July 2013 Environmental Update for SLEMA Board July 2013 Environmental Update for SLEMA Board Zhong Liu July 31, 2013

Outline 1. Mine Update 2. Inspection Update 3. Regulators’ Update 4. Aboriginal Update 5. Stakeholders’ Update 6. SLEMA Reviews

Acronyms  AANDC – Aboriginal Affairs and Northern Development Canada (previous INAC – India and Northern Affairs Canada)  AEMP – Aquatic Effects Monitoring Program  ARD – Acid Rock Drainage  DFO – Fisheries and Oceans Canada  EC – Environment Canada  ENR – Department of Environment and Natural Resources, GNWT  GNWT – Government of the Northwest Territories  MVLWB – Mackenzie Valley Land and Water Board  PK – Processed Kimberlite  SLEMA – Snap Lake Environmental Monitoring Agency  SNP – Surveillance Network Program  TDS – Total Dissolved Solids  WEMP – Wildlife Effects Monitoring Program  WTP – Water Treatment Plant  WMP – Water Management Pond

1.1 Mine Update – June 2013  Production rate: 92.6% of its capacity (87,490 tonnes of kimberlite processed)  4,040 m 3 of water withdrawn from Snap Lake  1,122,168 m 3 of treated water discharged into Snap Lake  75,440 tonnes of coarse reject and 60,794 m 3 of slimes deposited in the North Pile  2 surface spills (0 reportable)  Water sampled in 13 monitoring stations The monthly average for all parameters met compliance The monthly average for all parameters met compliance There were no exceedances observed for SNP stations 02-17B nor 02-16i for the month of June. Exceedances were seen for aluminum and copper at a number of surface runoff sites (SNP , SNP 02-05, and SNP 02-06) as well, surface runoff sites SNP and SNP experienced exceedances in ammonia There were no exceedances observed for SNP stations 02-17B nor 02-16i for the month of June. Exceedances were seen for aluminum and copper at a number of surface runoff sites (SNP , SNP 02-05, and SNP 02-06) as well, surface runoff sites SNP and SNP experienced exceedances in ammonia

1.2 Spill Reporting in July 2013 DateLocationWaste Spilled Amount (L)Cause July 20Process water line Process water 1,500Hole in water line

1.3 Air Quality, Meteorological Monitoring, and Emission Reporting 2012 Annual Report   Submitted on July 8, 2013 Required by Water Licence and Environmental Agreement

1.4 Installation of a Second Permanent Diffuser   Dated July 13, 2013 The current main diffuser and outfall is capable of discharging 35,000 m 3 /day, but underground mine flows are increasing and current volumes are approaching 37,000 m 3 /day A Second Permanent Diffuser is required to allow for responsible handling of the increased inflows and to properly discharge the treated effluent Identical to previously installed diffuser Plume Characterization Study proposed for the summer of 2014

1.5 Interim Mine Closure and Reclamation Plan   Submitted on July 22, 2013 Version 3.2 The ICRP is considered to be a “living” document which will undergo several further major revisions over the mine life

1.6 Test Drilling in the West Cell   Dated July 29, 2013 De Beers plans to carry out geotechnical test drilling and pit program within the footprint of the proposed West Cell to determine the bedrock competence and plan the extension of the grout curtain from the East to West cells Estimated commencement is 3 September 2013 Timeline from commencement of the geotecknical studies to the availability of the West Cell to receive processed kimberlite is approximately 3 years

1.7 Revised Chapters 6 and 7 of the AEMP   Chapters 6 and 7 of the AEMP revised on July 31, 2013 Chapter 6 (AEMP Response Framework) and Chapter 7 (Weight of Evidence Integration)

2. Inspection Update  AANDC Inspector – Patrick Kramers  No inspection reports received in July 2013

2.1 Issues with May 2013 SNP Monthly Report   The Inspector identified 6 issues (reporting, lab analysis, and exceedances) with May 2013 SNP Monthly Report on July 5   De Beers responded in a timely manner and communicated with the Inspector via follow-up s

