Dominion Diamond Corporation Announces Sable Project Preliminary Economic Assessment Results

Dominion Diamond Corporation (TSX:DDC, NYSE:DDC) (the "Company" or"Dominion") is pleased to announce positive results of a preliminaryeconomic assessment ("Sable PEA") of the Sable kimberlite pipe depositlocated within the Core Zone Joint Venture property in Canada's NorthwestTerritories, in which the Company holds an 88.9% interest. Sable is a fully-permitted undeveloped deposit on the Ekati property, with arapid development timeline and potential capital and operating synergieswith the Jay Project. Sable and Jay could share haul trucks, loadingequipment, and support equipment during development and operations.Combining Sable with Jay would also provide increased mine planning andprocessing flexibility. The Sable pipe is located beneath Sable Lake, 17 kilometres north-northwestof the existing Ekati mine infrastructure. The Sable Project will requireconstruction of an access road, site infrastructure, and sedimentation pondallowing Sable Lake to be dewatered ahead of the start of pre-strippingoperations, and is fully permitted under existing Land Use Permits, a WaterLicense, and a Fisheries Act Authorization. The Sable PEA evaluated the development of the Sable pipe concurrently withthe Jay Project. Incorporating production from Sable into the previouslyannounced Jay Project would supply ore to the existing Ekati process plantat its full capacity until 2033 (with Sable mining ending in 2027). Sablewould provide an additional high value ore source for the Ekati mine,allowing for optimal mine sequencing and operational flexibility to maximizethe value of the Ekati operation. The Sable Project was evaluated as anincremental development opportunity together with the Jay Project, and doesnot change the previously estimated mineral reserves and resources of theJay pipe. The Sable PEA includes in its evaluation the results of areverse-circulation drilling campaign conducted during the prior winter. Atotal of 8 holes were drilled at approximately 24 inches in diameter, for atotal of 1,535 tonnes sampled. The Ekati Bulk Sample Plant processed thedrill hole interval samples and a total of 1,210 carats were recovered at a1.0mm bottom cut-off. The Company utilized quality control and assuranceprotocols for each sampling interval and data verification was undertaken onall geological, geotechnical, survey and bulk density data collected.Security procedures were established to ensure limited access to the samplecollection areas and sample plant tailings samples were collected for futureaudit purposes in verifying the recovery process. Dominion compiled andprepared the Sable PEA with the assistance of its consultants Kleingeld,Young and Partners ("KYP") and Peter Ravenscroft, FAusIMM, of BurgundyMining Advisors Ltd. The key financial and project highlights of the Sable PEA are as follows:Key Financial and Project Highlights---------------------------------------------------Mined Waste 104.4 million tonnesMined Kimberlite 12.1 million tonnesStrip Ratio 8.6Recovered Carats 9.0 million caratsRecovered Grade 0.8 carats per tonneInitial Development Capital US$147.4 million(1)Sustaining Capital US$20.3 million(1)Base Case Diamond Price US$190 per carat(2)Post-tax NPV (incremental) US$233 million(3)Real Discount Rate 7%Mine Operational Life 10 yearsPost-tax IRR 17.3%(3)----------------------------- -------------------- Note: All US$ figures refer to unescalated 2015 United States dollars and,except for NPV and IRR, are on a 100% basis. All tonne totals refer to drymetric tonnes. 1. This estimate is at an assumed exchange rate of 1.25 CA$/US$ in calendar2015 and thereafter, and includes a US$21.1M contingency. The primarycapital development cost is expected to be the construction of the haulageroad, rock dikes and site infrastructure, and the procurement of the miningequipment fleet. Pre-stripping capital is excluded. 2. Using the average prices from the Company's June 2015 diamond sales,diamond valuation data from the 1996 and 2015 drilling program parcels, andthe diamond recovery cut-off of the Ekati processing plant as at June 2015(1.0 mm cut-off), KYP has modeled the diamond price for Sable to beapproximately US$190 per carat (in 2015 USD). Price forecasts for the SablePEA are inclusive of a real 2.5% annual escalation from the average 2015price over the life of the mine. The 2.5% escalation price forecast is basedon the Company's analysis of long term supply-demand balance in the diamondmarket. 