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 15(d) OF THE SECURITIES
              EXCHANGE ACT OF 1934

                    For the fiscal year ended March 31, 2004

                                       OR

              TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934
              For the transition period from ______________ to _________________

Commission file number               0-27322
                       -----------------------------------
                         MOUNTAIN PROVINCE DIAMONDS INC.
                       -----------------------------------

             (Exact name of Registrant as specified in its charter)

                                 Not Applicable
                       -----------------------------------
                 (Translation of Registrant's name into English)

                                British Columbia
                       -----------------------------------
                 (Jurisdiction of incorporation or organization)

               21 Nesbitt Drive, Toronto, Ontario, Canada M4W 2G2
                       -----------------------------------
                    (Address of principal executive offices)

<PAGE>

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

           None                                     Not Applicable
         --------                                  ----------------

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


                         Common shares without par value
                       -----------------------------------
                                (Title of Class)

                       -----------------------------------
                                (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 each of the  issuer's  classes of
capital  or common  stock as of the close of the  period  covered  by the annual
report:                                                               51,202,111

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.

                                                                  [X] Yes     No

Indicate by check mark which financial statement item the registrant has elected
to follow.

                                                         [X] Item 17     Item 18

(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.

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S>                                                                                                             <C>
GLOSSARY..........................................................................................................v

GLOSSARY OF TECHNICAL TERMS.....................................................................................vii

PART I............................................................................................................1
   Item 1    Identity of Directors, Senior Management and Advisers................................................1
   Item 2    Offer Statistics and Expected Timetable..............................................................1
   Item 3    Key Information......................................................................................1
     A.   Selected financial data.................................................................................1
     B.   Capitalization and indebtedness.........................................................................3
     C.   Reasons for the offer and use of proceeds...............................................................3
     D.   Risk factors............................................................................................3
   Item 4    Information on the Company..........................................................................10
     A.   History and development of the Company.................................................................10
     B.   Business Overview......................................................................................12
     C.   Organizational structure...............................................................................16
     D.   Property, plants and equipment.........................................................................16
   Item 5    Operating and Financial Review and Prospects........................................................33
     A.   Operating results......................................................................................33
     B.   Liquidity and capital resources........................................................................35
     C.   Research and development, patents and licenses etc.....................................................36
     D.   Trend information......................................................................................36
     E.   Off-balance sheet arrangements.........................................................................36
     F.   Tabular disclosure of contractual obligations..........................................................36
     G.   Safe harbour...........................................................................................36
   Item 6    Directors, Senior Management and Employees..........................................................38
     A.   Directors and Senior Management........................................................................38
     B.   Compensation...........................................................................................40
     C.   Board practices........................................................................................42
     D.   Employees..............................................................................................44
     E.   Share ownership........................................................................................44
   Item 7    Major Shareholders and Related Party Transactions...................................................45
     A.   Major shareholders.....................................................................................45
     B.   Related party transactions.............................................................................46
     C.   Interests of experts and counsel.......................................................................47
   Item 8    Financial Information...............................................................................47
     A.   Consolidated Statements and Other Financial Information................................................47
     B.   Significant Changes....................................................................................47
   Item 9    The Offer and Listing...............................................................................48
     A.   Offer and Listing Details..............................................................................48
     B.   Plan of Distribution...................................................................................49
     C.   Markets................................................................................................49
     D.   Selling Shareholders...................................................................................49
     E.   Dilution...............................................................................................50
     F.   Expenses of the Issuer.................................................................................50
   Item 10   Additional Information..............................................................................50
     A.   Share capital..........................................................................................50
     B.   Memorandum and articles of association.................................................................50

<PAGE>

     C.   Material contracts.....................................................................................53
     D.   Exchange controls......................................................................................53
     E.   Taxation...............................................................................................56
     F.   Dividends and paying agents............................................................................66
     G.   Statement by experts...................................................................................66
     H.   Documents on display...................................................................................66
     I.   Subsidiary Information.................................................................................67
   Item 11   Quantitative and Qualitative Disclosures About Market Risk..........................................67
   Item 12   Description of Securities Other than Equity Securities..............................................68

PART II..........................................................................................................68
   Item 13   Defaults, Dividend Arrearages and Delinquencies.....................................................68
   Item 14   Material Modifications to the Rights of Security Holders and Use of Proceeds........................68
   Item 15   Controls and Procedures.............................................................................68
   Item 16   [Reserved]..........................................................................................68
   Item 16A  Audit Committee Financial Expert....................................................................69
   Item 16B  Code of Ethics......................................................................................69
   Item 16C  Principal Accountant Fees and Services..............................................................69
   Item 16D  Exemptions from the Listing Standards for Audit Committees..........................................70
   Item 16E  Purchases of Equity Securities by the Issuer and Affiliated Purchasers..............................70

PART III.........................................................................................................71
   Item 17   Financial Statements................................................................................71
   Item 18   Financial Statements................................................................................71
   Item 19   Exhibits............................................................................................71

SIGNATURES.......................................................................................................74

EXHIBIT INDEX....................................................................................................75

</TABLE>

<PAGE>
                                    GLOSSARY

Affiliate  has the  meaning  given to  affiliated  bodies  corporate  under  the
Business Corporations Act (Alberta);

AK Property means the claims known as the "AK claims" held by MPV;

AK-CJ Properties means, collectively, the AK Property and CJ Property Claims;

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;

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

Business  Corporations Act (Alberta) means the Business  Corporations  Act, S.A.
1981, c. B-15 (Alberta), 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 means Camphor Ventures Inc.;

Canadian  National  Instrument  43-101  means  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, MPV or Registrant means Mountain Province Diamonds Inc.;

De Beers means De Beers Consolidated Mines Ltd.;

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

Exchange Act means the U.S. Securities Exchange Act of 1934;

Gahcho Kue Project,  located at Kennady  Lake,  is the  aboriginal  name for the
Kennady Lake Project involving the  diamondiferous  kimberlite bodies in Kennady
Lake located on the AK leased claims;

Glenmore  means  Glenmore  Highlands  Inc.,  a  company  incorporated  under the
Business Corporations Act (Alberta) and which, pursuant to the Arrangement,  has
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;
<PAGE>

Glenmore Shareholder means a holder of Glenmore Shares;

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;

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

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

MPV, Company or Registrant means Mountain Province Diamonds Inc.;

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

Nasdaq means the National  Association of Securities Dealers Automatic Quotation
System;

NASD OTCBB means the National Association of Securities Dealers over-the-counter
bulletin board;

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

PFIC means Passive Foreign Investment Company under the Code;

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

     a)   is an engineer or geoscientist  with a least five years  experience in
          mineral exploration,  mine development or operation or mineral project
          assessment, or any combination of these;

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

     (c)  is a member in good standing of a  professional  association  (as that
          term is defined in Canadian National Instrument 43-101);

Registrant, Company or MPV means Mountain Province Diamonds Inc.;

Sight means an  invitation  to purchase a certain  amount of rough  diamonds ten
times a year from the De Beers' Diamond Trading Company in London;

Sightholder  means a diamantaire who purchases rough diamonds  directly from the
De Beers' Diamond Trading Company;

TSX means the Toronto Stock Exchange; and

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

<PAGE>



                           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(Degree)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.

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.
<PAGE>

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.

Microdiamond

     Generally refers to diamonds smaller than  approximately  0.5mm,  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")
     STANDARDS  ON  MINERAL  RESOURCES  AND  MINERAL  RESERVES  DEFINITIONS  AND
     GUIDELINES  ADOPTED BY THE CIM  COUNCIL ON AUGUST 20,  2000.  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.

     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 Standards,  the


<PAGE>

     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  Canadian  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 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 Canadian  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 Standards,  Mineral  Resource is 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.

     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

<PAGE>

     INSTRUMENT  43-101 - STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS UNDER THE
     GUIDELINES SET OUT IN THE CIM 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 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 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  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

<PAGE>

     WILL EVER BE CONVERTED INTO RESERVES.

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 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 intrusion which is sandwiched between layers in the host 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.

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.

<PAGE>

                    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:

     o    risks  and  uncertainties  relating  to the  interpretation  of  drill
          results, the geology, grade and continuity of mineral deposits;
     o    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;
     o    mining  exploration  risks,  including  risks  related  to  accidents,
          equipment  breakdowns  or  other  unanticipated  difficulties  with or
          interruptions in production;
     o    the potential for delays in  exploration  activities or the completion
          of feasibility studies;
     o    risks  related to the inherent  uncertainty  of  exploration  and cost
          estimates and the potential for unexpected costs and expenses;
     o    risks related to commodity price fluctuations;
     o    the uncertainty of profitability  based upon the Company's  history of
          losses;
     o    risks  related  to failure to obtain  adequate  financing  on a timely
          basis and on acceptable terms;
     o    risks related to environmental regulation and liability;
     o    political and regulatory risks associated with mining and exploration;
          and
     o    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 as are described  further in this document  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.


<PAGE>

                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  and the  Canadian  filing  does not  include  the
financial statements and exhibits listed herein. Canadian investors should refer
to the annual  financial  statements of the Company as at March 31, 2004,  which
are incorporated by reference  herewith,  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
---------------------------------- -------------------------------- ------------
..

<PAGE>

                                     PART I

Item 1   Identity of Directors, Senior Management and Advisers.

This Form 20-F is being  filed as an annual  report  and,  as such,  there is no
requirement to provide information under this sub-item.

Item 2   Offer Statistics and Expected Timetable.

This Form 20-F is being  filed as an annual  report  and,  as such,  there is no
requirement to provide information under this sub-item.

Item 3   Key Information.

     A.   Selected financial data.

The selected  financial data set forth below should be read in conjunction  with
Item 5 - Operating and Financial  Review and Prospects,  and in conjunction with
the  consolidated  financial  statements  and related notes of the Company.  The
Company's  consolidated  financial  statements  have been prepared in accordance
with Canadian generally accepted  accounting  principles.  Material  measurement
differences between accounting  principles  generally accepted in Canada and the
United  States,  applicable  to the  Company,  are  described  in  Note 9 to the
consolidated  financial  statements.  The Company's financial statements are set
forth in Canadian dollars.

The following chart summarizes  certain selected  financial  information for the
Company as at and for its fiscal years ended March 31, 2004,  2003,  2002,  2001
and 2000.

<PAGE>

<TABLE>
<CAPTION>
<S>                                         <C>            <C>          <C>               <C>            <C>
------------------------------------ --------------------------------------------------------------------------------

                                                                     12 Months Ended

All in CDN$1,000's except Earnings     March 31,      March 31,    March 31, 2002   March 31, 2001   March 31, 2000
  (loss) per Share and Number of         2004           2003
           Common Shares
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------

Working Capital                                701          1,037          340               903          1,846

Interest Revenue                                12             19           18                66            144

Net Loss -
     Under Canadian GAAP:                  (1,813)        (1,718)      (1,456)           (3,060)        (2,074)
     Under U.S. GAAP:                      (1,223)       (14,513)      (1,520)           (3,155)        (4,514)

Basic and diluted loss per share -
     Under Canadian GAAP:                   (0.04)         (0.03)       (0.03)            (0.07)         (0.05)
     Under U.S. GAAP:                       (0.02)         (0.29)       (0.03)            (0.07)         (0.11)

Total Assets -
     Under Canadian GAAP:                   33,514         34,418       33,947            34,433         35,301
     Under U.S. GAAP:                        1,030          1,363       13,618            14,148         15,112

Total Liabilities                              273            240          324               303            312

Share Capital                               56,595         55,719       53,470            52,521         50,321

Shareholders' Equity -
     Under Canadian GAAP:                   33,241         34,178       33,623            34,129         34,989
     Under U.S. GAAP:                          757          1,122       13,294            13,845          14,801

Number of Common Shares issued         *51,202,111     66,597,766   63,883,100        62,166,188      42,457,760
less shares owned by subsidiary                  -    (16,015,696) (16,015,696)      (16,015,696)              -
                                     ----------------------------  ------------     ------------     -----------
                                        51,202,111    50,582,070    47,867,404        46,150,492      42,457,760
</TABLE>


*The  16,015,696  shares held by Mountain  Glen,  were cancelled and returned to
treasury on March 30, 2004.


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

Currency and Exchange Rates

All dollar  amounts  set forth in this report are in  Canadian  dollars,  except
where otherwise  indicated.  The following  tables set forth,  for the five most
recent  financial  years,  (i) the average rate (the "Average Rate") of exchange
for the Canadian  dollar,  expressed in U.S.  dollars,  calculated  by using the
average of the exchange  rates on the last day for which data is  available  for
each month during such  periods;  and (ii) the high and low exchange rate during
the previous six months,  in each case based on the noon buying rate in New York
City for cable transfers in Canadian  dollars as certified for customs  purposes
by the Federal Reserve Bank of New York.

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

<TABLE>
<CAPTION>
<S>      <C>                      <C>                    <C>                     <C>                    <C>
----------------------------------------------------------------------------------------------------------------------
                                             Fiscal Year Ended March 31,
          2004                    2003                    2002                   2001                   2000
------------------------- ---------------------- ----------------------- ---------------------- ----------------------

       US$0.7412                US$0.6474              US$0.6380               US$0.6630              US$0.6808
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
</TABLE>
<PAGE>

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

<TABLE>
<CAPTION>
<S>                                                       <C>                                 <C>
  ----------------------------------------- --------------------------------------- --------------------------------
                   Month                                     High                                 Low
  ----------------------------------------- --------------------------------------- --------------------------------
  February 2004                                         US$0.7629                           US$0.7439

  March 2004                                            US$0.7645                           US$0.7418

  April 2004                                            US$0.7637                           US$0.7293

  May 2004                                              US$0.7364                           US$0.7158

  June 2004                                             US$0.7459                           US$0.7261

  July 2004                                             US$0.7644                           US$0.7489
  ----------------------------------------- --------------------------------------- --------------------------------
</TABLE>

On August 4, 2004,  the noon buying rate in New York City for cable  transfer in
Canadian dollars as certified for customer  purposes by the Federal Reserve Bank
of New York (the "Exchange Rate") was $1 Canadian = US$0.7603.

     B.   Capitalization and indebtedness.

This Form 20-F is being filed as an annual report under the Exchange Act and, as
such, there is no requirement to provide any information under this sub-item.

     C.   Reasons for the offer and use of proceeds.

This Form 20-F is being filed as an annual report under the Exchange Act and, as
such, there is no requirement to provide any information under this sub-item.

     D.   Risk factors.

Risks of Exploration and Development

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.

     (a)  Speculative business

Resource exploration and 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 are required to be sold to The Diamond  Trading Co., a
wholly-owned subsidiary of De Beers, as per the Monopros Joint Venture Agreement
(see Item 4D - Property,  plant and  equipment - Principal  Properties  - The AK
Property), at a price which is reflective of the market at that time.

     (b)  Exploration and Development

All of the  Company's  properties  are in the  exploration  stage.  There  is no
certainty that the  expenditures  to be made by the Company or its joint venture
partner in the exploration of its properties as described  herein will result in
discoveries of diamonds in commercial  quantities.  Most exploration projects do
not

<PAGE>

result in the  discovery  of  diamonds  and no  assurance  can be given that any
particular  level of recovery  of diamonds  will in fact be realized or that any
identified  resource  will ever qualify as a  commercially  mineable (or viable)
resource  which can be legally and  economically  exploited.  While there are no
estimates of reserves,  mineral deposits and production costs,  these estimates,
when  made,  can  also be  affected  by such  factors  as  environmental  permit
regulations  and  requirements,   weather,   environmental  factors,  unforeseen
technical  difficulties,  unusual or unexpected  geological  formations and work
interruptions.  In addition,  the grade of diamonds  ultimately  discovered  may
differ from that indicated by drilling results.

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.
De Beers Canada is now paying for all  exploration of the AK Property,  and will
also be paying for all  development  of the AK Property and, with regard to that
property,  there is  currently  no risk to the Company in respect of the further
exploration and development costs. Any separate and additional  exploration done
by the  Company  on its other  properties  may not  result in  discovery  of any
diamondiferous kimberlite.

     (c)  History of Losses

The  Company has a history of losses and may  continue  to incur  losses for the
foreseeable  future.  The Company  incurred  losses during each of the following
periods:

o    $1.81 million for the year ended March 31, 2004.

o    $1.72 million for the year ended March 31, 2003.

o    $1.46 million for the year ended March 31, 2002

As of March 31, 2004, the Company had an accumulated deficit of $23.379 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  Company,  has only a history of losses.  The Company has
paid no  dividends  on its shares since  incorporation  and does not  anticipate
doing so in the foreseeable  future.

     (d)  Recoverability of capitalized mineral property costs

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

     (e)  Additional Funding Requirements

As of March 31, 2004, the Company had cash and cash equivalents of approximately
$0.915 million and working capital of approximately  $0.701 million.  During the
past three fiscal years ended March 31, 2004, the Company has used approximately
$3.974  million in cash flows in operating  activities  including  approximately
$1.020  million  during the fiscal year ended  March 31,  2004,  $1.585  million
during the fiscal year ended March 31, 2003 and $1.369 million during the fiscal
year ended March 31, 2002.

<PAGE>

The Company's administrative and other expenses are expected to be approximately
$0.5 million for the next year. The Company has sufficient  working  capital for
administrative  purposes  for the next  year,  but may need to raise  additional
capital  should it  participate  in  exploration  programs.  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 or to
the value of their common shares. The Company may consider debt financing, joint
ventures,  production  sharing  arrangements,  disposing of  properties or other
arrangements to meet its capital  requirements in the future.  Such arrangements
may have a  material  adverse  affect on the  Company's  business  or results of
operations.

     (f)  No Proven Reserves

The properties in which the Company has an interest, or the concessions in which
the Company has the right to earn an interest,  are all in the exploratory stage
and at this point,  there are only  indicated  and  inferred  resources  in four
kimberlite bodies in Kennady Lake. See Item 4D - Property,  plants and equipment
- Principal  Properties.  The Company has not yet determined whether its mineral
properties contain mineral reserves that are economically  recoverable.  Failure
to  discover  economically  recoverable  reserves  will  require  the Company to
write-off costs capitalized in its financial statements.

     (g)  Title Matters

While the Company has investigated  title to all of its mineral  properties and,
to the best of its  knowledge,  title to all of its properties and properties in
which it has the right to acquire or earn an interest are in good standing, this
should not be construed as a guarantee of title.  The  properties may be subject
to prior  unregistered  agreements  or  transfers  and title may be  affected by
undetected defects.

     (h)  Diamond Prices

The market for rough  diamonds is subject to strong  influence  from the world's
largest  diamond  producing  company,  De Beers,  of South Africa,  and from The
Diamond Trading Co.,  (formerly known as the Central  Selling  Organization),  a
marketing  agency  controlled by De Beers. The price of diamonds dropped sharply
after  September  11, 2001 and has now  recovered,  but future  prices cannot be
predicted.  Over the past two years, diamond prices have increased on average by
10% in 2003 and 8% in 2004, but there can be no assurance that the current trend
will continue.

     (i)  Compliance 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 production and other  schedules as a result of the need to
comply with applicable laws,  regulations and permits. The Company's exploration
activities  and its  potential  mining and  processing  operations in Canada are
subject  to  various  Federal  and  Provincial  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  operations  and  exploration  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

<PAGE>

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 or mining project which the
Company might undertake.

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

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.

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.

To the best of the Company's  knowledge,  the Company is operating in compliance
with all applicable environmental regulations.

     (j)  Climate and Transportation

The AK Property is subject to climate and transportation  risks because of their
remote  northern  location.  Such factors can add to the cost of exploration and
development and operation, thereby affecting costs and profitability.

     (k)  Joint Venture Partner

The Company and the success of the AK  Property  is  dependent  on the  efforts,
expertise and capital resources of joint venture partner De Beers Canada and its
parent De Beers. De Beers Canada is the project  operator and is responsible for
exploring and developing  the AK Property.  The Company is dependent on De Beers
Canada for  accurate  information  about the AK  Property  and the  progress  of
exploration  and  development.  Both De Beers  Canada and the Company  agreed on
March 8, 2000 that it was unlikely  that the agreed upon rate of return would be
achieved from mining the 5034, Hearne and Tuzo pipes using the conventional open
pit method.  As a result,  the Company and De Beers Canada  agreed that De Beers
would  conduct  a  desktop  study  examining  the  costs  of both  open-pit  and
underground mining scenarios.

The results of the desktop  study were  presented on August 4, 2000 to the board
of directors  of the  Company.  The study showed that the modeled rate of return
for the mining of the three main diamond pipes was below the agreed upon rate of
return  needed to  proceed to the next  phase,  but  sufficiently  close to only
require an increase  in diamond  revenues  of  approximately  15% to achieve the
agreed upon rate. A management committee was constituted and it was decided that
the best  options to advance  the  project  were an  additional  bulk sample and
additional  exploration.  The  bulk  sample  was  completed  in May 2001 and the
exploration  in June 2001.  The final results were reported on December 18, 2001
and were encouraging enough for De Beers to commit to another bulk sample in the
winter of 2002.  The results of the 2002 bulk  sample  program of the Hearne and
5034 pipes were  reported in April 2003 and the results of the updated  desk top
study two weeks later. Even though the study showed that estimated capital costs
<PAGE>

had increased only slightly and that the estimated  operating  costs had dropped
significantly,  the effect of lower diamond  values  (especially  for the Hearne
pipe) and a lower US dollar  against the Canadian  dollar since the 2000 desktop
study,  had resulted in an internal rate of return  (IRR),  which was well below
the agreed hurdle rate. Combined with the then current geo-political environment
and uncertainties, De Beers decided to postpone a pre-feasibility decision until
the  following  year when the  desktop  study  would be  updated  again.  In the
meantime,  De Beers would continue with exploration in the  Kelvin-Faraday  area
with an objective of adding to the existing resource.

However,  at the end of July 2003,  De Beers  notified the Company that they had
started  work on a detailed  cost  estimate  of a  pre-feasibility  study of the
Kennady  Lake  diamond  deposits.  They based their  decision  on the  improving
geo-political and economic conditions which supported  confidence in longer-term
diamond price projections.  In November 2003, the board of directors of De Beers
approved a budget of approximately $25 million for a pre-feasibility study which
started in January  2004.  The first  phase of the study was  completed  in June
2004.

This  study is  expected  to be of  sufficient  detail to allow the  Gahcho  Kue
Project,  previously  known as the  Kennedy  Lake  Project,  to  advance to mine
permitting in the first half of 2005, should the project's  profitability  level
support a decision to proceed to the next phase.

     (l)  Operating Hazards and Risks

Diamond exploration  involves many risks which even a combination of experience,
knowledge  and careful  evaluation  may not be able to overcome.  Operations  in
which the Company has a direct or indirect  interest  will be subject to all the
hazards and risks normally incidental to exploration, development and production
of resources,  any of which could result in work  stoppages,  damage to property
and possible environmental damage.

     (m)  Competition

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  than  itself.  Competition  could  adversely  affect  the
Company's  ability to acquire  suitable  producing  properties  or prospects for
exploration  in the future.  The Company is required  under the  Monopros  Joint
Venture Agreement (see Item 4B - Information on the Company - Business Overview)
to sell its rough diamonds at a price that is reflective of the market price, to
The Diamond Trading Co., a wholly-owned  subsidiary of De Beers,  which controls
approximately 60% of the diamond market.  There is therefore little  competition
for diamonds produced from the Company's properties,  if any. The Company really
only competes in the acquisition of new properties.

     (n)  Inability to Meet Cost Contribution Requirements

The Company  may, in the future,  be unable to meet its share of costs  incurred
under  agreements  to which it is a party  and the  Company  may as a result  be
subject to loss of its rights to acquire interests in the properties  subject to
such agreements.

     (o)  Financing Risks

The Company's  current  operations do not generate any cash flow. If the Company
seeks additional equity financing, the issuance of additional shares will dilute
the interests of the Company's current shareholders.  The degree of the dilution
would depend on the stock price.  The Company has  successfully  raised funds in
recent years  through  share and warrant  issuances.  As at July 31,  2004,  the
<PAGE>

Company had approximately  $775,000 in cash, and the Company does not anticipate
having to seek new equity financing this year.

     (p)  Dilution from Outstanding Securities

As at August 2, 2004, there were 1,145,000  options at prices ranging from $0.67
to $2.06 (expiring at various dates),  and 1,205,878  warrants  outstanding at a
price of $0.58 per share expiring  December 6, 2004 which,  if fully  exercised,
would increase the number of shares  outstanding by 2,350,878.  Such options and
warrants,  if fully  exercised,  would  constitute  approximately  4.37% (out of
53,735,847 shares  (51,384,969  issued and outstanding,  plus total warrants and
options)  respectively) of the Company's resulting share capital as at August 2,
2004.  It is unlikely  that options or warrants  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 or warrants 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  additional  share  purchase
warrants and stock options. Any share issuances from the Company's treasury will
result in immediate dilution to existing shareholders.

     (q)  Liquidity in Trading Market

The Company's  shares trade on the Toronto Stock Exchange ("TSX") and are quoted
on the NASD OTCBB.  The primary  market for the Company's  shares is the TSX and
the trading volume for the Company's shares at the TSX was approximately  30,000
shares per day during the fiscal year ended March 31, 2004.

     (r)  Conflicts of Interest

At the present time,  except to the extent that Jan Vandersande has a Consulting
Agreement with the Company (see Item 6C - Board Practices), none of the officers
and directors are in a position of conflict of interest. Elizabeth Kirkwood does
not have a consulting agreement with the Company.  However, certain officers and
directors  of the  Company may become  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. The
directors  of the Company are  required by law to act honestly and in good faith
with a view to the best  interest of the Company  and to disclose  any  interest
which they may have in any project or opportunity of the Company.  If a conflict
of interest  arises at a meeting of the board of  directors,  any  director in a
conflict will  disclose his interest and abstain from voting on such matter.  In
determining  whether  or not the  Company  will  participate  in any  project or
opportunity,  the director will  primarily  consider the degree of risk to which
the Company may be exposed and its financial position at that time.

     (s)  Dependence on Key Management Employees

The nature of the Company's  business,  its ability to continue its  exploration
and  development  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 its key management figure,
Jan  Vandersande,  who has  entered  into a new  Consulting  Agreement  with the
Company: See, Item 7B -Related party transactions and Item 6C - Board Practices.
Loss of the key

<PAGE>

person could have a material adverse effect on the Company. The Company does not
maintain key-man life insurance on Jan Vandersande.

     (t)  Fluctuations in Company Stock Prices

Prices  for the  Company's  shares  on both the TSX and  NASD  OTCBB  have  been
extremely volatile.  The price for the Company's common shares on the TSX ranged
from $0.60 (low) and $3.00  (high)  during the fiscal year ended March 31, 2004,
and from $1.61 (low) to $2.68 (high)  during the fiscal  quarter  ended June 30,
2004.  Any  investment  in the  Company's  securities  is  therefore  subject to
considerable fluctuations in price.

     (u)  Currency Rate Fluctuations

Feasibility and other studies conducted to evaluate the Company's properties are
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 months. 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.

     (v)  Penny Stock Rules

Broker-dealers  may be discouraged from effecting  transactions in the Company's
shares  because  they are  considered  penny stocks and are subject to the penny
stock rules.

Rules 15g-1  through  15g-9  promulgated  under the  Exchange  Act impose  sales
practice and disclosure  requirements on NASD  brokers-dealers who make a market
in "a penny  stock." A penny stock  generally  includes  any  non-NASDAQ  equity
security  that has a market price of less than US$5.00 per share.  The Company's
shares  are  quoted on the NASD  OTCBB and the  closing  price of the  shares on
August 4, 2004 was  US$1.55.  Purchases  and sales of the shares  are  generally
facilitated by NASD  broker-dealers who act as market makers for the shares. The
additional   sales   practice   and   disclosure   requirements   imposed   upon
brokers-dealers may discourage broker-dealers from effecting transactions in the
shares, which could severely limit the market liquidity of the shares and impede
the sale of the shares in the secondary market.

Under the penny stock regulations, a broker-dealer selling penny stock to anyone
other than an  established  customer or  "accredited  investor"  (generally,  an
individual  with  net  worth in  excess  of  US$1,000,000  or an  annual  income
exceeding US$200,000, or US$300,000 together with his or her spouse) must make a
special  suitability  determination  for the  purchaser  and  must  receive  the
purchaser's  written  consent  to the  transaction  prior  to sale,  unless  the
broker-dealer or the transaction is otherwise exempt.

In addition,  the penny stock regulations  require the broker-dealer to deliver,
prior to any transaction involving a penny stock, a disclosure schedule prepared
by the Commission  relating to the penny stock market,  unless the broker-dealer
or the  transaction is otherwise  exempt.  A  broker-dealer  is also required to
disclose   commissions   payable  to  the   broker-dealer   and  the  registered
representative   and  current   quotations  for  the  securities.   Finally,   a
broker-dealer  is required to send monthly  statements  disclosing  recent price
information  with  respect to the penny stock held in a  customer's  account and
information with respect to the limited market in penny stocks.

<PAGE>

     (w)  De Beers Support

The exploration of the AK Property has been primarily funded by De Beers, and De
Beers Canada has made an equity investment in the Company.  However, there is no
assurance  that the level of support  provided by De Beers will  continue in the
future.

Item 4   Information on the Company.

     A.   History and development of the Company.

The Corporate Organization

The Registrant,  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 reflect
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
and 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, B.C.) 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).

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.

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, these companies became wholly-owned subsidiaries of
the Company.


<PAGE>

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.

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:

<TABLE>
<CAPTION>
<S>                                                    <C>                               <C>
--------------------------------------------- --------------------------------- --------------------------------------
                  Name of                                 Date of                           Jurisdiction
                 Subsidiary                            Incorporation                      of Incorporation
--------------------------------------------- --------------------------------- --------------------------------------

Mountain Province Mining Corp. (USA)                   September 18, 1987                Nevada, U.S.A.

Baltic Minerals BV                                     January 26, 1996                  The Netherlands

Baltic Minerals Finland OY                             May 18, 1994                      Finland
--------------------------------------------- --------------------------------- --------------------------------------
</TABLE>

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

            --------------------------------------------------------
                         Mountain Province Diamonds Inc.
                               (British Columbia)
            --------------------------------------------------------
                                        |
              ----------------------------------------------------
              |                                                  |
              |                                                  |
              |                                                  |
              |                                                  |
  -------------------------                          ---------------------------
      Baltic Minerals BV                               Mountain Province Mining
            (100%)                                          Corp. (USA)
                                                               (100%)
  ----------------------------                       ---------------------------
              |
              |
  ----------------------------

        Baltic Minerals
          Finland OY
            (100%)
  ----------------------------



The Company's registered and records office is care of its solicitors,  MacNeill
Law, Suite 950 - 1055 West Georgia Street, Vancouver, British Columbia, V6E 3P3.
The  executive  office is at 21 Nesbitt  Drive,  Toronto,  Ontario M4W 2G2.  The
telephone  number is (416)  364-6928 and the fax number is (416)  364-

<PAGE>

0618.  The Company's  administrative  office is located at Empire Towers 1, 3633
East Inland Empire Blvd., Suite 465, Ontario, California, USA 91764.

The Company's  initial public offering on the Vancouver  Stock Exchange  ("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 Toronto
Stock  Exchange  ("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  Canadian  Venture  Exchange  ("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 NASD's  OTC-Bulletin  Board  under the  symbol  "MPVI".  The  Company is also
registered  extra-provincially  in  Manitoba,  Saskatchewan,  and the  Northwest
Territory,  and is a reporting issuer in British Columbia,  Ontario and Alberta.
The Company  files  reports in the United  States  pursuant to section 13 of the
Securities Exchange Act of 1934, as amended.

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
Company's 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 is not  considered to be a property that is
material  to the  Company.  Other than  this,  there  were no  acquisitions  and
dispositions  undertaken  by the Company  during the past three  fiscal years or
during the period since the  completion  of the most recently  completed  fiscal
year.

     B.   Business Overview.

Description of Business

1.1 Introduction

The Company is a natural resource property  exploration company. The Company has
interests in several  natural  resource  properties,  the most  significant  and
principal  property  being a 44.1%  interest in the AK  Property  located in the
Northwest Territories. See "Item 4D - Property, plants and equipment".

The Company, as yet, does not have any commercially viable resource  properties.
Bulk  sampling  and  exploration  drilling  continues  on the AK  Property.

1.2 Historical Corporate Development

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 Claims 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

<PAGE>

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.

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
"Monopros Joint Venture Agreement") with Monopros, a wholly-owned  subsidiary of
De Beers,  and now known as De Beers  Canada,  to develop the AK-CJ  Properties.
This agreement  provided that De Beers Canada could earn up to a 60% interest in
the  project by  conducting  exploration  and bulk  sampling  on one or more new
kimberlite  deposits.  As well,  De Beers  Canada  was  required  to  complete a
feasibility  study and fund development and  construction of a  commercial-scale
mine.

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 1044 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  Ventures Inc. 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.

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

<PAGE>

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 cost estimate of a pre-feasibility  study of the Kennady Lake
diamond deposits.  They based their decision on the improving  geo-political and
economic  conditions  which  supported  confidence in longer-term  diamond price
projections.  In November  2003,  the board of directors of De Beers  approved a
budget of approximately $25 million for a pre-feasibility study which started in
January 2004.

This  study  will be of  sufficient  detail to allow  the  Gahcho  Kue  Project,
previously  known as the Kennady Lake Project,  to advance to mine permitting in
the first  half of 2005,  should the  project's  profitability  level  support a
decision to proceed to the next phase.

For further particulars,  reference should be made to Item 4D - Property, plants
and equipment - Principal Properties - Resource Properties.

As of June 30, 2000, the Company,  through the  amalgamation of its wholly-owned
subsidiary,  Mountain Glen, with Glenmore,  acquired the principal properties of
Glenmore,  namely,  the Haveri and Sirkka gold properties,  which are located in
Finland, and indirect interests in the Telegraph and Springtime Property located
the United States.  The Sirkka,  Telegraph and  Springtime  claims all lapsed in
2002/2003.  The  Company's  interests  in the Ketza River  Property and Molanosa
Projects have also lapsed.  The Company has a 50% interest (acquired pursuant to
an  option/joint  venture  agreement with Opus Minerals Inc., now known as First
Strike  Diamonds  Inc. on July 13, 1998) in claims held by Opus Minerals Inc. in
the northern end of the Baffin Island. The property values for these claims have
been written off and the Baffin Island  property is no longer of interest to the
Company.  The  Company  also  acquired a group of seven  claims in  northeastern
Manitoba on March 20,  2001.  Five of the seven claims  lapsed in 2003,  and the
remaining two, in 2004. The Company does not regard the  properties,  other than
the AK Property, as material, and they are only briefly discussed in this annual
report.  The Haveri  property was  joint-ventured  with Northern Lion Gold Corp.
(formerly  known as Vision Gate  Ventures  Limited).  For  further  particulars,
reference  should be made to Item 4D -  Property,  plants and  equipment - Other
Properties.

Foreign Assets

Until the  Arrangement  with Glenmore  Highlands Inc., with the exception of the
Maris Project (which has been dropped because the claims have lapsed) all of the
Company's  assets were  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,  including  properties in Finland,  were acquired by Mountain Glen,
and are now held by the Company,  pursuant to the winding up of Mountain  Glen's
affairs.  A 70%  interest in the Haveri Gold  Property  was optioned to Northern
Lion Gold Corp.  (formerly Vision Gate Ventures Limited).  See Item 4A - History
and development of the Company - Acquisitions and Dispositions.

Competition

Competition  exists from other mining  exploration and development  companies in
respect of the  acquisition  of new  natural  resource  properties.  Many of the
mining  companies with which the Company  competes have operations and financial
strength many times that of the Company.  Competition could adversely affect the
Company's ability to acquire suitable properties or prospects for exploration in
the future.


<PAGE>

The  Company  is  contractually  bound  to sell  its  diamonds  from  the  AK-CJ
Properties  to The Diamond  Trading  Co.,  pursuant to the terms of the Monopros
Joint  Venture  Agreement  (see Item 4B -  Business  Overview -  Description  of
Business - Historic Corporate Development).  The Diamond Trading Company in turn
sells its rough diamonds to their sightholders.

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 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
activities  and its  potential  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.

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  Northwest  Territories
Waters Act, the Arctic Waters  Pollution  Prevention  Act, the Navigable  Waters
Protection Act, the Mackenzie  Valley Resource  Management Act and 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.
These  licenses  outline the volume of water the mine may use, how tailings will
be  treated,  the  quality  and  types of waste  that my 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 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,  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, Wildlife Act and Workers Compensation Act. The Fisheries Act,
Northwest  Territories Waters Act,  Territorial Lands Act, Mackenzie Valley Land
Use  Regulations,  Transportation  of Dangerous Goods Act, and the Canada Mining
Regulations  are  federal  legislation  or  regulations.  Failure to comply with
provincial  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

<PAGE>

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  or mining
project which the Company might undertake.

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

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.

     C.   Organizational structure

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

     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,  which is located in the  Northwest
Territories,  which  is in the  exploration  stage  and  there  are  no  reserve
estimates at this time.  All other  estimates  have been made at De Beers and De
Beers Canada.

A "mineral  resource"  as defined  under the  Canadian  Institute  of Mining and
Metallurgy  Guidelines (the "CIM Guidelines"),  which are different from the SEC
guidelines  (the  "SEC  Guidelines")  set  forth  in  Guide 7 under  Item 802 of
Regulation S-K, 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.

