UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

AMENDMENT NO. 1

TO

FORM 20-F/A

(Mark One)

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

OR

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

For the fiscal year ended March 31, 2009

OR

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

OR

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

Date of event requiring this shell company report
_______________________________

For the transition period from __________________ to
__________________

Commission file number 001-32468

MOUNTAIN PROVINCE DIAMONDS
INC.(Exact name of Registrant as specified in its
charter)

Not Applicable(Translation of
Registrants name into English)

Ontario(Jurisdiction of incorporation
or organization)

401 Bay Street, Suite 2700, PO Box 152, Toronto, Ontario
Canada M5H 2Y4(Address of principal executive offices)

Patrick Evans  416-361-3562401 Bay
Street, Suite 2700, PO Box 152, Toronto, Ontario Canada M5H 2Y4(Name, Telephone, E-mail and/or Facsimile number and Address of Company
Contact Person)

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

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

i

---

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

Not Applicable(Title of Class)

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

None(Title of Class)

Indicate the number of outstanding shares of the issuers
classes of capital or common stock as of the close of the period covered by
the annual report. 59,932,381

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

> o    Yes        
> x   No

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

o    Yes        
x   No

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

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

x    Yes        
o   No

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

o    Yes        
o   No

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

Large accelerated filer
o           
Accelerated filer x          
Non-accelerated filer o

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

U.S. GAAP 
    o
    International Financial Reporting Standards 
    o
    Other 
    xas issued by the
      International AccountingStandards Board


ii

---

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

x  Item 17      o  Item 18

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

o    Yes        
x   No

(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.

o    Yes        
o   No

Not Applicable

iii

---

EXPLANATORY NOTE

This Amendment No. 1 to the annual report on Form 20-F of
Mountain Province Diamonds Inc., which was originally filed on June 26, 2009
(the "2009 Form 20-F"), is being filed solely for the purpose of correcting a
clerical error pursuant to which the signature of our auditor was not included
on our auditor report entitled "Report of Independent Registered Public
Accounting Firm"relating to Company's internal control over financial
reporting. The Company has amended the disclosure contained herein to reflect
certain events that have occurred since such original filing that are considered
material to include as subsequent event disclosures in Notes 6 and 10 of the
financial statements, and referenced in Item 5 under the heading "Subsequent
Events", of this Amendment No. 1 to the annual report on Form 20-F of Mountain
Province Diamonds Inc. There are no other changes contained, and no other
information provided has been updated, in this Amendment No. 1 as compared to
the originally filed 2009 Form 20-F.



iv

---

TABLE OF CONTENTS

|GLOSSARY                    | vii                                                   
|--------------------------- | ------------------------------------------------------
|GLOSSARY OF TECHNICAL TERMS | x                                                     
|PART I                      |                                                       
|Item 1                      | Identity of Directors, Senior Management and Advisors.
|Item 2                      | Offer Statistics and Expected Timetable.              
|Item 3                      | Key Information.                                      
|A.                          | Selected financial data.                              
|B.                          | Capitalization and indebtedness.                      
|C.                          | Reasons for the offer and use of proceeds.            
|D.                          | Risk factors.                                         
|Item 4                      | Information on the Company.                           
|A.                          | History and development of the Company.               
|B.                          | Business Overview.                                    
|C.                          | Organizational structure.                             
|D.                          | Property, plants and equipment.                       
|Item 4A                     | Unresolved Staff Comments                             
|Item 5                      | Operating and Financial Review and Prospects.         
|A.                          | Operating results.                                    
|B.                          | Liquidity and capital resources.                      
|C.                          | Research and development, patents and licenses, etc.  
|D.                          | Trend information.                                    
|E.                          | Off-balance sheet arrangements.                       
|F.                          | Tabular disclosure of contractual obligations.        
|Item 6                      | Directors, Senior Management and Employees.           
|A.                          | Directors and Senior Management.                      
|B.                          | Compensation.                                         
|C.                          | Board practices.                                      
|D.                          | Employees.                                            
|E.                          | Share ownership.                                      

iv

---

|Item 7  | Major Shareholders and Related Party Transactions.                | 41
|------- | ----------------------------------------------------------------- | --
|A.      | Major shareholders.                                               | 41
|B.      | Related party transactions.                                       | 41
|C.      | Interests of experts and counsel.                                 | 41
|Item 8  | Financial Information.                                            | 42
|A.      | Consolidated Statements and Other Financial Information.          | 42
|B.      | Significant Changes.                                              | 42
|Item 9  | The Offer and Listing.                                            | 42
|A.      | Offer and Listing Details.                                        | 42
|B.      | Plan of Distribution.                                             | 43
|C.      | Markets.                                                          | 43
|D.      | Selling Shareholders.                                             | 43
|E.      | Dilution.                                                         | 43
|F.      | Expenses of the Issuer.                                           | 44
|Item 10 | Additional Information.                                           | 44
|A.      | Share capital.                                                    | 44
|B.      | Memorandum and articles of association.                           | 44
|C.      | Material contracts.                                               | 47
|D.      | Exchange controls.                                                | 47
|E.      | Taxation.                                                         | 49
|F.      | Dividends and paying agents.                                      | 57
|G.      | Statement by experts.                                             | 57
|H.      | Documents on display.                                             | 57
|I.      | Subsidiary Information.                                           | 57
|Item 11 | Quantitative and Qualitative Disclosures About Market
      Risk. | 57
|Item 12 | Description of Securities Other than Equity Securities.           | 58

v

---

|PART II       |                                                                                     |   
|------------- | ----------------------------------------------------------------------------------- | --
|Item 13       | Defaults, Dividend Arrearages and Delinquencies.                                    | 58
|Item 14       | Material Modifications to the Rights of Security Holders
      and Use of Proceeds. | 58
|Item 15       | Controls and Procedures.                                                            | 58
|Item 16       | [Reserved]                                                                          | 59
|Item 16A      | Audit Committee Financial Expert.                                                   | 59
|Item 16B      | Code of Ethics.                                                                     | 59
|Item 16C      | Principal Accountant Fees and Services.                                             | 60
|Item 16D      | Exemptions from the Listing Standards for Audit Committees.                         | 61
|Item 16E      | Purchases of Equity Securities by the Issuer and Affiliated
      Purchasers.       | 61
|Item 16F      | Change in Registrants Certifying Accountant.                                       | 61
|Item 16G      | Corporate Governance                                                                | 61
|PART III      |                                                                                     |   
|Item 17       | Financial Statements.                                                               | 61
|Item 18       | Financial Statements.                                                               | 62
|Item 19       | Exhibits.                                                                           | 62
|              |                                                                                     |   
|SIGNATURES    | 63                                                                                 
|EXHIBIT INDEX | 64                                                                                 
|APPENDIX      | Item 17. Financial Statements                                                       | 65

vi

---

GLOSSARY

Affiliate has the meaning given to affiliated
bodies corporate under the Ontario Business Corporations Act ;

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

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

AMECmeans AMEC Americas Limited.

AMEXmeans the American Stock Exchange prior to
the take-over of the American Stock Exchange LLC by the New York Stock Exchange;

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

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

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

Camphoror Camphor Venturesmeans
  Camphor Ventures Inc.;

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

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

Company, MPVor
Registrant means Mountain Province Diamonds Inc.;

De Beers means De Beers Consolidated Mines Ltd.;

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

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

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

Gahcho Kué Joint Venture Agreementmeans the
joint venture agreement entered into by Mountain Province Diamonds Inc., Camphor
Ventures Inc., and De Beers Canada Exploration Inc. on October 24, 2002, but
which took effect from January 1, 2002.

Gahcho KuéProject,located on Kennady Lake, and comprises four mineral leases that are 100%
owned by De Beers Canada Inc. (De Beers Canada), which holds them on behalf of
the Gahcho Kué Joint Venture. The participating interest of each of the joint
venture parties is governed by the 2002 Gahcho Kué Joint Venture Agreement,
which is registered against the mineral leases.

vii

---

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;

Glenmore Shareholdermeans 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;

Joint Venturemeans the joint venture formed
pursuant to the Gahcho Kué Joint Venture Agreement;

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

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

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

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

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

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

NYSE Amexmeans the New York Stock Exchange Amex,
after the take-over of the American Stock Exchange LLC by the New York Stock
Exchange;

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

OTCBBmeans the OTC bulletin board;

PFICmeans Passive Foreign Investment Company
under the Code;

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

| | (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                                                                                       

viii

---

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

Except where specifically indicated
otherwise, scientific and technical information included in this report on Form
20F regarding the Companys mineral projects has been reviewed by Carl Verley, a
Director of the Company and a Qualified Person as defined by National Instrument
43-101. Independent Qualified Persons responsible for the Technical Report dated
as of April 20, 2009 (the "Technical Report") entitled "Gahcho Kué Kimberlite
Project NI 43-101 Technical Report, Northwest Territories, Canada" prepared for
the Company by AMEC Americas Limited and discussed in Item 4 D Property, Plants
and Equipment from the headings Property Settings to AMEC Recommendations
are: Ken Brisebois, P.Eng., Dr. Ted Eggleston, P.Geo., and Alexandra Kozak,
P.Eng.

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

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

Sightholdermeans 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.

ix

---

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.                                                                                                                                                                                                                                                                                                               

x

---

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") DEFINITION STANDARDS FOR MINERAL RESOURCES AND
      MINERAL RESERVES (THE CIM DEFINITION STANDARDS) AS ADOPTED BY THE CIM
      COUNCIL ON DECEMBER 11, 2005. IN THE UNITED STATES, A MINERAL RESERVE IS
      DEFINED AS A PART OF A MINERAL DEPOSIT WHICH COULD BE ECONOMICALLY AND
      LEGALLY EXTRACTED OR PRODUCED AT THE TIME THE MINERAL RESERVE
      DETERMINATION IS MADE.Under United States standards:"Reserve" means that part of a mineral deposit which can
      be economically and legally extracted or produced at the time of the
      reserve determination."Economically," as used in the definition of reserve,
      implies that profitable extraction or production has been established or
      analytically demonstrated to be viable and justifiable under reasonable
      investment and market assumptions."Legally," as used in the definition of reserve, does not
      imply that all permits needed for mining and processing have been obtained
      or that other legal issues have been completely resolved. However, for a
      reserve to exist,there should be a reasonable certainty based on
      applicable laws and regulations that issuance of permits or resolution of
      legal issues can be accomplished in a timely manner.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.


xi

---

"Proven Mineral Reserve" means, in accordance with CIM
      Definition Standards, the economically viable part of a Measured Mineral
      Resource demonstrated by at least a Preliminary Feasibility study. This
      Study must include adequate information on mining, processing,
      metallurgical, economic, and other relevant factors that demonstrate at
      the time of reporting, that economic extraction is justified.The definition for "proven mineral reserves" under CIM
      Definition Standards differs from the standards in the United States,
      where proven or measured reserves are defined as reserves for which (a)
      quantity is computed from dimensions revealed in outcrops, trenches,
      workings or drill holes; grade and/or quality are computed from the
      results of detailed sampling and (b) the sites for inspection, sampling
      and measurement are spaced so closely and the geographic character is so
      well defined that size, shape, depth and mineral content of reserves are
      well established."Probable Mineral Reserve" means, in accordance with CIM
      Definition Standards, the economically mineable part of an Indicated, and
      in some circumstances a Measured Mineral Resource demonstrated by at least
      a Preliminary Feasibility Study. This Study must include adequate
      information on mining, processing, metallurgical, economic and other
      relevant factors that demonstrate, at the time of reporting, that economic
      extraction is justified.The definition for "probable mineral reserves" under CIM
      Definition Standards differs from the standards in the United States,
      where probable reserves are defined as reserves for which quantity and
      grade and/or quality are computed from information similar to that of
      proven reserves (under United States standards), but the sites for
      inspection, sampling, and measurement are further apart or are otherwise
      less adequately spaced. The degree of assurance, although lower than that
      for proven reserves, is high enough to assume continuity between points of
      observation.Mineral Resource
    Under CIM Definition Standards, a Mineral Resource is a
      concentration or occurrence of diamonds, natural solid inorganic material,
      or natural solid fossilized organic material including base and precious
      metals, coal, and industrial minerals in or on the Earths crust in such
      form and quantity and of such a grade or quality that it has reasonable
      prospects for economic extractions. The location, quantity, grade,
      geological characteristics and continuity of a Mineral Resource are known,
      estimated or interpreted from specific geological evidence and knowledge.THE TERMS "MINERAL RESOURCE", "MEASURED MINERAL
      RESOURCE", "INDICATED MINERAL RESOURCE", "INFERRED MINERAL RESOURCE" USED
      IN THIS REPORT ARE CANADIAN MINING TERMS AS DEFINED IN ACCORDANCE WITH
      NATIONAL INSTRUMENT 43-101 - STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS
      UNDER THE GUIDELINES SET OUT IN THE CIM DEFINITION STANDARDS. THE COMPANY
      ADVISES U.S. INVESTORS THAT WHILE SUCH TERMS ARE RECOGNIZED AND PERMITTED
      UNDER CANADIAN REGULATIONS, THE U.S. SECURITIES AND EXCHANGE COMMISSION
      DOES NOT RECOGNIZE THEM. THESE ARE NOT DEFINED TERMS UNDER THE UNITED
      STATES STANDARDS


xii

---

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

xiii

---

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

xiv

---

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

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

xv

---

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 consolidated financial statements of the Company as
at March 31, 2009, 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 byHectares
    Acres
    2.471Metres
    Feet (ft.)
    3.281Kilometres (km.)
    Miles
    0.621Tonnes
    Tons (2000 pounds)
    1.102Grams/tonne
    Ounces (troy/ton)
    0.029


xvi

---

PART I

Item
1.           
 Identity of Directors, Senior Management and Advisors

Not Applicable

Item
2.             Offer
Statistics and Expected Timetable

Not Applicable

Item
3.             Key
Information

A.Selected financial data.

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 (GAAP).
Material measurement differences between accounting principles generally
accepted in Canada and the United States, applicable to the Company, are
described in Note 11 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, 2009, 2008, 2007, 2006, and 2005. Except as otherwise indicated,
dollar amounts presented are equivalent under Canadian and United States
generally accepted accounting principles.

12
        Months Ended March 31,2009
      
      
      2008
      
      
      2007
      
      
      2006
      
      
      2005All
        in CDN$1,000's except Earnings (loss) per Shareand Number of Common SharesOperating Revenue
      
      nil
      
      
      nil
      
      
      nil
      
      
      nil
      
      
      nilInterest Revenue
      
      37
      
      
      62
      
      
      24
      
      
      12
      
      
      13Working Capital
      
      206
      
      
      1,567
      
      
      180
      
      
      808
      
      
      1,041Net Earnings (loss)
        -Under Canadian GAAP:
      
      (1,538
      )
      
      166
      
      
      (1,961
      )
      
      (2,200
      )
      
      1,531Under
        U.S. GAAP:
      
      (1,715
      )
      
      152
      
      
      (2,050
      )
      
      (1,948
      )
      
      1,836Basic and diluted earnings (loss) per share -Under
        Canadian GAAP:
      
      (0.03
      )
      
      -
      
      
      (0.04
      )
      
      (0.04
      )
      
      0.03Under U.S. GAAP:
      
      (0.03
      )
      
      -
      
      
      (0.04
      )
      
      (0.04
      )
      
      0.04Total Assets -Under Canadian GAAP:
      
      65,560
      
      
      66,764
      
      
      41,616
      
      
      34,874
      
      
      36,038Under
        U.S. GAAP
      
      34,351
      
      
      35,733
      
      
      10,925
      
      
      4,971
      
      
      3,683Total Current Liabilities
      
      192
      
      
      213
      
      
      419
      
      
      181
      
      
      95Share CapitalUnder Canadian GAAP:
      
      85,871
      
      
      85,582
      
      
      66,579
      
      
      58,253
      
      
      57,608Under
        U.S. GAAP:
      
      85,871
      
      
      85,515
      
      
      66,559
      
      
      58,233
      
      
      57,587Net
        Assets -Under
        Canadian GAAP:
      
      59,681
      
      
      60,642
      
      
      41,197
      
      
      34,693
      
      
      35,943Under U.S. GAAP
      
      28,473
      
      
      29,611
      
      
      10,506
      
      
      4,790
      
      
      3,588Number of Common Shares issued
      
      59,932,381
      
      
      59,870,881
      
      
      55,670,715
      
      
      53,075,847
      
      
      52,610,847


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

1

---

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, (i) for the five most recent financial years, the average rate
(the "Average Rate") of exchange for the Canadian dollar, expressed in U.S.
dollars, calculated by using the average of the U.S. noon exchange rates per the
Bank of Canada for each trading day of the fiscal year; and (ii) the high and
low exchange rates for each of the previous twelve calendar months for the
Canadian dollars, expressed per the Bank of Canada.

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

2009
    2008
    2007
    2006
    2005US$0.8878
    US$0.9688
    US$0.8784
    US$0.8379
    US$0.7820


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

Month
    High (US$)
    Low (US$)June 2008
    $1.0052
    $0.9690July 2008
    $1.0025
    $0.9733August 2008
    $0.9768
    $0.9332September 2008
    $0.9711
    $0.9241October 2008
    $0.9447
    $0.7695November 2008
    $0.8713
    $0.7721December 2008
    $0.8423
    $0.7688January 2009
    $0.8503
    $0.7834February 2009
    $0.8224
    $0.7855March 2009
    $0.8202
    $0.7653April 2009
    $0.8421
    $0.7870May 2009
    $0.9176
    $0.8365


On June 25, 2009, the noon buying rate
in Canadian dollars as per the Bank of Canada (the "Exchange Rate") was $1
Canadian = US$0.8636

B.Capitalization and indebtedness.

Not Applicable

C.Reasons for
the offer and use of proceeds.

Not Applicable

D.Risk factors.

The Company, and thus the securities of
the Company, should be considered a highly speculative investment and investors
should carefully consider all of the information disclosed in this Annual Report
prior to making an investment in the Company. In addition to the other
information presented in this Annual Report, the following risk factors should
be given special consideration when evaluating an investment in any of the

2

---

Company's securities. Any or all of
these risks could have a material adverse effect on the Companys business,
financial condition, results of operations, cash flows and on the market price
of its common stock.

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

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

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

Resource exploration and possible
development is a speculative business, characterized by a number of significant
risks including, among other things, unprofitable efforts resulting not only
from the failure to discover mineral deposits but from finding mineral deposits
which, though present, are insufficient in quantity and quality to return a
profit from production. Diamonds acquired or discovered by the Company may be
required to be sold to The Diamond Trading Co., a wholly-owned subsidiary of De
Beers, as per the Gahcho Kué 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 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.
The Companys current operations do not generate any cash flow. The Companys
annual operating costs are approximately $1.3 million.

(d)      Exploration and Development

The Company's properties are primarily
in the advanced exploration and permitting stage. Company mining operations may
never become profitable. Drilling of the 5034, Hearne and Tuzo kimberlite pipes
has been extensive and has now been completed. There are no estimates of
reserves. Estimates of mineral deposits, development plans and production costs,
when made, can 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. Mine plans and processing
concepts that have been developed are preliminary in nature.

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

Process testing is limited to small
scale testing based on a number of laboratory test programs, trade-off studies
and design evaluations conducted in 2002 and 2004. Ore dressing study technical
investigations were performed on kimberlite from the 5034 and Hearne pipes. A
database of operating information developed during the 1999/2000 bulk sample
processing of 2,000 tonnes of kimberlite was used to supplement the ore dressing
study data. Limited processing data is available for the Tuzo and Telsa
kimberlites. Process plant studies were conducted during the course of 2005.
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.

3

---

Difficulties may be experienced in
obtaining the expected diamond recoveries when scaling up to a production scale
process plant.

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

Except for the Gahcho Kué Project where
project costs are paid by De Beers, the Company does not have the ability to pay
for exploration or development costs on its other properties. If if such funds
were available, there is no assurance that expending such funds would result in
discovery of any diamondiferous kimberlite.

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

The Company has a history of losses and
is likely to continue to incur losses for the foreseeable future. During the
years ended March 31, 2009, 2008, and 2007, the Company incurred net losses or
earnings during each of the following periods:

•
    $1.538 million net loss for the
      year ended March 31, 2009.•
    $0.166 million net earnings for
      the year ended March 31, 2008.•
    $1.961 million net loss for the
      year ended March 31, 2007.


As of March 31, 2009, the Company had
an accumulated deficit of $27.5 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.

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

The recoverability of the amounts
capitalized for mineral properties in the Company's consolidated financial
statements, 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
some or all of the Company's mineral properties.

(i)      The Companys failure to generate revenues in
the future could cause the Company to go out of business.

As of March 31, 2009, the Company had
cash and short-term investment of approximately $0.297 million and working
capital of approximately $0.2 million. During the past three fiscal years ended
March 31, 2009, the Company has used approximately $3.4 million in cash flows in
operating activities including approximately $1.142 million during the fiscal
year ended March 31, 2009, $1.230 million during the fiscal year ended March 31,
2008, and $0.978 million during the fiscal year ended March 31, 2007.

The Company's administrative and other
expenses are expected to be approximately $1.3 million for the next year. The
Company will be required to raise additional capital through equity and/or debt
financings in the very near future on terms that may be dilutive to its
shareholders' interests in the Company and 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. As well, there is no
guarantee that the Company will be able to raise additional capital, or to raise
additional capital on terms and conditions which it finds acceptable. If the
Company is not able to raise sufficient capital, it may not be able to grow the
Company, or it may be forced to cease doing business.

4

---

(j)      The Companys properties have no proven
reserves

The properties in which the Company has
an interest are all in the advanced exploratory and permitting 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.

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

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

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

The market for rough diamonds is
subject to strong influence from 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 has historically fluctuated. The price of diamonds dropped
sharply after September 11, 2001 and had recovered, but future prices cannot be
predicted. Between 2003 and 2006 diamond prices increased on average by
approximately 15%. In 2007, rough diamond prices increased by an average of 25%,
and in the first five months of 2008, by a further 11%. From about mid-2008 to
mid-April 2009, rough diamond prices fell sharply with concerns of the global
economic environment of the time. Starting in mid-April 2009, rough diamond
prices have started to rebound, tempered by concerns of consumer buying
confidence and behaviour. Because of such fluctuations, the Companys results of
operation may fluctuate significantly.

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

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

Such 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.

5

---

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 of existing or new laws, could have a material adverse
impact on the Company and cause increases in capital expenditures or production
costs or reduction in levels of production at producing properties or require
abandonment or delays in development of new mining properties.

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

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

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

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

(p)      Operating Hazards and Risks

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

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

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

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

6

---

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

The resource industry is intensely
competitive in all of its phases, and the Company competes with many companies
possessing greater financial resources and technical facilities. Competition
could adversely affect the Company's ability to acquire suitable producing
properties or prospects for exploration in the future. The Company may be
required under the Gahcho Kué 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 50% of the
diamond market. There may therefore be no competition for diamonds produced from
the Company's properties. The Company only competes in the acquisition of new
properties.

