? Large reserve with room to grow; upside scenario could
lead to a 19% increase in our estimated 8% NAVPS. Gahcho
Kué’s reserve base is just shy of 50 million carats with an in-situ
value of approximately US$6-8 billion or approximately 3-5% of
annual global rough diamond mine supply for the next 10 years. We
expect this reserve to grow as recent drill results from Tuzo Deep
increased kimberlite volume by 78.5%.

? Permitting progression should allow for project re-rating. A
Record of Decision is expected in December which should lead
to commissioning in late 2014 and commercial production in
2015. We believe the market will be willing to pay 15x CFPS
once up and running or approximately $12-15 per share.

? We reiterate our Outperform Rating and $7.00 price target. Our
price target is derived based on NAVPS and CFPS methodologies.
Specifically, we ascribe a 75% weight to 1.0x our NAVPS of $4.83
(was $4.75), and a 25% weight to 15.0x our 2015 CFPS (discounted
three years) of $1.26 (unchanged). Catalysts to look for include: 1)
Successful completion of environmental review, and 2) Gahcho Kué
resource update – late 2012 or early 2013.