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  Canadian  Standards  as  required by Canadian  law for  disclosure  of
material facts.

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". No

<PAGE>

such  reserves,  as  defined  in the SEC  Guidelines  or as  defined  in the CIM
Guidelines, have been determined to exist at the present time.

Readers should read the Independent Qualified Person's Review and Technical
Report dated as of June 16, 2003 (the "Technical Report") entitled "Gahcho Kue,
Northwest Territories, Canada" prepared for the Company by Malcolm L. Thurston,
Ph.D., MAusimm, which Technical Report is incorporated herewith by reference.
The Technical Report has been submitted to the Securities Exchange Commission in
the United States and filed with the relevant Securities Commissions in Canada
on SEDAR.

Description of Property

     (a)  Administrative Offices

The  Company's  administrative  office is located in the United States at Empire
Tower 1, 3633 E. Inland Empire Blvd., Suite 465, Ontario,  California 91764. The
Company considers these premises suitable for current needs.

     (b)  Mineral Properties

The AK Property

The  Company's  AK  Property is  currently  under the most  intense  exploration
because of the discovery of the Kennady Lake Kimberlite  Field and is considered
to be the Company's only principal property.

Location and Access

The AK Property, located in the Mackenzie District of the Northwest Territories,
is centred near  63(degree)30'  north and  109(degree)  30' west. It is situated
between Fletcher Lake and Walmsley Lake to the east, Kirk Lake to the north, and
Margaret Lake to the west. The property lies 150 kilometers  south-southeast  of
the main Dia Met  Minerals  Ltd.  ("Dia  Met")  and BHP  Diamonds  Inc.  ("BHP")
discoveries at Lac de Gras and 275 kilometers east-northeast of Yellowknife. The
major prospects are in the area of Kennady Lake.

A multitude of lakes provide access for ski and float equipped aircraft.  A dock
is available on Kennady Lake.  The Echo Bay Mines' winter road to the Lupin mine
site runs from  Yellowknife  along  MacKay  Lake,  which is about 70  kilometers
northwest of Kennady Lake.

Topography, Vegetation and Climate

The  property  lies in the  treeless  tundra  of the  "barren  lands"  some  290
kilometers  south of the Arctic Circle,  and much of the area is lake and muskeg
covered. The climate is extreme with -45(degree)C temperatures. Winter winds can
create extreme wind chill factors and extensive drifting snow. However,  average
annual snowfall rarely exceeds one meter,  most of which falls during autumn and
spring  storms.   Ice-up  and  break-up  occupy  most  of  September  and  June,
respectively,  during  which time access to the property is via the esker runway
at Kirk Lake camp.  The ice-free  season  generally  lasts two and a half months
from early July to mid-September.  Summer temperatures rarely reach 30(degree)C;
furthermore, storms can occur at any time.

Local relief is generally  extremely flat. The elevation of rolling hills varies
between 400 meters and 550 meters above sea level.


<PAGE>

Acquisition - Joint Venture Agreement

The AK Property,  acquired in August 1992,  consists of 132  contiguous  claims,
which total  310,175  acres,  in the  Mackenzie  Mining  District,  NWT.  The AK
Property  forms a  nearly  rectangular  block,  which  is  about  25  kilometers
north-south  by 50 kilometers  east-west.  All of the claims  comprising  the AK
Property are in good standing and have no legal impediments.

Until August 3, 2000,  the AK Property and the CJ Property  (together the "AK-CJ
Properties")  were held by the Company,  as to 90%, and by Camphor Ventures Inc.
("Camphor"),  as to 10%. In March,  1997, Old MPV, 444965 and Camphor  announced
the Monopros  Joint  Venture  Agreement  with  Monopros (now De Beers Canada) in
connection  with the AK-CJ  Properties.  Operatorship  by De Beers Canada was to
occur  immediately and  operatorship  by Canamera was effectively  terminated at
that time.

Pursuant to the Monopros Joint Venture  Agreement dated March 6, 1997,  Monopros
would  earn  up to a 60%  interest  in the  AK-CJ  Properties  in  exchange  for
conducting an exploration program on the property and a bulk sampling program on
one or more  new  kimberlites,  completing  a  feasibility  study on one or more
kimberlites,  and funding the development and construction of a commercial mine.
On completion of a bulk sampling  program,  and if De Beers Canada  committed to
proceed with a full feasibility study, De Beers Canada would earn an initial 51%
interest,  increasing  to a  56%  or  60%  interest  (depending  on  alternative
arrangements  on  financing  the  feasibility  study)  on  the  commencement  of
commercial  production.  If on completion of the full bulk-sampling  program, De
Beers Canada did not commit to  proceeding  with a feasibility  study,  De Beers
Canada would earn only a 30% interest and the Company and Camphor would continue
to control the AK-CJ Properties.

Concurrently with entering into the Monopros Joint Venture  Agreement,  De Beers
Canada  subscribed  for  209,644  units of Old MPV at a price of $4.77 per unit,
each unit  consisting  of one common  share of Old MPV and one  non-transferable
warrant to purchase  one  additional  common share of Old MPV at $6.36 per share
exercisable before March 6, 1999.

Under the  agreement,  De Beers Canada had until  September 15, 1999 to elect to
purchase a 51% interest in a 3% gross overriding royalty against production from
the property from the Company (as to 90%) and Camphor (as to 10%). This purchase
was completed in November 1999.

Pursuant to an amending  agreement  dated  December 17, 1999,  the Joint Venture
Agreement was amended with respect to costs of Stages 1, 2, 3 and 4 of the Joint
Venture Program. Also, as of December 7, 1999, the joint venture parties entered
into an Area of Interest Agreement, in respect of acquisition from third parties
in the designated Area of Interest, being a five kilometer zone as measured from
the boundary of the claims comprising the AK-CJ Properties.

Pursuant  to an  agreement  reached at a meeting on March 8, 2000,  the  parties
agreed  to amend  the  Monopros  Joint  Venture  Agreement  to  clarify  funding
obligations  between  the  parties  and to  enable  the  parties  to  defer  the
feasibility  study  decision  date in order to give  time to De Beers  Canada to
investigate  several  conventional  and alternative  mining  scenarios to be the
subject of the desktop  study.  As a result,  De Beers Canada agreed to fund all
exploration,  development  and other  project  costs  going  forward,  effective
immediately  and would earn a 51% interest upon completion of the desktop study.
The Company had been paying 44.1% of all project costs since July 1999.

On August  4,  2000,  the  desktop  study was  presented  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  Ventures  Inc.  with a 4.9%  interest in the AK-CJ  Properties.  The CJ
Property  substantially  lapsed in November  2001 with the remaining CJ Property
claims lapsing on August 17, 2002.


<PAGE>

In August 2002 De Beers took 30 of the AK claims to lease.  These claims contain
all the  kimberlite  discoveries  at and in  Kennady  Lake,  MZ Lake  and in the
Kelvin-Faraday area. The remaining claims were permitted to lapse.

Regional Geological Setting

The AK  Property  is located  about 75  kilometers  south of Aylmer  Lake in the
southeastern corner of the Slave Craton. The Slave Craton,  about 400 kilometers
east-west  by 750  kilometers  north  south,  is an  integral  part of the North
American  Craton.  Except for Proterozoic  rocks,  mainly along the margin,  the
Slave is composed  dominantly  of Archean rocks greater than 2.4 Ga, which makes
it the oldest of the  Canadian  Shield.  This  Archean  setting  is  significant
because most  economic  kimberlites  are  restricted to stable  Archean  cratons
within continental  shield areas. It is therefore  consistent that a significant
kimberlite  province,  which hosts more than 150 kimberlite pipes, is centred in
the heart of the Slave Craton.  The first  kimberlites  were discovered there in
1991.

Kimberlites in the Slave Craton intrude granites,  metasedimentary rocks, and in
some cases,  diabase dykes.  Preliminary  dating of these kimberlites  indicates
that their  emplacement  occurred at various  times from  Paleozoic to Tertiary.
Kimberlite  pipes are known to have been emplaced in Late  Cretaceous and Eocene
in the Lac de Gras area, in Middle Jurassic and Late Ordovician  north of Lac de
Gras,  and in the Cambrian  south of Lac de Gras in the AK Property area. It has
been noted that  corridors  between  northwest  trending  diabase dykes may mark
preferred  locations for kimberlite  emplacement  in the Lac de Gras area.  Such
parallel  corridors may represent  major crustal  fracture zones that facilitate
ascent of kimberlite magma.

Late Wisconsinan  glaciation above the Slave Structural  Province climaxed about
20,000  years  ago.  Local and  regional  ice flow  patterns  show  considerable
variation.  Glacial  dispersion trends are further  complicated by englacial and
deglacial processes.

Detailed Geological Setting

Current regional mapping  indicates that the AK Property is 90% underlain mainly
by  unsubdivided  granitic rocks that intrudes the 10%, older  metavolcanic  and
metasedimentary rocks of the Yellowknife Supergroup.

A number of diamondiferous  kimberlite intrusions have been identified on the AK
Property.  Most have been located in the Kennady Lake area. The 5034  kimberlite
has been  dated  radiometrically  by the Rb-Sr  method on  phlogopite  as Middle
Cambrian  (539  Ma).  Drilling  has  encountered  the  5034  kimberlite,  Hearne
kimberlite,   Tesla  kimberlite,   Tuzo  kimberlite,   Wallace  kimberlite,  and
5034-South  kimberlite.  The number of kimberlite bodies  encountered  indicates
that the area may  represent a kimberlite  field,  referred to in this Report as
the Kennady Lake Kimberlite Field.

Quaternary Geology

At least two glaciations  have scoured the area and deposited a superficial till
veneer  over  bedrock.  This till is  generally  one to two  meters  thick,  but
occasionally it is up to ten meters thick. The predominant  direction of glacial
transport  is almost due east to west.  All the  glacial  features  and  related
deposits  appear to be related to the last glacial event,  the Late  Wisconsinan
glaciation.  There  is no  stratigraphic  evidence  of  deposits  from  previous
glaciation.


<PAGE>

Work History

Historically,  mineral  exploration in the southeastern  Slave Craton focused on
gold and later base metals, within the Yellowknife  Supergroup  metavolcanic and
metasedimentary   rocks  in  the  Walmsley  Lake  area.   However,  no  previous
exploration for base or precious  metals,  within what is now the AK Property is
recorded  in the  assessment  files of the  Department  of  Indian  Affairs  and
Northern  Development  ("DIAND").  Furthermore,  there is no record  of  diamond
exploration in the AK Property area prior to its staking in 1992.

5034 Kimberlite Pipe

The 5034 kimberlite pipe was the first kimberlite  discovered on the AK Property
in 1995, and consequently,  it is the best known on the property.  It is located
near the southeast corner of the AK Property under and adjacent to Kennady Lake.
It is a  diamondiferous  kimberlite.  The pipe  has an  irregular  shape  with a
surface  dimension of about 120 meters by 180 meters.  A 35 meter wide dyke-like
body extends from the pipe some 300 meters to the north- northeast.  The overall
near surface area is about 2.15 hectares,  and the majority of it is overlain by
the shallow water of Kennady Lake.

Diamond recoveries by caustic fusion of drill core from the 5034-kimberlite pipe
was performed by The  Saskatchewan  Research  Council and  Canamera.  Results in
terms of "carats  per  tonne"  and  "number of macros per ten kg" are of similar
magnitude  to the results  reported by Dia Met,  Aber and Ashton from the Lac de
Gras area. The results were encouraging enough for a mini-bulk sample in 1996.

Mini-Bulk Sample of 5034 Kimberlite Pipe

A 104 tonne  "mini-bulk"  test from 42 bulk sample drill holes was  performed to
obtain macro grade estimates and to obtain a reasonable quantity of diamonds for
preliminary  valuation.  Macro  grade  estimates  from the  "mini-bulk"  test by
Canamera  on drill core from the 5034  kimberlite  pipe is  reported in Table 1.
Crushing for this test was  performed  as follows.  The first 24.6 tonnes of the
"mini-bulk"  sample were  crushed and  screened at 24  millimeters,  followed by
systematic  step  recrushing  at 12, 6, 3 and 1.5  millimeters.  The second 79.0
tonne  "mini-bulk"  sample  involved the same crushing  stages,  except that the
final crush to 1.5 millimeters was omitted.  Diamond recovery  utilized a Sortex
x-ray fluorescence  machine, a dense media separation plant, and a grease table.
Recovery of all diamonds that would not pass through a 20 mesh (0.85 millimeter)
screen was attempted. 3,895 stones totaling 257 carats were collected. Thus, the
average stone size is about 0.065 carats.

                                     Table 1

           Diamond Recoveries by Heavy Media Plant from a "Mini-Bulk"
               Test of Drill Core Samples from the 5034 Kimberlite

<TABLE>
<CAPTION>
<S>                                <C>                         <C>                                 <C>
--------------------------- ------------------------- ------------------------- --------------------------------------

                             Sample Weight (Tonnes)    Weight Macros >1.0 mm           Macro Carats per Tonne
Description                                                   (Carats)                       (1,000 Kg)
--------------------------- ------------------------- ------------------------- --------------------------------------

5034Kimberlite Pipe:  Bulk Sample:  Heavy Media Separation Plant

Canamera                           24.6                        75.9                                3.09

Canamera                           79.0(1)                   181.1(1)                              2.29(1)

Summary                         3,895 Stones                257 Carats                     0.065 Carats/Stones
--------------------------- ------------------------- ------------------------- --------------------------------------
</TABLE>

(1) This portion of the bulk sample did not undergo a final crush to 1.5mm.

<PAGE>

Valuation  of the  diamonds  is  difficult  given the small  parcel of  diamonds
available. De Beers Canada released in September 1997 an estimate by De Beers of
US$55.00 per carat with a projected revenue per tonne of US$82.50. The valuation
was based on diamonds recovered from the "mini-bulk" test by Canamera (Table 1),
as well as on diamond  analysis of core  derived from a hole drilled by De Beers
Canada.  De Beers valued all diamonds  seven points and larger.  The  techniques
used in the valuation are proprietary to De Beers.

1997 Exploration Program

During  1997 the main  objective  of De Beers  Canada  was to locate  additional
kimberlite pipes and obtain sufficient samples for diamond analysis to establish
the merits of exploration on the AK Property. In particular,  an additional pipe
or pipes were sought in the immediate  vicinity of the 5034  kimberlite in order
to find  sufficient  potential  tonnage  and  diamond  content to  warrant  bulk
sampling to determine  economic viability of the AK Property.  Consequently,  De
Beers Canada  conducted the following on the AK Property:  (i) probe analyses of
indicator minerals recovered from till samples by Canamera, (ii) additional till
sampling,  (iii) a  comprehensive  airphoto  survey and  follow-up  analysis  of
surficial   geology,   (iv)  a  detailed   helicopter-borne   magnetometer   and
electromagnetic survey, and (v) a drilling program.

The 1997  drilling  program,  consisted  of land  based core holes and air drill
holes, which were targeted with the geophysical survey. Three new diamondiferous
kimberlite pipes were  discovered.  The Tesla  kimberlite,  about 1.0 kilometers
north-northwest  of the  5034  kimberlite,  was  discovered  in  May.  The  Tuzo
kimberlite and Hearne kimberlite,  about 0.6 kilometers north-northwest and 1.08
kilometers southwest of the 5034 kimberlite pipe, respectively,  were discovered
in August 1997.  The 1997  objectives  of De Beers Canada were achieved with the
discovery of the Tesla, Tuzo and Hearne kimberlite  pipes.  However,  although a
limited  amount of drilling was undertaken  outside the Kennady Lake  Kimberlite
Field, no new kimberlites were found. Thus, the exploration program for 1998 was
designed to focus on the further evaluation of the Hearne,  Tuzo, Tesla and 5034
kimberlites, as well as the discovery of the sources of the many known indicator
mineral dispersion trains.

The Hearne, Tesla and Tuzo Kimberlites

Diamond  recoveries by caustic  fusion of drill core from the Hearne,  Tesla and
Tuzo  kimberlites are in Table 2. De Beers in Kimberley,  South Africa performed
caustic fusion for De Beers Canada.

Results in terms of "number  of macros  per 10 kg" are of similar  magnitude  to
preliminary results reported in Table 2 for the 5034 kimberlite pipe.

                                     Table 2

    Diamond Recoveries by Caustic Fusion of Drill Core from the Hearne, Tesla
        and Tuzo Kimberlites, Kennady Lake Kimberlite Field, AK Property

<TABLE>
<CAPTION>
<S>                       <C>             <C>            <C>             <C>              <C>               <C>
------------------ ---------------- -------------- --------------- ---------------- ---------------- ------------------

                    Sample Weight      No. of       Diamonds per                     No. of Macros     No. of Macros
Description             (kg)          Diamonds         10 kg       Weight (Carats)    >0.5 mm(1)         per 10 kg
------------------ ---------------- -------------- --------------- ---------------- ---------------- ------------------

Hearne Pipe

Hole 1                    132             324            25              0.90             33                2.5

Hole 2 & Hole 3           168             439            26              1.33             50                3.0

<PAGE>
------------------ ---------------- -------------- --------------- ---------------- ---------------- ------------------

                    Sample Weight      No. of       Diamonds per                     No. of Macros     No. of Macros
Description             (kg)          Diamonds         10 kg       Weight (Carats)    >0.5 mm(1)         per 10 kg
------------------ ---------------- -------------- --------------- ---------------- ---------------- ------------------

Tesla Pipe

Hole 1                    245             188             8              0.13             14                0.6

Tuzo Pipe

Hole 1                    124             403            33              2.09             36                2.9

Hole 2                    154             294            19              0.39             19                1.2
------------------ ---------------- -------------- --------------- ---------------- ---------------- ------------------
</TABLE>

(1)      Size measured as stones not passing through a 0.5 by 0.5mm screen.

1998 Mini-Bulk Sample

During 1998, De Beers Canada  conducted a mini-bulk  sample on the four pipes in
Kennady  Lake on the AK  Property  that was  designed  to  extract,  by  reverse
circulation drill, small bulk samples from the recently  discovered Hearne, Tuzo
and  Tesla  pipes as well as the  5034  pipe.  The  object  of this  work was to
determine  if diamonds of  sufficient  quantity  and value were  indicated to be
contained in these pipes and therefore provide justification for a further large
scale bulk sampling program. In addition,  continued  exploration was undertaken
outside of the Kennady Lake Kimberlite  Field on both the AK-CJ Properties in an
effort to locate new  kimberlite  occurrences.  Table 3 lists the results of the
mini-bulk  sampling  program on the  kimberlites in the Kennady Lake  Kimberlite
Field cluster.

                                     Table 3

                  Results Of Mini-Bulk Sampling Of Kimberlites
                  In The Kennady Lake Kimberlite Field Cluster

<TABLE>
<CAPTION>
<S>                        <C>           <C>           <C>                  <C>         <C>                  <C>
-------------------- ------------- -------------- ------------------- --------------- ---------------- ---------------

                                                                         Best Fit                         Best Fit
                     Sample Size    Carats per     Value per Carat      Value per        Value per       Value per
Description            (Tonnes)        Tonne            (US$)          Carat ($US)      Tonne (US$)     Tonne (US$)
-------------------- ------------- -------------- ------------------- --------------- ---------------- ---------------

Hearne Pipe                62.6          2.33          25 - 50              44          58 - 177             103

Tuzo Pipe                  48.0          2.20          51 - 108             68          112 - 238            150

Tesla Pipe                 50.0          0.37          56 - 112             96           21 - 41              36

5034 Pipe                  55.8          1.60           26 - 58             51           42 - 93              82
-------------------- ------------- -------------- ------------------- --------------- ---------------- ---------------
</TABLE>

In addition to the  mini-bulk  sampling  program,  core  drilling of the Hearne,
Tuzo, Tesla and 5034 pipes was conducted in order to provide a better definition
of the geological and tonnage models of each of these bodies.

1999 Bulk Sampling Program

The main  purpose  of the bulk  sampling  phase of  evaluation  was to  obtain a
sufficiently  large number of diamonds for more accurate  determination of grade
and value per carat.

The bulk sample drilling, using two 12.25-inch diameter reverse circulation (RC)
drills,  started January 16, 1999. The objective of sampling approximately 1,600
tonnes of kimberlite to recover the  anticipated

<PAGE>

number of carats was  completed  ahead of schedule on April 6, 1999.  A total of
1,666  tonnes of  kimberlite  was  extracted  from a total of 43 vertical  holes
drilled into the four pipes to depths of up to 300 meters.  At the completion of
drilling,  575 tonnes  were  extracted  from the 5034 pipe,  454 tonnes from the
Hearne pipe, 460 tonnes from the Tuzo pipe and 177 tonnes from the Tesla pipe.

The bags of kimberlite chips and diamonds were sent to the De Beers Canada Dense
Media  Separation  plant  (DMS) in  Alberta,  where the chips  were  washed in a
scrubber and the larger pieces crushed to smaller sizes and recombined  with the
sample  which  was  subsequently  fed  through  the  DMS  plant.  The  resulting
concentrate was collected in a tamper-proof cage and the concentrate  containers
sealed  prior to  shipment  to South  Africa  for final  diamond  recovery.  The
recovered  rough  diamonds  were then sent to Kimberley  for  evaluation.  These
values were passed to the De Beers  Mineral  Resource  Estimation  Department in
Johannesburg and utilized together with all other recorded data in the grade and
value  modelling.  These  modeled  values are De Beers' best  estimates  for the
revenues per tonne expected during mine production.

5034 Pipe

In December 1999, De Beers Canada advised the Company of the modeled revenue and
grade estimates for the 5034 pipe. The modeled revenue value per tonne increased
significantly  from the initial  estimate based on the previous year's mini-bulk
sample.  For the 5034 pipe a total of 1044 carats were recovered from 609 tonnes
of  kimberlite.  De Beers  valued  the  recovered  diamonds  per sieve  class in
Kimberley,  South Africa. The De Beers Mineral Resources  Estimation  Department
has used these  current  grade and diamond  values,  together with the mini-bulk
sample results and the micro- and macrodiamond results announced previously,  to
model a grade  (carats  per tonne) and a revenue  per carat for each of the four
lobes that make up the 5034 pipe. Production recovery factors,  determined by De
Beers,  were applied and the commonly used  commercial  bottom cut-off  recovery
size of a screen with a 1.50 mm square mesh was used to determine the grades.

The 5034 pipe was subdivided on the basis of internal  geology into four lobes -
a west,  centre, and east lobe as well as a north lobe that extends to the north
under  land.  Based on the 1999 bulk  sampling  results,  the west,  central and
eastern lobes are classified in the Indicated Resource category. The north lobe,
which was not part of the 1999 bulk sampling,  remains in the Inferred  Resource
category. The modeled results for each of these parts of the pipe are summarized
in Table 4 below:

                                     Table 4

       Modeled Results for West, Centre, East and North Lobes of 5034 Pipe

<TABLE>
<CAPTION>
<S>                                             <C>                          <C>                      <C>
 -------------------------------------------------------------------------------------------------------------------

                                            Modeled Grade              Modeled Revenue          Value per tonne
              5034 Pipe                  (carats per tonne)              (US$/carat)                  US$
 -------------------------------------------------------------------------------------------------------------------

 West lobe                                      1.85                         65                       120.3
 Centre lobe                                    1.30                         55                        71.5
 East lobe                                      1.70                         65                       110.5
 North lobe                                     1.70                         65                       110.5
 -------------------------------------------------------------------------------------------------------------------
</TABLE>

The modeled  grades  represent  grades based on the  complete  three-dimensional
model of the pipe taking into account the different  phases of  kimberlite,  low
and high grade zones,  etc.  These modeled values are thus the best estimates of
the grade and expected revenue for the pipe.


<PAGE>

Tesla Pipe

In December  1999, De Beers Canada  notified the Company that 64 carats had been
recovered  from the  processing of 184 tonnes of kimberlite  from the Tesla pipe
for a sample  grade of 0.35 carats per tonne.  This grade  compares to a modeled
grade of 0.37  carats  per tonne  based on the  results of the  previous  year's
mini-bulk sample. The largest diamond recovered was 2.7 carats. The Tesla is the
smallest of the four pipes sampled.

Hearne Pipe

In late  January  2000,  De Beers  Canada  reported  to the  Company the modeled
revenue and grade  estimates for the Hearne  diamond pipe. The modeled value per
carat increased  significantly  (from US$44 to US$65 per carat) from the initial
estimate  based on the 1998  mini-bulk  sample while the modeled value per tonne
also increased from US$103 to US$111.

The Hearne pipe consists of two parts,  a northern and a southern  lobe. The two
lobes have been subdivided on the basis of internal geology into several phases.
Based on the 1999 bulk sampling results, all parts of the Hearne body except the
south lobe Phase E between 200 and 300 meters (called Phase E1) were  classified
in the Indicated  Resource  category.  Phase E1 remains in the Inferred Resource
category. The modeled results for each of these parts of the pipe are summarized
in Table 5 below:

                                     Table 5

            Modeled Results for North and South Lobes of Hearne Pipe

<TABLE>
<CAPTION>
<S>                                       <C>               <C>                   <C>                    <C>
--------------------------------------------------------------------------------------------------------------------

                                       Kimberlite
                                        Resource
                                        (million       Modeled grade       Modeled Revenue      Revenue Per Tonne
             Hearne Pipe                 tonnes)     (carats per tonne)      (US$/carat)               US$
--------------------------------------------------------------------------------------------------------------------

North Lobe Phase A                        3.08              2.05                  65                     133
North Lobe Phase B                        1.61              0.60                  65                      39
North Lobe Phase C                        0.72              2.05                  65                     133
South Lobe Phase D                        1.14              2.05                  65                     133
South Lobe Phase E1                       0.31              2.05                  65                     133
</TABLE>

The  modeled  grades are based on a  three-dimensional  model of the pipe taking
into  account  the  different  phases of  kimberlite,  (e.g.  low and high grade
zones).  These modeled values are thus the best current global  estimates of the
grade, value per carat, and expected revenue per tonne for the pipe.

Tuzo Pipe

In March 2000,  De Beers Canada  advised the Company of the modeled  revenue and
grade estimates for the Tuzo diamond pipe.

The Tuzo pipe can be divided into four zones based on the internal geology.  The
top 80 meters (from 20 meters to 100 meters depth) of the pipe  consists  mainly
of Zone A and Zone B kimberlite  and is classified  as an indicated  resource of
2.6  million  tonnes.  From 100 meters  depth to 200 meters,  the pipe  consists
predominantly  of Zone Bg  kimberlite  containing  generally  greater  than  40%
granite  inclusions and some Zone B and Zone C kimberlite.  This interval of the
pipe is classified as an indicated  resource of 3.5 million tonnes. At depths of
200 meters to 300 meters,  the pipe is classified as an inferred resource of 4.1


<PAGE>

million tonnes and consists  predominantly of Zone C kimberlite with some Zone B
and Zone Bg  kimberlite.  An additional  4.7 million tonnes of kimberlite on the
western side of the pipe (from 200 to 360 meters  depth) and in the deeper parts
of the pipe (from 300 to 360 meters depth) have not been included in the revenue
and grade  modelling.  The  modeled  results for each of these zones of the pipe
which have been sampled are summarized in Table 6 below.

The average  modeled  grade of 1.22 carats per tonne is greater than the initial
bulk  sampling  grade of 1.02 carats per tonne.  The modeled  revenue  value per
carat of $43 compares to a best-fit value of $68  determined  from the 1998 mini
bulk  sample.  The  decrease in value per carat is due to the smaller  number of
larger  diamonds and hence a higher  proportion of smaller  stones.  The modeled
grades are based on a  three-dimensional  model of the pipe taking into  account
the different zones of kimberlite,  (e.g. low and high grade zones).  Systematic
auditing of the processed  concentrates  (tailings) from the Tuzo kimberlite has
recovered an additional nineteen carats of diamonds which have been incorporated
into the modelling of the Tuzo grades.  These  modeled  values are thus the best
current global estimates of the grade, value per carat, and expected revenue per
tonne for the pipe.

                                     Table 6

              Modeled Results for Zone A, B, Bg and C of Tuzo Pipe

<TABLE>
<CAPTION>
<S>                                       <C>                <C>                  <C>                   <C>
--------------------------------------------------------------------------------------------------------------------

                                       Kimberlite
                                        Resource
                                        (million       Modeled grade       Modeled Revenue      Revenue Per Tonne
             Tuzo Pipe                  tonnes)      (carats per tonne)      (US$/carat)               US$
--------------------------------------------------------------------------------------------------------------------

Zone A                                    1.0                2.7                  47                    127
Zone B                                    2.4                0.94                 33                     31
Zone Bg (>40%granite)                     2.4                0.62                 33                     20
Zone C                                    4.4                1.35                 47                     63
</TABLE>

1999 Exploration/Delineation Program

Believing there could be more kimberlite bodies in Kennady Lake, De Beers Canada
in 1999 continued to undertake surface geological surveys in the vicinity of the
known  kimberlites.  Several  lake based  geophysical  targets  (EM highs)  were
identified by these  surveys.  The first to be drilled is located  approximately
300 meters  southwest of the southern  extremity of 5034 pipe.  The angled drill
hole  intersected  36 meters of  kimberlite  between 60 and 104 meters  giving a
horizontal projection of 22 meters. Based on the available information, De Beers
Canada  believes  that the maximum  dimension  of this pipe,  called the Wallace
pipe, is unlikely to exceed 60 meters.

A second  geophysical  target was drilled  approximately 150 meters northeast of
the recently  discovered  Wallace pipe and approximately 150 meters southwest of
the 5034 pipe.  This  angled  drill  hole  intersected  43 meters of  kimberlite
between 56 and 99 meters giving a horizontal  projection of 31 meters.  This new
body has been called 5034-South.

In  addition,  De Beers  Canada  looked for and found  similar EM highs in other
areas of the  southern  part of the AK  Property.  One of  these,  a lake  based
geophysical target is located in the area of the head of a long, broad indicator
mineral train.  The target is  approximately 12 km northeast of Kennady Lake. An
angled drill hole  intersected 34 meters of kimberlite  between 38 and 72 meters
giving a horizontal

<PAGE>

projection of 22 meters. A second hole, collared nearby,  intersected successive
narrow  intersections  (varying from 2 to 7 meters) of kimberlite.  The exciting
part of this discovery was that it was the first time a substantial intersection
of kimberlite had been discovered  outside of the Kennady Lake cluster of pipes.
This new kimberlite body was named the Faraday body.

Feasibility Study Decision - 2000

When the  results as set out in Table 6,  above,  were  obtained,  both De Beers
Canada and the Company  agreed on March 8, 2000,  that it was unlikely  that the
agreed upon rate of return would be achieved from the mining of the 5034, Hearne
and Tuzo pipes,  using the conventional open pit mining method. As a result, the
Company agreed to extend the feasibility study decision date and De Beers Canada
has agreed to carry all exploration,  development and other project costs. Prior
to March 8, 2000,  the  Company had been  paying  44.1% of all project  expenses
since July 1999. De Beers Canada, in the meantime,  conducted a desktop study to
investigate  several  alternative  mining scenarios in order to minimize capital
and working costs associated with the possible mining of the Kennady Lake pipes.
The results of that  desktop  study were  presented  to the Company on August 4,
2000.  The study  showed that the  modeled  rate of return for the mining of the
three  main  diamond  pipes was below the agreed  upon rate of return  needed to
proceed to the next phase, but sufficiently close to only require an increase in
diamond  revenues  of  approximately  15% to  achieve  the agreed  upon rate.  A
management committee was constituted and it was decided that the best options to
advance the project were an additional  bulk sample and additional  exploration.
The bulk sample was completed in May 2001 and the exploration in June 2001.

The  modeled  values of the  diamonds  recovered  in the 2001 bulk  sample  were
reported on December  18, 2001 and the results  were  encouraging  enough for De
Beers to commit to another bulk sample during the winter 2002.  The main purpose
of the  program  was to recover  more high  quality,  top color  diamonds.  Such
diamonds  very likely would  increase the values per tonne,  which in turn could
positively impact the modeled rate of return in the desktop study.

2000/2001/2002/2003/2004 Exploration

De Beers  Canada and the  Company  recognized  that the best way to enhance  the
potential  economic  viability  of the  project  was by  adding  quickly  to the
resource base. The results from the extensive 1999 summer sampling  program were
integrated  with the  existing  geophysical  and  sampling  databases  to define
targets that required drilling.

The 2000 spring exploration drilling program started in early March and ended in
the second week of May. A new kimberlite  body which has been named Kelvin,  was
discovered  in a lake located  approximately  nine km northeast of Kennady Lake,
which contains the Gahcho Kue diamondiferous kimberlites, and three km southwest
of the diamondiferous  Faraday body. One drill hole in the north-south direction
intersected 40 meters of kimberlite horizontally  projected,  while another hole
in  approximately  the east-west  direction  intersected 23 meters of kimberlite
horizontally projected. A third hole drilled failed to intersect kimberlite. The
shape and dimensions of the Kelvin kimberlite is difficult to determine from the
three holes  completed.  A 3.3 meter thick  kimberlite dyke (called Hobbes) at a
depth of 31 meters was discovered  approximately  200 meters south of the Kelvin
body in the same  lake.  The  Kelvin  kimberlite  is  relatively  small,  so any
additional work will concentrate on exploration in the hope of making additional
discoveries in that area.

Kimberlite  recovered  form  the  Faraday-  Kelvin  bodies  were  sent  for acid
dissolution in Kimberley,  South Africa. The micro-diamonds recovered per square
sieve size are shown in Table 7 (i.e., the number of micro-diamonds that did not
pass through each of the square mesh sieves).  The two largest  diamonds for the
Kelvin  body are 8.9 and 8.5  points  (one point is  one-hundredth  of a carat).
Diamonds larger than the

<PAGE>

0.5 x 0.5 mm square sieve size are called "macro-diamonds".  The number of macro
and  micro-diamonds  recovered  for both the Faraday and Kelvin bodies and their
size-frequency  distribution  is very  similar  to that for the 5034 and  Hearne
pipes in Kennady  Lake  (representative  micro-diamond  results for the 5034 and
Hearne pipes are also shown in the table).  Those pipes have  average  grades of
1.67 carats per tonne.

Table 7: Micro-diamonds recovered from the Faraday and Kelvin bodies compared to
             representative samples from the Hearne and 5034 pipes.

<TABLE>
<CAPTION>
<S>       <C>                    <C>                   <C>                  <C>                   <C>
----------------------- --------------------- -------------------- --------------------- --------------------

     Square mesh           Kelvin: 184kg         Faraday: 40kg        Hearne: 128kg          5034: 160kg
                         Number of diamonds
      Size (mm)                               Number of diamonds    Number of diamonds   Number of diamonds
----------------------- --------------------- -------------------- --------------------- --------------------

          2                      5                     1                    2                     4
----------------------- --------------------- -------------------- --------------------- --------------------

          1                      9                     0                    10                   10
----------------------- --------------------- -------------------- --------------------- --------------------

         0.5                     11                    5                    17                   23
----------------------- --------------------- -------------------- --------------------- --------------------

         0.3                     44                   11                    46                   37
----------------------- --------------------- -------------------- --------------------- --------------------

        0.212                    65                   12                    77                   68
----------------------- --------------------- -------------------- --------------------- --------------------

         0.15                   139                   21                    83                   138
----------------------- --------------------- -------------------- --------------------- --------------------

        0.104                    73                   24                   143                   218
----------------------- --------------------- -------------------- --------------------- --------------------
</TABLE>

These   results   indicated   that  both  the  Faraday  and  Kelvin  bodies  are
significantly  diamondiferous  and that more  exploration  work in that area was
needed.

A ground gravity survey  conducted in the 2003 winter program covered the Kelvin
body and as far as a few hundred meters south of Hobbes,  and identified several
drill  targets.  A hole  (called  Kelvin  1b)  drilled  50 m to the  west of the
original 2000 drill hole into Kelvin (called  Kelvin 1a)  intersected a total of
25 m of kimberlite horizontally projected in two closely spaced intervals, while
a hole drilled 60 m to the east  intersected  2.01 m of kimberlite  horizontally
projected.  The Kelvin  body now  appears to extend not just in the  north-south
direction, but also in the east-west direction.

A hole  (called  Kelvin-2)  drilled  120 m south of Kelvin  along the  suspected
structure between Kelvin and Hobbes intersected 7.4 m of kimberlite horizontally
projected,  while  a  hole  (called  Hobbes-2)  drilled  70 m  south  of  Hobbes
intersected  two  kimberlite  intersections  of  2.4  m and  3.0 m  horizontally
projected,  respectively.  It is suspected that this Hobbes intersection and the
Kelvin body could be connected with a kimberlite  bearing structure that pinches
and swells.

A ground gravity survey and detailed  ground  magnetic survey was then conducted
over the Faraday body and  approximately  600 m to the south along the suspected
structure  connecting the Faraday body and the 2001 hole that  intersected  some
kimberlite. The main purpose of the survey was to identify wider areas along the
observed  dyke  structure.  Several  such areas were  identified  and two of the
better target areas were drilled.


<PAGE>

The first target, a magnetic anomaly, was approximately 100 m southwest of the
Faraday body and 5.6 m of kimberlite horizontally projected was intersected. The
kimberlite contained some country rock. The second target, a gravity anomaly,
was approximately 520 m southwest of the Faraday body and approximately 80 m
north of the 2001 drill hole. Kimberlite was encountered just below the lake
bottom and 21.5 m of kimberlite horizontally projected was intersected. It is
suspected that the kimberlite intersections to the north and south of the
Faraday body are probably connected to the Faraday body with a kimberlite
bearing dyke structure that pinches and swell.

