UNITED STATESSECURITIES AND EXCHANGE
COMMISSIONWashington, 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 1934For the fiscal year ended March 31, 2005
      OR                                          
|[ ] | TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For 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)





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:

52,610,847

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.

ii



TABLE OF CONTENTS

|GLOSSARY                    | v      
|--------------------------- | -------
|                            |        
|GLOSSARY OF TECHNICAL TERMS | vii    
|                            |        
|PART I                      |        
|                            | Item 1 
|                            | Item 2 
|                            | Item 3 
|                            | A.     
|                            | B.     
|                            | C.     
|                            | D.     
|                            | Item 4 
|                            | A.     
|                            | B.     
|                            | C.     
|                            | D.     
|                            | Item 5 
|                            | A.     
|                            | B.     
|                            | C.     
|                            | D.     
|                            | E.     
|                            | F.     
|                            | G.     
|                            | Item 6 
|                            | A.     
|                            | B.     
|                            | C.     
|                            | D.     
|                            | E.     
|                            | Item 7 
|                            | A.     
|                            | B.     
|                            | C.     
|                            | Item 8 
|                            | A.     
|                            | B.     
|                            | Item 9 
|                            | A.     
|                            | B.     
|                            | C.     
|                            | D.     
|                            | E.     
|                            | F.     
|                            | Item 10
|                            | A.     
|                            | B.     

iii



|              | C.       | Material contracts.                                                                 | 55
|------------- | -------- | ----------------------------------------------------------------------------------- | --
|              | D.       | Exchange controls.                                                                  | 55
|              | E.       | Taxation                                                                            | 58
|              | F.       | Dividends and paying agents.                                                        | 67
|              | G.       | Statement by experts.                                                               | 68
|              | H.       | Documents on display.                                                               | 68
|              | I.       | Subsidiary Information.                                                             | 68
|              | Item 11  | Quantitative and Qualitative Disclosures About
      Market Risk.                   | 68
|              | Item 12  | Description of Securities Other than Equity
      Securities.                       | 69
|PART II       | 69      
|              | Item 13  | Defaults, Dividend Arrearages and
      Delinquencies.                              | 69
|              | Item 14  | Material Modifications to the Rights of
      Security Holders and Use of Proceeds. | 69
|              | Item 15  | Controls and Procedures                                                             | 70
|              | Item 16  | [Reserved]                                                                          | 70
|              | Item 16A | Audit Committee Financial Expert                                                    | 70
|              | Item 16B | Code of Ethics                                                                      | 70
|              | Item 16C | Principal Accountant Fees and Services                                              | 71
|              | Item 16D | Exemptions from the Listing Standards for Audit
      Committees                    | 72
|              | Item 16E | Purchases of Equity Securities by the Issuer
      and Affiliated Purchasers        | 72
|PART III      | 72      
|              | Item 17  | Financial Statements.                                                               | 72
|              | Item 18  | Financial Statements.                                                               | 72
|              | Item 19  | Exhibits                                                                            | 72
|SIGNATURES    | 75      
|EXHIBIT INDEX | 76      





iv



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, MPVor 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 Kué 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;

v



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 Registrantmeans Mountain
Province Diamonds Inc.;

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

Nasdaq meansthe 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.

vi





GLOSSARY OF
TECHNICAL TERMS

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

vii



|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

viii



|                       | 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

ix



| | 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
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

x



|                                    | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

xi



NOTE REGARDING FORWARD LOOKING STATEMENTS



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

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

| | • | risks and uncertainties relating to the
      interpretation of drill results, the geology, grade and continuity of
      mineral deposits;                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | • | results of initial feasibility, pre-feasibility
      and feasibility studies, and the possibility that future exploration,
      development or mining results will not be consistent with the Company's
      expectations;
| | • | mining exploration risks, including risks
      related to accidents, equipment breakdowns or other unanticipated
      difficulties with or interruptions in production;                                                    
| | • | the potential for delays in exploration
      activities or the completion of feasibility studies;                                                                                                                           
| | • | risks related to the inherent uncertainty of
      exploration and cost estimates and the potential for unexpected costs and
      expenses;                                                                                 
| | • | risks related to commodity price
      fluctuations;                                                                                                                                                                         
| | • | the uncertainty of profitability based upon the
      Company's history of losses;                                                                                                                                           
| | • | risks related to failure to obtain adequate
      financing on a timely basis and on acceptable terms;                                                                                                                       
| | • | risks related to environmental regulation and
      liability;                                                                                                                                                               
| | • | political and regulatory risks associated with
      mining and exploration; and                                                                                                                                             
| | • | 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.

xii



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,
2005, 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      



xiii



.

PART I

Item 1 Identity of Directors, Senior
Management and Advisers.

Not Applicable

Item 2 Offer Statistics and Expected
Timetable.

Not Applicable

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 included under Item 17, "Financial Statements."  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
10 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, 2005,
2004, 2003, 2002, and 2001.  Except as otherwise indicated, dollar amounts
presented are equivalent under Canadian and United States generally accepted
accounting principles.







|                                                                                      | 12 Months Ended      
|------------------------------------------------------------------------------------- | ---------------------
|All in CDN$1,000's except Earnings (loss) per Share and
      Number of Common Shares | March 31, 2005       
|Operating Revenue                                                                     | nil                  
|                                                                                      |                      
|Interest Revenue                                                                      | 13                   
|                                                                                      |                      
|Working Capital                                                                       | 1,041                
|                                                                                      |                      
|Net Earnings (loss) -                                                                 |                      
|Under Canadian GAAP:                                                                  | 1,531                
|Under U.S. GAAP:                                                                      | 1,836                
|Basic and diluted  earnings (loss) per share -                                        |                      
|Under Canadian GAAP:                                                                  | 0.03                 
|Under U.S. GAAP:                                                                      | 0.04                 
|Total Assets -                                                                        |                      
|Under Canadian GAAP:                                                                  | 36,038               
|Under U.S. GAAP:                                                                      | 3,683                
|                                                                                      |                      
|Total Liabilities                                                                     | 95                   
|Share Capital                                                                         | 57,608               
|Net Assets -                                                                          |                      
|Under Canadian GAAP:                                                                  | 35,943               
|Under U.S. GAAP:                                                                      | 3,588                
|Number of Common Shares issued 
     less
      shares owned by subsidiary            | 52,610,847-52,610,847

*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.

2



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

|2005      | 2004      | 2003      | 2002      | 2001     
|--------- | --------- | --------- | --------- | ---------
|US$0.7842 | US$0.7412 | US$0.6474 | US$0.6380 | US$0.6630

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

|Month         | High      | Low      
|------------- | --------- | ---------
|December 2004 | US$0.8450 | US0.8056 
|January 2005  | US$0.8333 | US0.8061 
|February 2005 | US$0.8147 | US$0.7966
|March 2005    | US$0.8337 | US$0.8043
|April 2005    | US$0.8248 | US$0.7948
|May 2005      | US$0.8085 | US$0.7894

On June 15, 2005, 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$0.79815.

B.     Capitalization and indebtedness.

Not Applicable

C.     Reasons for the offer and use of
proceeds.

Not Applicable

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

The Company has only a limited operating history on which to
base an evaluation of the Company's current business and prospects, each of
which should be considered in light of the risks, expenses and problems
frequently encountered in the early stages of development of all companies. This
limited operating history leads the Company to believe that period-to-period
comparisons of its operating results may not be meaningful and that the results
for any particular period should not be relied upon as an indication of future
performance.

3



(b)     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.

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

The Company currently has no significant source of operating cash flow. The
Company has limited financial resources. The Company's ability to achieve and
maintain profitability and positive cash flow is dependent upon the Company's
ability to generate revenues:

(d)     Exploration and
Development

The Company's properties are primarily 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 which can be commercialized at a
reasonable cost. 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 bulk sampling 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.

(e)     History of
Losses

The Company has a history of losses and may continue to incur
losses for the foreseeable future. During the year ended March 31, 2005 the
Company did have earnings in the amount of $1,531,244 which is due to the gain
realized in the sale of the Haveri project to Northern Lion Gold Corp. and the
gain on the sale of the Baffin Island claims to Patrician Diamonds Inc. The
Company incurred net earnings (loss)  during each of the following periods:

•    $1.531 million net earnings for the year ended
March 31, 2005.

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

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

4



As of March 31, 2005, the Company had an accumulated deficit of
$21.9 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.

(f)     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, the discovery of economically recoverable reserves, and,
if warranted, upon future
profitable production or proceeds from disposition of the Company's mineral
properties.

(g)     Additional Funding Requirements

As of March 31, 2005, the Company had cash and cash equivalents
of approximately $1.001 million and working capital of approximately $1.041
million. During the past three fiscal years ended March 31, 2005, the Company
has used approximately $3.463 million in cash flows in operating activities
including approximately $0.858 million during the fiscal year ended March 31,
2005, $1.020 million during the fiscal year ended March 31, 2004 and $1.585
million during the fiscal year ended March 31, 2003.

The Company's administrative and other expenses are expected to
be approximately $0.6 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.

(h)     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.

(i)     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.

5



(j)     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 three years, diamond prices have
increased on average by 25%. Current trends suggest an over demand for rough
diamonds in the near to mid-term.

(k)     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 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. The amount of
funds required to comply with all environmental regulations and to pay for
compensation in the event of a breach of such laws may exceed the Company's
ability to pay such amount.

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.

