | -- | ----------------------------------------------------------------



Not
applicable.



|Item 11. | Quantitative
    and Qualitative Disclosures About Market Risk.
|-------- | ---------------------------------------------------------------



Market
risk represents the risk of loss that may impact the financial position, results of operations, or cash flows of the Company due
to adverse changes in financial market prices, including interest rate risk, foreign currency exchange rate risk, commodity price
risk, and other relevant market or price risks.



As
the Company is in the development stage, it presently has no activities related to derivative financial instruments or derivative
commodity instruments.



The
financial results are quantified in Canadian dollars. In the past, the Company has raised equity funding through the sale of securities
denominated in Canadian dollars, and the Company may in the future raise additional equity funding or financing denominated in
Canadian dollars. The Company currently does not believe it currently has any materially significant market risks relating to
operations resulting from foreign exchange rates. However, if the Company enters into financing or other business arrangements
denominated in currency other than the Canadian or United States dollar, variations in the exchange rate may give rise to foreign
exchange gains or losses that may be significant.



The
Company currently has no long-term debt obligations. The Company does not use financial instruments for trading purposes and was
not at December 31, 2014 a party to any leverage derivatives. In the event the Company experiences substantial growth in the future,
the Company's business and results of operations may be materially affected by changes in interest rates and certain other credit
risk associated with the Company's operations.



|Item 12. | Description
    of Securities Other than Equity Securities
|-------- | ----------------------------------------------------------



Not
Applicable.



PART
II



|Item 13. | Defaults,
    Dividend Arrearages and Delinquencies.
|-------- | ----------------------------------------------------



None.



|Item 14. | Material
    Modifications to the Rights of Security Holders and Use of Proceeds.
|-------- | ---------------------------------------------------------------------------------



Not
Applicable.



91







|Item 15. | Controls
    and Procedures.
|-------- | ----------------------------



| | d) | Disclosure
                                         Controls and Procedures.
| | -- | ----------------------------------------------------------------------------



| |  | The Company's
                                         Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness
                                         of the Company's disclosure controls and procedures (as such term is defined in Rules
                                         13(a)-15(e) and 15(d)-15(e) under the "Exchange Act" as of the end of the period
                                         covered by this annual report (the "Evaluation Date"). Based on such evaluation,
                                         such officers have concluded that, as of the Evaluation Date, the Company's disclosure
                                         controls and procedures are effective. Such disclosure controls and procedures are designed
                                         to ensure that the information required to be disclosed by the Company in reports that
                                         it files or submits to the Securities and Exchange Commission under the Exchange Act
                                         is recorded, processed, summarized and reported within the time periods specified in
                                         applicable rules and forms, and includes controls and procedures designed to ensure information
                                         relating to the Company required to be included in our reports filed or submitted under
                                         the Exchange Act is accumulated and communicated to the Company’s management to
                                         allow timely decision regarding disclosure.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Management’s Annual
Report on Internal Control Over Financial Reporting.
| | --- | ------------------------------------------------------------------------



Management
is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Management
has designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with IFRS as issued by the International
Accounting Standards Board.



Because
of its inherent limitations, the Company’s internal control over financial reporting may not prevent or detect all possible
misstatements or frauds. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.



To
evaluate the effectiveness of the Company’s internal control over financial reporting, Management has used the Internal
Control – Integrated Framework (1992), which is a suitable, recognized control framework established by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”). Management has assessed the effectiveness of the Company’s
internal control over financial reporting and concluded that such internal control over financial reporting is effective as of
December 31, 2014.



| | (c) | Attestation Report of
the Company’s Registered Accounting Firm.
| | --- | ---------------------------------------------------------------



The
Registrant’s independent registered public accounting firm, KPMG LLP, has issued an attestation report expressing an opinion
on the Company’s internal control over financial reporting as of December 31, 2014. For KPMG LLP’s report, see Item
19 of this Annual Report on Form 20-F.



| | (d) | Changes
                                         in Internal Controls over Financial Reporting.
| | --- | -----------------------------------------------------------------------------------------------



| |  | There have
                                         not been any changes in the Company's internal controls over financial reporting or in
                                         other factors that have been identified in connection with the evaluation described above
                                         that occurred during the period covered by this Annual Report that has materially affected,
                                         or is reasonably likely to materially affect, the Company's internal controls over financial
                                         reporting.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



92







|Item 16A. | Audit Committee
    Financial Expert.
|--------- | -------------------------------------



The
Company's Board of Directors has determined that there is at least one audit committee financial expert, as defined under Item
16A of Form 20-F, serving on its audit committee, namely, David Whittle, whose qualifications are set out in Item 6, above.Mr. Whittle is independent, as such term is defined by the listing standards of the NASDAQ. All other members of the Audit
Committee are also independent as defined by the listing standards of the NASDAQ.



|Item 16B. | Code of Ethics.
|--------- | ---------------



The
Board of Directors, on February 2, 2003, adopted a Code of Ethics (the "Code") entitled "Ethics and Conflict of
Interest Policy" which applies to each of the directors and officers of the Company and its affiliates. A copy of the 2003
Code has been previously filed. On May 29, 2006, the Board of Directors adopted an updated and expanded set of Corporate Governance
Policies, which replaced the 2003 Code. On September 7, 2010, the Board of Directors approved an updated set of the 2006 Corporate
Governance Policies. A copy of the updated 2006 Corporate Governance Policies has been previously filed, and is incorporated by
reference to this Annual Report.



The
Corporate Governance Policy governs the actions of and is applicable to all of the directors and officers of the Company and its
subsidiaries, and their affiliates. The updated 2006 Corporate Governance Policies address the following:



| | · | compliance
                                         with all the laws and regulations identified therein and with the requirements of the
                                         U.S. Securities and Exchange Commission as mandated by the Sarbanes-Oxley Act of 2002,
                                         and the requirements of the Toronto Stock Exchange;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | corporate
                                         opportunities and potential conflicts of interest;
| | - | -----------------------------------------------------------------------------------------------------



| | · | the
                                         quality of public disclosures;
| | - | ---------------------------------------------------------------------------



| | · | the
                                         protection and appropriate use of the Company's assets and resources;
| | - | ------------------------------------------------------------------------------------------------------------------



| | · | the
                                         protection of confidential information;
| | - | ------------------------------------------------------------------------------------



| | · | insider
                                         trading;
| | - | ---------------------------------------------------------



| | · | fair
                                         behaviour; and
| | - | ------------------------------------------------------------



| | · | reporting
                                         violations of the Policy or Board Directives.
| | - | ------------------------------------------------------------------------------------------------



The
Company has also adopted an Insider Trading Policy which applies to all employees of the Company.



The
Company will provide a copy of the updated 2006 Corporate Governance Policies to any person, without charge. To obtain a copy
without charge, send a request, in writing, to the Company at Mountain Province Diamonds Inc., Attention: Corporate Secretary,
161 Bay Street, Suite 2315, PO Box 216, Toronto, Ontario, Canada M5J 2S1.



93







|Item
    16C. | Principal
    Accountant Fees and Services.
|------------- | -------------------------------------------



| | A. | Audit
                                         Fees
| | -- | ---------------------------------------------------



"Audit
Fees" are the aggregate fees billed by KPMG LLP (“KPMG”) for the audit of the Company's consolidated annual financial
statements, assistance with interim financial statements, attestation services that are provided in connection with statutory
and regulatory filings or engagements, services associated with registration statements, prospectuses, periodic reports and other
documents filed with securities regulatory bodies and stock exchanges and other documents issued in connection with securities
offerings and admissions to trading, and assistance in responding to comment letters from securities regulatory bodies, and consultations
with the Company's management as to accounting or disclosure treatment of transactions or events and/or the actual or potential
impact of final or proposed rules, standards or interpretations by the securities regulatory authorities, accounting standard
setting bodies, or other regulatory or standard setting bodies.



Aggregate
audit fees paid to KPMG in fiscal December 31, 2014 were $202,000 including fees for the 2014 audits of the consolidated financial
statements and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements
(fiscal year ended December 31, 2013 - $211,759). All such fees were approved by the Audit Committee.



| | B. | Audit-Related
                                         Fees
| | -- | -----------------------------------------------------------



"Audit-Related
Fees" are fees that are or would be charged by KPMG for services reasonably related to the performance of the audit or interim
review that are not reported under “Audit Fees”. "Audit Related Fees" charged by KPMG during the fiscal
period ended December 31, 2014 were $nil and $nil for the fiscal year ended December 31, 2013.



| | C. | Tax
                                         Fees
| | -- | -------------------------------------------------



"Tax
Fees" are fees for professional services rendered by KPMG for tax compliance, tax advice on actual or contemplated transactions.



Aggregate
tax fees for compliance services paid to KPMG in fiscal December 2014 were $69,700 (December 31, 2013 - $15,000). These services
were approved by the Audit Committee.



| | D. | All
                                         Other Fees
| | -- | -------------------------------------------------------



In
the fiscal year ending December 31, 2014, all other fees billed by KPMG were $Nil (December 31, 2013 - $nil).



The
Audit Committee pre-approves all audit services to be provided to the Company by its independent auditors. The Audit Committee's
policy regarding the pre-approval of non-audit services to be provided to the Company by its independent auditors is that all
such services shall be pre-approved by the Audit Committee. Non-audit services that are prohibited to be provided to the Company
by its independent auditors may not be pre-approved. In addition, prior to the granting of any pre-approval, the Audit Committee
must be satisfied that the performance of the services in question will not compromise the independence of the independent auditors.
All non-audit services, performed by the Company's auditor, for the fiscal year ended December 31, 2014, were pre-approved by
the Audit Committee of the Company. No non-audit services were approved pursuant to the de minimis exemption to the pre-approval
requirement.



94







|Item 16D. | Exemptions
    from the Listing Standards for Audit Committees.
|--------- | ---------------------------------------------------------------



Not
Applicable.



|Item 16E. | Purchases
    of Equity Securities by the Issuer and Affiliated Purchasers.
|--------- | ---------------------------------------------------------------------------



There
were no purchases made by or on behalf of the Company or any affiliated purchaser of shares or other units of the Company's equity
securities.



|Item
    16F. | Change
    in Registrant’s Certifying Accountant.
|------------- | -------------------------------------------------



Not
Applicable.



|Item
    16G. | Corporate
    Governance.
|------------- | -------------------------



NASDAQ
Corporate Governance Matters



The
MPV Shares are listed on NASDAQ. Section 110 of the NASDAQ Company Guide permits the NASDAQ to consider the laws, customs and
practices of the foreign issuer’s country of domicile in relaxing certain NASDAQ listing criteria. A description of the
significant ways in which the Company’s governance practices differ from those followed by domestic companies pursuant to
NASDAQ standards is as follows:



| | • | Shareholder
                                         Meeting Quorum Requirement: The NASDAQ minimum quorum requirement for a shareholder
                                         meeting is one-third of the outstanding common shares. In addition, a company listed
                                         on NASDAQ is required to state its quorum requirement in its bylaws. The Company’s
                                         quorum requirement (set forth in its Articles) is two persons who are, or who represent
                                         by proxy, shareholders who, in the aggregate, hold at least 5% of the issued shares entitled
                                         to be voted at the meeting.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Proxy
                                         Delivery Requirement: NASDAQ requires the solicitation of proxies and delivery of
                                         proxy statements for all shareholder meetings, and requires that these proxies shall
                                         be solicited pursuant to a proxy statement that conforms to SEC proxy rules. The Company
                                         is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange
                                         Act and Rule 405 under the Securities Act and the equity securities of the Company are
                                         accordingly exempt from the proxy rules set forth in Sections 14(a), 14(b), 14(c) and
                                         14(f) of the Exchange Act. The Company solicits proxies in accordance with applicable
                                         rules and regulations in Canada.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Shareholder
                                         Approval Requirement:The Company will follow the Canadian securities regulatory
                                         authorities and TSX rules for shareholder approval of new issuances of its common shares.
                                         Following securities and exchange rules, shareholder approval is required for certain
                                         issuances of shares that: (i) materially affect control of the Company; or (ii) provide
                                         consideration to insiders in aggregate of 10% or greater of the market capitalization
                                         of the listed issuer and have not been negotiated at arm’s length. Shareholder
                                         approval is also required, pursuant to TSX rules, in the case of most private placements:
                                         (x) for an aggregate number of listed securities issuable greater than 25% of the number
                                         of securities of the listed issuer which are outstanding, on a non-diluted basis, prior
                                         to the date of closing of the transaction if the price per security is less than the
                                         market price; or (y) that during any six month period are to insiders for listed securities
                                         or options, rights or other entitlements to listed securities greater than 10% of the
                                         number of securities of the listed issuer which are outstanding, on a non-diluted basis,
                                         prior to the date of the closing of the first private placement to an insider during
                                         the six month period.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



95







| | • | Board
                                         of Director Nomination Requirements: the NASDAQ requires Board of Director nominations
                                         must be either selected, or recommended for the Board's selection, by either a nominating
                                         committee comprised solely of independent directors or by a majority of the independent
                                         directors. The Company currently does not have a nominating committee and follows the
                                         Canadian securities regulatory authority and Toronto Stock Exchange rules with respect
                                         to the nomination and selection of directors. The directors of the Company are elected
                                         annually and hold office until the next annual general meeting of the shareholders of
                                         the Company or until their successors in office are duly elected or appointed.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Executive
                                         Sessions: the NASDAQ requires
                                         the Company to hold meetings of its Board of Directors on at least a quarterly basis.
                                         The independent directors should meet on a regular basis as often as necessary to fulfill
                                         their responsibilities, including at least annually in executive session without the
                                         presence of non-independent directors and management. The Company follows the Canadian
                                         securities regulatory authority and Toronto Stock Exchange rules. The Company is not
                                         required to, and currently does not, conduct executive sessions without the presence
                                         of non-independent directors and management.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item
    16H. | Mine
    Safety Disclosure.
|------------- | ---------------------------



Not
applicable.



