**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      20-F**

| 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 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934For                the fiscal year ended March                31, 2006                      |
|  OR  |
| o              | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934For                the transition period from                    to                     |

| Commission                  file number 0-27322 |
|-------------------------------------------------|

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

| ONTARIO,                  CANADA                                   |
|--------------------------------------------------------------------|
| (Jurisdiction                    of incorporation or organization) |

| 220                      Bay Street, 14th Floor, Toronto, Ontario Canada M5J                      2W4 |
|-------------------------------------------------------------------------------------------------------|
| (Address                        of principal executive offices)                                       |

|  Title                of each class |   |  Name                of each exchange on which registered |
|------------------------------------------|--------|----------------------------------------------------------------|
|  None                               |   |  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) |

----

**55,575,715**

**Not          Applicable **

----

----

**tain      Province**

----

----

**MESSAGE      TO SHAREHOLDERS**

**Patrick      Evans **

----

**INVESTING      IN GAHCHO KUE**

**Strategic      Location**

| **Breakdown                  of Resources** |            |            |             |              |
|---------------------------------------------|-----------------|-----------------|------------------|-------------------|
|                                        |            |            |             |              | **Average** |
| **Pipe**                                    |            |            |             | **Grade**         | **Value** |
| **Resource**                                | **Category**    | **Tonnes**      | **Carats**       | **(cpht)****(1)** | **(US$/ct)****(2)** |
| 5034                                        |  Indicated |  8,715,000 |  13,943,000 |  160         |  $                  82.00 |
|                                        | Inferred        | 4,921,000       | 8,366,000        | 170               | $                  90.00 |
| Hearne                                      | Indicated       | 5,678,000       | 9,676,000        | 170               | $                  70.00 |
|                                        | Inferred        | 1,546,000       | 2,373,000        | 153               | $                  70.00 |
| Tuzo                                        | Inferred        | 10,550,000      | 12,152,000       | 115               | $                  57.00 |
| Summary                                     | Indicated       | 14,392,000      | 23,619,000       | 164               | $                  77.00 |
|                                        | Inferred        | 17,017,000      | 22,890,000       | 135               | $                  70.00 |

| 1.                  Resource cut-off is 1.5 mm      |   |   |
|-----------------------------------------------------|--------|--------|
| 2.                  June 2005 DTC Price Book in US$ |   |   |

**Funding**

**Development          Timeline**

----

**INVESTING      IN DIAMONDS**

**Scarcity      of Mines**

**Looming           **Diamond          Shortage****

| The                  world is facing a looming diamond shortage as globaldemand increasingly                  outstrips supply. This is leading to a sharprise in diamond prices.                  Today,                  demand and supply are largely inbalance at approximately $11 billion                  annually. By 2012 - whenGahcho Kue is expected to achieve full                  production                  - global demandfor diamonds is expected to rise to $18 billion,                  outstrippingsupply by approximately $7 billion annually. As a result,                  diamondprices are projected to rise significantly within the next                  10                  years.   |                                                 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Powerful      New Markets**

**Canada      - The New Diamond Frontier**

----

**INVESTMENT      HIGHLIGHTS**

**SIZE:      **

**EVELOPMENT:      **

**EXPERIENCE:      **

**FUNDING:      **

**ACHIEVEMENTS      IN FISCAL 2006**

| **HEAD                OFFICE**                | **REGISTRAR                & TRANSFER AGENT**  | **OFFICERS                & DIRECTORS**  |
|----------------------------------------------------|---------------------------------------------------------|---------------------------------------------------|
| 220                Bay Street                      | **Computershare              Trust Company of Canada**  | **Jonathanof ****Comerford,**                |
| 14th                Floor                          | 510                Burrard Street                       | Chairman                                          |
| Toronto,                Ontario M5J 2W4            | Vancouver              B.C. V6C 3B9                |                                              |
|                                               | 604-661-9400                                            | **Patrick                Evans**                  |
|                                               |                                                         | President,                CEO and Director   |
| **INVESTOR                RELATIONS**              |                                                    |                                              |
|                                               |                                                    |                                              |
| **Patrick                Evans**                   | **AUDITORS**                                            | **Jennifer                Dawson**                |
| President                and CEO                   | **KPMG                LLP**                        | CFO                and Corporate Secretary        |
| Tel:                416-361-3562                   | 777                  Dunsmuir Street                    |                                              |
| Fax:                416-603-8565                   | P.O.                Box 10426, Pacific Centre      | **D.H.W.                Dobson, CA**              |
| Email:                info@mountainprovince.com    | Vancouver,                B.C. V7Y                1K3   | Director                                     |
|                                               |                                                    |                                              |
|  **BarnesMcInerney                Inc.**      | **LEGAL                COUNSEL**                        | **Elizabeth              Kirkwood**     |
|  Capital                Market Communications | Suite                1600                          | Director                                          |
|  Tel:                416-367-5000             | 130                King Street West           |                                              |
|                                               | Toronto,                Ontario M5X 1J5       | **Carl                G. Verley, P.Geol**    |
|                                                    |                                                    | Director                                          |
|                                               |                                                    |                                              |
|                                               |                                                    | **David                Whittle, CA**         |
|                                               |                                                    | Director                                     |

----

| **Project                    Statistics**                         |                                                 |
|-------------------------------------------------------------------|------------------------------------------------------|
| Resources                                                         | 46.5                    million carats               |
| Average                    value*                                 | US$83                    per carat                   |
| Full                    production rate**                         | 3                    million carats per year over 15 |
| Average                    grade >1.5 mm, to the plant         | 1.64                    carats per tonne             |
| Capital                    cost (Unescalated)**                   | CDN$825                    million                   |
| Capital                    cost (Escalated)**                     | CDN$960                    million                   |
| Operating                    cost**                               | CDN$65                    per tonne                  |
| Production                    scheduled to commence               | 2011                                                 |
| Life                    of mine                                   | 15                    years                          |
|                                                              |                                                 |
| *                    WWW International Diamond Consultants Report |
| **                    De Beers pre-feasibility study              |

----

**www.mountainprovince.com**

----

**MOUNTAIN      PROVINCE DIAMONDS INC.**

**FOR      THE YEAR ENDED MARCH 31, 2006**

**OVERALL      PERFORMANCE**

**Project        Technical Study**

----

**Exploration**

| **Pipe**                                                               | **Resource**  | **Tonnes**     | **Carats**     | **Grade**  | **Average**                       |
|------------------------------------------------------------------------|---------------|----------------|----------------|------------|-----------------------------------|
|                                                                   | **Category**  |           |           | **(cpht)** | **Value**                         |
|                                                                   |          |           |           | **(1)**    | **(US$/ct)                  (2)** |
|                                                                   |          |           |           |       |                              |
| 5034                                                                   | Indicated     | 8,715,000      | 13,943,000     | 160        | $82.00                            |
|                                                                   | Inferred      | 4,921,000      | 8,366,000      | 170        | $90.00                            |
| Hearne                                                                 | Indicated     | 5,678,000      | 9,676,000      | 170        | $70.00                            |
|                                                                   | Inferred      | 1,546,000      | 2,373,000      | 153        | $70.00                            |
| Tuzo                                                                   | Inferred      | 10,550,000     | 12,152,000     | 115        | $57.00                            |
| **Summary**                                                            | **Indicated** | **14,392,000** | **23,619,000** | **164**    | **$77.00**                        |
|                                                                   | **Inferred**  | **17,017,000** | **22,890,000** | **135**    | **$70.00**                        |
|                                                                   |          |           |           |       |                              |
| 1.                  Resource cut-off is 1.5mm                          |          |           |
| 2.                  June 2005 Diamond Trading Centre Price Book in US$ |          |