6



(l)     Climate and
Transportation

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

(m)     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 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 Kué Project, previously known as the Kennedy Lake Project, to advance to
mine permitting in the third quarter of 2005, should the project's profitability
level support a decision to proceed to the next phase.

(n)     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,

7



development and production of resources, any of which could
result in work stoppages, damage to property and possible environmental damage.
The Company maintains insurance policies relating to Director's and Officer's
liability, but can give no guarantees that such insurance will be sufficient
to protect the Company from losses

(o)     Numerous factors
beyond the control of the Company affect the marketability of any diamonds
discovered.

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

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

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

(q)    
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

(r)     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.

(s)     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 June 15, 2005, the Company had approximately $912,000 in cash, and the
Company does not anticipate having to seek new equity financing for the next 12
months.

8



(t)     Dilution from
Outstanding Securities

As at June 15, 2005, there were 1,310,000 options at prices
ranging from $0.67 to $2.06 (expiring at various dates), and nil warrants
outstanding. The stock options, if fully exercised, would increase the number of
shares outstanding by 1,310,000. Such options, if fully exercised, would
constitute approximately 2.4% (out of 53,935,848 shares (52,625,847 issued and
outstanding, plus total options) respectively) of the Company's resulting share
capital as at June 15, 2005. It is unlikely that options would be exercised
unless the market price of the Company's common shares exceeds the exercise
price at the date of exercise. The exercise of such options and the subsequent
resale of such Common shares in the public market could adversely affect the
prevailing market price and the Company's ability to raise equity capital in the
future at a time and price which it deems appropriate. The Company may also
enter into commitments in the future which would require the issuance of
additional common shares and the Company may grant new share purchase warrants
and stock options. Any share issuances from the Company's treasury will result
in immediate dilution to existing shareholders.

(u)     Liquidity in
Trading Market

The Company's shares trade on the Toronto Stock Exchange
("TSX") and were quoted on the NASD OTCBB until April 1, 2005. On April 4, 2005
the Company's shares began trading on the American Stock Exchange (the "Amex").
The primary market for the Company's shares is the TSX and the average trading
volume for the Company's shares at the TSX was approximately 30,000 shares per
day during the fiscal year ended March 31, 2005.

(v)     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 are associated
with other natural resource companies that acquire interests in mineral
properties.

Such associations may give rise to conflicts of interest from
time to time. 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.

(w)     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 a Consulting Agreement with the Company: See,
Item 7B -Related party transactions, Item 6C - Board Practices, and Item 10C-
Material Contracts. Loss of the key person could have a material adverse effect
on the Company. The Company does not maintain key-man life insurance on Jan
Vandersande.

9



(x)     Fluctuations in
Company Stock Prices

Prices for the Company's shares on the TSX, historically on the
NASD OTCBB and currently on the Amex, have been extremely volatile. The price
for the Company's common shares on the TSX ranged from $1.60 (low) and $2.26
(high) during the fiscal year ended March 31, 2005, and from $0.61 (low) to
$2.75 (high) during the fiscal year ended March 31, 2004. Any investment in the
Company's securities is therefore subject to considerable fluctuations in value.

(y)     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 years.
Accordingly, the Company is subject to fluctuations in the rates of currency
exchange between the U.S. dollar and the Canadian dollar, and these fluctuations
in the rates of currency exchange may materially affect the Company's financial
position, results of operations and timing of the development of its
properties.

| | (z) | The Mineral resources industry is
      intensely competitive and the Company competes with many companies that
      have greater financial means and technical facilities.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The mineral resources industry is intensely competitive and the
Company competes with many companies that have greater financial means and
technical facilities. Significant competition exists for the limited number of
mineral acquisition opportunities available. As a result of this competition,
the Company's ability to acquire additional attractive mining properties, should
it decide to do so in the future, on terms it considers acceptable may be
adversely affect.

(aa)     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.

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

10



Canadian courts to enforce liabilities based on
the U.S. federal securities laws against the Company and any of the Company's
resident executive officers or directors.

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 under the British Columbia Company Act(the "Old Act")
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.

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.

11



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.

Pursuant to the repeal of the British Columbia Company
Act and its replacement by the British Columbia Business Corporations Act(the "New Act"), the Company transitioned to the New Act and adopted new
Articles.

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:

|Name of Subsidiary                         | Date of Incorporation | Jurisdiction 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                      

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

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

12



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 the Amex under the symbol MDM. Prior to April 4, 2005 the Company's shares
traded on the OTCBB under the symbol "MPVI". The Company is also registered
extra-provincially in 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. On October 4, 2004, the Company
agreed to exchange the Company's 30% interest in the Haveri Gold Property for
4,000,000 common shares of Northern Lion Gold Corp. The shares are subject to a
two-year hold period and volume restrictions on re-sale
thereafter.

B.     Business Overview.

Description ofBusiness

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.

13



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

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.

14



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

At the end of July, 2003, De Beers notified the Company that
they had started work on a detailed 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 Kué
Project, previously known as the Kennady Lake Project, to advance to mine
permitting in the third quarter 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) and in October 2004, the Company's remaining 30% interest in
the Haveri property was exchanged with Northern Lion Gold Corp for 4,000,000 of
the latter's common shares. 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. The Haveri Gold Property in Finland has
now been transferred to Northern Lion Gold Corp. (formerly Vision Gate Ventures
Limited). See Item 4A - History and development of the Company - Acquisitions
and Dispositions.

15



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.

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 Actand the Mackenzie Valley Land Use
Regulations. Territorial environmental legislation may also apply for some
purposes. The Mackenzie Valley Land and Water Board established under the
federal Mackenzie Valley Resource Management Act has the responsibility
to receive and to process applications for water licenses under the Northwest
Territories Waters Act in most areas of the Northwest Territories. 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 Actand Workers Compensation Act.

16



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 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.

17



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 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 Kué, 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

Of the Company's properties, the AK Property is currently under
the most intense development 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䓞' north and 109° 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°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°C; furthermore, storms can occur at any time.

18



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

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.

19



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.

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

20



appear to be related to the last glacial event, the Late
Wisconsinan glaciation. There is no stratigraphic evidence of deposits from
previous glaciation.

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

|Description                                                          | Sample Weight (Tonnes) | Weight Macros >1.0 mm(Carats) | Macro Carats per Tonne(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             

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

21

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.22Table2
Diamond Recoveries by Caustic Fusion of Drill Core from the
Hearne, Tesla and Tuzo Kimberlites, Kennady Lake Kimberlite Field, AK
Property

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

(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.

Table3

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

|Description | Sample Size (Tonnes) | Carats per Tonne | Value per Carat (US$) | Best Fit Value per Carat ($US) | Value per Tonne (US$) | Best Fit Value per Tonne (US$)
|----------- | -------------------- | ---------------- | --------------------- | ------------------------------ | --------------------- | ------------------------------
|Hearne Pipe | 62.6                 | 2.33             | 25 - 50               | 44                             | 58 - 177              | 103                           
|Tuzo Pipe   | 48.0                 | 2.20             | 51 - 108              | 68                             | 112 - 238             | 150                           

23



|Description | Sample Size (Tonnes) | Carats per Tonne | Value per Carat (US$) | Best Fit Value per Carat ($US) | Value per Tonne (US$) | Best Fit Value per Tonne (US$)
|----------- | -------------------- | ---------------- | --------------------- | ------------------------------ | --------------------- | ------------------------------
|Tesla Pipe  | 50.0                 | 0.37             | 56 - 112              | 96                             | 21 - 41               | 36                            
|5034 Pipe   | 55.8                 | 1.60             | 26 - 58               | 51                             | 42 - 93               | 82                            

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 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,

24



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



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



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.

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:

25



Table 5

Modeled Results for North and South Lobes of Hearne Pipe

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

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 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.

26



Table 6

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

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

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 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

27



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.

Exploration from 2000 onwards

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 Kué 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 from 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 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.

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

28



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

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.

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.

29



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

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

The number of diamonds recovered from the kimberlite bodies in
the Kelvin-Faraday lakes and their size-frequency distribution  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 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.

30



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 five microdiamonds were recovered.

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 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

31



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 needed to be recovered so that their size frequency
distribution could 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.

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

32



|Pipe   | Modeled Grade(Carats per tonne) | Modeled Values(US$ Carat) | Revenue per tonne(US$)
|------ | ------------------------------- | ------------------------- | ----------------------
|5034   | 1.67                            | 62.70                     | 104.70                
|Hearne | 1.67                            | 50.00                     | 83.50                 

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 March 2004 diamond prices. The modeled values per carat, based
on those valuations and on production recovery factors as determined by De
Beers, were reported on June 16, 2004. Since March 2004, 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 August 2004 DTC diamond prices.

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

33





|Name of Pipe | March 2004 Modeled Value Per Carat(US$ per
      Carat) | August 2004 Modeled Value Per Carat(US$ per
      Carat)
|------------ | ------------------------------------------------------- | --------------------------------------------------------
|5034         | 74.20                                                   | 79.20                                                   
|Hearne       | 61.00                                                   | 65.00                                                   
|Tuzo         | 49.00                                                   | 53.00                                                   

The average modeled values per carat increased by an average of
approximately 7% between March 2004 and August 2004. The increase since January
2003 has been 25% for the 5034 and 29% for the Hearne pipes.

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 Kué 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.

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.