PART III



|Item 17. | Financial
    Statements.
|-------- | -------------------------



Not
Applicable.



|Item 18. | Financial
    Statements.
|-------- | -------------------------



The
Company's consolidated financial statements are stated in Canadian dollars and are prepared in accordance with IFRS as issued
by the IASB.



The
financial statements and notes thereto as required under Item 18 are attached hereto and filed as part of this Annual Report,
are individually listed under Item 19, and are found immediately following the text of this Annual Report. The reports of KPMG
LLP, independent registered public accounting firm, are included herein immediately preceding the financial statements.



|Item 19. | Exhibits
|-------- | --------



Financial
Statements



The
Consolidated Financial Statements of the Company and exhibits listed below are filed with this annual report on Form 20-F in the
United States. This report is also filed in Canada as an Annual Information Form and the Canadian filing includes the Consolidated
Financial Statements and exhibits listed below. Canadian investors should refer to the audited Financial Statements of the Company
as at and for the years ended December 31, 2014, 2013 and 2012 filed with Canadian Securities Regulators on SEDAR under "Audited
Annual Financial Statements - English" and incorporated herein by reference.



The
following financial statements are attached to and form a part of this Annual Report filed with the SEC (see Appendix):



96







Consolidated
Financial Statements of the Company:



| | · | Management’s
                                         Annual Report on Internal Control Over Financial Reporting
| | - | ----------------------------------------------------------------------------------------------------------------



| | · | Report
                                         of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



| | · | Report
                                         of Independent Registered Public Accounting Firm on Consolidated Financial Statements.
| | - | --------------------------------------------------------------------------------------------------------------------------------------



| | · | Consolidated
                                         Balance Sheets as of December 31, 2014 and 2013.
| | - | ------------------------------------------------------------------------------------------------------



| | · | Consolidated
                                         Statements of Comprehensive Loss for the years ended December 31, 2014 and 2013 and 2012.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------



| | · | Consolidated
                                         Statements of Equity for the years ended December 31, 2014 and 2013 and 2012.
| | - | -----------------------------------------------------------------------------------------------------------------------------------



| | · | Consolidated
                                         Statements of Cash Flows for the years ended December 31, 2014 and 2013 and 2012.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------



| | · | Notes
                                         to the Consolidated Financial Statements.
| | - | ----------------------------------------------------------------------------------------



SIGNATURES



The
registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.



|                     | Mountain
    Province Diamonds Inc.
|-------------------- | -----------------------------------
|                     | (Company)                          
|                     |                                    
|                     | By:
    “Patrick C. Evans”         
|                     | (Signature)*                       
|                     |                                    
|Date: March 26, 2015 | Patrick C. Evans                   
|                     | President, CEO and
    Director    



*Print the
name and title of the signing officer under this signature.



97







EXHIBIT
INDEX



|The following exhibits are attached to and form part of this Annual Report:Exhibit | Remarks.                                                                                                                                                                                                                                       
|---------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1                                                                                | By-Laws of the Company                                                                                                                                                                                                                         
|1.2                                                                                | Arrangement Agreement between the Company and Glenmore Highlands Inc. dated May 10, 2000.                                                                                                                                                      
|1.3                                                                                | Joint Information Circular of the Company and Glenmore Highlands Inc.                                                                                                                                                                          
|4.1                                                                                | Transfer agreement between MPV, Monopros and Camphor dated November 24, 1999 pursuant to which MPV and Camphor transferred the GOR to Monopros.                                                                                                
|4.2                                                                                | Letter Agreement between MPV, Monopros, Glenmore and Camphor dated December 17, 1999 relating to acquisition of property, within the "Area of Interest" as defined in the agreement and acquisition of property through third party agreements.
|4.3                                                                                | Letter Agreement dated December 17, 1999 between MPV, Monopros, Camphor and Glenmore amending the Monopros Joint Venture Agreement.                                                                                                            
|4.4                                                                                | Form of Subscription Agreement for the private placement described in item 1 of "Material Contracts".                                                                                                                                          
|4.5                                                                                | Agreement dated as of January 1, 2002 between the Company, Camphor Ventures Inc. and De Beers Canada Exploration Inc.                                                                                                                          
|4.6                                                                                | Second Amendment Agreement dated January 1, 2002 between the Company and Paul Shatzko.                                                                                                                                                         
|4.7                                                                                | Second Amendment Agreement dated January 1, 2002 between the Company and Jan Vandersande.                                                                                                                                                      
|4.8                                                                                | Third Amendment Agreement dated December 13, 2002 between the Company and Jan Vandersande                                                                                                                                                      
|4.9                                                                                | Letter agreement dated December 13, 2002 between the Company and Elizabeth Kirkwood                                                                                                                                                            
|4.10                                                                               | Consulting Agreement dated January 1, 2004 between the Company and Jan W. Vandersande                                                                                                                                                          
|4.11                                                                               | Consulting Agreement dated November 1, 2005 between the Company and Patrick Evans                                                                                                                                                              
|4.12                                                                               | Revised Consulting Agreement dated January 31, 2006 between the Company and Patrick Evans                                                                                                                                                      
|4.13                                                                               | Consulting Agreement dated May 11, 2006 between the Company and Jennifer Dawson                                                                                                                                                                
|4.14                                                                               | Amended and Restated Joint Venture Agreement, dated July 3, 2009, by and among the Company, Camphor Ventures Inc. and De Beers Canada Inc.                                                                                                     
|8.1                                                                                | List of Subsidiaries                                                                                                                                                                                                                           
|11.1                                                                               | Corporate Governance Policies dated May 29, 2006, and updated September 7, 2010                                                                                                                                                                
|11.2                                                                               | Ethics and Conflict of Interest Policy                                                                                                                                                                                                         
|12.1                                                                               | Section 302 Certification of the Company's Chief Executive Officer                                                                                                                                                                             
|12.2                                                                               | Section 302 Certification of the Company's Chief Financial Officer                                                                                                                                                                             
|13.1                                                                               | Section 906 Certification of the Company's Chief Executive Officer                                                                                                                                                                             
|13.2                                                                               | Section 906 Certification of the Company's Chief Financial Officer                                                                                                                                                                             
|15.1                                                                               | Independent Qualified Person's Technical Report dated May 13, 2014 as amended May 27, 2014 (with information effective as of March 31, 2014) entitled "Gahcho Kué Project, 2014 Feasibility Study Report, NI 43-101 Technical Report”          
|15.2                                                                               | Consents for use of information and inclusion of the Technical Report in Exhibit 15.1 and reference in Form 20-F                                                                                                                               



| | (1) | See list of subsidiaries on page 14 of this Annual Report.
| | --- | ----------------------------------------------------------

| | (2) | Previously filed and incorporated by reference.
| | --- | -----------------------------------------------

| | (3) | Previously filed as Exhibit 99.1 to Form 6K dated May
28, 2014 and incorporated by reference.
| | --- | ---------------------------------------------------------------------------------------------



98







Appendix



Item 18.
Financial Statements









Consolidated Financial Statements

(Expressed in Canadian Dollars)



MOUNTAIN PROVINCE

DIAMONDS INC.

As at December 31, 2014 and 2013

And for the years ended December 31, 2014, 2013 and 2012











|MOUNTAIN PROVINCE DIAMONDS INC.
|-------------------------------



|CONTENTS                                                                                             | Page   
|---------------------------------------------------------------------------------------------------- | -------
|                                                                                                     |        
|Responsibility for Consolidated Financial Statements                                                 | 3      
|                                                                                                     |        
|Management’s Annual Report on Internal Control Over Financial Reporting                              | 4      
|                                                                                                     |        
|Independent Auditors’ Report of Registered Public Accounting Firm                                    | 5      
|                                                                                                     |        
|Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting | 7      
|                                                                                                     |        
|Consolidated Balance Sheets                                                                          | 8      
|                                                                                                     |        
|Consolidated Statements of Comprehensive Loss                                                        | 9      
|                                                                                                     |        
|Consolidated Statements of Equity                                                                    | 10     
|                                                                                                     |        
|Consolidated Statements of Cash Flows                                                                | 11     
|                                                                                                     |        
|Notes to the Consolidated Financial Statements                                                       | 12 – 33



Page
                                         | 2







|MOUNTAIN PROVINCE DIAMONDS INC.
|-------------------------------



Responsibility
for Consolidated Financial Statements



The accompanying consolidated financial statements
of Mountain Province Diamonds Inc. (the "Company") are the responsibility of the Board of Directors.



The consolidated financial statements have
been prepared by management, on behalf of the Board of Directors, in accordance with the accounting policies disclosed in the notes
to the Company’s consolidated financial statements. Where necessary, management has made informed judgments and estimates
in accounting for transactions which were not complete at the balance sheet date. The consolidated financial statements have been
prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting
Standards Board (“IASB”) appropriate in the circumstances.



Management has established processes, which
are in place to provide sufficient knowledge to support management representations that it has exercised reasonable diligence that
the consolidated financial statements fairly present in all material respects the financial condition, results of operations and
cash flows of the Company, as of the date of and for the periods presented by the consolidated financial statements.



The Board of Directors is responsible for reviewing
and approving the consolidated financial statements together with other financial information of the Company and for ensuring that
management fulfills its financial reporting responsibilities. The Audit Committee assists the Board of Directors in fulfilling
this responsibility.



The Audit Committee meets with management to
review the financial reporting process and the consolidated financial statements together with other financial information of the
Company. The Audit Committee reports its findings to the Board of Directors for its consideration in approving the consolidated
financial statements together with other financial information of the Company for issuance to the shareholders.



Management recognizes its responsibility for
conducting the Company’s affairs in compliance with IFRS as issued by the IASB, and applicable laws and regulations, and
for maintaining proper standards of conduct for its activities.



|“Patrick C. Evans”                    | “Bruce Ramsden”                       
|------------------------------------- | --------------------------------------
|Patrick C. Evans                      | Bruce Ramsden                         
|President and Chief Executive Officer | VP Finance and Chief Financial Officer



Toronto, Canada

March 26, 2015



Page | 3







|MOUNTAIN PROVINCE DIAMONDS INC.
|-------------------------------





MANAGEMENT’S
ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING



Management of the Company is responsible for
establishing and maintaining adequate internal control over financial reporting for the Company. Management has designed such internal
control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with IFRS as issued by the IASB.



Because of its inherent limitations, the Company’s
internal control over financial reporting may not prevent or detect all possible misstatements or frauds. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with policies or procedures may deteriorate.



To evaluate the effectiveness of the Company’s
internal control over financial reporting, Management has used the Internal Control – Integrated Framework (1992), which
is a suitable, recognized control framework established by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”). Management has assessed the effectiveness of the Company’s internal control over financial reporting
and concluded that such internal control over financial reporting is effective as of December 31, 2014. The Company's independent
auditors, KPMG LLP, have issued an unqualified opinion on the effectiveness of the Company's internal control over financial
reporting.



March 26, 2015



Page | 4







|MOUNTAIN PROVINCE DIAMONDS INC.
|-------------------------------



INDEPENDENT
AUDITORS’ REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM



To the Shareholders of Mountain Province Diamonds
Inc.



We have audited the accompanying consolidated
financial statements of Mountain Province Diamonds Inc., which comprise the consolidated balance sheets as at December 31, 2014
and December 31, 2013, the consolidated statements of comprehensive loss, equity and cash flows for each of the years in the
three-year period ended December 31, 2014, and notes, comprising a summary of significant accounting policies and other explanatory
information.



Management’s Responsibility for the
Consolidated Financial Statements



Management is responsible for the preparation
and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary
to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud
or error.



Auditors’ Responsibility



Our responsibility is to express an opinion
on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted
auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement.



An audit involves performing procedures to
obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend
on our judgment, including the assessment of the risks of material misstatement of the consolidatedfinancial statements,
whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation
and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the
circumstances.An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.



We believe that the audit evidence we have
obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.



Opinion



In our opinion, the consolidated financial
statements present fairly, in all material respects, the consolidated financial position of Mountain Province Diamonds Inc. as
at December 31, 2014 and December 31, 2013, and its consolidated financial performance and its consolidated cash flows for each
of the years in the three-year period ended December 31, 2014 in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board.



Page | 5







|MOUNTAIN PROVINCE DIAMONDS INC.
|-------------------------------





Emphasis of Matter



Without modifying our opinion, we draw attention
to Note 1 in the consolidated financial statements which describes that the Company’s ability to continue operations is dependent
upon its ability to obtain sufficient financing to fund its operations and development costs. These conditions, along with other
matters as set forth in Note 1, indicate the existence of a material uncertainty that casts substantial doubt about the Company’s
ability to continue as a going concern.



Other Matter



We also have audited, in accordance with the
standards of the Public Company Accounting Oversight Board (United States), Mountain Province Diamond Inc.’s internal control
over financial reporting as of December 31, 2014, based on the criteria established in Internal Control – Integrated
Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March
26, 2015 expressed an unmodified (unqualified) opinion on the effectiveness of Mountain Province Diamonds Inc.’s internal
control over financial reporting.







Chartered Professional Accountants, Licensed
Public Accountants

March 26, 2015

Toronto, Canada



Page | 6







|MOUNTAIN PROVINCE DIAMONDS INC.
|-------------------------------



REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING



To the Shareholders of Mountain Province Diamonds Inc.



We have audited Mountain Province Diamonds
Inc.’s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal
Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Mountain Province Diamonds Inc.’s management is responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit.