----

**RESULTS      OF OPERATIONS**

**Selected        Annual Information**

|                                                     |   |     |       |     |   |       |   |
|----------------------------------------------------------|--------|----------|------------|----------|--------|------------|--------|
|                                                     |   | **2006** |       | **2005** |   | **2004**   |   |
| Interest                    revenue                      |   | $        | 12,173     |     | $      | 13,112     |   | $ | 12,127 |   |
| Expenses                                                 |   |     | (1,132,061 | )        |   | (848,502   | )      |   | (1,231,491 | ) |
| Write-down                    of long-term investments   |   |     | (1,080,000 | )        |   | (1,860,000 | )      |   | - |   |
| Gain                    on sale of mineral properties    |   |     | -          |     |   | 4,226,634  |   |   | - |   |
| Write-down                    of mineral properties and  |   |     |       |     |   |       |   |   |   |   |
| deferred                    exploration                  |   |     | -          |     |   | -          |   |   | (589,669 | ) |
| Net                    (loss) earnings for the year      |   |     | (2,199,888 | )        |   | 1,531,244  |   |   | (1,813,005 | ) |
| Basic                    and diluted (loss) earnings per |   |     | (0.04      | )        |   | 0.03       |   |   | (0.04 | ) |
| share                                                    |   |     |       |     |   |       |   |   |   |   |
| Cash                    flow (used in) from operations   |   |     | (727,123   | )        |   | (858,014   | )      |   | (1,019,586 | ) |
| Cash                    and cash equivalents, end of     |   |     | 845,452    |     |   | 1,001,104  |   |   | 914,494 |   |
| period                                                   |   |     |       |     |   |       |   |   |   |   |
| Total                    assets                          |   |     | 34,874,288 |     |   | 36,038,157 |   |   | 33,513,553 |   |
| Total                    long-term financial liabilities |   |     | Nil        |     |   | Nil        |   |   | Nil |   |
| Dividends                    declared                    |   |     | Nil        |     |   | Nil        |   |   | Nil |   |

**Year      ended March 31, 2006**

----

| **Summary                  of Quarterly Results**                                                         |                     |                     |                     |
|-----------------------------------------------------------------------------------------------------------|--------------------------|--------------------------|--------------------------|
|                                                                                                      |                     |                     |                     |   |   |   |   |
| 2006                  Fiscal Year                                                                         |                     |                     |                     |   |   |   |
|                                                                                                      |                     |                     |                     | **Fourth                  Quarter** | **Third                  Quarter** | **Second                  Quarter** | **First                  Quarter** |
|                                                                                                      |                     |                     |                     | March                  31, 2006 | December                  31, 2005 | September                  30, 2005 | June                  30, 2005 |
|                                                                                                      |                     |                     |                     |   |   |   |   |
|                                                                                                      |                     |                     |                     |   |   |   |   |
| Interest                  Income (expense)                                                                | $                  5,893 | $                  5,614 | $                  (361) | $                  1,027 |
|                                                                                                      |                     |                     |                     |   |   |   |   |
| Expenses                                                                                                  |                     |                     |                     | (439,934) | (316,601) | (256,689) | (118,837) |
| Write-down                  of                  long-term                  investments                    |                     |                     | -                        | - | (1,080,000) | - |
| Net                  income (loss)                                                                        |                     | (438,590)                | (311,707)                | (1,331,781) | (117,810) |
| Net                  income (loss)                  per                  share                    (basic) | (0.008)                  | (0.006)                  | (0.025)                  | (0.002) |
| Cash                  flow from (used in)                                                                 | (277,929)                | (36,035)                 | (240,581)                | (172,578) |
| operations                                                                                                |                     |                     |                     |   |   |   |   |
| Cash                  and cash                                                                            |                     | 845,452                  | 804,631                  | 738,886 | 846,071 |
| equivalents,                  end of period                                                               |                     |                     |                     |   |
| Assets                                                                                                    |                     |                     |                     | 34,874,288 | 34,835,554 | 34,775,760 | 35,913,588 |
| Long                  term liabilities                                                                    |                     | Nil                      | Nil                      | Nil | Nil |
| Dividends                                                                                                 |                     |                     |                     | Nil | Nil | Nil | Nil |

|                                                      |      |      |                     |                                |                               |                                |                               |
|-----------------------------------------------------------|-----------|-----------|--------------------------|-------------------------------------|------------------------------------|-------------------------------------|------------------------------------|
| 2005                  Fiscal Year                         |      |      |                     |                                |                               |                                |
|                                                      |      |      |                     | **Fourth                  Quarter** | **Third                  Quarter** | **Second                  Quarter** | **First                  Quarter** |
|                                                      |      |      |                     | March                  31, 2005     | December                  31, 2004 | September                  30, 2004 | June                  30, 2004     |
|                                                      |      |      |                     |                                |                               |                                |                               |
|                                                      |      |      |                     |                                |                               |                                |                               |
| Interest                  Income                          |      |      | $                  1,056 | $                  11,251           | $                  283             | $                  522              |
| Expenses                                                  |      |      |                     | (373,360)                           | (114,665)                          | (204,902)                           | (155,575)                          |
| Gain                  on sale of mineral                  | 4,226,634 | -         | -                        | -                                   |
| properties                                                |      |      |                     |                                |                               |                                |                               |
| Write-down                  of                  long-term |      |      | (1,860,000)              | -                                   | -                                  | -                                   |
| investments                                               |      |      |                     |                                |                               |                                |                               |
| Net                  income (loss)                        |      | 1,952,020 | (99,984)                 | (165,619)                           | (155,173)                          |
| Net                  income (loss)                  per   |      |      | 0.037                    | (0.000)                             | (0.000)                            | (0.003)                             |
| share                                                     |      |      |                     |                                |                               |                                |                               |
| Cash                  flow from (used in)                 | (192,007) | (234,237) | (181,849)                | (249,921)                           |
| operations                                                |      |      |                     |                                |                               |                                |                               |
| Cash                  and cash                            |      | 1,001,104 | 1,170,268                | 732,587                             | 757,575                            |
| equivalents,                  end of period               |      |      |                     |                                |
| Assets                                                    |      |      |                     | 36,038,157                          | 33,844,665                         | 33,374,711                          | 33,361,051                         |
| Long                  term liabilities                    |      | Nil       | Nil                      | Nil                                 | Nil                                |
| Dividends                                                 |      |      |                     | Nil                                 | Nil                                | Nil                                 | Nil                                |

**Fourth      Quarter 2006**

----

**SUBSEQUENT      EVENT**

**LIQUIDITY      AND CAPITAL RESOURCES**

**OFF-BALANCE      SHEET ARRANGEMENTS**

**TRANSACTIONS      WITH RELATED PARTIES**

----

**CRITICAL      ACCOUNTING ESTIMATES**

**CHANGES      IN ACCOUNTING POLICIES**

**OTHER      MANAGEMENT DISCUSSION AND ANALYSIS REQUIREMENTS**

**Risks**

**Contractual      Obligations**

----

**FINANCIAL      INSTRUMENTS**

**DISCLOSURE      OF OUTSTANDING SHARE DATA**

**DISCLOSURE      CONTROLS AND PROCEDURES**

**ADDITIONAL      INFORMATION**

**FORWARD-LOOKING      STATEMENTS**

*Some        statements contained in this MD&A are forward-looking and reflect our        expectations regarding the future performance, business prospects and        opportunities of the Company. Such forward-looking statements reflect our        current beliefs and are based on information currently available to us. Forward        looking statements involve significant risks and uncertainties and a number        of        factors, most of which are beyond the control of the Company, could cause        actual        results to differ materially from results discussed in the forward-looking        statements. Although the forward looking statements contained in this report        are        based on what we believe to be reasonable assumptions, we cannot assure readers        that actual results will be consistent with these forward looking statements.        The Company disclaims any obligation to update forward-looking        statements*
*.*

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**REPORT      OF MANAGEMENT**