As of the previous fiscal year, the Company had one
non-material property in Finland, the Haveri Gold Property. 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 Property.
On October 4, 2004, the

34

Company agreed to exchange its remaining 30% interest in the
Haveri Property for 4,000,000 shares of Northern Lion Gold Corp.

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  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 10 to the consolidated financial statements.

Fiscal Year ended March 31, 2005 compared to Fiscal Year ended March 31,
2004

The Company had net earnings for the fiscal year ended March 31, 2005 ("fiscal
2005") totaling $1,531,244 or $0.03 per share compared to a loss for the fiscal
year ended March 31, 2004 ("fiscal 2004") of $1,813,005 or $0.04 per share.

During fiscal 2005, operating expenses were $848,502 compared to $1,231,491
in fiscal 2004. The reduction in operating expenses of $382,989 or 31% was the
result of continuing cost cutting measures including (i) reduced consulting fees
($126,080 in fiscal 2005 and $182,846 in fiscal 2004), (ii) reduced
directors' fees ($2,700 in fiscal 2005 and $33,350 in fiscal 2004), (iii) reduced
professional fees ($235,680 in fiscal 2005 and $307,441 in fiscal 2004), (iv)
reduced salaries ($15,506 in fiscal 2005 and $78,805 in fiscal 2004) due to
eliminating all employees by the end of fiscal 2005, and no further severance
and contract termination costs ($nil in fiscal 2005 and $368,668 in fiscal 2004).
There was an increase in transfer agent and regulatory fees ($114,459 in fiscal
2005 and $37,890 in fiscal 2004) due to listing on the American Stock Exchange
and a new expense for stock-based compensation in fiscal 2005
($189,400) due to a change in accounting policy for expensing stock options. 

  Commencing April 1,
  2004, in accordance with new Canadian accounting standards, the Company
  expenses the fair value of all stock options. Previously, the Company only
  recorded stock-based compensation for options that were granted to
  non-employees. The change in accounting policy was adopted on a retroactive
  basis without restatement of prior periods.

During fiscal 2005 the Company's interest income was $13,112
compared to $12,127 a year earlier. The increase is a result of increased funds
available for investment.

In fiscal 2005, there was a gain on the sale of mineral properties in the
amount of $4,226,634 and no similar gain in fiscal 2004. 
The gain relates mainly to the sale of the Company's remaining 30% interest in
  its Haveri property in return for 4,000,000 common shares of Northern Lion Gold
  Corp. The gain and initial value of the 4,000,000 common shares were
  determined based on the fair value of Northern Lion Gold Corp. shares at the
  announcement date of the agreement. This resulted in a gain of $4,187,634 to
  the Company on this sale. The Company also recorded a gain of $39,000 on the
  sale of the Baffin Island project to Patrician Diamonds Inc. in exchange for
  325,000 common shares of Patrician Diamonds Inc.



35

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") totaled $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).

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.

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, 2005 the Company had $1,001,104 in cash and cash
equivalents, compared with $914,494 a year earlier. At March 31, 2005 the
Company had a working capital position of $1,040,723 compared with $700,953 a
year earlier. The Company had no long-term debt at either March 31, 2005 or
2004.  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.

36



During fiscal 2005 the Company received $981,730 by issuing
1,408,736 shares upon the exercise of various stock options and share purchase
warrants. During fiscal 2004 the Company received $720,002 by issuing 560,040
shares upon exercise of various stock options.

During fiscal 2005 the Company continued to reduce its
operating costs and going forward in fiscal 2006, the Company estimates its
monthly operating expenses to be approximately $50,000 per month, or $600,000
per year. The Company does not incur any costs in connection with the

The
Company believes it has sufficient capital for spending through fiscal 2006.

The Company expects to continue incurring annual losses until
it receives revenue from production on the Gahcho Kué 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 Kué
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, 2005 provide the Company with sufficient funds until approximately late
calendar 2006. Although the Company has received funds from the exercise of
stock options and warrants in the past and the exercise of some outstanding
options, which are currently in the money, could conceivably  extend that
date into calendar 2007, there is no assurance that such stock options 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.

37

As at June 15, 2005, the Company has 1,310,000 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 $1,908,900,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. If all of the options were 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 informationThere 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 arrangementsThe Company has no off balance sheet arrangements.F.     Tabular disclosure of contractual obligationsThe Company is committed to payments under an operating lease
for office premises through to December, 2005 of approximately $1,500 per month.
The following table lists, as of March 31, 2005, information with respect to the
Company's known contractual obligations.38

|                                                                                                                                  | Payments due by period
|--------------------------------------------------------------------------------------------------------------------------------- | ----------------------
|Contractual Obligations                                                                                                           | Total                 
|Long-term Debt Obligations                                                                                                        | 0                     
|Capital (Finance) Lease Obligations                                                                                               | 0                     
|Operating Lease Obligations                                                                                                       | $13,500               
|Purchase Obligations                                                                                                              | 0                     
|Other Long-Term Liabilities Reflected on the Company's
      Balance Sheet under the GAAP of the primary financial
    statements | 0                     
|Total                                                                                                                             | $13,500               

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 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 Estimates

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, the deferral of costs incurred for mineral properties and deferred
exploration, assumptions used to determine the fair value of stock-based
compensation, and impairment of long-term investment. 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.

39



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.

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.

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.

The Company's long term investment of shares in Northern Lion
  Gold Corp. is considered to be impaired if a decline in value is considered to
  be other than temporary. As at March 31, 2005, the Company has written down
  its investment equal to the quoted market price of the Northern Lion Gold
  Corp. shares as at March 31, 2005 as it considers the decline in the
  investment to be other than temporary.





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 10 to the Consolidated Financial Statements of the Company
for a description and quantification of material measurement differences between
Canadian GAAP and U.S. GAAP.

40



Item 6     Directors,
Senior Management and Employees.

A.     Directors and Senior Management.

The following table lists, as of March 31, 2005, 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.

|Name                  | Position with Company                                                           | Date of First Appointment                                                                                                                                                  | Age
|--------------------- | ------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---
|Jan W. Vandersande    | President, Chief Executive Officer
      and Director                           | A director and President of Old
      MPV since May 22, 1996. President and Director of the Company since
      November 1, 1997.                                          | 59 
|Carl Verley           | Director(2)(3(4))                                                               | Director of Old MPV since December
      2, 1986 and Director of the Company since November 1, 1997.                                                                       | 55 
|David E. Whittle      | Director(2)(3)(4)                                                               | November 1, 1997                                                                                                                                                           | 41 
|D. Harry W. Dobson    | Director                                                                        | November 1, 1997                                                                                                                                                           | 57 
|Elizabeth J. Kirkwood | Director, Chairman, Corporate
      Secretary and Chief Financial Officer(2)(4) | Director since September 21, 2001
      and Chairman since January 3, 2003. She was appointed Corporate Secretary
      and Chief Financial Officer on September 16, 2003. | 55 
|Jonathan Comerford    | Director(2)(3)(4)                                                               | September 21, 2001                                                                                                                                                         | 33 

(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.

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, and Chief
Executive Office since September 16, 2003. 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

41



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. From 1992
through 2004, Mr. Whittle  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, Corporate Secretary and a director of New Indigo Resources Inc. Currently,
Mr. Whittle is Chief Financial Officer of Hillsborough Resources Limited and 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 KirklandLake 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 on September 16, 2003 and Corporate Secretary
of the Company on November 6, 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),  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 O.S.E Corp. (formerly Oil Springs Energy Corp.(July,
1993- June 2005) and Hucamp Mines Limited (May, 2001-May 2002).

42



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). 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:

Summary Compensation Table

|                                                                        |                     | Annual Compensation | Long Term Compensation |                              
|----------------------------------------------------------------------- | ------------------- | ------------------- | ---------------------- | -----------------------------
|                                                                        |                     |                     |                        |                              
|Name and PrincipalPosition of Named
      Executive Officer             | FinancialYearEnding | Salary($)           | Bonus($)               | Other Annual Compen-sation($)
|Elizabeth KirkwoodChairman, Chief
      Financial Officer and Secretary | 2005                | Nil                 | Nil                    | $ 40,050(1)                  
|Jan W. VandersandePresident and Chief Executive
      Officer           | 2005                | Nil                 | Nil                    | 131,877(2)                   

(1)     $36,000 was paid to a company which
is wholly owned by Ms. Kirkwood in consideration for consulting services
performed by Ms. Kirkwood.

(2)     These monies were paid to Dr.
Vandersande pursuant to a consulting agreement. This amount includes drug,
medical and dental benefits paid to Dr. Vandersande.



(3)     Granted on October 1, 2004 and
exercisable for a period of 5 years at a price of $1.96.



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

43



(stock appreciation rights) or compensation through shares or
units that are subject to restrictions on resale.

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

|Name               | Securities,Acquired on
      Exercise(#) | Aggregate Value Realized ($)(1) | Unexercised Options atFinancial
      Year-EndExercisable/Unexercisable (#) | Value of Unexercised In-the-Money Options at Financial
      Year-End ($) Exercisable / Unexercisable
  (2)
|------------------ | ---------------------------------------- | ------------------------------- | --------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------
|Elizabeth Kirkwood | 10,000                                   | $9,000                          | 90,000/Nil                                                                  | $51,000/Nil                                                                                                
|Jan W. Vandersande | 10,000                                   | $10,100                         | 170,000/Nil                                                                 | $146,700/Nil                                                                                               

(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, 2005, (ie. financial year end) was $2.26.

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 20, 2005.