(t)      Financing Risks.

The Company's current operations do not
generate any cash flow. As the Company seeks additional equity financing, the
issuance of additional shares will dilute the interests of the Company's current
shareholders. The amount of the dilution would depend on the number of new
shares issued and the price at which they are issued. The Company has
successfully raised funds in recent years through share, option and warrant
issuances. As of March 31, 2009, the Company had cash and short-term investment
of approximately $0.297 million and working capital of approximately $0.2
million. Subsequent to March 31, 2009, certain directors and officers exercised
165,365 outstanding options for total proceeds of $208,360 in order to provide
additional liquidity to the Company for near term requirements. The Company is
currently investigating various sources of additional liquidity to increase the
cash balances required for ongoing operations over the foreseeable future. These
additional sources include, but are not limited to, share offerings, private
placements, credit facilities, and debt, as well as further possible exercises
of outstanding options by directors and officers. The Companys annual cash
operating costs are approximately $1.3 million.

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

As at June 25, 2009, there were
1,134,635 options outstanding with exercise prices ranging from $1.26 to $4.50
(expiring at various dates). There were no warrants outstanding. The stock
options, if fully exercised, would increase the number of shares outstanding by
1,134,635. Such options, if fully exercised, would constitute about 2% (out of
61,232,381 shares (60,097,746 issued and outstanding, plus total outstanding
options) respectively) of the Company's resulting share capital as at June 25,
2009. 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.

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

Patrick Evans and Jennifer Dawson have
Consulting Agreements with the Company (see Item 6C - Board Practices). In
addition, certain officers and directors of the Company are associated with
other natural resource companies that acquire interests in mineral properties..
Such associations may give rise to conflicts of interest from time to time.

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

The nature of the Company's business,
its ability to continue its exploration and development activities and to
thereby develop a competitive edge in its marketplace depends, in large part, on
its ability to attract and

7

---

maintain qualified key management
personnel. Competition for such personnel is intense, and there can be no
assurance that the Company will be able to attract and retain such personnel.
The Company's development to date has depended, and in the future will continue
to depend, on the efforts of Patrick Evans. See Item 7B -Related party
transactions and Item 6C - Board Practices. Loss of the key person could have
a material adverse effect on the Company. The Company does not maintain key-man
life insurance on Patrick Evans.

(x)      The Companys stock price is subject to
significant fluctuations.

Prices for the Company's shares on the
TSX and on the NYSE Amex, have been extremely volatile. The price for the
Company's common shares on the TSX ranged from $0.75 (low) and $5.05 (high)
during the fiscal year ended March 31, 2009, and from $3.79 (low) to $5.93
(high) during the fiscal year ended March 31, 2008. The price on the NYSE Amex
ranged from $0.58 US (low) and $4.95 US (high) during the fiscal year ended
March 31, 2009, and from $3.54 US (low) to $5.49 US (high) during the fiscal
year ended March 31, 2008. Any investment in the Company's securities is
therefore subject to considerable fluctuations in value.

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

Since our inception, we have not paid
any cash dividends on our common stock and we do not anticipate paying any cash
dividends on our common stock in the foreseeable future. If we do not pay any
dividends on our common stock, our shareholder will be able to profit from an
investment only if the price of the stock appreciates before the shareholder
sells it.

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

Feasibility and other studies conducted
to evaluate the Company's properties are denominated in U.S. dollars, and the
Company conducts a significant portion of its operations and incurs a
significant portion of its administrative and operating costs in Canadian
dollars. The exchange rate for converting U.S. dollars into Canadian dollars has
fluctuated in recent years. Accordingly, the Company is subject to fluctuations
in the rates of currency exchange between the U.S. dollar and the Canadian
dollar, and these fluctuations in the rates of currency exchange may materially
affect the Company's financial position, results of operations and timing of the
development of its properties. In particular, the recent strong increase in the
value of the Canadian dollar compared to the U.S. dollar should be expected to
have a material impact on projected future capital and operating costs, which
could impact on the economic viability of the Gahcho Kué Project.

(aa)    De Beers Support

The exploration of the Gahcho Kué
Project 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.

(bb)     It
will be difficult for any shareholder of our Company to commence legal
activation against our esecutives. Enforcing judgments won against them or the
Company will be difficult.

As the Company is a Canadian company,
it may be difficult for U.S. shareholders of the Company to effect service of
process on the Company or to realize on judgments obtained against the Company
in the United States. Some of its directors and officers are residents of Canada
and a significant part of its assets are, or will be, located outside of the
United States. As a result, it may be difficult for shareholders resident in the
United States to effect service of process within the United States upon the
Company, directors, officers or experts who are not residents of the United
States, or to realize in the United States judgments of courts of the United
States predicated upon civil liability of any of the Company, directors or
officers under the United States federal securities laws. If a judgment is
obtained in the U.S. courts based on civil liability provisions of the U.S.
federal securities laws against the Company or its directors or officers it will
be difficult to enforce the judgment in the Canadian courts against the Company
and any of the Company's non-U.S. resident executive officers or directors.
Accordingly, United States shareholders may be forced to bring actions against

8

---

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

(cc)    Our common
stock may be delisted from NYSE Amex, and if this occurs, shareholders may have
difficulty converting their investment into cash efficiently.

NYSE Amex has established certain
standards for the continued listing of a security on this exchange. If our
common stock were to be excluded from NYSE Amex, the prices of our common stock
and the ability of shareholders to sell such stock would be adversely affected.
As well, the Company would be required to comply with the initial listing
requirements to be relisted on NYSE Amex.

**Item
4.****Information on the Company**

A.History and development of the company.

The Corporate
Organization

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

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

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

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

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

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

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

9

---

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

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

Mountain Glen was voluntarily dissolved
on August 4, 2004.

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

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
    Juridiction of IncorporationBaltic Minerals
      BV
    January 26, 1996
    The
      NetherlandsBaltic Minerals
      Finland OY
    May
      18, 1994
    FinlandCamphor Ventures Inc.
    May 9, 1986 (as
      Sierra Madre Resources Inc.)
    British Columbia,
      Canada


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



The Company's registered, records,
administrative, and executive office is at 401 Bay Street, Suite 2700, PO Box
152, Toronto, Ontario, Canada M5H 2Y4, the telephone number is (416) 361-3562,
and the fax number is (416) 603-8565.

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

10

---

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 NYSE Amex (formerly 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 the Northwest Territories,
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.

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

Principal Capital Expenditures
and Divestitures

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

Takeover offers

There were no public takeover offers by
third parties in respect of the Company's shares or by the Company in respect of
other companies' shares during the last and current financial year, except as
discussed under Acquisitions and Dispositions relating to Camphor Ventures.

Acquisitions and Dispositions

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

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

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

B.Business
overview.

1.1    Introduction

The Company is a natural resource
property exploration and development company. The Company has interests in
several natural resource properties, the most significant and principal property
being a 49%

11

---

interest (including the 4.9% interest
in the property held by Camphor) in the AK Property located in the Northwest
Territories of Canada. See "Item 4D - Property, plants and equipment".

The Company, as yet, does not have any
commercially viable resource properties. Bulk sampling and drilling on the AK
Property is complete, and the AK Property is now in the advanced exploration and
permitting stage. There are no revenues from the Companys natural resource
properties.

1.2    Historical
Corporate Development

AK-CJ Properties, and the Gahcho Kué
Project

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

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

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

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

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

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

During 1999, De Beers Canada completed
a major bulk sample of the four major pipes. For the 5034 kimberlite pipe, a
total of 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 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.

12

---

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.

During 2002, the Company concluded a
new joint venture agreement (the Gahcho Kué Joint Venture Agreement) among
Mountain Province Diamonds Inc., Camphor Ventures Inc., and De Beers Canada
Exploration Inc. (now De Beers Canada Inc.). This agreement provides that De
Beers Canada could earn up to a 55% interest in the project by funding and
completing a positive definitive feasibility study. The agreement also provides
that De Beers Canada could earn up to a 60% interest in the project by funding
development and construction of a commercial-scale mine.

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

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

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

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

Other Properties

As of June 30, 2000, the Company
completed the Arrangement, an 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

13

---

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.

Acquisition of Camphor Ventures Inc.

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

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

Foreign Assets

Until the Arrangement with Glenmore,
all of the Company's assets are and have been located in Canada (see Item 4D -
Property, plants and equipment - Principal Properties). Since the Arrangement,
the Company has not generated any revenue from operations. Pursuant to the
Arrangement, the assets of Glenmore, including properties in Finland, were
acquired by Mountain Glen, and are now held by the Company, having been
distributed to the Company on the winding up of Mountain Glen. The Haveri Gold
Property in Finland was transferred to Northern Lion Gold Corp. in 2004. See
Item 4A - History and development of the Company - Acquisitions and
Dispositions.

Competition

The Company competes with 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 may be bound to sell its
diamonds from the Gahcho Kué Project to The Diamond Trading Co., pursuant to the
terms of the Gahcho Kué 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 customers.

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

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

14

---

disposal, toxic substances, land use,
environmental protection, mine safety and other matters. Companies engaged in
the development and operation of mine-related facilities generally experience
increased costs, and delays in production and other schedules as a result of the
need to comply with applicable laws, regulations and permits. The Company's
exploration 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, Archaeological
Resources Act, Boilers and Pressure Vessels Regulations, Business Licence
Fire Regulations, Civil Emergency Measures Act, Environmental Protection Act,
Environmental Rights Act, Explosives Use Act, Explosives Regulations, Fire
Prevention Act, Fire Prevention Regulations, Labour Standards Act, Mine Health
and Safety Act, Mine Health and Safety Regulations, Public Health Act, Research
Act, Wildlife Act,and Workers Compensation Act.

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

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

15

---

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 4 A - 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
also known as the Gahcho Kué Project, which is located in the Canadas Northwest
Territories. The Gahcho Kué Project is in the permitting and advanced
exploration stage, and there are no reserve estimates for this property at this
time.

A "mineral resource" as defined
under the Canadian Institute of Mining, Metallurgy and Petroleum Definition
Standards for Mineral Resource and Mineral Reserves (the "CIM Definition
Standards"), which are different from the SEC guidelines (the "SEC Guidelines")
set forth in Guide 7 under Item 802 of Regulation S-K, means a concentration or
occurrence of natural, solid, inorganic or fossilized organic material in or on
the Earth's crust in such form and quantity and of such a grade or quality that
it has reasonable prospects for economic extraction. The location, quantity,
grade, geological characteristics and continuity of a Mineral Resource are
known, estimated or interpreted from specific geological evidence and knowledge.
See "Glossary of Technical Terms" in this Report.

In this Annual Report, because the
Company is a Canadian company with mining properties in Canada, the definitions
and disclosures are made in accordance with the CIM Definition Standards as
required by Canadian law for disclosure of material facts. The CIM Definition
Standards differ from those adopted by the Securities and Exchange Commission
(the SEC) in its Industry Guideline No.7. See Glossary of Technical Terms in
this Report.

It should be noted that the SEC
Guidelines define "reserve" to mean "that part of a mineral deposit which could
be economically and legally extracted or produced at the time of the reserve
determination". No such reserves, as defined in the SEC Guidelines or as defined
in the CIM Definition Standards, have been determined to exist at the present
time.

Description of Property

Administrative Offices

The Company's administrative office is
located at 401 Bay Street, Suite 2700, PO Box 152, Toronto, Ontario, Canada M5H
2Y4. The Company considers these premises suitable for current needs.

Mineral Properties

Of the Companys properties, Gahcho Kué
Project is under the most intense work because of the discovery of the Kennady
Lake Kimberlite Field, and is considered to be the Company's only principal
property.

16

---

Extracts from Technical Report

Unless otherwise stated, the technical
information in this section from the sub-headings Property Settings to AMEC
Recommendations is based upon Independent Qualified Person's Technical Report
dated as of April 20, 2009 (the "Technical Report") entitled "Gahcho Kué
Kimberlite Project NI 43-101 Technical Report, Northwest Territories, Canada"
prepared for the Company by AMEC Americas Limited by Ken Brisebois, P.Eng., Dr.
Ted Eggleston, P.Geo., and Alexandra Kozak, P.Eng. The Technical Report is
included as Exhibit 14.1 of this Form 20-F report. It was filed with the
relevant Securities Commissions in Canada on the System for Electronic Document
Analysis and Retrieval (SEDAR) on June 12, 2009. Portions of the following
information are based on assumptions, qualifications and procedures which are
not fully described herein. Reference should be made to the full text of the
Technical Report.

Property Setting

The Gahcho Kué Project is located at
the informally-named Kennady Lake, approximately 300 km east-northeast of
Yellowknife in the District of Mackenzie, Northwest Territories (NWT), Canada.
The property lies on the edge of the continuous permafrost zone in an area known
as the barren lands. This terrain is characterized by low heath and tundra,
with occasional knolls, bedrock outcrops, and localized surface depressions
interspersed with lakes. Topographic elevations within the property range
between 400 masl to 450 masl. The climate in the Gahcho Kué area is classified
as sub-arctic, as the site is located immediately north of the tree line.
Winters are long and cold, and summers are short and generally cool. The
dominant flora is scrub birch-Labrador tea tundra and scrub birchcloudberry.
Fauna includes red fox, arctic fox, sic sic (small spotted squirrel), grizzly
bear, wolf and caribou (during annual migration), ptarmigan, abundant migratory
bird life in summer, and clouds of mosquitoes and black flies during the height
of the summer months (mid-June to mid-August).

Access to the Project is via
float-equipped airplanes landing on the lake during the ice-free summer season
and conventional or ski-equipped airplanes landing on an ice airstrip during the
winter. In the shoulder seasons access is either direct using a helicopter or
via a 1,000 foot long airstrip marked out on a relatively flat esker,
approximately 26 km north of the Gahcho Kué camp. A helicopter transports people
and goods between the esker and camp during these periods. Flight time from
Yellowknife is about 1 hour and 20 minutes by Twin Otter. During the 1999, 2001,
2002, and 2006 winters, a permitted 120 km winter ice road was constructed
connecting the Property with the main Tibbit-Contwoyto winter ice road, which
supported shipments of fuel, heavy equipment, and construction materials.

Tenure and Agreements

The Project falls within four mining
leases of 21-year tenure held. The mining leases are 100% owned by De Beers
Canada Inc. (De Beers Canada), which holds them on behalf of the Gahcho Kué
Joint Venture. The participating interest of each of the joint venture parties
is governed by the 2002 Gahcho Kué Joint Venture Agreement, which is registered
against the mineral leases.

Interest in the Gahcho Kué Project is
governed by the updated and expanded Gahcho Kué Joint Venture Agreement
effective January 1, 2002 when De Beers Canada agreed to fund all ongoing
exploration, development and other project costs, after earning a 51% interest
in the property by completion of a Desktop Study on August 4, 2000. MPV
subsequently acquired all the shares of minority partner, Camphor Ventures, in
2007, and now holds 49% of the Project.

Leases are maintained by annual
payments to the Department of Indian and Northern Affairs at C$1 per acre,
increasing to C$2 per acre upon renewal to a second 21-year term. The total area
under the lease is 4,189.72 ha (10,353 acres).

Mining tenure held by De Beers on
behalf of the Joint Venture is valid and sufficient to support Mineral
Resources. De Beers has taken appropriate steps to insure extension of the
leases, which will remain valid

17

---

until July 15, 2023 because of
expenditures on the property to date. Surface rights have not yet been acquired,
and can be obtained by application to the Crown.

At this time, all of the permits
required for exploration are in force. During those periods when exploration was
active, the work was conducted under the appropriate permits.

Permits required for exploitation were
identified, and the process for obtaining those permits was defined.

Previous Work

There is no recorded exploration prior
to 1992 for diamonds, base, or precious metals in the area covered by the
Property. Exploration conducted on behalf of MPV by Canamera Geological Ltd.
during 1995 resulted in the discovery of the 5034 kimberlite.

De Beers became the operator of the
property via a joint-venture agreement in 1997. Additional kimberlites,
including Tesla, Hearne, and Tuzo were discovered the same year.

Inferred and Indicated Mineral
Resources were disclosed for the first time in 2003 using CIM definitions with a
supporting technical report filed on SEDAR on July 17, 2003. Information
contained in the July 2003 technical report is superseded by the April 20, 2009
Technical Report, and should not be relied upon. Since 2003, there have been
material changes to scientific and technical information, including additional
diamond and geotechnical drilling, conceptual open pit and underground design
work, supplementary metallurgical testing, and optimization studies as set forth
in the April 20, 2009 Technical Report.

Geology and Mineralization

The Gahcho Kué kimberlite cluster
occurs in the southeast Slave Craton.

Several kimberlite bodies were
discovered and delineated by drilling. The 5034, Hearne North, Hearne South, and
Tuzo pipes have the most attractive grades and tonnages delineated to date. Of
the larger kimberlites on the property, the 5034 kimberlite is interpreted as
forming an irregular hypabyssal root zone, Hearne and Tesla as transitional
diatreme to root zones and Tuzo as the deeper part of a diatreme zone (Tesla is
not included in the Gahcho Kué Mineral Resource because of its small size (0.4
ha) and relatively low-grade).

The 5034, Hearne, and Tuzo kimberlites
have contrasting pipe shapes. The West Lobe, Centre Lobe, and eastern portion of
the North-East Lobe of the 5034 kimberlite sub-crop below lake-bottom sediments;
the northern portion of the 5034 North-East Lobe (referred to as the North Lobe)
is a blind lobe overlain by approximately 80 m of in-situ country rock. The 5034
pipe is dominantly infilled with hypabyssal kimberlite (HK). Hearne South is a
roughly circular pipe and smaller than Hearne North, which is a narrow elongated
pipe. Hearne South is infilled predominantly with tuffisitic kimberlite breccia
(TK); Hearne North is infilled with approximately equal amounts of HK and TK.
Tuzo is characterized by smooth, steep-sided pipe walls and is predominantly
infilled with TK with HK at depth.

In most cases, the top of the
kimberlites occur between 380 and 390 masl. Except for the 5034 North Lobe,
which intrudes 70 to 80 m below a peninsula, the kimberlites subcrop at the
bottom of Kennady Lake, covered by 10 to 15 m of water and between 5 to 15 m of
glacial lake sediments. The kimberlites are surrounded laterally by granite and
granite-gneiss country rock.

AMEC determined that the geological
understanding of the deposit setting, lithologies, and kimberlite type
distributions was adequate to support Mineral Resource estimation. Understanding
of diamond distributions within each kimberlite type were sufficient to support
Mineral Resource estimation.

As well, AMEC assessed that the style
of mineralization was sufficiently understood to support Mineral Resource
estimation.

18

---

Drilling and Sampling

The property was the subject of several
drilling campaigns since the initial work by Canamera Geological Ltd. in January
1995. In 1995, small diameter core drilling (47.6 mm NQ core) by Canamera
Geological Ltd. discovered the 5034 kimberlite during drilling of geophysical
anomalies at the head of a kimberlitic indicator mineral dispersion train.

Since then, small-diameter NQ core
drilling was used extensively to test geophysical and kimberlite indicator
mineral dispersion-train targets peripheral to the 5034 cluster (Tuzo and Hearne
were discovered in 1997), as well as to delineate the shape of the kimberlite
bodies and to provide data (including micro-diamonds) for geological and Mineral
Resource modelling.

Large diameter core (LDC) drilling
was used to collect small mini-bulk samples from 5034. In 1996, Canamera
Geological Ltd. obtained PQ-sized core samples (85 mm diameter), and in 2007,
the Gahcho Kué Project obtained 149 mm diameter LDC samples. The LDC samples
provide additional information (macro-diamonds) regarding the diamond content of
the pipes.

Large diameter reverse circulation
(RC) drilling (LDD) was used to collect kimberlite mini-bulk samples by GKJV.
LDD programs have included smaller scale 140 mm (5.5 -inch) diameter drillholes
in 1998 and 1999, 311 mm (12.25-inch) drill holes in 1999, to the largest
employed, the 610 mm (24-inch) diameter drill holes in the 2001, 2002, and 2008
mini-bulk sampling programs. The LDD mini-bulk sample programs were obtained
macro-diamonds for grade and revenue estimation.

5034

Canamera Geological Ltds. 1995 and
1996 drilling of the 5034 kimberlite comprised 69 NQ core holes to obtain
geological and pipe volume data and 43 PQ core holes to obtain macro-diamonds
for a preliminary estimate of diamond grade. An additional 11 NQ core holes and
17 RC holes of various sizes were drilled by the Project between 1998 and 2002.
Mini-bulk sampling conducted between 1998 and 2002 to determine diamond grade
and revenue has included 140 mm (5.5-inch) diameter drill holes in 1998, 311 mm
(12.25-inch) diameter drill holes in 1999, and 610 mm (24-inch) diameter holes
that were drilled in 2001 and 2002. The 1998 and 1999 drilling focused on the
5034 West, Centre and East lobes; in 2001 the East Lobe and the west neck of the
Centre Lobe were drilled; in 2002 work focused on the narrow corridor drilled
previously in 1999 through the West and Centre lobes. There was one delineation
NQ core hole drilled by GKJV at 5034 in 2003.

In 2004, 13 core holes drilled into the
5034 kimberlite as part of pit geotechnical, hydrogeology, and ore dressing
studies (ODS). In 2005, a single core hole for hydrogeology studies drilled
through the East Lobe of 5034, and two core holes were drilled at the North Lobe
of 5034 to provide additional geological data. A substantial core program
followed this in 2006 that comprised 11 HQ core holes for pit geotechnical, pipe
volume delineation, and geological investigations. The last campaign of core
drilling was conducted in 2007 with five HQ core holes being drilled to provide
geological data from the 5034 East Lobe and 5 LDC holes (149 mm, 5.875 -inch)
drilled into the 5034 North Lobe to obtain a small parcel of macro-diamonds for
comparative purposes.

Hearne

A total of 25 core holes were drilled
in and around the Hearne kimberlite by GKJV during 1997-2003:

| | • | 17 in Hearne North                                     
| | - | -------------------------------------------------------
| | • | 6 in Hearne South (1 that
      intersected both pipes)
| | • | 2 of which did not intersect
      kimberlite.         

In 1998, 19 LDD holes (140 mm diameter)
were drilled into the Hearne kimberlite to test the diamond grade:

19

---

| | • | 16 were located at Hearne North  
| | - | ---------------------------------
| | • | 1 in Hearne South                
| | • | 2 holes intersected only granite.

In 1999, 8 LDD (311 mm diameter) holes
were drilled into Hearne North and 2 into Hearne South to obtain macro-diamonds
for initial revenue estimation. In 2001, 3 LDD (610 mm diameter) holes were
drilled into the northern half of Hearne North, and 5 more LDD (610 mm diameter)
holes tested Hearne North in 2002, to increase the parcel of macro-diamonds
available for revenue estimation.