**Patrick          C. Evans**

**Jennifer            M. Dawson **

----

|   |                        **Consolidated                        Financial Statements****(Expressed                        in Canadian dollars)** **Mountain                        Province Diamonds Inc.** **Years                        ended March 31, 2006, 2005 and                        2004** |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**REPORT        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM **

----

| **MOUNTAIN                    PROVINCE DIAMONDS INC.**                         |   |       |               |   |       |        |
|--------------------------------------------------------------------------------|--------|------------|--------------------|--------|------------|-------------|
| Consolidated                    Balance Sheets                                 |   |       |               |   |       |        |   |   |   |   |
| (Expressed                    in Canadian dollars)                             |   |       |               |   |       |        |   |   |   |   |
| March                    31, 2006 and 2005                                     |   |       |               |   |       |        |   |   |   |   |
|                                                                           |   |       |               |   |       |        |   |   |   |   |
|                                                                           |   |       |               |   |       |        |   |   |   |   |
|                                                                           |   |       |               |   |       | **2006**    |   |   | **2005** |   |
|                                                                           |   |       |               |   |       |        |   |   |   |   |
| **Assets**                                                                |   |       |               |   |       |        |   |   |   |   |
| Current                    assets                                              |   |       |               |   |       |        |   |   |   |   |
| Cash                    and cash equivalents                                   |   |       |               |   | $          | 845,452     |   | $ | 1,001,104 |   |
| Marketable                    securities (Note 3)                              |   |       |               |   |       | 71,392      |   |   | 71,392 |   |
| Accounts                    receivable                                         |   |       |               |   |       | 66,637      |   |   | 26,324 |   |
| Advances                    and prepaid expenses                               |   |       |               |   |       | 6,052       |   |   | 36,879 |   |
|                                                                           |   |       |               |   |       |        |   |   |   |   |
|                                                                           |   |       |               |   |       | 989,533     |   |   | 1,135,699 |   |
| Long-term                    investment (Note 4)                               |   |       |               |   |       | 1,400,000   |   |   | 2,480,000 |   |
| Mineral                    properties (Note 6)                                 |   |       |               |   |       | 1,552,553   |   |   | 1,552,553 |   |
| Deferred                    exploration costs (Note 6)                         |   |       |               |   |       | 30,929,049  |   |   | 30,865,670 |   |
| Equipment                    (Note 5)                                          |   |       |               |   |       | 3,153       |   |   | 4,235 |   |
|                                                                           |   |       |               |   |       |        |   |   |   |   |
| Total                    assets                                                |   |       |               |   | $          | 34,874,288  |   | $ | 36,038,157 |   |
|                                                                           |   |       |               |   |       |        |   |   |   |   |
| **Liabilities                    and Shareholders' Equity**                    |   |       |               |   |       |        |
| Current                    liabilities                                         |   |       |               |   |       |        |   |   |   |   |
| Accounts                    payable and accrued liabilities (Note 8)           | $      | 181,266    |               | $      | 94,976     |        |
|                                                                           |   |       |               |   |       |        |   |   |   |   |
| Shareholders'                    equity:                                       |   |       |               |   |       |        |   |   |   |   |
| Share                    capital (Note 7(b))                                   |   |       |               |   |       | 58,253,663  |   |   | 57,607,786 |   |
| Contributed                    surplus (Note 7(e))                             |   |       |               |   |       | 561,777     |   |   | 257,925 |   |
| Deficit                                                                        |   |       |               |   |       | (24,122,418 | ) |   | (21,922,530 | ) |
|                                                                           |   |       |               |   |       |        |   |   |   |   |
| Total                    shareholders' equity                                  |   |       |               |   |       | 34,693,022  |   |   | 35,943,181 |   |
|                                                                           |   |       |               |   |       |        |   |   |   |   |
| Total                    liabilities and shareholders' equity                  | $      | 34,874,288 |               | $      | 36,038,157 |        |
|                                                                           |   |       |               |   |       |        |   |   |   |   |
| Nature                    of operations (Note 1)                               |   |       |               |   |       |        |   |   |   |   |
| Subsequent                    events (Note 7(f))                               |   |       |               |   |       |        |   |   |   |   |
|                                                                           |   |       |               |   |       |        |   |   |   |   |
| See                    accompanying notes to consolidated financial statements |   |       |               |   |       |        |
|                                                                           |   |       |               |   |       |        |
| **Approved                    on behalf of the Board:**                        |   |       |               |   |       |        |   |   |   |   |
|                                                                                |   |       |               |   |       |        |
|  (Signed)                    Jonathan Comerford                           |   |       | **Director**  |   |       |        |   |   |   |   |
|                                                                           |   |       |               |   |       |        |   |   |   |   |
| (Signed)                    Patrick C. Evans                                   |   |       | **Director**       |   |       |        |   |   |   |   |

----

| **MOUNTAIN                    PROVINCE DIAMONDS INC.**                         |   |   |        |   |   |        |   |   |        |   |
|--------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|-------------|--------|--------|-------------|--------|
| Consolidated                    Statements of Operations and Deficit           |   |   |        |   |   |        |   |   |        |   |
| (Expressed                    in Canadian dollars)                             |   |   |        |   |   |        |   |   |        |   |
| Years                    ended March 31, 2006, 2005, and 2004                  |   |   |        |   |   |        |   |   |        |   |
|                                                                           |   |   |        |   |   |        |   |   |        |   |
|                                                                           |   |   |        |   |   |        |   |   |        |   |
|                                                                           |   |   | **2006**    |   |   | **2005**    |   |   | **2004**    |   |
|                                                                           |   |   |        |   |   |        |   |   |        |   |
| Expenses:                                                                 |   |   |        |   |   |        |   |   |        |   |
| Amortization                                                                   |   | $      | 1,082       |   | $      | 2,136       |   | $      | 2,853       |   |
| Consulting                    fees (Note 8)                                    |   |   | 309,217     |   |   | 141,586     |   |   | 182,846     |   |
| Directors'                    fees and honourarium                             |   |   | 37,500      |   |   | 2,700       |   |   | 33,350      |   |
| Interest                    and bank charges                                   |   |   | 1,231       |   |   | 983         |   |   | 1,137       |   |
| Office                    and miscellaneous                                    |   |   | 43,647      |   |   | 89,941      |   |   | 78,619      |   |
| Professional                    fees (Note 8)                                  |   |   | 166,150     |   |   | 235,680     |   |   | 307,441     |   |
| Promotion                    and investor relations                            |   |   | 108,184     |   |   | 30,503      |   |   | 94,803      |   |
| Rent                                                                           |   |   | 10,396      |   |   | 18,466      |   |   | 23,600      |   |
| Salaries                    and benefits                                       |   |   | -           |   |   | -           |   |   | 78,805      |   |
| Severance                    and contract termination                          |   |   | -           |   |   | -           |   |   | 368,668     |   |
| Stock-based                    compensation (Note 7(c))                        |   |   | 314,879     |   |   | 189,400     |   |   | -           |   |
| Transfer                    agent and regulatory fees                          |   |   | 99,794      |   |   | 114,459     |   |   | 37,890      |   |
| Travel                                                                         |   |   | 39,981      |   |   | 22,648      |   |   | 21,479      |   |
|                                                                           |   |   |        |   |   |        |   |   |        |   |
|                                                                           |   |   | 1,132,061   |   |   | 848,502     |   |   | 1,231,491   |   |
|                                                                           |   |   |        |   |   |        |   |   |        |   |
| Other                    earnings (expenses):                                  |   |   |        |   |   |        |   |   |        |   |
| Gain                    on sale of mineral properties                          |   |   | -           |   |   | 4,226,634   |   |   | -           |   |
| Write-down                    of long-term investments (Note 4)                |   |   | (1,080,000  | )      |   | (1,860,000  | )      |   | -           |   |
| Interest                                                                       |   |   | 12,173      |   |   | 13,112      |   |   | 12,127      |   |
| Loss                    on disposal of equipment                               |   |   | -           |   |   | -           |   |   | (3,972      | )      |
| Write-down                    of mineral properties and                        |   |   |        |   |   |        |   |   |        |   |
| deferred                    exploration                                        |   |   | -           |   |   | -           |   |   | (589,669    | )      |
|                                                                           |   |   |        |   |   |        |   |   |        |   |
|                                                                           |   |   | (1,067,827  | )      |   | 2,379,746   |   |   | (581,514    | )      |
|                                                                           |   |   |        |   |   |        |   |   |        |   |
| Net                    (loss) earnings for the year                            |   |   | (2,199,888  | )      |   | 1,531,244   |   |   | (1,813,005  | )      |
|                                                                           |   |   |        |   |   |        |   |   |        |   |
| Deficit,                    beginning of year                                  |   |   | (21,922,530 | )      |   | (23,378,874 | )      |   | (21,565,869 | )      |
|                                                                           |   |   |        |   |   |        |   |   |        |   |
| Adjustment                    on adoption of new accounting                    |   |   |        |   |   |        |   |   |        |   |
| standard                    for stock based compensation (Note 2(i))           |   |   | -           |   |   | (74,900     | )      |   | -           |   |
|                                                                           |   |   |        |   |   |        |   |   |        |   |
| Deficit,                    end of year                                        |   | $      | (24,122,418 | )      | $      | (21,922,530 | )      | $      | (23,378,874 | )      |
|                                                                           |   |   |        |   |   |        |   |   |        |   |
| Basic                    and diluted (loss) earnings per share                 |   | $      | (0.04       | )      | $      | 0.03        |   | $      | (0.04       | )      |
| Weighted                    average number of shares                           |   |   |        |   |   |        |   |   |        |   |
| outstanding                                                                    |   |   | 52,783,833  |   |   | 51,781,905  |   |   | 50,759,430  |   |
|                                                                           |   |   |        |   |   |        |   |   |        |   |
| See                    accompanying notes to consolidated financial statements |   |   |        |   |   |        |