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.

44



Audit Committee

The members of the Audit Committee do not have any fixed term
for holding their positions and are appointed and replaced from time to time by
resolution of the board of directors. It is composed of at least three
directors, and the Board has determined that David Whittle, C.A. of the Audit
Committee meets the requirement of an "audit committee expert" as defined in
Item 16A of Form 20-F. Each member of the Audit Committee has 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:

(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 of 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.

Dr. Jan W. Vandersande has a consulting agreement dated January
1, 2004 pursuant to which he is paid US$7,500 a month.

45



D.     Employees.

As at the end of March 31, 2005, 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 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 June 15, 2005, 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.

|Title of
      Class | Name of Beneficial
      Owner          | Amount and
      Nature | Percentage(8)of Class(No. of shares,
      options + warrants held by owner divided by total issued and
      outstanding(9) plus no. of options held by owner multiplied by
      100)
|-------------------- | --------------------------------------- | ----------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Common               | Jan W. Vandersande                      | 205,000(1)              | *%                                                                                                                                                                                     
|Common               | Carl Verley                             | 265,250(2)              | *%                                                                                                                                                                                     
|Common               | David E. Whittle                        | 191,234(3)              | *%                                                                                                                                                                                     
|Common               | D. Harry W. Dobson                      | 1,364,923(4)            | 2.585%                                                                                                                                                                                 
|Common               | Elizabeth Kirkwood                      | 90,000(5)               | *%                                                                                                                                                                                     
|Common               | Jonathan Comerford                      | 150,000(6)              | *%                                                                                                                                                                                     
|Common               | Officers and Directors as a
      Group | 2,266,407(7)            | 4.4232%                                                                                                                                                                                

*     less than 1%

46



|(1)  | Includes 50,000 shares and 155,000 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. 95,000 options
      are exercisable at a price of $1.50 per share and expire on May 11, 2006.            
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2)  | Includes 105,250 shares 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 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 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 90,000 options
      (exercisable presently or within 60 days). 40,000 options are exercisable
      at a price of $1.36 per share and expire on October 21, 2007 and 50,000
      options are exercisable at a price of $1.96 per share and expire on
      October 1, 2009.
|(6)  | Includes nil shares and 150,000 options
      (exercisable presently or within 60 days). The options are exercisable at
      a price of $1.96 per share and expire on October 1, 2009.                                                                                                              
|(7)  | Includes 1,321,407 shares and 945,000
      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 June 15, 2005 was 52,625,847 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 June 15, 2005, the Company's issued and outstanding
capital was 52,625,847 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 June 15,
2005, the Company believes that approximately 13,178,828 of the issued and
outstanding common shares were held by 78 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 June 15, 2005) and percentage of shares, warrants and
options held by the Company's major shareholders on a partially diluted basis.

47





|Name of Shareholder                                                          | No. of Shares Held | Percentage out of issued and outstanding share capital of
      52,625,847 shares (as at June 5, 2005)
|---------------------------------------------------------------------------- | ------------------ | ------------------------------------------------------------------------------------------------------
|Bottin (International) Investments
      Ltd. (controlled by Dermot Desmond) | 13,253,430         | 25.2%                                                                                                 
|Desmond P. SharkeyDublin,
      Ireland                                      | 5,206,001          | 9.9%                                                                                                  
|De Beers Canada Exploration Ltd.
      (formerly Monopros Limited)           | 3,046,443          | 5.8%                                                                                                  

(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 June 5, 2002, to
3,046,443 shares and nil warrants as of June 5, 2005. 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 changed from
12,193,896 shares and 1,059,534 warrants beneficially held by it on June 5, 2002
to 13,253,430 shares as of June 5, 2005. The Company has no actual knowledge of
the above shareholdings and information pertaining thereto has been provided by
the named securityholders.

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 and Chief Executive Officer 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, 2005 other than the Company
entering into a Corporate Services Agreement effective September 1, 2003 with
1014620 Ontario Inc.

48



publicly traded company, including filing all such
press releases, notices, reports and financial statements on SEDAR) (the
"Corporate Services").

The two-year term of the Corporate Services Agreement expires
on August 31, 2005. During the term, 1014620 Ontario Inc. is paid a monthly fee
of $3,000 ($36,000 per annum) for providing the Corporate Services, and
is also 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, 2005, the Company paid $36,000
for corporate services to 1014620 Ontario Inc.  As at March 31, 2005, the
Company owed $3,210 to 1014620 Ontario Inc.

During the year ended March 31, 2005, Elizabeth Kirkwood, in
her individual capacity, was also paid $4,050 for consulting services rendered
and $900 for the director's fees. David Whittle and Carl Verley, directors of
the Company were each paid $900 for directors' fees during the year ended March
31, 2005.

During the year ended March 31, 2005, the Company paid a total
of $131,905 to Jan W. Vandersande, the President, Chief Executive Officer and a
director of the Company, for consulting, management, property evaluation and
administration services to the Company and for drug, medical and dental
benefits. There are no debts owing directly or indirectly to the Company or its
subsidiaries by any director or officer of the Company or vice versa.

As of March 31, 2005, 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
8 to the Company's Consolidated Financial Statements for the years ended March
31, 2005, 2004 and 2003, which are incorporated by reference.

C.     Interests of experts and counsel.

Not Applicable

Item 8     Financial
Information.

A.     Consolidated Statements and Other Financial
Information.

Listed in Item 19 hereto are audited consolidated financial
statements as at March 31, 2005 and 2004 and for the fiscal
years ended March 31, 2005, 2004 and 2003, accompanied by the report of our
independent registered accounting firm.

There are no legal proceedings currently pending.

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

B.     Significant Changes.

There have been no significant changes to the Company since the
last fiscal year.

49



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 traded on the NASD's OTC-Bulletin Board ("NASD
OTCBB") under the symbol "MPVI" until June 1, 2005. Commencing on April

The following tables set forth the reported high and low prices on the TSX, 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.

|High and Low Prices for the Five Most Recent Fiscal Years
|---------------------------------------------------------
|Fiscal Year ended                                        
|                                                         
|March 31, 2005                                           
|March 31, 2004                                           
|March 31, 2003                                           
|March 31, 2002                                           
|March 31, 2001                                           

|(1) | 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 and continued through April
      1, 2005. On April 4, 2005 the Company's shares began trading on the
      AMEX.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|High and Low Prices for Each Quarterly Period for
      thePast Two Fiscal Years
|--------------------------------------------------------------------------------
|                                                                                
|Period Ended:                                                                   
|March 31, 2005                                                                  
|Dec. 31, 2004                                                                   

50



|High and Low Prices for Each Quarterly Period for
      thePast Two Fiscal Years
|--------------------------------------------------------------------------------
|                                                                                
|Sept. 30, 2004                                                                  
|June 30, 2004                                                                   
|March 31, 2004                                                                  
|Dec. 31, 2003                                                                   
|Sept. 30, 2003                                                                  
|June 30, 2003                                                                   



|High and Low Prices for the Most Recent Six Months
|--------------------------------------------------
|                                                  
|Month Ended                                       
|December 31, 2004                                 
|January 31, 2005                                  
|February 28, 2005                                 
|March 31, 2005                                    
|April 30, 2005                                    
|May 31, 2005                                      

(1)

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 were also quoted on the over-the-counter (OTC)
Bulletin Board pursuant to Rule 6530(a) of the NASD's OTC Bulletin Board Rules
under the symbol "MPVI.OB" until April 1, 2005. Commencing April 4, 2005 the
Company's shares commenced trading on the AMEX under the symbol "MDM". The
Common Shares are not registered to trade in the United States in the form of
American Depository Receipts or similar certificates.

D.
Selling Shareholders

Not Applicable.

51



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 Northwest Territories (Registration no. E 6486, on February
25, 1998, amended October 16, 2000 for the name change).

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. The Company has completed its transition from the
Company Act to the BCA and adopted new Articles which reflect the provisions of
the BCA. The Company's Memorandum of Articles has been replaced by a Notice of
Articles.

Powers, functions and qualifications of
Directors

The powers and functions of directors are set forth in the BCA
and in theArticles of the Company.

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 new Articles provide that a director or senior officer who
has, directly or indirectly, a material interest in an existing or proposed
material contract or transaction of the Company or who holds any office or
possesses any property whereby, directly or indirectly, a duty or interest might
be created to

52



conflict with his duty or interest as a director or senior
officer, has to disclose the nature and extent of this interest or conflict with
his duty and interest as a director or senior officer, in accordance with the
provisions of the BCA. A director is also prohibited from voting in respect of
any such proposed material contract or transaction and if he does so, his vote
shall not be counted, but he shall be counted in the quorum at the meeting at
which such vote is taken. Notwithstanding this, if all of the directors have a
material interest in a proposed material contract or transaction, any or all of
those directors may vote on a resolution to approve the contract or transaction.
However, in this case the directors must have the contract or transaction
approved by special resolution of the shareholders to avoid accountability for
any profits.

