Dominion Diamond Provides Exploration Update and Announces Maiden Resource at Leslie Pipe at Ekati

Dominion Diamond Corporation (TSX: DDC, NYSE: DDC) (the “Company” or
“Dominion”) today provided an update on its renewed strategic focus on
greenfield exploration activities at the Ekati Diamond Mine (“Ekati
mine”), Diavik Diamond Mine (“Diavik mine”) and other properties in the
Lac de Gras region in the Northwest Territories in Canada. The Company
also announced a maiden resource at the Leslie kimberlite pipe at the
Ekati mine. Unless otherwise indicated, all financial information is
presented in US dollars.

Highlights

• Maiden inferred mineral resource of 51 million tonnes and 16 million
  carats at the Leslie pipe, the highest priority amongst pipes at the
  Ekati mine that have been bulk sampled, but not yet included in the
  mine plan
• Renewed strategic focus on exploration with success-based five-year
  budget of approximately C$50 million
• 150 known kimberlites on the Ekati property, including approximately
  110 pipes that have not had follow-up bulk sampling programs
• Kodiak pipe at the Ekati mine is the highest priority amongst pipes
  that have not been bulk sampled, and is land-based
• Kodiak and Leslie pipes are close to existing infrastructure at the
  Ekati mine, with potential to be included in a future life of mine plan
• At Diavik, the 2017 program includes drilling, microdiamond sampling
  and additional mineral chemistry analysis on three priority kimberlites
• Large land position, with exposure to more than 680,000 hectares, and
  infrastructure advantage in highly prospective Lac de Gras region

“Our renewed focus on exploration is generating strong results along
the entire project pipeline, reflecting near-, mid- and longer-term
potential,” said Jim Gowans, Chairman of the Board. “We expect to
complete pre-feasibility studies on Misery Deep and Fox Deep during the
current fiscal year, and have identified high potential pipes in
proximity to our existing infrastructure in the Lac de Gras region. The
Leslie pipe is our highest-priority pipe amongst kimberlites that have
been bulk sampled, as demonstrated by the announcement of its maiden
resource.”

“We are mining and exploring in what is still a relatively young
mining district,” continued Gowans. “There has been no greenfield
exploration at Ekati since 2007, and of the 150 known kimberlites, only
about 40 have had follow-up bulk sampling. We believe there is strong
potential for further exploration success at Ekati and Diavik, and
throughout the highly-prospective Lac de Gras region.”

Background

The first diamond-bearing kimberlite pipe in the Lac de Gras region was
discovered at Point Lake on the Ekati property as a result of systematic
heavy mineral sampling by prospectors Chuck Fipke and Stewart Blusson
over a ten-year period, and was ultimately confirmed by drilling in
1991. Mining operations were started by the operator of the Ekati mine,
BHP Billiton, in 1998. Dominion acquired its initial interest in the
Ekati mine in 2013.

The Core Zone at the Ekati mine, in which the Company has an 88.9%
participating interest, encompasses 175 mining leases, totaling 172,992
hectares, and hosts the Koala, Fox, Misery Main, Misery South, Misery SW
Extension, Pigeon and Sable pipes, as well as the Leslie and Kodiak
pipes. Kimberlite pipes having both development and exploration
potential are hosted in an area adjacent to the Core Zone referred to as
the Buffer Zone, in which the Company has a 72% participating interest.
The Buffer Zone contains 106 mining leases covering 89,184 hectares, and
hosts the Jay and Lynx pipes.

To date, exploration activities at the Ekati property have included till
sampling, airborne and ground geophysical surveys, and drill programs.
Approximately 350 geophysical and/or indicator dispersion targets have
been drilled, with a total of 150 kimberlites discovered to date in the
Core Zone and Buffer Zone.

For further details and information concerning the Ekati mine, please
refer to the technical report entitled “Ekati Diamond Mine, Northwest
Territories, Canada, NI 43-101 Technical Report” that has an effective
date of July 31, 2016. For further details and information concerning
the Diavik mine, please refer to the technical report entitled “Diavik
Diamond Mine, Northwest Territories, Canada, NI 43-101 Technical Report”
that has an effective date of January 31, 2017. These technical reports
can be found on the Company’s profile at www.sedar.com
and on the Company’s website at www.ddcorp.ca.

Ekati Exploration

Leslie

The Leslie kimberlite pipe is the highest-priority pipe amongst
kimberlites that have been bulk sampled, but not included in the current
mine plan. It was discovered in the summer of 1992, and is located under
a small lake between the Koala and Fox pipes, one kilometre east of the
Fox haul road. Close proximity to the existing infrastructure is a very
positive factor for the Leslie pipe.