----

| **MOUNTAIN                        PROVINCE DIAMONDS INC.**                         |   |   |       |   |   |       |   |   |       |   |
|------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Consolidated                        Statements of Cash Flows                       |   |   |       |   |   |       |   |   |       |   |
| (Expressed                        in Canadian dollars)                             |   |   |       |   |   |       |   |   |       |   |
| Years                        ended March 31, 2006, 2005, and 2004                  |   |   |       |   |   |       |   |   |       |   |
|                                                                               |   |   |       |   |   |       |   |   |       |   |
|                                                                               |   |   |       |   |   |       |   |   |       |   |
|                                                                               |   |   | **2006**   |   |   | **2005**   |   |   | **2004**   |   |
|                                                                               |   |   |       |   |   |       |   |   |       |   |
| Cash                        provided by (used in):                                 |   |   |       |   |   |       |   |   |       |   |
| Cash                        flows provided by (used in) operating activities:      |   |   |       |   |   |       |   |   |       |   |
| Net                        (loss) earnings for the year                            |   | $      | (2,199,888 | )      | $      | 1,531,244  |   | $      | (1,813,005 | )      |
| Items                        not involving cash:                                   |   |   |       |   |   |       |   |   |       |   |
| Amortization                                                                       |   |   | 1,082      |   |   | 2,136      |   |   | 2,853      |   |
| Stock-based                        compensation expense                            |   |   | 314,879    |   |   | 189,400    |   |   | 156,000    |   |
| Gain                        on sale of mineral properties                          |   |   | -          |   |   | (4,226,634 | )      |   | -          |   |
| Write-down                        of long-term investments                         |   |   | 1,080,000  |   |   | 1,860,000  |   |   | -          |   |
| Loss                        on disposal of equipment                               |   |   | -          |   |   | -          |   |   | 3,972      |   |
| Write-down                        of mineral properties and                        |   |   |       |   |   |       |   |   |       |   |
| deferred                        exploration                                        |   |   | -          |   |   | -          |   |   | 589,669    |   |
| Changes                        in non-cash operating working capital               |   |   |       |   |   |       |   |   |       |   |
| Accounts                        receivable                                         |   |   | (40,313    | )      |   | (7,891     | )      |   | 6,508      |   |
| Advances                        and prepaid expenses                               |   |   | 30,827     |   |   | (28,499    | )      |   | 1,816      |   |
| Accounts                        payable and accrued liabilities                    |   |   | 86,290     |   |   | (177,770   | )      |   | 32,651     |   |
| Due                        to related party                                        |   |   | -          |   |   | -          |   |   | (50        | )      |
|                                                                               |   |   |       |   |   |       |   |   |       |   |
|                                                                               |   |   | (727,123   | )      |   | (858,014   | )      |   | (1,019,586 | )      |
|                                                                               |   |   |       |   |   |       |   |   |       |   |
| **Cash                        flows provided by (used in) investing activities:**  |   |   |       |   |   |       |
| Mineral                        properties                                          |   |   | (63,379    | )      |   | (37,106    | )      |   | -          |   |
| Proceeds                        on sale of equipment                               |   |   | -          |   |   | -          |   |   | 4,002      |   |
|                                                                               |   |   |       |   |   |       |   |   |       |   |
|                                                                               |   |   | (63,379    | )      |   | (37,106    | )      |   | 4,002      |   |
|                                                                               |   |   |       |   |   |       |   |   |       |   |
| **Cash                        flows provided by financing activities:**            |   |   |       |   |   |       |   |   |       |   |
| Issuance                        of shares, net of share issue costs                |   |   | 634,850    |   |   | 981,730    |   |   | 720,002    |   |
|                                                                               |   |   |       |   |   |       |   |   |       |   |
| Increase                        (decrease) in cash and                             |   |   |       |   |   |       |   |   |       |   |
| cash                        equivalents                                            |   |   | (155,652   | )      |   | 86,610     |   |   | (295,582   | )      |
| Cash                        and cash equivalents, beginning of year                |   |   | 1,001,104  |   |   | 914,494    |   |   | 1,210,076  |   |
|                                                                               |   |   |       |   |   |       |   |   |       |   |
| Cash                        and cash equivalents, end of year                      |   | $      | 845,452    |   | $      | 1,001,104  |   | $      | 914,494    |   |
|                                                                               |   |   |       |   |   |       |   |   |       |   |
| Supplementary                        information:                                  |   |   |       |   |   |       |   |   |       |   |
| Income                        taxes paid                                           |   | $      | -          |   | $      | -          |   | $      | 8,307      |   |
| Non-cash                        transactions                                       |   |   |       |   |   |       |   |   |       |   |
| Shares                        issued in exchange for sale                          |   |   |       |   |   |       |   |   |       |   |
| of                        Haveri property (Note 6(b))                              |   |   | -          |   |   | 4,340,000  |   |   | -          |   |
| Shares                        issued in exchange for sale                          |   |   |       |   |   |       |   |   |       |   |
| of                        Baffin Island claim (Note 6(c))                          |   |   | -          |   |   | 39,000     |   |   | -          |   |
| Shares                        issued pursuant to consulting                        |   |   |       |   |   |       |   |   |       |   |
| agreement                        (Note 8)                                          |   |   | -          |   |   | -          |   |   | 156,000    |   |
|                                                                               |   |   |       |   |   |       |   |   |       |   |
| See                        accompanying notes to consolidated financial statements |   |   |       |   |   |       |