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

| | (i)    | A contract or transaction where both the
      Company and the other party to the contract or transaction are wholly
      owned subsidiaries of the same corporation;                                                                                                                                        
| | ------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii)   | A contract or transaction where the Company
      is a wholly owned subsidiary of the other party to the contract or
      transaction;                                                                                                                                                                       
| | (iii)  | A contract or transaction where the other
      party to the contract or transaction is a wholly owned subsidiary of the
      Company;                                                                                                                                                                       
| | (iv)   | A contract or transaction where the director
      or senior officer is the sole shareholder of the Company or of a
      corporation of which the Company is a wholly owned
    subsidiary;                                                                                                                  
| | (v)    | An arrangement by way of security granted by
      the Company for money loaned to, or obligations undertaken by, the
      director or senior officer, or a person in whom the director or senior
      officer has a material interest, for the benefit of the Company or an
      affiliate of the Company;
| | (vi)   | A loan to the Company, which a director or
      senior officer or a specified corporation or a specified firm in which he
      has a material interest has guaranteed or joined in guaranteeing the
      repayment of the loan or any part of the loan;                                                    
| | (vii)  | Any contract or transaction made or to be
      made with, or for the benefit of a corporation that is affiliated with the
      Company and the director or senior officer is also a director or senior
      officer of that corporation or an affiliate of that
    corporation;                           
| | (viii) | Any contract by a director to subscribe for
      or underwrite shares or debentures to be issued by the Company or a
      subsidiary of the Company;                                                                                                                                                        
| | (ix)   | Determining the remuneration of the director
      or senior officer in that person's capacity as director, officer, employee
      or agent of the Company or an affiliate of the Company;                                                                                                                   
| | (x)    | Purchasing and maintaining insurance to
      cover a director or senior officer against liability incurred by them as a
      director or senior officer; or                                                                                                                                                 
| | (xi)   | The indemnification of any director or
      senior officer by the Company.                                                                                                                                                                                                                                   

53



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

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

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

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

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

Rights and Restrictions attached to
Shares

As all of the 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, and 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 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 two-thirds
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.

54



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.

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
      installments 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
      installments.Under the terms of the 2004 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.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

55



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 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 2005 WTO Review Threshold is
CDN$250,000,000.

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.

56



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
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$250,000,000 (in 2005) for a WTO
investor or a threshold of CDN$ 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

57



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.

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 has carried 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 to it and on the Company's
understanding of the administrative practices of Canada Revenue Agency, and
takes into account all specific proposals to amend the Canadian Tax Act and
regulations to it publicly announced by the Minister of Finance of Canada 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

58



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.

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 years previous 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 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,
or

(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.

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

59



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.

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.

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

60



a capital asset within the meaning of Section 1221 of the
Code. U.S. Holders that are subject to special 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. Holder 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 (as
determined under U.S. tax principles). To the extent that a distribution exceeds
the current and accumulated "earnings and profits" of the Company, such
distribution will be treated (a) first, as a tax-free return of capital to
the extent of a U.S. Holder's tax basis in the Common Shares and,
(b) thereafter, as gain from the sale or exchange of such Common Shares.
(See more detailed discussion at "Disposition of Common Shares" below).

Reduced Tax Rates for Certain Dividends

For taxable years beginning after December 31, 2002 and before
January 1, 2009, a dividend paid (generally, a 15% federal tax rate for 2005) 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

61



requirements, the Company will not be treated as a QFC if the Company is 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).

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.

Although preferential tax rates generally apply to long-term
capital gains of a U.S. Holder that is an individual, estate, or trust, capital
gains rates are not available if the Company is a PFIC, unless a QEF election is
made,as described
below. 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.

62

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 known as "baskets" (including "passive
income," "high withholding tax interest," "financial services income," "shipping
income," and certain other categories of income), although after 2006 "basket"
limitations will be significantly altered. 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.
Unused foreign tax credits generally can be carried back one year and forward
ten years. The foreign tax credit rules are complex, and each U.S. Holder should
consult its own 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 "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.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,63domestic 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), and if certain other circumstances are
present 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.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."64A 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 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 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 annually on such U.S. Holder's pro rata share of (a) net  capital
gain of the Company, which will be taxed as capital gain to such U.S. Holder,
and (b) 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 loss 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.65The 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 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. Holder66has 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).
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).
An individual U.S. Holder's estate may not receive a step-up in
basis in the Common Shares at the U.S. Holder's death, if the Company is or was
a PFIC during the U.S. Holder's period of ownership of the Common Shares.
Certain additional adverse rules will apply with respect to a
U.S. Holder if the Company is a PFIC, regardless of whether such U.S. Holder
makes a QEF Election. For example under Section 1298(b)(6) of the Code, a
U.S. Holder that uses Common Shares as security for a loan will, except as may
be provided in Treasury Regulations, be treated as having made a taxable
disposition of such Common Shares.
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.Not Applicable.67G.     Statement by experts.Not Applicable.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.
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. Certain of these shares
are listed under current assets on the Company's balance sheet as at March 31,
2005 as "Marketable Securities" at an amount of $71,392.However, the
quote market value of these shares at March 31, 2005 was $133,079.  The
Company also owns 4,000,000 common shares of Northern Lion Gold Corp. This
long-term investment has a carrying value of68$2,480,000 as at March 31, 2005, being the quoted market value
of the shares at March 31, 2005. The shares are subject to a hold period expiring February 27,
2007 and other selling restrictions subsequent to that date. 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.Item 12     Description of Securities Other than Equity
Securities.Not Applicable.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.
  There have not been any  changes in the Company's internal
  controls over financial reporting or in other factors that have been
  identified in connection with the evaluation described above that occurred
  during the period covered by this Annual Report that has materially affected, or is reasonably likely to materially affect,
  the Company's internal controls over financial reporting.69Item 16    
[Reserved]Item 16A     Audit
Committee Financial ExpertThe Company's Board of Directors has determined that there is at least one
audit committee financial expert, as defined under Item 16A of Form 20-F,
serving on its audit committee, namely, David Whittle, whose qualifications are
set out in Item 6, above.Mr. Whittle is independent, as such term is
defined by the listing standards of the AMEX.Item 16B     Code
of EthicsThe 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 has been previously filed.
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:
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;
•
    corporate opportunities and potential conflicts
      of interest;•
    the quality of public
  disclosures;•
    the protection and appropriate use of the
      Company's assets and resources;•
    the protection of confidential
      information;•
    insider trading;•
    fair behaviour; and•
    reporting violations of the Policy or Board
      DirectivesThe 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 2005.Item 16C    
Principal Accountant Fees and ServicesA. Audit
Fees70"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 securities regulatory authorities, accounting standard setting bodies, or
other regulatory or standard setting bodies.
Aggregate audit fees billed in fiscal 2005 by KPMG were
$50,250, and $38,000 for the fiscal year 2004.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, 2005 or March 31, 2004.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 2005 by KPMG were $16,682
and $17,000 for the fiscal year 2004 pertaining to tax compliance and tax
planning pertaining to the wind-up of Mountain Glen. These services were
approved by the Audit Committee.D.All Other
Fees
There were no other fees charged by KPMG during the fiscal
periods ended March 31, 2005 and 2004 .
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
CommitteesNot Applicable.71Item 16E    
Purchases of Equity Securities by the Issuer and Affiliated
PurchasersThere 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 other than an exchange of the Company's remaining 30% interest in the
Haveri property for 4,000,000 of Northern Lion Gold Corp.'s common shares (see
Item 4D- Property, plants and equipment - Other Properties, above) and the
exchange of the Company's Baffin Island properties for 325,000 of Patrician
Diamond Inc.'s common shares.PART IIIItem 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 10 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, independent registered
public accounting firm, is
included herein immediately preceding the financial statements.
For audited financial statements for Fiscal 2005, Fiscal 2004
and Fiscal 2003, please see Item 19 below.Item 18     Financial
Statements.Not Applicable.72Consolidated Financial Statements(Expressed in
      Canadian dollars)MOUNTAIN PROVINCE DIAMONDS INC.Years ended March 31, 2005, 2004 and 2003
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
      FIRMTo the ShareholdersMountain Province Diamonds
      Inc.
      We have audited the
      accompanying consolidated balance sheets of Mountain Province Diamonds
      Inc. as at March 31, 2005 and 2004 and the consolidated statements of
      operations and deficit and cash flows for each of the years in the
      three-year period ended March 31, 2005. 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.
      In our opinion, the
      consolidated financial statements referred to above present fairly, in all
      material respects, the financial position of the Company as at March 31,
      2005 and 2004 and the results of its operations and its cash flows for
      each of the years in the three-year period ended March 31, 2005 in
      accordance with Canadian generally accepted accounting principles.
      As discussed in note 2(i) to
      the consolidation financial statements, the Company changed its method of
      accounting for stock-based compensation in 2005.
      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 10 to the consolidated financial statements.
      Chartered Accountants
      Vancouver, CanadaJune
      10, 2005
MOUNTAIN PROVINCE DIAMONDS INC.Consolidated Balance Sheets(Expressed in Canadian
      dollars)
      March 31, 2005 and 20042005
    2004AssetsCurrent
  assets:Cash and
      cash equivalents
    $
    1,001,104
    $
    914,494Accounts
      receivable
    26,324
    18,433Marketable
      securities (note 3)
    71,392
    32,392Advances and prepaid expenses
    36,879
    8,380Total
      current assets
    1,135,699
    973,699Long-term
      investment (note 4)
    2,480,000
    -Mineral
      properties (note 5)
    1,552,553
    1,671,939Deferred
      exploration costs (note 5)
    30,865,670
    30,861,544Equipment (note 6)
    4,235
    6,371Total assets
    $
    36,038,157
    $
    33,513,553Liabilities and Shareholders'
      EquityCurrent
    liabilitiesAccounts
      payable and accrued liabilities
    $
    94,976
    $
    272,746Shareholders'
      equity:Share
      capital (note 7)
    57,607,786
    56,595,262Contributed surplus (note 7(e))
    257,925
    24,419Deficit
    (21,922,530)
    (23,378,874)Total shareholders' equity
    35,943,181
    33,240,807Total liabilities and shareholders'
      equity
    $
    36,038,157
    $
    33,513,553Subsequent event (note
      7(c))See accompanying notes to
      consolidated financial statements.Approved on behalf of the
      Board:"Jan W. Vandersande"
    