Several drilling programs were completed at the Leslie pipe, resulting
in 12 delineation diamond drill holes and 12 reverse circulation (RC)
holes. The initial diamond recoveries and pipe size were encouraging.
The pipe has a circular surface area of approximately seven hectares. A
sample of 224 carats has been recovered from approximately 680 tonnes of
kimberlite for an average grade of 0.3 carats per tonne. Diamond price
modelling is based on the 224-carat parcel.

Grade estimation has been completed for the Leslie pipe using a method
similar to that used at the Sable and Jay projects. Grade data was used
along with bulk density data and pipe modelling to determine average
grades on 30-metre vertical intervals. A block model was completed by
Mineral Services Canada Inc., a consultant with significant experience
in diamond exploration and knowledge of the Ekati property. There are no
mineral reserves at Leslie pipe. The maiden mineral resource is shown in
the table below, expressed in millions of tonnes (Mt), carats per tonne
(cpt) and millions of carats (Mct).

Leslie Mineral Resources as of May 10, 2017 (100% basis)

Notes:

(1) Dominion has modelled the approximate rough diamond price for the
Leslie pipe to be $85 per carat, with a high case estimate of $120 per
carat. To demonstrate that there are reasonable prospects for economic
extraction, the high case was assumed along with 2.5% per annum real
price growth during the life of the mine.
(2) Mineral resources
that are not mineral reserves do not have demonstrated economic
viability.
(3) Mineral resources are reported in accordance with
CIM Definition Standards.
(4) Dominion is operator and has an 88.9%
participating interest in the Core Zone Joint Venture area.
(5)
Mineral resources are reported at +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).

A concept study is planned for the Leslie pipe in 2017, and future work
plans are under consideration.

Kodiak

The Kodiak kimberlite pipe was discovered in 2000, and is located
approximately seven kilometres east of the central infrastructure at the
Ekati mine, and three kilometres east of the Misery haul road. It is
land based and is overlain by 25 metres of glacial till. The pipe has a
surface area of 1.5 hectares and is infilled with resedimented
volcanicalstic kimberlite, which is typical of the economic pipes at the
Ekati and Diavik mines. Preliminary mineral chemistry and microdiamond
results are indicative of moderately diamondiferous kimberlite and the
microdiamond population contains a favourable proportion of white
octahedral fragments.

The work plan includes ground geophysics and a follow-up vertical drill
hole in the centre of the pipe in July 2017; this is expected to
increase the microdiamond sample and provide information on the
kimberlite geological domain. Remodelling of the pipe size and geology,
microdiamond estimation and quality assessment should be completed by
the fall of 2017. Pending the results of this program, an RC bulk sample
program may be planned for winter 2018.

Fiscal 2018 Exploration Program

As part of the Company’s renewed focus on exploration, a greenfield
exploration program was initiated at Ekati in fiscal 2018, to generate
new targets and investigate known kimberlites that have not yet been
subject to extensive testing. This four-part program includes an
assessment of historical geophysical data, till sample data analysis, an
evaluation of known kimberlites to prioritize targets, and a field
program comprised of geophysics and diamond drilling of high priority
targets.

For the geophysical data assessment, two 100 square kilometre blocks –
the Misery block and the Fox block – have been prioritized. The airborne
magnetic and electromagnetic (EM) data has been reprocessed, gridded and
interpreted in the context of known kimberlites pipes and bedrock
geology, with the objective of generating coincident geophysical
anomalies to be prioritized for drilling.

Till data analysis is underway in parallel with the geophysical data
assessment. This involves a study of glacial material using terrain
analysis and photogrammetry, in order to improve discernment of the
dispersion of indicator minerals associated with known kimberlites and
new geophysical anomalies.

Evaluation of known pipes involves sample data analysis and
prioritization, including a comprehensive assessment of microdiamond
populations. The initial focus has been on the Leslie and Kodiak pipes.

The summer 2017 field program is expected to include geophysical
surveys, and culminate in diamond drilling of the Kodiak pipe and at
least five geophysical targets in the Misery and Fox blocks.

Misery Block

The Misery block is a ten kilometre by ten kilometre block centred on
the Misery kimberlite complex, approximately 35 kilometres southeast of
the Ekati process plant. The Misery Block contains the current mining
operations of the Misery and Lynx kimberlites. The original airborne
geophysical survey data was re-gridded and analyzed by Mineral Services.
New approaches were used to discern the more subtle conductivity
anomalies at depth, and the associated magnetic signatures in areas of
geologic noise. Priority was placed on coincident anomalies
characterized as conductors with extension to depth and disruption to
the magnetic fabric. Of the 46 anomalies of interest, five have been
prioritized for possible drilling, and all are within three kilometres
of existing or planned roads.