In 2004, 14 NQ core holes were drilled
into the Hearne kimberlite as part of pit geotechnical and ODS programs. In 2005
a single core hole was drilled for hydrogeological studies, and in 2006 a single
core hole was drilled to support pit geotechnical studies.

Tuzo

Between 1997 and 1999, 8 NQ core holes
were drilled into Tuzo. All of these were angle holes collared outside the
kimberlite body and drilled into, and sometimes through, the kimberlite. In
2002, 7 vertical HQ core holes were drilled into the pipe. LDD mini-bulk sample
drilling took place in 1998 and 1999. Drilling to a maximum depth of 166 m, 17
LDD holes (140 mm diameter) were completed in 1998, and an additional 11 LDD
holes (311 mm diameter) were completed in 1999 to a maximum depth of 300 m.

In 2004, 2 HQ core holes were drilled
at Tuzo as part of a pit geotechnical study. This was followed by an 11-hole HQ
core program in 2006 to provide pipe delineation and geological data. In 2007, a
grid of 27 HQ core holes was completed to provide additional geological and pipe
volume delineation data. The final resource drilling at Tuzo was an LDD
mini-bulk sample program conducted in 2008 with 9 holes (610 mm) completed to
provide additional macro-diamonds for diamond revenue estimation.

AMECs Assessment

Exploration programs completed to date
were assessed by AMEC to be appropriate to the style of mineralization and
adequate to support Mineral Resource estimation. Drill hole types and
orientations were appropriate for the type of mineralization. Small-diameter
core holes defined the limits of the kimberlite bodies. Large-diameter core and
reverse circulation drilling provided mini-bulk samples of kimberlite material
for macro-diamond extraction. Micro-diamonds extracted from the small-diameter
cores drilled to define the limits of the deposit. Three diamond breakage
studies indicated that breakage was about 1015% that is typical for this type
of drilling program. The diamond parcels obtained in 20072008 were not
evaluated for diamond breakage.

AMEC also assessed that the sampling
and sample lengths were appropriate for the type of mineralization. Core sample
lengths were somewhat variable during the early years of the Project. Later in
the Project, core sample lengths were standardized at 12 m. These standardized
samples provided most of the data used for the Mineral Resource estimates
reported in the Gahcho Kué Kimberlite Project NI 43-101 Technical Report dated
April 20, 2009.

Core and cuttings logging met and
typically significantly exceeded industry practices. Core was quick-logged on
site, and the kimberlite intersections were transported to De Beers core
logging facility in Sudbury, Ontario where experienced geologists log kimberlite
type, mineral and inclusion types and concentrations, and structures. AMEC
assessed that geotechnical work to date was appropriate for the stage of the
project and type of mining planned. Geotechnical logging of exploration core is
a routine procedure performed by geologists trained in the logging methods
required. A number of core holes were drilled specifically to obtain
geotechnical data. Collar and downhole surveys were performed using
industry-standard methods and instruments.

20

---

AMEC determined that the analytical and
diamond recovery procedures were adequate to support Mineral Resource
estimation. Macro-diamond and micro-diamond extractions were performed using
procedures standard to the industry. Micro-diamonds were recovered from core
using either caustic fusion or acid dissolution procedures. Both are standard to
the industry, although caustic fusion is the most common procedure.
Macro-diamonds are extracted using small-scale diamond recovery plants.
Geochemical samples were analyzed using standard procedures and instrumentation.
Density determinations were performed using standard procedures, and the number
of density data is adequate to support Mineral Resource estimation. Most of the
density data were obtained using a water immersion procedure standard to the
industry. Some of the data were obtained using geophysical methods, and some
were obtained by water displacement methods. Quality control during drilling,
sampling, and sample analysis is adequate and reflects industry best practices.
Quality control of diamond extractions consists of spikes using marked diamonds
and tailings audits of a portion of the samples.

Sample and diamond security throughout
the exploration process was determined by AMEC to be excellent and consisted of
rigorous chain-of-custody procedures, multiple locks requiring at least two
persons to open critical areas or containers, cameras in all plants and
processing areas, and dedicated security personnel at all plants and processing
areas. Shipping of diamonds and diamond concentrates conforms to requirements of
Kimberley Process chain-of-custody procedures.

Data Verification

Independent data verifications were
undertaken on a number of occasions between 1999 and 2008:

| | • | 1999, 2004, 2007  independent consultants made site
      visits to review quality assurance/quality control (QA/QC)                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | • | 1999  external consultant audit of the 1999 evaluation
      program                                                                                                                                                                          
| | • | 2000  geology (petrological) peer review                                                                                                                                                                                                      
| | • | 2004  geotechnical and hydrogeology consultants QA/QC
      site visit, internal and external Mineral Resource evaluation data base
      audits, geology (petrological) peer review, Gemcom®three-
      dimensional (3D) model peer review
| | • | 2007  internal and external petrological peer reviews;
      external verification of macro-diamond resource evaluation data set                                                                                                              
| | • | 2008  external review of 2003 Technical Report resource
      estimation and density (rock density) models.                                                                                                                                   

Resource evaluation data base
verification included:

| | • | audits of drill collar locations
      and lengths
| | - | --------------------------------------------------
| | • | down-hole survey data                             
| | • | geological logs                                   
| | • | bulk density data                                 
| | • | macro-diamond data.                               

Metallurgical Testwork

AMEC determined that metallurgical
testwork was appropriate for the stage of the project and was adequate to
support Mineral Resource estimation. Mini-bulk samples were processed using
scaled-down equipment that allows collection of some of the processing
parameters. Other parameters were obtained from core specifically drilled for
that purpose.

Mineral Resource Statement

Large diameter reverse-flood drilling
(LDD) provided samples of kimberlite for grade and diamond value modelling.
Macro-diamonds from the LDD were used to estimate local grades on 5034 West and
Centre Lobes and Hearne Pipe. Grade estimations for these pipes were completed
using variography and kriging

21

---

methods. Diamonds from this drilling
were also used to confirm diamond size and value data for all lobes and
pipes.

Micro-diamonds from drill core were
used to create local estimates of grade for the 5034 North-East Lobe and Tuzo
Pipe. Micro-diamonds are stones (less than 0.5 mm) recovered from the
dissolution of drill core using a caustic fusion process. These results were
kriged into local blocks (25 m x 25 m x 12 m) and then converted to carats per
hundred tonnes above a commercial bottom cut-off using a model of grade with
size developed from micro and macro diamonds.

Density modelling was completed using
dry densities. Density was estimated per Lobe for 5034 West and Centre, locally
into mining blocks for the 5034 North-East Lobe and Tuzo, and by rock type for
Hearne Pipe. Industry-standard techniques were used to ensure appropriate
calculation and reporting of the diamond resources at a +1 mm lower cut-off. The
Mineral Resources were adjusted for the expected main treatment plant response
by reducing recoveries in the lower size classes.

AMEC had access to two sources of
diamond valuations. One valuation was from the Diamond Trading Company (DTC).
WWW Diamond Consultants International (WWW) performed the second for MPV. In
the Gahcho Kué Kimberlite Project NI 43-101 Technical Report, AMEC relied on
both valuations and the Qualified Persons believed that it was appropriate to
rely on both sources. WWW are recognized international leaders in this field and
are the valuers to the Federal Government of Canada for the Canadian diamond
mines in the Northwest Territories. The DTC is the internal qualified group that
performs valuations for DeBeers operations, the recognized originator of the
methods in use by all valuators, and the rough diamond distribution arm of the
De Beers Family of Companies. In addition, they are the world's largest supplier
of rough diamonds, handling nearly half of the world's supply by value.

To assess reasonable prospects for
economic extraction to support declaration of a Mineral Resource, diamond
valuations from the De Beers Group (project operator) and WWW were analysed, and
average mid-2008 pricing with a 20% increase was applied to the resource blocks.
It is common practice in the industry to assume a higher long-term commodity
price when determining a cut-off grade for Mineral Resources than the long-term
commodity price used for mineral reserves or financial analysis.

Most of the Mineral Resources were
shown to be amenable to open-pit mining. The relatively small amount of
remaining material lying outside of the resource pit shell was, at least
conceptually, shown to have reasonable prospects of economic extraction using
underground mining methods. Further study is required to determine economic
viability of the material amenable to underground mining methods. Average
diamond pricing was only used to assess reasonable prospects of economic
extraction to support declaration of Mineral Resources.

Table 1-1 summarizes the Mineral
Resource estimate. The Qualified Person for the estimate is Ken Brisebois,
P.Eng., an AMEC employee. In this case, AMEC has elected to report the resources
at a zero cut-off grade, deeming that the kimberlite contacts can be considered
to be the potentially mineable boundaries. Mountain Province Diamonds Inc. and
AMEC caution that Mineral Resources are not Mineral Reserves and do not have
demonstrated economic viability.

> Cautionary Note to U.S. Investors concerning estimates
>         of Indicated and Inferred Resources.This section uses the terms "indicated"
>         and "inferred resources." We advise U.S. investors that while those terms
>         are recognized and required by Canadian regulations, the U.S. Securities
>         and Exchange Commission does not recognize them. "Inferred resources"
>         have a great amount of uncertainty as to their existence, and great uncertainty
>         as to their economic and legal feasibility. It cannot be assumed that
>         all or any part of an Inferred Mineral Resource will ever be upgraded
>         to a higher category. Under Canadian rules, estimates of Inferred Mineral
>         Resources may not form the basis of feasibility or pre-feasibility studies,
>         except in. rare cases.

22

---

> U.S. investors are cautioned not to assume that any
>         part or all of mineral deposits in these categories will ever be converted
>         into reserves.
>       U.S. investors are cautioned not to assume that part
>         or all of an inferred resource exists, or is economically or legally minable.

Table 1-1: Gahcho Kué 2009 Mineral Resource Summary at
1.0 mm Bottom Cut-Off (Effective Date April 20, 2009)

Volume
    Tonnes
    Carats
    GradeResource
    Classification
    (Mm3)
    (Mt)
    (Mct)
    (cpht)5034
    Indicated
    5.1
    12.7
    23.9
    188Inferred
    0.3
    0.8
    1.2
    150Hearne
    Indicated
    2.3
    5.3
    11.9
    223Inferred
    0.7
    1.6
    2.9
    180Tuzo
    Indicated
    5.1
    12.2
    14.8
    121Inferred
    1.5
    3.5
    6.2
    175Summary
    Indicated
    12.4
    30.2
    50.5
    167Inferred
    2.5
    6.0
    10.3
    173


Notes:1) Mineral Resources are
reported at a bottom cut-off of 1.0 mm; cpht = carats per hundred tonnes. 2)
Mineral Resources are not Mineral Reserves and do not have demonstrated economic
viability 3) Volume, tonnes, and carats are rounded to the nearest 100,000
4) Tuzo volumes and tonnes exclude 0.6 Mt of a granite raft 5) Diamond
price assumptions used to assess reasonable prospects of economic extraction
reflect mid-2008 pricebooks with a 20% increase factor. The prices assumed, on a
per pipe basis (in US$), equate to $113/ct for 5034, $76/ct for Hearne and
$70/ct for Tuzo.

AMECs Recommendations

In the Gahcho Kué Kimberlite Project NI
43-101 Technical Report, AMEC concluded that the scientific and technical data
on the Gahcho Kué Project is of sufficient quality and level of detail to
support a feasibility study, if a decision is made by the Project partners to
proceed to a feasibility study. AMEC recommended that the Project partners
monitor market conditions to determine when such a decision would be
appropriate.

23

---

GAHCHO KUÉ PROJECT LOCATION MAP (2007)



24

---

Gahcho Kué Project and Mountain Province Diamonds Claims



Mountain Province (outside of the Joint
Venture with De Beers) has the following five claims with their respective claim
numbers  AK 81, AK 84, AK 85, AK 86 and AK 93. These five claims represent
about 12,555 acres. These claims are not part of the Gahcho Kué Joint Venture
Agreement with De Beers Canada and are not considered part of the Gahcho Kué
Project.

25

---

MAP  LOCATION OF PIPES



Information Prepared by the Company

The following information is prepared
by the Company. The Company has issued press releases commenting upon recent
results and activities for the Gahcho Kué Project. Such disclosure has been
reviewed by Carl G. Verley, P.Geo. who serves as the Qualified Person in
relation to such disclosure.

26

---

2008 Independent Diamond
Valuation

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 Company, a marketing
agency controlled by De Beers. The price of diamonds dropped sharply after
September 11, 2001 and had recovered, but future prices cannot be predicted.
Between 2003 and 2006 diamond prices increased on average by approximately 15%.
In 2007, rough diamond prices increased by an average of 25%, and in the first
five months of 2008, by a further 11%. From about mid-2008 to mid-April 2009,
rough diamond prices fell sharply with concerns of the global economic
environment of the time. Starting in mid-April 2009, rough diamond prices have
started to rebound, tempered by concerns of consumer buying confidence and
behaviour. Regardless, continuing trends suggest an over demand for rough
diamonds in the mid- to long-term.

On November 17, 2008, the Company
announced the results of an independent valuation of the diamonds recovered from
the Gahcho Kué Project during the exploration phase. The valuation was conducted
by WWW International Diamond Consultants Ltd. at the London offices of the
Diamond Trading Company on September 22 and 23, 2008. Subsequent to the
valuation, WWW has revised its Price Book and all diamond values presented below
are based on the WWW Price Book as at October 13, 2008.

The independent diamond valution
resulted in a 63% increase in the actual price of the Gahcho Kué diamonds to
US$135 per carat, on a statistically more robust sample and with rising rough
diamond prices compared to the Companys last independent valuation of a smaller
and less representative diamond parcel in 2006.

Table 1-2 below reflects the actual
price per carat for the parcel of 8,195.17 carats of diamonds recovered from the
Gahcho Kué Project.

Table 1-2: Actual Price (US$/carat)

Kimberlite
    Carats
    US$/carat
    US Dollars5034
    3,133.02
    122
    381,080Tuzo
    2,155.70
    252
    542,431Hearne
    2,906.45
    62
    179,032Total
    8,195.17
    135
    1,102,543


Table 1-3 below presents models of the
average price per carat (US$/carat) for each kimberlite lithology. The modeled
price per carat is determined using statistical methods to estimate the average
value of diamonds that will be recovered from potential future production from
Gahcho Kué.

Table 1-3: Models of Average Price
(US$/carat)

Kimberlite
    Model Price ($/carat)
    Minimum Price ($/carat)
    High Price ($/carat)5034 NE Lobe
    120
    108
    1455034 Centre
    112
    102
    1335034 West
    124
    112
    149Tuzo Other
    88
    80
    107Tuzo TK TK1
    102
    91
    126Tuzo TK
    70
    64
    83Hearne
    73
    67
    86


(+1.50mm bottom cut-off)

In their report to Mountain Province,
WWW stated: The Tuzo sample and the 5034 East sample both contained one high
value large stone. For Tuzo there was a 25.14 carat stone valued at $17,000 per
carat and 5034 East had a 9.90 carat stone valued at $15,000 per carat. It is
encouraging that such high value stones

27

---

were recovered in samples of this size.
If they are found in the same frequency throughout the resource then the
modelled APs [Average Pricess] will certainly be towards the high values
[highlighted in the right column of Table 1-3 above].

The WWW Price Book as at October 13,
2008 reflects a significant write down to reflect the current market conditions.
Since then, the diamond market, in the context of the overall financial markets,
has deteriorated further. However, WWW believes that the already discounted
Price Book of October 13, 2008 provides a reasonable and conservative view of
the likely value of Gahcho Kues production at the time that it may come into
production in several years time. The long-term supply/demand fundamentals, in
WWWs opinion, highlights that a shortage of rough diamond supply will still
prevail, but be deferred given the sudden drop in demand reflecting the current
global economic situation, which has depressed all commodity prices in the short
term. In fact, the current market difficulties will inevitably take out
considerable rough diamond supply capacity in the short term, but may well work
in favour of a new mine coming on stream at Gahcho Kué in several years time.

Definitive Feasibility Study

On December 16, 2008, the Company
announced that the Joint Venture was considering a proposal received from an
independent engineering firm to produce a NI 43-101 definitive feasibility study
for the Gahcho Kué Project. This definitive feasibility study proposal is still
under consideration by the Joint Venture.

Permitting

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

In July 2006, De Beers Canada filed an
application for a judicial review of the referral. De Beers Canada brought the
application for judicial review of the MVEIRB decision to the Supreme Court of
the NWT. On April 2, 2007, the Supreme Court of the Northwest Territories
dismissed De Beers Canadas application and upheld the decision by the MVEIRB.

Following the decision of the Supreme
Court of the NWT, the MVIERB has now commenced the EIR. The MVEIRB published
draft Terms of Reference and a draft Work Plan for the Gahcho Kué Project in
June 2007, and called for comments from interested parties by July 11, 2007. The
EIR is designed to identify all of the key environmental issues that will be
impacted by the eventual development of the Gahcho Kué diamond mine and to
facilitate participation by key stakeholders in addressing these issues. The
draft Work Plan anticipated that the EIR of the Gahcho Kué Project will be
completed by mid-2009, although the MVEIRB emphasized that the dates reported
are target dates only, and the schedule is subject to change. On June 14, 2007,
the Company announced its attendance at the first of two work plan meetings in
Yellowknife on June 11, 2007, conducted by the MVEIRB, where an overview of the
draft Terms of Reference for the Environmental Impact Study and draft Work Plan
for the EIR were discussed. The impact of the EIR on the projects eventual
development schedule is not yet known.

On December 17, 2007, the Company
announced that the MVEIRB published the final terms of reference for the Gahcho
Kué Environment Impact Statement (EIS) on October 5, 2007. On May 9, 2008, the
project operator, De Beers, advised the MVEIRB that the Joint Venture deferred
the filing of the EIS.

In view of the proposed definitive
feasibility study, the results of which are expected to impact on the final
project description, the Project Operator, De Beers Canada, advised the MVEIRB
that submission of the Gahcho Kué Environmental Impact Statement will be
deferred pending the completion of an updated project description. No fixed date
has been set for completion of the project description.

28

---

Project Costs to Date

The following table outlines the costs
to date, with funding coming primarily from De Beers Canada.

Period of
      Time
    **Amount (1)**January 1, 1997 to
      December 31, 2005
    $80,097,784Expenses January
      1, 2006 to December 31, 2006
    33,409,897Expenses January
      1, 2007 to December 31, 2007
    38,372,876Expenses January
      1, 2008 to December 31, 2008
    32,479,413Approved Budget
      January 1, 2009 to December 31, 2009
    1,954,782


1) information provided by project
operator, De Beers Canada Inc., and other disclosures

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.

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

**Item
4A.**

**Unresolved
Staff Comments**

None.

**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 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, 2009
  compared to Fiscal Year ended March 31, 2008

The Companys net loss for the year
ended March 31, 2009 was $1,537,590, or $0.03 per share, compared with a net
income of $165,531 for the year ended March 31, 2008. Before the Companys tax
recovery of $222,796 (2008 - $222,166), the net loss was $1,760,386 (2008 -
$56,635) for March 31, 2009.

The net loss for the year ended March
31, 2009 includes stock-based compensation expense of $574,200 compared to no
stock-based compensation expense for the year ended March 31, 2008. The options
were granted in November 2008, and each vested immediately, and was granted for
a five-year term. The net income for the year ended March 31, 2008 includes the
Companys gain on sale of its 4,000,000 common

29

---

shares of Northern Lion of $1,075,420.
Without the gain on sale for the year ended March 31, 2008, the Company had a
net loss for the year (before tax recovery) of $1,132,055, or $0.02 per
share.

Operating expenses, excluding
stock-based compensation, totaled $1,222,968 for the year ended March 31, 2009
compared to $1,194,210 for the prior year. The largest component of these
operating expenses was consulting fees, which were $639,987 for the year ended
March 31, 2009 compared to $474,704 for the prior year. Consulting fees
primarily relate to technical consulting and the fees paid to management, as
well as other corporate consulting.

Fiscal Year ended March 31, 2008
  compared to Fiscal Year ended March 31, 2007

The Companys net income for the year
ended March 31, 2008 was $165,531, compared with a net loss of $1,961,263 or
$0.04 per share, for the year ended March 31, 2007. Before the Companys tax
recovery of $222,166, the net loss was $56,635. The net loss for the year ended
March 31, 2008 includes the Companys gain on sale of its 4,000,000 common
shares of Northern Lion of $1,075,420. Without the gain on sale, the Company had
a net loss for the year (before tax recovery) of $1,132,055, or $0.02 per
share.

Operating expenses were $1,194,210 for
the year ended March 31, 2008 compared to $1,361,937 for the prior year.

Professional fees at $202,245 for the
year ended March 31, 2008 include audit and tax preparation accruals, and legal
expenses, compared to $198,628 in the prior year.

In the year ended March 31, 2008, the
Company incurred Promotion and investor relations expenses in the amount of
$86,380 compared to $124,467 for March 31, 2007 yearend. The March 31, 2007
amount includes approximately $53,000 as retainer for the Companys investor
relations firm in 2006. The investor relations retainer was terminated in
November 2006.

During the year ended March 31, 2007,
the Company recognized $186,321 of stock-based compensation expense related to
options granted in November 2005 and January 2006, each vesting 50% immediately,
and 50% at the one-year anniversary of their granting. All options are
exercisable and there is no stock-based compensation for the current year.

Other expenses have generally increased
over the prior year primarily due to increased management and oversight
activities undertaken with respect to the Company's investment in the Gahcho Kué
Project, particularly during the third quarter.

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 investments and
administrative expenses, among other things.

The Company reported working capital of
$206,261 at March 31, 2009 ($1,566,949 as at March 31, 2008), and cash and
short-term investment of $297,346 ($1,582,127 at March 31, 2008). The short-term
investment is a guaranteed investment certificate held with a major Canadian
financial institution, and the Company considers there to be no risk associated
with the banks creditworthiness.

The Company had no long-term debt at
either March 31, 2009 or March 31, 2008. The Company does not currently incur
any direct costs in connection with the Gahcho Kué Project as these costs are
currently being funded by De Beers Canada without recourse to the Company.

Since the end of the Companys quarter
ended June 30, 2008, global economic conditions and financial markets have
experienced significant weakness and volatility. Until this period of weakness
and unpredictability subsides, there is increased risk that the Company will be
unable to obtain additional

30

---

financing. In the meanwhile, the
Company will continue to exercise prudent management of available and future
capital.

The Company has incurred losses in the
year ended March 31, 2009 amounting to $1,537,590, incurred negative cash flows
from operations of $1,141,890, and will require additional sources of financing
to complete its future business plans. . At March 31, 2009, the Company had
approximately $300,000 of cash on hand and short-term investment. Subsequent to
March 31, 2009, certain directors and officers exercised 165,365 outstanding
options for total proceeds of $208,360 in order to provide additional liquidity
to the Company for near term requirements. The Company is currently
investigating various sources of additional liquidity to increase the cash
balances required for ongoing operations over the foreseeable future. These
additional sources include, but are not limited to, share offerings, private
placements, credit facilities, and debt, as well as further possible exercises
of outstanding options by directors and officers. However, there is no certainty
that the Company will be able to obtain financing from any of those sources. As
a result, there is substantial doubt as to the Companys ability to continue as
a going concern.