----

**MOUNTAIN        PROVINCE DIAMONDS INC.**

----

**1.        Nature of operations:**

**2.        Significant accounting policies:**

**(a)              Basis of consolidation: **

**(b)              Cash and cash equivalents: **

**(c)              Marketable securities: **

**(d)              Long-term investments: **

----

**MOUNTAIN        PROVINCE DIAMONDS INC.**

----

**2.        Significant accounting policies (continued): **

**(e)        Mineral properties and deferred exploration costs: **

**(f)        Equipment:**

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

**(g)          Impairment of long-lived assets: **

----

**MOUNTAIN            PROVINCE DIAMONDS INC.**

----

**2.          Significant accounting policies (continued): **

**(h)          Asset retirement obligations:**

**(i)          Stock-based compensation: **

----

**MOUNTAIN        PROVINCE DIAMONDS INC.**

----

**2.        Significant accounting policies (continued):**

**(j)        Income taxes:**

**(k)          Earnings (loss) per share:**

**(l)          Foreign currency translation:**

**(m)          Financial instruments: **

**(n)          Use of estimates:**

----

**MOUNTAIN          PROVINCE DIAMONDS INC.**

----

**2.          Significant accounting policies (continued):**

**(o)          Comparative figures:**

**3.          Marketable securities:**

**4.          Long-term investment:**

----

| **5.                      **Equipment:****  |   |   |        |   |   |   |   |   |           |       |       |                                        |       |       |                                             |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|----------------|------------|------------|---------------------------------------------|------------|------------|--------------------------------------------------|--------|
| **2006:**                                        |   |   |   |   |   |   |   |   |           |       |       |                                        |       |       |                                             |   |
|                                             |   |   |   |   |   |   |   |   |           |       |       |                                        |       |       |                                             |   |
|                                             |   |   |   |   |   |   |   |   | **Cost ** | ** ** | ** ** | **Accumulated ****Amortization ** | ** ** | ** ** | **Net                      Book****Value**  |   |
|                                             |   |   |   |   |   |   |   |   |           |       |       |                                        |       |       |                                             |   |
| Furniture                                        |   |   |   |   |   |   |   | $      | 11,088    |       | $          | (9,481                                      | )          | $          | 1,607                                            |   |
| Equipment                                        |   |   |   |   |   |   |   |   | 4,065     |       |       | (4,065                                      | )          |       | -                                                |   |
| Computers                                        |   |   |   |   |   |   |   |   | 14,584    |       |       | (13,038                                     | )          |       | 1,546                                            |   |
|                                             |   |   |   |   |   |   |   |   |           |       |       |                                        |       |       |                                             |   |
|                                             |   |   |   |   |   |   |   | $      | 29,737    |       | $          | (26,584                                     | )          | $          | 3,153                                            |   |
|                                             |   |   |   |   |   |   |   |   |           |       |       |                                        |       |       |                                             |   |
| **2005:**                                        |   |   |   |   |   |   |   |   |           |       |       |                                        |       |       |                                             |   |
|                                             |   |   |   |   |   |   |   |   |           |       |       |                                        |       |       |                                             |   |
|                                             |   |   |   |   |   |   |   |   | **Cost ** | ** ** | ** ** | **Accumulated****Amortization **       | ** ** | ** ** | **Net                      Book****Value**  |   |
|                                             |   |   |   |   |   |   |   |   |           |       |       |                                        |       |       |                                             |   |
| Furniture                                        |   |   |   |   |   |   |   | $      | 11,088    |       | $          | (9,079                                      | )          | $          | 2,009                                            |   |
| Equipment                                        |   |   |   |   |   |   |   |   | 4,065     |       |       | (4,048                                      | )          |       | 17                                               |   |
| Computers                                        |   |   |   |   |   |   |   |   | 14,584    |       |       | (12,375                                     | )          |       | 2,209                                            |   |
|                                                  |   |   |   |   |   |   |   | $      | 29,737    |       | $          | (25,502                                     | )          | $          | 4,235                                            |   |

----

**MOUNTAIN      PROVINCE DIAMONDS INC.**

----

| **6.****Mineral                  properties and deferred exploration:** |       |       |
|-------------------------------------------------------------------------|------------|------------|
| Acquisition                  costs:                                     |       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |       |       |   |   |   |   |   |   |   |   |   | 2006 |   |   | 2005 |   |
|                                                                    |       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gahcho                  Kue Project                                     |       |       |   |   |   |   |   |   |   |   | $ | 1,552,553 |   | $ | 1,552,553 |   |
|                                                                    |       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred                  exploration:                                  |       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |       |       |   |   |   |   |   |   |   |   |   |
|                                                                    |       |       |   |   |   |   |   |   | **Gahcho                  Kue ** | ** ** | ** ** | **Baffin                  Island ** | ** ** | ** ** | ** ** | ** ** |
|                                                                    | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Project ** | ** ** | ** ** | **Project** | ** ** | ** ** | **Total** |   |
|                                                                    |       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                  March 31, 2003                                |       |       |   |   |   |   |   | $  | 30,861,544   |   |  $ | 559,949  |   |  $ |                    31,421,493  |   |
| Write-down                  of deferred exploration costs               |       |       |   |   |   |  |   |   |  -   |   |   | (559,949 | ) |   | (559,949 | ) |
|                                                                         |       |       |   |   |   |   |   |   | -  |  |   |   |   |   |   |   |
| Balance,                  March 31, 2004                                |       |       |   |   |   |   |   |   | 30,861,544  |   |   | - |   |   | 30,861,544 |   |
| Exploration                  expenditures:                              |       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consulting                  and other professional services             |       |       |   |   |   |   |   |   | 4,126  |   |   | - |   |   | 4,126 |   |
|                                                                    |       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                  March 31, 2005                                |       |       |   |   |   |   |   |   | 30,865,670  |   |   | - |   |   | 30,865,670 |   |
| Geophysical                                                             |       |       |   |   |   |   |   |   | 3,220  |   |   | - |   |   | 3,220 |   |
| Due                  Diligence                                          |       |       |   |   |   |   |   |   | 60,159  |   |   | - |   |   | 60,159 |   |
|                                                                    |       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                  March 31, 2006                                |       |       |   |   |   |   |   | $  | 30,929,049  |   |  $ | -  |   |  $ | 30,929,049  |   |
|                                                                    |       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

**(a)        Gahcho Kue Project:**

----

**MOUNTAIN        PROVINCE DIAMONDS INC.**

----

**6.          Mineral properties and deferred exploration          (continued):**

**(a)          Gahcho Kue Project (continued):**

**(b)          Haveri Project:**

**(c)          Baffin Island Project:**

----

**MOUNTAIN            PROVINCE DIAMONDS INC.**

----

**6.              Mineral properties and deferred exploration (continued):**

**(c)              Baffin Island Project: (continued)**

| **7.                        **Share                        capital:****    |   |   |   |   |   |                                       |   |   |       |   |
|----------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------------------------------------------|--------|--------|------------|--------|
| **(a)                        Authorized**                                  |   |   |   |   |   |                                       |   |   |       |   |
| Unlimited                        number of common shares without par value |   |   |   |   |   |                                       |   |   |       |   |
| **(b)                        Issued and fully paid:**                      |   |   |   |   |   |                                       |   |   |       |   |
|                                                                       |   |   |   |   |   |                                       |   |   |       |   |
|                                                                       |   |   |   |   |   | **Number                        of**  |   |   |       |   |
|                                                                       |   |   |   |   |   | **Shares**                            |   |   | **Amount** |   |
|                                                                       |   |   |   |   |   |                                       |   |   |       |   |
| Balance,                        March 31, 2003                             |   |   |   |   |   | 50,582,071                                 |   | $      | 55,719,260 |   |
| Issued                        pursuant to consulting agreement (Note 8)    |   |   |   |   |   | 60,000                                     |   |   | 156,000    |   |
| Exercise                        of stock options                           |   |   |   |   |   | 560,040                                    |   |   | 720,002    |   |
|                                                                       |   |   |   |   |   |                                       |   |   |       |   |
| Balance,                        March 31, 2004                             |   |   |   |   |   | 51,202,111                                 |   |   | 56,595,262 |   |
| Adjustment                        on adoption of new accounting standard   |   |   |   |   |   |                                       |   |   |       |   |
| for                        stock-based compensation (Note 2(i))            |   |   |   |   |   | -                                          |   |   | 20,314     |   |
| Exercise                        of stock options                           |   |   |   |   |   | 202,858                                    |   |   | 282,321    |   |
| Exercise                        of warrants                                |   |   |   |   |   | 1,205,878                                  |   |   | 699,409    |   |
| Value                        on stock options exercised                    |   |   |   |   |   | -                                          |   |   | 10,480     |   |
|                                                                       |   |   |   |   |   |                                       |   |   |       |   |
| Balance,                        March 31, 2005                             |   |   |   |   |   | 52,610,847                                 |   |   | 57,607,786 |   |
| Exercise                        of stock options                           |   |   |   |   |   | 465,000                                    |   |   | 634,850    |   |
| Value                        on stock options exercised                    |   |   |   |   |   | -                                          |   |   | 11,027     |   |
|                                                                       |   |   |   |   |   |                                       |   |   |       |   |
| Balance,                        March 31, 2006                             |   |   |   |   |   | 53,075,847                                 |   | $      | 58,253,663 |   |