The  recovered  kimberlite  from all  intersections  was  sent for  petrographic
analysis and micro-diamond recovery and the results are shown on Table 8.

  Table 8: Micro-diamonds from the Faraday, Kelvin and Hobbes kimberlite bodies

<TABLE>
<CAPTION>
<S>    <C>                    <C>                <C>                <C>                 <C>                 <C>
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------

  Square Mesh Size     Faraday-1b 33kg    Faraday -2 65 kg    Kelvin-1b 65 kg     Kelvin-2 16 kg        Hobbes-2
        (mm)              Number of      Number of diamonds      Number of      Number of diamonds        16 kg
                          diamonds                               diamonds                               Number of
                                                                                                        diamonds
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------

        2.36                  0                  1                   0                  0                   0
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------

        1.70                  0                  2                   0                  0                   0
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------

        1.18                  1                  2                   2                  0                   0
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------

        0.85                  0                  6                   4                  0                   0
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------

        0.60                  1                  7                   6                  0                   0
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------

       0.425                  0                  17                 14                  3                   1
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------

       0.300                  3                  21                 24                  4                   2
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------

       0.212                 11                  41                 40                  4                   4
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------

       0.150                  8                  47                 60                  4                   2
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------

       0.100                  2                  50                 53                  19                  4
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
</TABLE>

The  number  of  diamonds   recovered   from  the   kimberlite   bodies  in  the
Kelvin-Faraday lakes and their size-frequency distribution are excellent and are
very  similar to those for the 5034 and  Hearne  pipes,  which each have  grades
averaging 1.67 carats per tonne. The two largest  diamonds  recovered weigh 0.40
carats  (Faraday-2_ and 0.09 carats  (Kelvin-1b).  The important point to notice
is, besides the total number of diamonds recovered,  that there are a relatively
large  proportion  of  macro-diamonds  (those  that  did not  pass  through  the
0.425-0.6 sieve sizes (Lakefield) or the 0.5 sieve sizes (De Beers),  especially
considering the small sample sizes.

The  kimberlite  samples for Kelvin-2  and Hobbes-2  were very small (only 16 kg
each) so even though the  micro-diamond  counts for these bodies are not as good
as for the others, the results are still very

<PAGE>

encouraging.  This is  especially  so  considering  that,  even for the 5034 and
Hearne pipes, the micro-diamond counts for 20 kg samples varied significantly.

The  winter-spring  exploration  program started at the end of February 2004. De
Beers  conducted a very large ground  gravity  survey from the northern  part of
Faraday Lake following the structural  trend in a southwestern  direction to the
property border. The survey area was approximately three km wide and six gravity
meters were used (compared to one meter the previous year). The targets obtained
from the survey were prioritized and then the best and larger ones were drilled.
A kimberlite  intersection of 2.0 m was intersected  approximately 1300 m to the
southwest of the Faraday body.

During the 1999  winter  program  kimberlite  dykes were  discovered  in MZ Lake
located in the central part of the AK claims,  approximately  20 km northwest of
Kennady Lake. A larger number of indicator minerals,  mainly garnets,  have been
recovered  on the western  edge of the lake and as far west as the border of the
AK claims  (approximately  20 km to the west).  A land based target on the north
shore of MZ Lake, was drilled with a vertical hole to a depth of 35 meters. Five
kimberlite  stringers  with the largest two having  thicknesses of 0.40 and 0.70
meters were intersected,  as well as a 1.70 meter thick  intersection of what is
believed to be a sill (an approximately horizontal lying kimberlite body).

This result was followed up in March and April,  2001,  by a ground  penetrating
radar (GPR) survey that covered the entire  length of the northern  shore of the
lake  (approximately 4 km) and several shallow dipping  reflectors were detected
on land along most of the area  surveyed.  De Beers  Canada  drilled five of the
seven holes in May 2001,  mainly along the  periphery of the surveyed area where
strong GPR reflector signals were recorded.  All holes were drilled  vertically,
on land and all except one were drilled to a maximum  depth of 50 m.  Kimberlite
was  intersected in five of seven drill holes on land just north of MZ Lake. The
thickest  intersection was 3.20 meters of kimberlite at a depth of 27 meters and
the  distance  between the most  easterly  and most  westerly  intersections  of
kimberlite was nearly four  kilometers.  De Beers Canada believes that there are
several sills of various lengths, widths and thicknesses north of the lake.

Most of the  recovered  kimberlite  (34 kg) was  sent to South  Africa  for both
indicator mineral and micro-diamond  recovery.  An additional 22 kg from the two
holes  drilled  into  the  MZ  kimberlite   during  1999  (MPV-99-33)  and  2000
(MPV-00-004) was also treated. A total of 40 micro-diamonds  were recovered from
four of the six holes.

The largest number of  microdiamonds  was recovered from hole MPV-01-73  (called
sill-73):  28 diamonds from 5 kg with the largest  diamond being 1mm. The second
largest number of microdiamonds  was recovered from hole MPV-01-070:  9 diamonds
from 4 kg. Four of the five sills  discovered so far have been  determined to be
diamondiferous.  Because of these  encouraging  results De Beers  decided upon a
follow-up  program  at MZ Lake  during the  spring of 2002.  A  detailed  ground
penetrating  radar (GPR) survey  using  closer line  spacing  than in 2001,  was
conducted  over a large area  encompassing  sill-73.  The results of survey were
used to  determine  drill hole  locations.  A total of 10  follow-up  holes were
drilled into sill-73 and numerous intersections of kimberlite was recovered. The
thicknesses  of the  intersections  varied  from 7cm to 2.19m  with the  largest
combined kimberlite  intersection in one drill hole being 3.49m,  between 14.66m
and 19.25m  depth.  This sill appears to extend at least one  kilometer.  The MZ
kimberlite  from sill-73 was sent to Kimberley,  South Africa for  micro-diamond
recovery.  Only fine microdiamonds were recovered. As a result, De Beers decided
to concentrate their exploration  efforts on the Kelvin-Faraday  area, which had
much more promising diamond counts.

2001/2002 Bulk Sampling

The winter 2001 bulk sample program of the Hearne and 5034 kimberlite  pipes was
completed on May 4, 2001.  De Beers Canada  recovered 751 carats from 334 tonnes
of kimberlite from the Hearne pipe and

<PAGE>

914 carats  from 635 tonnes from the 5034 pipe.  There were three holes  drilled
into the  high-grade  northern  part of the Hearne  pipe and four holes into the
high-grade  eastern lobe of the 5034 pipe. The kimberlite samples were processed
in Grand Prairie,  Alberta, Canada and the sample concentrates were subsequently
shipped to South Africa where the diamonds were recovered.

The 1,665 carats that were  recovered from both pipes (to a 1.5mm lower cut-off)
plus the diamonds recovered from the 1999 bulk sample were all valued,  based on
August 2001 diamond prices, at The Diamond Trading Company (DTC) in London.  The
De Beers Mineral Resources Estimation  Department in Johannesburg has used these
values for both bulk  samples to update the  modeled  revenue per carat for each
pipe. Production recovery factors,  determined by De Beers, were applied and the
commonly  used  commercial  bottom  cut-off  recovery  size screen with a 1.50mm
square mesh were used. De Beers changed the way diamond  values were reported to
the Company to make them  comparable  to the values  reported by other  Canadian
diamond mining  companies.  To compare the 1999 and the current values,  10% was
added to the 1999 values.  The average revenue per carat for the 5034 pipe based
on August  2001  values was US $65.50 for the  combined  1999 and 2001  parcels,
compared to the adjusted US $69.30 value for the 1999 bulk sample. Similarly the
average  revenue  per carat for the Hearne  pipe was US $63.30  compared  to the
adjusted US $71.50  value for the 1999 bulk  sample.  According  to analysts and
industry  sources,  the  prices of rough  diamonds  had  fallen by an average of
around 20% during the  recession of 2000-2001  and at least 10% since late 1999.
The decreases in value for the diamonds from the 5034 and Hearne pipes were thus
consistent with or less than the large drop in rough diamond market values.

A 9.9-carat  diamond  recovered  from the 5034 pipe was of high  quality and top
color,  and was valued by the DTC at  approximately  US $60,000.  The  Company's
consultant,  Overseas Diamonds N.V. from Antwerp, Belgium, valued representative
parcels of the  diamonds  at the DTC in  November.  Their  values  for  selected
parcels  were  within  several  percent  of the De Beers'  values for those same
parcels.  It was observed at the DTC that a population of high quality  diamonds
(such as that of the 9.9 carat diamond) exists amongst the diamonds recovered to
date from the Hearne and 5034 pipes.  This observation and additional  follow-up
analysis  of these  diamonds  has led De Beers to the  decision  that  more bulk
sampling of the Hearne and 5034 pipes was  needed.  More high  quality  diamonds
need to be recovered so that their size frequency distribution can be determined
more  accurately.  High quality  diamonds  have a large impact,  especially  the
larger  ones,  on the  revenue  per  tonne so the  more  accurately  their  size
frequency  distribution is known, the greater the confidence in and the accuracy
of the revenue  modeling.  High quality  diamonds also offer upside potential to
the  values  per  carat.  The  occurrence  of  the  9.9-carat  stone  posed  the
possibility  that  these  stones  could  occur  regularly   during   production.
Consequently, De Beers Canada decided to do more bulk sampling of the Hearne and
5034 pipes in 2002.

The 2002 bulk sample  program of the 5034 and Hearne  diamond  pipes  started on
February 13, 2002 and ended April 20, 2002. A total of six large  diameter holes
were drilled  into the 5034 pipe and five into the Hearne  pipe.  The same drill
(24 inch  diameter)  and same drill method (a "diamond  friendly"  flood reverse
system)  that  was used in 2001 was  used  again  in  2002.  De Beers  recovered
approximately  684 tonnes of kimberlite  from the Hearne pipe and  approximately
837 tonnes of kimberlite from the 5034 pipe for a total of 1,521 tonnes.

The 1,215 carats  recovered  from the 5034 pipe and the 1,174  carats  recovered
from the Hearne pipe as well as the  diamonds  recovered  from the 1999 and 2001
bulk  samples  (all to a 1.5 mm lower  cut-off)  were all  valued,  based on the
January 2003 diamond prices, at the Diamond Trading Company (DTC) in London. The
De Beers Mineral  Resource  Department in Johannesburg has used these values for
all three  (1999,  2001,  2002) bulk  samples to update the modeled  revenue per
carat for each pipe.  Production recovery factors,  determined by De Beers, have
been applied and the commonly  used  commercial  bottom  cut-off  recovery  size
screen with a 1.50 mm square mesh has been used.  These diamond values were then
combined with the updated grade  information  to give modeled  revenue per tonne
values.


<PAGE>

Table 9 shows the weighted average modeled grades, values per carat and revenues
per tonne for the four lobes in the 5034 pipe and the various  geologic zones in
the Hearne pipe.  The 5034 pipe has an indicated  resource of 8.6 million tonnes
and an inferred  resource of 4.5 million  tonnes,  while Hearne has an indicated
resource  size of 5.5  million  tonnes and an  inferred  resource of 1.6 million
tonnes, all to a depth of 290 m below lake surface.

                                     Table 9
<TABLE>
<CAPTION>
<S>          <C>                           <C>                          <C>                         <C>
------------------------------- ---------------------------- ---------------------------- ----------------------------

             Pipe                      Modeled Grade               Modeled Values              Revenue per tonne
                                    (Carats per tonne)               (US$ Carat)                     (US$)
------------------------------- ---------------------------- ---------------------------- ----------------------------

             5034                          1.67                         62.70                       104.70
------------------------------- ---------------------------- ---------------------------- ----------------------------

            Hearne                         1.67                         50.00                        83.50
------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>

The previous  valuation of the diamonds  from the 1999 and 2001 bulk samples was
in August 2001.  After September 11, 2001,  diamond prices decreased in value by
an average of around 20% with more severe  decreases  in certain  categories  of
diamonds  according  to industry  sources.  Since then,  De Beers has  increased
diamond  prices  twice and on average  diamond  prices  are now  nearly  back to
pre-September 11, 2001 levels. Specifically,  the January 2003 valuations of the
1999 and 2001 bulk  sample  diamonds  were on average  5-6% less than the August
2001 valuations for the same diamonds.

The average  modeled  value per carat of US $62.70 for the 5034 pipe compares to
the average value of US $65.50 based on the August 2001 price book,  reported in
December 2001. The drop is slightly less than the average drop in diamond values
since then.  The weighted  average  modeled grade for the 5034 pipe increased to
1.67 carats per tonne from 1.64  carats per tonne as reported in December  1999.
The upper and lower limits for the value per carat modeling are 18% - 20%.

The average modeled value per carat of US $50.00 for the Hearne pipe compares to
a value of US $63.30  based on the August  2001  values.  The  weighted  average
modeled  grade for the Hearne pipe  decreased to 1.67 carats per tonne from 1.71
carats per tonne as reported in December  1999.  The upper and lower  limits for
the value per carat modelling are 18% and 16% respectively.

De Beers and the Company's  consultant,  Overseas  Diamonds N.V., have confirmed
that a  sub-population  of high quality,  top color diamonds  exists in both the
5034 and Hearne  pipes.  A 3.4 carat diamond  recovered  from the Hearne pipe is
such a diamond  and has been  valued at US $7,140.  These  diamonds  represent a
significant  part of the  total  value of the  diamonds  even  though  they only
represent a small fraction of the total number of diamonds.

In 2003, De Beers used a De Beers group  composite of a year's  production  from
kimberlite  mines with wide ranges of  production  but similar  dollar per carat
values,  in the value per carat modelling in the over two carat size range.  The
reason for this is that  relatively  speaking,  only a small  number of over two
carat  diamonds were recovered from the Hearne and 5035 pipes and these diamonds
have a wide range of values.  This modelling  technique  models the shape of the
revenue  curves  for the Hearne and 5034 pipes to be similar to the shape of the
curves  for a  composite  of  producers  above the two carat  size  range.  This
technique is slightly more  conservative  than the technique used previously but
is more representative of an actual production scenario.

The diamonds  recovered from the 1999,  2001 and 2002 bulk samples of the Hearne
and 5034 pipes and the 1999 bulk  sample of the Tuzo pipe (all to a 1.5 mm lower
cutoff), were last valued at the Diamond Trading Company (DTC) using the January
2003 diamond prices. The modeled values per carat, based

<PAGE>

on those  valuations  and on  production  recovery  factors as  determined by De
Beers,  were reported on April 3, 2003. Since January 2003,  diamond prices have
risen  due to strong  demand  and the DTC has  increased  their  selling  prices
several  times.  The modeled  values per carat for the three pipes were adjusted
recently using the March 2004 DTC diamond prices.

The table  below shows the  weighted  average  modeled  values per carat for the
three pipes in January 2003 and March 2004.

<TABLE>
<CAPTION>
<S>                                                      <C>                                    <C>
---------------------------------------- -------------------------------------- --------------------------------------

             Name of Pipe                January 2003 Modeled Value Per Carat    March 2004 Modeled Value Per Carat
                                                    (US$ per Carat)                        (US$ per Carat)
---------------------------------------- -------------------------------------- --------------------------------------

                 5034                                    62.70                                  74.20
---------------------------------------- -------------------------------------- --------------------------------------

                Hearne                                   50.00                                  61.00
---------------------------------------- -------------------------------------- --------------------------------------

                 Tuzo                                    41.50                                  49.00
---------------------------------------- -------------------------------------- --------------------------------------
</TABLE>

The average  modeled  values per carat  increased from 18% for the 5034 and Tuzo
pipes to 22% for the  Hearne  pipe  during the  January  2003 to March 2004 time
period.

Feasibility Study Decision - 2003

The  results of the 2002 bulk  sample  program of the Hearne and 5034 pipes were
reported in April 2003 and the  results of the updated  desk top study two weeks
later.  Even though the study shows that estimated  capital costs have increased
only slightly and that the estimated operating costs have dropped significantly,
the effect of lower diamond values  (especially for the Hearne pipe) and a lower
US dollar against the Canadian dollar since the 2000 desktop study, has resulted
in an internal rate of return (IRR) slightly less than that obtained previously.
Considering  the  indicated  IRR,  which is well below the agreed  hurdle  rate,
combined with the current geo-political environment and uncertainties,  De Beers
decided to  postpone  a  pre-feasibility  decision  until the next year when the
desktop study would be updated again.  In the meantime,  De Beers would continue
with exploration in the  Kelvin-Faraday  area with an objective of adding to the
existing resource.

At the end of July,  2003,  De Beers  notified the Company that they had started
work on a detailed cost estimate of a pre-feasibility  study of the Kennady Lake
diamond deposits.  They based their decision on the improving  geo-political and
economic  conditions  which  supported  confidence in longer-term  diamond price
projections.  In  November  2003,  the De  Beers  board  approved  a  budget  of
approximately $25 million for a  pre-feasibility  study which started in January
2004.

This  study is  expected  to be of  sufficient  detail to allow the  Gahcho  Kue
Project,  previously  known as the  Kennady  Lake  Project  to  advance  to mine
permitting in the first half of 2005, should the project's  profitability  level
support a decision to proceed to the next phase.

Other Properties

No work has been done on the  Baffin  Island  Joint  Venture  since 2001 and the
property was written off in fiscal 2004.


<PAGE>

Pursuant  to the  amalgamation  of Mountain  Glen and  Glenmore,  the  Company's
wholly-owned subsidiary,  Mountain Glen, acquired mineral properties in Finland.
These  mineral  properties  were  transferred  to the Company when Mountain Glen
wound up its affairs.

There were two gold properties in Finland - the Haveri and Sirkka Properties. An
option was granted on October 10,  2002 to  Northern  Lion Gold Corp.  (formerly
Vision Gate  Ventures  Limited)  for the  acquisition  of a 70%  interest in the
Haveri Properties. The Sirkka property claims have lapsed.

The Company does not regard the Haveri property as a material property.

Item 5   Operating and Financial Review and Prospects.

     A.   Operating results.

The following discussion of the financial condition and operating results of the
Company should be read in conjunction with the consolidated financial statements
and  related  notes to the  financial  statements  which have been  prepared  in
accordance with Canadian  generally  accepted  accounting  principles  ("GAAP").
Discussion  and analysis set forth below covers the results  obtained under GAAP
in Canada. A significant  difference  between Canadian and U.S. GAAP exists with
respect to accounting for mineral  property  acquisition and  exploration  costs
which have been capitalized under Canadian GAAP but generally are required to be
expensed under U.S. GAAP when incurred until such time as commercially  mineable
deposits  are  determined  to  exist  within  a  particular  property.  Material
measurement  differences  between  accounting  principles  generally accepted in
Canada and the United States, applicable to the Company, are described in Note 9
to the  consolidated  financial  statements.  The  discussion  below  summarizes
results of operations in accordance with Canadian GAAP.

Fiscal Year ended March 31, 2004 compared to Fiscal Year ended March 31, 2003

The  Company's  loss for the fiscal year ended March 31,  2004  ("fiscal  2004")
totalled $1,813,005 or $0.04 per share compared to $1,718,342 or $0.03 per share
for the fiscal year ended March 31, 2003 ("fiscal 2003").  These losses included
the loss of the  Company's  wholly owned  subsidiary  Mountain  Glen Mining Inc.
(MGM).  MGM's loss for fiscal  2004 was  $16,978  compared  to a loss of $76,836
during fiscal 2003.

During fiscal 2004, operating expenses were $1,231,491 compared to $1,566,498 in
fiscal  2003.  The  reduction  in  operating  expenses  of $335,007 or 21.4% was
primarily the result of the following cost reducing  measures:  (i) reduced rent
($23,600  in  fiscal   2004  and   $37,095  in  fiscal   2003)  and  office  and
administration  costs  ($73,312  in fiscal  2004 and  $132,898  in fiscal  2003)
resulting from closing the office in Vancouver,  Canada,  (ii) decreased  salary
and benefit costs  ($78,805 in fiscal 2004 and $166,550 in fiscal 2003) due to a
reduction in the number of employees and reduced wages, (iii) the elimination of
management  fees  (nil in  fiscal  2004 and  $45,000  in  fiscal  2003),  (iv) a
reduction in the promotion and investor  relations  expenses  ($94,803 in fiscal
2004 and $213,760 in fiscal  2003),  and (v) a reduction of property  evaluation
and  maintenance  costs (nil in fiscal 2004 and  $62,076 in fiscal  2003) as our
joint venture  partners  funded all property  evaluation  costs during the year.
Other cost  savings were  realized  with  respect to lower  regulatory  fees and
transfer agent costs ($17,807) and travel expenses ($38,465). These cost savings
were partially  offset by increased  professional  fees ($307,441 in fiscal 2004
and $240,203 in fiscal 2003), due in part to the extra work required as a result
of the introduction of the  Sarbanes-Oxley  Act and the wind-up of Mountain Glen
Mining Inc., and increased severance and contract termination costs ($368,668 in
fiscal 2004 and $331,500 in fiscal 2003).


<PAGE>

The  severance  and  contract  termination  costs in fiscal  2004  pertain  to a
one-time payment of US$120,000 ($159,387) and 60,000 common shares to a director
of the Company to terminate his previous  consulting  agreement and enter into a
new consulting  agreement.  The 60,000 shares were valued at their fair value on
the  date  of  issuance  at  $156,000.  In  addition,   severance  and  contract
termination costs includes $53,281 of severance  payments made by the Company to
an officer and to an employee during fiscal 2004. These one-time  expenses total
$368,668 and represent 29.9% of the overall operating  expenses for fiscal 2004.
During  fiscal  2003 a  one-time  severance  payment of  $331,500  was paid to a
director  and a $24,419  stock-based  compensation  expense for the  granting of
stock  options  to a  consultant  was made,  representing  23% of the  operating
expenses in fiscal 2003.

During fiscal 2004 the Company's interest income was $12,127 compared to $19,034
a year  earlier.  The decrease is a result of lower  interest  rates and reduced
funds available for investment.

The fiscal 2004 expenses include a write-down of $589,669 of mineral  properties
and  deferred  exploration  costs,  relating  principally  to the Baffin  Island
diamond  property.  In fiscal 2003 there was a write down of  $120,435  relating
mostly to the Rabbit Tracks Diamond Project in Manitoba.

Fiscal Year ended March 31, 2003 compared to Fiscal Year ended March 31, 2002

The  Company's  loss for the fiscal year ended March 31,  2003  ("fiscal  2003")
totaled  $1,718,342 or $0.03 per share compared to $1,455,881 or $0.03 per share
for the fiscal year ended March 31, 2002 ("fiscal 2002").  These losses included
the loss of the  Company's  wholly owned  subsidiary  Mountain  Glen Mining Inc.
(MGM).  MGM's loss for fiscal  2003 was  $76,836  compared to a loss of $130,583
during fiscal 2002.

During fiscal 2003, operating expenses were $1,566,498 compared to $1,456,698 in
fiscal  2002.  The  operating  expenses  for  fiscal  2003  included  a one-time
severance  payment  of  $331,500  to a  director  of the  Company  and a $24,419
stock-based  compensation  expense  for  the  granting  of  stock  options  to a
consultant for services  rendered.  These two expenses  accounted for 23% of the
operating  expenses in fiscal 2003 and no  comparable  expenses were incurred in
fiscal 2002.  Excluding  the severance and  stock-based  compensation  expenses,
operating  expenses  were reduced in fiscal 2003 as compared to fiscal 2002 as a
result of the  following  cost cutting  measures:  (i) reduced rent  ($37,095 in
fiscal 2003 and  $126,356  in fiscal  2002)  resulting  from the move to smaller
offices in both the United States and Canada,  (ii) decreased salary and benefit
costs  ($166,550  in fiscal 2003 and $231,984 in fiscal 2002) due to a reduction
in the number of employees and reduced wages, and (iii) reductions in management
fees  ($45,000  in fiscal  2003 and  $96,000  in fiscal  2002),  and  consulting
expenses ($165,055,  excluding the $24,419 stock-based  compensation expense, in
fiscal 2003 and $227,023 in fiscal 2002) as a result of top management accepting
lower fees for their services.  Other cost savings were realized with respect to
lower insurance,  office,  and travel expenses.  These reductions were partially
offset by increased  professional  fees ($240,203 in fiscal 2003 and $167,444 in
fiscal  2002),  due in  part to the  extra  work  required  as a  result  of the
introduction of the Sarbanes-Oxley Act.

During fiscal 2003 the Company's interest income was $19,034 compared to $17,901
a year earlier.

The fiscal 2003 expenses include a write-down of $120,435 of mineral  properties
and deferred  exploration  costs,  relating  mostly to the Rabbit Tracks Diamond
Project in Manitoba.  There was no write-down of mineral  property during fiscal
2002.

<PAGE>

     B.   Liquidity and capital resources

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  improvements and administrative  expenses,
among other things.

At March 31,  2004,  the  Company  had  $914,494  in cash and cash  equivalents,
compared  with  $1,210,076 a year  earlier.  At March 31, 2004 the Company had a
working  capital  position of $700,953  compared with $1,037,460 a year earlier.
The  Company  had no  long-term  debt at  either  March  31,  2004 or 2003.  All
exploration  expenditures  in respect of the AK  property,  the  Company's  most
significant  property,  are the responsibility of De Beers Canada, the 51% owner
of the property.

During fiscal 2004 the Company received  $720,002 by issuing 560,040 shares upon
the exercise of various stock options.  During fiscal 2003 the Company  received
$607,829 by issuing  544,900  shares upon  exercise of various stock options and
$1,640,985 upon exercise of warrants to purchase 2,169,766 shares.

During fiscal 2004 the Company has  aggressively  reduced its operating costs by
closing the Vancouver office, by eliminating  salaried employees and outsourcing
its  accounting  and corporate  secretarial  functions.  Going forward in fiscal
2005, the Company estimates its monthly  operating  expenses to be approximately
$40,000 per month, or $480,000 per year. The Company does not incur any costs in
connection  with the  Gahcho  Kue  Project  as De Beers in  responsible  for all
exploration,  development and evaluation  costs to production.  The Company does
have costs associated with  maintaining its subsidiary  companies which hold the
Havari Gold prospect in Finland estimated at approximately $15,000 per annum.

With the cash on hand at March 31, 2004 of $914,494,  the Company is financed in
fiscal 2004 for its operating expenses and subsidiary maintenance costs.

The  Company  expects to  continue  incurring  annual  losses  until it receives
revenue from  production on the Gahcho Kue Project,  if placed into  production.
There is no  assurance  that the  property  will be  developed  or  placed  into
production.  In January,  2004, De Beers commenced an in-depth  project study of
the joint venture's Hearne, 5034, and Tuzo kimberlite bodies. This study will be
of sufficient  detail to allow the Gahcho Kue Project,  previously  known as the
Kennady  Lake  Project,  to advance  to mine  permitting,  should the  project's
profitability level support a decision to proceed to the next phase.

It is anticipated  that the cash and cash  equivalents on March 31, 2004 provide
the Company  with  sufficient  funds until  approximately  late  calendar  2005.
Although the Company has received  funds from the exercise of stock  options and
warrants  in the past  and the  exercise  of some  outstanding  warrants  and/or
options,  which are currently in the money,  could conceivably  extend that date
into calendar  2006,  there is no assurance  that such stock options or warrants
will be exercised in which case the Company will consider  undertaking an equity
financing.  It follows that there can be no assurance  that  financing,  whether
debt or equity,  will always be available to the Company in the amount  required
at any particular  time or for any particular  period or, if available,  that it
can be obtained on terms  satisfactory to the Company.  If the Company is unable
to receive  additional  funds  through the  issuance  of its shares,  it will be
required to reduce operations.

As at August 2, 2004, the Company has 1,145,000 stock options  outstanding which
are exercisable at prices between $0.67 and $2.06 per share. If all of the stock
options were exercised,  the Company would receive  proceeds of $1,563,000,  but
there is no assurance  that these will be exercised and such exercise  cannot be
considered  to be part  of the  Company's  financing  strategy.  Similarly,  the
Company  also has  1,205,878  warrants  outstanding  exercisable  at $0.58 until
December 6, 2004. If all the warrants were exercised,  the Company would receive
proceeds of $699,409.  If all of the options and  warrants  were

<PAGE>

exercised, to which no assurance can be given that all or any will be exercised,
these funds would be available to the Company as working capital.

     C.   Research and development, patents and licenses etc.

The Company does not engage in any research and  development  activities and has
not patents or licenses.

     D.   Trend information

There are no major trends which are anticipated to have a material effect on the
Company's  financial condition and results of operations in the near future. The
reduction of expenses has been achieved in most areas.  Management will continue
its efforts to reduce other expenses.

     E.   Off-balance sheet arrangements

The Company has no off balance sheet arrangements.

     F.   Tabular disclosure of contractual obligations

The  Company  is  committed  to  payments  under an  operating  lease for office
premises  through to  December,  2004 of  approximately  $1,460  per month.  The
following  table lists,  as of March 31, 2004,  information  with respect to the
Company's known contractual obligations.

<TABLE>
<CAPTION>
<S>                                     <C>                <C>             <C>               <C>          <C>
--------------------------------------- ------------------------------------------------------------------------------

                                                                   Payments due by period
                                        ------------------ --------------- ----------------- ------------ ------------

Contractual Obligations                 Total              Less   than  1  1-3 years         3-5 years    More   than
                                                           year                                           5 years
--------------------------------------- ------------------ --------------- ----------------- ------------ ------------

Long-term Debt Obligations              0                  0               0                 0            0
--------------------------------------- ------------------ --------------- ----------------- ------------ ------------

Capital (Finance) Lease Obligations     0                  0               0                 0            0
--------------------------------------- ------------------ --------------- ----------------- ------------ ------------

Operating Lease Obligations             $13,140            $13,140         0                 0            0
--------------------------------------- ------------------ --------------- ----------------- ------------ ------------

Purchase Obligations                    0                  0               0                 0            0
--------------------------------------- ------------------ --------------- ----------------- ------------ ------------

Other Long-Term  Liabilities Reflected  0                  0               0                 0            0
on the  Company's  Balance Sheet under
the GAAP of the primary financial
statements
--------------------------------------- ------------------ --------------- ----------------- ------------ ------------

Total                                   $13,140            $13,140         0                 0            0
--------------------------------------- ------------------ --------------- ----------------- ------------ ------------
</TABLE>

     G.   Safe harbour

Certain  statements  contained  in  the  foregoing  Results  of  Operations  and
elsewhere  in  this  Form  20-F  constitute  forward-looking   statements.  Such
forward-looking  statements  involve  a  number  of  known  and  unknown  risks,
uncertainties and other factors which may cause the actual results,  performance
or  achievements  of the  Company  to be  materially  different  from any future
results,   performance   or   achievements   expressed   or   implied   by  such
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date the statements
<PAGE>

were made and readers are advised to consider such forward-looking statements in
light of the risks set forth below.

Risk factors that could affect the Company's future results include, but are not
limited to, risks inherent in mineral exploration activities and other operating
and  development  risks,  competition,  environmental  regulations,  changes  to
reclamation  requirements,  volatility and sensitivity to market prices for base
metals the impact of changes in foreign  currencies'  exchange rates,  political
risk,  changes in government  regulation and policies  including  trade laws and
policies,  demand for base  metals,  replacement  of  reserves  and  production,
receipt of permits and approvals from governmental authorities.

Critical Accounting Policies

The preparation of financial  statements in conformity  with Canadian  generally
accepted  accounting  principles  requires  the  Company to make  estimates  and
assumptions  that affect the reported  amounts of assets and  liabilities at the
date of the  financial  statements  and the  reported  amounts of  revenues  and
expenses during the reporting periods. Significant estimates and assumptions are
used in  determining  the  application  of the  going  concern  concept  and the
deferral of costs incurred for mineral properties and deferred exploration.  The
Company  evaluates  its  estimates on an ongoing basis and bases them on various
assumptions  that are believed to be  reasonable  under the  circumstances.  The
Company's estimates form the basis for making judgments about the carrying value
of assets and  liabilities  that are not readily  apparent  from other  sources.
Actual results may differ from these estimates  under  different  assumptions or
conditions.

The Company  believes the policies for going  concern,  mineral  properties  and
deferred   exploration  are  critical   accounting   policies  that  affect  the
significant  judgments and estimates  used in the  preparation  of the Company's
financial statements.

The Company considers that its mineral  properties have the  characteristics  of
property,   plant  and  equipment,   and,  accordingly  defers  acquisition  and
exploration costs under Canadian generally accepted accounting  principles.  The
recoverability  of  mineral  property   acquisition  and  deferred   exploration
expenditures  is  dependent  upon  the  discovery  of  economically  recoverable
reserves and on the future profitable production,  or proceeds from disposition,
of the  Company's  properties.  The Company is in the process of  exploring  its
mineral  properties  and has not yet determined  whether the properties  contain
mineral reserves that are economically recoverable.  Development of any property
may take  years to  complete  and the amount of  resulting  income,  if any,  is
difficult to determine with any certainty. The sales value of any mineralization
discovered by the Company is largely dependent upon factors beyond the Company's
control, such as the market value of the diamonds recovered.

Changes  in  circumstances  in  the  future,   many  of  which  are  outside  of
management's   control,  will  impact  on  the  Company's  estimates  of  future
recoverability  of net amounts to be realized  from their  assets.  Such factors
include,   but  are  not  limited  to,  the   availability  of  financing,   the
identification of economically  recoverable reserves,  co-venturer decisions and
developments, market prices of minerals, the Company's plans and intentions with
respect to its assets and other industry and competitor developments.

The  consolidated  financial  statements  have been  prepared on a going concern
basis in accordance  with Canadian  generally  accepted  accounting  principles,
which assumes that the Company will  continue in operation  for the  foreseeable
future and be able to  realize  its assets and  discharge  its  liabilities  and
commitments in the normal course of business.

The Company  believes that it has the ability to obtain the necessary  financing
to meet commitments and liabilities as they become payable and that economically
recoverable reserves will be discovered. The costs of further exploration of the
AK claims are being borne by De Beers Canada.


<PAGE>

The financial  statements do not reflect  adjustments that would be necessary if
the  Company is unable to  continue  as a going  concern.  If the going  concern
assumption is not appropriate  for the financial  statements,  then  adjustments
would be necessary in the carrying value of assets and liabilities, the reported
net losses, and the balance sheet classifications used.

While the  Company  believes  that  economically  recoverable  reserves  will be
identified,  there is no  assurance  that this will  occur.  Failure to discover
economically  recoverable  reserves will require the Company to write-off  costs
capitalized to date and will result in further reported losses.

Effect of Inflation

In the Company's view, at no time during any of the last three fiscal years have
inflation  or  changing  prices had a material  impact on the  Company's  sales,
earnings or losses from operations, or net earnings.

U.S. Generally Accepted Accounting Principles

U.S.  GAAP  differs  in some  respects  from  Canadian  GAAP,  as applied to the
Company. Reference should be made to Item 3A - Selected Financial Data, and Note
9 to the Consolidated  Financial Statements of the Company for a description and
quantification  of material  measurement  differences  between Canadian GAAP and
U.S. GAAP.

Item 6   Directors, Senior Management and Employees.

     A.   Directors and Senior Management.

The following  table lists, as of March 31, 2004, the names of the directors and
senior  management  of the Company.  The directors  and senior  management  have
served in their respective  capacities  since their election and/or  appointment
and will serve until the next Annual General  Meeting of Shareholders or until a
successor is duly elected,  unless the office is vacated in accordance  with the
Company's Articles or unless there is a prior resignation or termination.

<TABLE>
<CAPTION>
<S>                             <C>                                      <C>                                    <C>
------------------------------- ---------------------------------------- ----------------------------------- ---------

             Name                        Position with Company               Date of First Appointment         Age
------------------------------- ---------------------------------------- ----------------------------------- ---------

Jan W. Vandersande              President and Director                   A director  and President of Old       58
                                                                         MPV since May 22, 1996. President
                                                                         and Director of the Company since
                                                                         November 1, 1997.
------------------------------- ---------------------------------------- ----------------------------------- ---------

Carl Verley                     Director(2)(3(4))                        Director of Old MPV since              54
                                                                         December 2, 1986 and Director of
                                                                         the Company since November 1,
                                                                         1997.
------------------------------- ---------------------------------------- ----------------------------------- ---------

David E. Whittle                Director(2)(3)(4)                        November 1, 1997                       40
------------------------------- ---------------------------------------- ----------------------------------- ---------

D. Harry W. Dobson              Director                                 November 1, 1997                       56
------------------------------- ---------------------------------------- ----------------------------------- ---------

Elizabeth J. Kirkwood           Director, Chairman, Corporate            Director since September 21, 2001      54
                                Secretary and Chief Financial            and Chairman since January 3,
                                Officer(2)(4)                            2003. She was appointed Corporate
                                                                         Secretary and Chief Financial
                                                                         Officer on September 16, 2003.
------------------------------- ---------------------------------------- ----------------------------------- ---------

Jonathan Comerford              Director(2)(3)(4)                        September 21, 2001                     32
------------------------------- ---------------------------------------- ----------------------------------- ---------
</TABLE>
<PAGE>

(1) The  information  provided as to country of residence and the details listed
as to the principal  occupation  of the directors and executive  officers is not
within the  knowledge of the  management of the Company and has been provided by
the respective directors and executive officers.