There can be no assurance of continued
access to financing, including new equity capital, in the future, and an
inability to secure such financing may require the Company to substantially
curtail and defer its planned operations, and impact on the Companys ability to
continue as a going concern. The Companys consolidated annual financial
statements are prepared on a going concern basis. Readers are advised to review
the Companys going concern references in Note 1 to the March 31, 2009 year-end
audited consolidated financial statements.

During the year, the Company received
$34,502 by issuing 61,500 shares upon the exercise of stock options. During the
year ended March 31, 2008, the Company received $141,048 by issuing 147,350
shares upon the exercise of various stock options.

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.

C.

Research and
development, patents and licenses, etc.

The Company does not engage in any
research and development activities and has no patents or licenses.

D.

Trend
information.

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

E.

Off-balance sheet arrangements.

The Company has no off balance sheet
arrangements.

F.

Tabular
disclosure of contractual obligations.

The Company has no contractual
obligations relating to debt or lease obligations as at March 31, 2009.

Critical Accounting
Estimates

The preparation of financial statements
in conformity with 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 continual deferral of costs incurred for mineral properties and
exploration, assumptions used to determine the fair value of stock-based
compensation, and impairment of the Companys interest in the Gahcho Kué
Project. The Company evaluates its estimates on an ongoing basis and bases them
on various

31

---

assumptions that are believed to be
reasonable under the circumstances. The Company's estimates form the basis for
making judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

The Company believes the policies for
going concern and its interest in the Gahcho Kué Project 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 Company reviews its interest in the
Gahcho Kué Project for impairment based on results to date and when events and
changes in circumstances indicate that the carrying value of the assets may not
be recoverable. Canadian GAAP requires the Company to make certain judgments,
assumptions, and estimates in identifying such events and changes in
circumstances, and in assessing their impact on the valuations of the affected
assets. Impairments are recognized when the book values exceed managements
estimate of the net recoverable amounts associated with the affected assets. The
values shown on the balance sheet for the Companys interest in the Gahcho Kué
Project represent the Companys assumption that the amounts are recoverable.
Owing to the numerous variables associated with the Companys judgments and
assumptions, the precision and accuracy of estimates of related impairment
charges are subject to significant uncertainties, and may change significantly
as additional information becomes known. The Companys assessment is that as at
March 31, 2009, there has been no impairment in the carrying value of its
mineral properties.

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 development and permitting of the AK Property
claims are being borne by De Beers Canada.

The Company uses the Black-Scholes
option pricing model to determine the fair value of stock-based compensation
recognized. Estimates and assumptions are required under the model, including
those related to the Company's stock volatility, expected life of options
granted, and the risk free interest rate. The Company believes that its
estimates used in arriving at stock-based compensation are reasonable under the
circumstances.

32

---

Subsequent Events

Revised and Restated Joint Venture Agreement

Under the agreement with De Beers
Canada in effect at March 31, 2009, the Company was not responsible for funding
the Project, and De Beers Canada had no recourse to the Company for repayment of
funds until, and unless, the Project is built, in production, and generating net
cash flows.

On July 3, 2009, the Company entered
into a revised and restated joint venture agreement (the "2009 Agreement") with
De Beers Canada (jointly, the "Participants") with respect to the Gahcho Kué
Project that replaces the previous agreement (the "2002 Agreement") entered into
by the Participants. Under the 2009 Agreement:

1.

The
Participants continuing interests in the Gahcho Kué Project will be Mountain
Province 49% and De Beers Canada 51%, with Mountain Provinces interest no
longer subject to the dilution provisions in the 2002 Agreement except for
normal dilution provisions which are applicable to both Participants;

2.

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

3.

Each Participant will contribute
their proportionate share to the future project development costs;

4.

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

5.

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

6.

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

- 

Up to $5.1 million in respect of De Beers
  Canadas share of the costs of a feasibility study to be commissioned as soon
  as possible;

$10 million upon the earlier of the completion of
  a feasibility study with a 15% IRR and/or a decision to build;

$10 million following the issuance of the
  construction and operating permits;

$10 million following the commencement of
  commercial production; and



Mountain Province has agreed that the marketing
rights provided to the Company in the 2009 Agreement will be diluted if the
Company defaults on certain of the repayments described above.

Execution of the 2009 Agreement
brings to an end the strategic review announced by Mountain Province on June 4,
2008. During the strategic review, Mountain Province explored a number of
value-enhancing alternatives and concluded that the interests of Mountain
Province shareholders would be best served by entering into the 2009 Agreement.

Non-brokered Private Placement

On July 14, 2009, the Company
announced the arrangement of a non-brokered private placement of up to 3 million
Units at a price of $1.50 (US$1.30) per Unit. If fully subscribed, the private
placement will raise proceeds of $4.5 million.

Each Unit is comprised of one common
share and one-half of a common share purchase warrant. Each whole warrant will
entitle the holder to acquire one additional common share at an exercise price
of $2.00 (US$1.73) within 18 months from closing.

Net proceeds from the offering will be used to
support the development of the Gahcho Kué diamond project, and for general
corporate purposes.

33

---

The securities offered in this
private placement have not been and will not be registered under the Securities
Act of 1933, as amended and may not be offered or sold in the United States
absent registration or an applicable exemption from registration requirements.

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.

**Item
6.**

**Directors,
Senior Management and Employees**

A.

Directors and
senior management.

The following table lists, as of June
25, 2009, 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
      AgeJonathan Comerford
      Chairman and Director(2)(3)
    Chairman of the Company since May
      11, 2006 and Director since September 21, 2001
      37Patrick Evans
      President, Chief Executive Officer and Director
    President and director of the
      Company since November 15, 2005.
      54Jennifer Dawson
      Chief
        Financial Officer
    Chief Financial Officer since May 11, 2006
      48D. Harry W. Dobson
      Director(1)
    Director since November 1, 1997
      61Elizabeth J.
      Kirkwood
      Director(1)
    Director since September 21, 2001
      59Peeyush Varshney
      Director(2)
    Director since April 13, 2007
      42Carl Verley
      Director(1)(3)
    Director of Old MPV since
      December 2, 1986 and Director of the Company since November 1, 1997
      59David E. Whittle
      Director(2)(3)
    Director since November 1, 1997
      45


| | (1) | Member of the Company's Corporate Governance
      Committee.
| | --- | -------------------------------------------------------------
| | (2) | Member of the Company's Audit Committee.                     
| | (3) | Member of the Company's Compensation
  Committee.            

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

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

Mr. Jonathan Comerford has been a
director of the Company since September, 2001 and Chairman since April 2006. Mr.
Comerford is resident in Dublin, Ireland. He obtained his Masters in Business
from the Michael Smurfit Business School in 1993 and his Bachelor of Economics
from University College, Dublin in

34

---

1992. Mr. Comerford has been Investment
Manager at IIU Limited since August 1995. He represents the Company's largest
shareholder, Bottin (International) Investments Ltd., on the Company's
board.

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

Mr. Patrick C. Evans has been
President, CEO and a director of the Company since November 2005. He is a
resident of Arizona, USA. Mr. Evans is a graduate of the University of Cape Town
where he received his Bachelor of Arts degree in 1977 and Bachelor of Science
degree in 1978. He was a career diplomat from 1979 to 1998. In 1999, he was
appointed a Vice President of Placer Dome Inc. (a major gold mining company) and
a non-executive director of SouthernEra Resources Ltd. (a diamond and platinum
exploration, development and mining company). In 2001, he was appointed
President and CEO of SouthernEra Resources Ltd. and Messina Limited (a platinum
mining company). In 2004, he was appointed President, CEO and a director of
Southern Platinum Corp (a platinum mining company), which was acquired by Lonmin
Plcin June 2005. In September 2005, he was appointed President,
CEO and a director of Weda Bay Minerals Inc. (a nickel exploration and
development company), which was acquired by Eramet S.A. in May 2006. Mr. Evans
was appointed the CEO and a director of Norsemont Mining Inc. (a copper
exploration and development company) in June 2007, and has been a non-executive
director of First Uranium Corp. (a uranium and gold mining company) since
December 2006 and a non-executive director of Anvil Mining Limited (a copper
mining company) since March 2009.

Jennifer M. Dawson, B.B.A.

Ms. Dawson has been the Companys Chief
Financial Officer and Corporate Secretary since May 2006. She is a resident of
Ontario, Canada. Ms. Dawson is a graduate of St. Francis Xavier University where
she received her Bachelor of Business Administration in 1984. Her work
experience includes public accounting experience with Touche Ross & Co. (now
Deloitte) from 1984 to 1989, and financial management experience with CCH
Canadian Limited (1989 to 2000) and Genesis Media Inc.(from 2000 to 2004) She
provided financial support to SouthernEra Resources Ltd. in its corporate
reorganization in 2004, and ongoing financial support to both SouthernEra
Diamonds Inc. and to Southern Platinum Corp. after the reorganization in 2004
and 2005. Since 2004, she has been a self-employed financial consultant, and in
addition to her CFO and Corporate Secretary roles with the Company, she provided
financial and administrative services to Arizona Star Resource Corp. as a
consultant from 2005 to 2008 (now owned 100% by Barrick Gold Corporation) and
currently serves as Controller to Blacksands Petroleum, Inc. and its
subsidiary, Access Energy Inc. (2005 to current).

D. Harry W. Dobson

Mr. Harry Dobson has been a director of
the Company since November 1997 and is a resident of Monaco. 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 Kirkland Lake Gold Inc.

Elizabeth J. Kirkwood

Ms. Elizabeth J. Kirkwood has been an
entrepreneur and independent business woman since February 1989 with a focus on
the creation, financing and management of junior resource companies. She has
been a director of the Company since September, 2001 and was past Chairman of
the Board of the Company from January 2003 until April 2006. She was also Chief
Financial Officer of the Company from September 2003 until May 2006, and
Corporate Secretary from November 2003 until May 2006. She is resident in
Ontario, Canada, and a member of the Prospectors and Developers Association of
Canada. Ms. Kirkwood was the President and CEO of First Nickel Inc. (November
2003 to June 2006). She is also a director of Everbright Capital Corporation
(since June 2005). She has been a past director of Canadian Shield Resources
Inc. (June 2005-June 2007), Intrepid Minerals Corporation (April 1999  July
2006), Investor Links.com (March 1993-May 2001), Canada's Choice Spring Water
(July 1996-August 1999), Stroud Resources Ltd. (August, 2000

35

---

- March 2002), and a past
director and officer of O.S.E Corp. (formerly Oil Springs Energy Corp.
(July, 1993- June 2005), Hucamp Mines Limited (May 2001-May 2002), and First
Strike Diamonds Inc. (October 1995  March 2004).

Peeyush Varshney, LL.B.

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

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

Carl Verley was a director of Old MPV
since its inception in December 1986 and has been a director of the Company
since November 1997. He is a resident of British Columbia, Canada, and a
graduate of the University of British Columbia where he received his Bachelor of
Science Degree in May of 1974. He worked for Cordilleran Engineering Ltd. from
1975 to 1982. He has been a self-employed geologist since 1982. From August of
1990 to January 2002, he served on the Board of Directors of Gee-Ten Ventures
Inc., and since July 2003, he has been a director of Alphamin Resources Corp.
(formerly La Plata Gold Corporation) and a director of African Metals
Corporation since October 2007. He has been the President of Amerlin Exploration
Services Ltd., a private company providing exploration services to the mineral
industry, since its inception in 1983. He is a registered Professional
Geoscientist with both the Association of Professional Geoscientists of Ontario
and the British Columbia Association of Professional Engineers and
Geoscientists.

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

Mr. Whittle is a Chartered Accountant
and is a resident of British Columbia, Canada. He has been a director of the
Company since November 1997, and from November 1997 to April 1998 served as
Secretary of the Company. 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 a director of Glenmore
Highlands Inc., a public company in the mineral exploration business. From 2004
to August 2007, Mr. Whittle was Chief Financial Officer of Hillsborough
Resources Limited, a public company in the mining business. From 2004 to August
2007, Mr. Whittle was a director of Image Innovations Holdings Inc., a public
company in the business of sports memorabilia and artwork. From October 2007 to
the present, Mr. Whittles principal occupation has been and is Chief Financial
Officer of Alexco Resource Corp., a public company in the business of both
undertaking mineral exploration and development and providing consulting
services to third parties in respect of environmental remediation and
permitting.

B.Compensation.

The Company has two executive officers
(collectively, the "Executive Officers"): Patrick Evans, the President and CEO,
and Jennifer Dawson, the Chief Financial Officer and Corporate Secretary. For
particulars on these executive officers, reference should be made to Item 6A -
Directors and Senior Management.

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

| | • | Patrick Evans, President and Chief Executive Officer,
      earned other annual compensation of $155,000 in the most recent fiscal
      year including $150,000 pursuant to a Consulting Agreement for his
      services as President and CEO, as well as a directors fee of $5,000 for
      the year ended March 31, 2009. He has 380,000 stock options as follows:
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

36

---

Grant
      date
    Number
    Vesting
    Exercise Price
    TermNovember 1, 2005
    100,000
    50,000 on acceptance of the
      Consulting Agreement 50,000 on the first anniversary of the
      acceptance of the Consulting Agreement
    $2.63
    5 yearsJanuary 30, 2006
    100,000
    50,000 vested immediately
      50,000 vested January 31, 2007
    $4.50
    5 yearsNovember 24, 2008
    180,000
    Immediately
    $1.26
    5 years


| | • | Jennifer Dawson, Chief Financial Officer and Corporate
      Secretary, was paid $99,350 pursuant to a Consulting Agreement for her
      services as CFO and Corporate Secretary for the year ended March 31, 2009.
      She was granted 90,000 options on November 24, 2008, each with a term of 5
      years, an exercise price of $1.26, and all of which vested immediately.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Compensation for the directors has been
approved effective April 1, 2005 at the following levels: the Chairman of the
Board receives $10,000 per annum, the Chairman of the Audit Committee receives
$7,500 per annum, and all other Directors receive $5,000 per annum. All are paid
semi-monthly, in advance.

During each of the years ended March
31, 2009, 2008 and 2007, director fees were earned by the following directors:
Jonathan Comerford ($10,000 as Chair of the Board, annually), David Whittle
($7,500 as Chair of the Audit Committee, annually), Carl Verley ($5,000
annually), Elizabeth Kirkwood ($5,000 annually), Patrick Evans ($5,000 annually)
and Harry Dobson ($5,000 annually), and for the years ended March 31, 2009 and
2008 only, Peeyush Varshney ($5,000 annually). In the year ended March 31, 2008,
three directors were compensated for their work in the Companys Gahcho Kué
Project strategic alternatives review (David Whittle $25,000, Jonathan Comerford
$20,000 and Peeyush Varshney $20,000).

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

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

Name
    Securities, Acquired on
      Exercise (#)
    Aggregate Value Realized
      ($)(1)
    Unexercised Options at
      Financial Year-End Exercisable /
      Unexercisable (#)
    Value of Unexercised In-the-
      Money Options at Financial Year-End Exercisable /
      Unexercisable ($)(2)Patrick Evans
      (3)
    Nil
    Nil
    380,000/0
    0/0Jennifer Dawson
    Nil
    Nil
    90,000/0
    0/0


37

---

(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, 2009,
(ie. financial year end) was $0.85.

(3)     
Subsequent to the year-end of March 31, 2009, Mr. Evans exercised 79,365
options.

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

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

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

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

C.Board
practices.

The directors of the Company are
elected annually and hold office until the next annual general meeting of the
shareholders of the Company or until their successors in office are duly elected
or appointed. The Company does not have an executive committee. All directors
are elected for a one-year term. All officers serve at the pleasure of the
Board. The next Annual General Meeting of the shareholders of the Company has
been scheduled for September 10, 2009.

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

Audit Committee

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

The current members of the Audit
Committee are Jonathan Comerford, Peeyush Varshney and David Whittle. Elizabeth
Kirkwood was appointed to the Audit Committee in September 2007, but shortly
thereafter, it was determined that she was not considered an independent
director and Jonathan Comerford assumed her position on the Audit Committee.
There had been no business transacted by the Audit Committee between the time
Ms. Kirkwood had been appointed, and her replacement was appointed. Except for
the chairman, David Whittle, the Audit Committee members receive no separate
remuneration for acting as such and their appointments are not for any fixed
term.

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

| | a. | identify and monitor the management of the principal
      risks that could impact the financial reporting of the Company;                                             
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                        
| | b. | monitor the integrity of the Company's financial
      reporting process and system of internal controls regarding financial
      reporting and accounting compliance;
| |    |                                                                                                                                                                        

38

---

| | c. | make recommendations regarding the selection of the
      Company's external auditors (by shareholders) and monitor their
      independence and performance;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                              
| | d. | provide an avenue of communication among the external
      auditors, management and the Board;                                                              
| |    |                                                                                                                                                              
| | e. | handle complaints regarding the Company's accounting
      practices; and                                                                                    
| |    |                                                                                                                                                              
| | f. | administer and monitor compliance with the Company's
      Ethics and Conflict of Interest Policy.                                                           

Corporate Governance Committee

The members of the Corporate Governance
Committee are Elizabeth Kirkwood (Chair), Carl Verley and Harry Dobson, 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 (Chair), 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.

D.Employees.

As at the end of the fiscal years March
31, 2009, March 31, 2008, and March 31, 2007, the Company had no full-time
employees. Patrick Evans and Jennifer Dawson have consulting agreements with the
Company. The Toronto administrative and executive office uses outsourced
administrative assistance on an as-needed, part-time basis.

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

39

---

E.Share ownership.

The following table sets forth, as of
June 25, 2009, 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.

Name of Beneficial Owner(11)
    Amount and
      Nature
    Percentage(9)(10)of ClassD. Harry
      Dobson(1)
    1,282,510
    2.1%Patrick C.
      Evans(2)
    483,400
    *%Carl G. Verley
      (3)
    305,250
    *%Jonathan
      Comerford(4)
    330,000
    *%Peeyush Varshney
      (5)
    170,122
    *%Elizabeth
      Kirkwood(6)
    145,000
    *%David E.
      Whittle(7)
    115,600
    *%Jennifer
      Dawson(8)
    90,000
    *%Officer and
      Directors as a Group (9)
    2,921,882
    4.9%* less than 1%


| |      |                                                                                                                                                                                                                                                                                                                                                                                              
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1)  | Includes 1,208.510 shares and 74,000 options which are
      exercisable at a price of $1.26 per share, and which expire on November
      23, 2013.                                                                                                                                                                                                                                         
| |      |                                                                                                                                                                                                                                                                                                                                                                                              
| | (2)  | Includes 182,765 shares and 300,635 options (exercisable
      presently). 100,000 options are exercisable at a price of $2.63 per share
      and expire on November 1, 2010. 100,000 options are exercisable at a price
      of $4.50 per share and expire on January 30, 2011. 100,635 options are
      exercisable at a price of $1.26 per share and expire on November 23,
      2013.
| |      |                                                                                                                                                                                                                                                                                                                                                                                              
| | (3)  | Includes 255,250 shares and 50,000 options. The options
      are exercisable at a price of $1.26 per share, and expire on November 23,
      2013.                                                                                                                                                                                                                                          
| |      |                                                                                                                                                                                                                                                                                                                                                                                              
| | (4)  | Includes nil shares and 330,000 options (exercisable
      presently). 150,000 of the options are exercisable at a price of $1.96 per
      share and expire on October 1, 2009. 180,000 of the options are
      exercisable at a price of $1.26 per share and expire on November 23,
      2009.                                                                                           
| |      |                                                                                                                                                                                                                                                                                                                                                                                              
| | (5)  | Includes 80,122 shares and 90,000 options. The options
      are exercisable at a price of $1.26 per share, and expire on November 23,
      2013.                                                                                                                                                                                                                                           
| |      |                                                                                                                                                                                                                                                                                                                                                                                              
| | (6)  | Includes 5,000 shares and 140,000 options. 50,000 of the
      options are exercisable at $1.96 and expire October 1, 2009. 90,000 of the
      options are exercisable at a price of $1.26 per share and expire on
      November 23, 2013.                                                                                                                                                 
| |      |                                                                                                                                                                                                                                                                                                                                                                                              
| | (7)  | Includes 55,600 shares and 60,000 options. The options
      are exercisable at a price of $1.26 per share and expire on November 23,
      2013.                                                                                                                                                                                                                                            
| |      |                                                                                                                                                                                                                                                                                                                                                                                              
| | (8)  | Includes nil shares and 90,000 options, exercisable at
      $1.26 per share, and which expire November 23, 2013.                                                                                                                                                                                                                                                                            
| |      |                                                                                                                                                                                                                                                                                                                                                                                              
| | (9)  | Includes 1,134,635 options (exercisable).                                                                                                                                                                                                                                                                                                                                                    
| |      |                                                                                                                                                                                                                                                                                                                                                                                              
| | (9)  | The calculation does not include stock options that are
      not exercisable presently or within 60 days.                                                                                                                                                                                                                                                                                   
| |      |                                                                                                                                                                                                                                                                                                                                                                                              
| | (10) | Total issued and outstanding capital as at the close of
      June 25, 2009 was 60,097,746 shares.                                                                                                                                                                                                                                                                                           
| |      |                                                                                                                                                                                                                                                                                                                                                                                              
| | (11) | 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.

40

---

**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 25, 2009, the Company's
issued and outstanding capital was 60,097,746 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 25, 2009, the Company believes that approximately
14,501,200 of the issued and outstanding common shares were held by 74
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 25, 2009) and percentage of
shares, warrants and options held by the Company's major shareholders on a
partially diluted basis.

Name of Shareholder(1)
    No. of Shares Held
    Percentage of issued and
      outstanding share capital of 60,097,746 shares
      (as at June 25, 2009)Bottin (International) Investments Ltd. (controlled by
      Dermot Desmond)
    13,253,430
    22.05%Desmond P. Sharkey Dublin, Ireland
    5,206,001
    8.66%De Beers Canada Exploration Ltd. (formerly Monopros
      Limited)
    3,103,543
    5.16%(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.

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 Patrick Evans, who is President and CEO, and Jennifer Dawson, who is Chief
Financial Officer and Corporate Secretary. Patrick Evans is also a director of
the Company. See Item 6B  Compensation.

Both Mr. Evans and Ms. Dawson have
Consulting Agreements with the Company.

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

There is no indebtedness between the
directors and the Company.

C.Interests of
experts and counsel.

Not Applicable

41

---

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, 2009 and 2008 and for the
fiscal years ended March 31, 2009, 2008 and 2007, 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 end of last fiscal year, other than the exercise of
options as disclosed in the financial statements included in this Form 20-F.