----

**MOUNTAIN        PROVINCE DIAMONDS INC.**

----

| **7.****Share                  capital (continued):**                                                                                                                                                                                                            |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(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. |
|                                                                                                                                                                                                                                                             |
| The                  following presents the continuity of stock options                  outstanding:                                                                                                                                                            |   |   |   |   |
|                                                                                                                                                                                                                                                             |   |
|                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   | **Number                  of**  |   |   |   |   |   | **Weighted****Average** |   |
|                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   | **Options**  |   | **Exercise                  Price** |
|                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                  March 31, 2003                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   | 2,399,100 |   |   |   |   | $ | 1.46 |   |
| Granted                  (i)                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   | 12,858 |   |   |   |   | $ | 1.40 |   |
| Exercised                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   | (560,040 | ) |   |   |   | $ | 1.29 |   |
| Expired                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   | (324,060 | ) |   |   |   | $ | 2.19 |   |
| Cancelled                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   | (200,000 | ) |   |   |   | $ | 1.32 |   |
|                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                  March 31, 2004                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   | 1,327,858 |   |   |   |   | $ | 1.37 |   |
| Granted                  (ii)                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   | 200,000 |   |   |   |   | $ | 1.96 |   |
| Exercised                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   | (202,858 | ) |   |   |   | $ | 1.39 |   |
|                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                  March 31, 2005                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   | 1,325,000 |   |   |   |   | $ | 1.48 |   |
| Granted                  (iii)                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   | 200,000 |   |   |   |   | $ | 3.57 |   |
| Exercised                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   | (465,000 | ) |   |   |   | $ | 1.37 |   |
|                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                  March 31, 2006                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   | 1,060,000 |   |   |   |   | $ | 1.90 |   |

| The                  following are the stock options outstanding and exercisable at                  March 31,                  2006. |   |     |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|
|                                                                                                                                  |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                  |   |     |   |   |   | **Black**   |   |   |   |   |   | **Weighted**  |   |   |   |   |   |   |   |
|  **Expiry**                                                                                                                      |   |     |   |   |   | **Scholes**  |   |   | **Number                of**  |   |   | **Average**  |   |   |   |   |   | **Exercise**  |   |
|  **Date**                                                                                                                        |   |     |   |   |   | **Value**  |   |   | **Options**  |   |   | **Remaining                    Life**  |   |   |   |   |   | **Price**  |   |
|                                                                                                                                  |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| May                  11, 2006                                                                                                         |   |     |   |   | $ | - |   |   | 215,000 |   |   | 0.11                  years |   |   |   |   | $ | 1.25 |   |
| May                  11, 2006                                                                                                         |   |     |   |   |   | - |   |   | 340,000 |   |   | 0.11                  years |   |   |   |   | $ | 1.50 |   |
| December                  21, 2006                                                                                                    |   |     |   |   |   | - |   |   | 50,000 |   |   | 0.73                  years |   |   |   |   | $ | 0.67 |   |
| October                  21, 2007                                                                                                     |   | 33,079   |   | 30,000 |   |   | 1.56                  years |   |   |   |   | $ | 1.36 |   |
| March                  21, 2008                                                                                                       |   | 24,419   |   | 25,000 |   |   | 1.98                  years |   |   |   |   | $ | 2.06 |   |
| October                  1, 2009                                                                                                      |   | 189,400  |   | 200,000 |   |   | 3.51                  years |   |   |   |   | $ | 1.96 |   |
| November                  1, 2010                                                                                                     |   | 127,571  |   | 100,000 |   |   | 4.59                  years |   |   |   |   | $ | 2.63 |   |
| January                  30, 2011                                                                                                     |   | 187,308  |   | 100,000 |   |   | 4.84                  years |   |   |   |   | $ | 4.50 |   |
|                                                                                                                                  |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                  |   | $561,777 |   | 1,060,000 |   |   | 1.74                  years |   |   |   |   | $ | 1.90 |   |

----

**MOUNTAIN          PROVINCE DIAMONDS INC.**

----

**7.            Share capital (continued):**

**(c)            Stock options (continued):**

**(i)            **

**(ii)            **

**(iii)            **

|                                                                                                                                                                                                                                               |                           |                        |                           |                           |                           |                        |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|-----------------------------|--------------------------------|--------------------------------|--------------------------------|-----------------------------|
|                                                                                                                                                                                                                                               |                           | **2006**                    |                           | **2005**                       |                           | **2004**                    |
|                                                                                                                                                                                                                                               |                           |                        |                           |                           |                           |                        |
| Net                  loss as reported                                                                                                                                                                                                              | $                  (2,199,888) |                        | $                    1,531,244 | $                  (1,813,005) |
| Pro                  forma adjustment                                                                                                                                                                                                              |                           | -                           |                           | -                              |                           | (4,943)                     |
|                                                                                                                                                                                                                                               |                           |                        |                           |                           |                           |                        |
| Pro                  forma net loss                                                                                                                                                                                                                | $                  (2,199,888) |                        | $                    1,531,244 | $                  (1,817,948) |
|                                                                                                                                                                                                                                               |                           |                        |                           |                           |                           |                        |
| Pro                  forma basic and diluted loss per share                                                                                                                                                                                        |                           | $                    (0.04) |                           | $                    0.03      |                           | $                    (0.04) |
|                                                                                                                                                                                                                                               |                           |                        |                           |                           |                           |                        |
| 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 |
|                                                                                                                                                                                                                                               |                           |                        |                           |                           |                           |                        |
|                                                                                                                                                                                                                                               |                           | 2006                        |                           | 2005                           |                           | 2004                        |
|                                                                                                                                                                                                                                               |                           |                        |                           |                           |                           |                        |
| Dividend                  yield                                                                                                                                                                                                                    |                           | 0%                          |                           | 0%                             |                           | 0%                          |
| Expected                  volatility                                                                                                                                                                                                               | 84%-89.78%                     |                        | 50%                            |                           | 93%                            |
| Risk-free                  interest rate                                                                                                                                                                                                           |                           | 3.9%                        |                           | 4.1%                           |                           | 3.0%                        |
| Expected                  lives                                                                                                                                                                                                                    |                           | 5                  years    |                           | 5                  years       | 5                  to 8 months |

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**MOUNTAIN          PROVINCE DIAMONDS INC.**

