DOMINION DIAMOND CORPORATION DOMINION TO PROCEED WITH JAY DEVELOPMENT BASED ON POSITIVE FEASIBILITY STUDY AND PROVIDES UPDATED LIFE OF MINE PLAN Jay Feasibility Study Results July 2016
Forward Looking Information Caution Regarding Forward Looking Information Certain information included herein that is not current or historical factual information, including information about estimated mine life and other development plans regarding mining activities at the Ekati Diamond Mine, estimated economics of the Jay pipe, estimated mineral reserves and mineral resources, projected capital and operating costs, future diamond price, future diamond jewelry demand and diamond production, and future exchange rates constitute forward-looking information or statements within the meaning of applicable securities laws. Forward-looking information can generally be identified by the use of terms such as may, will, should, could, expect, plan, anticipate, foresee, appears, believe, estimate, predict, continue, modeled, hope, forecast or other similar expressions concerning matters that are not historical facts. Forward-looking information is based on certain factors and assumptions including, among other things, the current mine plan for the Ekati Diamond Mine; mining, production, construction and exploration activities at the Ekati Diamond Mine; the timely receipt of required regulatory approvals; mining methods; currency exchange rates; estimates related to the capital expenditures related to bring the Jay pipe into production, required operating and capitals costs; labour and fuel costs; world and US economic conditions; future diamond prices; and the level of worldwide diamond production. These assumptions may prove to be incorrect. Forward-looking information is subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from what the Company currently expects. These factors include, among other things, the uncertain nature of mining activities, including risks associated with underground construction and mining operations, risks associated with joint venture operations, risks associated with the remote location of and harsh climate at the Ekati Diamond Mine, risks resulting from the Eurozone financial crisis, risks associated with regulatory requirements, the risk of fluctuations in diamond prices and changes in US and world economic conditions, the risk of fluctuations in the Canadian/US dollar exchange rate and cash flow and liquidity risks. Actual results may vary from the forward-looking information. Readers are cautioned not to place undue importance on forward-looking information, which speaks only as of the date of this presentation, and should not rely upon this information as of any other date. While the Company may elect to, it is under no obligation and does not undertake to, update or revise any forward-looking information, whether as a result of new information, further events or otherwise at any particular time, except as required by law. Additional information concerning factors that may cause actual results to materially differ from those in such forward-looking statements is contained in the Company's filings with Canadian and United States securities regulatory authorities and can be found at www.sedar.com and www.sec.gov, respectively. Technical Information The scientific and technical information contained in this presentation has been prepared and verified by Dominion, operator of the Ekati Diamond Mine, under the supervision of Peter Ravenscroft, FAusIMM, of Burgundy Mining Advisors Ltd., an independent mining consultant, and a Qualified Person within the meaning of National Instrument 43-101 of the Canadian Securities Administrators. Dominion was assisted by Danny Tolmer, P.Eng., of Golder Associates Ltd., who supervised the probable mineral reserve estimate, and John Cunning, P.Eng., of Golder Associates Ltd., who supervised the capital development cost estimates for the construction of the dike and its associated infrastructure, including roads and pumping infrastructure, each of whom is a Qualified Person within the meaning of National Instrument 43-101. Each Qualified Person has reviewed and approved the information in this presentation relevant to the Jay Feasibility Study for which they are responsible. 2