    Director"Elizabeth Kirkwood"
    
    DirectorF-1

|MOUNTAIN PROVINCE DIAMONDS
      INC.Consolidated Statements of
      Operations and Deficit(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                           
|                                                                                                                                                                           
|Expenses:                                                                                                                                                                  
|Amortization                                                                                                                                                               
|Capital taxes                                                                                                                                                              
|Consulting fees (notes 8)                                                                                                                                                  
|Directors' fees and honorarium                                                                                                                                             
|Interest and bank charges                                                                                                                                                  
|Management fees (note 8)                                                                                                                                                   
|Office and miscellaneous                                                                                                                                                   
|Professional fees (note 8)                                                                                                                                                 
|Promotion and investor relations                                                                                                                                           
|Property evaluation and maintenance                                                                                                                                        
|Rent                                                                                                                                                                       
|Salaries and benefits                                                                                                                                                      
|Severance and contract termination (note 8)                                                                                                                                
|Stock-based compensation (note 7(c))                                                                                                                                       
|Transfer agent and regulatory fees                                                                                                                                         
|Travel                                                                                                                                                                     
|                                                                                                                                                                           
|                                                                                                                                                                           
|Other
      earnings (expenses):                                                                                                                                           
|Gain on sale of mineral properties (notes 5(b)   and
      5(c))                                                                                                           
|Write-down of
      long-term investment                                                                                                                                   
|Interest                                                                                                                                                                   
|Loss on disposal of equipment                                                                                                                                              
|Write-down of mineral properties and deferred   
      exploration                                                                                                         
|                                                                                                                                                                           
|                                                                                                                                                                           
|Earnings
      (loss) before income taxes                                                                                                                                  
|                                                                                                                                                                           
|Income tax expense (note 9)                                                                                                                                                
|                                                                                                                                                                           
|Net earnings
      (loss) for the year                                                                                                                                     
|                                                                                                                                                                           
|Deficit,
      beginning of year:                                                                                                                                          
|As previously
      reported                                                                                                                                               
|Adjustment on
      adoption of new accounting   standard for stock-based
      compensation   (note 2(i))                                                                 
|As restated                                                                                                                                                                
|                                                                                                                                                                           
|Deficit, end of year                                                                                                                                                       
|                                                                                                                                                                           
|Basic and diluted
      earnings (loss) per share                                                                                                                          
|                                                                                                                                                                           
|Weighted average
      number of shares outstanding                                                                                                                        
|                                                                                                                                                                           
|                                                                                                                                                                           
|See accompanying
      notes to consolidated financial
statements.                                                                                                         

F-2



|MOUNTAIN PROVINCE DIAMONDS
      INC.Consolidated Statements of Cash
      Flows(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|---------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                               
|Cash
      provided by (used in):                                                                                                                              
|                                                                                                                                                               
|Cash
      flows provided by (used in) operating activities:                                                                                                   
|Net earnings (loss)
      for the year                                                                                                                         
|Items not involving
      cash:                                                                                                                                
|Amortization                                                                                                                                                   
|Stock-based
      compensation expense                                                                                                                         
|Gain on sale of
      mineral properties                                                                                                                       
|Write-down of
      long-term investment                                                                                                                       
|Loss on disposal of
      equipment                                                                                                                            
|Write-down of mineral
      properties and  deferred exploration                                                                                               
|Changes in non-cash
      operating working capital:                                                                                                           
|Accounts
      receivable                                                                                                                                      
|Advances and prepaid
      expenses                                                                                                                            
|Accounts payable and
      accrued liabilities                                                                                                                 
|Due to related
      party                                                                                                                                     
|                                                                                                                                                               
|                                                                                                                                                               
|                                                                                                                                                               
|Cash
      flows provided by (used in) investing activities:                                                                                                   
|Purchase of
      equipment                                                                                                                                    
|Proceeds on sale of
      equipment                                                                                                                            
|Mineral
      properties                                                                                                                                       
|Deferred
      exploration costs                                                                                                                               
|                                                                                                                                                               
|Cash flows
      provided by financing activities:                                                                                                             
|Shares
      issued for cash, net of share issue costs                                                                                                         
|                                                                                                                                                               
|Increase (decrease) in cash and cash equivalents                                                                                                               
|Cash and cash equivalents, beginning of
      year                                                                                                             
|Cash and cash equivalents, end of year                                                                                                                         
|                                                                                                                                                               
|Supplementary
      information:                                                                                                                               
|Income taxes
      paid                                                                                                                                        
|Non-cash
      transactions                                                                                                                                    
|Shares issued in
      exchange for sale of  Haveri property (note 5(b))                                                                                       
|Shares issued in
      exchange for sale of   Baffin Island claim (note
    5(c))                                                                              
|Shares issued
      pursuant to consulting  agreement (note 8)                                                                                                 
|                                                                                                                                                               
|See
      accompanying notes to consolidated financial
  statements                                                                                            



F-3



|MOUNTAIN PROVINCE DIAMONDS
      INC.Notes to Consolidated Financial
      Statements(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.                                                                                                                                                                  
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|2.                                                                                                                                                                  
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    

F-4



|MOUNTAIN PROVINCE DIAMONDS
      INC.Notes to Consolidated Financial
      Statements(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                    
|2.                                                                                                                                                                  
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    

| |                         |     
| | ----------------------- | ----
| | Asset                   | Rate
| |                         |     
| | Furniture and equipment | 20% 
| | Computers               | 30% 

| |    
| | ---
| | (g)
| |    

F-5



|MOUNTAIN PROVINCE DIAMONDS INC.Notes to Consolidated Financial Statements(Expressed
      in Canadian dollars)
      Years ended March 31, 2005, 2004 and
2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | Significant
      accounting policies (continued):
|-- | --------------------------------------------------
|   | (h)                                               
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   | (i)                                               
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   

F-6



|MOUNTAIN PROVINCE DIAMONDS
      INC.Notes to Consolidated Financial
      Statements(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | Significant
      accounting policies (continued):
|-- | --------------------------------------------------
|   | (i)                                               
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   | (j)                                               
|   |                                                   
|   |                                                   
|   |                                                   
|   | (k)                                               
|   |                                                   
|   |                                                   
|   | (l)                                               
|   |                                                   

F-7



|MOUNTAIN PROVINCE DIAMONDS
      INC.Notes to Consolidated Financial
      Statements(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.                                                                                                                                                                  
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3. | Marketable
      securities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The quoted market
      value of marketable securities at March 31, 2005 was $134,772 (2004 -
      $82,322).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4. | Long-term
      investment:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The long-term investment
      consists of 4,000,000 common shares of Northern Lion Gold Corp. ("Northern
      Lion"), acquired upon disposal of the Company's remaining interest in the
      Haveri property (note 5(b)).  The common shares are subject to a hold
      period expiring February 24, 2007, following which the Company is
      contractually obligated to sell not fewer than 250,000 common shares at a
      time and must first offer Northern Lion the right to place the number of
      shares that the Company wishes to sell.  The Company has also agreed
      to provide Northern Lion's management a proxy for the purpose of voting
      the common shares for a period of three years.  On acquisition, the
      Company has valued the shares based on the share price of Northern Lion
      using the weighted average price for the five days around the announcement
      date of the transaction and has recorded a gain on the sale in the amount
      of $4,187,634.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | As at March 31, 2005 the
      Company has written down the investment to $2,480,000, reflecting the quoted
      market price of the shares as at March 31, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|5. | Mineral properties
      and deferred exploration:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Acquisition
      costs:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|
|
|
|
|
|
|
|

F-8



|MOUNTAIN PROVINCE DIAMONDS
      INC.Notes to Consolidated Financial
      Statements(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                    
|                                                                                                                                                                    

| |                                                |                                                   | Gahcho Kuéproject |       | Baffin Island project |          | Rabbit Tracks Diamond project |          | Total     
| | ---------------------------------------------- | ------------------------------------------------- | ----------------- | ----- | --------------------- | -------- | ----------------------------- | -------- | ----------
| |                                                |                                                   |                   |       |                       |          |                               |          |           
| | Balance,
      March 31, 2002                  |                                                   | 30,861,544        |       | 559,949               |          | 71,433                        |          | 31,492,926
| | Write-down of deferred exploration
      costs | -                                                 |                   | -     |                       | (71,433) |                               | (71,433)
| |                                                |                                                   |                   |       |                       |          |                               |          |           
| | Balance,
      March 31, 2003                  |                                                   | 30,861,544        |       | 559,949               |          | -                             |          | 31,421,493
| | Write-down of deferred exploration
      costs |                                                   | -                 |       | (559,949)             |          | -                             |          | (559,949) 
| |                                                |                                                   |                   |       |                       |          |                               |          |           
| | Balance,
      March 31, 2004                  |                                                   | 30,861,544        |       | -                     |          | -                             |          | 30,861,544
| | Exploration
      expenditures:                |                                                   |                   |       |                       |          |                               |          |           
| |                                                | Consulting and other professional 
      services |                   | 4,126 |                       | -        |                               | -        |           
| |                                                |                                                   |                   |       |                       |          |                               |          |           
| | Balance, March 31, 2005                        | $                                                 | 30,865,670        | $     | -                     | $        | -                             | $        | 30,865,670

| | (a) | Gahcho Kué
    project:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | The Company currently holds a
      44.1% interest in the Gahcho Kué 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 Kué
  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) 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%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    