3. Company's share of NPV and the project IRR, after taxes/royalties andunleveraged. Taxes are calculated on a stand-alone basis. Key applicabletaxes assumed include a 13% Northwest Territories royalty rate and 26.5%statutory income tax rate. The Company owns an 88.9% interest in the CoreZone property, and a 65.3% interest in the Buffer Zone property. The SablePEA evaluated the Sable Project as an incremental development opportunity atthe Ekati Diamond Mine inclusive of the Jay Project (located in the BufferZone), and the NPV calculation represents the Company's share of theincremental NPV. The incremental NPV analysis includes the positive cashfloweffects of the Sable project, while also factoring in a delay in Jay oreprocessing and additional years of fixed operating costs. In January 2015,the Company announced the results of a pre-feasibility study on the Jaykimberlite pipe ("Jay PFS") and reported a Mineral Reserve and MineralResource estimate for the Jay Project. The Jay PFS evaluated the developmentof the Jay Project as a stand-alone open pit operation. The Company iscontinuing to pursue the required regulatory approvals for the Jay Project. 4. The Sable PEA is preliminary in nature and is based solely on IndicatedMineral Resources. Mineral Resources that are not Mineral Reserves do nothave demonstrated economic viability. Dominion is also pleased to report an updated Mineral Resource estimate forthe Sable pipe. The table below summarizes the Mineral Resources expressedin millions of tonnes, carats per tonne and millions of carats. Sable Mineral Resources at Ekati Diamond Mine (100% basis) MEASURED INDICATED INFERREDKimberlite pipes RESOURCES RESOURCES RESOURCES----------------------- ------------- ------------------ ----------------- MZone location Type tCt/t M ct M t Ct/t M ct M t Ct/t M ct--------------- ----- ---- ------ ---- ---- ------ --- ---- ------Sable Core OP -- - 15.4 0.8 11.7 0.3 0.8 0.3------- ------- ---- ---- ------ ---- ---- ------ --- ---------- Notes: 1. Mineral resources have an effective date of August 2015. 2. Mineral resources are reported on a 100% basis, at a 1.0 mm cut-off(diamonds retained on a 1.00 mm slot screen). The Company has an 88.9%interest in the Core Zone joint venture. 3. Mineral resources have been classified using a rating system thatconsiders drill hole spacing, volume and moisture models, grade, internalgeology and diamond valuation, mineral tenure, processing characteristicsand geotechnical and hydrogeological factors. 4. Mineral resources that are not mineral reserves do not have demonstratedeconomic viability. 5. Mineral resources are reported in accordance with the CIM DefinitionStandards. 6. Total carats may not sum due to rounding of tonnage and grade inaccordance with reporting guidelines. Next steps The Sable PEA is based on the capacity and recovery of the Ekati ProcessPlant as configured in June 2015, and does not include any results from thediamond liberation initiative that the Company began in July 2015. Dominionis currently advancing a Sable Pre-Feasibility Study which could include theimpact of these changes on the mine plan, once they have been fully testedand if the positive results are confirmed. The Company's timetable for the development of Sable is based on theestimated start of construction in the first half of 2016. Construction ofthe rock dams and site infrastructure would then be expected to take placein 2017, dewatering and pre-stripping in 2018, and mining and processing ofkimberlite by 2019. Qualified Person The scientific and technical information contained in this press release hasbeen prepared and verified by Dominion, operator of the Ekati Diamond Mine,under the supervision of Peter Ravenscroft, FAusIMM, of Burgundy MiningAdvisors Ltd., an independent mining consultant, and a Qualified Personwithin the meaning of National Instrument 43-101 of the Canadian SecuritiesAdministrators. For further details and information concerning the Company'smineral reserves and resources at the Ekati Diamond Mine, please refer tothe technical report entitled "Ekati Diamond Mine, Northwest Territories,Canada, NI 43-101 Technical Report" that has an effective date of January31, 2015, which can be found on the Company's profile at www.sedar.com andon the Company's website at www.ddcorp.ca.