Feasibility Study Demonstrates Technically and Economically Sound Project Executive Summary of Highlights Positive project economics Platform for future growth at Ekati Self-funded development 100% Basis: US$398M after-tax NPV 7, IRR 15.6% Dominion share: US$278M after-tax NPV 7, IRR 16.7% 44.7 M tonnes of probable reserves @ 1.8 carats/tonne Mine life extended to 2033 Existing cash and internally generated cash flows to fund project Development schedule aligned with positive market outlook Development: calendar 2017-2021 First ore: calendar 2022 3
Jay: Extension of Ekati Mine Jay is located 25 km from the Ekati mine along the Misery Road 7 km northeast of Misery Pit operations Within the Buffer Zone Joint Venture Property 4
Jay: Brownfield Project Leverages Existing Infrastructure Leveraging existing infrastructure: Process plant Power plant Waste management Airstrip Misery haul road and power line Misery pit (water management) Lynx pit (water management, granite rock) Koala and Panda pits (processed kimberlite management) 5
Integration into Extended Ekati Life-of-Mine Plan Jay represents long-term, steady and significant production for an additional 13 years Ekati Life-of-Mine Plan updated to integrate Jay, Sable, and existing operations Consistent ore feed through FY34 Misery Deep, Fox Deep, and coarse processed kimberlite represent future plant feed upside potential Note: Operating Case shown which does not include the impact of the process plant fire that occurred in Q2 FY17. Lynx and Jay are part of the Buffer Zone. All other deposits are part of the Core Zone. Misery South and Southwest are currently inferred mineral resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the operating case mine plan will be realized. 6
Life-of-Mine Increased Carat Recoveries Including Jay, total Ekati mine life of 18 years With Jay, Ekati expected to produce 116 M carats Carat recoveries increase substantially in later years of mine plan as Jay Volcaniclastic Kimberlite (VK) ore processed Note: Operating Case shown which does not include the impact of the process plant fire that occurred in Q2 FY17. Lynx and Jay are part of the Buffer Zone. All other deposits are part of the Core Zone. Misery South and Southwest are currently inferred mineral resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the operating case mine plan will be realized. 7
Feasibility Study Economics Compared to PFS Study Key Financial and Project Highlights Jay Feasibility Study Jay Pre-Feasibility Study Release Date July 2016 January 2015 Mined Waste 136.0 million tonnes 182.1 million tonnes Mined Kimberlite 44.7 million tonnes 45.6 million tonnes Strip Ratio 3.0 4.0 Recovered Carats 78.6 million carats 84.6 million carats Recovered Grade 1.8 carats per tonne 1 1.9 carats per tonne 2 Initial Development Capital US$647 million 3 US$657 million 4 Pre-Stripping Capital US$33 million 3 US$33 million 4 Sustaining Capital US$183 million 3 US$148 million 4 Life-of-Mine Exchange Rate 1.33 CAD per USD 1.10 CAD per USD Life-of-Mine Operating Costs US$2,676 million US$3,098 million Base Case Diamond Price US$53 per carat US$64 per carat Base Case Diamond Price Book November 2015 October 2014 Post-tax NPV (incremental) US$398 million 5 US$610 million 5 Real Discount Rate 7% 7% Mine Operational Life 13 years 11 years Post-tax IRR 15.6% 3 16.2% 3 Note: US$ figures for Jay FS and PFS refer to unescalated 2015 and 2014 United States dollars, respectively. All figures are on a 100% basis. All tonne totals refer to dry metric tonnes. 1. The recovered grade in the Jay FS is reported at a 1.0 mm cut-off (based upon diamonds that would be recovered by the Ekati bulk sample plant using 1.0 mm slot de-grit screens) and includes the contribution of additional carats recovered after commissioning of a Fine Dense Media Separator ( Fine DMS ) unit in the Ekati processing plant. 