F-9



|MOUNTAIN PROVINCE DIAMONDS
      INC.Notes to Consolidated Financial
      Statements(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5.                                                                                                                                                                  
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    

F-10



|MOUNTAIN PROVINCE DIAMONDS
      INC.Notes to Consolidated Financial
      Statements(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5.                                                                                                                                                                  
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    

|  
|--
|6.
|  
|  
|  
|  
|  
|  
|  
|  
|  
|  
|  
|  
|  
|  
|  
|  

F-11



|MOUNTAIN PROVINCE DIAMONDS
      INC.Notes to Consolidated Financial
      Statements(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|7.                                                                                                                                                                  
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    

| |  |                                                                                                           |                                 | Numberof shares |           | Amount    
| |  | --------------------------------------------------------------------------------------------------------- | ------------------------------- | --------------- | --------- | ----------
| |  |                                                                                                           |                                 |                 |           |           
| |  | Balance,
      March 31, 2002                                                                             |                                 | 47,867,405      |           | 53,470,446
| |  |                                                                                                           |                                 |                 |           |           
| |  | Issued for
      cash pursuant to:                                                                        |                                 |                 |           |           
| |  |                                                                                                           | Exercise of stock
      options |                 | 544,900   |           
| |  |                                                                                                           | Exercise of warrants            |                 | 2,169,766 |           
| |  |                                                                                                           |                                 |                 |           |           
| |  | Balance,
      March 31, 2003                                                                             |                                 | 50,582,071      |           | 55,719,260
| |  |                                                                                                           |                                 |                 |           |           
| |  | Issued
      pursuant to consulting agreement (note 8)                                                    |                                 | 60,000          |           | 156,000   
| |  |                                                                                                           |                                 |                 |           |           
| |  | Issued for
      cash pursuant to:                                                                        |                                 |                 |           |           
| |  |                                                                                                           | Exercise of stock options       |                 | 560,040   |           
| |  |                                                                                                           |                                 |                 |           |           
| |  | Balance,
      March 31, 2004                                                                             |                                 | 51,202,111      |           | 56,595,262
| |  |                                                                                                           |                                 |                 |           |           
| |  | Adjustment
      on adoption of new accounting standard for   
      stock-based compensation (note 2(i)) |                                 | -               |           | 20,314    
| |  |                                                                                                           |                                 |                 |           |           
| |  | Issued for
      cash pursuant to:                                                                        |                                 |                 |           |           
| |  |                                                                                                           | Exercise of stock
      options |                 | 202,858   |           
| |  |                                                                                                           | Exercise of warrants            |                 | 1,205,878 |           
| |  |                                                                                                           |                                 |                 |           |           
| |  | Stock-based compensation of options
      exercised during the year                                       |                                 | -               |           | 10,480    
| |  |                                                                                                           |                                 |                 |           |           
| |  | Balance, March 31, 2005                                                                                   |                                 | 52,610,847      | $         | 57,607,786

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  | 
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
| |     | On March 30, 2004, the
      Company cancelled 16,015,996 shares previously owned by its wholly-owned
      subsidiary Mountain Glen Mining Inc. ("Mountain Glen") that were received
      by the Company on the wind up of Mountain Glen. 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,
      2005, the Company has 1,325,000 (2004 - 1,327,858; 2003 - 2,399,100) stock
      options outstanding in total, comprised of 1,325,000 (2004 - 1,327,858;
      2003 - 1,919,100) granted inside the Plan and nil (2004 - nil; 2003 -
      480,000) granted outside the plan.

F-12



|MOUNTAIN PROVINCE DIAMONDS
      INC.Notes to Consolidated Financial
      Statements(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                    
|7.                                                                                                                                                                  
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    

| |  |                                                                                                                           |  |  |  | 
| |  | ------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
| |  | The following table summarizes information about the
      stock options outstanding and exercisable at March 31,
  2005:
| |  |                                                                                                                          

| |  |               | Options outstanding and exercisable
| |  | ------------- | -----------------------------------
| |  |               | Number of shares                   
| |  |               |                                    
| |  | $0.67         | 50,000                             
| |  | $1.25 -
$1.50 | 1,050,000                          
| |  | $1.96         | 200,000                            
| |  | $2.06         | 25,000                             
| |  |               | 1,325,000                          

| | As at March 31, 2005, all
      options are fully vested.                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                 
| | During the year ended March 31,
      2005, the Company granted 200,000 options to directors of the Company at
      an exercise price of $1.96 per share. These options expire October 1, 2009
      and vested immediately. The weighted average grant date fair value of the
      options granted during the year ended March 31, 2005 was $0.95 per option,
      or $189,400 in aggregate.
| |                                                                                                                                                                                                                                                                                                                                                                                                 
| | During the year ended March 31,
      2003, the Company 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 weighted
      average grant date fair value was $0.98 per option, or $24,419 in
      aggregate.                                      

F-13



|MOUNTAIN PROVINCE DIAMONDS
      INC.Notes to Consolidated Financial
      Statements(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                    
|7.                                                                                                                                                                  
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    

| | 
| | 
| | 
| | 
| | 
| | 
| | 
| | 
| | 
| | 
| | 

| |  |  |                                                                                                                                                                                  |  | 
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
| |  |  | The fair value of the options
      granted has been estimated on the date of the grant using the
      Black-Scholes option pricing model with the following
      assumptions:

| |                        
| | -----------------------
| |                        
| |                        
| | Dividend yield         
| | Expected volatility    
| | Risk-free interest rate
| | Expected lives         
| |                        

| |                                                                                            |  | 
| | ------------------------------------------------------------------------------------------ |  | 
| | Subsequent to March 31, 2005, 15,000 options were
      exercised for proceeds of $20,000.

F-14



|MOUNTAIN PROVINCE DIAMONDS
      INC.Notes to Consolidated Financial
      Statements(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                    
|7.                                                                                                                                                                  
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    

| |  | Issue date       | Balance, March 31, 2004 | Issued | Exercised | Lapsed | Balance, March 31, 2005 | Exercise price | Expiry date
| |  | ---------------- | ----------------------- | ------ | --------- | ------ | ----------------------- | -------------- | -----------
| |  |                  |                         |        |           |        |                         |                |            
| |  | December 6, 2001 | 1,205,878               | -      | 1,205,878 | -      | -                       | $0.58          | -          

| |  |                  |                         |        |           |        |                         |                |                 
| |  | ---------------- | ----------------------- | ------ | --------- | ------ | ----------------------- | -------------- | ----------------
| |  | Issue date       | Balance, March 31, 2003 | Issued | Exercised | Lapsed | Balance, March 31, 2004 | Exercise price | Expiry date     
| |  |                  |                         |        |           |        |                         |                |                 
| |  | December 6, 2001 | 1,205,878               | -      | -         | -      | 1,205,878               | $ 0.58         | December 6, 2004

| |    
| | ---
| | (e)
| |    
| |    
| |    
| |    
| |    
| |    
| |    
| |    
| |    
| |    
| |    
| |    
| |    
| |    
| |    
| |    

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|8. | Related party
      transactions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | As at March 31, 2005, $6,210
      (2004 - $3,000) was owed to directors or companies controlled by directors  of the Company. Amounts are
      repayable on demand, unsecured and non-interest bearing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Included in management fees
      during the year ended March 31, 2005 is nil (2004 - nil; 2003 - $45,000)
      for management services paid to a director of the
Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Included in professional fees
      during the year ended March 31, 2005 is $36,000 (2004 - $21,000; 2003 -
      nil) paid for corporate services to a company owned by a director of the
      Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | During the year ended March 31,
      2005, the Company paid $4,050 (2004 - $176,896; 2003 - $193,301) 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,
      2005, the Company paid nil (2004 - nil; 2003 - $20,340) for secretarial
      and public relations services to individuals related to a director of the
      Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | During the year ended March 31,
      2004, the Company entered into a new consulting agreement with the
      President of the Company.
      As compensation for terminating his old consulting agreement, the
      President received US$120,000 paid in 12 equal monthly installments commencing
      January 1, 2004. As at March 31, 2004, the remaining US$90,000 was
      included in accounts payable and accrued liabilities. No amounts are
      unpaid at March 31, 2005.  As further
      compensation, 60,000 shares were issued to the President 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, was charged to contract
      termination expense during the year ended March 31, 2004.  During the
      year ended March 31, 2005, the President was paid $131,905 (US$7,500 per
      month plus benefits) pursuant to this consulting agreement.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | During the year ended March 31,
      2003, a severance payment of $331,500 was paid to a director of the
      Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

F-15



|MOUNTAIN PROVINCE DIAMONDS
      INC.Notes to Consolidated Financial
      Statements(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.                                                                                                                                                                  
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    

| |                                                   |  |  |   | 2005        |   | 2004       
| | ------------------------------------------------- |  |  | - | ----------- | - | -----------
| |                                                   |  |  |   |             |   |            
| | Mineral properties
      and deferred exploration |  |  | $ | 579,000     | $ | 1,756,000  
| | Loss carry
      forwards                         |  |  |   | 2,168,000   |   | 2,095,000  
| | Equipment                                         |  |  |   | 172,000     |   | 172,000    
| | Other                                             |  |  |   | 6,000       |   | 3,000      
| |                                                   |  |  |   | 2,925,000   |   | 4,026,000  
| | Valuation allowance                               |  |  |   | (2,925,000) |   | (4,026,000)
| |                                                   |  |  |   |             |   |            
| | Net future income tax asset
      (liability)     |  |  | $ | -           | $ | -          

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At March 31, 2005, the
      Company has available losses for income tax purposes totalling
      approximately $6.0 million, expiring at various times from 2006 to 2012. 
      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 $34.0 million,
      which may be carried forward and utilized to reduce future taxable
      income.  Included in the $34.0 million of tax pools is $24.9 million that
      is successored, which can only be utilized against taxable income from
      specific mineral properties.