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
OTC-Bulletin Board ("OTCBB") under the symbol "MPVI" until June 1, 2005.
Commencing on April 4, 2005, the Company's shares were listed for trading on the
AMEX under the symbol "MDM".

The following tables set forth the
reported high and low prices on the TSX, and for Amex, Nasdaq and/or OTCBB
(combined for the period ended March 2006),for (a) the five most recent
fiscal years; (b) each quarterly period for the past two fiscal years, and (c)
for the most recent twelve months.

High
        and Low Prices for the Five Most Recent Fiscal Years**Fiscal Year Ended**
      **TSX**
      **NYSE AMEX / OTCBB(1)**High (CDN$)
      Low (CDN$)
      High (US$)
      Low (US$)March 31, 2009
      $5.05
      $0.75
      $4.95
      $0.58March 31, 2008
      $5.93
      $3.79
      $5.49
      $3.54March 31, 2007
      $5.05
      $3.05
      $4.40
      $2.70March 31, 2006
      $4.90
      $2.26
      $4.26
      $1.90March 31, 2005
      $2.68
      $1.61
      $2.00
      $1.19


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 OTCBB
and continued through April 1, 2005. On April 4, 2005, the Company's shares
began trading on the AMEX. AMEX was taken over by NYSE Euronext which then
rebranded to NYSE Amex.

42

---

High and Low Prices for Each Quarterly Period for the Past
        Two Fiscal YearsTSX
      NYSE Amex / OTCBBPeriod Ended:
      High (CDN$)
      Low (CDN$)
      High (US$)
      Low (US$)March 31, 2009
      $1.20
      $0.75
      $1.03
      $0.58December 31, 2008
      $3.20
      $0.96
      $3.05
      $0.78September 30, 2008
      $4.74
      $2.70
      $4.70
      $2.58June 30, 2008
      $5.05
      $4.20
      $4.95
      $4.12March 31, 2008
      $5.10
      $4.12
      $5.12
      $4.07December 31, 2007
      $5.10
      $4.00
      $5.23
      $4.07September 30, 2007
      $5.51
      $3.79
      $5.26
      $4.15June 30, 2007
      $5.93
      $4.17
      $5.49
      $4.34


High and Low Prices for the Most Recent Twelve MonthsTSX (CDN$)
      NYSE AMEX(1)Month Ended
      High
      Low
      High
      LowMay 2009
      $1.65
      $1.30
      $1.46
      $1.09April 2009
      $1.31
      $0.86
      $1.08
      $0.69March 2009
      $0.90
      $0.75
      $0.74
      $0.58February 2009
      $1.08
      $0.79
      $0.90
      $0.63January 2009
      $1.20
      $0.92
      $1.03
      $0.76December 2008
      $1.23
      $0.96
      $1.10
      $0.78November 2008
      $1.81
      $1.17
      $1.51
      $0.89October 2008
      $3.20
      $1.31
      $3.05
      $1.06September 2008
      $4.33
      $2.70
      $4.04
      $2.58August 2008
      $4.40
      $4.22
      $4.29
      $3.97July 2008
      $4.74
      $4.21
      $4.70
      $4.21June 2008
      $4.75
      $4.20
      $4.63
      $4.12


(1)On April
  4, 2005, the Company's Common Shares began trading on the American Stock Exchange.
  AMEX was taken over by NYSE, and rebranded as NYSE Amex. On March 31, 2009,
  the closing price of the Common Shares on the TSX was $0.85 and on June 25,
  2009 was $1.78. The shares commenced trading on NYSE AMEX on April 4, 2005 and
  the closing price of the Common Shares on March 31, 2009 was US$0.70 per share.
  The closing price on June 25, 2009 on the NYSE Amex was US$1.55 per share.

B.           Plan of distribution.

Not Applicable.

C.           Markets.

The Company's shares are listed on the
Toronto Stock Exchange under the symbol "MPV" 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 (now NYSE
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.

E.           Dilution.

Not Applicable.

43

---

F.           Expenses of the issue.

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. Pursuant to the Shareholders special
resolution on September 20, 2005 approving the continuance of the Company into
Ontario, the Company continued under the laws of the Province of Ontario
pursuant to Articles of Continuance dated May 8, 2006.

Powers, functions and qualifications
  of Directors

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

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

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

44

---

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

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

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

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

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

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

45

---

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 Bylaws for the requisitioning of special meetings by
shareholders. However, the Ontario Securities Act provides that the holders of
not less than 5% of the issued shares of the Company may requisition the
directors to call a general meeting of the shareholders for the purposes stated
in the requisition. All meetings of the shareholders may be attended by
registered shareholders or persons who hold powers of attorney or proxies given
to them by registered shareholders.

Foreign Ownership
Limitations

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

Change of Control

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

At the September 13, 2006 Annual and
Special Meeting of the shareholders, a Shareholder Rights Plan dated August 4,
2006 was approved, ratified, confirmed and adopted by the shareholders of the
Company in accordance with and subject to its terms and conditions. The
objectives of the Rights Plan are to ensure, to the extent possible, that all
shareholders of the Company are treated equally and fairly in connection with
any Take-Over Bid for the Company.

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

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

46

---

In addition, the Rights Plan Agreement
provides that the continued existence of the Rights Plan must be ratified by a
majority of the shareholders of the Company at a meeting of shareholders of the
Company to be held not earlier than January 31, 2010 and not later than the date
on which the 2010 annual meeting of shareholders of the Company terminate.

Share Ownership Reporting Obligations

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

| | (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 Ontario than in the United States where United States law prescribes a 5%
threshold for ownership disclosure.

C.Material contracts.

The Company did not enter into any
material contracts in the last two fiscal years and up to the date of this Form
20-F.

D.Exchange controls.

Exchange Controls and Investment
Canada Act

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

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

47

---

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 2006 WTO Review Threshold is CDN$265,000,000.

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

For non-Canadians (other than WTO
investors), an indirect acquisition of control, by the acquisition of voting
interests of an entity that directly or indirectly controls the Company, is
reviewable if the value of the assets of the Company is then CDN$50,000,000 or
more. If the WTO investor rules apply, then this requirement does not apply to a
WTO investor, or to a person acquiring the entity from a WTO investor.

Special rules specified in the Act
apply if the value of the assets of the Company is more than 50% of the value of
the entity so acquired. By these special rules, if the non-Canadian (whether or
not a WTO investor) is acquiring control of an entity that directly or
indirectly controls the company, and the value of the assets of the Company and
all other entities carrying on business in Canada, calculated in the manner
provided in the Act and the regulations under the Act, is more than 50% of the
value, calculated in the 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$265,000,000 (in 2006) 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

48

---

activity in Canada, including the
effect on employment, on resource processing, and on the utilization of parts,
components and services produced in Canada; (ii) the effect of the investment on
exports from Canada; (iii) the degree and significance of participation by
Canadians in the Canadian business and in any industry in Canada of which it
forms a part; (iv) the effect of the investment on productivity, industrial
efficiency, technological development, product innovation and product variety in
Canada; (v) the effect of the investment on competition within any industry or
industries in Canada; (vi) the compatibility of the investment with national
industrial, economic and cultural policies taking into consideration industrial,
economic and cultural objectives enunciated by the government or legislature of
any province likely to be significantly affected by the investment; and (vii)
the contribution of the investment to Canada's ability to compete in world
markets.

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

Where the Minister has advised the
acquiror that he is not satisfied that the investment is likely to be of net
benefit to Canada, the acquiror has the right to make representations and submit
undertakings within 30 days of the date of the notice (or any further period
that is agreed upon between the acquiror and the Minister). On the expiration of
the 30 day period (or the agreed extension), the Minister must forthwith notify
the acquiror (i) that he is now satisfied that the investment is likely to be of
net benefit to Canada or (ii) that he is not satisfied that the investment is
likely to be of net benefit to Canada. In the latter case, the acquiror may not
proceed with the investment or, if the investment has already been consummated,
must divest itself of control of the Canadian business.

E.Taxation.

A brief description of certain
provisions of the tax treaty between Canada and the United States,
Canada-United States Income Tax Convention (1980), as amended, (the
"Convention"), is included below, together with a brief outline of certain
taxes, including withholding provisions, to which United States security holders
are subject under the Income Tax Act (Canada) (the "Canadian Tax Act").
The consequences, if any, of provincial, territorial, state, local or foreign
taxes (other than Canadian federal income taxes) are not considered.

The following information is 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.

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, at all relevant times and for purposes of the Canadian Tax
Act, is solely a resident of the United States for purposes of the Convention,
holds shares of common stock of the Company as capital property, deals at arm's
length and is not affiliated with the Company, and, does not use or hold, is not
deemed to use or hold shares of the common stock of the Company in, or in the
course of, carrying on business in Canada. (a "U.S. Holder"). This summary is
based on the current provisions of the Canadian Tax Act and the regulations to
it and on the Company's understanding of the administrative practices of Canada
Revenue Agency, in effect as of the date hereof, and takes into account all
specific proposals to amend the Canadian Tax Act and regulations to it publicly
announced by the Minister of Finance of Canada prior to the date hereof. No
assurances can be given that such proposed amendments will be enacted in the
form proposed, or at all. This summary is not exhaustive of all potential
Canadian federal income tax consequences to a U.S. Holder and does not take into
account or anticipate any other changes in law or administrative practices,
whether by judicial, governmental or legislative action or decision.. This
discussion is general only and is not a substitute for independent advice from a
shareholder's own Canadian and U.S. tax advisors.

49

---

The provisions of the Canadian Tax Act
are subject to income tax treaties to which Canada is a party, including the
Convention.

Dividends on Common Shares and
  Other Income

Under the Canadian Tax Act, a
non-resident of Canada is generally subject to Canadian non-resident tax at the
rate of 25 percent on amounts that are paid or credited or deemed under the
Canadian Tax Act to be paid or credited as, on account or in lieu of payment of,
or in satisfaction of dividends to a U.S. Holder by a corporation resident in
Canada. The Convention limits the rate to 15 percent if the shareholder is a
resident of the United States 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 Canadian payor corporation.

The Convention generally exempts from
Canadian non-resident tax dividends paid to certain religious, scientific,
literary, educational or charitable organizations and certain pension
organizations that are resident in the United States and are exempt from income
tax under the laws of the United States.

The non-resident tax payable on
dividends is to be withheld at source by the Company or people acting on its
behalf.

Dispositions of Common
Shares

Under the Canadian Tax Act, a U.S.
Holder will generally not be subject to tax in respect of capital gains realised
on the disposition or deemed disposition of shares of the common stock of the
Company unless, at the time of disposition, the shares constitute "taxable
Canadian property."

Shares of common stock of the Company
will not constitute taxable Canadian property of a U.S. Holder at a particular
time unless at any time in the 60 months immediately preceding the disposition
of such shares 25% or more of the issued shares of any class or series in the
capital stock of the Company belonged to one or more persons in a group
comprising the U.S. Holder and persons with whom the U.S. Holder did not deal at
arm's length.

The Convention relieves U.S. Holders
from liability for Canadian tax on capital gains derived on a disposition of
shares that are "taxable Canadian property" unless

| | (c) | 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                                                                                                                                                                          
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (d) | the shareholder was an individual resident in Canada for
      120 months during any period of 20 consecutive years preceding the
      disposition of the shares, and at any time during the 10 years immediately
      preceding the disposition of the shares the individual was a resident of
      Canada, and the shares were owned by the individual when he or she ceased
      to be resident in Canada.

If a U.S. Holder realizes a capital
gain or capital loss from a disposition of a share of common stock of the
Company which constitutes taxable Canadian property for purposes of the Canadian
Tax Act and is not otherwise exempt under the Convention, then the capital gain
or capital loss is the amount, if any, by which the U.S. Holder's proceeds of
disposition exceed (or are exceeded by, respectively) the aggregate of the U.S.
Holder's adjusted cost base of the share and reasonable expenses of disposition.
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 (taxable capital gain) is included in income for Canadian tax purposes.
The amount by which one half of a U.S. Holder's capital loss from the
disposition of taxable Canadian property exceeds the taxable capital gain in a
year may generally be deducted for Canadian tax purposes from taxable capital
gains realized by the shareholder from the disposition of taxable Canadian
property in the three years previous or any subsequent year, in the manner
permitted under the Canadian Tax Act. A U.S. Holder whose shares do not
constitute taxable Canadian property for purposes of the Canadian Tax Act should
not be

50

---

subject to Canadian income tax on any
gain realized on the disposition of a share of the capital stock of the Company.

United States Federal Income Tax
Consequences

The following is a summary of certain
U.S. federal income tax consequences to a U.S. Holder (as defined below) arising
from and relating to the acquisition, ownership, and disposition of shares of
common stock of the Company ("Common Shares").

This summary is for general information
purposes only and does not purport to be a complete analysis or listing of all
potential U.S. federal income tax consequences that may apply to a U.S. Holder
as a result of the acquisition, ownership, and disposition of Common Shares. In
addition, this summary does not take into account the individual facts and
circumstances of any particular U.S. Holder that may affect the U.S. federal
income tax consequences of the acquisition, ownership, and disposition of Common
Shares. This summary is not intended to be, and should not be construed as,
legal or U.S. federal income tax advice with respect to any U.S. Holder. Each
U.S. Holder should consult its own tax advisor, 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.

Circular 230 Disclosure

Any tax statement made herein
regarding any U.S. federal tax is not intended or written to be used, and cannot
be used, by any taxpayer for purposes of avoiding any penalties. Any such
statement herein is written in connection with the marketing or promotion of the
transaction to which the statement relates. Each taxpayer should seek advice
based on the taxpayers particular circumstances from an independent tax
advisor.

Scope of this Disclosure

Authorities

This summary is based on the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury Regulations, published
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 or proposed changes to the Canada-U.S. Tax Convention.

U.S. Holders

For purposes of this summary, a "U.S.
Holder" is a beneficial owner of Common Shares that, for U.S. federal income tax
purposes, is (a) an individual who is a citizen or, or resident in, the U.S.,
(each as defined under U.S. tax laws),(b) a corporation, or other entity
classified as a corporation for U.S. federal income tax purposes, that is
created or organized in or under the laws of the U.S. or any state in the U.S.,
including the District of Columbia, (c) an estate if the income of such estate
is subject to U.S. federal income tax regardless of the source of such income,
or (d) a trust if (i) such trust has validly elected to be treated as a U.S.
person for U.S. federal income tax purposes or (ii) a U.S. court is able to
exercise primary supervision over the administration of such trust and one or
more U.S. persons have the authority to control all substantial decisions of
such trust.

Non-U.S. Holders

A "non-U.S. Holder" is a beneficial
owner of Common Shares other than a U.S. Holder. This summary does not address
the U.S. federal income tax consequences of the acquisition, ownership, and
disposition of Common Shares to non-U.S. Holders.

51

---

U.S. Holders Subject to Special U.S.
Federal Income Tax Rules Not Addressed

This summary does not address the U.S.
federal income tax consequences of the acquisition, ownership, and disposition
of Common Shares to U.S. Holders that are subject to special provisions under
the Code, including but not limited to the following 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. tax expatriates; (f) U.S. Holders that own
Common Shares as part of a straddle, hedging transaction, conversion
transaction, constructive sale, or other arrangement involving more than one
position; (g) U.S. Holders that acquired Common Shares in connection with the
exercise of employee stock options or otherwise as compensation for services;
(h) partners of partnerships that hold Common Shares or owners of other entities
classified as partnerships or "pass-through" entities for U.S. federal income
tax purposes that hold Common Shares, (i) U.S. Holders that hold Common Shares
other than as a capital asset within the meaning of Section 1221 of the Code.
U.S. Holders that are subject to special provisions under the Code, including
U.S. Holders described immediately above, should consult their own tax advisors
regarding the tax consequences of the acquisition, ownership, and disposition of
Common Shares.

Tax Consequences Other than U.S.
Federal Income Tax Consequences Not Addressed

This summary does not address the U.S.
state, local or foreign, tax consequences to U.S. Holders of the acquisition,
ownership, and disposition of Common Shares, nor U.S. federal tax consequences
other than income tax. Each U.S. Holder should consult its own tax advisors
regarding these and other tax consequences of the acquisition, ownership, and
disposition of Common Shares.

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

Distributions on Common Shares

General Taxation of Distributions

Generally, and subject to the
discussion below, concerning passive foreign investment companies (PFICs), a
U.S. Holder that receives a distribution, including a constructive distribution,
with respect to the Common Shares will be required to include the amount of such
distribution in gross income as a dividend (without reduction for any Canadian
income tax withheld from such distribution) to the extent of the current or
accumulated "earnings and profits" of the Company (as determined under U.S. tax
principles). To the extent that a distribution exceeds the current and
accumulated "earnings and profits" of the Company, such distribution will be
treated (a) first, as a tax-free return of capital to the extent of a U.S.
Holder's tax basis in the Common Shares and, (b) thereafter, as gain from the
sale or exchange of such Common Shares. (See more detailed discussion at
"Disposition of Common Shares" below).

Reduced Tax Rates for Certain
Dividends

For taxable years beginning after
December 31, 2002 and before January 1, 2011, a dividend paid by the Company
generally may be taxed at the preferential tax rates applicable to long-term
capital gains (generally, a 15% federal tax rate) 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

52

---

benefits of the Canada-U.S. Tax
Convention, or (c) the Common Shares are readily tradable on an established
securities market in the U.S. However, even if the Company satisfies one or more
of such requirements, the Company will not be treated as a QFC if the Company is
a PFIC 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 is a PFIC (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). As discussed below, additional U.S. tax consequences
may arise on such a dividend under the PFIC rules. The dividend rules are
complex and each U.S. Holder should consult its own tax advisors 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 tax advisors regarding the dividends
received deduction.

Disposition of Common Shares

Subject to the discussion of the PFIC
rules, below, 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, such preferential tax rates are not available if
the Company is a PFIC, unless a qualified electing fund (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.

Foreign Tax Credit

A U.S. Holder who pays (whether
directly or through withholding) Canadian income tax with respect to the Common
Shares generally will be entitled, at the election of such U.S. Holder, to
receive either a deduction or a credit for such Canadian income tax paid.
Generally, a credit is more advantageous because it will reduce a U.S. Holder's
U.S. federal income tax liability on a dollar-for-dollar basis, whereas a
deduction will reduce a U.S. Holder's income subject to U.S. federal income tax.
This election is made on a year-by-year basis and applies to all foreign taxes
paid (whether directly or through withholding) by a U.S. Holder during a
year.

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

53

---

either "foreign source" or "U.S.
source." In addition, this limitation is calculated separately with respect to
specific categories of income known as "baskets", and there are limitations
under the basket rules also. Unused foreign tax credits generally can be carried
back one year and forward ten years. The foreign tax credit rules are complex,
and each U.S. Holder should consult its own tax advisors regarding the foreign
tax credit rules.

Information Reporting; Backup
Withholding Tax

Payments of dividends made on, and
proceeds arising from certain sales or other taxable dispositions of, Common
Shares generally will be subject to information reporting and backup withholding
tax, at the rate of 28%, if a U.S. Holder (a) fails to furnish such U.S.
Holder's correct U.S. taxpayer identification number (generally on Form W-9),
(b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified
by the IRS that such U.S. Holder has previously failed to properly report items
subject to backup withholding tax, or (d) fails to certify, under penalty of
perjury, that such U.S. Holder has furnished its correct U.S. taxpayer
identification number and that the IRS has not notified such U.S. Holder that it
is subject to backup withholding tax. However, U.S. Holders that are
corporations generally are excluded from these information reporting and backup
withholding tax rules. Any amounts withheld under the U.S. backup withholding
tax rules will be allowed as a credit against a U.S. Holder's U.S. federal
income tax liability, if any, or will be refunded, if such U.S. Holder furnishes
required information to the IRS. Each U.S. Holder should consult its own tax
advisors regarding the information reporting and backup withholding tax rules.

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 U.S. federal income tax consequences to U.S. Holders described above of the
acquisition, ownership, and disposition of Common Shares are modified by special
rules.

Controlled Foreign Corporation

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

If the Company is a CFC, a 10%
Shareholder generally will be subject to current U.S. federal income tax with
respect to (a) such 10% Shareholder's pro rata share of the "subpart F income"
(as defined in Section 952 of the Code) of the Company and (b) such 10%
Shareholder's pro rata share of the earnings of the Company invested in "United
States property" (as defined in Section 956 of the Code). In addition, under
Section 1248 of the Code, any gain recognized on the sale or other taxable
disposition of Common Shares by a U.S. Holder that was a 10% Shareholder at any
time during the five-year period ending with such sale or other taxable
disposition generally will be treated as a dividend to the extent of the
"earnings and profits" of the Company that are attributable to such Common
Shares.

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. "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.

54

---

For purposes of the PFIC income and
asset test described above, if the Company owns, directly or indirectly, 25% or
more of the total value of the outstanding shares of another foreign
corporation, the Company will be treated as if it (a) held a proportionate share
of the assets of such other foreign corporation and (b) received directly a
proportionate share of the income of such other foreign corporation. If the
Company is a PFIC, in addition to the rules discussed below, U.S. Holders
generally may be required to file certain information returns with the IRS. The
PFIC rules are extremely complex, and U.S. Holders should consult their own U.S.
tax advisors concerning the application of the PFIC rules.

The Company believes that it was a PFIC
for the taxable year ended March 31, 2009 and that it will be a PFIC for the
taxable year ending March 31, 2010. There can be no assurance, however, that the
IRS will agree with a 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 makes a mark-to-market election
under Section 1296 of the Code (a "Mark-to-Market Election"). A U.S. Holder that
does not make either a QEF Election or a Mark-to-Market Election will be
referred to in this summary as a "Non-Electing U.S. Holder."

A Non-Electing U.S. Holder will be
subject to the rules of Section 1291 of the Code with respect to (a) any gain on
the disposition of Common Shares and any excess distribution paid on the
Common Shares.

Under Section 1291 of the Code, any
gain recognized on the sale or other disposition of Common Shares, and any
excess distribution paid on the Common Shares, must be rateably allocated to
each day in a Non-Electing U.S. Holder's holding period for the Common Shares.
The amount of any such gain or excess distribution allocated to prior years of
such Non-Electing U.S. Holder's holding period for the Common Shares will be
subject to U.S. federal income tax at the highest tax applicable to ordinary
income in each such prior year. A Non-Electing U.S. Holder will be required to
pay interest on the resulting tax liability for each such prior year, calculated
as if such tax liability had been due in each such prior year. The amount of any
such gain or excess distribution allocated to the current year of such
Non-Electing U.S. Holder's holding period for the Common Shares will be treated
as ordinary income in the current year (but will not qualify for the
preferential dividend rate previously discussed), and no interest charge will be
incurred with respect to the resulting tax liability for the current year.