We conducted our audit in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed
risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that
our audit provides a reasonable basis for our opinion.



A company’s internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.



Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.



In our opinion, Mountain Province Diamonds
Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based
on the criteria established in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO).



We also have audited, in accordance with Canadian
generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), the consolidated
balance sheets of Mountain Province Diamonds Inc. as of December 31, 2014 and 2013, and the related consolidated statements
of comprehensive loss, equity, and cash flows for each of the years in the three-year period ended December 31, 2014, and
our report dated March 26, 2015 expressed an unmodified (unqualified) opinion on those consolidated financial statements.







Chartered Professional Accountants, Licensed
Public Accountants

March 26, 2015

Toronto, Canada



Page | 7







|MOUNTAIN PROVINCE DIAMONDS INC.
|-------------------------------



Consolidated Balance Sheets

In Canadian dollars



|                                           |  |        |  | December 31, |              |   | December 31, |  
|------------------------------------------ |  | ------ |  | ------------ | ------------ | - | ------------ | -
|                                           |  | Notes  |  | 2014         |              |   | 2013         |  
|ASSETS                                     |  |        |  |              |              |   |              |  
|Current assets                             |  |        |  |              |              |   |              |  
|Cash                                       |  | 5      |  | $            | 3,779,907    |   |              | $
|Short-term investments                     |  | 5      |  |              | 77,261,842   |   |              |  
|Marketable securities                      |  | 5      |  |              | -            |   |              |  
|Amounts receivable                         |  | 5      |  |              | 1,597,060    |   |              |  
|Prepaid expenses and supplies              |  | 6      |  |              | 2,245,319    |   |              |  
|                                           |  |        |  |              | 84,884,128   |   |              |  
|                                           |  |        |  |              |              |   |              |  
|Financing costs                            |  | 7      |  |              | 2,570,914    |   |              |  
|Property and equipment                     |  | 8 & 13 |  |              | 213,539,470  |   |              |  
|                                           |  |        |  |              |              |   |              |  
|Total assets                               |  |        |  | $            | 300,994,512  |   |              | $
|                                           |  |        |  |              |              |   |              |  
|LIABILITIES AND SHAREHOLDERS’ EQUITY       |  |        |  |              |              |   |              |  
|Current liabilities                        |  |        |  |              |              |   |              |  
|Accounts payable and accrued liabilities   |  | 5 & 13 |  | $            | 38,087,790   |   |              | $
|                                           |  |        |  |              |              |   |              |  
|Decommissioning and restoration liability  |  | 9      |  |              | 7,996,825    |   |              |  
|                                           |  |        |  |              |              |   |              |  
|Shareholders' equity:                      |  |        |  |              |              |   |              |  
|Share capital                              |  | 10     |  |              | 377,614,185  |   |              |  
|Share-based payments reserve               |  | 10     |  |              | 2,507,424    |   |              |  
|Deficit                                    |  |        |  |              | (125,211,712 | ) |              |  
|Accumulated other comprehensive income     |  |        |  |              | -            |   |              |  
|                                           |  |        |  |              |              |   |              |  
|Total shareholders' equity                 |  |        |  |              | 254,909,897  |   |              |  
|                                           |  |        |  |              |              |   |              |  
|Total liabilities and shareholders' equity |  |        |  | $            | 300,994,512  |   |              | $
|                                           |  |        |  |              |              |   |              |  
|Going concern                              |  | 1      |  |              |              |   |              |  
|Contingencies and commitments              |  | 8 & 12 |  |              |              |   |              |  
|Subsequent event                           |  | 18     |  |              |              |   |              |  



On behalf of the Board:



|“Patrick Evans” |  | “Jonathan Comerford”
|--------------- |  | --------------------
|Director        |  | Director            



The notes to the consolidated financial statements are an integral
part of these statements.



Page | 8







|MOUNTAIN PROVINCE DIAMONDS INC.
|-------------------------------



Consolidated Statements of Comprehensive Loss

In Canadian dollars



|                                                                        |  |         |  | Year ended        |             |   | Year ended        |   |             | Year ended        | 
|----------------------------------------------------------------------- |  | ------- |  | ----------------- | ----------- | - | ----------------- | - | ----------- | ----------------- | 
|                                                                        |  | Notes   |  | December 31, 2014 |             |   | December 31, 2013 |   |             | December 31, 2012 | 
|Expenses:                                                               |  |         |  |                   |             |   |                   |   |             |                   | 
|Consulting fees                                                         |  | 10 & 13 |  | $                 | (1,536,292  | ) |                   | $ | (2,459,140  | )                 | 
|Depreciation                                                            |  |         |  |                   | (6,795      | ) |                   |   | (259,334    | )                 | 
|Exploration and evaluation expenses                                     |  | 14      |  |                   | (1,508,329  | ) |                   |   | (21,837,083 | )                 | 
|Gahcho Kué Project management fee                                       |  | 13      |  |                   | -           |   |                   |   | (1,113,848  | )                 | 
|Office and administration                                               |  |         |  |                   | (354,846    | ) |                   |   | (286,539    | )                 | 
|Professional fees                                                       |  |         |  |                   | (423,752    | ) |                   |   | (344,701    | )                 | 
|Promotion and investor relations                                        |  |         |  |                   | (115,857    | ) |                   |   | (179,277    | )                 | 
|Director fees                                                           |  |         |  |                   | (264,232    | ) |                   |   | (145,153    | )                 | 
|Transfer agent and regulatory fees                                      |  |         |  |                   | (232,772    | ) |                   |   | (180,412    | )                 | 
|Travel                                                                  |  |         |  |                   | (193,964    | ) |                   |   | (129,997    | )                 | 
|                                                                        |  |         |  |                   |             |   |                   |   |             |                   | 
|Loss for the year from operations                                       |  |         |  | $                 | (4,636,839  | ) |                   | $ | (26,935,484 | )                 | 
|Accretion expense on decommissioning and restoration liability          |  | 9       |  |                   | (214,211    | ) |                   |   | (23,882     | )                 | 
|Other income:                                                           |  |         |  |                   |             |   |                   |   |             |                   | 
|Interest income                                                         |  |         |  |                   | 458,659     |   |                   |   | 355,428     |                   | 
|Loss on sale of marketable securities                                   |  |         |  |                   | (1,688      | ) |                   |   | -           |                   | 
|Gain on asset transfer to Kennady Diamonds Inc.                         |  | 17      |  |                   | -           |   |                   |   | -           |                   | 
|                                                                        |  |         |  |                   |             |   |                   |   |             |                   | 
|Net loss for the year                                                   |  |         |  | $                 | (4,394,079  | ) |                   | $ | (26,603,938 | )                 | 
|                                                                        |  |         |  |                   |             |   |                   |   |             |                   | 
|Other Comprehensive Loss                                                |  |         |  |                   |             |   |                   |   |             |                   | 
|Items that are and may be reclassified subsequently to profit and loss: |  |         |  |                   |             |   |                   |   |             |                   | 
|Reclassification of loss on sale of marketable securities               |  |         |  |                   | 1,688       |   |                   |   | -           |                   | 
|Change in fair value of available-for-sale marketable securities        |  |         |  |                   | (646        | ) |                   |   | (5,931      | )                 | 
|Comprehensive loss for the year                                         |  |         |  | $                 | (4,393,037  | ) |                   | $ | (26,609,869 | )                 | 
|                                                                        |  |         |  |                   |             |   |                   |   |             |                   | 
|Basic and diluted loss per share                                        |  | 10(iv)  |  | $                 | (0.04       | ) |                   | $ | (0.28       | )                 | 
|                                                                        |  |         |  |                   |             |   |                   |   |             |                   | 
|Weighted average number of shares outstanding                           |  |         |  |                   | 113,865,562 |   |                   |   | 94,838,537  |                   | 



The notes to the consolidated financial statements are an integral
part of these statements.



Page | 9







|MOUNTAIN PROVINCE DIAMONDS INC.
|-------------------------------



Consolidated Statements of Equity

In Canadian dollars



|                                                                  |  | Notes  |  | Number of shares |             |  | Share Capital |   |             | Share-based Payments
    Reserve |  |   | Deficit   |   |  | Accumulated other
    comprehensive income (loss) |              |   | Total |  
|----------------------------------------------------------------- |  | ------ |  | ---------------- | ----------- |  | ------------- | - | ----------- | -------------------------------- |  | - | --------- | - |  | ------------------------------------------------- | ------------ | - | ----- | -
|Balance, January 1, 2012                                          |  |        |  |                  | 80,345,558  |  |               | $ | 146,911,995 |                                  |  | $ | 1,083,422 |   |  | $                                                 | (90,876,085  | ) |       | $
|Net loss for the year                                             |  |        |  |                  | -           |  |               |   | -           |                                  |  |   | -         |   |  |                                                   | (3,337,610   | ) |       |  
|Issuance of common shares – Rights Offering, net of costs         |  |        |  |                  | 13,452,593  |  |               |   | 46,062,632  |                                  |  |   | -         |   |  |                                                   | -            |   |       |  
|Issuance of common shares – exercise of options                   |  |        |  |                  | 370,000     |  |               |   | 604,200     |                                  |  |   | -         |   |  |                                                   | -            |   |       |  
|Fair value of options exercised from share-based payments reserve |  |        |  |                  | -           |  |               |   | 313,065     |                                  |  |   | (313,065  | ) |  |                                                   | -            |   |       |  
|Share-based payment expense                                       |  |        |  |                  | -           |  |               |   | -           |                                  |  |   | 463,500   |   |  |                                                   | -            |   |       |  
|Dividend-in-kind                                                  |  |        |  |                  | -           |  |               |   | (13,721,645 | )                                |  |   | -         |   |  |                                                   | -            |   |       |  
|Other Comprehensive Loss:                                         |  |        |  |                  |             |  |               |   |             |                                  |  |   |           |   |  |                                                   |              |   |       |  
|Available-for-sale financial assets                               |  |        |  |                  |             |  |               |   |             |                                  |  |   |           |   |  |                                                   |              |   |       |  
|- Current period unrealized
    losses                            |  |        |  |                  | -           |  |               |   | -           |                                  |  |   | -         |   |  |                                                   | -            |   |       |  
|Balance, December 31, 2012                                        |  |        |  |                  | 94,168,151  |  |               | $ | 180,170,247 |                                  |  | $ | 1,233,857 |   |  | $                                                 | (94,213,695  | ) |       | $
|Net loss for the year                                             |  |        |  |                  | -           |  |               |   | -           |                                  |  |   | -         |   |  |                                                   | (26,603,938  | ) |       |  
|Issuance of common shares – Rights Offering, net of costs         |  | 10(ii) |  |                  | 5,889,200   |  |               |   | 28,807,501  |                                  |  |   | -         |   |  |                                                   | -            |   |       |  
|Issuance of common shares – exercise of options                   |  |        |  |                  | 444,000     |  |               |   | 559,440     |                                  |  |   | -         |   |  |                                                   | -            |   |       |  
|Fair value of options exercised from Share-based Payments Reserve |  |        |  |                  | -           |  |               |   | 283,272     |                                  |  |   | (283,272  | ) |  |                                                   | -            |   |       |  
|Share-based payment expense                                       |  |        |  |                  | -           |  |               |   | -           |                                  |  |   | 1,240,821 |   |  |                                                   | -            |   |       |  
|Other Comprehensive Loss:                                         |  |        |  |                  |             |  |               |   |             |                                  |  |   |           |   |  |                                                   |              |   |       |  
|Available-for-sale financial assets                               |  |        |  |                  |             |  |               |   |             |                                  |  |   |           |   |  |                                                   |              |   |       |  
|- Current period unrealized
    losses                            |  |        |  |                  | -           |  |               |   | -           |                                  |  |   | -         |   |  |                                                   | -            |   |       |  
|Balance, December 31, 2013                                        |  |        |  |                  | 100,501,351 |  |               | $ | 209,820,460 |                                  |  | $ | 2,191,406 |   |  | $                                                 | (120,817,633 | ) |       | $
|Net loss for the year                                             |  |        |  |                  | -           |  |               |   | -           |                                  |  |   | -         |   |  |                                                   | (4,394,079   | ) |       |  
|Issuance of common shares – Private Placements                    |  | 10(ii) |  |                  | 34,703,199  |  |               |   | 167,793,725 |                                  |  |   | -         |   |  |                                                   | -            |   |       |  
|Share-based payment expense                                       |  |        |  |                  | -           |  |               |   | -           |                                  |  |   | 316,018   |   |  |                                                   | -            |   |       |  
|Other Comprehensive Loss:                                         |  |        |  |                  |             |  |               |   |             |                                  |  |   |           |   |  |                                                   |              |   |       |  
|Available-for-sale financial assets                               |  |        |  |                  |             |  |               |   |             |                                  |  |   |           |   |  |                                                   |              |   |       |  
|- Current period unrealized losses                                |  |        |  |                  |             |  |               |   |             |                                  |  |   |           |   |  |                                                   |              |   |       |  
|- Reclassification of loss
    on sale of marketable securities   |  |        |  |                  | -           |  |               |   | -           |                                  |  |   | -         |   |  |                                                   | -            |   |       |  
|Balance, December 31, 2014                                        |  |        |  |                  | 135,204,550 |  |               | $ | 377,614,185 |                                  |  | $ | 2,507,424 |   |  | $                                                 | (125,211,712 | ) |       | $



The notes to the consolidated financial statements are an integral
part of these statements.