----

| **7.                      **Share                      capital (continued):****                                         |   |        |   |      |   |   |   |   |                                   |    |                                    |
|-------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|-----------|--------|--------|--------|--------|----------------------------------------|---------|-----------------------------------------|
| **(d)                      **Warrants:****                                                                              |   |   |   |      |   |        |   |   |                                   |    |                                    |   |   |   |   |   |
| The                      following presents the continuity of share purchase warrants                      outstanding: |   |   |   |      |   |   |
|                                                                                                                    |   |   |   |      |   |   |   |   |                                   |    |                                    |   |   |   |   |   |
|                                                                                                                    |   |   |   |      |   |   |   |   |                                   |    |                                    |   |   |   | **Weighted**  |   |
|                                                                                                                    |   |   |   |      |   |   |   |   | **Number                    of**  |    |                                    |   |   |   | **Average** |   |
|                                                                                                                         |   |   |   |      |   |   |   |   | **Warrants**                      |    | **Exercise                      Price** |
| Balance,                      March 31, 2003 and March 31, 2004                                                         |   |   |   | 1,205,878 |   |   |   |   | $                                      | 0.58    |                                    |
| Exercised                                                                                                               |   |   |   |      |   |   |   |   | (1,205,878                             | )       |                                    |   |   | $ | 0.58 |   |
|                                                                                                                    |   |   |   |      |   |   |   |   |                                   |    |                                    |   |   |   |   |   |
| Balance,                      March 31, 2005 and March 31, 2006                                                         |   |   |   | -         |   |   |   |   | $                                      | -       |                                    |
|                                                                                                                    |   |   |   |      |   |   |   |   |                                   |    |                                    |   |   |   |   |   |
| (e)                       Contributed                      surplus:                                                |   |   |   |      |   |   |   |   |                                   |    |                                    |   |   |   |   |   |
|                                                                                                                         |   |   |   |      |   |   |   |   |                                   |    |                                    |   |   |   |   |   |
|                                                                                                                    |   |   |   |      |   |   |   |   |                                   |    |                                    |   |   |   | Amount  |   |
| Balance,                      March 31, 2003 and March 31, 2004                                                         |   |   |   |      |   |   |   |   | $                                      | 24,419  |                                    |
| Adjustment                      on adoption of new accounting standard for                                              |   |   |   |      |   |   |   |   |                                   |    |                                    |   |   |   |   |   |
| stock-based                      compensation (Note 2(i))                                                               |   |   |   |      |   |   |   |   |                                   |    |                                    |   |   |   | 74,900 |   |
| Less:                      value of options exercised prior to adoption of                                              |   |   |   |      |   |   |   |   |                                   |    |                                    |   |   |   |   |   |
| new                      standard and value transferred to share capital                                                |   |   |   |      |   |   |   |   |                                   |    |                                    |   |   |   | (20,314 | ) |
| Grant                      of stock options                                                                             |   |   |   |      |   |   |   |   |                                   |    |                                    |   |   |   | 189,400 |   |
| Value                      on exercise of stock options transferred to share capital                                    |   |   |   |      |   |   |   |   |                                   |    |                                    |   |   |   | (10,480 | ) |
|                                                                                                                    |   |   |   |      |   |   |   |   |                                   |    |                                    |   |   |   |   |   |
| Balance,                      March 31, 2005                                                                            |   |   |   |      |   |   |   |   |                                   | 257,925 |                                    |
| Issuance                      of stock options                                                                          |   |   |   |      |   |   |   |   |                                   |    |                                    |   |   |   | 314,879 |   |
| Value                      on exercise of stock options transferred to share capital                                    |   |   |   |      |   |   |   |   |                                   |    |                                    |   |   |   | (11,027 | ) |
|                                                                                                                    |   |   |   |      |   |   |   |   |                                   |    |                                    |   |   |   |   |   |
| Balance,                      March 31, 2006                                                                            |   |   |   |      |   |   |   |   | $                                      | 561,777 |                                    |

**(f)        Subsequent events: **

**(i)**

**(ii)**

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**MOUNTAIN        PROVINCE DIAMONDS INC.**

----

**8.          Related party transactions:**

**9.          Income taxes**

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**MOUNTAIN        PROVINCE DIAMONDS INC.**

----

| **9.                      Income taxes **(continued**)******     |   |   |   |   |   |       |   |   |       |   |   |       |   |
|------------------------------------------------------------------|--------|--------|--------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                                                             |   |   |   |   |   |       |   |   |       |   |   |       |   |
|                                                             |   |   |   |   |   | **2006**   |   |   | **2005**   |   |   | **2004**   |   |
|                                                             |   |   |   |   |   |       |   |   |       |   |   |       |   |
| Mineral                      properties and deferred exploration |   |   |   |   | $      | 682,300    |   | $      | 579,000    |   | $      | 1,756,000  |   |
| Loss                      carry forwards                         |   |   |   |   |   | 1,962,200  |   |   | 2,168,000  |   |   | 2,095,000  |   |
| Equipment                                                        |   |   |   |   |   | 155,300    |   |   | 172,000    |   |   | 172,000    |   |
| Long-term                      investment                        |   |   |   |   |   | 503,100    |   |   | 308,200    |   |   | -          |   |
| Other                                                            |   |   |   |   |   | -          |   |   | 6,000      |   |   | 3,000      |   |
|                                                             |   |   |   |   |   |       |   |   |       |   |   |       |   |
|                                                             |   |   |   |   |   | 3,302,900  |   |   | 3,233,200  |   |   | 4,026,000  |   |
|                                                             |   |   |   |   |   |       |   |   |       |   |   |       |   |
| Valuation                      allowance                         |   |   |   |   |   | (3,302,900 | )      |   | (3,233,200 | )      |   | (4,026,000 | )      |
|                                                             |   |   |   |   |   |       |   |   |       |   |   |       |   |
| Net                      future income tax asset (liability)     |   |   |   |   | $      | -          |   | $      | -          |   | $      | -          |   |
|                                                             |   |   |   |   |   |       |   |   |       |   |   |       |   |

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

**(a)          Mineral properties and deferred exploration costs:**

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**MOUNTAIN            PROVINCE DIAMONDS INC.**

----

**10.              Reconciliation to United States generally accepted accounting principles              ("US              GAAP") (Continued): **

**(b)              Stock-based compensation**

----

**MOUNTAIN              PROVINCE DIAMONDS INC.**

----

**10.                Reconciliation to United States generally accepted accounting principles                ("US                GAAP") (Continued):**

**(c)                  Unrealized holding gains and losses on marketable securities and                  long-term                  investments:**

**(d)                Reporting comprehensive income: **

**(e)                Recent accounting pronouncements: **

----

**MOUNTAIN        PROVINCE DIAMONDS INC.**

----

| **10.****Reconciliation                  to United States generally accepted accounting principles ("US                  GAAP")**                                                                                                                                                                                 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(Continued):**                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **(f)                  **Reconciliation:****                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The                  effect of the differences between Canadian GAAP and US GAAP (including                  practices prescribed                  by the SEC) on the consolidated balance sheets, statements of loss                  and                  cash flows                  is summarized as follows: |
|                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **As                  at March 31,**                                                                                                                                                                                                                                                                              |   |   |   |   |   |   | **2006** |   |   |   |   | **2005** |
|                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (i)                  Total assets:                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  assets, under Canadian GAAP                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   | $                  34,874,288 | $                  36,038,157 |
| Adjustment                  for mineral property acquisition                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and                  deferred exploration costs (Note 10(a))                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   | (32,481,602) |   |   |   |   | (32,418,223) |
| Adjustment                  for change in fair value of                                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available-for-sale                  marketable                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| securities                  (Note 10(c) and (d))                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   | 146,120  |   |   |   |   | 63,380 |
| Adjustment                  for change in fair value of                                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| long-term                  investments (Note 10(c) and (d))                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   | 880,000 |   |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  assets, under US GAAP                                                                                                                                                                                                                                                                      |   |   |   |   |   | $ | 3,418,806 |   |   |   | $ | 3,683,314 |
|                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (ii)                  Share capital:                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Share                  capital, under Canadian GAAP                                                                                                                                                                                                                                                               |   |   |   |   |   |   |   | $                  58,253,663 |   |   |   | $ | 57,607,786 |
| Adjustment                  for fair value of employee and                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| director                  options exercised prior to adoption                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                  new accounting standard and transferred                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to                  share capital (Note 10(b))                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   | (20,314) |   |   |   |   | (20,314) |
|                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Share                  capital, under US GAAP                                                                                                                                                                                                                                                                     |   |   | $                  58,233,349 | $                  57,587,472 |
|                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (iii)                  Contributed surplus                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Contributed                  surplus, under Canadian GAAP                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   | $ | 561,777 |   |   |   | $ | 257,925 |
| Adjustment                  for grant of employee                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock                  options (Note 10(b))                                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   | (504,279) |   |   |   |   | (189,400) |
| Adjustment                  on adoptions of new accounting standard                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for                  stock-based compensation (Note 10(b))                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   | (74,900) |   |   |   |   | (74,900) |
| Adjustment                  for fair value of employee                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and                  director options exercised prior to                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| adoption                  of new accounting standard and                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| transferred                  to share capital (Note 10(b))                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   | 20,314 |   |   |   |   | 20,314 |
| Adjustment                  for stock-based compensation                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Note                  10(b))                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   | 1,704,000 |   |   |   |   | 1,704,000 |
|                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Contributed                  surplus, under US GAAP                                                                                                                                                                                                                                                               |   |   |   |   |   | $ | 1,706,912 |   |   |   | $ | 1,717,939 |