Follow-up ground geophysical surveys are to be carried out over some of
the targets prior to drilling. Mineral Services plans to trial a
high-resolution aeromagnetic system over known pipes and several targets
in the Misery area.

Fox Block

Similar to the Misery block, the Fox block is a ten kilometre by ten
kilometre block centred on the Fox kimberlite pipe, approximately seven
kilometres southwest of the Ekati process plant to which it is connected
by existing road infrastructure. A review by Mineral Services of
re-gridded airborne EM and magnetic data is underway. This includes a
review of the geophysical signatures of known kimberlites and bedrock
geology. Targets are to be identified based on the presence of
conductors with extensions to depth, in combination with subtle magnetic
anomalies or disruptions to magnetic fabric. Of the 24 anomalies of
interest, three have been prioritized for possible drilling.

Summer Field Program

Ground geophysical surveys including magnetics and horizontal loop EM
are to be carried out in the area of the Kodiak kimberlite as well as on
land targets in the Misery and Fox blocks. An unmanned aerial vehicle
(UAV)-mounted high-resolution magnetic system will also be tested.

Diamond drilling is expected to consist of a single 300-metre vertical
drill hole into the Kodiak kimberlite and testing of at least five new
targets in the Misery and Fox blocks. The Kodiak pipe and any new
kimberlite discoveries will undergo microdiamond evaluation in addition
to standard logging processes.

Regional Exploration

Lac de Gras Joint Venture Project

The Lac de Gras Joint Venture (LDGJV) property covers an area of 1,470
square kilometres and is located south of and adjacent to the existing
Ekati and Diavik mines within the geological terrane known as the Slave
Craton. The LDGJV Agreement was signed in 2015 and the resulting LDGJV
property formed from an amalgamation of claims and mineral leases
formerly held by Dominion and North Arrow Minerals. Dominion is the
operator and, as of February 1, 2017, had a participating interest of
approximately 60%, the remaining interest being held by North Arrow
Minerals Inc.

Exploration work spanning over 25 years has resulted in the discovery of
three kimberlites within the LDGJV property and has produced a large
database of sampling, drilling and geophysical information. A
comprehensive review of this database was conducted during 2016,
including the compilation and interpretation of 5,438 historical till
sample results. This review resulted in the identification of 13
anomalous kimberlite indicator mineral (KIM) trends that were
recommended for further follow-up work. The KIM trends were compared
with available regional geophysical data and seven geophysical targets
were identified for follow-up based on their association with one or
more of the anomalous KIM trends.

The 2016 exploration program also included a review of the historical
airborne geophysical data sets and their re-evaluation using modern
processing and interpretive techniques. A 220 square kilometre area with
limited or poor geophysical coverage was selected for a new survey using
a time domain electromagnetic system which measures resistivity and
conductivity, and a magnetic gradiometer system to measure variations in
the ground’s magnetic properties. The results of the 2016 survey were
incorporated into the property data set and used in a target selection
process leading to the identification of 236 anomalies. Twenty of these
anomalies were selected as priority targets for follow-up in 2017,
including several targets that were upgraded based on their proximity to
the identified regional KIM trends.

A spring 2017 ground geophysics program utilizing magnetic, gravity and
resistivity techniques, has been completed over the 20 selected targets.
The data is currently being interpreted and will be used to guide the
selection of targets for possible drill testing later this summer.
Additionally, a 400 square kilometre area in the southern part of the
property will be covered with a new airborne geophysical survey during
the summer of 2017.

Glowworm Lake

The Glowworm Lake leases were acquired in early 2016 and occupy 1,408
square kilometres north and east of the Diavik mine. The property is
favourably located on the central Slave Craton, but does not currently
have any known kimberlite pipes. There are, however, several pipes in
adjacent areas, pointing to the prospectivity of the region. As part of
the acquisition, Dominion received the sampling, drilling and
geophysical data from the previous exploration work, including more than
5,000 till sample results.

A re-evaluation of the historical data on the Glowworm Lake property is
underway. KIM data has been compiled and areas were reassessed for
follow-up targeting. A number of unresolved KIM anomalies have been
highlighted, including G10 garnet anomalies. In addition, the
geophysical data is being assessed for reprocessing and
reinterpretation. Follow-up target selection will be made based on both
geophysical criteria and KIM associations.

A study of the known kimberlite pipes in the region is ongoing to better
understand kimberlite characteristics in the area in order to refine
targeting techniques.

A field program is planned for 2017 with targets being selected for
follow up with ground geophysics (magnetics, gravity and resistivity).
The data collected from the ground surveys will be used to select future
drill targets. Any new kimberlite discoveries will advance to core
drilling for morphology definition and microdiamond sampling.