Page | 10







|MOUNTAIN PROVINCE DIAMONDS INC.
|-------------------------------



Consolidated Statements of Cash Flows

In Canadian dollars



|                                                               |  |        |  | Year ended        |              |   | Year ended        |   |             | Year ended        | 
|-------------------------------------------------------------- |  | ------ |  | ----------------- | ------------ | - | ----------------- | - | ----------- | ----------------- | 
|                                                               |  | Notes  |  | December 31, 2014 |              |   | December 31, 2013 |   |             | December 31, 2012 | 
|Cash provided by (used in):                                    |  |        |  |                   |              |   |                   |   |             |                   | 
|Operating activities:                                          |  |        |  |                   |              |   |                   |   |             |                   | 
|Net loss for the year                                          |  |        |  | $                 | (4,394,079   | ) |                   | $ | (26,603,938 | )                 | 
|                                                               |  |        |  |                   |              |   |                   |   |             |                   | 
|Adjustments:                                                   |  |        |  |                   |              |   |                   |   |             |                   | 
|Accretion expense on decommissioning and restoration liability |  |        |  |                   | 214,211      |   |                   |   | 23,882      |                   | 
|Depreciation                                                   |  |        |  |                   | 6,795        |   |                   |   | 259,334     |                   | 
|Share-based payment expense                                    |  |        |  |                   | 316,018      |   |                   |   | 1,240,821   |                   | 
|Interest income                                                |  |        |  |                   | (458,659     | ) |                   |   | (355,428    | )                 | 
|Loss on sale of marketable securities                          |  |        |  |                   | 1,688        |   |                   |   | -           |                   | 
|Gain on asset transfer to Kennady Diamonds Inc.                |  |        |  |                   | -            |   |                   |   | -           |                   | 
|Changes in non-cash operating working capital:                 |  |        |  |                   |              |   |                   |   |             |                   | 
|Amounts receivable                                             |  |        |  |                   | (982,451     | ) |                   |   | (276,702    | )                 | 
|Prepaid expenses and supplies                                  |  |        |  |                   | 8,372,547    |   |                   |   | (12,054,423 | )                 | 
|Accounts payable and accrued liabilities                       |  |        |  |                   | (11,934,754  | ) |                   |   | 5,146,918   |                   | 
|                                                               |  |        |  |                   | (8,858,684   | ) |                   |   | (32,619,536 | )                 | 
|Investing activities:                                          |  |        |  |                   |              |   |                   |   |             |                   | 
|Interest income                                                |  |        |  |                   | 458,659      |   |                   |   | 355,428     |                   | 
|Proceeds from sale of marketable securities                    |  |        |  |                   | 2,944        |   |                   |   | -           |                   | 
|Payments for property and equipment                            |  |        |  |                   | (112,267,464 | ) |                   |   | (9,108,832  | )                 | 
|(Purchase) redemption of short-term investments                |  |        |  |                   | (52,918,620  | ) |                   |   | 23,075,775  |                   | 
|                                                               |  |        |  |                   | (164,724,481 | ) |                   |   | 14,322,371  |                   | 
|Financing activities:                                          |  |        |  |                   |              |   |                   |   |             |                   | 
|Transfer to Kennady Diamonds Inc.                              |  |        |  |                   | -            |   |                   |   | -           |                   | 
|Proceeds from option exercises                                 |  |        |  |                   | -            |   |                   |   | 559,440     |                   | 
|Financing costs                                                |  |        |  |                   | (1,775,125   | ) |                   |   | -           |                   | 
|Proceeds from share issuance, net of costs                     |  | 10(ii) |  |                   | 167,793,725  |   |                   |   | 28,807,501  |                   | 
|                                                               |  |        |  |                   | 166,018,600  |   |                   |   | 29,366,941  |                   | 
|                                                               |  |        |  |                   |              |   |                   |   |             |                   | 
|(Decrease) increase in cash                                    |  |        |  |                   | (7,564,565   | ) |                   |   | 11,069,776  |                   | 
|Cash, beginning of year                                        |  |        |  |                   | 11,344,472   |   |                   |   | 274,696     |                   | 
|Cash, end of year                                              |  |        |  | $                 | 3,779,907    |   |                   | $ | 11,344,472  |                   | 



The notes to the consolidated financial statements are an integral
part of these statements.



Page | 11







|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



| | 1. | Nature of Operations AND GOING CONCERN
| | -- | --------------------------------------



Mountain Province Diamonds Inc. (“Mountain
Province” and together with its subsidiaries collectively, the “Company”) was incorporated on December 2, 1986
under the British Columbia Company Act. The Company amended its articles and continued incorporation under the Ontario Business
Corporation Act effective May 8, 2006. The Company is involved in the discovery and development of diamond properties in Canada’s
Northwest Territories.



The address of the Company’s registered
office and its principal place of business is 161 Bay Street, Suite 2315, PO Box 216, Toronto, ON, Canada, M5J 2S1. The Company’s
shares are listed on the Toronto Stock Exchange under the symbol ‘MPV’ and on the NASDAQ under the symbol ‘MDM’.



The Company is in the process of developing
the Gahcho Kué project (“Gahcho Kué Project”) in conjunction with De Beers Canada Inc. (“De Beers
Canada”) (Note 8). The underlying value and recoverability of the amounts shown as “Property and Equipment” are
dependent on development and commissioning, and upon future profitable production or proceeds from disposition of the Company’s
assets. Failure to meet the obligations for the Company’s share in the Gahcho Kué Project may lead to dilution of
the interest in the Gahcho Kué Project and may require the Company to write off costs capitalized to date.



As at December 31, 2014, the Company has not
achieved profitable operations and continues to be dependent upon its ability to obtain external financing to meet the Company’s
liabilities as they become payable and to fund the Company’s share of the construction of the Gahcho Kué Project.



The Company currently has no source of revenues.
In the years ended December 31, 2014, 2013 and 2012, the Company incurred losses, had negative cash flows from operating activities,
and will be required to obtain additional sources of financing to complete its business plans going into the future. Although the
Company had working capital of $46,796,338 at December 31, 2014, including $81,041,749 of cash and short-term investments the Company
has insufficient capital to finance its operations including the Company’s share of development costs of the Gahcho Kué
Project.



The Company intends to obtain the required
financing through a senior secured term loan facility of up to US$370 million (the “Facility”) and by issuing common
shares by way of a rights offering for gross proceeds of $95 million (Note 18). Finalization of the Facility remains subject to
agreement on Facility documentation, the arrangement of a cost overrun facility of US$75 million, which is being arranged by way
of the rights offering, and certain other matters and conditions.



However, there is no certainty that the Company
will be able to obtain financing from any of those sources. These conditions indicate the existence of a material uncertainty that
results in substantial doubt as to the Company’s ability to continue as a going concern.



The Company’s consolidated financial
statements have been prepared on the basis that the Company will continue as a going concern, and do not reflect adjustments to
assets and liabilities that would be necessary if the going concern assumption were not appropriate. These adjustments could be
material.



Authorization of Financial Statements

These consolidated financial statements were
approved by the Board of Directors on March 26, 2015.



| | 2. | BASIS OF PRESENTATION
| | -- | ---------------------



These consolidated financial statements were
prepared in accordance with IFRS as issued by the IASB.  The policies set out below were consistently applied to all the periods
presented.



Page | 12









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



These financial statements were prepared under
the historical cost convention, as modified by the revaluation of cash, short-term investments and available-for-sale financial
assets at fair value.



| | 3. | Significant accounting policies
| | -- | -------------------------------



The significant accounting policies adopted
in the preparation of the consolidated financial statements are set out below.



| | (i) | Basis of consolidation
| | --- | ----------------------

The consolidated financial statements include
the accounts of Mountain Province and its wholly-owned subsidiaries:



| | · | 2435572 Ontario Inc. (100% owned)
| | - | ---------------------------------

| | · | 2435386 Ontario Inc. (100% owned by 2435572
Ontario Inc.)
| | - | ---------------------------------------------------------



The Company’s interest in the Gahcho
Kué Project is held through 2435386 Ontario Inc.



A subsidiary is an entity controlled by the
Company. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its power over the entity. A subsidiary is included in the consolidated
financial statements from the date control is obtained until the date control ceases. All intercompany balances, transactions,
income, expenses, profits and losses, including unrealized gains and losses have been eliminated on consolidation.



The Company has determined that its
interest in the Gahcho Kué Project through its joint arrangement is a joint operation under IFRS 11, Joint Arrangement,
and, accordingly has recorded the assets, liabilities, revenues and expenses in relation to its interest in the joint operation.
The Company’s interest in the Gahcho Kué Project is bound by a contractual arrangement establishing joint control
over the project through required unanimous consent of the Company and De Beers Canada (the “Participants”) for strategic,
financial and operating policies of the Gahcho Kué Project. The Gahcho Kué Project management committee has two representatives
of each of the Company and De Beers Canada. The Participants have appointed De Beers Canada as the operator of the Gahcho Kué
Project.



| | (ii) | Foreign Currency
| | ---- | ----------------

The functional currency of the Company and
its subsidiaries is the Canadian Dollar.



In preparing the consolidated financial statements,
transactions in currencies other than the Company’s functional currency, are recognized at the rates of exchange prevailing
at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are re-translated
at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are re-translated
at the rates prevailing at the date when the fair value was determined.



Exchange differences are recognized in profit
or loss in the period in which they arise and presented in consolidated Statements of Comprehensive Loss within Office and administration.



| | (iii) | Share-based payments
| | ----- | --------------------

Equity-settled share-based payments to employees
and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding
the determination of the fair value of equity-settled share-based payment transactions are set out in Note 10.



Page | 13









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



The fair value determined at the grant date
of the equity-settled share-based payments is expensed to the consolidated Statement of Comprehensive Loss over the vesting period,
if any, which is the period during which the employee becomes unconditionally entitled to equity instruments. At the end of each
reporting period, the Company revises its estimate of the number of equity instruments expected to vest, if any.



Equity-settled share-based payment transactions
with parties other than employees, if any, are measured at the fair value of the goods or services received, except where that
fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured
at the date the entity obtains the goods or the counterparty renders the service.



| | (iv) | Income Taxes and Deferred Taxes
| | ---- | -------------------------------

The income tax expense or benefit for the period
consists of two components: current and deferred.



Current tax is the expected tax payable or
receivable on the taxable profit or loss for the year. Current tax is calculated using tax rates and laws that were enacted or
substantively enacted at the balance sheet date in each of the jurisdictions and includes any adjustments for taxes payable or
recovery in respect of prior periods.



Taxable profit or loss differs from profit
or loss as reported in the consolidated Statements of Comprehensive Loss because of items of income or expense that are taxable
or deductible in other years, and items that are never taxable or deductible.



Deferred tax is recognized on temporary differences
between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred
tax assets are generally recognized for all deductible temporary differences, loss carryforwards and tax credit carryforwards to
the extent that it is probable that taxable profits will be available against which they can be utilized. To the extent that the
Company does not consider it to be probable that taxable profits will be available against which deductible temporary differences,
loss carryforwards, and tax credit carryforwards can be utilized, a deferred tax asset is not recognized.



Deferred tax assets and liabilities are not
recognized if the temporary difference arises from the initial recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.



Deferred tax liabilities are recognized for
taxable temporary differences associated with investments in subsidiaries, except where the Company is able to control the reversal
of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred
tax assets arising from deductible temporary differences associated with such investments are only recognized to the extent that
it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences
and they are expected to reverse in the foreseeable future.



Deferred tax assets and liabilities are measured
at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax
rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred
tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the
end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.



Deferred tax assets and liabilities are offset
when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to
income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on
a net basis.



Page | 14









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



Current and deferred taxes are recognized in
profit or loss, except when they relate to items that are recognized in other comprehensive income or directly into equity, in
which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity respectively.



| | (v) | Mineral properties and exploration and evaluation costs and development costs
| | --- | -----------------------------------------------------------------------------

Exploration and evaluation (“E&E”)
costs are those costs required to find a mineral property and determine commercial viability and technical feasibility. E&E
costs include costs to establish an initial mineral resource and determine whether inferred mineral resources can be upgraded to
measured and indicated mineral resources and whether measured and indicated mineral resources can be converted to proven and probable
reserves.



Exploration and evaluation costs consist of:

| | • | gathering exploration data through topographical and
geological studies;
| | - | ------------------------------------------------------------------------

| | • | exploratory drilling, trenching and sampling;
| | - | ---------------------------------------------

| | • | determining the volume and grade of the resource;
| | - | -------------------------------------------------

| | • | test work on geology, metallurgy, mining, geotechnical
and environmental; and
| | - | -----------------------------------------------------------------------------

| | • | conducting and refining engineering, marketing and financial
studies.
| | - | ---------------------------------------------------------------------



Costs
in relation to these activities are expensed as incurred until such time that the
technical feasibility and commercial viability of extracting the mineral resource are demonstrable. At such time, mineral properties
are assessed for impairment, and an impairment loss, if any, is recognized, and future development costs will be capitalized to
assets under construction.



The key factors management used in determining technical feasibility
and commercial viability of the Gahcho Kué Project are demonstrable are the following;

| | • | completion of a feasibility study;
| | - | ----------------------------------

| | • | obtaining required permits to construct the Gahcho Kué
Project;
| | - | ---------------------------------------------------------------

| | • | completion of an evaluation of the financial resources
required to construct the Gahcho Kué Project;
| | - | ----------------------------------------------------------------------------------------------------

| | • | availability of financial resources necessary to commence development activities to construct the
Gahcho Kué Project; and
| | - | -------------------------------------------------------------------------------------------------------------------------

| | • | management’s determination that a satisfactory return on investment, in relation to the risks
to be assumed, is likely to be obtained.
| | - | --------------------------------------------------------------------------------------------------------------------------------------



The Company also recognizes exploration and
evaluation costs as assets when acquired as part of a business combination, or asset purchase, or as a result of rights acquired
relating to a mineral property.



| | (vi) | Property and equipment
| | ---- | ----------------------

Property and equipment are stated at cost less
accumulated amortization and accumulated impairment losses. Cost comprises the fair value of consideration given to acquire an
asset and includes the direct charges associated with bringing the asset to the location and condition necessary to put the asset
into use, as well as the future cost of dismantling and removing the asset. When parts of an item of property, plant and equipment
have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Replacement
cost, including major inspection and overhaul expenditures are capitalized for components of property, plant and equipment, which
are accounted for separately.