3. Regulators’ Update – MVLWB   Updated Water Licence MV2011L on July 18, 2013 To reflect approved changes to the AEMP Design Plan   Requested stakeholders’ comments on De Beers request on the Installation of a Second Permanent Diffuser, on July 25 Due on August 13   Requested stakeholders’ comments on De Beers Interim Mine Closure and Reclamation Plan, on July 31 Due on August 30

3.1 Monthly Average Limit for Chloride  MVLWB staff sent an to De Beers on June 4, 2013 “it was brought to my attention that the average monthly limit for chloride reported in the April 2013 SNP report is 303 mg/L (or close to that). The WL monthly EQC for chloride is 310 mg/L. In looking at the trend line (also provided in the SNP report pg 38) it appears as though the chloride numbers seem to increase around mid February. Could there be an operational reason for this increase?” “it was brought to my attention that the average monthly limit for chloride reported in the April 2013 SNP report is 303 mg/L (or close to that). The WL monthly EQC for chloride is 310 mg/L. In looking at the trend line (also provided in the SNP report pg 38) it appears as though the chloride numbers seem to increase around mid February. Could there be an operational reason for this increase?” “I wanted to bring this to your attention so you can comment on what De Beers is doing to ensure that the average annual monthly limit is not exceeded?” “I wanted to bring this to your attention so you can comment on what De Beers is doing to ensure that the average annual monthly limit is not exceeded?”

De Beers Responses   Date June 11, 2013 via “The increase in TDS is based on where we are mining. Traditionally with Canadian shield rock the deeper that you mine, the higher the TDS values in the connate water, so you are right it is operationally based.” “In terms of ensuring that the limit is not exceeded we are watching our sampling closely, collecting water from various faces as we progress and looking at Chloride kick back thresholds to be installed similarly to those for nitrates in the WTP. In terms of long term management this will be the basis for our water license amendment and the TDS response plan.”

3.2 Phase IV Starter Cell Embankment Raise   The MVLWB, on July 18, 2013, reviewed De Beers request on modification for the Phase IV Raise, but unable to consider it as a modification, because the proposed maximum elevation is higher than what was scoped in the MVEIRB’s Environmental Assessment of the Project   In order to proceed with the proposed Phase IV Raise, De Beers must submit an amendment application for the Board's consideration. The amendment application will be subject to preliminary screening   Additional information regarding this direction is available at /MV2011L2-0004%20-%20DeBeers%20- %20Phase%20IV%20Starter%20Cell%20Embankment%20Raise%20- %20Amendment%20Application%20required%20-%20Jul18-13.pdf /MV2011L2-0004%20-%20DeBeers%20- %20Phase%20IV%20Starter%20Cell%20Embankment%20Raise%20- %20Amendment%20Application%20required%20-%20Jul18-13.pdf

4. Aboriginal Update  No comments received from Aboriginal groups in July 2013

5. Stakeholders’ Update   Comments on De Beers request on the Installation of a Second Permanent Diffuser by DFO on July 29, 2013

5.1 DFO Comments on De Beers Request on the Second Diffuser   DFO has concluded that De Beers proposal is not likely to result in impacts to fish and fish habitat   De Beers will not need to obtain a formal approval from DFO in order to proceed with the proposal

6. SLEMA Reviews  Quarterly Toxicity Results for SNP 02-17B

6.1 Quarterly Toxicity Results for SNP 02-17B   Submitted on July 31, 2013   Water Treatment Plant (WTP) effluent samples taken on June 18, 25 and 30 were tested By HydroQual Laboratories Ltd. (Calgary) during June and July 2013   Standard biological test methods used   9 analysis reports for each samples submitted 1 Algae test – inhibitory effects did not occur 2 Ceriodaphnia tests – no effect occurred 3 Trout tests – no effect occurred 3 Daphania tests – no effect occurred

Comments from the Environmental Analyst   No concerns are raised