Diavik Exploration

The Diavik Joint Venture consists of the Diavik mine and its surrounding
exploration properties, comprising 153 mining leases and covering
330,230 acres. The A-21, A-154 North and A-154 South kimberlite pipes
were discovered in 1994, and the A-418 pipe was discovered in 1995.
Initial mining commenced in late 2002, and commercial production in
early 2003. Exploration continued after the mine start-up and into
operations, until 2013. Activities included additional geophysical
surveying, till sampling, sample processing, indicator mineral counts
and analyses, mapping and drilling. Many more kimberlites were found,
but none have been economic to date.

Three priority kimberlites – C42, T29 and A61 – have been highlighted
for additional work based on potential size and proximity to the
existing infrastructure. The goal for 2017 is to delineate these
kimberlites further using core drilling, and to collect sufficient
material for mineral chemistry and microdiamond sampling.

The C42 pipe is the highest priority pipe at Diavik, and is located 1.4
kilometres southwest of the A-21 pipe. It was intersected with three
drill holes between 1994 and 1995, including hole C42-03 which
intersected 280 metres of kimberlite, of which 192 metres were reported
as pyroclastic kimberlite. Based on the three drill holes and
geophysical EM interpretation, the surface area of the pipe is estimated
at 2.9 hectares. Mineral chemistry analysis confirmed the presence of a
high interest peridotitic garnet population at C-42. The pipe has not
been adequately sampled for microdiamond analysis.

The T29 pipe is located seven kilometres south of the Diavik mine. Based
on the four drill holes that intersected the pipe between 1992 and 1996,
the kimberlite is macrocrystic and highly altered, with kimberlite
intervals ranging between 12 and 30 metres in thickness. T29 is
interpreted as a long thin kimberlite, with a length of up to one
kilometre. There are no mineral chemistry or microdiamond results for
T29.

The A61 pipe is located 20 kilometres northeast of the Diavik mine. It
was intersected with two drill holes between 1993 and 1994.
Intersections include intervals of seven metres of coherent kimberlite
(HK) and 48 metres of volcaniclastic kimberlite. The surface area is
estimated at 1.1 hectares. Mineral chemistry results confirm the
presence of garnets and chromites within the diamond stability zone.
There are no microdiamond results from A61 and additional mineral
chemistry sampling is required.

Additional work has been recommended on the three priority kimberlites.
This includes two to three drill holes on each pipe, microdiamond
sampling and additional mineral chemistry analysis for a total spend of
approximately C$1 million in calendar 2017.

Qualified Person
The mineral resource estimate for
the Leslie pipe was prepared and verified under the supervision of Mr.
Peter Ravenscroft, FAusIMM, of Burgundy Mining Advisors Ltd., an
independent mining consultancy, and a Qualified Person within the
meaning of National Instrument 43-101. The other scientific and
technical information contained in this press release has been prepared
and verified by Dominion, operator of the Ekati Diamond Mine, under the
supervision of Jon Carlson, P. Geo., Manager of Strategic Planning for
the Ekati Operation with Dominion, and a Qualified Person within the
meaning of National Instrument 43-101 of the Canadian Securities
Administrators.

Forward-Looking Information
The information
included herein that is not current or historical factual information,
including information about expected exploration activities and other
plans regarding mine development the Ekati Diamond Mine and the Diavik
Diamond Mine, and expectations concerning the diamond industry,
constitutes forward-looking information or statements within the meaning
of applicable securities laws. Forward-looking information is based on
certain factors and assumptions including, among other things, the
current mine plan for each of the Ekati Diamond Mine and the Diavik
Diamond Mine; mining, production, construction and exploration
activities at the Ekati Diamond Mine and the Diavik Diamond Mine;
currency exchange rates; world and US economic conditions; future
diamond prices; and the level of worldwide diamond production.
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
Company’s mining properties, variations in mineral reserve and mineral
resource estimates, grade estimates and expected recovery rates, failure
of plant, equipment or processes to operate as anticipated, 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
disclosure, 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.

About Dominion Diamond Corporation
Dominion
Diamond Corporation is a Canadian diamond mining company with ownership
interests in two major producing diamond mines. Both mines are located
in the low political risk environment of the Northwest Territories in
Canada. The Company operates the Ekati Diamond Mine, in which it owns a
controlling interest, and also owns 40% of the Diavik Diamond Mine. It
supplies premium rough diamond assortments to the global market through
its sorting and selling operations in Canada, Belgium and India.

For more information, please visit www.ddcorp.ca

View source version on businesswire.com: http://www.businesswire.com/news/home/20170518006527/en/

News by QuoteMedia

www.quotemedia.com