Development costs are capitalized under assets
under construction. Expenditures, including engineering to design the size and scope of the project, environmental assessment and
permitting and borrowing costs are capitalized to assets under construction.



Page | 15









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



Amortization is provided on property, plant
and equipment. Amortization is calculated so as to allocate the cost of each asset over its expected useful life to its estimated
residual value. The estimated useful lives, residual values and amortization method are reviewed at the end of each annual reporting
period. Mineral properties are not amortized until the properties to which they relate are placed into commercial production, at
which time the costs will be amortized on a unit-of-production method following commencement of commercial production. Assets under
construction are not amortized; rather it is deferred until the asset is ready for use, at which point the deferred amount is transferred
to the appropriate asset category and amortized as set out below.



|Corporate assets                 | five years, straight line         
|-------------------------------- | ----------------------------------
|Vehicles                         | three to five years, straight line
|Production and related equipment | three to ten years, straight line 
|General infrastructure           | four to ten years, straight line  
|Earth moving equipment           | estimated hours                   
|Assets under construction        | not depreciated until production  



| | (vii) | Impairment of non-financial assets
| | ----- | ----------------------------------

The carrying value of the Company’s capitalized
property and equipment is assessed for impairment when indicators of such impairment exist. If any indication of impairment exists,
an estimate of the asset’s recoverable amount is calculated to determine the extent of the impairment loss, if any. The recoverable
amount is determined as the higher of the fair value less costs to sell for the asset and the asset’s value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash
flows have not been adjusted.



Impairment is determined on an asset by asset
basis, whenever possible. If it is not possible to determine impairment on an individual asset basis, then impairment is considered
on the basis of a cash generating unit (“CGU”). CGUs represent the lowest level for which there are separately identifiable
cash inflows that are largely independent of the cash flows from other assets or Company’s other group of assets. The Company
has determined that it operates one CGU.



If the carrying amount of the asset exceeds
its recoverable amount, the asset is impaired and an impairment loss is charged immediately to the consolidated Statements of Comprehensive
Loss so as to reduce the carrying amount to its recoverable amount.



| | (viii) | Financial Instruments
| | ------ | ---------------------

Financial instruments are classified into one
of the following four categories: loans and receivables; fair value through profit or loss; held-to-maturity; and available-for-sale.
Financial assets are initially measured at fair value. Subsequent measurement and recognition of the changes in fair value of financial
instruments depends upon their initial classifications, as follows:



•	          Financial assets and financial liabilities
at fair value through profit and loss include financial assets and financial liabilities that are held for trading or designated
upon initial recognition as at fair value through profit and loss. These financial instruments are measured at fair value with
changes in fair values recognized in the consolidated Statements of Comprehensive Loss.



•	          Financial assets classified as available-for-sale
are measured at fair value, with changes in fair values recognized as Other Comprehensive Income (“OCI”) in the consolidated
Statements of Comprehensive Loss, except when there is objective evidence that the asset is impaired, at which point the cumulative
loss that had been previously recognized in OCI is recognized within the consolidated Statements of Comprehensive Loss.



Page | 16









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



•	          Financial assets classified as held-to-maturity
and loans and receivables are measured subsequent to initial recognition at amortized cost using the effective interest method.

•	          Financial liabilities, other than
financial liabilities classified as fair value through profit and loss, are measured in subsequent periods at amortized cost using
the effective interest method.



The effective interest method is a method of
calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received
that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected
life of the financial liability, or where appropriate, a shorter period, to the net carrying amount on initial recognition.



The Company has classified its financial instruments
as follows:



|Asset/Liability                          |  | Classification                     |  | Measurement   
|---------------------------------------- |  | ---------------------------------- |  | --------------
|Cash                                     |  | Fair Value through Profit and Loss |  | Fair Value    
|Short-term investments                   |  | Fair Value through Profit and Loss |  | Fair Value    
|Amounts receivable                       |  | Loans and Receivables              |  | Amortized Cost
|Marketable securities                    |  | Available-for-Sale                 |  | Fair Value    
|Accounts payable and accrued liabilities |  | Other liabilities                  |  | Amortized Cost



The Company’s cash consists of balances
with banks. Short-term investments are investments with original maturities of greater than three months when acquired (see Note
5).



The Company had no held-to-maturity financial
assets at December 31, 2014 and December 31, 2013.



The market values of marketable securities
are determined based on the closing prices reported on recognized securities exchanges and over-the-counter markets. Such individual
market values do not necessarily represent the realizable value of the total holding of any security, which may be more or less
than that indicated by market quotations.



The fair values of the Company's amounts receivable
and accounts payable and accrued liabilities approximate their carrying values because of the immediate or short-term to maturity
of these financial instruments.



Derivative financial liabilities

Derivative instruments, including embedded
derivatives, are recorded at their fair value on the date the derivative contract is entered into. They are subsequently remeasured
at their fair value at each consolidated Balance Sheet date, and the changes in the fair value are recognized in the consolidated
Statements of Comprehensive Loss. Fair values for derivative instruments are determined using valuation techniques, including assumptions
based on market conditions existing at the date of the consolidated Balance Sheets.



There are no derivative financial liabilities
as at December 31, 2014 or 2013.



| | (ix) | Provisions
| | ---- | ----------

Provisions represent liabilities to the Company for which the amount
or timing is uncertain. Provisions are recognized when the Company has a present legal or constructive obligation as a result of
past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably
estimated. Provisions are not recognized for future operating losses. Provisions are measured at the present value of the expected
expenditures to settle the obligation, applying a risk-free discount rate. The increase in the provision due to passage of time
is recognized as accretion expense. The Company does not have any provisions as of December 31, 2014 other than the provision for
decommissioning and restoration associated with the Mineral Properties.



Page | 17









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



The Company records as decommissioning and
restoration liability the present value of estimated costs of legal and constructive obligations required to restore locations
in the period in which the obligation is incurred. The nature of these decommissioning and restoration activities includes dismantling
and removing structures, rehabilitating mines and tailings dams, dismantling operating facilities, closure of plant and waste sites,
and restoration, reclamation and re-vegetation of affected areas.



The obligation generally arises when the asset
is installed or the ground and/or environment is disturbed at the production location. When the liability is initially recognized,
the present value of the estimated cost is capitalized if the Company has a related asset on its balance sheet, or expensed as
part of exploration and evaluation expenditures if no asset exists. Over time, the discounted liability is increased for the change
in present value. The periodic unwinding of the discount is recognized in the consolidated Statement of Comprehensive Loss as a
finance cost called “accretion expense on decommissioning and restoration liability”. Additional disturbances or changes
in rehabilitation costs will be recognized as additional capitalized costs (or exploration and evaluation expense depending on
whether there was a related asset when the liability was initially recognized) and additional decommissioning and restoration liability
when they occur. If it is determined that the expected costs for decommissioning and restoration are reduced, the change in the
present value of the reduction is recorded as a reduction in the capitalized costs (or a charge against exploration and evaluation
expense), and a reduction of the decommissioning and restoration liability. For closed sites, changes to estimated costs are recognized
immediately in the consolidated Statement of Comprehensive Loss.



| | (x) | Loss per share
| | --- | --------------

Basic loss or earnings per share is calculated
by dividing loss or earnings attributable to common shares divided by the weighted average number of shares outstanding during
the period.



Diluted loss or earnings per share is calculated
using the denominator of the basic calculation described above adjusted to include the potentially dilutive effect of outstanding
stock options. The denominator is increased by the total number of additional common shares that would have been issued by the
Company assuming exercise of all stock options with exercise prices below the average market price for the year.



| | (xi) | New accounting policies
| | ---- | -----------------------

The Company adopted the following new standards
and interpretations issued by the IASB or International Financial Reporting Standards Interpretation Committee (“IFRIC”)
as of January 1, 2014.



IFRIC 21 - Levies

IFRIC 21 Levies (“IFRIC 21”) was
issued in May 2013 and is an interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets (“IAS 37”),
on the accounting for levies imposed by governments. IAS 37 sets out criteria for the recognition of a liability, one of which
is the requirement for the entity to have a present obligation as a result of a past event. IFRIC 21 clarifies that the obligating
event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment
of the levy. The adoption of IFRIC 21 did not have a material effect on the consolidated financial statements.



IAS 32 – Offsetting Financial Assets
and Liabilities

IAS 32 Financial Instruments: Presentation
was amended to clarify that an entity currently has a legally enforceable right to set-off if that right is not contingent on a
future event; and enforceable both in the normal course of business and in the event of default, insolvency or bankruptcy of the
entity and all counterparties. This amendment also clarifies when a settlement mechanism provides for net settlement or gross settlement
that is equivalent to net settlement. The adoption of the amended standard did not have an impact on the consolidated financial
statements.



Page | 18









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



| | (xii) | Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early
by the Company
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------



At the date of authorization of these financial
statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective,
and have not been adopted early by the Company. The Company anticipates that all of the relevant pronouncements will be adopted
by the Company in the first period beginning after the effective date of the pronouncement. Information on new standards, amendments
and interpretations that are expected to be relevant to the Company’s financial statements is provided below. Certain other
new standards and interpretations have been issued but are not expected to have a material impact on the Company’s financial
statements and are therefore not discussed below.



Financial instruments

In July 2014, the IASB issued the final version of IFRS 9 Financial
Instruments (“IFRS 9”) bringing together the classification and measurement, impairment and hedge accounting phases
of the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 is effective for annual
periods beginning on or after January 1, 2018, with early adoption permitted. The extent of the impact of adoption of IFRS 9 has
not yet been determined.



Property, plant and equipment and intangible
assets

In May 2014, the IASB issued amendments to
IAS 16 Property, plant and equipment (“IAS 16”) and IAS 38 Intangible assets (“IAS 38”). The amendments
are effective for annual periods beginning on or after January 1, 2016 and are to be applied prospectively. The amendments clarify
the factors in assessing the technical or commercial obsolescence and the resulting depreciation period of an asset and state that
a depreciation method based on revenue is not appropriate. The amendments to IAS 16 and IAS 38 are effective for annual periods
beginning on or after January 1, 2016. The extent of the impact of adoption of the amendments to IAS 16 and IAS 38 has not yet
been determined.



| | 4. | SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
| | -- | -----------------------------------------------------------



The preparation of the Company’s consolidated
financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes
could differ from these estimates. These consolidated financial statements include estimates, which, by their nature, are uncertain
and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period
in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are
based on historical experience, current and future economic conditions, and other factors, including expectations of future events
that are believed to be reasonable under the circumstances.



i)	           Significant judgments
in applying accounting policies

The areas which require management
to make significant judgments in applying the Company’s accounting policies in determining carrying values include, but are
not limited to:



a)	Impairment analysis – mineral
properties

As required under IAS 36 – Impairment
of Assets (“IAS 36”), the Company reviews its mineral properties for impairment based on results to date and when events
and changes in circumstances indicate that the carrying value of the assets may not be recoverable. The Company is required to
make certain judgments in assessing indicators of impairment. The Company’s assessment is that as at December 31, 2014 and
2013, no indicator of an impairment in the carrying value of its mineral properties had occurred.



Page | 19









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



ii)	          Significant accounting
estimates and assumptions

The areas which require management
to make significant estimates and assumptions in determining carrying values include, but are not limited to:



a)	Mineral
reserves and resources

Mineral reserve and resource estimates
include numerous uncertainties and depend heavily on geological interpretations and statistical inferences drawn from drilling
and other data, and require estimates of future price for the commodity and future cost of operations. The mineral reserve and
resources are subject to uncertainty and actual results may vary from these estimates. Results from drilling, testing and production,
as well as material changes in commodity prices and operating costs subsequent to the date of the estimate, may justify revision
of such estimates. Changes in the proven and probable mineral reserves or measured and indicated and inferred mineral resources
estimates may impact the carrying value of the properties.



b)	Impairment
analysis - mineral properties

As required under IAS 36, the Company
reviews its mineral properties for impairment based on results to date and when events and changes in circumstances indicate that
the carrying value of the assets may not be recoverable. Upon the Company’s determination of technical feasibility and commercial
viability an impairment test of the capitalized costs related to the Gahcho Kué Project was completed. IAS 36 requires the
Company to make certain estimates in respect of recoverability of the asset, including estimated development costs, life of mine,
discount rates and diamond prices.



d)	Provision
for decommissioning and restoration

The decommissioning and restoration
liability and the accretion recorded are based on estimates of future cash flows, discount rates, and assumptions regarding timing.
The estimates are subject to change and the actual costs for the decommissioning and restoration liability may change significantly.



e)	Stock options

The stock option pricing model requires
the input of highly subjective assumptions including the expected life and volatility. Changes in the subjective input assumptions
can materially affect the fair value estimate.



f)	Deferred
taxes

Deferred income tax assets and liabilities
are determined based on differences between the financial reporting and tax bases of assets and liabilities and on unused losses
carried forward, and are measured using the substantively enacted tax rates that are expected to be in effect when the differences
are expected to reverse or losses are expected to be utilized. Deferred tax assets are recorded to recognize tax benefits only
to the extent that, based on available evidence, including forecasts, it is probable that they will be realized. The Company has
not recorded the benefit of tax losses or deductible temporary differences.