2. The recovered grade in the Jay PFS is reported at a 0.5 mm cut-off (based upon diamonds that would be recovered by the Ekati bulk sample plant using 0.5 mm slot de-grit screens). As detailed in the February 23, 2016 news release issued by the Company, during the Jay FS review the 1996 and 2006 bulk sample results were reinterpreted and it was determined that they were processed at smaller slot screen cut-offs than was originally assumed for the Jay PFS. 3. The Jay FS estimate is at an assumed exchange rate of 1.33 CA$/US$ in calendar 2016 and thereafter, and includes a US$75 million contingency. 4. The Jay PFS estimate is at an assumed exchange rate of 1.135 CA$/US$ in calendar 2015 and 1.10 CA$/US$ in calendar 2016 and thereafter, and includes a US$83M contingency. 5. After taxes/royalties and unleveraged. Key applicable taxes assumed include a 13% Northwest Territories royalty rate and 26.5% statutory income tax rate. 8
Capital Expenditure Summary Feasibility Study capex, US$ millions Dike, roads, and pumping systems Mining & support equipment Engineering, design, & consulting Process plant upgrades Project team Truck shop Power connection Construction camp Environmental Road upgrades Total without contingency Contingency Total initial development capital Pre-stripping Total incremental capital 329 86 42 40 22 15 13 13 9 4 572 75 647 33 680 9
Strong Financial Position Strong cash position, clean balance sheet and strong free cash flow generation support both Dominion s project development and capital allocation strategy Financial Position Q1 FY2017: Sources: Uses: US$227 million unrestricted cash US$210 million of un-used credit facility Cash on hand Expected cash flows Sale of Toronto office building Jay, Sable, and A21 development capex Sustaining capex Enhanced dividend NCIB 10
Economic Sensitivities IRR (Percent) Base case assumptions Low IRR (Percent) Base IRR (Percent) High IRR (Percent) Real price growth (0% to 3.5%) CA/US exchange rate (-20% to +20%) Initial price (-15% to +15%) Operating costs (+20% to -10%) Initial capex (+20% to -10%) 2.5% real p.a. 6% 16% 19% 1.33 CA$/US$ 10% 16% 22% US$53/ct 11% 16% 20% US$2,676 M 12% 16% 18% US$680 M 13% 16% 17% 11
Jay Pipe Geology and Drilling Three lithological domains: Resedimented volcaniclastic kimberlite (RVK) Uppermost 140 to 190m Lower grade, higher average $/carat value Volcaniclastic kimberlite (VK) Higher grade, lower average $/carat value Mixed or transitional zone (MIX) 20 to 70m thick interbedded material Three reverse circulation drill programs completed (1996, 2006, 2015): In aggregate, 2,347 tonnes sampled with 4,149 carats recovered Deposit remains open at depth exploration target below 0m masl (meters above sea level) 12
Jay Pipe Mineral Resources and Mineral Reserves (100% basis) Kimberlite Pipes Measured Resources Indicated Resources Inferred Resources Zone Location Type M t Ct/t M ct M t Ct/t M ct M t Ct/t M ct Jay Buffer OP - - - 48.1 1.9 89.8 4.2 2.1 8.7 Note: Totals may not add up due to rounding Kimberlite Pipes Proven Reserves Probable Reserves Proven and Probable Zone Location Type M t Ct/t M ct M t Ct/t M ct M t Ct/t M ct Jay Buffer OP - - - 44.7 1.8 78.6 44.7 1.8 78.6 Note: Totals may not add up due to rounding Notes: 1. Mineral Reserves and Mineral Resources have an effective date of March 31, 2016. The Mineral Resources were prepared under the supervision of Peter Ravenscroft, FAusIMM, of Burgundy Mining Advisors Ltd., an independent mining consultancy. The Mineral Reserves were prepared under the supervision of Danny Tolmer, P.Eng., of Golder Associates Ltd. Mr. Ravenscroft and Mr. Tolmer are both Qualified Persons within the meaning of National Instrument 43-101. 2. Mineral Reserves and Mineral Resources are reported on a 100% basis. Mineral Resources are inclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. 3. Mineral Reserves and Mineral Resources are reported in accordance with CIM Definition Standards. 4. The reference point for the definition of Mineral Reserves is at the point of delivery to the process plant. 5. Mineral Resources are reported at a +0.5 mm cut-off (based upon diamonds that would be recovered by the Ekati bulk sample plant using 0.5 mm width slot de-grit screens). 