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

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

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

(5) Jesus R. Martinez, who was on the board from November 1, 1997, and Corporate
Secretary  of Old MPV  since  September  9,  1991,  resigned  from the  board of
directors  effective  February  2, 2004.  He ceased to  Corporate  Secretary  on
September 16, 2003. Pradeep Varshney,  who was appointed Chief Financial Officer
on July 23, 1998, ceased to be Chief Financial  Officer effective  September 16,
2003.

Resumes

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.

Jan W. Vandersande, Ph.D.

A  director  and  President  of Old MPV since  May 22,  1996.  President,  and a
director of the Company since November,  1997. He is a U.S. citizen and has a BA
from Swarthmore  College, a M.Sc.  (Physics) from Cornell University and a Ph.D.
(Solid State  Physics) from the University of the  Witwatersrand,  South Africa.
His thesis was on the properties of natural diamonds.  While in South Africa, he
worked  closely  with De  Beers  Diamond  Research  Laboratory.  He is a  former
Associate  Professor of Physics at Cornell  University and the University of the
Witwatersrand  where he performed research relating to the conductivity of rocks
and  minerals,  including  diamonds.  He is the  author  of  over  30  published
articles,  including book  contributions,  on the properties of natural diamonds
and diamond films. He is a former financial and scientific consultant and mining
analyst. He has provided financial advice to brokerage firms, money managers and
private clients on natural resource companies and commodities. Dr. Vandersande's
responsibilities include overseeing the Company's day to day operations.

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

A director of Old MPV since  December  1986 and a director of the Company  since
November  1997. He is a resident of British  Columbia,  Canada.  Mr. Verley is a
graduate of the University of British Columbia where he received his Bachelor of
Science  Degree in May of 1974.  From  August of 1990 to  January  2002,  he has
served on the Board of Directors of Gee-Ten  Ventures Inc. In August of 1991 the
Association of  Professional  Engineers and  Geoscientists  of British  Columbia
awarded him the professional  designation of Professional Geologist. He has been
a self-employed geologist since 1982. Since July 2003, he has been a director of
La Plata Gold Corporation.

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

A director  of the  Company  since  November  1997.  He is a resident of British
Columbia,  Canada. A Chartered Accountant, Mr. Whittle was employed with Coopers
& Lybrand, Chartered Accountants, from 1987 to 1992. Since 1992, Mr. Whittle has
served as operator or partner of a financial consulting and chartered accounting
practice.  From 1993 to June 2000,  Mr.  Whittle was  President  and director of
Glenmore  Highlands  Inc. and  President  and director of 444965 B.C.  Ltd. From
November  1997 to April 1998,  Mr.  Whittle  served as Secretary of the Company.
From 1994 to January 1998, Mr. Whittle was CFO and a director of Lytton Minerals
Limited. From 1993 to January 1998, Mr. Whittle was CFO,

<PAGE>

Corporate  Secretary and a director of New Indigo  Resources Inc. Mr. Whittle is
currently also a director of Image Innovations Holdings Inc.

D. Harry W. Dobson

A director of the Company since November 1997. He is a resident of Scotland. Mr.
Dobson was the founder and chairman of American  Pacific Mining Company Inc. and
a director of Breakwater  Resources  Ltd.  until 1991.  Subsequent to 1991,  Mr.
Dobson served as Deputy  Chairman of the Board and a director of Lytton Minerals
Limited.  He is a former officer and director of 444965 B.C. Ltd.; and served as
a director and Chairman of Glenmore  Highlands  Inc.  Since October 2001, he has
been a director and officer of Kirkwood Lake Gold Inc.

Elizabeth J. Kirkwood

Ms.  Elizabeth J. Kirkwood has been a director of the Company  since  September,
2001 and  Chairman  of the Board of the  Company  since  January  2003.  She was
appointed  Chief  Financial  Officer and  Corporate  Secretary of the Company on
September  16,  2003.  She is resident in Ontario,  Canada,  and a member of the
Prospectors and Developers  Association of Canada. Ms. Kirkwood is President and
CEO of First  Nickel  Inc.  (since  November  2003),  Oil Springs  Energy  Corp.
(formerly Oil Springs Energy Corp. since July, 1973), First Strike Diamonds Inc.
(since October 1995). . She is also a director of Intrepid Minerals  Corporation
(since April 1999).  She has been a past director of Investor  Links.com  (March
1993-May 2001),  Canada's Choice Spring Water (July  1996-August  1999),  Stroud
Resources  Ltd.  (August,  2000 - March 2002) and a past director and officer of
Hucamp Mines Limited (May, 2001-May 2002).

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

A director of the Company since  September,  2001. Mr.  Comerford is resident in
Dublin, Ireland. Mr. Comerford 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 is Investment  Manager at IIU Limited
(since  August,  1995) and was a Researcher  at McKinsey  Pacific Rim (from July
1993  to  May,  1994).  Jonathan  Comerford  represents  the  Company's  largest
shareholder, Bottin (International) Investments Ltd. on the Company's board.

     B.   Compensation.

The Company has two executive officers (collectively, the "Executive Officers"):
Jan W. Vandersande,  the President, and Elizabeth Kirkwood, who is also Chairman
of the Board,  Corporate Secretary and Chief Financial Officer.  For particulars
on these executive officers, reference should be made to Item 6A - Directors and
Senior  Management - Resumes.  Elizabeth  Kirkwood  does not have a  consultancy
agreement  with the  Company  but is paid for work  done  pursuant  to  invoices
approved by Jan W. Vandersande.

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 detailed in
the table below:

<PAGE>

                           Summary Compensation Table

<TABLE>
<CAPTION>
<S>                     <C>        <C>         <C>        <C>           <C>         <C>          <C>       <C>
---------------------------------------------------------------------------------------------------------------------

                                           Annual Compensation               Long Term Compensation
---------------------------------------------------------------------------------------------------------------------

                                                                                Awards           Payouts
                                                                        ---------------------------------------------
                                                                        ---------------------------------------------

                                                             Other      Securities  Shares   or            All
                                                             Annual     Under       Units                  Other
Name and Principal      Financial                         Compen-sation Options /   Subject  to  LTIP      Compen-
Position    of   Named  Year         Salary      Bonus        ($)       SARs        Resale       Payouts   sation
Executive Officer       Ending        ($)         ($)                   Granted     Restrictions ($)       ($)
                                                                        (#)         ($)
---------------------------------------------------------------------------------------------------------------------

Elizabeth Kirkwood      2004       Nil         Nil        $30,700(1)    Nil         Nil          N/A       Nil
Chairman,        Chief
Financial  Officer and
Secretary
---------------------------------------------------------------------------------------------------------------------

Jan W. Vandersande      2004       Nil         46,025(3)  129,138 (2)   Nil         Nil          N/A       315,387
President   and  Chief
Executive Officer

---------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Of these monies,  $24,950 was paid to Elizabeth  Kirkwood as  Chairperson's
     honorarium, and $5,750 was paid for consulting fees.

(2)  These  monies  were  paid  to  Dr.  Vandersande  pursuant  to a  consulting
     agreement. Refer to "Termination of Employment,  Change in Responsibilities
     and Employment Contracts" for further details.

(3)  Out of this sum,  $39,831 was paid to Dr.  Vandersande in  consideration of
     the  termination  of  the  consulting   agreement.   In   consideration  of
     terminating his old consulting agreement and entering into a new consulting
     agreement,   Dr.  Vandersande  earned  a  one-time  payment  of  US$120,000
     (CDN$159,387),  of which  US$90,000  (CDN $119,552) is payable on March 31,
     2004,  and 60,000  common  shares of the Company which were valued at their
     fair value on the date of issuance at $156,000.

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.

During the most recently  completed  financial  year, no incentive stock options
granted to the Executive Officers and no SARs (stock  appreciation  rights) were
granted during this period.

The  following  table sets out  incentive  stock  options  exercised  by the two
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.

<PAGE>

<TABLE>
<CAPTION>
<S>                              <C>              <C>                  <C>                        <C>
--------------------------------------------------------------------------------------------------------------------

                                                                                             Value of Unexercised
                              Securities,                        Unexercised Options at      In-the-Money Options
                              Acquired on       Aggregate          Financial Year-End        at Financial Year-End
                                Exercise          Value         Exercisable/Unexercisable      ($) Exercisable /
Name                              (#)        Realized ($)(1)               (#)                 Unexercisable (2)
--------------------------------------------------------------------------------------------------------------------

Elizabeth Kirkwood               44,000           67,740               50,000/Nil                 52,000/Nil

--------------------------------------------------------------------------------------------------------------------

Jan W. Vandersande               37,000           27,750               180,000/Nil                182,000/Nil
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(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
     March 31, 2004, (ie. financial year end) was $2.40.

There were no options or freestanding  SARs held by the Executive  Officers that
were repriced 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,  all 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.

     C.   Board practices.

The directors of the Company are elected annually and hold office until the next
annual general  meeting of the members 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.  The next Annual General Meeting of the  shareholders
of the Company has been scheduled for September 21, 2004.

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, all of whom have
the ability to read and  understand a balance sheet,  an income  statement and a
cash flow statement.

The current members of the Audit Committee are Jonathan  Comerford,  Carl Verley
and 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:

<PAGE>

(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.

Nominating/Corporate Governance Committee

The members of the Corporate Governance Committee are Jonathan Comerford,  David
Whittle and Carl Verley, a majority of whom are unrelated.

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 Carl Verley, David Whittle, and Jonathan
Comerford, a majority of whom are unrelated. 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.

One of the directors,  Jan W. Vandersande,  entered into a Consulting  Agreement
dated  June 1, 1997 (the "Old  Consulting  Agreement")  with the  Company.  This
agreement was amended on January 1, 2001 and January 1, 2002,  pursuant to which
Dr.  Vandersande was paid a remuneration of US$12,000 per month from January 31,
2001 until  December 31, 2001,  and US$8,000 per month for a period of 12 months
commencing January 1, 2002 and ending on December 31, 2002,  following which the
original monthly remuneration rate of US$14,000 would resume.

The Old Consulting  Agreement (as amended) provided for severance amounts of the
greater  of three  times the amount of Dr.  Vandersande's  salary at the date of
termination or US$504,000, in the event of termination without cause, in certain
change of control  conditions of the Company or if the respective officer ceases
to be a director of the Company for any reason  provided  there is an absence of
just cause.  On January 1, 2004,  the  Consulting  Agreement was  terminated and
replaced  with a new  Consulting  Agreement  (the "New  Consulting  Agreement").
Pursuant to the New Consulting Agreement, Dr. Vandersande would be paid US$7,500
a month. In consideration  for the termination of the Old Consulting  Agreement,
the Company agreed to pay Dr. Vandersande the sum of $120,000 payable monthly in
12 equal  instalments and to the issued of shares from the pool of stock options
available for stock option grants under the Company's Stock Option Plan,  60,000
common shares in the capital of the Company. 55,000 of the shares are subject to
escrow,  to be  released  monthly  in 11  equal  instalments.  A copy of the New
Consulting  Agreement is filed herewith as an exhibit to this Annual Report.

<PAGE>

     D.   Employees.

As at the end of March 31, 2004,  the Company had nil full-time  employees  (not
including the President, Jan W. Vandersande,  or the Chief Financial Officer and
Corporate  Secretary,  Elizabeth  Kirkwood).  The  employment  contract  of  the
Company's former Chief Financial  Officer,  Pradeep Varshney,  was terminated on
October 10, 2003. The U.S. office uses a part-time secretary.


De Beers  Canada  employs  personnel  who  conduct  the  exploration  and  other
activities on the AK Property.

     E.   Share ownership.

The  following  table  sets  forth,  as of August  2,  2004,  the  number of the
Company's common 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 and warrants which are exercisable within 60
days from the above date.

<TABLE>
<CAPTION>
<S>                             <C>                                  <C>                             <C>
------------------------------- ---------------------------- ---------------------------- ----------------------------

                                                                                           Percentage(8) of Class
                                                                                          ([No. of shares, options +
                                                                                            warrants held by owner]
                                                                                            divided by [total issued
                                                                                            and outstanding(9) plus
                                                                                              no. of options and
            Title                Name of Beneficial Owner              Amount               warrants held by owner]
           of Class                                                  and Nature               multiplied by 100)
------------------------------- ---------------------------- ---------------------------- ----------------------------
                                                                     268,000(1)
Common                          Jan W. Vandersande                                                  0.5197%

------------------------------- ---------------------------- ---------------------------- ----------------------------
                                                                     265,250 (2)
Common                          Carl Verley                                                          0.5146%

------------------------------- ---------------------------- ---------------------------- ----------------------------
                                                                     191,234 (3)
Common                          David E. Whittle                                                     0.3708%

------------------------------- ---------------------------- ---------------------------- ----------------------------
                                                                    1,537,336 (4)
Common                          D. Harry W. Dobson                                                   2.9703%

------------------------------- ---------------------------- ---------------------------- ----------------------------

Common                          Elizabeth Kirkwood                   50,000 (5)                      0.0972%

------------------------------- ---------------------------- ---------------------------- ----------------------------

Common                          Jonathan Comerford                       0 (6)                         0%

------------------------------- ---------------------------- ---------------------------- ----------------------------

Common                          Officers and Directors as           2,311,820(7)                     4.4171%
                                a Group
------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>

(1)  Includes 88,000 shares and nil warrants (exercisable presently or within 60
     days) and 180,000 options (exercisable presently or within 60 days). 80,000
     options are exercisable at a price of $1.25 per share and expire on May 11,
     2006.  100,000  options are  exercisable  at a price of $1.50 per share and
     expire on May 11, 2006.


<PAGE>

(2)  Includes 105,250 shares and nil warrants  (exercisable  presently or within
     60 days) and 160,000  options  (exercisable  presently  or within 60 days).
     60,000 options are  exercisable at a price of $1.25 per share and expire on
     May 11, 2006. 100,000 options are exercisable at a price of $1.50 per share
     and expire on May 11, 2006.

(3)  Includes 1,234 shares and nil warrants (exercisable  presently or within 60
     days)  and  190,000  options  (exercisable  presently  or  within 60 days).
     100,000 options are exercisable at a price of $1.25 per share and expire on
     May 11, 2006.  90,000 options are exercisable at a price of $1.50 per share
     and expire on May 11, 2006.

(4)  Includes  1,164,923 shares and 172,413 warrants  (exercisable  presently or
     within 60 days) and 200,000  options  (exercisable  presently  or within 60
     days).  100,000  options are  exercisable at a price of $1.25 per share and
     expire on May 11, 2006. 100,000 options are exercisable at a price of $1.50
     per share and expire on May 11, 2006.

(5)  Includes  nil shares and nil warrants  (exercisable  presently or within 60
     days) and 50,000  options  (exercisable  presently or within 60 days).  The
     50,000 options are  exercisable at a price of $1.36 per share and expire on
     October 21, 2007.

(6)  Includes  nil shares and nil warrants  (exercisable  presently or within 60
     days) and nil options (exercisable presently or within 60 days).

(7)  Includes  1,359,407 shares and 172,413 warrants  (exercisable  presently or
     within 60 days) and 780,000  options  (exercisable  presently  or within 60
     days).

(8)  The  calculation  does not include stock  options that are not  exercisable
     presently or within 60 days.

(9)  Total issued and outstanding  capital as at the close of August 2, 2004 was
     51,384,969 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  August  2,  2004,  the  Company's  issued  and  outstanding  capital  was
51,384,969 shares.

The Company is a publicly-owned corporation the majority of the common 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 July 26, 2004, the Company
believes  that  approximately  12,948,731 of the issued and  outstanding  common
shares were held by 81  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 August 2, 2004) and  percentage  of shares,  warrants and options held by the
Company's major shareholders on a partially diluted basis.

<PAGE>
<TABLE>
<CAPTION>
<S>                                          <C>                                <C>
------------------------------------------ ----------------------------- -------------------------------------------

           Name of Shareholder                  No. of Shares Held        Percentage out of issued and outstanding
                                                                         share capital of 51,384,969 shares (as at
                                                                                      August 2, 2004)
------------------------------------------ ----------------------------- -------------------------------------------

Bottin (International) Investments Ltd.      13,253,430                         25.79%
(controlled by Dermot Desmond)
------------------------------------------ ----------------------------- -------------------------------------------

De Beers Canada Exploration Ltd.             3,103,543                          6.04%
(formerly Monopros Limited)
------------------------------------------ ----------------------------- -------------------------------------------
</TABLE>

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

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

Of the major  shareholders,  De Beers  Canada  changed  its  shareholdings  from
2,176,977  shares and 983,666  warrants on August 17, 2001, to 3,103,543  shares
and nil warrants as of August 2, 2004. Bottin  (International)  Investments Ltd.
became  shareholders of the Company  subsequent to the Arrangement with Glenmore
effected on June 30, 2000 and held no  securities  in the Company  prior to that
date. Its current securities holdings are as shown in the above table.

     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  listed under Item 4A.  Bottin  (International)  Investments  Ltd.,
which is  controlled  by Dermot  Desmond,  has  significant  influence  over the
Company as its largest  single  shareholder:  see Item 7A - Major  shareholders,
above.

Key management personnel of the Company are Elizabeth Kirkwood,  who is Chairman
of the Board,  Chief  Financial  Officer  and  Corporate  Secretary,  and Jan W.
Vandersande, who is President of the Company. Both Dr. Vandersande and Elizabeth
are also directors of the Company. See Item 6B - Compensation.

Of such key  management  personnel,  only Jan W.  Vandersande  has a  Consulting
Agreement  with the  Company.  See Item 10C - Material  Contracts  and Item 6C -
Board Practices.

There were no related party transactions  included in the management fees during
the year ended March 31, 2004.

The Company entered into a Corporate Services Agreement  effective  September 1,
2003 with  1014620  Ontario Inc.  Elizabeth J.  Kirkwood,  the  Chairman,  Chief
Financial  Officer,  Secretary  and a director of the Company,  is also the sole
director,  officer and  shareholder of 1014620  Ontario Inc. Under the Corporate
Services  Agreement,  the  Company  retained  1014620  Ontario  Inc.  to provide
bookkeeping and accounting services (including  cash-flow  management,  accounts
payable,  accounts  receivable,  government  remittances,   preparing  unaudited
interim  financial  statements,  and  assisting  the  Company's  auditors in the
preparation  of  the  audited  year-end  financial   statements)  and  corporate
secretarial services (including the preparation, dissemination and filing of all
press  releases and material  change  reports and any and all agendas,  minutes,
reports and proxy  materials  that are  required by a publicly  traded  company,
including  filing  all such  press  releases,  notices,  reports  and  financial
statements on SEDAR)(the "Corporate Services").


<PAGE>

The two-year  term of the  Corporate  Services  Agreement  expires on August 31,
2005. During the term, 1014620 Ontario Inc. will be paid a monthly fee of $3,000
($36,000  per annum) for  providing  the  Corporate  Services,  and will also be
reimbursed  for all  reasonable  out-of-pocket  expenses  properly  incurred  in
connection with the performance of the Corporate Services. Either the Company or
1014620  Ontario Inc. may  terminate the  Corporate  Services  Agreement for any
reason upon sixty days' prior written notice to the other party,  or in the case
of termination by the Company,  upon payment of two months' fees in lieu of such
written  notice.  During the year ended March 31, 2004, the Company paid $21,000
for corporate services to 1014620 Ontario Inc.

During the year ended March 31,  2004,  Elizabeth  Kirkwood,  in her  individual
capacity,  was also paid $5,750 for consulting services rendered and $24,950 for
the Chairperson's honorarium.

During the year ended March 31,  2004,  the Company  paid a total of $176,896 to
Jan W. Vandersande, the President and a director of the Company, for consulting,
management,  property evaluation and administration services and to companies in
which other directors have an interest.

There  are  no  debts  owing  directly  or  indirectly  to  the  Company  or its
subsidiaries by any director or officer of the Company.

As of March 31, 2004,  the Company owed $3,000 to David  Whittle,  a director of
the  Company.  This was in respect of an account  that Mr.  Whittle  had paid on
behalf of  Glenmore.  The Company  proposes to pay Mr.  Whittle the  outstanding
amount this year and otherwise  there is no  indebtedness  amongst the directors
and the Company.

For  further  particulars  on  related  party  transactions,  see  note 7 to the
Company's  Consolidated Financial Statements for the years ended March 31, 2004,
2003 and 2002, which are incorporated by reference.

     C.   Interests of experts and counsel.

This Form 20-F is being filed as an annual report under the Exchange Act and, as
such, there is no requirement to provide any information under this sub-item.

Item 8 Financial Information.

     A.   Consolidated Statements and Other Financial Information.

Listed in Item 19 hereto are audited  consolidated  financial statements audited
by an  independent  registered  public  accounting  firm  accompanied  by  audit
report(s) as at March 31, 2004 and 2003 and for the fiscal years ended March 31,
2004, 2003 and 2002.

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 since the date of the Company's  annual
financial  statements  other than the  cancellation of the 16,015,696 MPV shares
held by Mountain  Glen,  and the winding up of the  affairs and  dissolution  of
Mountain Glen.
<PAGE>

Item 9 The Offer and Listing.

          A.   Offer and Listing Details

The common  shares of the  Company  were  listed  and posted for  trading on The
Toronto  Stock  Exchange (the "TSX") on January 22, 1999.  The Company's  shares
were delisted from the Vancouver  Stock  Exchange  ("VSE",  now known as the TSX
Venture  Exchange and before that, the Canadian  Venture  Exchange  ("CDNX")) on
January 31, 2000, and from the Nasdaq Smallcap Market on September 29, 2000. The
Company's  shares also trade on the NASD's  OTC-Bulletin  Board  ("NASD  OTCBB")
under the symbol "MPVI".

The  following  tables  set forth the  reported  high and low  prices on the TSX
and/or the VSE  (combined  for the fiscal  year  ended  March 31,  2000 when the
Company  was  listed on both the TSX and the VSE),  and for Nasdaq  and/or  NASD
OTCBB  (combined for the period ended March 2001),  for (a) the five most recent
fiscal years;  (b) each  quarterly  period for the past two fiscal years and for
the first quarter of 2003, and for the most recent six months.

<TABLE>
<CAPTION>
<S>                             <C>                      <C>                     <C>                   <C>
----------------------------------------------------------------------------------------------------------------------

                              High and Low Prices for the Five Most Recent Fiscal Years
----------------------------------------------------------------------------------------------------------------------

  Fiscal Year ended                       TSX/VSE (1)                               NASDAQ (2) / NASD OTCBB
---------------------- -------------------------------------------------- --------------------------------------------

                             High (CDN$)               Low (CDN$)             High (US$)             Low (US$)
---------------------- ------------------------ ------------------------- -------------------- -----------------------

March 31, 2004                  $3.00                    $0.60                   $2.25                 $0.37
---------------------- ------------------------ ------------------------- -------------------- -----------------------

March 31, 2003                  $2.26                    $0.62                   $1.55                 $0.39
---------------------- ------------------------ ------------------------- -------------------- -----------------------

March 31, 2002                  $1.50                    $0.44                   $1.08                 $0.27
---------------------- ------------------------ ------------------------- -------------------- -----------------------

March 31, 2001                  $1.21                    $0.37                   $1.34                 $0.22
---------------------- ------------------------ ------------------------- -------------------- -----------------------

March 31, 2000                  $4.20                    $1.15                   $2.81                 $0.75
---------------------- ------------------------ ------------------------- -------------------- -----------------------
</TABLE>

(1)  The Company  delisted  from the VSE (now known as the TSX Venture  Exchange
     and prior to that,  as the CDNX)  effective  January 31, 2000.  The Company
     listed its shares on the TSX on January 22, 1999. The Company was listed on
     both the TSX and the VSE for the period  January  22,  1999 to January  31,
     2000.

(2)  Until  September  29, 2000 only.  The  Company's  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
     NASD OTCBB.

<TABLE>
<CAPTION>
<S>                             <C>                      <C>                     <C>                   <C>
---------------------------------------------------------------------------------------------------------------------

                               High and Low Prices for Each Quarterly Period for the
                              Past Two Fiscal Years and For the first Quarter of 2004
---------------------------------------------------------------------------------------------------------------------

                                             TSX                                         NASD OTCBB
---------------------------------------------------------------------------------------------------------------------

Period Ended:                High (CDN$)              Low (CDN$)              High (US$)             Low (US$)
---------------------------------------------------------------------------------------------------------------------

June 30, 2004                   $2.68                   $1.61                   $2.00                  $1.19
---------------------------------------------------------------------------------------------------------------------

March 31, 2004                  $2.88                   $2.16                   $2.15                  $1.68
---------------------------------------------------------------------------------------------------------------------

Dec. 31, 2003                   $3.00                   $1.33                   $2.25                  $1.00
---------------------------------------------------------------------------------------------------------------------

Sept. 30, 2003                  $1.53                   $0.72                   $1.15                  $0.48
---------------------------------------------------------------------------------------------------------------------

June 30, 2003                   $1.95                   $0.60                   $1.30                  $0.37
---------------------------------------------------------------------------------------------------------------------

March 31, 2003                  $2.26                   $1.40                   $1.55                  $0.91
---------------------------------------------------------------------------------------------------------------------
<PAGE>

---------------------------------------------------------------------------------------------------------------------

                               High and Low Prices for Each Quarterly Period for the
                              Past Two Fiscal Years and For the first Quarter of 2004
---------------------------------------------------------------------------------------------------------------------

                                             TSX                                         NASD OTCBB
---------------------------------------------------------------------------------------------------------------------

Period Ended:                High (CDN$)              Low (CDN$)              High (US$)             Low (US$)
---------------------------------------------------------------------------------------------------------------------

Dec. 31, 2002                   $1.78                   $1.02                   $1.14                  $0.64
---------------------------------------------------------------------------------------------------------------------

Sept. 30, 2002                  $1.55                   $0.62                   $0.99                  $0.39
---------------------------------------------------------------------------------------------------------------------

June 30, 2002                   $0.87                   $0.69                   $0.58                  $0.45
---------------------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>
<S>                             <C>                      <C>                     <C>                   <C>
----------------------------------------------------------------------------------------------------------------------

                                 High and Low Prices for the Most Recent Six Months
----------------------------------------------------------------------------------------------------------------------

                                                TSX (CDN$)                               NASD OTCBB (US$)
------------------------------ --------------------------------------------- -----------------------------------------

Month Ended                            High                    Low                  High                  Low
------------------------------ ---------------------- ---------------------- -------------------- --------------------

February 28, 2004                      $2.88                  $2.35                 $2.15                $1.77
------------------------------ ---------------------- ---------------------- -------------------- --------------------

March 31, 2004                         $2.75                  $2.25                 $2.10                $1.68
------------------------------ ---------------------- ---------------------- -------------------- --------------------

April 30, 2004                         $2.68                  $2.12                 $2.00                $1.55
------------------------------ ---------------------- ---------------------- -------------------- --------------------

May 31, 2004                           $2.28                  $1.61                 $1.65                $1.19
------------------------------ ---------------------- ---------------------- -------------------- --------------------

June 30, 2004                          $2.00                  $1.66                 $1.50                $1.23
------------------------------ ---------------------- ---------------------- -------------------- --------------------

July 31, 2004                          $2.01                  $1.62                 $1.51                $1.24
------------------------------ ---------------------- ---------------------- -------------------- --------------------
</TABLE>

On March 31,  2004  (being the last  trading  day for the year  ended  March 31,
2004), the closing price of the Common Shares on the TSX was $2.40 per share and
on August 4, 2004,  the closing  price of the Common Shares on the TSX was $2.01
per share. The closing price on August 4, 2004 on the NASD OTCBB was US$1.55 per
share.

     B.   Plan of Distribution

Not Applicable.

     C.   Markets

The Company's  shares are listed on the Toronto Stock  Exchange under the symbol
"MPV.TO"  and are 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". 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.


<PAGE>

     E.   Dilution

Not Applicable.

     F.   Expenses of the Issuer

Not Applicable.

Item 10  Additional Information.

     A.   Share capital.

This Form 20-F is being  filed as an annual  report  and,  as such,  there is no
requirement to provide information under this sub-item.

     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  is also  registered  as an  extra-territorial  corporation  in the
following   provinces   or   territories   of  Canada:   Northwest   Territories
(Registration no. E 6486, on February 25, 1998, amended October 16, 2000 for the
name  change),  Saskatchewan  (Corporation  no.  621496,  on February  18, 1998,
amended  October 25, 2000 for the name change),  and Manitoba  (Corporation  no.
4423330, on August 9, 2001).

The Company  does not have any stated  "objects" or  "purposes"  as such are not
required by the corporate laws of the Province of British Columbia.  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 British Columbia.

The Company was amalgamated under the British Columbia Company Act (the "Company
Act"), which has now been replaced by the British Columbia Business Corporations
Act (the "BCA").  The BCA came into effect on March 29, 2004. Under the BCA, the
Company is classified as a "pre-existing"  corporation and, as such, the Company
is required to complete a "transition  application" on or before March 29, 2006.
The  Company  will make its  transition  application  in due  course  within the
prescribed  period.  Upon filing of the  transition  application,  the Company's
Memorandum  will be replaced by a Notice of Articles.  The  transition  may also
involve  alteration  of the  Articles to the extent  necessary to comply with s.
438(3) of the BCA.

Powers, functions and qualifications of Directors

The  powers  and  functions  of  directors  are set  forth in the BCA and in the
Articles  of the  Company.  The  Company is  required  to effect its  transition
rollover  under the BCA by March 29, 2006.  As at the date of this Form 20F, the
Company has not adopted new articles under the BCA. It is  anticipated  that the
transition rollover will be effected sometime in September 2004.

With respect to the voting powers of directors, the BCA 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 Articles provide that, in respect of an
existing

<PAGE>

or proposed  contract or transaction with the Company,  where a duty or interest
might be created to conflict  with a director's  duty or interest as a director,
the director  shall  declare the nature and extent of his interest in accordance
with the  provisions  of the Company  Act.  The  Articles  also  provide  that a
director  shall not vote in  respect of any  contract  or  transaction  with the
Company in which he is  interested  and if he shall do so, his vote shall not be
counted.  However,  this  prohibition  does not apply to:

          (i)  any  contract  or  transaction  relating to a loan to the Company
               guaranteed by the director or entity in which he has an interest;

          (ii) any contract or transaction  made with a corporation of which the
               director is a director;

          (iii)any contract by a director to subscribe for or underwrite  shares
               or  debentures  of  the  Company  or  its  subsidiaries,  or  any
               contract,  arrangement  or  transaction  in which a director  is,
               directly or indirectly, interested if all the other directors are
               also,  directly  or  indirectly   interested  in  such  contract,
               arrangement or transaction;

          (iv) determining the remuneration of the directors;


          (v)  purchasing and maintaining  insurance to cover directors  against
               liability incurred by them as directors; or

          (vi) the indemnification of any director or officer by the Company.

The  circumstance  that a director or senior  officer is directly or  indirectly
interested in a proposed  contract or  transaction,  or has not disclosed his or
her  interest  in  the  contract  or  transaction,  or  that  the  directors  or
shareholders  of the Company have not approved the contract or transaction  with
the  Company  in which a  director  or  senior  officer  of the  Company  has an
interest, does not invalidate the contract or transaction, but on application of
the Company or any  interested  person,  the court may enjoin the  Company  from
entering into the proposed  contract or transaction,  order that the director or
senior officer  account for profit that accrues to him or her as a result of the
contract  or  transaction,  or make any other  order  that the  court  considers
appropriate.

The BCA also  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 BCA, the directors  may vote  compensation  to
themselves  or any members of their body.  A contract  relating  primarily  to a
fiduciary's remuneration as a director,  officer,  employee or agent of a member
the  Company or its  affiliates  is a permitted  conflict of interest  under the
Company's Ethics and Conflict of Interest Policy.

There  are no  limitations  on the  exercise  by the board of  directors  of its
borrowing powers on the credit or on behalf of the Company.

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.

A director or senior  officer who holds any office or  possesses  any  property,
right or  interest  that could  result,  directly or  indirectly,  in a material
conflict of interest  with that  individual's  duty or interest as a director or
senior officer of the Company, is also required to disclose such interest to the
other directors.


<PAGE>

Rights and Restrictions attached to Shares

As all of the Company's authorized and issued 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,  the rights to share in any  profits or
surplus on liquidation, dissolution or winding up of the Company. Each share has
attached to it one non-cumulative vote.

Alteration of Share Rights

To alter the rights of holders of issued shares of the Company,  such alteration
must  be  approved  by a  majority  vote of not  less  than  three-quarters  (or
two-thirds, once the Company completes its transitional rollover and removes the
application of the  "Pre-Existing  Company  Provisions" of the BCA) of the votes
cast  by  shareholders  voting  in  person  or by  proxy  at a  meeting  of  the
shareholders of the Company.

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   Articles  for  the
requisitioning  of special meetings by shareholders.  However,  the BCA 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.

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  Articles 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.

Share Ownership Reporting Obligations

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

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

          (b)  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 British  Columbia than in the United States
where United States law prescribes a 5% threshold for ownership  disclosure.

<PAGE>

     C.   Material contracts.


The following is a list of material contracts, other than contracts entered into
in the ordinary course of business, to which the Company or any member of the
group is a party, for the two years immediately preceding publication of the
document, including dates, parties, general nature of the contracts, terms and
conditions, and amount of any consideration passing to or from the company or
any other member of the group.

          1.   Consulting  Agreement  dated  January 1, 2004 between the Company
               and Jan W. Vandersande pursuant to which the Consulting Agreement
               between  the same  parties  dated June 1, 1997 (as  amended)  was
               terminated in consideration for the payment to Dr. Vandersande of
               the sum of US$120,000,  payable  monthly in 12 equal  instalments
               and the issuance of 60,000  common shares of the Company from the
               pool of  shares  available  for  stock  option  grants  under the
               Company's Stock Option Plan.  55,000 of these shares were held in
               escrow pursuant to an escrow  agreement for release monthly in 11
               equal instalments.

               Under the terms of the new Consulting Agreement,  Dr. Vandersande
               agreed to provide  certain  services to the Company for a term of
               three years in consideration for a fee of US$7,500 per month.

          2.   De Beers updated and expanded Joint-Venture Agreement dated as of
               January 1, 2002. The  joint-venture  agreement  between  Monopros
               Ltd. (now De Beers Canada Exploration Inc.) and the Company dated
               March 6, 1997 was  updated  to  include  the  several  additional
               amendments  entered  into  since  the  original  agreement.   The
               amendments  were date  November 24,  1999,  December 17, 1999 and
               March 8, 2000. The agreement was also expanded to include diamond
               deposits  outside of the Kennady Lake area since, in the original
               agreement, only deposits in Kennady Lake were considered.

          3.   Letter  agreement dated December 13, 2002 between the Company and
               Elizabeth  Kirkwood pursuant to which Elizabeth Kirkwood would be
               paid an honorarium of $34,200 in 10 equal instalments  commencing
               January 31, 2003 and ending on October 31, 2003, in consideration
               of her  acceptance  of the  position of Chairman of the  Company,
               provided  that the  proceeds  of each  instalment  are applied to
               exercise incentive stock options in the Company within 30 days of
               its receipt. with no entitlement to receive any instalments after
               the date of any Termination Event as defined therein.

     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".

The Investment Canada Act (the "Act"),  enacted on June 20, 1985, requires prior
notification  to the  Government  of Canada on the  "acquisition  of control" of
Canadian businesses by non-Canadians, as

<PAGE>

defined in the Act. Certain  acquisitions of control,  discussed below, are also
to be reviewed by the Government of Canada. The term "acquisition of control" is
defined as any one or more  non-Canadian  persons acquiring all or substantially
all of the assets  used in the  Canadian  business,  or the  acquisition  of the
voting shares of a Canadian corporation carrying on the Canadian business or the
acquisition of the voting interests of an entity  controlling or carrying on the
Canadian business.  The acquisition of the majority of the outstanding shares is
deemed to be an  "acquisition  of control" of a corporation.  The acquisition of
less than a majority, but one-third or more, of the outstanding voting shares of
a  corporation  is presumed to be an  "acquisition  of control" of a corporation
unless  it  can  be  established   that  the  purchaser  will  not  control  the
corporation.

Investments  requiring  notification  and review are all direct  acquisitions of
Canadian  businesses  with  assets  of  CDN$5,000,000  or more  (subject  to the
comments  below on WTO  investors),  and all indirect  acquisitions  of Canadian
businesses  (subject to the comments below on WTO investors) with assets of more
than  CDN$50,000,000 or with assets of between  CDN$5,000,000 and CDN$50,000,000
which  represent  more  than  50%  of  the  value  of  the  total  international
transaction.  In addition, specific acquisitions or new businesses in designated
types of business  activities  related to Canada's cultural heritage or national
identity could be reviewed if the  Government of Canada  considers that it is in
the public interest to do so.

The Act was amended with the  implementation  of the Agreement  establishing the
World Trade  Organization  ("WTO") to provide for special review  thresholds for
"WTO  investors",  as defined in the Act. "WTO investor"  generally means (i) an
individual,  other than a Canadian,  who is a national of a WTO member (such as,
for example,  the United States), or who has the right of permanent residence in
relation to that WTO member, (ii) governments of WTO members, and (iii) entities
that are not  Canadian  controlled,  but which are WTO investor  controlled,  as
determined by rules specified in the Act. The special review  thresholds for WTO
investors do not apply,  and the general rules  described above do apply, to the
acquisition  of control of certain  types of  businesses  specified  in the Act,
including a business that is a "cultural  business".  If the WTO investor  rules
apply, an investment in the shares of the Company by or from a WTO investor will
be reviewable  only if it is an investment to acquire control of the Company and
the value of the assets of the  Company is equal to or greater  than a specified
amount  (the "WTO  Review  Threshold").  The WTO Review  Threshold  is  adjusted
annually  by a formula  relating to  increases  in the  nominal  gross  domestic
product of Canada. The 2004 WTO Review Threshold is CDN$237,000,000.