Page | 20









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



| | 5. | FAIR VALUE MEASUREMENT
| | -- | ----------------------



For financial instruments recorded at fair
value, the Company categorizes each of its fair value measurements in accordance with a fair value hierarchy. The fair value hierarchy
establishes three levels to classify the inputs to valuation techniques used to measure fair value. Level 1 inputs are quoted prices
(unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices in markets that are not active,
quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the
asset or liability (for example, interest rate and yield curves observable at commonly quoted intervals, forward pricing curves
used to value currency and commodity contracts and volatility measurements used to value option contracts), or inputs that are
derived principally from or corroborated by observable market data or other means. Level 3 inputs are unobservable (supported by
little or no market activity).



The fair value hierarchy gives the highest
priority to Level 1 inputs and the lowest priority to Level 3 inputs.



The Company’s financial assets as at
December 31, 2014 and December 31, 2013 measured at fair value are summarized in the following table:



|                       |  | December 31, 2014 |          
|---------------------- |  | ----------------- | ---------
|                       |  | Level 1           |          
|Cash                   |  | $                 | 3,779,907
|Short-term investments |  |                   | -        



|                       |  | December 31, 2013 |           
|---------------------- |  | ----------------- | ----------
|                       |  | Level 1           |           
|Cash                   |  | $                 | 11,344,472
|Short-term investments |  |                   | -         
|Marketable securities  |  |                   | 3,590     



Short-term investments at December 31, 2014
and December 31, 2013 are cashable guaranteed investment certificates (“GICs”) held with a major Canadian financial
institution. GICs are measured using a discounted cash flow model, where the future value of the GIC is discounted to the reporting
period using the market interest rate.



The Company disposed of all of its marketable
securities classified as available-for-sale during the year ended December 31, 2014 which resulted in a loss of $1,688. The quoted
market value of marketable securities at December 31, 2013 was $3,590. The original cost of these marketable securities at December
31, 2013 was $4,632.



The fair values of the amounts receivable,
and accounts payable and accrued liabilities approximate their carrying values due to the relatively short-term maturity of these
financial instruments.



The carrying amounts by classification are:



|                                                 |  | December 31, |             |   | December 31, |  
|------------------------------------------------ |  | ------------ | ----------- | - | ------------ | -
|                                                 |  | 2014         |             |   | 2013         |  
|Financial assets                                 |  |              |             |   |              |  
|Fair Value Through Profit or Loss                |  |              |             |   |              |  
|Cash                                             |  | $            | 3,779,907   |   |              | $
|Short-term investments                           |  |              | 77,261,842  |   |              |  
|                                                 |  |              |             |   |              |  
|Loans and Receivables                            |  |              |             |   |              |  
|Amounts receivable                               |  |              | 1,597,060   |   |              |  
|                                                 |  |              |             |   |              |  
|Available-for-Sale                               |  |              |             |   |              |  
|Marketable securities                            |  |              | -           |   |              |  
|                                                 |  |              |             |   |              |  
|Financial liabilities                            |  |              |             |   |              |  
|Financial liabilities measured at amortized cost |  |              |             |   |              |  
|Accounts payable and accrued liabilities         |  |              | (38,087,790 | ) |              |  





Page | 21









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



Financial Instruments Risks

The Company has examined the various financial
instrument risks to which it is exposed and assesses the impact and likelihood of those risks. These risks may include credit risk,
liquidity risk, market risk, foreign currency risk and interest rate risk.



Credit risk

Credit risk is the risk of financial loss to
the Company if a customer or counterparty to a financial instrument fails to meet its obligations. The Company’s maximum
exposure to credit risk for its amounts receivable is summarized as follows:



|                  |  | December 31, |           |  | December 31, |  
|----------------- |  | ------------ | --------- |  | ------------ | -
|                  |  | 2014         |           |  | 2013         |  
|0-30 days         |  | $            | 1,536,394 |  |              | $
|30 to 90 days     |  |              | 49,964    |  |              |  
|More than 90 days |  |              | 10,702    |  |              |  
|Total             |  | $            | 1,597,060 |  |              | $



On December 31, 2014 and December 31, 2013,
the Company does not have any allowance for doubtful accounts, and does not consider that any such allowance is necessary.



All of the Company’s cash and short-term
investments are held with a major Canadian financial institution and thus the exposure to credit risk is considered insignificant.
The short-term investments are in the form of guaranteed investment certificates (“GICs”) and are cashable in whole
or in part, with interest, at any time to maturity. Management actively monitors the Company’s exposure to credit risk under
its financial instruments, including with respect to amounts receivable. The Company considers the risk of loss for its amounts
receivable to be remote and significantly mitigated due to the financial strength of the parties from whom most of the amounts
receivable are due - the Canadian government for harmonized sales tax (“HST”) refunds receivable in the amount of approximately
$1,532,499 (December 31, 2013 – approximately $572,551).



The Company’s current policy is to invest
excess cash in GICs. It periodically monitors the investments it makes and is satisfied with the credit ratings of its bank.



Liquidity risk

Liquidity risk is the risk that the Company
will not be able to meet its obligations associated with financial liabilities. The Company has a planning and budgeting process
in place by which it anticipates and determines the funds required to support its operating requirements. The Company coordinates
this planning and budgeting process with its financing activities through its capital management process. The Company’s financial
liabilities comprise its accounts payable and accrued liabilities, all of which are due within the next 12 month period. Other
than minimal office space rental commitments, there are no other operating lease commitments. Refer to Note 1 with respect to the
ability of the Company to continue as a going concern.



Market risk

Market risk is the risk that changes in market
prices such as foreign exchange rates, interest rates and equity prices will affect the Company’s income and the value of
its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within
acceptable parameters while optimizing returns.



Page | 22









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



| | (i) | Interest rate risk
| | --- | ------------------

The Company has no significant exposure at
December 31, 2014, 2013 or 2012 to interest rate risk through its financial instruments. The short-term investments are at fixed
rates of interest that do not fluctuate during the remaining term. The Company has no interest-bearing debt.

| | (ii) | Foreign currency sensitivity
| | ---- | ----------------------------

The Company is exposed to foreign currency
risk at the balance sheet date through its U.S. denominated accounts payable and cash. A 10% depreciation or appreciation of the
U.S. dollar against the Canadian dollar would result in an approximate $49,100 (December 31, 2013 - $3,400) decrease or increase,
respectively, in both net and comprehensive loss. The Company currently has only limited exposure to fluctuations in exchange rates
between the Canadian and U.S. dollar. Accordingly, the Company has not employed any currency hedging programs during the current
period.



| | 6. | ADVANCES, PREPAID EXPENSES, AND SUPPLIES
| | -- | ----------------------------------------



|                    |  | December 31, |           |  | December 31, |  
|------------------- |  | ------------ | --------- |  | ------------ | -
|                    |  | 2014         |           |  | 2013         |  
|Prepaid expenses    |  | $            | 2,245,319 |  |              | $
|Supplies            |  |              | -         |  |              |  
|Reclamation deposit |  |              | -         |  |              |  
|                    |  | $            | 2,245,319 |  |              | $



Supplies consist of $304,607 of diesel fuel and
$183,804 of spare parts as at December 31, 2013.



| | 7. | FINANCING COSTS
| | -- | ---------------



As at December 31, 2014, the Company incurred
financing costs of $2,570,914 (December 31, 2013 - $Nil), consisting primarily of legal and advisory fees and other financing expenses
in relation to a proposed loan facility (Note 1).



Page | 23









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



| | 8. | PROPERTY AND EQUIPMENT
| | -- | ----------------------



The Company’s property and equipment as at December 31, 2014
and December 31, 2013 are as follows:



|                                          |  | Corporate |         |   |          |   |           | Production and        |  |   | General        |   |  | Earthmoving |           |   | Mineral    |   |            | Assets under |  |   |            |  
|----------------------------------------- |  | --------- | ------- | - | -------- | - | --------- | --------------------- |  | - | -------------- | - |  | ----------- | --------- | - | ---------- | - | ---------- | ------------ |  | - | ---------- | -
|                                          |  | assets    |         |   | Vehicles |   |           | related
    equipment |  |   | infrastructure |   |  | equipment   |           |   | properties |   |            | construction |  |   | Total      |  
|Cost                                      |  |           |         |   |          |   |           |                       |  |   |                |   |  |             |           |   |            |   |            |              |  |   |            |  
|At January 1, 2013                        |  | $         | 32,996  |   |          | $ | 59,992    |                       |  | $ | 13,457         |   |  | $           | 7,326     |   |            | $ | -          |              |  | $ | 46,680,519 |  
|Decomissioning and restoration adjustment |  |           | -       |   |          |   | -         |                       |  |   | -              |   |  |             | -         |   |            |   | -          |              |  |   | (1,083,990 | )
|Additions                                 |  |           | 5,881   |   |          |   | 668,271   |                       |  |   | 163,573        |   |  |             | 985,837   |   |            |   | 1,773,510  |              |  |   | -          |  
|At December 31, 2013                      |  |           | 38,877  |   |          |   | 728,263   |                       |  |   | 177,030        |   |  |             | 993,163   |   |            |   | 1,773,510  |              |  |   | 45,596,529 |  
|Decomissioning and restoration adjustment |  |           | -       |   |          |   | -         |                       |  |   | -              |   |  |             | -         |   |            |   | -          |              |  |   | 2,557,952  |  
|Additions                                 |  |           | -       |   |          |   | 1,474,510 |                       |  |   | 260,768        |   |  |             | 3,507,483 |   |            |   | 8,450,313  |              |  |   | 10,000,000 |  
|At December 31, 2014                      |  | $         | 38,877  |   |          | $ | 2,202,773 |                       |  | $ | 437,798        |   |  | $           | 4,500,646 |   |            | $ | 10,223,823 |              |  | $ | 58,154,481 |  
|                                          |  |           |         |   |          |   |           |                       |  |   |                |   |  |             |           |   |            |   |            |              |  |   |            |  
|Accumulated depreciation                  |  |           |         |   |          |   |           |                       |  |   |                |   |  |             |           |   |            |   |            |              |  |   |            |  
|At January 1, 2013                        |  | $         | (6,049  | ) |          | $ | (34,494   | )                     |  | $ | (4,190         | ) |  | $           | (122      | ) |            | $ | -          |              |  | $ | -          |  
|Depreciation                              |  |           | (8,070  | ) |          |   | (53,225   | )                     |  |   | (15,321        | ) |  |             | (145,431  | ) |            |   | (37,287    | )            |  |   | -          |  
|At December 31, 2013                      |  |           | (14,119 | ) |          |   | (87,719   | )                     |  |   | (19,511        | ) |  |             | (145,553  | ) |            |   | (37,287    | )            |  |   | -          |  
|Depreciation                              |  |           | (6,795  | ) |          |   | (519,970  | )                     |  |   | (194,672       | ) |  |             | (713,352  | ) |            |   | (883,561   | )            |  |   | -          |  
|At December 31, 2014                      |  | $         | (20,914 | ) |          | $ | (607,689  | )                     |  | $ | (214,183       | ) |  | $           | (858,905  | ) |            | $ | (920,848   | )            |  | $ | -          |  
|                                          |  |           |         |   |          |   |           |                       |  |   |                |   |  |             |           |   |            |   |            |              |  |   |            |  
|Carrying amounts                          |  |           |         |   |          |   |           |                       |  |   |                |   |  |             |           |   |            |   |            |              |  |   |            |  
|At December 31, 2013                      |  | $         | 24,758  |   |          | $ | 640,544   |                       |  | $ | 157,519        |   |  | $           | 847,610   |   |            | $ | 1,736,223  |              |  | $ | 45,596,529 |  
|At December 31, 2014                      |  | $         | 17,963  |   |          | $ | 1,595,084 |                       |  | $ | 223,615        |   |  | $           | 3,641,741 |   |            | $ | 9,302,975  |              |  | $ | 58,154,481 |  



Page | 24









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



The Company’s mineral asset, the Gahcho
Kué Project is in the development stage. On December 2, 2013,the approval of a pioneer Land Use Permit for the Gahcho
Kué diamond mine was obtained. Based on successful permitting and demonstrated technical feasibility and commercial viability
(Note 3(vii)) of the Gahcho Kué Project, the Company is now capitalizing all development expenditures incurred related to
the Gahcho Kué Project.



The Company holds a 49% interest in the Gahcho
Kué Project located in the Northwest Territories, Canada, and De Beers Canada holds the remaining 51% interest. The arrangement
between the Company and De Beers Canada is governed by an agreement entered into on July 3, 2009 (the “2009 Agreement”).
The Company considers that the operator of the Gahcho Kué Project is a related party under IAS 24 Related Parties.



The 2009 Agreement’s provision for consensus
decision-making for material strategic and operating decisions provides the Company with joint control for the Gahcho Kué
Project with De Beers Canada, and represents a joint arrangement in accordance with IFRS 11. The arrangement is not structured
through a legal entity or vehicle separate from the Company and De Beers Canada and accounts for the Project as a joint operation
in accordance with IFRS 11. The Company has determined its proportionate share (49%) of the assets, liabilities, revenues and expenses
of the joint operation, and recorded them in its consolidated financial statements.



Under a previous agreement (the “2002
Agreement”) in effect until July 3, 2009, De Beers Canada carried all costs incurred by the Project, and De Beers Canada
had no recourse to the Company for repayment of funds until, and unless, the Project was built, in production, and generating net
cash flows.