6. Mineral Reserves are reported at a +1.0 mm cut-off (based upon diamonds that would be recovered by the Ekati bulk sample plant utilizing 1.0 mm slot de-grit screens and equivalent to the current Ekati Process Plant recovery and inclusive of the Fine DMS circuit). Overall estimated Process Plant diamond recovery relative to resource grade is 96-98%, depending on the rock type. 7. Mineral Reserves will be mined using open pit methods. The Jay Mineral Reserve estimate assumes an overall dilution of 2% and mining recovery of 98%. 8. Dominion is the operator of the Ekati Diamond Mine and has a majority interest in the Buffer Zone Joint Venture area. 13
Timeline to Development Calendar Years 2015 2016 2017 2018 2019 2020 2021 2022 Feasibility Study Environmental Assessment Minister s Response Permitting Road Construction Dike Construction Instrumentation & Dewatering Waste Stripping Ore Production Open water construction seasons 14
US$ Billion (2015 PRICES) Steady, Real Growth in Diamond Jewelry Demand Jay well-positioned to capitalize on favourable market dynamics Globally diverse consumers Real Diamond Jewelry Demand* Consumers based in both mature and emerging markets Demand for diamond jewelry grows with GDP and resilient to macroeconomic shocks Real demand growth expected India and China forecasted to experience real CAGRs of 6%-7% Mature markets forecasted to grow at lower rates 120 100 80 60 40 3.4% CAGR 20-2015 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E * DDC analysis, based on 2015 prices, non-recycled diamond jewelry 15
2011-2015 CHANGE IN PRICE LIST (%) Commercial Goods Have Shown Strong Price Trends Price growth is strongest for the types of diamonds Jay will produce Polished diamonds range in physical characteristics including differing colors and clarities Democratization of diamond jewelry and resilience of mass market jewelry has led to stronger price trend in lower quality polished diamonds Polished diamonds in lower colors (e.g. K- M) have outperformed better colors (e.g. D-F) Better clarities (IF-VVS) have shown weaker price performance than lower clarities Source: DDC analysis using Rapaport 2015 Diamond Statistics. Average price for each colour/clarity category, 0.3ct-2ct polished. 2011-2015 Rapaport Price List Change 10% 8% 6% 4% 2% 0% 14% 12% 10% 8% 6% 4% 2% 0% -2% D E F G H I J K L M Polished diamond color IF VVS VS SI I Polished diamond clarity 16
MCTS MINE AVERAGE US$/CT PRODUCTION (2015 PRICES) Rough Diamond Supply Expected to Diminish, Particularly for Lower-Average Price Production Rough Diamond Production (by mine average US$/ct) 2015-2023E % Change in Production Volume 160 140 US$150/ct 120 100 80 US$70/ct -US$150/ct 60 40 20-2015 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E US$70/ct US$150/ct US$70/ct -US$150/ct US$70/ct -50% -40% -30% -20% -10% 0% 10% 20% 30% Source: DDC analysis of industry annual reports, resources/reserve statements, investor presentations, KPCS 17
Summary Jay Feasibility Study: Demonstrates a technically and economically sound project Fully funded from cash and future cash flows Supports strategy for growing Dominion, with Ekati as one major platform for expansion Strong diamond market dynamics aligned with Jay development Dominion well-positioned to pursue other potential growth opportunities near existing operations 18
Dominion Provides Clear Direction on Capital Allocation Strategy Delivering Value To Shareholders Through Disciplined investment in development opportunities Returning capital to shareholders Divesting of Non-core Asset Jay, Sable & A21 approved development projects Exploration potential Intention to commence an normal course issuer bid to purchase up to 6.15 million shares Confirmation of minimum level dividend for fiscal 2017 of US $0.40 per share Intention to enhance base level of dividends Selling of 100% owned downtown Toronto office building 19
DOMINION DIAMOND CORPORATION DOMINION TO PROCEED WITH JAY DEVELOPMENT BASED ON POSITIVE FEASIBILITY STUDY AND PROVIDES UPDATED LIFE OF MINE PLAN Jay Feasibility Study Results July 2016