If any  non-Canadian,  whether or not a WTO  investor,  acquires  control of the
Company by the  acquisition of shares,  but the transaction is not reviewable as
described above, the non-Canadian is required to notify the Canadian  government
and  to  provide  certain  basic  information  relating  to  the  investment.  A
non-Canadian,  whether  or not a WTO  investor,  is also  required  to provide a
notice to the government on the establishment of a new Canadian business. If the
business of the Company is then a prescribed type of business  activity  related
to  Canada's  cultural  heritage  or  national  identity,  and if  the  Canadian
government considers it to be in the public interest to do so, then the Canadian
government may give notice in writing within 21 days requiring the investment to
be reviewed.

For  non-Canadians  (other  than WTO  investors),  an  indirect  acquisition  of
control,  by the  acquisition of voting  interests of an entity that directly or
indirectly controls the Company, is reviewable if the value of the assets of the
Company is then  CDN$50,000,000  or more. If the WTO investor rules apply,  then
this requirement does not apply to a WTO investor,  or to a person acquiring the
entity from a WTO  investor.  Special  rules  specified  in the Act apply if the
value of the  assets of the  Company is more than 50% of the value of the entity
so acquired.  By these special rules, if the non-Canadian  (whether or not a WTO
investor) is acquiring control of an entity that directly or indirectly controls
the company,  and the value of the assets of the Company and all other  entities
carrying on business in Canada, calculated in the manner provided in the Act and
the regulations under the Act, is more than 50% of the value,  calculated in the


<PAGE>

manner provided in the Act and the  regulations  under the Act, of the assets of
all entities, the control of which is acquired,  directly or indirectly,  in the
transition of which the acquisition of control of the Company forms a part, then
the  thresholds  for a direct  acquisition  of control as  discussed  above will
apply,  that is, a WTO Review Threshold of  CDN$237,000,000  (in 2004) for a WTO
investor or a threshold of  CDN$5,000,000  for a  non-Canadian  other than a WTO
investor. If the value exceeds that level, then the transaction must be reviewed
in the same manner as a direct  acquisition of control by the purchase of shares
of the Company.

If an investment is reviewable, an application for review in the form prescribed
by the regulations is normally required to be filed with the Director  appointed
under the Act (the  "Director")  prior to the  investment  taking  place and the
investment may not be  consummated  until the review has been  completed.  There
are, however, certain exceptions.  Applications concerning indirect acquisitions
may be filed up to 30 days after the investment is consummated and  applications
concerning reviewable investments in culture-sensitive sectors are required upon
receipt of a notice for review.  In addition,  the Minister (a person designated
as such  under the Act) may  permit an  investment  to be  consummated  prior to
completion  of the  review,  if he is  satisfied  that delay  would  cause undue
hardship to the acquiror or jeopardize the  operations of the Canadian  business
that is  being  acquired.  The  Director  will  submit  the  application  to the
Minister,  together with any other information or written  undertakings given by
the acquiror and any representation submitted to the Director by a province that
is likely to be significantly affected by the investment.

The Minister will then  determine  whether the investment is likely to be of net
benefit to Canada,  taking into  account  the  information  provided  and having
regard to certain  factors of assessment  where they are  relevant.  Some of the
factors to be considered  are (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.

The Act sets certain time limits for the  Director and the  Minister.  Within 45
days after a completed  application has been received,  the Minister must notify
the acquiror that (a) he is satisfied that the investment is likely to be of net
benefit to Canada,  or (b) he is unable to complete his review, in which case he
shall have 30 additional days to complete his review (unless the acquiror agrees
to a longer period), or (c) he is not satisfied that the investment is likely to
be of net benefit to Canada.

Where the Minister has advised the acquiror  that he is not  satisfied  that the
investment is likely to be of net benefit to Canada,  the acquiror 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 acquiror and
the Minister). On the expiration of the 30 day period (or the agreed extension),
the Minister  must  forthwith  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 acquiror  may not proceed with the  investment  or, if the
investment  has already been  consummated,  must divest itself of control of the
Canadian business.

The Act provides civil remedies for non-compliance with any provision. There are
also  criminal  penalties  for  breach of  confidentiality  or  providing  false
information.
<PAGE>

     E.   Taxation

A brief  description of certain  provisions of the tax treaty between Canada and
the United  States is included  below,  together with a brief outline of certain
taxes, including withholding provisions, to which United States security holders
are subject under existing laws and regulations of Canada. The consequences,  if
any, of provincial, state and local taxes are not considered.

The following information is general and security holders 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 and of any provincial, state or local taxes.

Certain Canadian Federal Income Tax Consequences

The  discussion  under this heading  summarizes the principal  Canadian  federal
income tax consequences of acquiring,  holding and disposing of shares of common
stock of the Company for a  shareholder  of the Company who is not a resident of
Canada but is a  resident  of the United  States and who will  acquire  and hold
shares of common  stock of the Company as capital  property  for the purposes of
the Income Tax Act  (Canada)  (the  "Canadian  Tax Act").  This summary does not
apply to a  shareholder  who carries on business in Canada  through a "permanent
establishment"  situated in Canada or performs  independent personal services in
Canada  through  a fixed  base in  Canada if the  shareholder's  holding  in the
Company is  effectively  connected with such  permanent  establishment  or fixed
base.  This summary is based on the  provisions  of the Canadian Tax Act and the
regulations  thereunder and on an understanding of the administrative  practices
of Canada Revenue Agency, and takes into account all specific proposals to amend
the Canadian Tax Act or regulations made by the Minister of Finance of Canada as
of the date hereof.  It has been  assumed  that there will be no other  relevant
amendment  of any  governing  law  although  no  assurance  can be given in this
respect. This discussion is general only and is not a substitute for independent
advice from a shareholder's own Canadian and U.S. tax advisors.

The  provisions  of the  Canadian  Tax Act are subject to income tax treaties to
which  Canada  is  a  party,  including  the  Canada-United  States  Income  Tax
Convention (1980), as amended (the "Convention").

Dividends on Common Shares and Other Income

Under the Canadian  Tax Act, a  non-resident  of Canada is generally  subject to
Canadian  withholding  tax at the rate of 25 percent on dividends paid or deemed
to have  been  paid  to him or her by a  corporation  resident  in  Canada.  The
Convention limits the rate to 15 percent if the shareholder is a resident of the
United  States  and the  dividends  are  beneficially  owned by and paid to such
shareholder,  and to 5 percent if the  shareholder  is also a  corporation  that
beneficially  owns  at  least  10  percent  of the  voting  stock  of the  payor
corporation.

The amount of a stock  dividend (for tax purposes)  would  generally be equal to
the amount by which the paid up or stated  capital of the Company had  increased
by  reason  of the  payment  of such  dividend.  The  Corporation  will  furnish
additional tax information to shareholders in the event of such a dividend.

The Convention  generally  exempts from Canadian  income tax dividends paid to a
religious, scientific, literary, educational or charitable organization or to an
organization  constituted  and  operated  exclusively  to  administer a pension,
retirement or employee  benefit fund or plan, if the  organization is a resident
of the United  States and is exempt from income tax under the laws of the United
States.

The tax  payable on  dividends  is to be  withheld  at source by the  Company or
people  acting on its  behalf.  The Company is liable for the amount of the tax,
penalties and interest if it fails to so withhold. The taxpayer is liable in any
event if the Company fails to withhold.


<PAGE>

Dispositions of Common Shares

Under the  Canadian  Tax Act, a  taxpayer's  capital gain or capital loss from a
disposition of a share of common stock of the Company is the amount,  if any, by
which  his  or  her  proceeds  of  disposition   exceed  (or  are  exceeded  by,
respectively)  the  aggregate of his or her adjusted  cost base of the share and
reasonable expenses of disposition. The capital gain or loss must be computed in
Canadian  currency  using a weighted  average  adjusted  cost base for identical
properties.  Fifty percent of a capital gain are included in income.  The amount
by which a shareholder's  capital loss exceeds the capital gain in a year may be
deducted from a capital gain realized by the  shareholder  in the three previous
years or any subsequent year,  subject to certain  restrictions in the case of a
corporate shareholder.

Under the Canadian Tax Act, a non-resident  of Canada is subject to Canadian tax
on taxable capital gains, and may deduct allowable capital losses, realized on a
disposition  of  "taxable  Canadian  property."  Shares of  common  stock of the
Company  will  constitute  taxable  Canadian  property  of  a  shareholder  at a
particular  time if the  shareholder  used the shares in carrying on business in
Canada,  or if  at  any  time  in  the  five  years  immediately  preceding  the
disposition  25% or more of the  issued  shares  of any  class or  series in the
capital  stock  of the  Company  belonged  to one or  more  persons  in a  group
comprising the  shareholder  and persons with whom the  shareholder  and persons
with whom the  shareholder  did not deal at arm's  length and in  certain  other
circumstances.

The Convention  relieves United States residents from liability for Canadian tax
on capital gains derived on a disposition of shares 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,

(b) the  shareholder  was resident in Canada for 120 months during any period of
20 consecutive years preceding,  and at any time during the 10 years immediately
preceding,  the  disposition  and the  shares  were  owned by him when he or she
ceased to be resident in Canada, or

(c)  the  shares   formed  part  of  the  business   property  of  a  "permanent
establishment"  that  the  holder  has or had in  Canada  within  the 12  months
preceding the disposition.

United States Federal Income Tax Consequences

The following is a summary of the anticipated  material 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.  Accordingly,  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 financial advisor, legal counsel, or accountant regarding
the U.S.  federal,  U.S. state and local,  and foreign tax  consequences  of the
acquisition, ownership, and disposition of Common Shares.

<PAGE>

Scope of this Disclosure

Authorities

This  summary is based on the  Internal  Revenue  Code of 1986,  as amended (the
"Code"),  Treasury  Regulations,  published  Internal  Revenue  Service  ("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
that, if enacted, could be applied on a retroactive basis.

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 resident of the U.S., (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.  Accordingly,  a  non-U.S.  Holder  should  consult  its own  financial
advisor, legal counsel, or accountant regarding the U.S. federal, U.S. state and
local, and foreign tax consequences  (including the potential application of and
operation of any tax treaties) of the acquisition, ownership, and disposition of
Common Shares.

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 the following U.S.
Holders:  (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, or regulated  investment  companies or that are
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) 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;  (f) U.S.  Holders that acquired  Common Shares in connection with the
exercise of employee  stock options or otherwise as  compensation  for services;
(g) 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,  (h) U.S.  Holders that hold Common Shares
other than as a capital  asset  within the meaning of Section  1221 of the Code.
U.S. Holders that are subject to special

<PAGE>

provisions under the Code,  including U.S. Holders described  immediately above,
should  consult  their  own  financial  advisor,  legal  counsel  or  accountant
regarding the U.S.  federal,  U.S. state and local, and foreign 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  the  U.S.  state  and  local  or  foreign  tax
consequences to U.S. Holders of the acquisition,  ownership,  and disposition of
Common Shares. Each U.S. Holder should consult its own financial advisor,  legal
counsel,  or  accountant  regarding  the U.S.  state and local and  foreign  tax
consequences of the  acquisition,  ownership,  and disposition of Common Shares.
(See "Taxation--Canadian Federal Income Tax Consequences" above).

Treaty Application to Certain Individual U.S. Holders

An  individual  U.S.  Holders  who does not  maintain  a  substantial  presence,
permanent  home, or habitual  abode in the U.S., or whose  personal and economic
relations  are not  closer to the U.S.  than to any other  country  (other  than
Canada),  may be unable to benefit from the  provisions of the  Canada-U.S.  Tax
Convention. An individual U.S. Holder described immediately above should consult
its  own  financial  advisor,   legal  counsel,  or  accountant   regarding  the
availability of benefits under the Canada-U.S. Tax Convention.

U.S.  Federal  Income  Tax  Consequences  of  the  Acquisition,  Ownership,  and
Disposition of Common Shares

Distributions on Common Shares

General Taxation of Distributions

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. 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).

Reduced Tax Rates for Certain Dividends

For taxable years  beginning after December 31, 2002 and before January 1, 2009,
a dividend paid by the Company  generally will be taxed at the  preferential tax
rates  applicable to long-term  capital gains if (a) the Company is a "qualified
foreign  corporation"  (as defined below),  (b) the U.S.  Holder  receiving such
dividend is an individual,  estate,  or trust,  and (c) such dividend is paid on
Common  Shares  that have been  held by such  U.S.  Holder  for at least 61 days
during the 121-day period beginning 60 days before the "ex-dividend date" (i.e.,
the first date that a purchaser  of such  Common  Shares will not be entitled to
receive such dividend).

The Company generally will be a "qualified  foreign  corporation"  under Section
1(h)(11)  of the  Code  (a  "QFC")  if (a)  the  Company  is  incorporated  in a
possession  of the U.S.,  (b) the  Company is eligible  for the  benefits of the
Canada-U.S.  Tax Convention, or (c) the Common Shares are readily tradable on an
established securities market in the U.S. However, even if the Company satisfies
one or more of such  requirements,  the Company  will not be treated as a QFC if
the Company is a "foreign personal holding

<PAGE>

company,"  a "foreign  investment  company,"  or a "passive  foreign  investment
company"  (each as defined  below) for the taxable year during which the Company
pays a dividend or for the preceding taxable year.

As discussed  below,  the Company  believes  that it will be a "passive  foreign
investment  company" (See more detailed discussion at "Additional Rules that May
Apply to U.S. Holders--Passive Foreign Investment Company" below).  Accordingly,
the Company does not believe that it will be a QFC. If the Company is not a QFC,
a dividend paid by the Company to a U.S. Holder, including a U.S. Holder that is
an individual,  estate, or trust, generally will be taxed at ordinary income tax
rates (and not at the  preferential  tax rates  applicable to long-term  capital
gains).  The dividend rules are complex and each U.S.  Holder should consult its
own financial  advisor,  legal  counsel,  or  accountant  regarding the dividend
rules.

Distributions Paid in Foreign Currency

The amount of a distribution paid to a U.S. Holder in foreign currency generally
will be  equal  to the  U.S.  dollar  value  of such  distribution  based on the
exchange  rate  applicable on the date of receipt.  A U.S.  Holder that does not
convert foreign  currency  received as a distribution  into U.S.  dollars on the
date of receipt  generally will have a tax basis in such foreign  currency equal
to the U.S. dollar value of such foreign currency on the date of receipt. Such a
U.S. Holder  generally will recognize  ordinary income or loss on the subsequent
sale or  other  taxable  disposition  of such  foreign  currency  (including  an
exchange for U.S.  dollars).  However,  an individual U.S. Holder whose realized
gain upon such  subsequent  sale or other  taxable  disposition  of such foreign
currency does not exceed  U.S.$200  will not  recognize  such gain to the extent
that  there  are no  expenses  associated  with the  transaction  that  meet the
requirements  for  deductibility as a trade or business expense or as an expense
for the production of income.

Dividends Received Deduction

Dividends  paid on the Common  Shares  generally  will not be  eligible  for the
"dividends  received  deduction."  The  availability  of the dividends  received
deduction  is subject to complex  limitations  that are beyond the scope of this
discussion,  and a U.S.  Holder  that is a  corporation  should  consult its own
financial advisor, legal counsel, or accountant regarding the dividends received
deduction.

Disposition of Common Shares

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.

Preferential tax rates apply to long-term capital gains of a U.S. Holder that is
an individual,  estate, or trust.  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.
For a U.S. Holder that is an individual, estate, or trust, capital losses may be
used to offset capital gains and up to U.S.$3,000 of ordinary income.  An unused
capital loss of a U.S. Holder that is an individual,  estate, or trust generally
may be carried forward to subsequent  taxable years, until such net capital loss
is exhausted.  For a U.S.  Holder that is a  corporation,  capital losses may be
used to offset  capital  gains,  and an unused  capital  loss  generally  may be
carried  back three years and carried  forward five years from the year in which
such net capital loss is recognized.

<PAGE>

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 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.

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." In addition,  this limitation is calculated  separately with respect to
specific categories of income (including "passive income," "high withholding tax
interest,"  "financial  services income,"  "shipping  income," and certain other
categories of income).  Dividends paid by the Company  generally will constitute
"foreign source" income and generally will be classified as "passive income" or,
in the case of certain U.S. Holders, "financial services income." In addition, a
U.S.  Holder that is a corporation and that owns 10% or more of the voting stock
of the Company may, subject to complex limitations, be entitled to an "indirect"
foreign tax credit under Section 902 of the Code with respect to dividends  paid
by the Company.  The foreign tax credit rules are complex,  and each U.S. Holder
should consult its own financial advisor, legal counsel, or accountant regarding
the foreign tax credit rules.

Information Reporting; Backup Withholding Tax

Payments made within the U.S. of dividends 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 financial advisor, legal counsel, or accountant regarding
the information reporting and backup withholding tax rules.

Additional Rules that May Apply to U.S. Holders

If the Company is a "foreign  personal holding  company," a "foreign  investment
company," a "controlled  foreign  corporation," or a "passive foreign investment
company" (each as defined below), the preceding sections of this summary may not
describe  the U.S.  federal  income  tax  consequences  to U.S.  Holders  of the
acquisition, ownership, and disposition of Common Shares.

Foreign Personal Holding Company

The Company generally will be a "foreign personal holding company" under Section
552 of the Code (a "FPHC") if (a) at any time during a taxable  year,  more than
50% of the total  voting power or the total

<PAGE>

value of the outstanding shares of the Company is owned, directly or indirectly,
by five or fewer  individuals  who are citizens or residents of the U.S. and (b)
60% (or 50% in certain  cases) or more of the gross  income of the  Company  for
such taxable year is foreign personal holding company income.  "Foreign personal
holding company 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.

If the Company is a FPHC, a U.S. Holder generally will be required to include in
gross income such U.S. Holder's allocable portion of the "undistributed  foreign
personal  holding company income" (as defined in Section 556 of the Code) of the
Company.  The Company does not believe that it has previously been, or currently
is, a FPHC.  However,  there can be no assurance  that the Company will not be a
FPHC for the current or any future taxable year.

Foreign Investment Company

The Company generally will be a "foreign  investment company" under Section 1246
of the Code (a "FIC") if (a) 50% or more of the total  voting power or the total
value of the outstanding shares of the Company is owned, directly or indirectly,
by  citizens  or  residents  of  the  U.S.,  domestic   partnerships,   domestic
corporations,  domestic estates,  or domestic trusts (each as defined in Section
7701(a)(30)  of the Code) and (b) the Company is (i)  registered  under the U.S.
Investment Company Act of 1940, as amended, as a "management company" or a "unit
investment  trust" or (ii)  engaged  primarily  in the  business  of  investing,
reinvesting,  or  trading  in  securities,   commodities,  or  any  interest  in
securities or commodities.

If the Company is a FIC, all or part of any gain  recognized by a U.S. Holder on
the sale or other  taxable  disposition  of Common  Shares  will be  treated  as
ordinary income (rather than as capital gain). The Company does not believe that
it has  previously  been,  or  currently  is, a FIC.  However,  there  can be no
assurance  that the  Company  will not be a FIC for the  current  or any  future
taxable year.

Controlled Foreign Corporation

The Company generally will be a "controlled  foreign  corporation" under Section
957 of the Code (a  "CFC") if more  than 50% of the  total  voting  power or the
total  value of the  outstanding  shares of the  Company is owned,  directly  or
indirectly,  by  citizens  or  residents  of the  U.S.,  domestic  partnerships,
domestic corporations,  domestic estates, or domestic trusts (each as defined in
Section 7701(a)(30) of the Code), each of which own, directly or indirectly, 10%
or more of the total  voting power of the  outstanding  shares of the Company (a
"10% Shareholder").

If the Company is a CFC, a 10% Shareholder  generally will be subject to current
U.S.  federal  income tax with  respect to (a) such 10%  Shareholder's  pro rata
share of the  "subpart F income"  (as defined in Section 952 of the Code) of the
Company  and (b) such 10%  Shareholder's  pro rata share of the  earnings of the
Company  invested in "United States  property" (as defined in Section 956 of the
Code).  In addition,  under Section 1248 of the Code, any gain recognized on the
sale or other taxable  disposition of Common Shares by a U.S.  Holder that was a
10% Shareholder at any time during the five-year period ending with such sale or
other taxable disposition  generally will be treated as a dividend to the extent
of the  "earnings  and  profits" of the Company  that are  attributable  to such
Common Shares.  If the Company is both a CFC and a "passive  foreign  investment
company" (as defined below), the Company generally will be treated as a CFC (and
not  as a  "passive  foreign  investment  company")  with  respect  to  any  10%
Shareholder.

The Company does not believe that it has  previously  been,  or currently  is, a
CFC.  However,  there can be no assurance that the Company will not be a CFC for
the current or any future taxable year.
<PAGE>

Passive Foreign Investment Company

The Company  generally  will be a "passive  foreign  investment  company"  under
Section 1297 of the Code (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, based on the fair market value of
such assets (or on the adjusted tax basis of such assets,  if the Company is not
publicly  traded and either is a "controlled  foreign  corporation"  or makes an
election). "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 test and assets 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.  In addition,  for purposes of the PFIC income
test and asset test  described  above,  "passive  income"  does not  include any
interest,  dividends,  rents,  or royalties  that are received or accrued by the
Company from a "related  person" (as defined in Section  954(d)(3) of the Code),
to the extent such items are  properly  allocable  to the income of such related
person that is not passive income.

The Company  believes  that it was a PFIC for the  taxable  year ended March 31,
2004 and that it will be a PFIC for the  taxable  year  ending  March 31,  2005.
There  can be no  assurance,  however,  that  the IRS  will  not  challenge  the
determination made by the Company concerning its PFIC status.

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 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  recognized  on the  sale or other  taxable
disposition of Common Shares and (b) any excess  distribution paid on the Common
Shares. A distribution  generally will be an "excess distribution" to the extent
that such distribution  (together with all other  distributions  received in the
current taxable year) exceeds 125% of the average distributions  received during
the three preceding  taxable years (or during a U.S. Holder's holding period for
the Common Shares, if shorter).

Under Section 1291 of the Code, any gain recognized on the sale or other taxable
disposition of Common  Shares,  and any excess  distribution  paid on the Common
Shares,  must be ratably  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 Class Common  Shares (other than years prior to the first taxable
year of the Company during such  Non-Electing  U.S.  Holder's holding period and
beginning  after  January  1,  1987 for which the  Company  was a PFIC)  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.  Such a
Non-Electing  U.S. Holder that is not a corporation must treat any such interest
paid as "personal  interest,"  which is not  deductible.  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


<PAGE>

income in the current year, 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 on such U.S.
Holder's pro rata share of (a) the net capital  gain of the Company,  which will
be taxed as long-term capital gain to such U.S. Holder, and (b) and the ordinary
earnings of the  Company,  which will be taxed as  ordinary  income to such U.S.
Holder. Generally, "net capital gain" is the excess of (a) net long-term capital
gain over (b) net  short-term  capital  gain,  and  "ordinary  earnings" are the
excess of (a) "earnings  and profits"  over (b) net capital gain. A U.S.  Holder
that makes a QEF  Election  will be subject to U.S.  federal  income tax on such
amounts  for each  taxable  year in which the Company is a PFIC,  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.  If such U.S.  Holder is not a
corporation,  any such  interest  paid will be treated as  "personal  interest,"
which is not deductible.

A U.S.  Holder  that  makes a QEF  Election  generally  also (a) may  receive  a
tax-free  distribution  from the  Company to the extent  that such  distribution
represents  "earnings and profits" of the Company that were previously  included
in income by the U.S.  Holder  because of such QEF  Election and (b) will adjust
such U.S. Holder's tax basis in the Common Shares to reflect the amount included
in income or allowed as a tax-free distribution because of such QEF Election. 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.

The  procedure  for  making a QEF  Election,  and the U.S.  federal  income  tax
consequences of making a QEF Election,  will depend on whether such QEF Election
is timely.  A QEF  Election  will be treated as "timely" if such QEF Election is
made for the first  year in the U.S.  Holder's  holding  period  for the  Common
Shares in which the  Company  was a PFIC.  A U.S.  Holder  may make a timely QEF
Election by filing the appropriate QEF Election  documents at the time such U.S.
Holder files a U.S. federal income tax return for such first year.  However,  if
the  Company  was a PFIC in a prior  year,  then in  addition  to filing the QEF
Election  documents,  a U.S. Holder must elect to recognize (a) gain (which will
be taxed under the rules of Section 1291 of the Code discussed  above) as if the
Common Shares were sold on the qualification date or (b) if the Company was also
a CFC, such U.S. Holder's pro rata share of the post-1986 "earnings and profits"
of the Company as of the  qualification  date. The  "qualification  date" is the
first day of the first  taxable year in which the Company was a QEF with respect
to such U.S.  Holder.  The  election to  recognize  such gain or  "earnings  and
profits" can only be made if such U.S.  Holder's  holding  period for the Common
Shares  includes the  qualification  date. By electing to recognize such gain or
"earnings  and profits,"  such U.S.  Holder will be deemed to have made a timely
QEF Election. In addition,  under very limited circumstances,  a U.S. Holder may
make a  retroactive  QEF  Election  if such U.S.  Holder  failed to file the QEF
Election documents in a timely manner.

A QEF  Election  will apply to the taxable  year for which such QEF  Election is
made  and  to  all  subsequent  taxable  years,  unless  such  QEF  Election  is
invalidated  or  terminated  or the IRS  consents  to  revocation  of

<PAGE>

such QEF  Election.  If a U.S.  Holder makes a QEF Election and, in a subsequent
taxable year,  the Company  ceases to be a PFIC, the QEF Election will remain in
effect (although it will not be applicable)  during those taxable years in which
the Company is not a PFIC. Accordingly, if the Company becomes a PFIC in another
subsequent  taxable year, the QEF Election will be effective and the U.S. Holder
will be  subject to the QEF rules  described  above  during any such  subsequent
taxable  year in which the Company  qualifies as a PFIC.  In  addition,  the QEF
Election will remain in effect (although it will not be applicable) with respect
to a U.S.  Holder  even  after  such U.S.  Holder  disposes  of all of such U.S.
Holder's direct and indirect interest in the Common Shares. Accordingly, if such
U.S.  Holder  reacquires  an interest in the Company,  such U.S.  Holder will be
subject  to the QEF rules  described  above for each  taxable  year in which the
Company is a PFIC.

Each U.S.  Holder should consult its own financial  advisor,  legal counsel,  or
accountant  regarding  the  availability  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  that apply to a QEF, or that
the Company will supply U.S.  Holders with  information  that such U.S.  Holders
require to report under the QEF rules, in event that the Company is a PFIC and a
U.S. Holder wishes to make a QEF Election.

Mark-to-Market Election

A U.S. Holder may make a  Mark-to-Market  Election only if the Common Shares are
marketable stock. The Common Shares generally will be "marketable  stock" if the
Common Shares are regularly traded on (a) a national securities exchange that is
registered with the Securities and Exchange Commission,  (b) the national market
system established pursuant to section 11A of the Securities and Exchange Act of
1934, or (c) a foreign securities  exchange that is regulated or supervised by a
governmental  authority of the country in which the market is located,  provided
that  (i)  such  foreign  exchange  has  trading  volume,   listing,   financial
disclosure,  and other  requirements  and the laws of the  country in which such
foreign exchange is located,  together with the rules of such foreign  exchange,
ensure that such  requirements are actually  enforced and (ii) the rules of such
foreign exchange ensure active trading of listed stocks.

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 certain dispositions of, and distributions on, the Common Shares.

A U.S.  Holder that makes a  Mark-to-Market  Election  will  include in 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).


<PAGE>

A   Mark-to-Market   Election   applies  to  the  taxable  year  in  which  such
Mark-to-Market  Election is made and to each subsequent taxable year, unless the
Common Shares cease to be  "marketable  stock" or the IRS consents to revocation
of such election.  Each U.S.  Holder should  consult its own financial  advisor,
legal counsel,  or accountant  regarding the  availability 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).  However,  the specific U.S.
federal income tax consequences to a U.S. Holder may vary based on the manner in
which Common Shares are transferred.

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.

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.

     F.   Dividends and paying agents.

This Form 20-F is being  filed as an annual  report  and,  as such,  there is no
requirement to provide information under this sub-item.

     G.   Statement by experts.

This Form 20-F is being  filed as an annual  report  and,  as such,  there is no
requirement to provide information under this sub-item.

     H.   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 in Room 1024, Judiciary Plaza, 450
Fifth Street,  N.W.,  Washington,  D.C. 20549. Readers may also obtain copies of
such  materials  from  the  Public  Reference  Section  of the SEC,  Room  1024,
Judiciary Plaza, 450 Fifth Street, N.W.,  Washington,  D.C. 20549, at prescribed
rates. 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.


<PAGE>

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.

The Company is required to file reports and other information with the SEC under
the Securities  Exchange Act of 1934, as amended.  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  Securities  Exchange Act of 1934, as
amended  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 Securities  Exchange Act of 1934, as amended.  Under the Securities Exchange
Act of 1934,  as  amended,  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  solicitors,  MacNeill  Law, at Suite 950 - 1055 West Georgia  Street,
1055 West Georgia Street,  Vancouver,  British Columbia,  Canada V6E 3P3. All of
the documents referred to above are in English.

     I.   Subsidiary Information.

Not applicable.

Item 11  Quantitative and Qualitative Disclosures About Market Risk.

The Company owns shares of other listed companies. These shares are listed under
current  assets  on  the  Company's  balance  sheet  as at  March  31,  2004  as
"Marketable Securities" at an amount of $32,392. However, the quote market value
of these shares at March 31, 2004 was $82,322.

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  exploration  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 is not 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.
<PAGE>

Item 12  Description of Securities Other than Equity Securities.

This Form 20-F is being  filed as an annual  report  and,  as such,  there is no
requirement to provide information under this sub-item.

                                     PART II

Item 13  Defaults, Dividend Arrearages and Delinquencies.

There are none.

Item 14  Material  Modifications  to the Rights of  Security  Holders and Use of
Proceeds.

Not Applicable.

Item 15   Controls and Procedures

     (a) Evaluation of 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  13a-15 and 15d-15 under the  Securities  Exchange
     Act of 1934, as amended (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 in alerting
     them on a timely  basis to  material  information  relating  to the Company
     required  to be  included  in our  reports  filed or  submitted  under  the
     Exchange Act.

     (b) Changes in Internal Controls over Financial Reporting.

     Management - the Chief Executive Officer,  Jan W. Vandersande and the Chief
     Financial  Officer,  Elizabeth  Kirkwood - established  and maintained more
     than adequate  internal  controls over  financial  reporting.  Any expenses
     beyond the regular monthly expenses (such as rent,  telephone,  legal fees,
     etc.) are discussed and only when both agree are they paid or incurred. All
     checks are signed by both the Chief  Executive  Officer and Chief Financial
     Officer.  Any large  expenditure  (anything  over  $10,000) is discussed at
     board meetings and approved or not approved.

     The audit committee  reviews every quarter's  financial  statements  before
     they are issued.  The financial  statements  are  discussed  with the Chief
     Financial Officer.

     There  have not been any  significant  changes  in the  Company's  internal
     controls  over   financial   reporting  or  in  other  factors  that  could
     significantly  affect these  disclosures  during the period covered by this
     Annual  Report,   including  any   significant   deficiencies  or  material
     weaknesses of internal controls that would require corrective action.

Item 16  [Reserved]

<PAGE>

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  by the  SEC,  serving  on its  audit
committee,  namely,  David Whittle,  whose qualifications are set out in Item 6,
above.

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
Code is attached hereto as Exhibit "11.1" and filed herewith.

The Ethics  and  Conflict  of  Interest  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 Ethics and Conflicts of Interest Policy
addresses the following:

     o    compliance  with all the laws and regulations  identified  therein and
          with the requirements of the U.S. Securities and Exchange  Commissions
          as mandated by the Sarbanes-Oxley Act of 2002, and the requirements of
          the Toronto Stock Exchange;

     o    corporate opportunities and potential conflicts of interest;

     o    the quality of public disclosures;

     o    the  protection  and  appropriate  use of  the  Company's  assets  and
          resources;

     o    the protection of confidential information;

     o    insider trading;

     o    fair behaviour; and

     o    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.

There were no waivers to the Ethics and  Conflicts  of  Interest  Policy  during
calendar 2004.

Item 16C Principal Accountant Fees and Services

A.       Audit Fees

"Audit  Fees"  are the  aggregate  fees  billed  by 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

<PAGE>

securities regulatory authorities,  accounting standard setting bodies, or other
regulatory or standard setting bodies.

Aggregate  audit  fees  billed  in  fiscal  2004 by KPMG  were  $38,000  (2003 -
$36,600).

B.       Audit-Related Fees

"Audit-Related  Fees"  are  fees  that  are or  would  be  charged  by KPMG  for
presentations  or training  on  accounting  or  regulatory  pronouncements,  due
diligence  services  related to accounting  and tax matters in  connection  with
potential  acquisitions/dispositions,  advice and documentation  assistance with
respect to internal  controls over financial  reporting and disclosure  controls
and procedures of the Company, and if applicable, audits of financial statements
of a company's employee benefit plan. There were no "Audit Related Fees" charged
by KPMG during the fiscal periods ended March 31, 2004 or March 31, 2003.

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 billed in fiscal 2004 by KPMG were  $17,000  (2003 - $5,000)
pertaining  to tax  compliance  and tax  planning  pertaining  to the wind-up of
Mountain Glen.

D.       All Other Fees

There were no other fees charged by KPMG during the fiscal  periods  ended March
31, 2004 and 2003.

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.  Since the enactment of the  Sarbanes-Oxley Act of
2002, all non-audit services, performed by the Company's auditor, for the fiscal
year ended March 31, 2004, have been  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.

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.

<PAGE>

                                    PART III
Item 17  Financial Statements.

The Company's  consolidated  financial statements are stated in Canadian dollars
(CDN$)  and  are  prepared  in  accordance  with  Canadian   Generally  Accepted
Accounting Principles (GAAP).  Material measurement  differences between GAAP in
Canada and GAAP in the United States applicable to the Company, are described in
Note 9 to the Consolidated Financial Statements.

The  financial  statements  and notes  thereto  as  required  under  Item 17 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 audit report of KPMG LLP, Chartered Accountants,  is included herein
immediately preceding the financial statements.

For audited  financial  statements for Fiscal 2004, Fiscal 2003 and Fiscal 2002,
please see Item 19 below.

Item 18 Financial Statements.

Not Applicable.

Item 19  Exhibits

Financial Statements

The Consolidated  Financial  Statements of the Company and exhibits listed below
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 and the Canadian filing does
not include the  Consolidated  Financial  Statements and exhibits  listed below.
Canadian  investors  should  refer to the audited  Financial  Statements  of the
Company  for the  years  ended  March  31,  2004 and 2003  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
report filed with the SEC (see Appendix) :

Consolidated Financial Statements of the Company:

Report of Independent Registered Public Accounting Firm.

Consolidated Balance Sheets as of March 31, 2004 and 2003.

Consolidated Statements of Operations and Deficit for the years ended March 31,
2004, 2003 and 2002.

Consolidated Statements of Cash Flows for the years ended March 31, 2004, 2003
and 2002.

Notes to the Consolidated Financial Statements.
<PAGE>

Exhibits
<TABLE>
<CAPTION>
<C>         <C>                                                                                              <C>
------------------------------------------------------------------------------------------------------- ---------------

The following exhibits are attached to and form part of this Annual Report:                             Remarks.

Exhibit
------------------------------------------------------------------------------------------------------- ---------------
1.1         Memorandum and Articles of the Company.                                                          (3)
----------- ------------------------------------------------------------------------------------------- ---------------
1.2         Arrangement Agreement between the Company and Glenmore Highlands Inc. dated May 10, 2000.        (5)
----------- ------------------------------------------------------------------------------------------- ---------------
1.3         Joint Information Circular of the Company and Glenmore Highlands Inc.                            (4)
----------- ------------------------------------------------------------------------------------------- ---------------
4.1         Transfer agreement between MPV, Monopros and Camphor dated November 24, 1999 pursuant to         (3)
            which MPV and Camphor transferred the GOR to Monopros.
----------- ------------------------------------------------------------------------------------------- ---------------
4.2         Letter Agreement between MPV, Monopros, Glenmore and Camphor dated December 17, 1999             (3)
            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             (3)
            amending the Monopros Joint Venture Agreement.
----------- ------------------------------------------------------------------------------------------- ---------------
4.4         Form of Subscription Agreement for the private placement described in item 1 of "Material        (3)
            Contracts".
----------- ------------------------------------------------------------------------------------------- ---------------
4.5         Agreement dated as of January 1, 2002 between the Company, Camphor Ventures Inc. and De          (1)
            Beers Canada Exploration Inc.
----------- ------------------------------------------------------------------------------------------- ---------------
4.6         Second Amendment Agreement dated January 1, 2002 between the Company and Paul Shatzko.           (3)
----------- ------------------------------------------------------------------------------------------- ---------------
4.7         Second Amendment Agreement dated January 1, 2002 between the Company and Jan Vandersande.        (3)
----------- ------------------------------------------------------------------------------------------- ---------------
4.8         Third Amendment Agreement dated December 13, 2002 between the Company and Jan Vandersande        (3)
----------- ------------------------------------------------------------------------------------------- ---------------
4.9         Letter agreement dated December 13, 2002 between the Company and Elizabeth Kirkwood              (3)
----------- ------------------------------------------------------------------------------------------- ---------------
4.10        Consulting Agreement dated January 1, 2004 between the Company and Jan W. Vandersande             -
----------- ------------------------------------------------------------------------------------------- ---------------
8.1         List of Subsidiaries                                                                             (2)
----------- ------------------------------------------------------------------------------------------- ---------------
11.1        Ethics and Conflict of Interest Policy dated February 2, 2003.                                    -
----------- ------------------------------------------------------------------------------------------- ---------------
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                                -
----------- ------------------------------------------------------------------------------------------- ---------------
14.1        Independent Qualified Person's Review and Technical Report dated June 16, 2003 entitled          (3)
            Gahcho Kue, Northwest Territories, Canada prepared by Malcolm L. Thurston, Ph.D., MAusimm
----------- ------------------------------------------------------------------------------------------- ---------------
14.2        Independent Registered Public Accounting Firm's Consent to incorporation by reference of          -
            audit report on financial statements for fiscal year ended March 31, 2004 in the
            Company's S-8 Registration Statement.
----------- ------------------------------------------------------------------------------------------- ---------------
</TABLE>
<PAGE>

(1) The Registrant has received approval for confidential treatment with respect
to certain portions of this Agreement, which have been omitted, pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

(2) See list of subsidiaries on page 11 of this Annual Report.