If the Company is a PFIC for any
taxable year during which a Non-Electing U.S. Holder holds Common Shares, the
Company will continue to be treated as a PFIC with respect to such Non-Electing
U.S. Holder, regardless of whether the Company ceases to be a PFIC in one or
more subsequent years. A Non-Electing U.S. Holder may terminate this deemed PFIC
status by electing to recognize gain (which will be taxed under the rules of
Section 1291 of the Code discussed above) as if such Common Shares were sold on
the last day of the last taxable year for which the Company was a PFIC.

QEF Election

A U.S. Holder that makes a QEF Election
generally will not be subject to the rules of Section 1291 of the Code discussed
above. However, a U.S. Holder that makes a QEF Election will be subject to U.S.
federal income tax annually on such U.S. Holder's pro rata share of (a) net
capital gain of the Company, which will be taxed as capital gain to such U.S.
Holder, and (b) the ordinary earnings of the Company, which will be taxed as
ordinary income to such U.S. Holder, regardless of whether such amounts are
actually distributed to such U.S. Holder by the Company. However, a U.S. Holder
that makes a QEF Election may, subject to certain limitations, elect to defer
payment of current U.S. federal income tax on such amounts, subject to an
interest charge. In addition, a U.S. Holder that makes a QEF Election generally
will recognize capital gain or loss on the sale or other taxable disposition of
Common Shares, as long as the U.S. Holder always had a QEF election in
effect.

55

---

Each U.S. Holder should consult its own
U.S. tax advisors regarding the advisability of, and procedure for making, a QEF
Election. U.S. Holders should be aware that there can be no assurance that the
Company will satisfy record keeping requirements so that a U.S. Holder may made
certain information returns to the IRS, or that the Company will supply U.S.
Holders with information that such U.S. Holders are required to report under the
QEF rules, in the event that the Company is a PFIC and a U.S. Holder wishes to
make a QEF Election.

Mark-to-Market Election

A U.S. Holder may make a Mark-to-Market
Election only if the Common Shares are marketable stock, which generally would
be the case here for a U.S. Holder. A U.S. Holder that makes a Mark-to-Market
Election generally will not be subject to the rules of Section 1291 of the Code
discussed above. However, if a U.S. Holder makes a Mark-to-Market Election after
the beginning of such U.S. Holder's holding period for the Common Shares and
such U.S. Holder has not made a timely QEF Election, the rules of Section 1291
of the Code discussed above will apply to dispositions of, and certain
distributions on, the Common Shares.

A U.S. Holder that makes a
Mark-to-Market Election will include as ordinary income, for each taxable year
in which the Company is a PFIC, an amount equal to the excess, if any, of (a)
the fair market value of the Common Shares as of the close of such taxable year
over (b) such U.S. Holder's tax basis in such Common Shares. A U.S. Holder that
makes a Mark-to-Market Election will be allowed a deduction in an amount equal
to the lesser of (a) the excess, if any, of (i) such U.S. Holder's adjusted tax
basis in the Common Shares over (ii) the fair market value of such Common Shares
as of the close of such taxable year or (b) the excess, if any, of (i) the
amount included in ordinary income because of such Mark-to-Market Election for
prior taxable years over (ii) the amount allowed as a deduction because of such
Mark-to-Market Election for prior taxable years.

A U.S. Holder that makes a
Mark-to-Market Election generally also will adjust such U.S. Holder's tax basis
in the Common Shares to reflect the amount included in gross income or allowed
as a deduction because of such Mark-to-Market Election. In addition, upon a sale
or other taxable disposition of Common Shares, a U.S. Holder that makes a
Mark-to-Market Election will recognize ordinary income or loss (not to exceed
the excess, if any, of (a) the amount included in ordinary income because of
such Mark-to-Market Election for prior taxable years over (b) the amount allowed
as a deduction because of such Mark-to-Market Election for prior taxable years).

Each U.S. Holder should consult its own
tax advisors regarding the advisability of, and procedure for making, a
Mark-to-Market Election.

Other PFIC Rules

Under Section 1291(f) of the Code, the
IRS has issued proposed Treasury Regulations that, subject to certain
exceptions, would cause a U.S. Holder that had not made a timely QEF Election to
recognize gain (but not loss) upon certain transfers of Common Shares that would
otherwise be tax-deferred (e.g., gifts and exchanges pursuant to corporate
reorganizations).

An individual U.S. Holder's estate may
not receive a step-up in basis in the Common Shares at the U.S. Holder's death,
if the Company is or was a PFIC during the U.S. Holder's period of ownership of
the Common Shares.

Certain additional adverse rules will
apply with respect to a U.S. Holder if the Company is a PFIC, regardless of
whether such U.S. Holder makes a QEF Election. For example under Section
1298(b)(6) of the Code, a U.S. Holder that uses Common Shares as security for a
loan will, except as may be provided in Treasury Regulations, be treated as
having made a taxable disposition of such Common Shares.

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.

56

---

F.Dividend and paying agents

Not Applicable

G.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 at 100 F Street, N.E., Washington, D.C. 20549. Readers may call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms. The
SEC maintains a Web site (http://www.sec.gov) that contains reports, submissions
and other information regarding registrants that file electronically with the
SEC. The Company has only recently become subject to the requirement to file
electronically through the EDGAR system most of its securities documents,
including registration statements under the Securities Act of 1933, as amended
and registration statements, reports and other documents under the Securities
Exchange Act of 1934, as amended (the Exchange Act).

Readers may read and copy any reports,
statements or other information that the Company files with the SEC at the
address indicated above and may also access them electronically at the Web site
set forth above. These SEC filings are also available to the public from
commercial document retrieval services.

The Company is required to file reports
and other information with the SEC under the Exchange Act. Reports and other
information filed by the Company with the SEC may be inspected and copied at the
SEC's public reference facilities described above. As a foreign private issuer,
the Company is exempt from the rules under the Exchange Act prescribing the
furnishing and content of proxy statements and the Company's officers, directors
and principal shareholders are exempt from the reporting and short-swing profit
recovery provisions contained in section 16 of the Exchange Act. Under the
Exchange Act, as a foreign private issuer, the Company is not required to
publish financial statements as frequently or as promptly as United States
companies.

Any of the documents referred to above
can also be viewed at the offices of the Company's attorneys, Hodgson Russ LLP,
150 King Street West, Suite 2309, Toronto, Ontario M5H 1J9. 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, 2009 as "Marketable Securities" at an amount of $5,958, which is
their quoted market value. 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 permitting and advanced exploration
stage, it presently has no activities related to derivative financial
instruments or derivative commodity instruments.

57

---

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)                                                                                
|                |                                                                                    
|                |                                                                                    
|                |                                                                                    
|                | (b)                                                                                
|                |                                                                                    
|                |                                                                                    
|                |                                                                                    
|                |                                                                                    

58

---

| |     | To evaluate the effectiveness of the Companys internal
      control over financial reporting, Management has used the Internal Control
       Integrated Framework, which is a suitable, recognized control framework
      established by the Committee of Sponsoring Organizations of the Treadway
      Commission (COSO). Management has assessed the effectiveness of the
      Companys internal control over financial reporting and concluded that
      such internal control over financial reporting is effective as of March
      31, 2009.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (c) | Attestation Report of the Companys Registered
      Accounting Firm.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The Registrants independent registered public accounting
      firm, KPMG LLP, has issued an attestation report expressing an opinion on
      the Companys internal control over financial reporting as of March 31,
      2009. For KPMG LLPs report, see Item 19 of this Annual Report on Form
      20-F.                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (d) | Changes in Internal Controls over Financial
      Reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | There have not been any changes in the Company's internal
      controls over financial reporting or in other factors that have been
      identified in connection with the evaluation described above that occurred
      during the period covered by this Annual Report that has materially
      affected, or is reasonably likely to materially affect, the Company's
      internal controls over financial reporting.                                                                                                                               

Item 16.

[Reserved]

Item 16A.

Audit
Committee Financial Expert.

The Company's Board of Directors has determined that there is
at least one audit committee financial expert, as defined under Item 16A of Form
20-F, serving on its audit committee, namely, David Whittle, whose
qualifications are set out in Item 6, above.Mr. Whittle is independent,
as such term is defined by the listing standards of the NYSE Amex. All other
members of the Audit Committee are also independent as defined by the listing
standards of the NYSE Amex.

Item 16B.

Code of
Ethics.

The Board of Directors, on February 2, 2003, adopted a Code of
Ethics (the "Code") entitled "Ethics and Conflict of Interest Policy" which
applies to each of the directors and officers of the Company and its affiliates.
A copy of the 2003 Code has been previously filed. On May 29, 2006 the Board of
Directors adopted an updated and expanded set of Corporate Governance Policies,
which replaced the 2003 Code.

The Corporate Governance Policy governs the actions of and is
applicable to all of the directors and officers of the Company and its
subsidiaries, and their affiliates. The 2006 Corporate Governance Policies
address the following:

- compliance with all the laws and regulations identified therein and with
  the requirements of the U.S. Securities and Exchange 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 Directives

59

---

The Company has also adopted an Insider Trading Policy which
applies to all employees of the Company.

There were no waivers to the 2006 Corporate Governance Policies
during fiscal 2009. A copy of the 2006 Corporate Governance Policies is filed as
Exhibit 11.1 to this Annual Report.

The Company will provide a copy of the 2006 Corporate
Governance Policies to any person, without charge. To obtain a copy without
charge, send a request, in writing, to the Company at Mountain Province Diamonds
Inc., Attention: Corporate Secretary, 401 Bay Street, Suite 2700, PO Box 152,
Toronto, Ontario, Canada M5H2Y4.

Item 16C.        
Principal Accountant Fees and Services.

A.Audit Fees

"Audit Fees" are the aggregate fees
billed by KPMG LLP 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
2009 by KPMG were $75,000, and the Company was billed $57,978 in the fiscal year
2008. All such fees were approved by the Audit Committee.

B.Audit-Related
Fees

"Audit-Related Fees" are fees that are
or would be charged by KPMG for 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.
"Audit Related Fees" charged by KPMG during the fiscal period ended March 31,
2009 were $nil and $nil for March 31, 2008. All such services were approved by
the Audit Committee.

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
2009 by KPMG were $18,695 (2008 - $nil) pertaining to tax compliance. These
services were approved by the Audit Committee.

D.All
Other Fees

There were no other fees charged by
KPMG during the fiscal years ended March 31, 2009 and 2008.

The Audit Committee pre-approves all
audit services to be provided to the Company by its independent auditors. The
Audit Committee's policy regarding the pre-approval of non-audit services to be
provided to the Company by its independent auditors is that all such services
shall be pre-approved by the Audit Committee. Non-audit services that are
prohibited to be provided to the Company by its independent auditors may not be
pre-approved. In addition, prior to the granting of any pre-approval, the Audit
Committee must be satisfied that the performance of the services in question
will not compromise the independence of the independent auditors. All non-audit
services, performed by the Company's auditor, for the fiscal year ended March
31, 2009, 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.

60

---

Item 16D.        
Exemptions from the Listing Standards for Audit Committees.

Not Applicable.

Item 16E.        
Purchases of Equity Securities by the Issuer and Affiliated Purchasers.

There were no purchases made by or on behalf of the Company or
any affiliated purchaser of shares or other units of the Company's equity
securities.

Item 16F.        
Change in Registrants Certifying Accountant.

Not Applicable.

Item 16G.        
Corporate Governance.

NYSE Amex Corporate Governance Matters

The Corporations common shares are listed on NYSE Amex.
Section 110 of the NYSE Amex Company Guide permits the NYSE Amex to consider the
laws, customs and practices of the foreign issuers country of domicile in
relaxing certain NYSE Amex listing criteria. A description of the significant
ways in which the Corporations governance practices differ from those followed
by domestic companies pursuant to NYSE Amex standards is as follows:

•Shareholder
  Meeting Quorum Requirement: The NYSE Amex minimum quorum requirement for
  a shareholder meeting is one-third of the outstanding common shares. In addition,
  a Corporation listed on NYSE Amex is required to state its quorum requirement
  in its bylaws. The Corporations quorum requirement (set forth in its Articles)
  is two persons who are, or who represent by proxy, shareholders who, in the
  aggregate, hold at least 5% of the issued shares entitled to be voted at the
  meeting.
  •Proxy Delivery Requirement: NYSE Amex
  requires the solicitation of proxies and delivery of proxy statements for all
  shareholder meetings, and requires that these proxies shall be solicited pursuant
  to a proxy statement that conforms to SEC proxy rules. The Corporation is a
  foreign private issuer as defined in Rule 3b-4 under the Exchange
  Act and Rule 405 under the Securities Act and the equity securities of the Corporation
  are accordingly exempt from the proxy rules set forth in Sections 14(a), 14(b),
  14(c) and 14(f) of the Exchange Act. The Corporation solicits proxies in accordance
  with applicable rules and regulations in Canada. 
  •    Shareholder Approval Requirement:The
  Corporation will follow the Canadian securities regulatory authorities and Toronto
  Stock Exchange rules for shareholder approval of new issuances of its common
  shares. Following securities and exchange rules, shareholder approval is required
  for certain issuances of shares that: (i) materially affect control of the Corporation;
  or (ii) provide consideration to insiders in aggregate of 10% or greater of
  the market capitalization of the listed issuer and have not been negotiated
  at arms length. Shareholder approval is also required, pursuant to Toronto
  Stock Exchange rules, in the case of most private placements: (x) for an aggregate
  number of listed securities issuable greater than 25% of the number of securities
  of the listed issuer which are outstanding, on a non-diluted basis, prior to
  the date of closing of the transaction if the price per security is less than
  the market price; or (y) that during any six month period are to insiders for
  listed securities or options, rights or other entitlements to listed securities
  greater than 10% of the number of securities of the listed issuer which are
  outstanding, on a non-diluted basis, prior to the date of the closing of the
  first private placement to an insider during the six month period.

PART III

Item
17.           Financial
Statements.

The Company's consolidated financial statements are stated in
Canadian dollars (CDN$) and are prepared in accordance with Canadian Generally
Accepted Accounting Principles (GAAP). Material measurement differences between
GAAP in Canada and GAAP in the United States applicable to the Company, are
described in Note 11 to the Consolidated Financial Statements.

61

---

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 2009, Fiscal 2008
and Fiscal 2007, please see Item 19 below.

Item
18.           Financial
Statements.

Not Applicable.

Item
19.           Exhibits

Financial Statements

The Consolidated Financial Statements
of the Company and exhibits listed below are filed with this annual report on
Form 20-F in the United States. This report is also filed in Canada as an Annual
Information Form and the Canadian filing 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,
2009 and 2008 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
      on Internal Control over Financial Reporting.                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                          
| | • | Report of Independent Registered Public Accounting Firm,
      and Comments by Auditors for US Readers on Canada-US Reporting
      Differences.         
| |   |                                                                                                                                                          
| | • | Consolidated Balance Sheets as of March 31, 2009 and
      2008.                                                                                         
| |   |                                                                                                                                                          
| | • | Consolidated Statements of Operations and Deficit for the
      years ended March 31, 2009, 2008 and 2007.                                               
| |   |                                                                                                                                                          
| | • | Consolidated Statements of Comprehensive Income and
      Accumulated Other Comprehensive Income for the years ended March 31, 2009,
      2008 and 2007.
| |   |                                                                                                                                                          
| | • | Consolidated Statements of Cash Flows for the years ended
      March 31, 2009, 2008 and 2007.                                                           
| |   |                                                                                                                                                          
| | • | Notes to the Consolidated Financial Statements.                                                                                                          

62

---

SIGNATURES

The registrant hereby certifies that it meets all of the
requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.

|                                                                             | **Mountain Province Diamonds
      Inc.**
|---------------------------------------------------------------------------- | -----------------------------------------
|                                                                             | (Company)                                
|                                                                             |                                          
|                                                                             |                                          
|                                                                             |                                          
|                                                                             |                                          
|                                                                             | By:Patrick C. Evans                    
|                                                                             | (Signature)*                             
|                                                                             |                                          
|Date: July 24, 2009                                                          | Patrick C. Evans                         
|                                                                             | **President, CEO and Director**          
|                                                                             |                                          
|*Print the name and title of the signing officer under this
      signature. |                                          

63

---

EXHIBIT INDEX

The following exhibits are attached to and form
        part of this Annual Report: Exhibit
      Remarks.1.1
      By-Laws of the Company
      (3)1.2
      Arrangement Agreement between the Company and Glenmore
          Highlands Inc. dated May 10, 2000.
      (5)1.3
      Joint Information Circular of the Company and Glenmore
          Highlands Inc.
      (4)4.1
      Transfer agreement between
          MPV, Monopros and Camphor dated November 24, 1999 pursuant to which
          MPV and Camphor transferred the GOR to Monopros.
      (3)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.
      (3)4.3
      Letter Agreement dated December
          17, 1999 between MPV, Monopros, Camphor and Glenmore amending the Monopros
          Joint Venture Agreement.
      (3)4.4
      Form of Subscription Agreement for the private placement
          described in item 1 of "Material Contracts".
      (3)4.5
      Agreement dated as of January
          1, 2002 between the Company, Camphor Ventures Inc. and De Beers Canada
          Exploration Inc.
      (1)4.6
      Second Amendment Agreement dated January 1, 2002 between
          the Company and Paul Shatzko.
      (3)4.7
      Second Amendment Agreement dated January 1, 2002 between
          the Company and Jan Vandersande.
      (3)4.8
      Third Amendment Agreement dated December 13, 2002 between
          the Company and Jan Vandersande
      (3)4.9
      Letter agreement dated December 13, 2002 between the Company
          and Elizabeth Kirkwood
      (3)4.10
      Consulting Agreement dated January 1, 2004 between the
          Company and Jan W. Vandersande
      (3)4.11
      Consulting Agreement dated November 1, 2005 between the
          Company and Patrick Evans
      (3)4.12
      Revised Consulting Agreement dated January 31, 2006 between
          the Company and Patrick Evans
      (3)4.13
      Consulting Agreement dated May 11, 2006 between the Company
          and Jennifer Dawson
      (3)8.1
      List of Subsidiaries
      (2)11.1
      Corporate Governance Policies dated May 29, 2006.
      (3)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 Persons Technical Report dated April 20, 2009 entitled
          Gahcho Kué Kimberlite Project NI 43-101 Technical Report prepared
          by Ken Brisebois, P.Eng., Dr. Ted Eggleston, P.Geo., and Alexandra Kozak,
          P.Eng., all of AMEC Americas Limited.
      (6)14.2
      Consents for inclusion of the
          Technical Report in Exhibit 14.1 and reference in Form 20-F
      (6)15
      Revised Charter of the Board
          of Directors and Committees thereof of Mountain Province Diamonds Inc.
      (3)


(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. 11.1 was included in the Companys Form 20-F
filing of June 30, 2006.

(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.

(6)

Previously filed
and incorporated by reference. Included in the Companys Form 20-F filing of
June 26, 2009.

64

---

Appendix

Item 17. Financial Statements









65

---





|Consolidated Financial Statements        
|-----------------------------------------
|(Expressed in Canadian dollars)          
|                                         
|Mountain Province Diamonds Inc.          
|                                         
|Years ended March 31, 2009, 2008 and 2007







---





KPMG LLP
    Telephone
    (416) 777-8500Chartered Accountants
    Fax
    (416) 777-8818Suite 3300 Commerce Court West
    Internet
    www.kpmg.caPO Box 31 Stn Commerce CourtToronto ON M5L 1B2Canada




REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

To the Board of Directors of Mountain Province Diamonds Inc.

We have audited Mountain Province Diamonds Inc.s ("the
Company") internal control over financial reporting as of March 31, 2009, based
on the criteria established in Internal ControlIntegrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The
Company's management is responsible for maintaining effective internal control
over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting included in the accompanying Managements
Report on Internal Control over Financial Reporting within Form 20-F. Our
responsibility is to express an opinion on the Company's internal control over
financial reporting based on our audit.

We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in
all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audit also included performing
such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. A
company's internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets that could have a
material effect on the financial statements.

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

In our opinion, the Companymaintained, in all material
respects, effective internal control over financial reporting as of March 31,
2009, based on the criteria established in Internal ControlIntegrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).

---

We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the consolidated
balance sheets of the Company as of March 31, 2009 and 2008, and the related
consolidated statements of operations and deficit, comprehensive income,
accumulated other comprehensive income and cash flows for each of the years in
the three-year period ended March 31, 2009, and our report dated June 25, 2009,
except as to Notes 6 and 10 which are as of July 14, 2009, expressed an
unqualified opinion on thoseconsolidatedfinancial statements.



Chartered Accountants, Licensed Public Accountants

Toronto, Canada June 25, 2009





KPMG LLP, is a Canadian
      limited liability partnership and a member firm of the KPMGnetwork of independent member
      firms affiliated with KPMG International, a Swiss cooperative.KPMG Canada provides services
      to KPMG LLP.




---



REPORT OF MANAGEMENT

The accompanying consolidated financial statements are the
responsibility of management. These statements have been prepared in accordance
with generally accepted accounting principles in Canada, and reflect
managements best estimates and judgments based on currently available
information.

Management has developed and maintains systems of internal
accounting controls in order to ensure, on a reasonable and cost effective
basis, the reliability of its financial information and the safeguarding of
assets.

The Board of Directors is responsible for ensuring that
management fulfils its responsibilities through the Audit Committee of three
independent directors which meets with management and the auditors during the
year, to review reporting and control issues and to satisfy itself that each
party has properly discharged its responsibilities. The Committee reviews the
financial statements before they are presented to the Board of Directors for
approval and considers the independence of the auditors.

The consolidated financial statements have been audited by KPMG
LLP, an independent firm of chartered accountants appointed by the shareholders
at the Companys last annual meeting. Their report outlines the scope of their
examination and opinion on the consolidated financial statements.

Patrick EvansPatrick C. EvansPresident and Chief Executive Officer

Jennifer DawsonJennifer M. DawsonChief Financial Officer and Corporate Secretary

July 24, 2009

---



KPMG LLP
    Telephone
    (416) 777-8500Chartered Accountants
    Fax
    (416) 777-8818Suite 3300 Commerce Court West
    Internet
    www.kpmg.caPO Box 31 Stn Commerce CourtToronto ON M5L 1B2Canada


REPORT OF INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRM

To the Board of Directors of Mountain Province Diamonds Inc.

We have audited the accompanying consolidated balance sheets of
Mountain Province Diamonds Inc. ("the Company") as of March 31, 2009 and 2008
and the related consolidated statements of operations and deficit, comprehensive
income, accumulated other comprehensive income and cash flows for each of the
years in the three-year period ended March 31, 2009. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of the
Company as of March 31, 2009 and 2008 and the results of its operations and its
cash flows for each of the years in the three-year period ended March 31, 2009
in conformity with Canadian generally accepted accounting principles.

Canadian generally accepted accounting principles vary in
certain significant respects from US generally accepted accounting principles.
Information relating to the nature and effect of such differences is presented
in Note 11 to theconsolidated financial statements.

We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the Company's
internal control over financial reporting as of March 31, 2009, based on the
criteria established in Internal ControlIntegrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our
report dated June 25, 2009expressed an unqualified opinion on the
effectiveness of the Companys internal control over financial reporting.



