April 2017 Environmental Update for SLEMA Board Zhong Liu April 30, 2017

Outline Mine Update Inspection Update Regulators’ Update Aboriginal Update Stakeholders’ Update SLEMA Reviews

Acronyms AEMP – Aquatic Effects Monitoring Program ARD – Acid Rock Drainage DFO – Fisheries and Oceans Canada ECCC – Environment and Climate Change Canada ECM – Extended Care and Maintenance ENR – Department of Environment and Natural Resources, GNWT EQC – Effluent Quality Criterion GNWT – Government of the Northwest Territories INAC – Indigenous and Northern Affairs Canada (formerly Aboriginal Affairs and Northern Development Canada [AANDC]) MVEIRB – Mackenzie Valley Environmental Impact Review Board MVLWB – Mackenzie Valley Land and Water Board PK – Processed Kimberlite SLEMA – Snap Lake Environmental Monitoring Agency SNP – Surveillance Network Program SSWQO – Site-Specific Water Quality Objective TDS – Total Dissolved Solids WEMP – Wildlife Effects Monitoring Program WTP – Water Treatment Plant WMP – Water Management Pond

1.1 Mine Update – March 2017 The Snap Lake Mine remained in suspended operations (Extended Care and Maintenance) Flooding of the underground workings is on-going 4,647 m3 of water withdrawn from Snap Lake No treated water discharged into Snap Lake No reportable spills Water sampled in 2 monitoring stations SNP 02-15 (water intake), 02-16i (sewage effluent) There was no discharge to the lake from Station 02-17B after February 9

1.2 Snap Lake Mine Care and Maintenance – Quarterly Update Submitted on April 3, 3017 For March 2017 the Snap Lake Mine remains in suspended operations “De Beers continues to follow the Extended Care and Maintenance Plan (ECM) that was approved by the MVLWB on June 22, 2016.”

2. Inspection Update Inspector – Andrew Howton Water Licence Inspections No inspection reports received in April 2016

3. Regulators’ Update – MVLWB (I) Requested reviewers to submit comments on 2016 Water Licence Annual Report, on April 5, 2017 Comments due on May 3

4. Aboriginal Update No comments received in April 2017

5. Stakeholders’ Update No comments received in April 2017

6. SLEMA Reviews 2016 Water Licence Annual Report

6.1 2016 Water Licence Annual Report Submitted on March 31, 2017 Provided information and data in order to fulfill the annual reporting requirements of Water Licence MV201L2-0004 Four appendices attached Appendix I 2016 Snap Lake Mine Surveillance Network Program Water Quality Data Appendix II Geochemical Field Inspection Report, 2016 Appendix III Acid/Alkaline Rock Drainage and Geochemical Characterization Report, 2016 Appendix IV Geotechnical Instrumentation Monitoring Program Summary, 2016

Comments from the Environmental Analyst (I) It is evident that the submission did not follow the Schedule 1, Part B of the Water Licence MV201L2-0004 (pages 23 to 25 of 66, current to: September 8, 2016) Part of the Table of Contents is out of date The following requirements are not fulfilled Schedule 1, Part B 1q, 1t (geotechnical inspection report), dd, ee, ff, gg, hh Information and data related to the aforementioned conditions should be added into the Annual Report. Re-submission is requested

Comments from the Environmental Analyst (II) There are a few editing issues in the Table of Contents A few tables missing in Page iv Tables 10-1, 11-1, 12-1, 14-1, etc. Figure 11-2?