On July 3, 2009, the Company entered the 2009 Agreement with De
Beers Canada (jointly, the “Participants”) under which:

| | (a) | The Participants’ continuing interests in the Gahcho Kué Project will be Mountain
Province 49% and De Beers Canada 51%, with the Company’s interest no longer subject to the dilution provisions in the 2002
Agreement except for normal dilution provisions which are applicable to both Participants. On October 2, 2014, Mountain Province
assigned its 49% interest to its wholly-owned subsidiary 2435386 Ontario Inc. to the same extent as if 2435386 Ontario Inc. had
been the original party to the Joint Venture Agreement;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Each Participant will market their own proportionate share of diamond production in accordance
with their participating interest;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------

| | (c) | Each Participant will contribute their proportionate share to the future project development costs;
| | --- | ---------------------------------------------------------------------------------------------------

| | (d) | Material strategic and operating decisions will be made by consensus of the Participants as long
as each Participant has a participating interest of 40% or more;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (e) | The Participants have agreed that the sunk historic costs to the period ending on December 31,
2008 will be reduced and limited to $120,000,000;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------

| | (f) | The Company will repay De Beers Canada $59 million (representing 49% of an agreed sum of $120,000,000)
plus interest compounded on the outstanding amounts in settlement of the Company’s share of the agreed historic sunk costs
on the following schedule:
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | $200,000 on execution of the 2009 Agreement
(the Company’s contribution to the 2009 Joint Arrangement expenses to date of execution of the 2009 Agreement – paid
and expensed);
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Up to $5.1 million in respect of De Beers
Canada’s share of the costs of the feasibility study; (paid - $4,417,421 to December 31, 2012, included in “Mineral
Properties”; no further payments are expected);
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | $10 million upon the completion of a feasibility
study with at least a 15% IRR and approval of the necessary development work for a mine (as defined in the 2009 Agreement) (paid
in 2011, included in “Mineral Properties”);
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | $10 million following the issuance of
the construction and operating permits (paid October 27, 2014);
| | - | -----------------------------------------------------------------------------------------------------



Page | 25









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



| | · | $10 million following the commencement
of commercial production (commencement of commercial production means the first day of the calendar month following the first thirty
consecutive days (excluding maintenance days) that the relevant Mine has achieved and maintained 70% of rated Production specified
in the relevant Feasibility Study); and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The balance of approximately $24.4 million plus accumulated interest
of approximately $25 million within 18 months following commencement of commercial production, which is targeted to take place
by January 2017. At December 31, 2014, accumulated interest of approximately $16.4 million is owing. Accumulated interest is being
calculated at the prevailing LIBOR rate plus 5%.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



2435386 Ontario Inc. has agreed that the marketing rights provided
to the Company in the 2009 Agreement will be diluted if the Company defaults on certain of the payments described above.



Since these payments are contingent on certain
events occurring, and/or work being completed, they will be recorded as the payments become due or are made. As these contingent
payments are made, they are being capitalized to Mineral Properties.



The Company’s proportional interest (49%)
of commitments made by the operator of the Gahcho Kué Project is $136,972,262 at December 31, 2014:



The total commitments are as follows:



|                               |  | 2015 |             |  | 2016 |   |            | Total | 
|------------------------------ |  | ---- | ----------- |  | ---- | - | ---------- | ----- | 
|Gahcho Kué Project commitments |  | $    | 123,225,388 |  |      | $ | 13,746,874 |       | 



| | 9. | DECOMMISSIONING AND RESTORATION LIABILITY
| | -- | -----------------------------------------



The Gahcho Kué Project decommissioning
and restoration liability was calculated using the following assumptions as at December 31, 2014 and 2013:



|                                 |  | December 31, |            |   | December 31, |  
|-------------------------------- |  | ------------ | ---------- | - | ------------ | -
|                                 |  | 2014         |            |   | 2013         |  
|Expected undiscounted cash flows |  | $            | 16,279,371 |   |              | $
|Discount rate                    |  |              | 2.33       | % |              |  
|Periods                          |  |              | 2028       |   |              |  



The decommissioning and restoration liability
has been calculated using expected cash flows that are current dollars, with inflation.



The continuity of the decommissioning and restoration
liability at December 31, 2014 is follows:



|                                                           |  | December 31, |           |  | December 31, |   |            | December 31, | 
|---------------------------------------------------------- |  | ------------ | --------- |  | ------------ | - | ---------- | ------------ | 
|                                                           |  | 2014         |           |  | 2013         |   |            | 2012         | 
|Balance, beginning of period                               |  | $            | 5,224,662 |  |              | $ | 6,284,770  |              | 
|Change in estimate of discounted cash flows for the period |  |              | 2,557,952 |  |              |   | (1,083,990 | )            | 
|Accretion recorded during the period                       |  |              | 214,211   |  |              |   | 23,882     |              | 
|Balance, end of the period                                 |  | $            | 7,996,825 |  |              | $ | 5,224,662  |              | 



Page | 26









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



| | 10. | SHAREHOLDERS’ EQUITY
| | --- | --------------------



| | i. | Authorized share capital
| | -- | ------------------------



Unlimited common shares, without par value

There is no other class of shares in the Company.



| | ii. | Share capital
| | --- | -------------



The number of common shares issued and fully
paid as at December 31, 2014 is 135,204,550. There are no shares issued but not fully paid.



On October 16, 2014, Mountain Province closed
a bought-deal private placement and non-brokered private placement for common shares for gross proceeds of $100,000,000. Mountain
Province issued 20,000,000 common shares at a price of $5.00 per share. Transaction costs in the amount of $3,803,500 were paid
in relation to the bought-deal private placement and other share issuance costs of $237,822 were incurred in connection with the
private placements.



On June 28, 2014, Mountain Province closed
a non-brokered private placement for common shares for gross proceeds of $45,525,140. Mountain Province issued 9,105,028 common
shares at a price of $5.00 per share. Transaction costs in the amount of $755,250 were incurred which included 60,000 common shares
at a price of $5.00 per share which were issued and other share issuance costs of $269,799.



On March 28, 2014, Mountain Province closed
a bought-deal private placement and a non-brokered private placement for common shares for gross proceeds of $28,244,672. Mountain
Province issued 5,538,171 common shares at a price of $5.10 per share. Transaction costs in the amount of $1,058,942 were paid
in relation to the private placements and other share issuance costs of $150,775 were incurred in connection with the private placements.



On
November 27, 2013,Mountain Province closed a non-brokered private placement of common shares for gross proceeds of $29,446,000.
Mountain Province issued 5,889,200 common shares at a price of $5.00 per share. Transaction costs in the amount of $567,330 were
paid in relation to the private placement and share issuance costs of $71,169 were incurred in connection with the private placement.



On November 28, 2012, Mountain Province closed
a rights offering for gross proceeds of approximately $47.1 million. Under the rights offering, each registered holder of common
shares of Mountain Province as of the record date established as October 30, 2012, received one right (a “Right”) for
each share held. Six (6) Rights plus the sum of $3.50 (the “Subscription Price”) were required to subscribe for one
share (“Rights Share”). The Rights expired on November 28, 2012 (the “Expiry Date”) with unexercised Rights
becoming void and without value. The Rights were listed on the TSX until their expiry. Mountain Province entered into a stand-by
agreement with Bottin (International) Investments Ltd. (“Bottin”), a shareholder, under which Bottin undertook to fully
subscribe for those Rights Shares not otherwise subscribed for on the Expiry Date. A total of 65,100,414 Rights were exercised
by shareholders for 10,850,069 shares, and Bottin subscribed for an additional 2,602,524 Rights Shares for the Rights not otherwise
subscribed for on the Expiry Date, under the stand-by agreement. Fees charged by Bottin in connection with the stand-by agreement
have been recorded as share issuance costs (Note 13).



| | iii. | Stock Options and Share-based Payments Reserve
| | ---- | ----------------------------------------------

The Company, through its Board of Directors
and shareholders, adopted a stock option plan (the “Plan”) which, among other things, allows for the maximum number
of shares that may be reserved for issuance under the Plan to be 10% of the Company’s issued and outstanding shares at the
time of the grant. The Board of Directors has the authority and discretion to grant stock option awards within the limits identified
in the Plan, which includes provisions limiting the issuance of options to insiders and significant shareholders to maximums identified
in the Plan. The aggregate maximum number of shares pursuant to options granted under the Plan will not exceed 13,520,455 shares,
and as at December 31, 2014, there were 12,120,455 shares available to be issued under the Plan. All stock options are settled
by the issuance of common shares.



Page | 27









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



The following table summarizes information about the stock options
outstanding and exercisable:



|                                             |  | December 31, 2014     |           |  | December 31, 2013               |   |      | December 31, 2012     | 
|-------------------------------------------- |  | --------------------- | --------- |  | ------------------------------- | - | ---- | --------------------- | 
|                                             |  | Number of
    options |           |  | Weighted average
exercise price |   |      | Number of
    options | 
|Balance at beginning of period               |  |                       | 1,200,000 |  |                                 | $ | 5.04 |                       | 
|Granted during the period                    |  |                       | 200,000   |  |                                 |   | 5.29 |                       | 
|Exercised during the period                  |  |                       | -         |  |                                 |   | -    |                       | 
|Balance at end of the
    period             |  |                       | 1,400,000 |  |                                 | $ | 5.08 |                       | 
|Options exercisable at the end of the period |  |                       | 1,350,000 |  |                                 |   |      |                       | 



The fair value of the 200,000 stock options
granted during the year ended December 31, 2014 has been estimated on the date of the grant using the Black-Scholes option pricing
model. The assumptions are presented below. Expected volatility is calculated by reference to the weekly closing share price for
a period that reflects the expected life of the options. 850,000 stock options were granted in the year ended December 31, 2013
and valued using the assumptions below and 200,000 stock options were granted in the year ended December 31, 2012 and valued using
the assumptions below.



|                             |  | December 31, |            |   | December 31, |  |                   | December 31, | 
|---------------------------- |  | ------------ | ---------- | - | ------------ |  | ----------------- | ------------ | 
|                             |  | 2014         |            |   | 2013         |  |                   | 2012         | 
|Exercise price               |  | $            | 5.29       |   |              |  | $4.06 - $5.28     |              | 
|Expected volatility          |  |              | 38.19      | % |              |  | 42.17%
- 44.04    | %            | 
|Expected option life         |  |              | 2.70 years |   |              |  | 3.00 - 3.50 years |              | 
|Expected forfeiture          |  |              | none       |   |              |  | none              |              | 
|Expected option cancellation |  |              | none       |   |              |  | none              |              | 
|Expected dividend yield      |  |              | 0          | % |              |  | 0                 | %            | 
|Risk-free interest rate      |  |              | 1.21       | % |              |  | 1.14% - 1.77      | %            | 



In the year ended December 31, 2013, 444,000
stock options were exercised for gross proceeds of $559,440 (December 31, 2012 – 370,000 stock options were exercised for
gross proceeds of $665,000). The market price of stock options exercised during the year ended December 31, 2013 was $2,261,240
(December 31, 2012 - $1,826,200).



Page | 28









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



The following tables reflect the Black-Scholes
values (share-based payments reserve amounts), the number of stock options outstanding, the weighted average of options outstanding,
and the exercise price of stock options outstanding at December 31, 2014.

|At December 31, 2014 |  |               |           |  |           |  |           |          | 
|-------------------- |  | ------------- | --------- |  | --------- |  | --------- | -------- | 
|                     |  | Black-Scholes |           |  | Number of |  |           | Exercise | 
|Expiry Date          |  | Value         |           |  | Options   |  |           | Price    | 
|January 9, 2016      |  |               | 487,085   |  |           |  | 150,000   |          | 
|March 8, 2017        |  |               | 463,500   |  |           |  | 200,000   |          | 
|January 31, 2018     |  |               | 133,700   |  |           |  | 100,000   |          | 
|March 10, 2018       |  |               | 129,300   |  |           |  | 100,000   |          | 
|March 17, 2018       |  |               | 64,250    |  |           |  | 50,000    |          | 
|May 13, 2018         |  |               | 156,700   |  |           |  | 100,000   |          | 
|July 2, 2018         |  |               | 802,500   |  |           |  | 500,000   |          | 
|February 13, 2019    |  |               | 274,600   |  |           |  | 200,000   |          | 
|                     |  | $             | 2,511,635 |  |           |  | 1,400,000 |          | 



The weighted average remaining contractual life of the options outstanding
at December 31, 2014 is 3.06 years (December 31, 2013 - 3.89 years).



The share-based payments recognized as an expense for each year
are:



|                               |  | December 31, |         |  | December 31, |   |           | December 31, | 
|------------------------------ |  | ------------ | ------- |  | ------------ | - | --------- | ------------ | 
|                               |  | 2014         |         |  | 2013         |   |           | 2012         | 
|Expense recognized in the year |  |              |         |  |              |   |           |              | 
|for share-based payments       |  | $            | 316,018 |  |              | $ | 1,240,821 |              | 



The
share-based payments expense for the years ended December 31, 2014, 2013 and 2012 is recorded in consulting fees.



| | iv. | Loss Per Share
| | --- | --------------

The following table sets forth the computation of basic
and diluted loss per share:



|                                                                     |  | Year ended        |             |   | Year ended        |   |             | Year ended        | 
|-------------------------------------------------------------------- |  | ----------------- | ----------- | - | ----------------- | - | ----------- | ----------------- | 
|                                                                     |  | December 31, 2014 |             |   | December 31, 2013 |   |             | December 31, 2012 | 
|Numerator                                                            |  |                   |             |   |                   |   |             |                   | 
|Net loss for the period                                              |  | $                 | (4,394,079  | ) |                   | $ | (26,603,938 | )                 | 
|                                                                     |  |                   |             |   |                   |   |             |                   | 
|Denominator                                                          |  |                   |             |   |                   |   |             |                   | 
|For basic - weighted average number of shares outstanding            |  |                   | 113,865,562 |   |                   |   | 94,838,537  |                   | 
|Effect of dilutive securities                                        |  |                   | -           |   |                   |   | -           |                   | 
|For diluted - adjusted weighted average number of shares outstanding |  |                   | 113,865,562 |   |                   |   | 94,838,537  |                   | 
|                                                                     |  |                   |             |   |                   |   |             |                   | 
|Loss Per Share                                                       |  |                   |             |   |                   |   |             |                   | 
|Basic                                                                |  | $                 | (0.04       | ) |                   | $ | (0.28       | )                 | 
|Diluted                                                              |  | $                 | (0.04       | ) |                   | $ | (0.28       | )                 | 



For the year ended December 31, 2014, stock
options totaling 1,400,000 (December 31, 2013 – 1,200,000 stock options; December 31, 2012 – 794,000 stock options)
are not included in the calculation of diluted earnings per share since to include them would be anti-dilutive.