Chartered Accountants, Licensed Public Accountants

Toronto, Canada

June 25, 2009, except as to Notes 6 and 10 which are as of July
14, 2009

KPMG LLP, is a Canadian limited liability
      partnership and a member firm of the KPMGnetwork of independent member firms affiliated
      with KPMG International, a Swiss cooperative.KPMG Canada provides services to KPMG LLP.




---

COMMENTS BY AUDITORS FOR US READERS ON CANADA 
USREPORTING DIFFERENCES

In the United States, reporting standards for auditors require
the addition of an explanatory paragraph (following the opinion paragraph) when
the financial statements are affected by conditions and events that cast
substantial doubt on the company's ability to continue as a going concern, such
as those described in Note 1 to the consolidated financial statements. Our
report to the Board of Directors dated June 25, 2009, except as to Notes 6 and
10 which are as of July 14, 2009,is expressed in accordance with
Canadian reporting standards, which do not permit a reference to such events and
conditions in the auditors' report when these are adequately disclosed in the
financial statements.



Chartered Accountants, Licensed Public Accountants

Toronto, Canada

June 25, 2009

KPMG LLP, is a Canadian limited liability
      partnership and a member firm of the KPMGnetwork of independent member firms affiliated
      with KPMG International, a Swiss cooperative.KPMG Canada provides services to KPMG LLP.




---

|MOUNTAIN PROVINCE DIAMONDS INC.
|-------------------------------
|Consolidated Balance Sheets    
|(Expressed in Canadian dollars)
|March 31, 2009 and 2008        
|                               



|                                                 |   | 2009        |   |   | 2008        |  
|------------------------------------------------ | - | ----------- | - | - | ----------- | -
|                                                 |   |             |   |   |             |  
|Assets                                           |   |             |   |   |             |  
|Current assets                                   |   |             |   |   |             |  
|Cash                                             | $ | 65,410      |   | $ | 144,750     |  
|Short-term investment (Note 4)                   |   | 231,936     |   |   | 1,437,377   |  
|Marketable
      securities (Note 3)             |   | 5,958       |   |   | 37,569      |  
|Amounts receivable                               |   | 37,419      |   |   | 103,399     |  
|Advances and prepaid expenses                    |   | 57,249      |   |   | 56,932      |  
|                                                 |   | 397,972     |   |   | 1,780,027   |  
|Interest in Gahcho Kué Project (Note 6)          |   | 65,161,533  |   |   | 64,984,140  |  
|Total assets                                     | $ | 65,559,505  |   | $ | 66,764,167  |  
|Liabilities and Shareholders' Equity             |   |             |   |   |             |  
|Current liabilities                              |   |             |   |   |             |  
|Accounts payable and accrued
      liabilities   | $ | 191,711     |   |   | 213,078     |  
|Long-term liabilities                            |   |             |   |   |             |  
|Future income tax liabilities
      (Note 8)     |   | 5,686,567   |   |   | 5,909,363   |  
|Shareholders' equity:                            |   |             |   |   |             |  
|Share capital
      (Note 7)                     |   | 85,870,841  |   |   | 85,581,729  |  
|Contributed surplus (Note 7)                     |   | 1,264,800   |   |   | 945,210     |  
|Deficit                                          |   | (27,455,740 | ) |   | (25,918,150 | )
|Accumulated other comprehensive (loss) income    |   | 1,326       |   |   | 32,937      |  
|Total
      shareholders' equity                 |   | 59,681,227  |   |   | 60,641,726  |  
|Total liabilities and
      shareholders' equity | $ | 65,559,505  |   | $ | 66,764,167  |  

See accompanying notes to consolidated financial statements
Nature of operations (Note 1) Going concern (Note 1) Subsequent
events (Notes 6 and 10)

|On behalf of the Board of Directors: |                        
|------------------------------------ | -----------------------
|                                     |                        
|Jonathan
      Comerford           | Patrick
      Evans  
|Jonathan Comerford, Director         | Patrick Evans, Director



---

|MOUNTAIN PROVINCE DIAMONDS INC.                  
|-------------------------------------------------
|Consolidated Statements of Operations and Deficit
|(Expressed in Canadian dollars)                  
|Years ended March 31, 2009, 2008, and 2007       
|                                                 



|                                                       |   | 2009        |   |   | 2008        |   |   | 2007        |  
|------------------------------------------------------ | - | ----------- | - | - | ----------- | - | - | ----------- | -
|                                                       |   |             |   |   |             |   |   |             |  
|                                                       |   |             |   |   |             |   |   |             |  
|Expenses:                                              |   |             |   |   |             |   |   |             |  
|Amortization                                           | $ | -           |   | $ | (14,239     | ) | $ | (1,675      | )
|Consulting fees                                        |   | (639,987    | ) |   | (474,704    | ) |   | (476,754    | )
|Interest and bank charges                              |   | (2,355      | ) |   | (4,605      | ) |   | (1,200      | )
|Office and
      administration                        |   | (71,887     | ) |   | (115,079    | ) |   | (80,998     | )
|Professional fees                                      |   | (185,011    | ) |   | (202,245    | ) |   | (198,628    | )
|Promotion and
      investor relations                 |   | (82,816     | ) |   | (86,380     | ) |   | (124,467    | )
|Salary and benefits                                    |   | (46,371     | ) |   | (129,291    | ) |   | (56,101     | )
|Stock-based
      compensation (Note 7)                |   | (574,200    | ) |   | -           |   |   | (186,321    | )
|Transfer agent and regulatory
      fees               |   | (115,856    | ) |   | (106,343    | ) |   | (190,121    | )
|Travel                                                 |   | (78,685     | ) |   | (61,324     | ) |   | (45,672     | )
|Net loss for the period
      before the undernoted    |   | (1,797,168  | ) |   | (1,194,210  | ) |   | (1,361,937  | )
|Other earnings (expenses):                             |   |             |   |   |             |   |   |             |  
|Interest income                                        |   | 36,782      |   |   | 62,155      |   |   | 23,940      |  
|Write-down of
      long-term investment               |   | -           |   |   | -           |   |   | (480,000    | )
|Gain on sale of long-term
      investment             |   | -           |   |   | 1,075,420   |   |   | -           |  
|Share of loss of Camphor
      Ventures                |   | -           |   |   | -           |   |   | (143,266    | )
|                                                       |   | 36,782      |   |   | 1,137,575   |   |   | (599,326    | )
|Net loss for the year before tax recovery              |   | (1,760,386  | ) |   | (56,635     | ) |   | (1,961,263  | )
|Future income tax
      recovery (Note 8)              |   | 222,796     |   |   | 222,166     |   |   | -           |  
|Net (loss) income for the year                         |   | (1,537,590  | ) |   | 165,531     |   |   | (1,961,263  | )
|Deficit, beginning of
      year                       |   | (25,918,150 | ) |   | (26,083,681 | ) |   | (24,122,418 | )
|Deficit,
      end of year                             | $ | (27,455,740 | ) | $ | (25,918,150 | ) | $ | (26,083,681 | )
|Basic and diluted (loss) earnings per share            | $ | (0.03       | ) | $ | 0.00        |   | $ | (0.04       | )
|Weighted average number of shares   
      outstanding |   | 59,929,348  |   |   | 59,674,830  |   |   | 55,092,966  |  

See accompanying notes to consolidated financial statements

---

|MOUNTAIN PROVINCE DIAMONDS INC.               
|----------------------------------------------
|Consolidated Statement of Comprehensive Income
|(Expressed in Canadian dollars)               
|                                              



|                                                                                         |   | 2009       |   |   | 2008       |   |   | 2007       |  
|---------------------------------------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
|                                                                                         |   |            |   |   |            |   |   |            |  
|                                                                                         |   |            |   |   |            |   |   |            |  
|Net (loss) income for the year                                                           | $ | (1,537,590 | ) | $ | 165,531    |   | $ | (1,961,263 | )
|Other comprehensive (loss) income                                                        |   |            |   |   |            |   |   |            |  
|Unrealized loss
      on marketable securities                                           |   | (31,611    | ) |   | (14,239    | ) |   | -          |  
|Increase in value of long-term
      investment                                          |   | -          |   |   | 795,420    |   |   | -          |  
|Recycling
      of gain on sale of long-term investment                                  |   | -          |   |   | (1,075,420 | ) |   | -          |  
|Recycling on opening
      unrealized gain on
                long-term
      investment |   | -          |   |   | 280,000    |   |   | -          |  
|Comprehensive (Loss) Income                                                              | $ | (1,569,201 | ) | $ | 151,292    |   | $ | (1,961,263 | )



|Consolidated Statement of Accumulated Other
      Comprehensive Income                       
|---------------------------------------------------------------------------------------------
|(Expressed in Canadian Dollars)                                                              
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Balance, beginning of year                                                                   
|Adjustment at beginning of period due to change in                                           
|accounting for available-for-sale assets                                                     
|-    
      marketable securities                                                            
|-    
      long-term investment                                                             
|-    
      Change in fair value of available-for-sale assets                                
|-      marketable securities                                                                 
|-      long-term investment                                                                  
|Recycling of gain on sale of long-term investment through
         other comprehensive income
|Balance, end of year                                                                         

See accompanying notes to consolidated financial
statements

---

|MOUNTAIN PROVINCE DIAMONDS INC.           
|------------------------------------------
|Consolidated Statements of Cash Flows     
|(Expressed in Canadian dollars)           
|Years ended March 31, 2009, 2008, and 2007
|                                          



|                                                                              |   | 2009       |   |   | 2008       |   |   | 2007       |  
|----------------------------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
|                                                                              |   |            |   |   |            |   |   |            |  
|Cash provided by (used in):                                                   |   |            |   |   |            |   |   |            |  
|Operating activities:                                                         |   |            |   |   |            |   |   |            |  
|Net income
      (loss) for the year                                          | $ | (1,537,590 | ) | $ | 165,531    |   | $ | (1,961,263 | )
|Items not involving cash:                                                     |   |            |   |   |            |   |   |            |  
|Future income tax recovery                                                    |   | (222,796   | ) |   | (222,166   | ) |   | -          |  
|Amortization                                                                  |   | -          |   |   | 14,239     |   |   | 1,675      |  
|Stock-based compensation (Note 7)                                             |   | 574,200    |   |   | -          |   |   | 186,321    |  
|Write-down
      of long-term investment                                      |   | -          |   |   | -          |   |   | 480,000    |  
|Gain on sale of long-term investment                                          |   | -          |   |   | (1,075,420 | ) |   | -          |  
|Share of
      loss of Camphor Ventures                                       |   | -          |   |   | -          |   |   | 143,266    |  
|Changes in non-cash operating working capital                                 |   |            |   |   |            |   |   |            |  
|Amounts
      receivable                                                      |   | 65,980     |   |   | 139,668    |   |   | (60,850    | )
|Advances and prepaid expenses                                                 |   | (317       | ) |   | (45,672    | ) |   | (5,208     | )
|Accounts payable and accrued liabilities                                      |   | (21,367    | ) |   | (205,721   | ) |   | 237,533    |  
|                                                                              |   | (1,141,890 | ) |   | (1,229,541 | ) |   | (978,526   | )
|Investing activities:                                                         |   |            |   |   |            |   |   |            |  
|Deferred
      exploration costs                                              |   | (177,393   | ) |   | (13,496    | ) |   | (88,722    | )
|Divestment/(investment)
      in short-term investment                        |   | 1,205,441  |   |   | (912,377   | ) |   | (275,000   | )
|Purchase
      of equipment                                                   |   | -          |   |   | -          |   |   | (5,929     | )
|Proceeds from sale of
      investment                                        |   | -          |   |   | 1,995,420  |   |   | -          |  
|Acquisition of Camphor Ventures,
                  net
      of cash acquired |   | -          |   |   | (16,274    | ) |   | (205,755   | )
|                                                                              |   | 1,028,048  |   |   | 1,053,273  |   |   | (575,406   | )
|Financing activities:                                                         |   |            |   |   |            |   |   |            |  
|Shares issued for cash                                                        |   | 34,502     |   |   | 141,048    |   |   | 888,450    |  
|Increase (decrease) in cash and cash equivalents                              |   | (79,340    | ) |   | (35,220    | ) |   | (665,482   | )
|Cash, beginning of
      year                                                 |   | 144,750    |   |   | 179,970    |   |   | 845,452    |  
|Cash, end
      of year                                                       | $ | 65,410     |   | $ | 144,750    |   | $ | 179,970    |  

See accompanying notes to consolidated financial statements

---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|1. | Nature of operations and Going Concern:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company is in the process of developing and
      permitting its mineral properties primarily in conjunction with De Beers
      Canada Inc. (De Beers Canada) (Note 6), and has not yet determined
      whether these properties contain mineral reserves that are economically
      recoverable. The underlying value and recoverability of the amounts shown
      as Interest In Gahcho Kué Projectis dependent upon the ability
      of the Company and/or its mineral property partner to discover
      economically recoverable reserves, successful permitting and development,
      and upon future profitable production or proceeds from disposition of the
      Companys mineral properties. Failure to discover economically recoverable
      reserves will require the Company to write-off costs capitalized to
      date.                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | These consolidated financial statements have been
      prepared on a going concern basis in accordance with Canadian Generally
      Accepted Accounting Principles (GAAP). The Companys ability to continue
      as a going concern and to realize the carrying value of its assets and
      discharge its liabilities is dependent on the discovery of economically
      recoverable mineral reserves, the ability of the Company to obtain
      necessary financing to fund its operations, and the future production or
      proceeds from developed properties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company has incurred losses in the year ended March
      31, 2009 amounting to $1,537,590, incurred negative cash flows from
      operations of $1,141,890, and will require additional sources of financing
      to complete its future business plans. At March 31, 2009, the Company had
      approximately $300,000 of cash on hand and short-term investment.
      Subsequent to March 31, 2009, certain directors and officers exercised
      165,365 outstanding options for total proceeds of $208,360 in order to
      provide additional liquidity to the Company for near term requirements.
      The Company is currently investigating various sources of additional
      liquidity to increase the cash balances required for ongoing operations
      over the foreseeable future. These additional sources include, but are not
      limited to, share offerings, private placements, credit facilities, and
      debt, as well as further possible exercises of outstanding options by
      directors and officers. However, there is no certainty that the Company
      will be able to obtain financing from any of those sources. As a result,
      there is substantial doubt as to the Companys ability to continue as a
      going concern. (See Note 10).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | These financial statements do not reflect adjustments
      that would be necessary if the going concern assumption were not
      appropriate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|2. | Significant Accounting Policies and Future Accounting
      Policy Changes:                                                                                                                                                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | These consolidated financial statements have been
      prepared in accordance with Canadian generally accepted accounting
      principles. A reconciliation of material measurement differences between
      Canadian generally accepted accounting principles and United States
      generally accepted accounting principles and practices prescribed by the
      Securities and Exchange Commission, is included in Note 11.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     



---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|2. | Significant accounting policies
  (continued):
|-- | ----------------------------------------------
|   |                                               
|   | (d)                                           
|   |                                               
|   |                                               
|   |                                               
|   |                                               
|   |                                               
|   |                                               
|   |                                               
|   | (e)                                           
|   |                                               
|   |                                               
|   |                                               
|   | (f)                                           
|   |                                               
|   |                                               
|   |                                               
|   |                                               
|   |                                               
|   | (g)                                           
|   |                                               
|   |                                               



---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



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



---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|2. | Significant accounting policies
  (continued):                                                                                                                                                           
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                          
|   | Newly Adopted Accounting Standards                                                                                                                                                                       
|   |                                                                                                                                                                                                          
|   | Effective April 1, 2008 and during the year ended March
      31, 2009, the Company adopted the following new accounting standards under
      Canadian GAAP for interim and annual financial statements:
|   |                                                                                                                                                                                                          
|   | (m)                                                                                                                                                                                                      
|   |                                                                                                                                                                                                          
|   |                                                                                                                                                                                                          
|   |                                                                                                                                                                                                          
|   |                                                                                                                                                                                                          
|   |                                                                                                                                                                                                          
|   |                                                                                                                                                                                                          
|   |                                                                                                                                                                                                          
|   |                                                                                                                                                                                                          
|   |                                                                                                                                                                                                          
|   |                                                                                                                                                                                                          
|   |                                                                                                                                                                                                          
|   |                                                                                                                                                                                                          
|   |                                                                                                                                                                                                          
|   | (n)                                                                                                                                                                                                      
|   |                                                                                                                                                                                                          
|   |                                                                                                                                                                                                          
|   |                                                                                                                                                                                                          
|   | (o)                                                                                                                                                                                                      
|   |                                                                                                                                                                                                          
|   |                                                                                                                                                                                                          
|   |                                                                                                                                                                                                          
|   | (p)                                                                                                                                                                                                      
|   |                                                                                                                                                                                                          
|   |                                                                                                                                                                                                          



---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|2. | Significant accounting policies
  (continued):    
|-- | --------------------------------------------------
|   |                                                   
|   | Newly Adopted Accounting Standards
    (continued)
|   |                                                   
|   | (q)                                               
|   |                                                   
|   |                                                   
|   |                                                   
|   | Future Accounting Policy Changes:                 
|   |                                                   
|   | (r)                                               
|   |                                                   
|   |                                                   
|   |                                                   
|   | (s)                                               
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   



---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|2. | Significant accounting policies
  (continued):                                                                                                                                                                                                
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                               
|   | Future Accounting Policy Changes:                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                               
|   | (t)                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                               
|3. | Marketable Securities:                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                               
|   | The quoted market value of remaining marketable
      securities at March 31, 2009 was $5,958 (March 31, 2008 - $37,569). The
      original cost of these marketable securities at March 31, 2009 was $4,632
      (March 31, 2008 - $4,632).
|   |                                                                                                                                                                                                                                               
|   | The Company has assessed the risk associated with its
      available-for-sale securities to include market risk, since the market
      value of the available-for-sale securities is subject to
    fluctuations.                           
|   |                                                                                                                                                                                                                                               
|4. | Financial Instruments:                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                               
|   | Financial Assets and Liabilities                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                               
|   | Information regarding the Companys financial assets and
      liabilities is summarized as follows:                                                                                                                                          



| |                                                       |   |                |  |   |                | 
| | ----------------------------------------------------- | - | -------------- |  | - | -------------- | 
| |                                                       |   | March 31, 2009 |  |   | March 31, 2008 | 
| |                                                       |   |                |  |   | Carrying       | 
| |                                                       |   | Fair Value     |  |   | **Value**      | 
| |                                                       |   |                |  |   |                | 
| | Held-for-trading                                     |   |                |  |   |                | 
| | Cash                                                  | $ | 65,410         |  | $ | 65,410         | 
| | Short-term investment                                 |   | 231,936        |  |   | 231,936        | 
| |                                                       | $ | 297,346        |  | $ | 297,346        | 
| | Available-for-sale                                    |   |                |  |   |                | 
| | Marketable securities                                 | $ | 5,958          |  | $ | 5,958          | 
| | Loans and receivables                                 |   |                |  |   |                | 
| | Amounts receivable                                    | $ | 37,419         |  | $ | 37,419         | 
| | Other liabilities                                     |   |                |  |   |                | 
| | Accounts payable and accrued       
      liabilities | $ | 191,711        |  | $ | 191,711        | 

The short-term investment at March 31,
2009 is a cashable guaranteed investment certificate (GIC) held with a major
Canadian financial institution with a maturity of October 6, 2009. The GIC held
at March 31, 2009 is carried at fair market value. Given the GICs low risk and
the ability to cash it at any time, the fair market value recorded is estimated
to be reasonably approximated by the amount of cost plus accrued interest. There
is no restriction on the use of the short-term investment. The balance of
interest income recognized in the Companys financial statements represents
interest income from all other sources.

The fair values of the amounts
receivable and accounts payable and accrued liabilities are considered to be the
same as their carrying values.

---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|4. | Financial Instruments (continued):                                                                                                                                                                                                                                                                   
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                      
|   | Financial Instrument Risk
Exposure                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                      
|   | Credit Risk                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                      
|   | Credit risk is the risk of financial loss to the Company
      if a customer or counterparty to a financial instrument fails to meet its
      obligations. The Companys maximum exposure to credit risk at the balance
      sheet date under its financial instruments is summarized as
  follows:



| |                                                      |   | March 31, 2009 | 
| | ---------------------------------------------------- | - | -------------- | 
| | Amounts receivable                                  |   |                | 
| | Currently due                                        | $ | 5,364          | 
| | Past due by 90 days or less,
      not impaired      |   | -              | 
| | Past
      due by greater than 90 days, not impaired |   | 32,055         | 
| |                                                      | $ | 37,419         | 
| | Cash                                                 |   | 65,410         | 
| | Short-term investments                               |   | 231,936        | 
| |                                                      | $ | 297,346        | 

All of the Companys cash and
short-term investment are held with a major Canadian financial institution and
thus the exposure to credit risk is considered insignificant. The short-term
investment is cashable in whole or in part with interest at any time to
maturity. Management actively monitors the Companys exposure to credit risk
under its financial instruments, including with respect to receivables. The
Company considers the risk of loss to be remote and significantly mitigated due
to the financial strength of the party from whom the receivables are due - the
Canadian government for goods and services tax refunds receivable in the amount
of $37,419.

The Companys current policy is to
invest excess cash in Canadian bank guaranteed notes. It periodically monitors
the investments it makes and is satisfied with the credit ratings of its bank.

Liquidity Risk

Liquidity risk is the risk that the
Company will not be able to meet its obligations associated with financial
liabilities. The Company has a planning and budgeting process in place by which
it anticipates and determines the funds required to support its normal operating
requirements. The Company is not currently required to fund the exploration and
development work of the Gahcho Kué Project (see Note 6). The Company coordinates
this planning and budgeting process with its financing activities through the
capital management process described in Note 9. The Companys financial
liabilities are comprised of its accounts payable and accrued liabilities, all
of which are due within the next 12 month period. Other than minimal office
space rental commitments, there are no other capital or operating lease
commitments.

As identified in Note 1, the Companys
ability to continue as a going concern and to realize the carrying value of its
assets and discharge its liabilities is dependent on the discovery of
economically recoverable mineral reserves, the ability of the Company to obtain
necessary financing to fund its operations, and the future production or
proceeds from developed properties.

The Company has incurred losses and
negative cash flows from operations of $1,537,590 and $1,141,890 respectively in
the year ended March 31, 2009. With approximately $300,000 of cash and
short-term investment at March 31, 2009, the Company has sufficient capital to
finance its operations until approximately June 30, 2009, after which it will be
required to obtain additional sources of financing to complete its future
business plans (see Note 1).