6.2 Appendix I 2016 Snap Lake Mine Surveillance Network Program Water Quality Data SNP data have been analyzed on a monthly basis, and any findings had been reported in the Environmental Updates in 2016

6.3 Appendix II Geochemical Field Inspection Report, 2016 Prepared by Arktis Solutions for De Beers The 2016 site inspection was conducted by staff from ARKTIS Solutions Inc. between August 30 and September 5, 2016 A visual inspection of the Engineered Structures designed to contain, withhold, retain, or divert Water or Waste was completed, including the North Pile, sumps, Water Management Pond (WMP), etc. Seventeen rock grab samples and ten water grab samples were collected

Aerial View of Starter Cell and East Cell Areas

Aerial View of Mine Site including Process Plant and Water Management Pond

Report Conclusion and Recommendations All locations inspected continue to show no apparent signs of incipient acid generation or Acid Rock Drainage based on visual observations. Assessment of the geochemical laboratory analysis for rock and water are required to confirmation this preliminary observation. Samples of standing or flowing water should continue to be collected from the ten locations identified within the North Pile perimeter ditches, quarry, landfarm area and Il6 Ditch as part of the spring and fall seepage surveys

Comments from the Environmental Analyst The site photos presented in the Appendix A are helpful for reviewers to understand the mine site situations No concerns are raised Report recommendations are supported

6.4 Appendix III Acid/Alkaline Rock Drainage and Geochemical Characterization Report, 2016 This report summarizes the acid/alkaline rock drainage (ARD) and geochemical conditions observed at the Mine in 2016 Appendix A Selected Photographs from 2016 Site Inspection Appendix B Water Quality Results From Several Locations Sampled in Support of the 2016 Geochemistry Evaluation Appendix C Water Quality Results from Selected Surveillance Network Program Monitoring Stations Appendix D Results of Geochemical Characterization of Supplemental Geochemistry Samples Appendix E 2016 Seepage Survey Summary Report

Snap Lake Mine Site Configuration, including Geochemistry Sample Locations

Snap Lake Mine Site Configuration, including water monitoring locations

ARD Monitoring Program The study area consisted of the underground Mine and surface facilities, including the North Pile, WMP, roadways, pads, and any other areas where rock has been disturbed or deposited The results of geochemical characterization of PK, metavolcanic, and granite rock collected in 2016 were used to evaluate the conditions at the Mine relative to the existing geochemical dataset The results of water quality analysis were used to evaluate trends in seepage and runoff quality at the Mine site A sulphide sulphur cut-off of 0.17% by weight was defined as the operational criterion for geochemical classification of granite rock at the Snap Lake Mine

Minewater Discharge Rate through December 31, 2016

Minewater Discharge (SNP 02-01)

Water Management Pond Stilling Well Concentrations (SNP 02-14)

North Pile Runoff Water Quality (SNP 02-02)

Water Quality in the Vicinity of the Explosive Storage Facility (SNP 02-07 and SNP 02-09)

Assessment of Potential for Acidic or Alkaline Drainage (I) Kimberlite and Processed Kimberlite Classified as non-AG, confirmed by long-term kinetic leach testing Metavolcanic In general, metavolcanics contain low neutralization potential The results of ongoing kinetic testing indicated that samples of metavolcanic rock that contained up to 0.29% sulphide-sulphur were not likely to generate acidity

Assessment of Potential for Acidic or Alkaline Drainage (II) Granite The main development rock lithology at the Mine Two classifications have been developed for granitic rock at the Mine granitic rock not associated with metavolcanics and faulting; and granitic rock associated with metavolcanics and faulting or containing elevated sulphide content,including development rock near the granite metavolcanic interface and granite in dilution rock

2016 PK samples had similar geochemical characteristics to samples collected during the EAR and previous geochemical assessments Kimberlite ore at the Mine is classified as non-AG. Kimberlite contains substantial excess buffering capacity in the form of carbonate minerals. Sufficient NP is available to counteract the acidity produced by the oxidation of sulphide minerals in the kimberlite, or in metavolcanic dilution rock interspersed with the kimberlite in the ore zone

The results of metavolcanic samples analysis collected in 2016 do not change the geochemical interpretation of metavolcanic discussed in the EAR, or the ARD and Geochemistry Plan