(3) Previously filed and incorporated by reference.

(4)  Previously  furnished  under  cover  of Form 6K  dated  June  2,  2000  and
incorporated by reference.

(5) Attached as Appendix A to the Joint Information  Circular of the Company and
Glenmore  Highlands Inc.  which  information  circular was previously  furnished
under cover of Form 6K dated June 2, 2000, and incorporated by reference.

<PAGE>

                                   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)





                                                 "Jan Vandersande"
                                                 -------------------------------
                                                 (Signature)*

Date:   August 17, 2004                           Jan W. Vandersande
                                                  President and Director

*Print the name and title of the signing officer under this signature.

<PAGE>

                                  EXHIBIT INDEX
<TABLE>
<CAPTION>
<C>         <C>                                                                                   <C>
----------------------------------------------------------------------------------------------- --------------

The following exhibits are attached to and form part of this Annual Report:                     Remarks.

Exhibit
----------------------------------------------------------------------------------------------- --------------
1.1        Memorandum and Articles of the Company.                                                   (3)
---------- ------------------------------------------------------------------------------------ --------------
1.2        Arrangement Agreement between the Company and Glenmore Highlands Inc. dated May           (5)
           10, 2000.
---------- ------------------------------------------------------------------------------------ --------------
1.3        Joint Information Circular of the Company and Glenmore Highlands Inc.                     (4)
---------- ------------------------------------------------------------------------------------ --------------
4.1        Transfer agreement between MPV, Monopros and Camphor dated November 24, 1999              (3)
           pursuant to which MPV and Camphor transferred the GOR to Monopros.
---------- ------------------------------------------------------------------------------------ --------------
4.2        Letter Agreement between MPV, Monopros, Glenmore and Camphor dated December 17,           (3)
           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               (3)
           Glenmore amending the Monopros Joint Venture Agreement.
---------- ------------------------------------------------------------------------------------ --------------
4.4        Form of Subscription Agreement for the private placement described in item 1 of           (3)
           "Material Contracts".
---------- ------------------------------------------------------------------------------------ --------------
4.5        Agreement dated as of January 1, 2002 between the Company, Camphor Ventures Inc.          (1)
           and De Beers Canada Exploration Inc.
---------- ------------------------------------------------------------------------------------ --------------
4.6        Second Amendment Agreement dated January 1, 2002 between the Company and Paul             (3)
           Shatzko.
---------- ------------------------------------------------------------------------------------ --------------
4.7        Second Amendment Agreement dated January 1, 2002 between the Company and Jan              (3)
           Vandersande.
---------- ------------------------------------------------------------------------------------ --------------
4.8        Third Amendment Agreement dated December 13, 2002 between the Company and Jan             (3)
           Vandersande
---------- ------------------------------------------------------------------------------------ --------------
4.9        Letter agreement dated December 13, 2002 between the Company and Elizabeth Kirkwood       (3)
---------- ------------------------------------------------------------------------------------ --------------
4.10       Consulting Agreement dated January 1, 2004 between the Company and Jan W.                  -
           Vandersande
---------- ------------------------------------------------------------------------------------ --------------
8.1        List of Subsidiaries                                                                      (2)
---------- ------------------------------------------------------------------------------------ --------------
11.1       Ethics and Conflict of Interest Policy dated February 2, 2003.                             -
---------- ------------------------------------------------------------------------------------ --------------
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                         -
---------- ------------------------------------------------------------------------------------ --------------
14.1       Independent Qualified Person's Review and Technical Report dated June 16, 2003            (3)
           entitled Gahcho Kue, Northwest Territories, Canada prepared by Malcolm L.
           Thurston, Ph.D., MAusimm
<PAGE>
----------------------------------------------------------------------------------------------- --------------

The following exhibits are attached to and form part of this Annual Report:                     Remarks.

Exhibit
----------------------------------------------------------------------------------------------- --------------

---------- ------------------------------------------------------------------------------------ --------------
14.2       Independent Registered Public Accounting Firm's Consent to incorporation by                -
           reference of audit report on financial statements for fiscal year ended March 31,
           2004 in the Company's S-8 Registration Statement.
---------- ------------------------------------------------------------------------------------ --------------
</TABLE>

(1) The Registrant has received approval for confidential treatment with respect
to certain portions of this Agreement, which have been omitted, pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

(2) See list of subsidiaries on page 11 of this Annual Report.

(3) Previously filed and incorporated by reference.

(4)  Previously  furnished  under  cover  of Form 6K  dated  June  2,  2000  and
incorporated by reference.

(5) Attached as Appendix A to the Joint Information  Circular of the Company and
Glenmore  Highlands Inc.  which  information  circular was previously  furnished
under cover of Form 6K dated June 2, 2000, and incorporated by reference.

<PAGE>




                  Consolidated Financial Statements
                  (Expressed in Canadian dollars)



                  MOUNTAIN  PROVINCE  DIAMONDS  INC.



                  Years ended March 31, 2004, 2003 and 2002




<PAGE>


[KPMG LOGO OMITTED]
              KPMG  LLP
              Chartered Accountants
              Box 10426, 777 Dunsmuir Street            Telephone (604) 691-3000
              Vancouver BC V7Y 1K3                      Telefax   (604) 691-3031
              Canada                                    www.kpmg.ca





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Mountain Province Diamonds Inc.

We have audited the consolidated  balance sheets of Mountain  Province  Diamonds
Inc. as at March 31, 2004 and 2003 and the consolidated statements of operations
and deficit and cash flows for each of the years in the three year period  ended
March  31,  2004.  These  financial  statements  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We have  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 plan and perform an audit
to obtain  reasonable  assurance  whether the financial  statements  are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  these consolidated  financial statements present fairly, in all
material  respects,  the financial  position of the Company as at March 31, 2004
and 2003 and the  results of its  operations  and its cash flows for each of the
years in the three year period ended March 31, 2004 in conformity  with Canadian
generally accepted accounting principles.

Canadian generally accepted  accounting  principles vary in certain  significant
respects from accounting  principles  generally accepted in the United States of
America.  Information  relating  to the nature  and  effect of such  measurement
differences is presented in note 9 to the consolidated financial statements.


KPMG LLP (signed)


Chartered Accountants

Vancouver, Canada
June 16, 2004

[KPMG LOGO OMITTED]

KPMG LLP, a Canadian owned limited liability  partnership  established under the
laws of Ontario,  is the  Canadian  member firm of KPMG  International,  a Swiss
nonoperating association.

<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Consolidated Balance Sheets
(Expressed in Canadian dollars)

March 31, 2004 and 2003
<TABLE>
<CAPTION>
<S>                                                                                  <C>                  <C>
------------------------------------------------------------------------ -------------------- --------------------
                                                                                       2004                 2003
------------------------------------------------------------------------------------------------------------------

Assets

Current assets:
        Cash and cash equivalents                                        $          914,494   $        1,210,076
        Accounts receivable                                                          18,433               24,941
        Marketable securities (note 3)                                               32,392               32,392
        Advances and prepaid expenses                                                 8,380               10,196
        ---------------------------------------------------------------- -------------------- --------------------
        Total current assets                                                        973,699            1,277,605

Mineral properties (note 4)                                                       1,671,939            1,701,659

Deferred exploration costs (note 4)                                              30,861,544           31,421,493

Equipment (note 5)                                                                    6,371               17,198
------------------------------------------------------------------------ -------------------- --------------------

Total assets                                                             $       33,513,553   $       34,417,955
------------------------------------------------------------------------ --- ---------------- --- ----------------

Liabilities and Shareholders' Equity

Current liabilities
        Accounts payable and accrued liabilities                         $          263,950   $          228,299
        Due to related party (note 7)                                                 3,000                3,050
        Taxes payable                                                                 5,796                8,796
        ---------------------------------------------------------------- -------------------- --------------------
        Total current liabilities                                                   272,746              240,145

Shareholders' equity:
        Share capital (note 6)                                                   56,595,262           55,719,260
        Contributed surplus                                                          24,419               24,419
        Deficit                                                                 (23,378,874)         (21,565,869)
        ---------------------------------------------------------------- -------------------- --------------------
        Total shareholders' equity                                               33,240,807           34,177,810
------------------------------------------------------------------------ -------------------- --------------------

Total liabilities and shareholders' equity                               $       33,513,553   $       34,417,955
------------------------------------------------------------------------ --- ---------------- --- ----------------
</TABLE>

Subsequent event (note 6(c))


See accompanying notes to consolidated financial statements.


Approved on behalf of the Board:



"Jan W. Vandersande"                                         Director
--------------------------------------------------------



"Elizabeth Kirkwood"                                         Director
--------------------------------------------------------
<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Consolidated Statements of Operations and Deficit
(Expressed in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002

<TABLE>
<CAPTION>
<S>                                                                 <C>              <C>                <C>
-------------------------------------------------------- ------------------- ------------------ ------------------
                                                                      2004              2003               2002
-------------------------------------------------------- ------------------- ------------------ ------------------

Expenses:
      Amortization                                       $          2,853    $        17,319    $        19,357
        Capital taxes                                               5,307                  -            (15,600)
        Consulting fees (notes 6(c) and 7)                        182,846            189,474            227,023
        Directors' fees and honorarium                             33,350             12,493              2,000
        Interest and bank charges                                   1,137              2,489              2,344
        Management fees (note 7)                                        -             45,000             96,000
        Office and miscellaneous                                   73,312            132,898            159,994
        Professional fees (note 7)                                307,441            240,203            167,444
        Promotion and investor relations                           94,803            213,760            193,010
        Property evaluation and maintenance                             -             62,076            108,197
        Rent                                                       23,600             37,095            126,356
        Salaries and benefits                                      78,805            166,550            231,984
        Severance and contract termination (note 7)               368,668            331,500                  -
        Transfer agent and regulatory fees                         37,890             55,697             55,475
        Travel                                                     21,479             59,944             83,114
        ------------------------------------------------ ------------------- ------------------ ------------------
                                                                1,231,491          1,566,498          1,456,698

Other earnings (expenses):
        Interest                                                   12,127             19,034             17,901
        Loss from write-down of marketable securities                   -                  -             (3,868)
        Loss on disposal of equipment                              (3,972)           (44,862)                 -
        Write-down of mineral properties and deferred
           exploration                                           (589,669)          (120,435)                 -
        ------------------------------------------------ ------------------- ------------------ ------------------
                                                                 (581,514)          (146,263)            14,033
-------------------------------------------------------- ------------------- ------------------ ------------------

Loss before income taxes                                       (1,813,005)        (1,712,761)        (1,442,665)

Income tax expense (note 8)                                             -              5,581             13,216
-------------------------------------------------------- ------------------- ------------------ ------------------

Loss for the year                                              (1,813,005)        (1,718,342)        (1,455,881)

Deficit, beginning of year                                    (21,565,869)       (19,847,527)       (18,391,646)
-------------------------------------------------------- ------------------- ------------------ ------------------

Deficit, end of year                                     $    (23,378,874)   $   (21,565,869)   $   (19,847,527)
-------------------------------------------------------- --- --------------- --- -------------- --- --------------

Basic and diluted loss per share                         $          (0.04)   $         (0.03)   $         (0.03)

Weighted average number of shares outstanding                  50,759,430         49,345,950         46,734,442

-------------------------------------------------------- --- --------------- -- --------------- -- ---------------
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
<TABLE>
<CAPTION>
<S>                                                      <C>                 <C>               <C>
-------------------------------------------------------- ------------------- ------------------ ------------------
                                                                      2004              2003               2002
-------------------------------------------------------- ------------------- ------------------ ------------------

Cash provided by (used in):

Cash flows provided by (used in) operating activities:
        Loss for the year                                $     (1,813,005)   $   (1,718,342)   $     (1,455,881)
        Items not involving cash:
           Amortization                                             2,853            17,319              19,357
           Loss from write-down of marketable
             securities                                                 -                 -               3,868
           Loss on disposal of equipment                            3,972            44,862                   -
           Write-down of mineral properties and
             deferred exploration                                 589,669           120,435                   -
           Stock-based compensation expense                       156,000            24,419                   -
        Changes in non-cash operating working capital:
           Accounts receivable                                      6,508            13,738              (6,180)
           Advances and prepaid expenses                            1,816            (3,004)             48,722
           Accounts payable and accrued liabilities                35,651            15,090              10,265
           Due to related party                                       (50)          (95,986)              3,926
           Taxes payable                                           (3,000)           (3,204)              6,640
        ------------------------------------------------ --- --------------- -- -------------- -- ----------------
                                                               (1,019,586)       (1,584,673)         (1,369,283)

Cash flows provided by (used in) investing activities:
        Purchase of equipment                                           -           (19,105)             (3,772)
        Proceeds on sale of equipment                               4,002             1,000                 788
        Mineral properties                                              -           (21,839)                  -
        Deferred exploration costs                                      -                 -             (44,456)
        ------------------------------------------------ --- --------------- -- -------------- -- ----------------
                                                                    4,002           (39,944)            (47,440)

Cash flows provided by financing activities:
        Shares issued for cash, net of share issue
          costs                                                   720,002         2,248,814             920,409
-------------------------------------------------------- ------------------- ------------------ ------------------

Increase (decrease) in cash and cash equivalents                 (295,582)           624,197           (496,314)

Cash and cash equivalents, beginning of year                    1,210,076            585,879          1,082,193
-------------------------------------------------------- ------------------- ------------------ ------------------

Cash and cash equivalents, end of year                   $        914,494    $     1,210,076    $       585,879
-------------------------------------------------------- -- ---------------- -- --------------- - ----------------

Supplementary information:
        Income taxes paid                                $          8,307    $        8,201    $          6,576
        Non-cash transactions
           Shares issued pursuant to consulting
            agreement (note 7)                                    156,000                 -              29,000

------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------

1.   Nature of operations:

     On November 1, 1997,  Mountain  Province  Mining Inc. and 444965 B.C.  Ltd.
     amalgamated  and  continued  as Mountain  Province  Mining  Inc.  under the
     Company Act (British  Columbia).  During the year ended March 31, 2001, the
     Company changed its name to Mountain Province Diamonds Inc.

     Pursuant to an Assignment  and Assumption  agreement  dated March 25, 2004,
     the  Company  reorganized,  assuming  the  assets  and  liabilities  of its
     wholly-owned  subsidiary  Mountain  Glen  Mining  Inc.  ("Mountain  Glen"),
     including the 16,015,896 common shares of the Company held by Mountain Glen
     (the  "Shares").  Following  completion  of the transfer of the Shares from
     Mountain  Glen to the  Company,  in  accordance  with  the  Assumption  and
     Distribution  Agreement,  the Shares  were  cancelled  and  restored to the
     status of  authorized  but unissued  shares on March 30, 2004.  There is no
     impact to the consolidated outstanding share capital as presented in note 6
     to the  financial  statements  as the  shares  held by  Mountain  Glen have
     previously  been  eliminated  for  purposes of the  consolidated  financial
     statements.  The Shares were  non-voting  and were not  eligible  for share
     distributions while held by Mountain Glen.

     The Company is in the process of exploring its mineral  properties  and has
     not yet determined  whether these properties  contain mineral reserves that
     are economically  recoverable.  The underlying value and  recoverability of
     the amounts shown for mineral properties and deferred  exploration costs is
     dependent  upon the  ability of the  Company  and/or its  mineral  property
     partners to complete exploration and development and discover  economically
     recoverable reserves and upon future profitable production or proceeds from
     disposition  of the  Company's  mineral  properties.  Failure  to  discover
     economically  recoverable  reserves  will  require the Company to write-off
     costs capitalized to date.


2.   Significant accounting policies:

     These  consolidated  financial  statements are prepared in accordance  with
     Canadian  generally  accepted  accounting  principles.  A reconciliation of
     material  measurement   differences  between  Canadian  generally  accepted
     accounting  principles  and United  States  generally  accepted  accounting
     principles  and  practices   prescribed  by  the  Securities  and  Exchange
     Commission, is included in note 9.

     (a)  Basis of consolidation:

          The  consolidated  financial  statements  include the  accounts of the
          Company and wholly owned subsidiaries,  Mountain Province Mining Corp.
          (U.S.A.) and Mountain  Glen Mining Inc. All  significant  intercompany
          amounts and transactions have been eliminated on consolidation.

     (b)  Cash and cash equivalents:

          Cash equivalents consist of highly liquid investments that are readily
          convertible to known amounts of cash and generally have  maturities of
          three months or less when acquired.

     (c)  Marketable securities:

          Marketable securities are carried at the lower of cost and quoted fair
          market value.


<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------

2.   Significant accounting policies (continued):

     (d)  Mineral properties and deferred exploration costs:

          The Company  accounts  for its mineral  properties  whereby all direct
          costs related to the acquisition, exploration and development of these
          properties are capitalized. All sales and option proceeds received are
          first  credited  against the costs of the related  property,  with any
          excess credited to earnings. Once commercial production has commenced,
          the net costs of the applicable property will be charged to operations
          using the  unit-of-production  method based on  estimated  recoverable
          reserves.  On an ongoing  basis,  the Company  evaluates each property
          based on results to date to determine the nature of  exploration  work
          that is warranted in the future. If there is little prospect of future
          work on a property  being  carried out, the deferred  costs related to
          that property are written down to the estimated amount recoverable.

          The amounts shown as mineral properties and deferred exploration costs
          represent  unamortized  costs to date and do not  necessarily  reflect
          present or future values.

          All general and administrative expenses are expensed as incurred.

     (e)  Equipment:

          Equipment  is  initially  recorded  at cost and  amortized  over their
          estimated useful lives on the declining balance basis at the following
          annual rates:

             ---------------------------------------------------- ------
             Asset                                                 Rate
             ---------------------------------------------------- ------

             Furniture and equipment                              20%
             Computers                                            30%

             -----------------------------------------------------------

     (f)  Stock-based compensation:

          The Company  accounts for all stock based  payments to  non-employees,
          and  employee  awards that are direct  awards of stock,  granted on or
          after April 1, 2002, using the fair value method. No compensation cost
          is  recorded   for  other   stock   options   granted  to   employees.
          Consideration  paid by employees  on the exercise of stock  options is
          recorded as share  capital.  The Company  presents in the notes to the
          financial  statements  the pro  forma  loss and loss per share had the
          fair value  method been used to account for the  employee  stock-based
          compensation awards (note 6(c)).

          Under  the  fair  value   based   method,   stock-based   payments  to
          non-employees  are  measured  at the fair  value of the  consideration
          received,  or the fair  value of the  equity  instruments  issued,  or
          liabilities  incurred,  whichever is more reliably  measurable and are
          amortized over the vesting period. The cost of stock-based payments to
          non-employees  that are fully vested and non  forfeitable at the grant
          date is measured and  recognized  at that date.  Stock-based  payments
          that  vest  over a period of time are  recognized  on a  straight-line
          basis over the vesting period.


<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------

2.   Significant accounting policies (continued):

     (g)  Income taxes:

          The Company  uses the asset and  liability  method of  accounting  for
          income taxes. Under the asset and liability method,  future tax assets
          and  liabilities  are  recognized  for  the  future  tax  consequences
          attributable to differences  between the financial  statement carrying
          amounts of existing assets and  liabilities  and their  respective tax
          bases. Future tax assets and liabilities are measured using enacted or
          substantively enacted tax rates expected to apply to taxable income in
          the years in which  those  temporary  differences  are  expected to be
          recovered or settled.  The effect on future tax assets and liabilities
          of a change in tax rates is  recognized  in income in the period  that
          includes the  enactment  date.  The amount of future income tax assets
          recognized is limited to the amount that is more likely than not to be
          realized.

     (h)  Loss per share:

          Basic loss per share is  calculated  by dividing the loss for the year
          by the weighted average number of common shares outstanding during the
          year.  For  all  periods  presented,  loss  available  to  the  common
          shareholders equals the reported loss. In addition, the treasury stock
          method is used to compute the dilutive effect of options, warrants and
          similar instruments.  For all periods presented,  all such instruments
          are anti-dilutive.

     (i)  Foreign currency translation:

          Monetary  assets and liabilities  expressed in a foreign  currency are
          translated  at rates of  exchange  in  effect  at the end of the year.
          Revenue and expense items are  translated at the average rates for the
          months in which such items are  recognized  during the year.  Exchange
          gains and losses  arising  from the  translation  are  included in the
          statement of operations.

     (j)  Financial instruments:

          The fair values of the Company's cash and cash  equivalents,  accounts
          receivable,  accounts  payable  and  accrued  liabilities  and  due to
          related  party  approximate  their  carrying  values  because  of  the
          immediate  or short term to maturity of these  financial  instruments.
          The fair value of marketable securities is disclosed in note 3.

     (k)  Use of estimates:

          The  preparation of financial  statements in accordance with generally
          accepted  accounting  principles requires management to make estimates
          and  assumptions  that affect the  reported  amounts of the assets and
          liabilities and disclosure of contingent assets and liabilities at the
          date of the financial  statements and the reported amounts of revenues
          and expenses during the reporting period.  Significant areas requiring
          the  use  of  management  estimates  relate  to the  determination  of
          impairment of mineral properties,  deferred  exploration and equipment
          and their useful lives for  amortization or depletion,  as well as the
          assumptions   used  in  determining  the  fair  value  of  stock-based
          compensation. Actual results could differ from these estimates.



<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------

2.   Significant accounting policies (continued):

     (l)  Comparative figures:

          Certain of the prior year's comparative figures have been reclassified
          to conform with the current year's presentation.


3.   Marketable securities:

     The quoted  market  value of  marketable  securities  at March 31, 2004 was
     $82,322 (2003 - $100,178).


4.   Mineral properties and deferred exploration:

<TABLE>
<CAPTION>
<S>                                                                      <C>                  <C>
        Acquisition costs:

        ---------------------------------------------------------------- --- ---------------- --- ----------------
                                                                                       2004                 2003
        ---------------------------------------------------------------- --- ---------------- --- ----------------

        Gahcho Kue Project                                               $        1,552,553   $        1,552,553
        Haveri Project                                                              119,386              121,839
        Baffin Island Project                                                             -               27,267
        ---------------------------------------------------------------- --- ---------------- --- ----------------

                                                                         $        1,671,939   $        1,701,659
        ---------------------------------------------------------------- --- ---------------- --- ----------------
</TABLE>

        Deferred exploration:
<TABLE>
<CAPTION>
<S>                                            <C>             <C>               <C>                <C>
        -------------------------------------- -- ------------ -- -------------- -- -------------- --- ------------
                                                                                           Rabbit
                                                   Gahcho Kue            Baffin            Tracks
                                                      project            Island           Diamond            Total
                                                                        project           project
        -------------------------------------- -- ------------ -- -------------- -- -------------- --- ------------

        Balance, March 31, 2001                $  30,861,544   $       556,973   $        29,953    $  31,448,470

        Exploration expenditures:
             Airborne and geophysical survey               -                 -            28,764           28,764
             Consulting and other
               professional services                       -             2,307             3,776            6,083
             Line-cutting                                  -                 -            12,000           12,000
             Report and filing fees                        -               669                 -              669
             Travel, transportation and                    -                 -             8,537            8,537
               supplies
             Reimbursement of costs by
               provincial government                       -                 -           (11,597)         (11,597)
             --------------------------------- -- ------------ -- -------------- -- -------------- --- ------------
                                                           -             2,976            41,480           44,456

        -------------------------------------- -- ------------ -- -------------- -- -------------- --- ------------

        Balance, March 31, 2002                   30,861,544           559,949            71,433       31,492,926

        Write-down of deferred exploration                 -                 -           (71,433)         (71,433)
        costs
        -------------------------------------- -- ------------ -- -------------- -- -------------- --- ------------

        Balance, March 31, 2003                   30,861,544           559,949                 -       31,421,493

        Write-down of deferred exploration                 -          (559,949)                -         (559,949)
        costs
        -------------------------------------- -- ------------ -- -------------- -- -------------- --- ------------

        Balance, March 31, 2004                $  30,861,544   $             -   $             -    $  30,861,544
        -------------------------------------- -- ------------ -- -------------- -- -------------- --- ------------
</TABLE>

<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------

4.   Mineral properties and deferred exploration (continued):

     (a)  Gahcho Kue project:

          The Company currently holds a 44.1% interest in the Gahcho Kue project
          located in the District of Mackenzie,  Northwest Territories,  Canada.
          Other  interests  are held by De Beers Canada  Exploration  Inc.  ("De
          Beers Canada") (51%) and Camphor Ventures Inc.  ("Camphor") (4.9%). De
          Beers  Canada has been  granted the right to earn up to a 60% interest
          in the Gahcho Kue project.

          De Beers Canada has agreed to carry all subsequent  costs incurred and
          has committed to certain minimum expenditures and activities per year.
          Decisions are to be jointly (via a management  committee consisting of
          two members each from De Beers Canada and the Company)  made as to the
          further  progress  of the  project,  and  specifically  the  timing of
          possible full conceptual  pre-feasibility and feasibility  studies. De
          Beers Canada is to continue to fund the  exploration  and  development
          work.  Once the desktop study shows that an internal rate of return of
          15% can be achieved,  De Beers Canada is to proceed with a feasibility
          study.  If they do not proceed with the  feasibility  study,  De Beers
          interest will be diluted down to 30%.

          Upon  completion of a feasibility  study,  De Beers Canada interest in
          the claims shall  increase to 55% and upon  development,  construction
          and  commencement of production of a commercial  mine, De Beers Canada
          interest shall increase to 60%.

          All costs paid with respect to the expenses  incurred by the venturers
          shall be  repaid  first to De Beers  Canada  for all  exploration  and
          development  costs  incurred by De Beers Canada outside of the Kennedy
          Lake area  since  March 8, 2000 out of 100% of annual  available  cash
          flow  (i.e.  cash flow  after  provision  for  ongoing  operating  and
          non-operating  costs including third party debt  repayments)  from any
          mine  constructed  on the  property  with  interest at a rate equal to
          LIBOR plus 5% compounded annually; then to all venturers for all other
          exploration,  development  and mine  construction  costs out of 90% of
          annual  available cash flow from any mine  constructed on the property
          with  interest at a rate equal to LIBOR plus 4%  compounded  annually;
          and the remaining 10% of such available cash flow shall be distributed
          to the  participants in proportion to their  respective  participating
          interests.

          During the years ended March 31, 2003 and 2002, the venturers  allowed
          certain  claims to lapse.  As the claims that were retained  relate to
          the area that is of interest,  no write-down has been taken related to
          the lapsing of the claims.

          On  November  26,  2003,  the Board of  Directors  of De Beers  Canada
          approved the commencement of a pre-feasibility study on the Gahcho Kue
          Project.  The estimated $25 million cost is to be borne entirely by De
          Beers Canada.



<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------

4.   Mineral properties and deferred exploration (continued):

     (b)  Haveri project:

          The Company has a 100%  interest in this mineral  property  located in
          Northern  Europe.  On  October  10,  2002,  Northern  Lion Gold  Corp.
          ("Northern  Lion"),  formerly Vision Gate Ventures Limited was granted
          an option to acquire a 70%  undivided  interest in the Haveri Mine. In
          exchange  for  this  option,  Northern  Lion  must  expend  a total of
          $1,650,000 in  exploration  and  development  expenditures  over three
          years as follows:

             ---------------------------------------------------- --- ----------

             By:
                 October 10, 2003                            $          50,000
                 October 10, 2004                                      600,000
                 October 10, 2005                                    1,000,000

             ---------------------------------------------------- --- ----------

          Northern Lion may exercise the option as to a 51%  undivided  interest
          at any time prior to October 10,  2004 by  delivering  written  notice
          confirming a  cumulative  total of $650,000 in  expenditures;  and the
          remaining 19% undivided interest at any time prior to October 10, 2005
          by  delivering   written  notice  confirming  a  cumulative  total  of
          $1,650,000 in expenditures.

          Once a positive  feasibility study of the construction and development
          of a mine on the  property  is  complete,  Northern  Lion  will  issue
          200,000  of  its  common  shares  to  the  Company.   Once  commercial
          production begins on the property,  Northern Lion will issue a further
          200,000 of its common shares to the Company. Northern Lion is entitled
          to terminate  the  agreement at any time prior to the exercise date on
          30 days written notice.

          The Company has granted a third party a right to receive an  aggregate
          commencement-of-production  payment  of  US$500,000  phased  over  two
          years.

     (c)  Baffin Island claims:

          Pursuant to an agreement  dated July 13, 1999, the Company was granted
          an option to acquire a 50% interest in four mineral  claims located in
          the Northwest Territories and Nunavut Territory.  In order to exercise
          the option and earn the 50% interest in the property,  the Company had
          to incur  expenditures  on or in respect of the  property  of not less
          that  $300,000 on or before July 13,  2000.  The Company  incurred the
          minimum required  expenditure and exercised its option.  Subsequent to
          entering into the agreement,  the Company staked another claim that is
          subject to the option agreement.

          During  the year  ended  March 31,  2004,  the  property  and  related
          deferred  exploration  was written  down to a nil value as the Company
          will  not be  proceeding  with  further  exploration  and  will not be
          renewing the claims.

     (d)  Rabbit Tracks Diamond project:

          During the year  ended  March 31,  2003,  the  Rabbit  Tracks  Diamond
          property  in Manitoba  was written  down to a nil value as the Company
          will  not be  proceeding  further  with  exploration  and  will not be
          renewing the claims.



<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------

5.   Equipment:

<TABLE>
<CAPTION>
<S>                                                              <C>                  <C>                  <C>
        ------------------------------------------- --- ---------------- --- ---------------- --- ----------------
                                                                                 Accumulated             Net book
        2004                                                       Cost         amortization                value
        ------------------------------------------- --- ---------------- --- ---------------- --- ----------------

        Furniture                                   $           11,088    $           8,772   $            2,316
        Equipment                                                4,065                2,830                1,235
        Computers                                               14,584               11,764                2,820
        ------------------------------------------- --- ---------------- --- ---------------- --- ----------------

                                                    $           29,737    $          23,366   $            6,371
        ------------------------------------------- --- ---------------- --- ---------------- --- ----------------


        ------------------------------------------- --- ---------------- --- ---------------- --- ----------------
                                                                                 Accumulated             Net book
        2003                                                       Cost         amortization                value
        ------------------------------------------- --- ---------------- --- ---------------- --- ----------------

        Furniture                                   $           11,088    $           8,364   $            2,724
        Equipment                                               15,497                4,663               10,834
        Computers                                               14,584               10,944                3,640
        ------------------------------------------- --- ---------------- --- ---------------- --- ----------------

                                                    $           41,169    $          23,971   $           17,198
        ------------------------------------------- --- ---------------- --- ---------------- --- ----------------
</TABLE>


6.   Share capital:

     (a)  Authorized:

          500,000,000 common shares without par value

     (b)  Issued and fully paid:
<TABLE>
<CAPTION>
<S>                                                                                  <C>                  <C>
             ----------------------------------------------------------- -- ----------------- -- -----------------
                                                                                      Number
                                                                                   of shares               Amount
             ----------------------------------------------------------- -- ----------------- -- -----------------

             Balance, March 31, 2001                                             46,150,493   $       52,521,037

             Issued pursuant to Rabbit Tracks Diamond project                        50,000               29,000

             Issued for cash pursuant to:
                 Private placement                                                1,636,912              902,409
                 Exercise of stock options                                           30,000               18,000
             ----------------------------------------------------------- -- ----------------- -- -----------------

             Balance, March 31, 2002                                             47,867,405           53,470,446

             Issued for cash pursuant to:
                 Exercise of stock options                                          544,900              607,829
                 Exercise of warrants                                             2,169,766            1,640,985
             ----------------------------------------------------------- -- ----------------- -- -----------------

             Balance, March 31, 2003                                             50,582,071           55,719,260

             Issued pursuant to consulting agreement (note 7)                        60,000              156,000

             Issued for cash pursuant to:
                 Exercise of stock options                                          560,040              720,002
             ----------------------------------------------------------- -- ----------------- -- -----------------

             Balance, March 31, 2004                                             51,202,111   $       56,595,262
             ----------------------------------------------------------- -- ----------------- -- -----------------

</TABLE>

<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------

6.   Share capital (continued):

     (b)  Issued and fully paid (continued):

          On March 30, 2004, the Company cancelled  16,015,996 shares previously
          owned by its wholly-owned  subsidiary Mountain Glen that were received
          by the  Company as part of a  reorganization  (note 1). The  cancelled
          shares  have  been  excluded  from the  above  table  for all  periods
          presented.

     (c)  Stock options:

          The Company, through its Board of Directors and shareholders,  adopted
          a November 26, 1998 Stock  Option Plan (the "Plan")  which was amended
          on February 1, 1999.  As at March 31, 2004,  the Company has 1,327,858
          (2003 - 2,399,100)  stock options  outstanding in total,  comprised of
          1,327,858  (2003 - 1,919,100)  granted inside the Plan and nil (2003 -
          480,000) granted outside the plan.

<TABLE>
<CAPTION>
<S>                                                                        <C>                              <C>
             ------------------------------------------------------ --- -------------- -- ------------------------
                                                                               Number            Weighted average
                                                                            of shares              exercise price
             ------------------------------------------------------ --- -------------- -- ------------------------

             Balance, March 31, 2001                                       2,197,036                     $  2.38
                Granted                                                    1,845,000                        1.27
                Exercised                                                    (30,000)                       0.60
                Expired                                                     (261,700)                       3.46
                Cancelled                                                    (89,336)                       1.72
             ------------------------------------------------------ --- -------------- -- ------------------------

             Balance, March 31, 2002                                       3,661,000                        1.78
                Granted                                                      364,000                        1.61
                Exercised                                                   (544,900)                       1.12
                Expired                                                   (1,081,000)                       2.78
             ------------------------------------------------------ --- -------------- -- ------------------------

             Balance, March 31, 2003                                       2,399,100                        1.46
                Granted                                                       12,858                        1.40
                Exercised                                                   (560,040)                       1.29
                Expired                                                     (324,060)                       2.19
                Cancelled                                                   (200,000)                       1.32
             ------------------------------------------------------ --- -------------- -- ------------------------

             Balance, March 31, 2004                                        1,327,858                    $  1.37
             ------------------------------------------------------ --- -------------- -- ------------------------
</TABLE>

              The following table summarizes information about the stock options
              outstanding and exercisable at March 31, 2004:
<TABLE>
<CAPTION>
<S>          <C>                          <C>          <C>              <C>              <C>               <C>
             -------------------------- ---------------------------------------- --- ------------------------------
                                                  Options outstanding                     Options exercisable
                                        ----------------------------------------     ------------------------------
                                                        Weighted       Weighted                           Weighted
                                        Number           average        average           Number           average
                                        of shares      remaining       exercise      exercisable    exercise price
                                                            life          price
             -------------------------- ---------- -------------- -------------- --- ------------ -----------------

             $0.67                        50,000       2.7 years        $  0.67          50,000            $  0.67
             $1.25 - $1.50              1,252,858      2.2 years           1.38       1,240,000               1.38
             $2.06                        25,000       4.0 years           2.06          25,000               2.06
             -------------------------- ---------- -------------- -------------- --- ------------ -----------------

                                        1,327,858      2.2 years        $  1.37       1,315,000            $  1.38
             -------------------------- ---------- -------------- -------------- --- ------------ -----------------
</TABLE>


<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------

6.   Share capital (continued):

     (c)  Stock options (continued):

          As at March 31, 2004, there were 12,858 options with an exercise price
          of $1.40 that vest in three equal portions of 4,286 on April 20, 2004,
          May 20, 2004 and June 20, 2004. All other options are fully vested.

          During the year ended  March 31,  2004,  the  Company  granted  12,858
          options to an employee at an exercise price of $1.40 per share. During
          the year ended March 31, 2003, the Company  granted 339,000 options to
          directors,  officers and  employees at an exercise  price ranging from
          $1.36 to $1.71 per  share.  The  weighted  average  fair  value of the
          options  granted to  employees  in 2004 was $0.38  (2003 - $0.26).  In
          accordance  with the  Company's  accounting  policy  (note  2(f)),  no
          compensation cost is recorded in these financial  statements for share
          options granted to directors, officers and employees.