---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|4. | Financial Instruments (continued):                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Financial Instrument Risk
Exposure                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Market Risk                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Companys marketable securities are classified as
      available-for-sale, and are subject to changes in the market. They are
      recorded at fair value in the Companys financial statements, based on the
      closing market value at the end of the period for each security included.
      The original cost of the marketable securities is $4,632. The Companys
      exposure to market risk is not considered to be material.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Foreign Currency Risk                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company is exposed to foreign currency risk at the
      balance sheet date through the following financial assets and liabilities,
      which are denominated in US dollars:                                                                                                                                                                                                                                                               



| |                                          |   | March 31, 2009 |  
| | ---------------------------------------- | - | -------------- | -
| | Cash                                     | $ | 7,507          |  
| | Amounts receivable                       |   | -              |  
| | Accounts payable and accrued liabilities |   | (40,962        | )
| | Net exposure                             | $ | (33,455        | )

Based on the above net exposure at
March 31, 2009, a 10% depreciation or appreciation of the US dollar against the
Canadian dollar would result in an approximately $3,350 increase or decrease
respectively in both net and comprehensive loss. The Company currently has only
limited exposure to fluctuations in exchange rates between the Canadian and US
dollar as significantly all of its operations are located in Canada.
Accordingly, the Company has not employed any currency hedging programs during
the current period.

Interest Rate Risk

The Company has no significant exposure
at March 31, 2009 to interest rate risk through its financial instruments. The
short-term investment is at a fixed rate of interest that does not fluctuate
during the remaining term. The Company has no interest-bearing debt.

---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|5. | Investment in Camphor Ventures Inc.:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | During the year ending March 31, 2008, the Company
      acquired 9,884,915 common shares of Camphor Ventures Inc. (Camphor),
      representing approximately 66% of the issued and outstanding common shares
      of Camphor that the Company did not already own, and bringing the
      Companys holdings in Camphor to 100%, and the Companys interest in the
      Gahcho Kué Project to 49%, with De Beers Canada holding a 51% interest. A
      total of 4,052,816 Mountain Province shares were issued in exchange for
      the Camphor shares. The Company has valued the common shares issued in
      this transaction based on the market price of the Companys shares on the
      various dates the consideration was exchanged.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | In addition to the issuance of common shares, the Company
      took up the 485,000 stock options of Camphor, and exchanged them for
      198,850 stock options of the Company. These replacement stock options were
      valued at their estimated fair market value using the Black-Scholes model
      with the following assumptions: dividend yield of 0%; expected
      volatilities of 34% to 64%; risk-free interest rate of 4.64% and expected
      lives between 2.83 and 10.33 months.                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The allocation of the purchase price is summarized in the
      table below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



| | Purchase price:                                                                                                                                                                                                           |   |            |  
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ---------- | -
| | 4,052,816
      Common shares issued in exchange for 9,884,915
      Camphor                     common
      shares outstanding (net of 4,992,750 shares in Camphor held
                         
      by the Company) | $ | 18,330,842 |  
| | Value of replacement options issued                                                                                                                                                                                       |   | 774,340    |  
| | Transaction costs                                                                                                                                                                                                         |   | 233,879    |  
| | Camphor shares previously owned by the Company                                                                                                                                                                            |   | 7,313,992  |  
| |                                                                                                                                                                                                                           | $ | 26,653,053 |  
| | Purchase price allocation                                                                                                                                                                                                 |   |            |  
| | Net assets                                                                                                                                                                                                                | $ | 384,262    |  
| | Mineral properties                                                                                                                                                                                                        |   | 32,400,320 |  
| | Future income taxes                                                                                                                                                                                                       |   | (6,131,529 | )
| |                                                                                                                                                                                                                           | $ | 26,653,053 |  



|6. | Interest in Gahcho Kué
Project:
|-- | -------------------------------

| |                                                            |   |            |  |   |            | 
| | ---------------------------------------------------------- | - | ---------- |  | - | ---------- | 
| |                                                            |   | 2009       |  |   | 2008       | 
| | Opening balance                                            | $ | 64,984,140 |  | $ | 32,570,324 | 
| | Mineral Acquisition
      Properties  Camphor acquisition |   | -          |  |   | 32,400,320 | 
| | Technical consulting                                       |   | 164,638    |  |   | -          | 
| | Mining lease costs                                         |   | 12,755     |  |   | 13,496     | 
| |                                                            | $ | 65,161,533 |  | $ | 64,984,140 | 



---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|6. | Interest in Gahcho Kué Project
  (continued):                                                                                                                                                                                                                                                                                                                                                                                           
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company holds a 49% interest in the Gahcho Kué
      Project located in the District of Mackenzie, Northwest Territories,
      Canada, and De Beers Canada Inc. (De Beers Canada) holds the remaining
      51% interest. De Beers Canada may under certain circumstances earn up to a
      60% interest in the Gahcho Kué Project.                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | De Beers Canada has agreed to carry all costs incurred by
      the Project, and has undertaken to support the proper and timely
      exploration and development of the Gahcho Kué Project. Key decisions are
      made by vote (via a Management Committee consisting of two members each
      from De Beers Canada (such members representing 51% of the vote) and the
      Company (such members representing 49% of the vote)).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Once a desktop study shows that an internal rate of
      return of 15% can be achieved, De Beers Canada is to proceed with a
      definitive feasibility study. If they do not proceed with the definitive
      feasibility study, De Beers Canadas interest will be reduced to a 30%
      participating interest.                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | If called upon to fully fund the definitive feasibility
      study, De Beers Canadas interest in the Project will increase to 55% on
      completion of the study. If called upon to fully fund the capital for
      construction of a mine, De Beers Canadas interest in the Project will
      increase to 60% on the commencement of commercial production.                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Under the agreement with De Beers Canada in effect at
      March 31, 2009, the Company is not responsible for funding the Project and
      De Beers Canada has no recourse to the Company for repayment of funds
      until, and unless, the Project is built, in production, and generating net
      cash flows.                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | On July 3, 2009, the Company entered into a revised and
      restated joint venture agreement (the 2009 Agreement) with De Beers
      Canada (jointly, the Participants) with respect to the Gahcho Kué
      Project that replaces the previous agreement (the 2002 Agreement)
      entered into by the Participants. Under the 2009 Agreement:                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | 1.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 2.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 3.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 4.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 5.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 6.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                         



---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|6. | Interest in Gahcho Kué Project
  (continued):                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                       
|   | Mountain Province has agreed that the marketing rights
      provided to the Company in the 2009 Agreement will be diluted if the
      Company defaults on certain of the repayments described above.
|   |                                                                                                                                                                                                       
|7. | Share Capital and Contributed Surplus:                                                                                                                                                                
|   |                                                                                                                                                                                                       
|   | (a)                                                                                                                                                                                                   
|   |                                                                                                                                                                                                       
|   |                                                                                                                                                                                                       
|   |                                                                                                                                                                                                       
|   | (b)                                                                                                                                                                                                   

| |                                                                                               |  |                  |  |   |            | 
| | --------------------------------------------------------------------------------------------- |  | ---------------- |  | - | ---------- | 
| |                                                                                               |  | Number of shares |  |   | Amount     | 
| |                                                                                               |  |                  |  |   |            | 
| | Balance, March 31, 2006                                                                       |  | 53,075,847       |  | $ | 58,253,663 | 
| | Exercise of stock options                                                                     |  | 650,000          |  |   | 888,450    | 
| | Value of
      stock options exercised                                                        |  | -                |  |   | 46,472     | 
| | Issuance
      of shares upon investment
                  in
      Camphor Ventures (Note 5) |  | 1,944,868        |  |   | 7,390,498  | 
| | Balance, March 31, 2007                                                                       |  | 55,670,715       |  |   | 66,579,083 | 
| | Exercise of stock options                                                                     |  | 147,350          |  |   | 141,048    | 
| | Value of
      stock options exercised                                                        |  | -                |  |   | 530,756    | 
| | Issuance of
      shares upon investment
                  in
      Camphor Ventures (Note 5) |  | 4,052,816        |  |   | 18,330,842 | 
| | Balance, March 31, 2008                                                                       |  | 59,870,881       |  |   | 85,581,729 | 
| | Exercise of stock options                                                                     |  | 61,500           |  |   | 34,502     | 
| | Value of stock options
      exercised                                                        |  | -                |  |   | 254,610    | 
| | Balance, March 31, 2009                                                                       |  | 59,932,381       |  | $ | 85,870,841 | 

(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, and subsequently on September 27,
2002. The Board of Directors has the authority and discretion to grant stock
option awards within the limits identified in the Plan, which includes
provisions limiting the issuance of options to insiders and significant
shareholders to maximums identified in the Plan. The aggregate maximum number of
shares pursuant to options granted under the Plan will not exceed 3,677,300
shares, and as at March 31, 2009, there were 1,327,432 shares available to be
issued under the Plan.

---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|7. | Share Capital and Contributed Surplus (continued):
|-- | --------------------------------------------------
|   |                                                   
|   | **(c)**                                           
|   |                                                   
|   |                                                   

| |                               |  |           |   |   |                | 
| | ----------------------------- |  | --------- | - | - | -------------- | 
| |                               |  |           |   |   | Weighted       | 
| |                               |  | Number of |   |   | Average        | 
| |                               |  | Options   |   |   | Exercise Price | 
| |                               |  |           |   |   |                | 
| | Balance, March 31, 2006       |  | 1,060,000 |   | $ | 1.90           | 
| | Exercised                     |  | (650,000  | ) |   | 1.37           | 
| | Balance, March 31, 2007       |  | 410,000   |   |   | 2.73           | 
| | Granted                       |  | 198,850   |   |   | 0.92           | 
| | Exercised                     |  | (147,350  | ) |   | 1.05           | 
| | Balance, March 31, 2008       |  | 461,500   |   |   | 2.47           | 
| | Granted                       |  | 900,000   |   |   | 1.26           | 
| | Exercised                     |  | (61,500   | ) |   | 0.56           | 
| | Balance,
      March 31, 2009 |  | 1,300,000 |   | $ | 1.72           | 

The following are the stock options
outstanding and exercisable at March 31, 2009.

| |                   |   | Black     |  |  |           |  |  | Weighted         |  |  |          | 
| | ----------------- | - | --------- |  |  | --------- |  |  | ---------------- |  |  | -------- | 
| | Expiry            |   | Scholes   |  |  | Number of |  |  | Average          |  |  | Exercise | 
| | Date              |   | Value     |  |  | Options   |  |  | Remaining Life   |  |  | Price    | 
| |                   |   |           |  |  |           |  |  |                  |  |  |          | 
| | October 1, 2009   | $ | 189,400   |  |  | 200,000   |  |  | 0.50 years       |  |  | 1.96     | 
| | November 1, 2010  |   | 180,100   |  |  | 100,000   |  |  | 1.59 years       |  |  | 2.63     | 
| | January 30, 2011  |   | 321,100   |  |  | 100,000   |  |  | 1.84 years       |  |  | 4.50     | 
| | November 23, 2013 |   | 574,200   |  |  | 900,000   |  |  | 4.65
      years |  |  | 1.26     | 
| |                   | $ | 1,264,800 |  |  | 1,300,000 |  |  | 3.56 years       |  |  |          | 

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:

| | Fiscal Year:                                  |   | 2009    |  |   | 2008              | 
| | --------------------------------------------- | - | ------- |  | - | ----------------- | 
| |                                               |   |         |  |   |                   | 
| | Dividend yield                                |   | 0%      |  |   | 0%                | 
| | Expected volatility                           |   | 55.59%  |  |   | 34%-64%           | 
| | Risk-free interest rate                       |   | 2.57%   |  |   | 4.64%             | 
| | Expected lives                                |   | 5 years |  |   | 2.83-10.33 months | 
| | Weighted average fair value of options issued | $ | 0.638   |  | $ | 3.58-$4.14        | 



---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|7. | Share Capital and Contributed Surplus (continued):
|-- | --------------------------------------------------
|   |                                                   
|   | **(d)**                                           

| |                                                                       |   |           |  
| | --------------------------------------------------------------------- | - | --------- | -
| |                                                                       |   | Amount    |  
| |                                                                       |   |           |  
| | Balance, March 31, 2006                                               | $ | 561,777   |  
| | Value of options issued
      to Camphor option holders               |   | 186,321   |  
| | Value on exercise of
      stock options transferred to share capital |   | (46,472   | )
| | Balance, March 31, 2007                                               |   | 701,626   |  
| | Value of
      options issued to Camphor option holders               |   | 774,340   |  
| | Value on exercise of stock options transferred to
      share capital |   | (530,756  | )
| | Balance, March 31, 2008                                               |   | 945,210   |  
| | Recognition of
      stock-based compensation expense                 |   | 574,200   |  
| | Value on exercise of
      stock options transferred to share capital |   | (254,610  | )
| | Balance, March 31, 2009                                               | $ | 1,264,800 |  

(e)

Shareholder
Rights Plan:

On August 4, 2006, the Board of
Directors of the Company approved a Shareholder Rights Plan (the Rights Plan).
The Rights Plan is intended to provide all shareholders of the Company with
adequate time to consider value enhancing alternatives to a take-over bid and to
provide adequate time to properly assess a take-over bid without undue pressure.
The Rights Plan is also intended to ensure that the shareholders of the Company
are provided equal treatment under a takeover bid.

---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|8. | Income Taxes:                                                                                                                                                                                                                                                                                                                                     
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                   
|   | Income tax recovery differs from the amounts that would
      have been computed by applying the combined federal and provincial tax
      rates of 26.5% for the years ended March 31, 2009 (2008  26.5% and 2007 
      34.25%) to loss before income taxes. The reasons for the differences are
      primarily as a result of the following:

| |                                                                                    |   |           |   |   |         |  |   |           |  
| | ---------------------------------------------------------------------------------- | - | --------- | - | - | ------- |  | - | --------- | -
| |                                                                                    |   | 2009      |   |   | 2008    |  |   | 2007      |  
| |                                                                                    |   |           |   |   |         |  |   |           |  
| | Loss before income taxes                                                           | $ | 1,760,386 |   | $ | 56,635  |  | $ | 1,961,263 |  
| | Tax recovery calculated using     
      statutory rates                           |   | 466,500   |   |   | 15,000  |  |   | 671,700   |  
| | (Expenses not deductible for
      taxation)/earnings      not subject to taxation |   | (152,163  | ) |   | 207,166 |  |   | (195,000  | )
| | Other (return to
      provision adjustments)                                      |   | (91,541   | ) |   | -       |  |   | -         |  
| |                                                                                    |   | 222,796   |   |   | 222,166 |  |   | 476,700   |  
| | Valuation
      allowance                                                          |   | -         |   |   | -       |  |   | (476,700  | )
| |                                                                                    | $ | 222,796   |   | $ | 222,166 |  | $ | -         |  

The components that give rise to future
income tax assets and future tax liabilities are as follows:

| |                                               |   | 2009       |   |   | 2008       |   |   | 2007       |  
| | --------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
| |                                               |   |            |   |   |            |   |   |            |  
| | Interest in Gahcho Kué Project                | $ | (6,369,281 | ) | $ | (6,131,529 | ) | $ | 869,900    |  
| | Loss carry forwards                           |   | 992,556    |   |   | 872,259    |   |   | 810,200    |  
| | Equipment                                     |   | -          |   |   | -          |   |   | 143,000    |  
| | Long-term
      investment                    |   | -          |   |   | -          |   |   | 590,000    |  
| |                                               |   | (5,376,725 | ) |   | (5,259,270 | ) |   | 2,413,100  |  
| | Valuation
      allowance                     |   | (309,842   | ) |   | (650,093   | ) |   | (2,413,100 | )
| | Net
      future income tax asset (liability) | $ | (5,686,567 | ) | $ | (5,909,363 | ) | $ | -          |  

At March 31, 2009, the Company has
available losses for income tax purposes totaling approximately $3.8 million,
expiring at various times from 2010 to 2029. Of the available losses, $0.9
million are subject to acquisition of control rules which may restrict their
future deductibility. The Company also has available resource tax pools of
approximately $41 million, which may be carried forward and utilized to reduce
future taxable income. Included in the $41 million of tax pools is $30 million
which can only be utilized against taxable income from specific mineral
properties.

---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|9.  | Capital Management:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The Company considers its capital structure to consist of
      share capital, contributed surplus and options. The Company manages its
      capital structure and makes adjustments to it, in order to have the funds
      available to support the acquisition, exploration and development of
      mining interests. The Board of Directors does not establish quantitative
      return on capital criteria for management, but rather relies on the
      expertise of the Companys management to sustain future development of the
      business.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The property in which the Company currently has an
      interest is in the development and permitting stage; as such the Company
      is dependent on external equity financing to fund its activities. In order
      to carry out the planned management of our property and pay for
      administrative costs, the Company will spend its existing working capital
      and raise additional amounts as needed.                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Management reviews its capital management approach on an
      ongoing basis and believes that this approach, given the relative size of
      the Company, is reasonable.                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | There were no changes in the Companys approach to
      capital management during the year ended March 31, 2009. Neither the
      Company nor its subsidiaries are subject to externally imposed capital
      requirements.                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10. | Subsequent Events:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | As described in Note 6, on July 3, 2009, the Company
      entered into a revised and restated joint venture agreement (the 2009
      Agreement) with De Beers Canada (jointly, the Participants) with
      respect to the Gahcho Kué Project that replaces the previous agreement
      (the 2002 Agreement) entered into by the Participants.                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | On July 14, 2009, the Company announced that it would be
      arranging a non-brokered private placement of up to 3 million Units at a
      price of $1.50 per Unit. If fully subscribed, the private placement will
      raise proceeds of $4.5 million.                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Each Unit is comprised of one common share and one-half
      of a common share purchase warrant. Each whole warrant will entitle the
      holder to acquire one additional common share at an exercise price of
      $2.00 within 18 months from closing.                                                                                                                                                                                                                                                                                                



---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|11. | Reconciliation to United States generally accepted
      accounting principles ("US GAAP"):                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                             
|    | As disclosed in Note 2, these financial statements have
      been prepared in accordance with Canadian generally accepted accounting
      principles (Canadian GAAP). A description and reconciliation of material
      measurement differences to US GAAP and practices prescribed by the US
      Securities and Exchange Commission (SEC) follows:
|    |                                                                                                                                                                                                                                                                                                                                                             
|    | (a)                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                             
|    | (b)                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                             



---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|11. | Reconciliation to United States generally accepted
      accounting principles ("US GAAP") (continued):
|--- | -------------------------------------------------------------------------------------------------------
|    |                                                                                                        
|    | (c)                                                                                                    
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        
|    | (d)                                                                                                    
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        



---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|11. | Reconciliation to United States generally accepted
      accounting principles ("US GAAP") (continued):
|--- | -------------------------------------------------------------------------------------------------------
|    |                                                                                                        
|    | (e)                                                                                                    
|    |                                                                                                        
|    |                                                                                                        

| |                                                              |   |             |   |   |             |  
| | ------------------------------------------------------------ | - | ----------- | - | - | ----------- | -
| | As at March 31                                               |   | 2009        |   |   | 2008        |  
| |                                                              |   |             |   |   |             |  
| | Total assets:                                                |   |             |   |   |             |  
| | Total assets, under
      Canadian GAAP                      | $ | 65,559,505  |   | $ | 66,764,167  |  
| | Adjustment for deferred
      exploration costs (Note 11(a)) |   | (31,208,660 | ) |   | (31,031,267 | )
| | Total assets, under US
      GAAP                            | $ | 34,350,845  |   | $ | 35,732,900  |  
| | Shareholders equity:                                        |   |             |   |   |             |  
| | Shareholders equity,
      under Canadian GAAP              | $ | 59,681,227  |   | $ | 60,641,726  |  
| | Adjustment for deferred
      exploration costs (Note 11(a)) |   | (31,208,660 | ) |   | (31,031,267 | )
| | Shareholders equity,
      under US GAAP                    | $ | 28,472,567  |   | $ | 29,610,459  |  



---

|MOUNTAIN PROVINCE DIAMONDS INC.                 
|------------------------------------------------
|Notes to Consolidated Financial Statements      
|(Expressed in Canadian dollars)                 
|Years ended March
      31, 2009, 2008, and 2007



|11. | Reconciliation to United States generally accepted
      accounting principles ("US GAAP") (continued):
|--- | -------------------------------------------------------------------------------------------------------

**(f)**

**Reconciliation
(continued):**

| |                                                                                                           |   |            |   |   |            |   |   |            |  
| | --------------------------------------------------------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
| | Years ended
      March 31                                                                                |   | 2009       |   |   | 2008       |   |   | 2007       |  
| |                                                                                                           |   |            |   |   |            |   |   |            |  
| |                                                                                                           |   |            |   |   |            |   |   |            |  
| | (Loss) income and (loss) income per
      share for the year:                                             |   |            |   |   |            |   |   |            |  
| | (Loss) income for the
      year,           under
      Canadian GAAP                                     | $ | (1,537,590 | ) | $ | 165,531    |   | $ | (1,961,263 | )
| | Adjustment for
      deferred exploration
                expenditures
      (Note 11(a))                 |   | (177,393   | ) |   | (13,496    | ) |   | (88,722    | )
| | (Loss) income for the year, under US GAAP                                                                 |   | (1,714,983 | ) |   | 152,035    |   |   | (2,049,985 | )
| | Other Comprehensive income:                                                                               |   |            |   |   |            |   |   |            |  
| | Change in fair value
      of available for sale
                marketable
      securities (Note 11(b)) |   | (31,611    | ) |   | (14,239    | ) |   | 8,704      |  
| | Change in fair value
      of long-term          
      investments (Note 11(b))                          |   | -          |   |   | (280,000   | ) |   | (600,000   | )
| | Comprehensive loss for
      the year    under US GAAP                                                    | $ | (1,746,594 | ) | $ | (142,204   | ) | $ | (2,641,281 | )
| | Basic and
      diluted (loss) income per share,    under US GAAP                                         | $ | (0.03      | ) | $ | 0.00       |   | $ | (0.04      | )
| | Cash used in operating activities:                                                                        |   |            |   |   |            |   |   |            |  
| | Cash
      used in operating
                activities,
      under Canadian GAAP                        | $ | (1,141,890 | ) | $ | (1,229,541 | ) | $ | (978,526   | )
| | Adjustment for deferred
      exploration costs
                (Note 11(a))                              |   | (177,393   | ) |   | (13,496    | ) |   | (88,722    | )
| | Cash used
      in operating activities,    under US GAAP                                                 | $ | (1,319,283 | ) | $ | (1,243,037 | ) | $ | (1,067,248 | )
| | Cash provided (used) in investing activities:                                                             |   |            |   |   |            |   |   |            |  
| | Cash
      provided (used) in investing activities,
                under Canadian
      GAAP             | $ | 1,028,048  |   | $ | 1,053,273  |   | $ | (575,406   | )
| | Adjustment for deferred
      exploration costs
                (Note 11(a))                              |   | 177,393    |   |   | 13,496     |   |   | 88,722     |  
| | Cash
      provided (used) in investing activities    under US GAAP                                       | $ | 1,205,441  |   | $ | 1,066,769  |   | $ | (486,684   | )



---