Page | 29









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



| | v. | Shareholder Rights Plan
| | -- | -----------------------



On September 7, 2010, the Board of Directors
of the Company approved an amended Shareholder Rights Plan (the “Rights Plan”), which was ratified by the shareholders
at the Annual General Meeting on November 18, 2010. The Rights Plan is intended to provide all shareholders of the Company with
adequate time to consider value enhancing alternatives to a take-over bid and to provide adequate time to properly assess a take-over
bid without undue pressure. The Rights Plan is also intended to ensure that the shareholders of the Company are provided equal
treatment under a takeover bid.



| | 11. | INCOME TAXES
| | --- | ------------



Rate Reconciliation

The provision for income tax differs from the
amount that would have resulted by applying the combined Canadian statutory income tax rates of approximately 26.5% (2013 and 2012
– 26.5%):



|                                                              |  | December 31, 2014 |            |   | December 31, 2013 |   |             | December 31, 2012 | 
|------------------------------------------------------------- |  | ----------------- | ---------- | - | ----------------- | - | ----------- | ----------------- | 
|                                                              |  |                   |            |   |                   |   |             |                   | 
|Loss before income taxes                                      |  | $                 | (4,394,079 | ) |                   | $ | (26,603,938 | )                 | 
|                                                              |  |                   | 26.5       | % |                   |   | 26.5        | %                 | 
|Tax recovery calculated using statutory rates                 |  |                   | (1,164,431 | ) |                   |   | (7,050,044  | )                 | 
|                                                              |  |                   |            |   |                   |   |             |                   | 
|Non-taxable portion of gain on Kennady Diamond asset transfer |  |                   | -          |   |                   |   | -           |                   | 
|                                                              |  |                   |            |   |                   |   |             |                   | 
|Expenses not deductible                                       |  |                   | 84,395     |   |                   |   | 329,796     |                   | 
|                                                              |  |                   |            |   |                   |   |             |                   | 
|Change in tax benefits not recognized                         |  |                   | 1,080,036  |   |                   |   | 6,720,248   |                   | 
|                                                              |  |                   |            |   |                   |   |             |                   | 
|Income tax expense (recovery)                                 |  |                   | -          |   |                   |   | -           |                   | 



Unrecognized deferred tax assets

Deductible temporary differences for which
no deferred tax assets have been recognized are attributable to the following:



|                                          |  | December 31, 2014 |             |  | December 31, 2013 |  
|----------------------------------------- |  | ----------------- | ----------- |  | ----------------- | -
|Mineral properties                        |  | $                 | 97,590,705  |  |                   | $
|Property and equipment                    |  |                   | 470,042     |  |                   |  
|Decommissioning and restoration liability |  |                   | 7,996,825   |  |                   |  
|Loss carryforwards                        |  |                   | 1,487,695   |  |                   |  
|Share issuance cost                       |  |                   | 6,417,087   |  |                   |  
|                                          |  | $                 | 113,962,354 |  |                   | $



Page | 30









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



As at December 31, 2014, the Company had the
following non-capital losses available for carryforward and certain other tax attributes as follows:



|                                    |  | Amounts |             |  | Expiry Date
|----------------------------------- |  | ------- | ----------- |  | -----------
|Tax basis of mineral properties     |  | $       | 134,133,055 |  |            
|Tax basis of property and equipment |  | $       | 155,855,032 |  |            
|Loss carryforwards                  |  | $       | 1,487,695   |  |            



| | 12. | LEASE COMMITMENTS
| | --- | -----------------



The total future minimum lease payments for
office space by the Company under non-cancellable operating leases are as follows:



|                              |  | 2015 |         |  | 2016 |   |         | 2017 |  |   | Total  | 
|----------------------------- |  | ---- | ------- |  | ---- | - | ------- | ---- |  | - | ------ | 
|                              |  |      |         |  |      |   |         |      |  |   |        | 
|Future minimum lease payments |  | $    | 142,256 |  |      | $ | 142,256 |      |  | $ | 11,855 | 



| | 13. | RELATED PARTIES
| | --- | ---------------



The Company’s related parties include
the operator of the Gahcho Kué Project, Bottin, key management and their close family members, and the Company’s directors.
Kennady Diamonds Inc. (“Kennady Diamonds”) is also a related party since the Company and Kennady Diamonds have common
members of key management.



None of the transactions with related parties
incorporate special terms and conditions, and no guarantees were given or received. Related party transactions are recorded at
their exchange amount, being the amount agreed to by the parties. Outstanding balances are settled in cash.



The Company had the following transactions
and balances with its related parties including key management personnel and the Company’s directors, Bottin, the operator
of the Gahcho Kué Project, and Kennady Diamonds. The transactions with key management personnel are in the nature of remuneration.
The transactions with the operator of the Gahcho Kué Project relate to the funding of the Company’s interest in the
Gahcho Kué Project for the current year’s expenditures, capital additions and management fee. The transactions with
Kennady Diamonds are for a monthly management fee charged by the Company and reimbursement of expenses paid on behalf of Kennady
Diamonds.



|                                                                 |  |        |  | December 31, |           |  | December 31, |   |           | December 31, | 
|---------------------------------------------------------------- |  | ------ |  | ------------ | --------- |  | ------------ | - | --------- | ------------ | 
|                                                                 |  |        |  | 2014         |           |  | 2013         |   |           | 2012         | 
|The total of the transactions:                                   |  |        |  |              |           |  |              |   |           |              | 
|Bottin - Stand-by Fee under Stand-by Agreement                   |  | 10(ii) |  | $            | -         |  |              | $ | -         |              | 
|Kennady Diamonds                                                 |  |        |  |              | 90,000    |  |              |   | 152,500   |              | 
|Remuneration to key management personnel                         |  |        |  |              | 1,426,256 |  |              |   | 2,457,759 |              | 
|Management fee charged by the operator of the Gahcho Kué Project |  |        |  |              | 4,067,683 |  |              |   | 1,113,848 |              | 
|Payable to the operator of the Gahcho Kué Project                |  |        |  |              | 1,345,183 |  |              |   | 5,647,892 |              | 
|Payable to key management personnel                              |  |        |  |              | 398,895   |  |              |   | 357,967   |              | 



Page | 31









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



The remuneration expense of directors and other
members of key management personnel for the year ended December 31, 2014, 2013 and 2012 were as follows:



|                                                                    |  | December 31 |           |  | December 31, |   |           | December 31, | 
|------------------------------------------------------------------- |  | ----------- | --------- |  | ------------ | - | --------- | ------------ | 
|                                                                    |  | 2014        |           |  | 2013         |   |           | 2012         | 
|Consulting fees, director fees, bonus and other short-term benefits |  | $           | 1,110,238 |  |              | $ | 1,216,938 |              | 
|Share-based payments                                                |  |             | 316,018   |  |              |   | 1,240,821 |              | 
|                                                                    |  | $           | 1,426,256 |  |              | $ | 2,457,759 |              | 



In accordance with IAS 24
Related Parties, key management personnel are those persons having authority and responsibility for planning, directing and controlling
the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company.



| | 14. | EXPLORATION AND EVALUATION COSTS
| | --- | --------------------------------



|                                                     |  | December 31, |           |  | December 31, |   |            | December 31, | 
|---------------------------------------------------- |  | ------------ | --------- |  | ------------ | - | ---------- | ------------ | 
|                                                     |  | 2014         |           |  | 2013         |   |            | 2012         | 
|Camp support and personnel                           |  | $            | -         |  |              | $ | 1,001,910  |              | 
|Transportation and fuel                              |  |              | -         |  |              |   | 1,871,771  |              | 
|Drilling                                             |  |              | 1,508,329 |  |              |   | 990,223    |              | 
|Permitting                                           |  |              | -         |  |              |   | 3,469,838  |              | 
|Safety, health and environmental costs               |  |              | -         |  |              |   | 44,574     |              | 
|De Beers overhead                                    |  |              | -         |  |              |   | 1,866,632  |              | 
|Engineering, procurement and construction management |  |              | -         |  |              |   | 12,483,069 |              | 
|Other                                                |  |              | -         |  |              |   | 109,066    |              | 
|Total                                                |  | $            | 1,508,329 |  |              | $ | 21,837,083 |              | 



| | 15. | CAPITAL MANAGEMENT
| | --- | ------------------



The Company considers its capital structure
to consist of share capital, share-based payments reserve, and options. The Company manages its capital structure and makes adjustments
to it, in order to have the funds available to support the acquisition, exploration and development of mineral properties. The
Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise
of the Company’s management to sustain future development of the business.



The Company’s main property, Gahcho Kué
Project, is in the development stage, and as such the Company is dependent on external equity financing to fund its activities.
In order to carry out the planned management of our properties and pay for administrative costs, the Company will spend its existing
working capital and raise additional amounts as needed.



Management reviews its capital management approach
on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.



The Company’s capital is summarized as
follows:





|                             |  | December 31, |              |   | December 31, |  
|---------------------------- |  | ------------ | ------------ | - | ------------ | -
|                             |  | 2014         |              |   | 2013         |  
|Share capital                |  | $            | 377,614,185  |   |              | $
|Share-based payments reserve |  |              | 2,507,424    |   |              |  
|Deficit                      |  |              | (125,211,712 | ) |              |  
|                             |  | $            | 254,909,897  |   |              | $





Page | 32









|MOUNTAIN PROVINCE DIAMONDS INC.                     
|----------------------------------------------------
|Notes to Consolidated Financial Statements          
|As at December 31, 2014 and 2013 and                
|For the Years Ended December 31, 2014, 2013 and 2012
|In Canadian Dollars                                 



There were no changes in the Company’s
approach to capital management during the year ended December 31, 2014. Neither the Company nor its subsidiaries are subject to
externally imposed capital requirements.



| | 16. | SEGMENTED REPORTING
| | --- | -------------------



The Company has determined that it has only one operating segment.



| | 17. | PLAN OF ARRANGEMENT WITH KENNADY DIAMONDS INC.
| | --- | ----------------------------------------------



In January 2012, the Company announced that
the Board of Directors had approved a proposal to spin-out the Company’s 100%-controlled Kennady North project into a newly
incorporated company, Kennady Diamonds, through a plan of arrangement and subject to regulatory, court and shareholder approvals.



On March 12, 2012, Kennady Diamonds and Mountain
Province entered into an arrangement agreement (the “Arrangement”) pursuant to which Mountain Province would transfer
its interest in the Kennady North Project, including permits, mining claims, rights and title, in the Northwest Territories in
Canada, and $3 million of cash, to Kennady Diamonds in exchange for one common share of Kennady Diamonds for every five common
shares of Mountain Province outstanding. The Arrangement called for the share capital of Mountain Province to be reorganized into
a new class of shares which would be distributed, with the Kennady Diamonds common shares, to the existing Mountain Province common
shareholders.



The Arrangement was approved by the Board of
Directors of Mountain Province and was subject to approval by two-thirds of the votes cast by holders of Mountain Province common
shares, at a special meeting of Mountain Province shareholders held on April 25, 2012. The Mountain Province shareholders voted
99.57% in favour of the Arrangement. As well, on April 30, 2012, Mountain Province received final court approval for the Arrangement.
Regulatory approval was obtained by the Toronto Stock Exchange and the TSX Venture Exchange.



The various transactions under the Arrangement
were completed on July 6, 2012, the effective date of the Arrangement. The Company transferred the Kennady North Project and cash
of $3 million to Kennady Diamonds in exchange for 16,143,111 shares of Kennady Diamonds which in turn were distributed to the Mountain
Province shareholders on the basis of one Kennady Diamonds’ share for every five shares of Mountain Province held by the
shareholders.



The Company recorded the fair value of the
transaction as a dividend-in-kind of $13.7 million. The fair value was calculated by applying the simple average of the closing
share price for Kennady Diamonds on the TSX Venture Exchange for the first five days of its trading to the number of shares outstanding.
The fair value in excess of the book value of the transferred assets was recorded as a gain on asset transfer to Kennady Diamonds
of $10.7 million in the Company’s consolidated Statement of Comprehensive Loss.



| | 18. | SUBSEQUENT EVENT
| | --- | ----------------



On February
18, 2015, the Company announced that it is undertaking a $95,047,132 rights offering in order to fund a US$75 million cost overrun
facility, the arrangement of which is a condition precedent to drawdown of a proposed US$370 million term loan facility (Note 1).
The Company will be issuing a maximum of 23,761,783 common shares under the rights offering. The Company’s major shareholder,
Mr. Dermot Desmond, has advised the Company that he intends to fully exercise his rights under the rights offering. In addition,
the Company has entered into a standby agreement with Mr. Desmond whereby Mr. Desmond has undertaken to fully subscribe for those
rights not otherwise subscribed for under the rights offering. Mr. Desmond will be paid 3% or $2,851,414 as a standby fee. Subscription
under the standby agreement is subject to certain conditions.



Page | 33