----

**MOUNTAIN        PROVINCE DIAMONDS INC.**

----

| **10.****Reconciliation                  to United States generally accepted accounting principles ("US                  GAAP")** |
|-----------------------------------------------------------------------------------------------------------------------------------|
| **(Continued):**                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **(f)                  Reconciliation (continued):**                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| As                  at March 31,                                                                                                  |   |   |   |   |   |   |   |   | 2006 |   |   |   |   | 2005    |
|                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (iv)                  Accumulated other comprehensive income:                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustment                  for fair value of available                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for                  sale marketable securities (Note 10(c) and (d))                                                              |   |   |   |   |   |   |   | $ | 146,120     |   |   |   | $ | 63,380    |
| Adjustment                  for fair value of long-term                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| investments                  (Note 10(c) and (d))                                                                                 |   |   |   |   |   |   |   |   | 880,000     |   |   |   |   | - |
|                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accumulated                  other comprehensive income,                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| under                  US GAAP                                                                                                    |   |   |   |   |   |   |   | $ | 1,026,120     |   |   |   | $ | 63,380    |
|                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (v)                  Deficit:                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Deficit,                under Canadian GAAP                                                                                 |   |   |   |   |   |   |   | $ | (24,122,418) |   |   |   |   | $ |  (21,922,530 | )  |
| Adjustment                  for mineral property acquisition costs                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and                  deferred exploration (Note (10(a))                                                                           |   |   |   |   |   |   |   |   | (32,481,602)     | (32,418,223)    |
| Grant                  of stock options (Note 10(b))                                                                              |   |   |   |   |   |   |   |   | 504,279                      |   |   |   |   | 189,400    |
| Adjustment                  on adoption of new accounting standard                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for                  stock-based compensation (Note 10(b))                                                                        |   |   |   |   |   |   |   |   | 74,900                      |   |   |   |   | 74,900    |
| Adjustments                  for stock-based compensation                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Note                  10(b))                                                                                                     |   |   |   |   |   |   |   |   | (1,704,000)                      |   |   |   |   | (1,704,000)    |
|                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Deficit,                under US GAAP                                                                                       |   |   |   |   |   |   |   | $ |  (57,728,841 | )  |   |   |   | $  |                  (55,780,453 | )  |

----

**MOUNTAIN        PROVINCE DIAMONDS INC.**

----

| **10.****Reconciliation                  to United States generally accepted accounting principles ("US                  GAAP")** |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|
| **(Continued):**                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **(f)                  Reconciliation (continued):**                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Years                  ended March 31,                                                                                            |   |   |   |   |   |   |   |   | 2006 |   |   |   |   |   | 2005 |   |   |   |   |   | 2004 |   |
|                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (vi)                  (Loss) earnings and (loss) earnings per share for the                  year:                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)                  earnings for the year,                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  under                  Canadian GAAP                                                                                        |   |   |   |   |   |   |   |  $ |  (2,199,88 | 8)  |   |   |   | $  | 1,531,244 |   |   |   |   | $  |  (1,813,0 | 05)  |
| Adjustment                  for deferred exploration                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| expenditures                  (Note 10(a))                                                                                        |   |   |   |   |   |   |   |   | (63,379) |   |   |   |   | (4,126 | ) |   |   |   | - |
| Adjustment                  for write-down of mineral                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| property                  acquisition and deferred                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| exploration                  costs (Note 10(a))                                                                                   |   |   |   |   |   |   |   |   | - |   |   |   |   | - |   |   |   |   | 589,669 |
| Adjustment                  to gain on sale of mineral                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| property                  previously written-off (Note 10(a))                                                                     |   |   |   | - |   |   |   |   | 119,386 |   |   |   |   | - |
| Adjustment                  for stock-based compensation                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Note                  (10(b))                                                                                                     |   |   |   |   |   |   |   |   | 314,879 |   |   |   |   | 189,400 |   |   |   |   | - |
|                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss                  (earnings) for the year, under US GAAP                                                                      |   |   |   |   |   |   |   |   | (1,948,388) |   |   |   |   | 1,835,904 |   |   |   |   | (1,223,336) |
| Other                  Comprehensive income:                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change                  in fair value of available for sale                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| marketable                  securities (Note 10(c) and (d))                                                                       |   |   |   | 82,740 |   |   |   |   | 13,450 |   |   |   |   | (17,856) |
| Change                  in fair value of long-term                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| investments                  (Note 10(c))                                                                                         |   |   |   |   |   |   |   |   | 880,000 |   |   |   |   | - |   |   |   |   | - |
|                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                  (loss) earnings, under                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| US                  GAAP                                                                                                          |   |   |   |   |   |   |   | $ | (985,648) | $                  1,849,354 | $                  (1,241,192) |
|                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                  and diluted (loss) earnings per share,                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| under                  US GAAP                                                                                                    |   |   |   |   |   |   |   | $ | (0.04) |   |   |   | $ | 0.04 |   |   |   | $ | (0.02) |
|                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (vii)                  Cash provided by (used in) operating activities:                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                  provided by (used in) operating                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| activities,                  under Canadian GAAP                                                                                  |   |   |   |   |   |   |   | $ | (727,123) |   |   |   | $ | (858,014) | $                  (1,019,586) |
| Adjustment                  for deferred exploration                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Note                  10(a))                                                                                                     |   |   |   |   |   |   |   |   | (63,379) |   |   |   |   | (37,106) |   |   |   |   | - |
|                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                  provided by (used in) operating activities                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| under                  US GAAP                                                                                                    |   |   |   |   |   |   |   | $ | (790,502) |   |   |   | $ | (895,120) | $                  (1,019,586) |

----

**MOUNTAIN              PROVINCE DIAMONDS INC.**

----

| **10.****Reconciliation                      to United States generally accepted accounting principles ("US                      GAAP")** |
|-------------------------------------------------------------------------------------------------------------------------------------------|
| **(Continued):**                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **(f)                      Reconciliation (continued):**                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Years                      ended March 31,**                                                                                            |   |   |   |   |   | **2006** |   |   | **2005** |   |   | **2004** |   |
|                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (viii)                      Cash provided by (used in) investing activities:                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                      provided by (used in) investing                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| activities,                      under Canadian GAAP                                                                                      |   |   |   |   | $ | (63,379 | ) | $ | (37,106 | ) | $ | 4,002 |   |
| Adjustment                      for deferred exploration                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Note                      10(a))                                                                                                         |   |   |   |   |   | 63,379 |   |   | 37,106 |   |   | - |   |
|                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                      provided by (used in) investing activities                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| under                      US GAAP                                                                                                        |   |   |   |   | $ | - |   | $ | - |   | $ | 4,002 |   |

**• **