          During the year ended March 31, 2003,  the Company also granted 25,000
          options to a consultant at an exercise price of $2.06 per share. These
          options  had a term of five  years or 30 days after  cessation  of the
          consulting agreement.  The fair value of the 25,000 options granted to
          the  consultant was estimated to be $24,419 and has been recorded as a
          consulting expense in the year ended March 31, 2003.

          The  table  below  presents  pro forma net loss and net loss per share
          using the fair market  value  method of  accounting  for all  employee
          stock-based  compensation  plans. The pro forma adjustments  presented
          below pertain to the new options  granted to employees  since adoption
          of the new  stock-based  compensation  standards on April 1, 2002. The
          pro forma  disclosure  does not include  the effect of awards  granted
          before April 1, 2002.

          Reconciliation of pro forma net loss to common shareholders:
<TABLE>
<CAPTION>
<S>                                                                            <C>                <C>
             ------------------------------------------------------------------------------------------------------
                                                                                           2004               2003
             ---------------------------------------------------------------- --- -------------- -- ---------------

              Net loss as reported                                             $    (1,813,005)   $    (1,718,342)
              Pro forma adjustment                                                      (4,944)           (69,957)
             ---------------------------------------------------------------- --- -------------- -- ---------------

              Pro forma net loss                                               $    (1,817,949)   $    (1,788,299)
             ---------------------------------------------------------------- --- -------------- -- ---------------

              Pro forma basic and diluted loss per share                       $         (0.04)   $         (0.04)
             ---------------------------------------------------------------- --- -------------- -- ---------------
</TABLE>

<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------

6.   Share capital (continued):

     (c)  Stock options (continued):

          The fair value of the options  granted to employees and  non-employees
          in 2004 and 2003 has been estimated on the date of the grant using the
          Black-Scholes option pricing model with the following assumptions:

<TABLE>
<CAPTION>
<S>                                                                                        <C>                 <C>
             ------------------------------------------------------------------------------------------------------
                                                                                         2004                2003
             ------------------------------------------------------------- -- ---------------- -- ----------------

              Dividend yield                                                               0%                  0%
              Expected volatility                                                         93%           62% - 75%
              Risk-free interest rate                                                    3.0%                4.0%
              Expected lives                                                    5 to 8 months      1 to 30 months

             ------------------------------------------------------------- ------------------- -------------------
</TABLE>

          Subsequent  to March 31,  2004,  82,858  options  were  exercised  for
          proceeds of $105,500.

     (d)  Share purchase warrants:

          The  following  presents the  continuity  of share  purchase  warrants
          outstanding:

<TABLE>
<CAPTION>
<S>                                <C>         <C>      <C>          <C>       <C>            <C>    <C>
             ------------------- ----------- --------- ----------- --------- ------------ ---------- -----------------
                                 Balance,                                       Balance,
                                 March 31,                                     March 31,  Exercise
             Issue date                2003    Issued   Exercised    Lapsed         2004      price        Expiry date
             ------------------- ----------- --------- ----------- --------- ------------ ---------- -----------------

             December 6, 2001    1,205,878         -           -         -    1,205,878      $ 0.58   December 6, 2004

             ------------------- ----------- --------- ----------- --------- ------------ ---------- -----------------

             ------------------- ----------- --------- ----------- --------- ------------ ---------- ------------------
                                 Balance,                                       Balance,
                                 March 31,                                     March 31,  Exercise
             Issue date                2002    Issued     Exercised  Lapsed         2003      price         Expiry date
             ------------------- ----------- --------- ----------- --------- ------------ ---------- ------------------

             September 15, 2000    983,666         -    (983,666)        -            -       $0.80  September 15, 2002
             October 24, 2000      880,066         -    (755,066)  (125,000)          -        0.80    October 24, 2002
             December 6, 2001    1,636,912         -    (431,034)        -    1,205,878        0.58    December 6, 2004
             ------------------- ----------- --------- ----------- --------- ------------ ---------- ------------------

                                 3,500,644         -   (2,169,766) (125,000)  1,205,878
             ------------------- ----------- --------- ----------- --------- ------------ ---------- ------------------
</TABLE>

7.   Related party transactions:

     Included  in  management  fees  during the year ended March 31, 2004 is nil
     (2003 - $45,000; 2002 - $96,000) for management services paid to a director
     of the Company.

     Included  in  professional  fees  during the year ended  March 31,  2004 is
     $21,000  (2003 - nil) paid for  corporate  services to a company owned by a
     director of the Company.

     During the year ended March 31,  2004,  the Company paid  $176,896  (2003 -
     $193,301; 2002 - $207,913) for consulting,  management, property evaluation
     and  administration  services to a director and to companies in which other
     directors have an interest.

     During the year ended March 31, 2004, the Company paid nil (2003 - $20,340;
     2002  -  $35,200)  for  secretarial  and  public   relations   services  to
     individuals related to a director of the Company.

<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------

7.   Related party transactions (continued):

     During  the year ended  March 31,  2004,  the  Company  entered  into a new
     consulting  agreement with a director.  As compensation for terminating his
     old consulting agreement,  the director is to receive US$120,000 payable in
     12 equal monthly  instalments  commencing  January 1, 2004. As at March 31,
     2004, the remaining  US$90,000 is included in accounts  payable and accrued
     liabilities.  As further  compensation,  60,000  shares  were issued to the
     director  on  February  20,  2004 with  55,000  shares held in escrow to be
     released in 11 equal monthly  portions  commencing  February 27, 2004.  The
     value of the shares based on quoted  market prices on the date of issuance,
     was $156,000 and this amount along with the US $120,000 cash  payment,  has
     been charged to contract  termination  expense  during the year ended March
     31, 2004.

     During the year ended March 31, 2003,  a severance  payment of $331,500 was
     paid to a director of the Company.

     As at March 31,  2004,  $3,000 (2003 - $3,050) was owed to directors of the
     Company.  Amounts  are  repayable  on demand,  unsecured  and  non-interest
     bearing.


8.   Income taxes:

     Income tax expense (recovery) differs from the amounts computed by applying
     the combined federal and provincial tax rate of 36.1% (2003 - 42.6%; 2002 -
     42.6%) to pre-tax income from continuing  operations  primarily as a result
     of losses,  the tax benefits of which have not been recognized.  Income tax
     expense of nil (2003 - $5,581; 2002 - $13,216) relates to large corporation
     tax.

     As at March 31, 2004, the tax effect of the significant  components  within
     the Company's future tax asset (liability) are as follows:

<TABLE>
<CAPTION>
<S>                                                                         <C>                 <C>
        ---------------------------------------------- --- ---------------- --- --------------- -- ---------------
                                                                                         2004               2003
        ---------------------------------------------- --- ---------------- --- --------------- -- ---------------

        Mineral properties and deferred exploration                         $         244,000   $       (286,000)
        Loss carry forwards                                                         2,095,000          3,827,000
        Equipment                                                                     172,000            167,000
        Other                                                                           3,000              4,000
        ---------------------------------------------- --- ---------------- --- --------------- -- ---------------
                                                                                    2,514,000          3,712,000
        Valuation allowance                                                        (2,514,000)        (3,712,000)
        ---------------------------------------------- --- ---------------- --- --------------- -- ---------------

        Net future income tax asset (liability)                             $               -   $              -
        ---------------------------------------------- --- ---------------- --- --------------- -- ---------------
</TABLE>

     At March 31, 2004, the Company has available losses for income tax purposes
     totalling  approximately $5.8 million,  expiring at various times from 2005
     to 2011. Of the available losses $2.3 million are subject to acquisition of
     control rules which may restrict  their future  deductibility.  The Company
     also has available resource tax pools of approximately $33.2 million, which
     may be carried  forward  and  utilized  to reduce  future  taxable  income.
     Included  in the  $33.2  million  of tax  pools  is $24.5  million  that is
     successored,  which  can  only be  utilized  against  taxable  income  from
     specific mineral properties.


<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------

9.   Reconciliation to United States generally  accepted  accounting  principles
     ("US GAAP"):

     As disclosed in note 2, these  financial  statements  have been prepared in
     accordance  with  accounting   principles   generally  accepted  in  Canada
     ("Canadian GAAP"). A description and reconciliation of material measurement
     differences from US GAAP and practices  prescribed by the US Securities and
     Exchange Commission ("SEC") follows:

     (a)  Mineral properties and deferred exploration costs:

          US GAAP requires  that  long-lived  assets be reviewed for  impairment
          whenever events or changes in circumstances indicate that the carrying
          amount of an asset may not be  recoverable.  In performing  the review
          for  recoverability,  the Company is to estimate the future cash flows
          expected  to  result  from  the  use of the  asset  and  its  eventual
          disposition.   If  the  sum  of  the   expected   future   cash  flows
          (undiscounted  and without interest charges) is less than the carrying
          amount of the asset, an impairment loss is recognized.  SEC staff have
          indicated  that  their  interpretation  of US  GAAP  requires  mineral
          property  exploration  and land use costs to be  expensed  as incurred
          until  commercially  minable deposits are determined to exist within a
          particular property as cash flows cannot be reasonably estimated prior
          to such  determination.  Accordingly,  for all periods presented,  the
          Company has expensed  all mineral  property  exploration  and land use
          costs for US GAAP  purposes.  In fiscal 2002 and prior years,  mineral
          property  acquisition  costs were capitalized for both Canadian and US
          GAAP  purposes.  In  fiscal  2003,  the  Company  changed  its US GAAP
          accounting  policy for property  acquisition costs to expense these as
          incurred.  Accordingly,  $12,865,615 of mineral  property  acquisition
          costs,  representing the cumulative effect of the change in accounting
          policy,  have been  expensed  for US GAAP  purposes  in  fiscal  2003,
          including $12,914,617 incurred in prior years.

          For Canadian GAAP,  cash flows relating to mineral  property costs are
          reported as investing  activities.  For US GAAP,  these costs would be
          characterized as operating activities.

     (b)  Stock-based compensation:

          The  Financial  Accounting  Standards  Board  in the U.S.  has  issued
          Statement of Financial  Accounting  Standards No.123,  "Accounting for
          Stock-Based   Compensation"  ("FAS  123").  The  statement  encourages
          entities to adopt a fair value  methodology of accounting for employee
          stock-based compensation.


<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------

9.   Reconciliation to United States generally  accepted  accounting  principles
     ("US GAAP") (continued):

     (b)  Stock-based compensation (continued):

          As  permitted  by the  statement,  the Company has elected to continue
          measuring compensation costs using the intrinsic value based method of
          accounting  for  stock-based   compensation  issued  to  employees  as
          prescribed  by APB Opinion No. 25. Under the  intrinsic  value method,
          compensation is the excess,  if any, of the quoted market value of the
          stock  at the  date  of the  granting  of  options  to  employees  and
          directors  to purchase  stock over the amount an optionee  must pay to
          acquire the stock at that date.  This excess is recognized by a charge
          to  operations  over the  vesting  period.  As the  exercise  price of
          options   granted  by  the   Company  to   employees   and   directors
          approximates,  or is greater than, the market value at the grant date,
          the Company has determined that the adoption of this accounting policy
          for stock  options  granted to employees and directors has no material
          effect on its results of operations for US GAAP purposes.

          Stock options granted to  non-employees  for services  rendered to the
          Company are  required to be  accounted  for as  compensation  cost and
          charged to  operations  as the services are  performed and the options
          earned.  The  compensation  cost is to be  measured  based on the fair
          value of the stock  options  granted.  This  method is  similar to the
          Canadian  standard adopted as of April 1, 2002, and so the adoption of
          the  accounting  policy  for US GAAP  purposes  does not  result  in a
          measurement  difference  for grants  made in the years ended March 31,
          2003 and 2004.  The  stock-based  compensation  expense  in respect of
          stock options granted to non-employees,  under US GAAP, based upon the
          fair value of the options granted,  determined using an option pricing
          model,  would  be  $20,000  for the  year  ended  March  31,  2002 and
          cumulatively  $1,704,000 from the date of adoption of FAS 123 to March
          31, 2002.

     (c)  Unrealized holding gains and losses on marketable securities:

          Statement of Financial Accounting Standards Board No. 115, "Accounting
          for  Investments in Debt and Equity  Securities"  ("FAS 115") requires
          that  the   Company's   marketable   securities   be   classified   as
          available-for-sale  securities  and that  they be  recorded  at market
          value with unrealized  gains or losses recorded outside of income as a
          component  of  shareholders'  equity  unless  a  decline  in  value is
          considered  to be  other  then  temporary.  The  Company's  marketable
          securities  are  presented  at the lower of cost or market value under
          Canadian GAAP. At March 31, 2002, the Company's marketable  securities
          were written down to market value. As the write-down was considered to
          be other than  temporary,  there was no US GAAP difference in 2002. At
          March  31,  2004,  there  is an  unrealized  gain of  $49,930  (2003 -
          $67,786) between the carrying value and market value of the securities
          which  has been  recorded  through  comprehensive  income  for US GAAP
          purposes.


<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------

9.   Reconciliation to United States generally  accepted  accounting  principles
     ("US GAAP") (continued):

     (d)  Reporting comprehensive income:

          Statement  of  Financial  Accounting  Standards  No.  130 ("FAS  130")
          "Reporting  Comprehensive  Income",   establishes  standards  for  the
          reporting and display of comprehensive  income and its components in a
          full set of general purpose financial statements. Comprehensive income
          equals net income  (loss)  for the  period as  adjusted  for all other
          non-owner changes in shareholders'  equity.  FAS 130 requires that all
          items that are required to be recognized under accounting standards as
          components  of  comprehensive   income  be  reported  in  a  financial
          statement. For the year ended March 31, 2004, the Company has recorded
          an  unrealized  holding gain of $49,930 (2003 - $67,786) on marketable
          securities   classified  as  "available  for  sale"  securities  as  a
          component of  comprehensive  income under US GAAP.  For the year ended
          March 31, 2002, comprehensive loss equals loss for the year.

     (e)  Recent accounting pronouncements:

          In May 2003,  the FASB issued SFAS No.  150,  "Accounting  for certain
          Financial  Instruments  with  Characteristics  of both Liabilities and
          Equity"  ("SFAS No. 150").  SFAS 150 requires  that certain  financial
          instruments  issued  in  the  form  of  shares  that  are  mandatorily
          redeemable  as  well  as  certain  other   financial   instruments  be
          classified as liabilities in the financial statements. SFAS No. 150 is
          effective for financial instruments entered into or modified after May
          31, 2003.

          The  adoption  of  SFAS  150 did  not  and is not  expected  to have a
          material affect on the Company's consolidated financial statements.

          In addition,  the FASB and Emerging  Issues Task Force  ("EITF")  have
          issued  a  variety  of   interpretations   including   the   following
          interpretations with wide applicability:

          o    Financial  Interpretation  No. 46 ("FIN 46"),  "Consolidation  of
               Variable Interest Entities", which addresses the consolidation of
               variable   interest   entities    (formerly    referred   to   as
               "Special-Purpose  Entities").  The  Interpretation  is  generally
               effect for interim or annual periods beginning after December 15,
               2003.

          o    In November  2002,  the EITF  reached a consensus on Issue 00-21,
               "Revenue Arrangements with Multiple Deliverables" ("EITF 00-21").
               This  consensus   addresses  issues  related  to  separating  and
               allocating value to the individual  elements of a single customer
               arrangement  involving  obligations  regarding multiple products,
               services, or rights which may be fulfilled at different points in
               time or over  different  periods of time.  EITF 00-21 guidance is
               applicable  for  arrangements  entered  into  in  fiscal  periods
               beginning after June 15, 2003.

          To date,  the  adoption of FIN 46 and EITF 00-21 has not  impacted the
          Company's consolidated financial statements.


<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------

9.   Reconciliation to United States generally  accepted  accounting  principles
     ("US GAAP") (continued):

     (f)  Reconciliation:

          The  effect  of the  differences  between  Canadian  GAAP  and US GAAP
          (including  practices  prescribed  by the  SEC)  on  the  consolidated
          balance  sheets,  statements  of loss and cash flows is  summarized as
          follows:

<TABLE>
<CAPTION>
<S>                                                                      <C>                  <C>
              ---- ----------------------------------------------------- --- ---------------- --- -----------------
                                                                                    Years ended March 31,
                                                                             -------------------------------------
                                                                                       2004                  2003
              ---- ----------------------------------------------------- --- ---------------- --- -----------------

                 (i) Total assets, under Canadian GAAP                     $     33,513,553   $        34,417,955
                   Adjustment for mineral property acquisition and
                     deferred exploration costs (note 9(a))                     (32,533,483)          (33,123,152)
                   Adjustment for change in fair value of available
                     for sale marketable securities (notes 9(c) and                  49,930                67,786
                     (d))
                   ----------------------------------------------------- --- ---------------- --- -----------------

                   Total assets, under US GAAP                           $        1,030,000   $         1,362,589
                   ----------------------------------------------------- --- ---------------- --- -----------------

                 (ii) Accumulated other comprehensive income for US GAAP purposes:

                   Adjustment for change in fair value of available
                      for sale marketable securities (note 9(c) and      $           49,930   $            67,786
                      (d))
                   ----------------------------------------------------- --- ---------------- --- -----------------

              (iii) Contributed surplus:

                   Contributed surplus, under Canadian GAAP              $           24,419   $            24,419
                   Adjustment for stock-based compensation (note 9(b))
                                                                                  1,704,000             1,704,000
                   ----------------------------------------------------- --- ---------------- --- -----------------

                   Contributed surplus, under US GAAP                    $        1,728,419   $         1,728,419
                   ----------------------------------------------------- --- ---------------- --- -----------------

              (iv) Deficit:

                   Deficit, under Canadian GAAP                          $      (23,378,874)  $       (21,565,869)
                   Adjustment for mineral property acquisition costs
                     and deferred exploration (note 9(a))                       (32,533,483)          (33,123,152)
                   Adjustments for stock-based compensation (note 9(b))
                                                                                 (1,704,000)           (1,704,000)
                   ----------------------------------------------------- --- ---------------- --- -----------------

                   Deficit, under US GAAP                                $      (57,616,357)  $       (56,393,021)
                   ----------------------------------------------------- --- ---------------- --- -----------------
</TABLE>

<PAGE>

MOUNTAIN PROVINCE DIAMONDS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended March 31, 2004, 2003 and 2002
--------------------------------------------------------------------------------

9.   Reconciliation to United States generally  accepted  accounting  principles
     ("US GAAP") (continued):

(f)  Reconciliation (continued):

              (v) Loss and loss per share for the year:

<TABLE>
<CAPTION>
<S>                                                         <C>                <C>               <C>
                   ---------------------------------------- ------------------------------------------------------
                                                                            Years ended March 31
                                                            ------------------------------------------------------
                                                                        2004              2003              2002
                   ---------------------------------------- ---- ------------- --- ------------- --- -------------

                   Loss for the year, under Canadian GAAP   $     (1,813,005)  $    (1,718,342)  $    (1,455,881)
                   Adjustment for write-down of mineral
                     property acquisition and deferred
                     exploration costs (note 9(a))                   589,669           120,435           (44,456)
                   Adjustment for stock-based
                     compensation (note 9(b))                              -                 -           (20,000)
                   ---------------------------------------- ---- ------------- --- ------------- --- -------------

                   Loss before cumulative effect of
                     change in accounting policy                  (1,223,336)       (1,597,907)                -
                   Adjustment for mineral property
                     acquisition costs (note 9(a))                         -       (12,914,617)                -
                   ---------------------------------------- ---- ------------- --- ------------- --- -------------

                   Loss for the year, under US GAAP               (1,223,336)      (14,512,524)      (1,520,337)
                   Other comprehensive income:
                      Change in fair value of available
                      for sale marketable securities                 (17,856)           67,786                 -
                      (noted 9(c) and (d))
                   ---------------------------------------- ---- ------------- --- ------------- --- -------------

                   Comprehensive loss, under US GAAP        $     (1,241,192)  $   (14,444,738)  $   (1,520,337)
                   ---------------------------------------- ---- ------------- --- ------------- --- -------------

                   Basic and diluted loss per share,
                     under US GAAP                                  $  (0.02)         $  (0.29)         $  (0.03)
                   ---------------------------------------- ---- ------------- --- ------------- --- -------------

             (vi) Cash provided by (used in) operating
                     activities, under Canadian GAAP         $    (1,109,586)  $     (1,584,673)  $    (1,369,283)
                   Adjustment for mineral properties                       -            (21,839)                -
                     (note 9(a))
                   Adjustment for deferred exploration
                     (note 9(a))                                           -                  -           (44,456)
                   ----------------------------------------- --- ------------- --- -------------- -- --------------

                   Cash provided by (used in) operating
                     activities, under US GAAP               $    (1,109,586)  $     (1,606,512)  $    (1,413,739)
                   ----------------------------------------- --- ------------- --- -------------- -- --------------

             (vii) Cash provided by (used in) investment
                     activities, under Canadian GAAP         $         4,002   $        (39,944)  $       (47,440)
                   Adjustment for mineral properties                       -             21,839                 -
                     (note 9(a))
                   Adjustment for deferred exploration
                     (note 9(a))                                           -                  -            44,456
                   ----------------------------------------- --- ------------- --- -------------- -- --------------

                   Cash provided by (used in) investment
                     activities, under US GAAP               $         4,002   $        (18,105)  $        (2,984)
                   ----------------------------------------- --- ------------- --- -------------- -- --------------

</TABLE>

<PAGE>

                                  Exhibit 4.10
<PAGE>

                              CONSULTING AGREEMENT

THIS AGREEMENT made the 1st day of January 2004.

BETWEEN:

          Mountain Province Diamonds Inc., a company  amalgamated under the laws
          of the  Province of British  Columbia,  having an office at 21 Nesbitt
          Drive, Toronto, Ontario M4W 2G2;

          (the "Company")

AND:

          Jan  Vandersande,  of 1777 Maywood  Avenue,  Upland,  California,  USA
          91784;

          (the "Consultant")


WHEREAS:

A. The Consultant has been providing  management and administrative  services to
the  Company  under a  consulting  agreement  dated June 1, 1997,  as amended on
January 1, 2001, January 1, 2002 and December 31, 2002 (the "Old Agreement");

B. The Company and the Consultant have agreed to terminate the Old Agreement and
all of the rights and obligations of the parties thereunder;

C. The Company has agreed to engage the  Consultant  to provide  management  and
administrative  services to the Company under the terms and conditions contained
herein and the Consultant has agreed to provide such services; and

D. This Agreement supersedes the Old Agreement;

NOW THEREFORE THIS AGREEMENT  WITNESSES that in  consideration  of the premises,
the mutual  covenants and  agreements set forth in this Agreement and other good
and  valuable  consideration  (the  receipt and  sufficiency  of which is hereby
acknowledged by each of the parties), the parties hereby agree as follows:

                                   ARTICLE 1
                         DEFINITIONS AND INTERPRETATION

1.1      Definitions

In this  Agreement,  the  following  words and  expressions  have the  following
meanings unless the context otherwise requires:

     (a)  "Agreement"  means  this  agreement  and  schedules  attached  to this
          agreement, as amended or supplemented from time to time.

     (b)  "approved by the Company" or words of similar import means approved by
          an authorized representative of the Company other than the Consultant.


<PAGE>

     (c)  "Associates"  has the  meaning  given to that  term  under  subsection
          1.1(h).

     (d)  "Board" means the board of directors of the Company.

     (e)  "Business" means (i) the  acquisition,  exploration and development of
          natural  resource  properties;  and (ii) any other  material  business
          carried on from time to time by the  Company or another  member of the
          Group.

     (f)  "Commencement Date" means January 1, 2004.

     (g)  "Competitive  Business"  means a Person  engaged  in the  business  of
          acquiring, exploring or developing,  directly or indirectly, a natural
          resource property.

     (h)  "Confidential  Information" means trade secrets and other information,
          in whatever form or media, in the possession or control of a member of
          the  Group,  which is owned by a member  of the Group or by one of its
          clients or  suppliers or a third party with whom a member of the Group
          has a business  relationship  (collectively,  the  "Associates"),  and
          which is not generally  known to the public and has been  specifically
          identified as confidential or proprietary,  or its nature is such that
          it would generally be considered confidential in the industry in which
          the Group and its Associates  operate,  or which a member of the Group
          is obligated to treat as  confidential  or  proprietary.  Confidential
          Information   includes,   without  limitation,   the  following:   (i)
          confidential  or proprietary  facts,  materials and other  information
          related to the  Properties  or the  Business,  including  all  related
          developmental or experimental work or research,  related documentation
          owned or  marketed by a member of the Group and  related  maps,  drill
          cores, assays, drill logs,  geological data, technical data, technical
          procedures  and  proprietary   techniques  to  select   properties  of
          interest,  the  locations of  potential  prospects,  reports,  models,
          programs and test results,  patent  applications,  concepts,  designs,
          flowcharts, ideas, programming techniques, specifications and software
          programs  (including  source  code  listings),   methods,   processes,
          inventions,   sources,   drawings,   prototypes  and  patterns;   (ii)
          information  regarding the Group's  business  operations,  methods and
          practices,  including market strategies,  product pricing, margins and
          hourly rates for staff and information regarding the financial,  legal
          and corporate affairs of each member of the Group;  (iii) the names of
          the Group's  Associates  and the nature of the  Group's  relationships
          with such Associates;  and (iv) technical and business  information of
          or regarding the Group's Associates. Confidential Information does not
          include  information  that is or becomes  generally  available  to the
          public  without the fault of the Consultant or that the Consultant can
          establish, through written records, was in his possession prior to its
          disclosure in connection with the consulting relationship.

     (i)  "Group" means the Company and its  affiliates (as such term is defined
          in the Company Act  (British  Columbia)  (as amended or replaced  from
          time to time)).

     (j)  "Old  Agreement"  has the meaning given to such term in paragraph A of
          the preamble.

     (k)  "Person" means any individual, partnership, limited partnership, joint
          venture,  syndicate, sole proprietorship,  company or corporation with
          or without share capital,  unincorporated association, trust, trustee,
          executor,   administrator  or  other  legal  personal  representative,
          regulatory body or agency, government or governmental agency or entity
          however designated or constituted.


<PAGE>

     (l)  "Properties" means all (i) natural resource property interests held by
          a  member  of  the  Group  from  time  to  time,  either  directly  or
          indirectly,  through leases, options,  working interests or otherwise;
          and  (ii)  prospective   natural  resource  property  interests  being
          actively sought by a member of the Group from time to time.

     (m)  "Services" means (i) acting as a director of the Company if so elected
          or  appointed  and subject to the Company Act (British  Columbia)  (as
          amended  or  replaced  from  time to  time)  and the  Articles  of the
          Company;  (ii)  acting  as  President  and CEO of the  Company;  (iii)
          managing the business  and affairs of the Company,  subject  always to
          the general or specific  instructions  and directions of the Board and
          except in respect of such  matters as must by law or the  Articles  of
          the Company be transacted or performed by the Board,  the shareholders
          or other senior  officers of the  Company;  and (iv)  performing  such
          other  duties and  exercising  such other powers as the Board may from
          time to time properly  assign to the Consultant in connection with the
          Business of the Company or another member of the Group.

     (n)  "Term" has the meaning given to that term under section 5.1.

1.2     Entire Agreement

This  Agreement  supersedes  all  previous  invitations,   proposals,   letters,
correspondence,   negotiations,  promises,  agreements,  covenants,  conditions,
representations  and  warranties  with  respect  to the  subject  matter of this
Agreement.  There is no representation,  warranty,  collateral term or condition
affecting this Agreement for which any party can be held responsible in any way,
other than as expressed in writing in this Agreement.

1.3      Amendments

No  change  or  modification  of this  Agreement  will be valid  unless it is in
writing and signed by each party to this Agreement.

1.4      Invalidity of Particular Provision

It is  intended  that  all of the  provisions  of this  Agreement  will be fully
binding and  effective  between the  parties.  In the event that any  particular
provision or provisions  or a part of one or more is found to be void,  voidable
or unenforceable  for any reason  whatsoever,  then the particular  provision or
provisions or part of the provision will be deemed severed from the remainder of
this Agreement.  The other  provisions of this Agreement will not be affected by
the severance and will remain in full force and effect.

1.5     Governing Law

This Agreement will be governed by and construed in accordance  with the laws of
British Columbia and the laws of Canada applicable in such Province.  Each party
attorns to the jurisdiction of courts of competent  jurisdiction in the Province
of British Columbia.


<PAGE>

                                   ARTICLE 2
                                   ENGAGEMENT

2.1      Engagement

The  Company  hereby  engages  the  Consultant  to provide  the  Services to the
Company, and the Consultant hereby covenants and agrees to provide such Services
to the  Company,  subject  to the terms and  conditions  of this  Agreement.  In
providing the Services to the Company, the Consultant will:

     (a)  act honestly and in good faith in what he reasonably believes to be in
          the best interests of the Company;

     (b)  exercise  the degree of care,  diligence  and skill that a  reasonably
          prudent  director  and senior  officer  would  exercise in  comparable
          circumstances; and

     (c)  generally  use his best efforts to promote the Business and  interests
          of the Company and the Group.

2.2      Business of the Group

The  Consultant  will not,  during  the course of the  consulting  relationship,
engage in any  business,  enterprise or activity that is contrary to or detracts
from the due performance of the Business.

2.3 Devotion of Time

The  Consultant  will  devote  such  amounts  of time at  such  locations  as is
necessary for the Consultant to fully and effectively provide the Services or as
directed  by the Board from time to time.  While  providing  the  Services,  the
Consultant  will give the Company the full benefit of his  knowledge,  expertise
and ingenuity.

2.4 Fee

The Company will pay to the  Consultant a fee at the rate of US$7,500 per month.
The fee will be payable  monthly  in  arrears,  by cash or  cheque,  on the last
business day of each month.

2.5 Expenses

The  Consultant  will be  reimbursed  for all  reasonable  travelling  and other
out-of-pocket  expenses  actually and  properly  incurred by the  Consultant  in
connection  with the Services,  provided  that the  Consultant  first  furnishes
detailed invoices and receipts or vouchers for all such expenses to the Company.
The  Consultant  will invoice the Company for expenses  monthly in arrears.  All
invoices  submitted  in  accordance  with the  foregoing  will be payable by the
Company within 15 days of the date of each such invoice.  The Consultant  agrees
that with regard to air  travel,  the most  economical  fare  available  will be
utilized on scheduled  airlines for flights of less than two hours duration.  On
flights of two hours  duration  or more,  the  Consultant  will be  entitled  to
purchase a business class or equivalent fare.

2.6      Consultant Not Employee

The parties agree that the  Consultant is not an employee of the Company and, as
such, there will be no deductions for any statutory withholdings.


<PAGE>

2.7      Medical and Dental Insurance

The  Company  will  secure  and pay for  medical  and dental  insurance  for the
Consultant  to the same  standard as was enjoyed by the  Consultant  immediately
prior to the Commencement Date.

2.8      Duties to the Group

While the  Consultant  is a director or officer of the Company,  the  Consultant
will:

     (a)  avoid  potential  ethical,  legal,  financial  and other  conflicts of
          interest,  and will refrain from directly or indirectly  (A) competing
          with a  member  of the  Group;  (B)  serving  as a  principal,  agent,
          director, officer, employee, consultant, shareholder or investor of or
          to a  Competitive  Business;  (C)  permitting  his  name to be used or
          employed  by  or  associated  with  a  Competitive  Business;  or  (D)
          advising, lending money to or guaranteeing the debts or obligations of
          a  Competitive  Business,  without the prior  written  approval of the
          Board;

     (b)  refrain from making personal  profits from the position of director or
          officer of the Company;

     (c)  strive  to  protect  the  Group's  assets  and  resources  and use any
          corporate  assets and resources  employed by him or entrusted with him
          in a responsible manner;

     (d)  to the best of his  knowledge,  comply  with all  applicable  federal,
          provincial,  state,  municipal  or local  government  laws,  statutes,
          rules,  by-laws and  regulations,  and all applicable  official rules,
          policies,  notices,  directives,  orders,  judgments  and  degrees  of
          governmental bodies;

     (e)  abide by any ethics and conflict of interest policy, trading policy or
          other policy implemented from time to time by the Company; and

     (f)  conduct himself at all times with the highest  ethical  standards in a
          manner that will bear the closest scrutiny.

For greater certainty, subsection 2.8(b) does not apply to (a) remuneration
received by the Consultant under this Agreement or otherwise, for acting as a
director, officer or committee member of the Company or another member of the
Group; or (b) personal profits made from the sale of securities of the Company,
provided the sale is made in compliance with applicable laws and any trading
policy implemented from time to time by the Company.

                                   ARTICLE 3
                          TERMINATION OF OLD AGREEMENT

3.1      Termination of Old Agreement

The parties hereby  acknowledge and agree that effective  December 31, 2003, the
Old Agreement and all of the rights and  obligations  of the parties  thereunder
are terminated.

3.2      Consideration for Termination

In  consideration  of the Consultant  agreeing (a) to the termination of the Old
Agreement  and all of his rights and  obligations  thereunder;  and (b) to enter
into this Agreement with the Company,  which  supersedes the Old Agreement,  the
Company will:


<PAGE>

     (a)  pay to the  Consultant the sum of  US$120,000,  payable  monthly in 12
          equal  instalments  on the last business day of each month  commencing
          with January 30, 2004; and

     (b)  as soon as it has filed its S-8 Registration Statement, and subject to
          the approval of Toronto Stock  Exchange,  issue to the Consultant from
          the pool of shares  available  for stock option grants under its stock
          option  plan,  60,000  common  shares in the  capital of the  Company.
          55,000  of the  shares  will be held in escrow  pursuant  to an escrow
          agreement and will be released monthly in 11 equal  instalments on the
          last business day of each month commencing with February 27, 2004.

3.3      Survival of Provision

The Consultant will receive the consideration  under section 3.2 notwithstanding
any  termination  of the  consulting  relationship  prior to  January 1, 2005 in
accordance with this Agreement.

                                   ARTICLE 4
                            CONFIDENTIAL INFORMATION

4.1      General Obligation of Confidentiality

The Consultant acknowledges that the Confidential  Information consists entirely
of trade secrets, confidential and proprietary information that is the exclusive
property  of a member  of the  Group or an  Associate  from whom a member of the
Group has  obtained  its  rights.  The  Consultant  will treat the  Confidential
Information in strict  confidence  and will not directly or  indirectly,  either
during or subsequent to the consulting relationship,  disclose, allow access to,
transmit or transfer the  Confidential  Information to a third party (other than
the Company's directors,  officers, bankers, legal and financial advisors in the
ordinary course of business) unless otherwise required by law or by a regulatory
authority having jurisdiction over the Company, or except as previously approved
in writing  by the  Company.  The  Consultant  will  protect  such  Confidential
Information  from  disclosure by exercising a standard of care as may reasonably
be expected to  preserve  its secret and  confidential  nature.  The  Consultant
acknowledges  and  agrees  that  nothing  contained  in this  Agreement  will be
construed  as an  assignment  to him of any  right,  title  or  interest  in the
Confidential  Information.  All  right,  title  and  interest  relating  to  the
Confidential  Information is expressly  reserved by the Group and the Associates
from  whom  the  Group  has  obtained  its  rights.  All  documents   containing
Confidential  Information  are the property of the Group.  Without  limiting the
generality of the foregoing,  the Consultant hereby transfers to the Company the
property  rights  in  all  documents  that  now or  hereafter  may  contain  the
Confidential Information.

4.2      Use of Confidential Information

The Consultant  agrees that at all times during and subsequent to the consulting
relationship  with  the  Company,  he  will  not  use  any of  the  Confidential
Information  in any manner except as reasonably  required for the  Consultant to
provide the Services.

4.3      Prohibition on Copying

The Consultant will not copy or reproduce the Confidential Information except in
the  course  of the  consulting  relationship  with and for the  benefit  of the
Company or with the written approval of the Company.  All such copies remain the
property of the Company.


<PAGE>

4.4      Injunctive Relief

The Consultant acknowledges that irreparable harm may result to the Group if the
Consultant   breaches  his  obligations  under  this  Article.   The  Consultant
acknowledges  that such a breach may not properly be  compensated by an award of
damages. Accordingly, the remedy for any such breach may include, in addition to
other  available  remedies and  damages,  injunctive  relief or other  equitable
relief enjoining such breach at the earliest possible date.

                                   ARTICLE 5
                                      TERM

5.1      Term

The term of this  Agreement  (the  "Term")  will be for a period of three years,
commencing on the  Commencement  Date and ending on December 31, 2006.  Upon the
expiry of the Term, the consulting relationship will automatically terminate.

5.2      Early Termination by Consultant


If for any  reason  the  Consultant  should  wish to  terminate  the  consulting
relationship  prior to the expiry of the Term,  he will provide the Company with
two months' prior written notice of his intention.

5.3      Early Termination by Company

The Company may terminate the consulting  relationship  at any time prior to the
expiry of the Term,  effective  immediately,  by providing the  Consultant  with
written  notice  (the  "Notice").  In  the  event  the  Company  terminates  the
consulting  relationship in accordance  with this section,  the Company will pay
the Consultant (a) any amounts  accrued under this Agreement up to the date that
Notice is  provided  and  unpaid  at such  date;  and (b) the sum of  US$30,000,
payable  in four  instalments  on the  first,  second,  third and  fourth  month
anniversaries  of the date that the Notice is  provided.  The Company  will also
continue the benefits that the  Consultant  otherwise  would have received under
section  2.7 for a period  of four  months  following  the date  that  Notice is
provided.