The composition of granite samples collected in 2016 falls within the range of composition of other samples in the granite dataset

Report Conclusions and Recommendations (I) Geochemical Site Inspection No visible signs of incipient acid generation were observed in the roads, rock pads or building foundations at the Mine Geochemical Characterization of Mine Rock and Processed Kimberlite The composition of 18 samples collected in 2016 was within the range of composition of samples in the existing geochemical dataset The geochemical assessment of kimberlite, PK and granite has not changed

Report Conclusions and Recommendations (II) It is not expected that the metavolcanic materials currently near surface on site will result in acidic conditions developing in the runoff Based on the current results and existing geochemical dataset, the geochemical criteria for mine rock management as outlined in De Beers 2014 are considered appropriate and no changes to these criteria are proposed at this time

Report Conclusions and Recommendations (III) Mine Water Quantity and Quality Minewater inflow rates remained stable and TDS loading rates increased throughout 2016 as expected Observed flow rates and water quality at SNP 02-01 as measured in 2016 are generally consistent with the updated water quality predictions made in 2013

Report Conclusions and Recommendations (IV) Site Runoff and Seepage The results of water quality analysis at most SNP monitoring stations, bog and seepage monitoring stations was similar to concentration trends observed during the previous monitoring year Observed water quality at SNP 02-02 (North Pile) was similar to water quality predictions made in the 2013 Base Case Site Water Quality Model, with the exception of sulphate and some major ions. These values were higher than predictions

Report Conclusions and Recommendations (V) Bogs in the vicinity of the airstrip are reporting some elevated nitrate (0.05 to 16 mg/L) and major ion concentrations on the southeast side and require ongoing monitoring to evaluate trends, or to assess if the results are due to evaporation near or at the sample location and/or runoff from blasting activities at the nearby quarry location

Comments from the Environmental Analyst No concerns are raised

6.4.1 Appendix E 2016 Seepage Survey Summary Report ARKTIS Solutions Inc. was contracted by De Beers to complete the 2016 Seepage Survey Report Two seepage surveys were conducted from June 14 to 15, 2016 and August 30 to September 3, 2016 Early summer and fall seepage surveys involved visually identifying any flow and/or ponded water about the perimeters of the following Waste areas: ore stockpiles, waste rock and tailings pile

2016 Water Quality Monitoring Locations

Main Findings of the 2016 Seepage Surveys Nearly all monitoring locations had at least one measurement that was elevated compared to the Water Licence’s treated effluent quality criteria. The monitoring locations, except for bogs and some SNP stations, are within a catchment at the mine that directs the water to the water management pond for treatment to ensure Water Licence effluent quality criteria at the controlled discharge to Snap Lake is achieved Elevated concentrations of TSS and aluminum at the reference bog near the emulsion plant suggest some parameters for site water are also likely within the range of natural environmental variability

Comments from the Environmental Analyst No concerns are raised Monitoring results at the bogs downgradient of the North Pile and WMP indicate that there were no abnormally elevated measurements. It is a good sign, but continual seepage surveys are required to identify potential spills

6.5 Appendix IV Geotechnical Instrumentation Monitoring Program Summary, 2016 (I) Prepared by Arktis Solutions for De Beers Results from the monitoring of thermistors, piezometers, and survey prisms installed on the Site were presented in this report Monitoring data from 1999 to 2016

Report Conclusions and Recommendations In general, the geotechnical conditions and trends at the North Pile and Water Management Pond are consistent with previous years, and no notable changes were observed throughout 2016, with the possible exception of a potential decrease in the active layer thickness along the shoreline of Snap Lake and a potential decrease in water levels adjacent to Dam 1 Some thermistors, piezometers, and survey prisms in the North Pile and WMP have become damaged. Replacement or repair is recommended It is recommended that the geotechnical information presented in this report be used to inform annual geotechnical inspection of the Mine

Comments from the Environmental Analyst No concerns are raised Report recommendations are supported