F-16



|MOUNTAIN PROVINCE DIAMONDS
      INC.Notes to Consolidated Financial
      Statements(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.                                                                                                                                                                 
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    

F-17



|MOUNTAIN PROVINCE DIAMONDS
      INC.Notes to Consolidated Financial
      Statements(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.                                                                                                                                                                 
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    

F-18



|MOUNTAIN PROVINCE DIAMONDS
      INC.Notes to Consolidated Financial
      Statements(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.                                                                                                                                                                 
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    

F-19



|MOUNTAIN PROVINCE DIAMONDS
      INC.Notes to Consolidated Financial
      Statements(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.                                                                                                                                                                 
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    

F-20



|MOUNTAIN PROVINCE DIAMONDS
      INC.Notes to Consolidated Financial
      Statements(Expressed in Canadian dollars)
      Years ended March 31, 2005, 2004 and 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.                                                                                                                                                                 
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    

| |  |        |                                                                               |   |           |   |             |          |            
| |  | ------ | ----------------------------------------------------------------------------- | - | --------- | - | ----------- | -------- | -----------
| |  | (vii)  | Cash provided by (used
      in) operating   activities, under Canadian GAAP  | $ | (858,010) | $ | (1,109,586) | $        | (1,584,673)
| |  |        | Adjustment
      for mineral properties  (note 10(a))                         | - |           | - |             | (21,839)
| |  |        | Adjustment for deferred exploration  
      (note 10(a))                      |   | (37,106)  |   | -           |          | -          
| |  |        |                                                                               |   |           |   |             |          |            
| |  |        | Cash provided by (used in) operating  
      activities, under US GAAP        | $ | (895,120) | $ | (1,019,586) | $        | (1,606,512)
| |  |        |                                                                               |   |           |   |             |          |            
| |  | (viii) | Cash provided by (used
      in) investment   activities, under Canadian GAAP | $ | (37,106)  | $ | 4,002       | $        | (39,944)   
| |  |        | Adjustment
      for mineral properties (note 10(a))                          | - |           | - |             | 21,839  
| |  |        | Adjustment for deferred exploration 
      (note 10(a))                       |   | 37,106    |   | -           |          | -          
| |  |        |                                                                               |   |           |   |             |          |            
| |  |        | Cash provided by (used in) investment  
      activities, under US GAAP       | $ | -         | $ | 4,002       | $        | (18,105)   

F-21



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, 2005 and 2004 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, 2005 and
2004.

72



Consolidated Statements of Operations and Deficit for the years
ended March 31, 2005, 2004 and 2003.

Consolidated Statements of Cash Flows for the years ended March
31, 2005, 2004 and 2003.

Notes to the Consolidated Financial Statements.

Exhibits

|The following exhibits
      are attached to and form part of this Annual Report:Exhibit | Remarks.                                                                                                                                                                                                                                                               
|---------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1                                                                                      | Memorandum and Articles of the
      Company.                                                                                                                                                                                                                          
|1.2                                                                                      | Arrangement Agreement between the
      Company and Glenmore Highlands Inc. dated May 10, 2000.                                                                                                                                                                        
|1.3                                                                                      | Joint Information Circular of the
      Company and Glenmore Highlands Inc.                                                                                                                                                                                            
|4.1                                                                                      | Transfer agreement between MPV,
      Monopros and Camphor dated November 24, 1999 pursuant to which MPV and
      Camphor transferred the GOR to Monopros.                                                                                                            
|4.2                                                                                      | Letter Agreement between MPV,
      Monopros, Glenmore and Camphor dated December 17, 1999 relating to
      acquisition of property, within the "Area of Interest" as defined in the
      agreement and acquisition of property through third party
      agreements.
|4.3                                                                                      | Letter Agreement dated December
      17, 1999 between MPV, Monopros, Camphor and Glenmore amending the Monopros
      Joint Venture Agreement.                                                                                                                        
|4.4                                                                                      | Form of Subscription Agreement for
      the private placement described in item 1 of "Material
    Contracts".                                                                                                                                                        
|4.5                                                                                      | Agreement dated as of January 1,
      2002 between the Company, Camphor Ventures Inc. and De Beers Canada
      Exploration Inc.                                                                                                                                      
|4.6                                                                                      | Second Amendment Agreement dated
      January 1, 2002 between the Company and Paul Shatzko.                                                                                                                                                                           
|4.7                                                                                      | Second Amendment Agreement dated
      January 1, 2002 between the Company and Jan Vandersande.                                                                                                                                                                        
|4.8                                                                                      | Third Amendment Agreement dated
      December 13, 2002 between the Company and Jan Vandersande                                                                                                                                                                        
|4.9                                                                                      | Letter agreement dated December
      13, 2002 between the Company and Elizabeth Kirkwood                                                                                                                                                                              
|4.10                                                                                     | Consulting Agreement dated January
      1, 2004 between the Company and Jan W. Vandersande                                                                                                                                                                            
|8.1                                                                                      | List of Subsidiaries                                                                                                                                                                                                                                                   
|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                                                                                                                                                                                               

73



|The following exhibits
      are attached to and form part of this Annual Report:Exhibit | Remarks.                                                                                                                                                                                           
|---------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|14.1                                                                                     | Independent Qualified Person's
      Review and Technical Report dated June 16, 2003 entitled Gahcho Kué,
      Northwest Territories, Canada prepared by Malcolm L. Thurston, Ph.D.,
      MAusimm
|15                                                                                       | Revised Charter of the Board of
      Directors and Committees thereof of Mountain Province Diamonds
    Inc.                                                                                      

(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.

74



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)       
|------------------- | ---------------------------------------------------
|                    | /s/Jan W. Vandersande(Signature)*                  
|Date: June 27, 2005 | Jan W. VandersandePresident, CEO and
      Director

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





EXHIBIT INDEX



|The following exhibits
      are attached to and form part of this Annual Report:Exhibit | Remarks.                                                                                                                                                                                                                                                               
|---------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1                                                                                      | Memorandum and Articles of the
      Company.                                                                                                                                                                                                                          
|1.2                                                                                      | Arrangement Agreement between the
      Company and Glenmore Highlands Inc. dated May 10, 2000.                                                                                                                                                                        
|1.3                                                                                      | Joint Information Circular of the
      Company and Glenmore Highlands Inc.                                                                                                                                                                                            
|4.1                                                                                      | Transfer agreement between MPV,
      Monopros and Camphor dated November 24, 1999 pursuant to which MPV and
      Camphor transferred the GOR to Monopros.                                                                                                            
|4.2                                                                                      | Letter Agreement between MPV,
      Monopros, Glenmore and Camphor dated December 17, 1999 relating to
      acquisition of property, within the "Area of Interest" as defined in the
      agreement and acquisition of property through third party
      agreements.
|4.3                                                                                      | Letter Agreement dated December
      17, 1999 between MPV, Monopros, Camphor and Glenmore amending the Monopros
      Joint Venture Agreement.                                                                                                                        
|4.4                                                                                      | Form of Subscription Agreement for
      the private placement described in item 1 of "Material
    Contracts".                                                                                                                                                        
|4.5                                                                                      | Agreement dated as of January 1,
      2002 between the Company, Camphor Ventures Inc. and De Beers Canada
      Exploration Inc.                                                                                                                                      
|4.6                                                                                      | Second Amendment Agreement dated
      January 1, 2002 between the Company and Paul Shatzko.                                                                                                                                                                           
|4.7                                                                                      | Second Amendment Agreement dated
      January 1, 2002 between the Company and Jan Vandersande.                                                                                                                                                                        
|4.8                                                                                      | Third Amendment Agreement dated
      December 13, 2002 between the Company and Jan Vandersande                                                                                                                                                                        
|4.9                                                                                      | Letter agreement dated December
      13, 2002 between the Company and Elizabeth Kirkwood                                                                                                                                                                              
|4.10                                                                                     | Consulting Agreement dated January
      1, 2004 between the Company and Jan W. Vandersande                                                                                                                                                                            
|8.1                                                                                      | List of Subsidiaries                                                                                                                                                                                                                                                   
|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 Gahcho Kué,
      Northwest Territories, Canada prepared by Malcolm L. Thurston, Ph.D.,
      MAusimm                                                                    





|The following exhibits
      are attached to and form part of this Annual Report:Exhibit | Remarks.                                                                                                     
|---------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------
|15                                                                                       | Revised Charter of the Board of
      Directors and Committees thereof of Mountain Province Diamonds
    Inc.

(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.