5.4      Termination with Event

Notwithstanding any other provision of this Agreement, the Company may terminate
the consulting agreement effective  immediately upon delivery of written notice,
upon the occurrence of any of the following events:

     (a)  the  Consultant's  commission of a crime that relates  directly to the
          provision  of the  Services,  or any act by the  Consultant  involving
          money or other property of the Group or an Associate of the Group that
          would constitute a crime in the jurisdiction involved; or

     (b)  any  breach by the  Consultant  of any of the terms of this  Agreement
          that remains  uncured after the expiration of one month  following the
          delivery  of written  notice of such breach to the  Consultant  by the
          Company.

In the event the Company  terminates the consulting  relationship  in accordance
with this section, the Company will pay the Consultant any amounts accrued under
this Agreement up to the date of termination and unpaid at such date.
<PAGE>

5.5     Return of Property

Upon termination of the consulting  relationship,  the Consultant will return to
the Company all Group property including all written  information,  tapes, discs
or memory  devices and copies  thereof,  and any other material on any medium in
the Consultant's  possession or control pertaining to provision of the Services,
without  retaining  any  copies  or  records  of  any  Confidential  Information
whatsoever. The Consultant will also return any keys, pass cards, identification
cards or other property belonging to the Company.

5.6   Director

Upon  termination of the  consulting  relationship,  the Consultant  may, in his
discretion, continue to act as a director of the Company, subject to his removal
in  accordance  with the Company Act (British  Columbia) (as amended or replaced
from time to time) or the Articles of the Company.  The  Consultant  will not be
entitled  to any fee or other  amounts  or  benefits  for so  acting,  except as
proscribed by the Articles of the Company.

                                   ARTICLE 6
                                   INDEMNITY

6.1      Indemnity

The  Consultant  will defend,  indemnify  and save  harmless the Company and the
other members of the Group and their respective directors,  officers,  employees
and agents  (the  "Indemnified  Persons")  and each of them from and against any
liability  that  the  Indemnified  Persons  or any of  them  or  their  personal
representatives  may  incur or be  liable  to pay to any  authority  for  source
deductions,  goods and services tax,  provincial  sales tax,  excise or use tax,
state sales tax or any other  remittance  obligations  arising  with  respect to
payments pursuant to this Agreement.

                                   ARTICLE 7
                                     GENERAL

7.1      Arbitration

All disputes arising out of or in connection with this Agreement,  or in respect
of any defined legal  relationship  associated  therewith or derived  therefrom,
will be referred to and finally  resolved by arbitration  under the Rules of the
British Columbia  International  Commercial  Arbitration  Centre. The appointing
authorities will be the British Columbia  International  Commercial  Arbitration
Centre.  The case will be  administered  by the British  Columbia  International
Commercial Arbitration Centre in accordance with its "Procedures for Cases Under
the BCICAC Rules". The place of arbitration will be Vancouver, British Columbia,
Canada.

7.2      Notices

Any notice  required or permitted to be given  hereunder  must be in writing and
will be  sufficiently  given or made if delivered or sent by registered  mail to
the address of the parties set out on page 1 hereof. Any notice so given will be
deemed to have been given and to have been received on the day of delivery if it
is a business  day and  otherwise  on the next  succeeding  business  day or, if
mailed, on the third business day following the mailing thereof  (excluding each
day during which there exists any interruption of postal

<PAGE>

services due to strike,  lockout or other  cause).  Addresses  for notice may be
changed by giving notice in accordance with this section.

7.3      Waiver

No  failure or delay on the part of any party in  exercising  any power or right
under this Agreement  will operate as a waiver of such power or right,  nor will
any single or partial  exercise of any such right or power  preclude any further
or other exercise of such right or power under this  Agreement.  No modification
or waiver of any provision of this  Agreement and no consent to any departure by
any party from any provision of this Agreement will be effective unless it is in
writing.  Any such  waiver or consent  will be  effective  only in the  specific
instance  and for the specific  purpose for which it was given.  No notice to or
demand on any party in any circumstances will entitle such party to any other or
further notice or demand in similar or other circumstances.

7.4      Enurement

This  Agreement  will enure to the  benefit of and be binding on the parties and
their respective heirs, executors, administrators, successors and assigns.

6.5       Survival of Terms

The  provisions  of Article 1,  Article 3,  Article 4,  Article 5, Article 6 and
Article 7 of this  Agreement  will  survive the  termination  of the  consulting
relationship.

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first
above written.


Mountain Province Diamonds Inc.
Per:

"Elizabeth J. Kirkwood"
--------------------
Authorized Signatory

SIGNED, SEALED & DELIVERED                                 )
by Jan Vandersande                                         )
in the presence of:                                        )
                                                           )
"Marlene Vandersande"                                          "Jan Vandersande"
-------------------------------------------------          )   -----------------
Signature of Witness                                       )   Jan Vandersande
                                                           )
Name of Witness:  Marlene Vandersande                      )
                  -------------------------------------
Address of Witness:  1777 Maywood Ave                      )
                     ----------------------------------
Upland CA 91784 U.S.A.                                     )
-------------------------------------------------------
Occupation of Witness:  HOMEMAKER                          )
                        -------------------------------
                                                           )
                                                           )
                                                           )


<PAGE>

                                                                    Exhibit 11.1

                     Ethics and Conflict of Interest Policy

                                February 2, 2003

                                  Introduction

Mountain  Province  Diamonds Inc. (the "Company") and its affiliates  (together,
the "Group") expect each of their directors and officers (the  "fiduciaries") to
act ethically and with the greatest  integrity.  The Group's fiduciaries have an
obligation to avoid potential ethical,  legal,  financial and other conflicts of
interest and to refrain from making personal profits from their positions.

A conflict of interest exists if a fiduciary has personal financial interests or
other  opportunities  for personal  benefit of such a nature or extent that they
could reasonably be expected to exert a substantial and improper  influence upon
the fiduciary's  professional  judgment in exercising any duty or responsibility
to a member of the Group.

One of the purposes of this document  (the  "Policy") is to assist the Group and
its fiduciaries in identifying  potential conflicts of interest and to establish
a procedure to deal with them.  As such,  the Policy is intended for the benefit
of both the  individual  and the Group.  If properly  observed,  in  appropriate
circumstances,  the  Policy  will  allow a  contract  to be treated as valid and
binding  even  though a fiduciary  has or may have a conflict  of interest  with
respect to it.

Since the possibilities for conflict of interest are almost limitless and cannot
all be covered in procedures,  the Group's  fiduciaries  are expected to conduct
themselves at all times with the highest ethical standards in a manner that will
bear the closest scrutiny,  and are responsible for seeking appropriate guidance
before embarking on activities that might be questionable.

The Policy is intended to comply with the  procedure  prescribed  in the Company
Act  (British  Columbia)  (the  "Act").  In the event there is an  inconsistency
between the requirements and procedures  prescribed herein and those in the Act,
the Company's  Memorandum or Articles of Amalgamation or any existing  agreement
between  the  Company  and any of its  fiduciaries,  then the  Act,  Memorandum,
Articles of Amalgamation or agreement will prevail. If there is an inconsistency
between  the  requirements  and  procedures  prescribed  herein and those in the
legislation  governing a corporate  affiliate  of the Company,  the  affiliate's
constating  documents or any existing  agreement  between the  affiliate and the
fiduciary, then the legislation, constating documents or agreement will prevail.

The  Policy  is also  intended  to  comply  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 stock  exchanges on which the Company's  securities
are listed for trading from time to time.

Each fiduciary is required to become  familiar with and adhere to the Policy.  A
fiduciary  should  notify  the  Company  of  any  concerns  or  difficulties  in
interpretation or application of the Policy.

<PAGE>

The Policy is subject to  modification  and further  development in light of the
Group's ongoing experience with it. The Group reserves the right to unilaterally
amend the Policy and any of its provisions without advance notification.  A copy
of any amendment to the Policy will be delivered to each fiduciary. In addition,
the Group  reserves  the right to use  discretion  when  applying  the Policy in
particular instances.

                                   The Policy

                       Article 1 - Additional Definitions

1.1  Definitions.

     (a)  Affiliate.  The word "affiliate" has the meaning given to it under the
          Act.

     (b)  Applicable  Laws.  "Applicable  Laws"  means all  applicable  federal,
          provincial,  state,  municipal  or local  government  laws,  statutes,
          rules,  by-laws and  regulations,  and all applicable  official rules,
          policies,  notices,  directives,  orders,  judgments  and  decrees  of
          Governmental Bodies.

     (c)  Board. "Board" means the board of directors of the Company.

     (d)  Conflict of Interest.  Subject to paragraph 1.2 below,  a "conflict of
          interest"  exists if a fiduciary has personal  financial  interests or
          other  opportunities  for personal  benefit of such a nature or extent
          that they could  reasonably  be  expected to exert a  substantial  and
          improper  influence  upon the  fiduciary's  professional  judgment  in
          exercising  any  duty or  responsibility  to a  member  of the  Group.
          Without  limiting  the  generality  of the  foregoing,  and subject to
          paragraph 1.2 below, the following circumstances constitute a conflict
          of interest:

          (i)  a contract or proposed contract between a member of the Group and
               a fiduciary or a family member of a fiduciary;

          (ii) a contract or proposed contract in which a member of the Group is
               or is  proposed  be a party,  and (A) in which a  fiduciary  or a
               family member of a fiduciary  has, other than by reason solely of
               his or her  relationship  with the  Group,  a direct or  indirect
               material financial  interest;  or (B) one of the other parties to
               the contract or proposed  contract is an entity in or for which a
               fiduciary  or a family  member  of a  fiduciary  is a  principal,
               agent,  director,  officer,  employee,  consultant,  shareholder,
               investor or legal representative;

          (iii)a fiduciary  directly or  indirectly  competing  with a member of
               the Group;

          (iv) a  fiduciary   directly  or  indirectly  (i)  having  a  material
               financial  interest  in;  (ii)  serving  as a  principal,  agent,
               director, officer, employee, consultant,

<PAGE>

               shareholder,  investor or legal  representative  of or to;  (iii)
               advising,   lending  money  to  or  guaranteeing   the  debts  or
               obligations  of; or (iv) permitting his or her name to be used or
               employed by or  associated  with,  an entity that competes with a
               member of the Group;

          (v)  a  fiduciary  or  a  family  member  of  a  fiduciary  demanding,
               accepting  or offering or agreeing to accept a direct or indirect
               commission,  reward,  advantage,  benefit, gift, entertainment or
               other favour from any individual or entity that:

               (i)  does or is  seeking  to do  business  with a  member  of the
                    Group; or

               (ii) has  received,  is receiving or is seeking to receive a loan
                    or investment,  or secure other financial commitments from a
                    member of the Group,

               under  circumstances  where it reasonably  might be inferred that
               such action was  intended to  influence  or might  influence  the
               fiduciary in the performance of his or her duties.  This does not
               preclude  the  acceptance  of items of nominal  or  insignificant
               value or entertainment of nominal or insignificant  value,  which
               are not related to any particular  transaction or activity of the
               Company or any of its affiliates; and

          (vi) a fiduciary  engaging in any business or  transaction or having a
               material  financial  interest or other personal  interest that is
               incompatible  with the  discharge of the  fiduciary's  duties and
               responsibilities.

     (e)  Director.  A "director"  means a director of the Company or any of its
          affiliates.

     (f)  Family Member.  A "family member" is a spouse  (including a common law
          spouse),  domestic partner,  parent,  child,  sibling or a spouse of a
          child or sibling.

     (g)  Governmental  Bodies. A "Governmental Body" or "Governmental  Bodies",
          as the case may be, is any federal,  provincial,  state,  municipal or
          local government, parliament, legislature or any regulatory authority,
          agency,   commission  or  board  of  any  government,   parliament  or
          legislature, or any court or, without limitation to the foregoing, any
          other  law,  regulation  or  rule-making  entity  (including,  without
          limitation,   any  central  bank,  fiscal  or  monetary  authority  or
          authority  regulating  banks,  and any  stock  exchange,  inter-dealer
          quotation  network or other organized  trading  facility or securities
          regulatory  body),  having or purporting to have  jurisdiction  in the
          relevant  circumstances,  or any person  acting or  purporting  to act
          under  the  authority  of  any of the  foregoing  (including,  without
          limitation, any arbitrator).


<PAGE>

     (h)  Material Financial Interest.  A "material financial interest" includes
          a material ownership or investment  interest as well as a compensation
          arrangement.

     (i)  Permitted Conflict. A "Permitted Conflict" includes the following:

          (i)  a conflict  of interest or  potential  conflict of interest  that
               results  from a  fiduciary  directly or  indirectly  acting for a
               member of the Group or an entity that  competes  with a member of
               the Group in a professional advisory capacity;

          (ii) an   arrangement  by  way  of  security  for  money  lent  to  or
               obligations  undertaken by a fiduciary,  or by an entity in which
               he or she has an  interest,  for the  benefit  of a member of the
               Group;

          (iii)a contract relating primarily to a fiduciary's  remuneration as a
               director, officer, employee or agent of a member of the Group;

          (iv) a  contract  between a member of the  Group and a  fiduciary  for
               indemnity or insurance; and

          (v)  a conflict  of interest or  potential  conflict of interest  that
               results  from a contract  between  two  different  members of the
               Group.

1.2  Exclusions.

Notwithstanding  anything else contained in the Policy,  no conflict of interest
will exist solely by virtue of:

     (a)  a  fiduciary  directly  or  indirectly  holding  any class of publicly
          traded securities of:

          (i)  an entity that is or is proposed to be a party to a contract or a
               proposed  contract  in  which  a  member  of the  Group  is or is
               proposed to be a party; or

          (ii) an entity that competes with a member of the Group,

          provided that the fiduciary,  alone or in  conjunction  with any other
          individual or entity,  does not directly or indirectly  hold more than
          1% of the securities of any such class; or

     (b)  an investment in:

          (i)  an entity that is or is proposed to be a party to a contract or a
               proposed  contract  in  which  a  member  of the  Group  is or is
               proposed to be a party; or


<PAGE>

          (ii) an entity that competes with a member of the Group,

          by a mutual fund, pension or other institutional investment over which
          a fiduciary and his or her family members has no control.

                           Article 2 - General Duties

2.1  Good Faith.

When  discharging  his or her  duties  and  responsibilities  to the  Company or
another  member of the Group,  a fiduciary  must at all times act in good faith,
responsibly  and with due care and diligence.  A fiduciary must strive to ensure
that his or her independent judgment is not compromised.

2.2  Corporate Assets.

A fiduciary must strive to protect the Group's assets and resources. A fiduciary
must use any  corporate  assets  and  resources  employed  by the  fiduciary  or
entrusted with the fiduciary in a responsible manner.

2.3  Advance Interests.

A  fiduciary  must act to advance  the  Group's  legitimate  interests  when the
opportunity arises.

2.4  Fair Dealing.

A  fiduciary  must not take unfair  advantage  of anyone  through  manipulation,
concealment,  abuse of  privileged  information,  misrepresentation  of material
facts or any other unfair-dealing practise.

                           Article 3 - Audit Committee

3.1  Audit Committee.

The Audit Committee will administer and monitor  compliance with the Policy. The
Audit  Committee  will require each fiduciary to review a copy of the Policy and
acknowledge in writing that he or she has done so and agrees to comply with it.



                       Article 4 - Disclosure of Conflict

4.1  Disclosure of Conflict.

A fiduciary who has a conflict of interest or potential conflict of interest, or
who is unsure as to whether a conflict  of  interest  or  potential  conflict of
interest exists, must disclose in writing to

<PAGE>

the Audit Committee the nature and extent of the actual or possible  conflict of
interest  or  potential  conflict  of  interest.  The  disclosure  must  be made
forthwith after the fiduciary  becomes aware of the actual or possible  conflict
of interest or potential  conflict of interest and in sufficient detail and form
as to afford the Audit Committee an understanding of the relevant facts.

The Audit  Committee  will review any  disclosure  made in accordance  with this
paragraph  4.1  and  determine   whether  it  reasonably   requires   additional
information.  If a request for additional  information  is reasonably  made, the
fiduciary must provide it to the Audit Committee forthwith.

Provided a conflict of interest  or  potential  conflict of interest is found to
exist, then as soon as the Audit Committee has completed its review,  and in any
event  within  15 days  following  the date of  initial  disclosure,  the  Audit
Committee will report to the Board with its findings and its recommendations.

Within five days of receiving a report from the Audit Committee,  the Board will
issue a  written  directive  to the  fiduciary  advising  the  fiduciary  of the
findings  of the Audit  Committee  and the steps  that the  Board  requires  the
fiduciary  to take.  In  general,  the  directives  will  follow the  guidelines
established under Article 5 of the Policy. However, the Group reserves the right
to use discretion when applying the guidelines in any particular instance.

In addition, fiduciaries must ensure they satisfy the disclosure requirements of
sections  120-123  of the Act (or the  requirements  of  equivalent  legislation
governing them), a copy of which is attached as Appendix A.

                    Article 5 - General Conflicts Guidelines

5.1  Avoidance of Conflicts of Interest.

Unless  otherwise  provided  herein,  a  fiduciary  must  structure  his  or her
activities and interests to avoid conflicts of interest and potential  conflicts
of interest and refrain from making personal profits from his or her position. A
fiduciary  must act at all times with  honesty and  integrity  and refrain  from
using corporate assets,  information,  opportunities or the fiduciary's position
for personal gain or taking for himself or herself personally opportunities that
are discovered through the use of corporate assets,  information,  opportunities
or the fiduciary's position.

5.2  Prohibition.

As a general  rule,  fiduciaries  are  prohibited  from engaging in any activity
described under sections 1.1(d)(iii), (iv) or (vi) above, unless the activity is
a Permitted Conflict.


<PAGE>

5.3  Approval of Gifts, Entertainment and other Favours.

As a general rule,  fiduciaries and their family members must not demand, accept
or offer or agree to accept a direct or indirect commission,  reward, advantage,
benefit,  gift,  entertainment  or other favour from any of the  individuals  or
entities listed under section 1.1(d)(v) above. However, a fiduciary may apply in
writing  to the Audit  Committee  for  approval  to  accept  or  retain  such an
offering. The Audit Committee will determine whether there is a business benefit
or purpose for  accepting or  retaining  the  offering,  taking into account the
source, value, purpose and frequency of the offering. Any potential detriment to
a member of the Group will be grounds for  resisting or returning  the offering.
The  Audit  Committee  will  report  to the  Board  with  its  findings  and its
recommendations  and  the  Board  will  issue a  directive  in  accordance  with
paragraph 4.1 above.

5.4  Approval of Proposed Contracts.

As a general  rule,  a board of  directors  of the Group  should  not  approve a
proposed contract that places a fiduciary in a conflict of interest,  unless the
conflict  of  interest  is a  Permitted  Conflict  or one of the  following  two
exceptions applies:

     1.   the proposed contract provides no benefit, or only minimal benefit, to
          the fiduciary or to the relevant family member of the fiduciary; or

     2.   the  benefit  to the  relevant  member  of the  Group is such that the
          conflict of interest should be tolerated.

Even if one of the  foregoing  two  exceptions  applies,  the proposed  contract
should not be approved unless:

     (a)  overall, the contract is fair and reasonable and in the best interests
          of the relevant member of the Group;

     (b)  the board of directors has made reasonable  inquiries and has received
          information  in response  confirming  there is no  alternative  to the
          contract  that is both  reasonable  and as  favourable to the relevant
          member of the Group; and

     (c)  tolerating  the  conflict  will not impair  public  confidence  in the
          Company or any other member of the Group or their reputations.

Notwithstanding  anything to the  contrary,  no board of  directors of the Group
will  directly  or  indirectly  extend  or  maintain  credit or  arrange  for an
extension of credit or renew an  extension of credit,  in the form of a personal
loan, to or for any fiduciary of the Company or another member of the Group.


<PAGE>

5.5  Board Meetings.

As a general  rule,  if a director is in a conflict  of  interest  or  potential
conflict of interest as a result of a proposed  contract,  including a Permitted
Conflict that relates to the director's own remuneration, that director will not
participate  in or be  permitted  to hear the  discussion  of the  matter at any
meeting  of  directors  except to  disclose  material  facts and to  respond  to
questions.  The director  will not be counted in  determining  the presence of a
quorum for purposes of the vote. The director will not vote on any resolution to
approve the  proposed  contract and will not be present in the meeting room when
the vote is taken, unless the vote is by secret ballot.

The foregoing  does not apply if the conflict of interest or potential  conflict
of interest  is a  Permitted  Conflict,  other than a  Permitted  Conflict  that
relates to the director's own remuneration.

                      Article 6 - Confidential Information

6.1  Confidential Information.

Each  fiduciary  will  exercise  care not to disclose  confidential  information
acquired in connection with his or her position or information the disclosure of
which might be adverse to the interests of the Company or another  member of the
Group. No fiduciary will disclose or use information relating to the business of
the Company or another member of the Group for the personal  profit or advantage
of the fiduciary or a family member of the fiduciary.

                  Article 7 - Compliance with Laws and Policies

7.1  Compliance with Laws and Policies.

Each fiduciary must comply with:

(a)  all Applicable Laws,  including,  without  limitation,  insider trading and
     tipping laws;

(b)  all applicable policies and procedures established from time to time by the
     Company  or  another  member of the Group  including,  without  limitation,
     policies and procedures  with respect to prevention of insider  trading and
     tipping; and

(c)  all applicable corporate governance mandates,  charters, internal controls,
     disclosure  controls  and  procedures  and other  policies  and  procedures
     developed or adopted by a board of directors of the Group or a committee of
     a board of directors of the Group from time to time.

8.2  Responsibilities of the Directors.

The directors are responsible,  collectively and  individually,  for the Group's
compliance  with  Applicable  Laws. A director must  disclose  without delay all
information  that the  Company or another  member of the Group needs in order to
comply with Applicable Laws, insofar as that

<PAGE>

information  is known to the  director  or could with  reasonable  diligence  be
ascertained  by the director.  Whenever  appropriate,  directors are required to
seek advice from the Group's  advisors  regarding  the Group's  compliance  with
Applicable Laws and take that advice into account.

            Article 8 - Additional Provisions for Financial Officers

8.1  Additional Provisions for Financial Officers.

The Company's CEO, CFO, Chief Accounting Officer and Controller,  and any person
performing a similar function, are also required to adhere to the provisions set
out in Appendix 2 to the Policy, which forms a part of the Policy.

                  Article 9 - Violation of Policy or Directive

9.1  Report Violations.

Individuals  are  strongly  encouraged  to  speak  with a  member  of the  Audit
Committee  about any  possible  violation of the Policy and to report any actual
violation of the Policy or any other illegal or unethical behaviour to the Audit
Committee.  Upon receiving a report,  the Audit Committee will conduct a prompt,
thorough and fair  examination,  document  the  situation  and, if  appropriate,
recommend to the Board appropriate disciplinary and corrective action.

To the extent practicable, all reports will be kept confidential. The Group will
not condone any retaliation for a report made in good faith.

9.2  Failure to Disclose Conflict of Interest.

If the Audit  Committee  has  reasonable  cause to believe that a fiduciary  has
failed to disclose a conflict of interest or potential conflict of interest,  it
will inform the  fiduciary of the basis for such belief and afford the fiduciary
an opportunity to explain the alleged failure to disclose.

If,  after  hearing  the  response  of the  fiduciary  and making  such  further
investigation  as may be warranted  in the  circumstances,  the Audit  Committee
determines  that the  fiduciary  has in fact  failed  to  disclose  an actual or
potential  conflict of  interest,  it will  recommend  to the Board  appropriate
disciplinary and corrective action.

9.3  Violation of Policy or Board Directive.

The violation of the Policy  including any directive  issued by the Board,  is a
serious  matter  and,  in  addition  to any  fines or  penalties  imposed  under
Applicable  Laws,  may  constitute  cause  for the  removal  or  dismissal  of a
fiduciary.


<PAGE>

                                 Acknowledgement

Please  sign and  return to the  Company  the  duplicate  copy of the  Policy to
indicate  that you have  read it and that you agree to  comply  with it.  Please
retain the original copy for your files.



Date:
     -------------------------------         -----------------------------------
                                             Signature

                                             -----------------------------------
                                             Name

<PAGE>
                                   Appendix 1

            Sections 120 - 123 of the Company Act (British Columbia)

Director to disclose interest
120  (1)  Every  director of a company who, in any way,  directly or indirectly,
          is interested in a proposed  contract or transaction  with the company
          must  disclose the nature and extent of the  director's  interest at a
          meeting of the directors.

     (2)  The disclosure required by subsection (1) must be made:

          (a)  at the  meeting at which a proposed  contract or  transaction  is
               first considered,

          (b)  if the director  was not, at the time of the meeting  referred to
               in  paragraph   (a),   interested  in  a  proposed   contract  or
               transaction,  at the first  meeting  after the  director  becomes
               interested, or

          (c)  at the  first  meeting  after  the  relevant  facts  come  to the
               director's knowledge.

     (3)  For the purpose of this section,  a general notice in writing given by
          a director of a company to the other  directors  of the company to the
          effect  that the  director  is a  member,  director  or  officer  of a
          specified corporation,  or that the director is a partner in, or owner
          of, a  specified  firm,  and that the  director  has an  interest in a
          specified  corporation or firm, is a sufficient disclosure of interest
          to comply with this section.

     (4)  A director of a company is not deemed to be interested or to have been
          interested at any time in a proposed  contract or  transaction  merely
          because:

          (a)  if the proposed contract or transaction  relates to a loan to the
               company,  the  director or a specified  corporation  or specified
               firm in which the  director  has an interest  has  guaranteed  or
               joined in  guaranteeing  the repayment of the loan or any part of
               the loan,

          (b)  if the proposed  contract or transaction has been or will be made
               with  or  for  the  benefit  of an  affiliated  corporation,  the
               director is a director or officer of that corporation,

          (c)  the  proposed  contract or  transaction  relates to an  indemnity
               under section 128 or to insurance under section 128, or

          (d)  the proposed contract or transaction  relates to the remuneration
               of a director in that capacity.

Director liable to account
121  (1)  Every  director  referred  to in section  120 (1) must  account to the
          company for any profit made as a consequence  of the company  entering
          into or performing the proposed contract or transaction, unless:

          (a)  he or she  discloses  his or her  interest as required by section
               120,

          (b)  after his or her disclosure the proposed  contract or transaction
               is approved by the directors, and

          (c)  he or she  abstains  from voting on the  approval of the proposed
               contract or transaction,

      or unless:
<PAGE>

          (d)  the contract of or  transaction  was  reasonable  and fair to the
               company at the time it was entered into, and

          (e)  after  full  disclosure  the  nature  and  extent  of  his or her
               interest, it is approved by special resolution.

     (2)  Unless the  articles  otherwise  provide,  a director  referred  to in
          section  120 (1) must not be counted in the quorum at a meeting of the
          directors at which the proposed contract or transaction is approved.

Validity
122 The  circumstance  that a director is, in any way,  directly or  indirectly,
interested in a proposed contract or transaction,  or a contract or transaction,
with the company does not make the contract or transaction invalid,  but, if the
matters referred to in section 121 (1) (a) to (c) or section 121 (1) (d) and (e)
have  not  occurred,  the  court,  on  the  application  of the  company  or any
interested  person,  may enjoin the  company  from  entering  into the  proposed
contract or transaction,  or set aside the contract or transaction,  or make any
other order that the court considers appropriate.

Disclosure of conflict of office or property
123  (1)  Every  director of a company who holds any office,  or  possesses  any
          property,  whereby, whether directly or indirectly, a duty or interest
          might be created in conflict with the director's duty or interest as a
          director of the company, must declare at a meeting of the directors of
          the company the fact, and the nature and extent of the conflict.

     (2)  The declaration  must be made by a director  referred to in subsection
          (1) at the first meeting of the directors held:

          (a)  after he or she becomes a director, or

          (b)  if he or she is already a director, after he or she began to hold
               the office or possess the property.

<PAGE>

                                   Appendix 2

                               Financial Officers

A2.1 Presentation of Information.

The Company's CEO, CFO, Chief Accounting Officer and Controller,  and any person
performing a similar function (collectively, the "Financial Officers"), must, to
the best of their abilities:

(a)  present financial information fully, honestly and professionally so that it
     will be understood in its context; and

(b)  ensure that financial  information is maintained in a manner that describes
     clearly the true nature of business transactions, assets or liabilities and
     entries are classified and recorded in a timely and proper manner.

A2.2 Disclosure in Reports and Documents.

The Financial Officers are responsible for establishing and maintaining controls
and procedures to ensure that  information  (both  financial and  non-financial)
that is potentially  subject to disclosure  under the requirements of Applicable
Laws is  accumulated,  recorded,  processed  and  communicated  to the Financial
Officers to allow  timely  decisions  regarding  required  disclosure,  and that
information  that is required to be disclosed is summarized and reported  within
the required  time  periods.  The Financial  Officers are also  responsible  for
establishing procedures for testing the effectiveness of the disclosure controls
and procedures.

A.2.3 Internal Controls.

The Financial Officers are responsible for establishing and maintaining internal
controls to assure that  transactions are properly  authorized,  that assets are
safeguarded and that transactions are properly recorded for financial  reporting
purposes.   The  Financial   Officers  are  also  responsible  for  establishing
procedures  for (a) testing the  effectiveness  of the  internal  controls;  (b)
evaluating  deficiencies  in the  design  or  operation  of  internal  controls,
material weaknesses in internal controls and any fraud, whether or not material,
that involves  management or other employees who have a significant  role in the
Company's internal controls.

A.2.4 Review.

The Financial  Officers  must  continually  review,  evaluate and, if necessary,
modify the Company's disclosure controls and procedures and internal controls to
accommodate changes in its size, business, personnel and regulatory changes.


<PAGE>

A.2.5 Disclosure to Board and Audit Committee.

The Financial  Officers  should  report to the Audit  Committee and the Board on
disclosure  contained in each report required to be filed under Applicable Laws.
The Financial  Officers  must disclose to the Audit  Committee and the Company's
external  auditors (a) all significant  deficiencies in the design and operation
of the Company's  internal  controls which could adversely affect its ability to
record,  process,  summarize  and report  financial  data;  and (b) any material
weaknesses in internal  controls and any fraud,  whether or not  material,  that
involves  management  or  other  employees  who have a  significant  role in the
Company's internal controls.

For the  purposes of this  paragraph,  "material  weakness"  means a  reportable
condition  in which  the  design  or  operation  of one or more of the  internal
control  components  does not  reduce  to a  relatively  low level the risk that
misstatements  caused by error or fraud in  amounts  that would be  material  in
relation to the financial statements being audited may occur and not be detected
within a timely  period by employees in the normal  course of  performing  their
assigned functions. "Significant deficiencies" means significant deficiencies in
the design or operation of internal  controls,  which could adversely affect the
Company's  ability  to  initiate,  record,  process  and report  financial  data
consistent  with  the  assertions  of  management  in  the  Company's  financial
statements.

A.2.6 CEO Disclosure.

As  and  when  the  CEO  becomes  aware  of  material   information,   risks  or
opportunities  relating to the  Company's  business,  the CEO will disclose such
information,  risks  or  opportunities  to the  Board,  by  means  of  telephone
conference call or email.


<PAGE>

                                                                    Exhibit 12.1

                    CERTIFICATIONS PURSUANT TO SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002

I,  Jan W. Vandersande, certify that:

I have reviewed this annual  report on Form 20-F of Mountain  Province  Diamonds
Inc;

1.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

2.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the issuer as of, and for, the periods presented in this annual report;

3.   The  issuer's  other  certifying  officer(s)  and  I  are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the issuer and have:

     (a)  Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          issuer, including its consolidated  subsidiaries,  is made known to us
          by others  within those  entities,  particularly  during the period in
          which this report is being prepared;

     (b)  Evaluated the  effectiveness of the issuer's  disclosure  controls and
          procedures  and  presented  in this report our  conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     (c)  Disclosed in this report any change in the issuer's  internal  control
          over financial  reporting  that occurred  during the period covered by
          the annual  report  that has  materially  affected,  or is  reasonably
          likely to  materially  affect,  the  issuer's  internal  control  over
          financial reporting; and

5.   The issuer's other certifying officer(s) and I have disclosed, based on our
     most recent evaluation of internal control over financial reporting, to the
     issuer's  auditors  and  the  audit  committee  of the  issuer's  board  of
     directors (or persons performing the equivalent functions):

     (a)  All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to adversely affect the issuer's ability to record,
          process, summarize and report financial information; and

     (b)  Any fraud, whether or not material,  that involves management or other
          employees who have a significant role in the issuer's internal control
          over financial reporting.

Date: August 17, 2004    By:  "Jan W. Vandersande"
                         -------------------------------------------------------
                         Jan W. Vandersande, President (Chief Executive Officer)


<PAGE>

                                                                    Exhibit 12.2

                    CERTIFICATIONS PURSUANT TO SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002

I,  Elizabeth J. Kirkwood, certify that:

I have reviewed this annual  report on Form 20-F of Mountain  Province  Diamonds
Inc;

1.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

2.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the issuer as of, and for, the periods presented in this annual report;

3.   The  issuer's  other  certifying  officer(s)  and  I  are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the issuer and have:

     (a)  Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          issuer, including its consolidated  subsidiaries,  is made known to us
          by others  within those  entities,  particularly  during the period in
          which this report is being prepared;

     (b)  Evaluated the  effectiveness of the issuer's  disclosure  controls and
          procedures  and  presented  in this report our  conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     (c)  Disclosed in this report any change in the issuer's  internal  control
          over financial  reporting  that occurred  during the period covered by
          the annual  report  that has  materially  affected,  or is  reasonably
          likely to  materially  affect,  the  issuer's  internal  control  over
          financial reporting; and

5.   The issuer's other certifying officer(s) and I have disclosed, based on our
     most recent evaluation of internal control over financial reporting, to the
     issuer's  auditors  and  the  audit  committee  of the  issuer's  board  of
     directors (or persons performing the equivalent functions):

     (a)  All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to adversely affect the issuer's ability to record,
          process, summarize and report financial information; and

     (b)  Any fraud, whether or not material,  that involves management or other
          employees who have a significant role in the issuer's internal control
          over financial reporting.

Date: August 17, 2004   By: "Elizabeth Kirkwood"
                        --------------------------------------------------------
                        Elizabeth J. Kirkwood, Chief Financial Officer


<PAGE>

                                                                    Exhibit 13.1

       CERTIFICATION PURSUANT TO 18 U.S.C.ss.1350, AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In  connection  with the Annual  Report of Mountain  Province  Corporation  (the
"Company")  on Form 20-F for the period  ended  March 31, 2004 as filed with the
Securities  and Exchange  Commission on the date hereof (the  "Report"),  I, Jan
Vandersande,  President  (Chief  Executive  Officer)  of the  Company,  certify,
pursuant  to 18  U.S.C.ss.1350,  as  adopted  pursuant  to  Section  906  of the
Sarbanes-Oxley Act of 2002, that:

(1)  The Report fully complies with the  requirements  of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934; and

(2)  The information  contained in the Report fairly  presents,  in all material
     respects, the financial condition and results of operations of the Company.

Date  August 17, 2004

                                             "Jan W. Vandersande"
                                             -----------------------------------
                                             Jan W. Vandersande
                                             President (Chief Executive Officer)




<PAGE>

                                                                    Exhibit 13.2

       CERTIFICATION PURSUANT TO 18 U.S.C.ss.1350, AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In  connection  with the Annual  Report of Mountain  Province  Corporation  (the
"Company")  on Form 20-F for the period  ended  March 31, 2004 as filed with the
Securities  and  Exchange  Commission  on the date  hereof  (the  "Report"),  I,
Elizabeth Kirkwood, Chief Financial Officer) of the Company,  certify,  pursuant
to 18  U.S.C.ss.1350,  as adopted pursuant to Section 906 of the  Sarbanes-Oxley
Act of 2002, that:

(3)  The Report fully complies with the  requirements  of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934; and

(4)  The information  contained in the Report fairly  presents,  in all material
     respects, the financial condition and results of operations of the Company.

Date August 17, 2004

                                             "Elizabeth Kirkwood"
                                             -----------------------------------
                                             Elizabeth Kirkwood
                                             Chief Financial Officer






<PAGE>

                                  Exhibit 14.2

<PAGE>

[KPMG LOGO OMITTED]
KPMG LLP
Chartered Accountants
Box 10426, 777 Dunsmuir Street                  Telephone (604) 691-3000
Vancouver BC V7Y 1K3                            Telefax (604) 691-3031
Canada                                          www.kpmg.ca





             INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S CONSENT


To the Board of Directors
Mountain Province Diamonds Inc.


We consent to the  incorporation by reference in the  Registration  Statement on
Form S-8 of Mountain  Province Diamonds Inc. (the  "Corporation")  (Registration
Number  333-112986)  of our report  dated  June 16,  2004,  with  respect to the
consolidated  balance  sheets of the  Corporation as of March 31, 2004 and 2003,
and the related consolidated statements of operations and deficit and cash flows
for each of the years in the three  year  period  ended  March 31,  2004,  which
report  appears  in the  March  31,  2004  Annual  Report  on  Form  20-F of the
Corporation.

KPMG LLP (Signed)

Chartered Accountants

Vancouver, British Columbia
August 6, 2004



[KPMG LOGO OMITTED]

KPMG LLP, a Canadian  limited  liability  partnership is the Canadian  member of
KPMG International, a Swiss nonoperating association.