Diamonds in Brazil Finally showing their potential

1

2

Cautionary Statement Regarding Forward-Looking Statements This document and the documents incorporated by reference may contain “forward-looking statements” regarding Lipari Mineração Ltda. (“Lipari” or

“the Company”). These forward-looking statements are made as of the date of this document or, in the case of the documents incorporated by reference

herein, as of the date of such documents and, the Company does not intend, and does not assume any obligation, to update these forward-looking

statements, except as required by law. These forward-looking statements include, among others, statements with respect to Lipari’s objectives for the

ensuing year, its medium and long-term goals, and strategies to achieve those objectives and goals, as well as statements with respect to the Company’s

plans, objectives, expectations, anticipations, estimates and intentions. All forward-looking statements and information are based on Lipari’s current

beliefs as well as assumptions made by and information currently available to Lipari concerning anticipated financial performance, business prospects,

strategies, regulatory developments, development plans, exploration, development and mining activities and commitments. Although management

considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking statements

relate to future events or future performance and reflect current expectations or beliefs regarding future events and include, but are not limited to,

statements with respect to: (i) the amount of mineral resources and exploration targets; (ii) the amount of future production over any period; (iii) net

present value and internal rates of return of the mining operation; (iv) assumptions relating to capital costs, operating costs and other cost metrics set

out in the independent technical studies; (v) assumptions relating to gross revenues, operating cash flow and other revenue metrics set out in the

independent technical studies; (vi) assumptions relating to recovered grade, average ore recovery and other mining parameters set out in the

independent technical studies; (vii) mine expansion potential and expected mine life; (viii) expected time frames for completion of permitting and

regulatory approvals and making a production decision; (ix) future exploration plans; (x) future market prices for rough diamonds; and (xi) sources of and

anticipated financing requirements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans,

projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”,

“plans”, “projects”, “estimates”, “assumes”, “intends”, “strategy”, “goals”, “objectives” or variations thereof or stating that certain actions, events or

results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not

statements of historical fact and may be forward-looking statements. Certain important factors that could cause actual results, performances or

achievements to differ materially from those in the forward-looking statements include, but are not limited to: (i) receipt of approval of the

Environmental and Social Impact Assessment; (ii) required capital investment and estimated workforce requirements; (iii) estimates of net present value

and internal rates of return; (iv) receipt of regulatory approvals on acceptable terms within commonly experienced time frames; (v) the assumption that

a production decision will be made, and that decision will be positive; (vi) anticipated timelines for the commencement of mine production; (vii)

anticipated timelines for community consultations and the impact of those consultations on the regulatory approval process; (ix) market prices for rough

diamonds and the potential impact on the Braúna Mine’s value; (x) the Company’s ability to raise the required capital to operate or expand the Braúna

Mine; and (xi) future exploration plans and objectives. By their very nature, forward-looking statements involve inherent risks and uncertainties, both

general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions

do not reflect future experience.

Diamonds in Brazil Finally showing their potential

Diamond producer for over 290 years

World’s largest producer for almost 150

years prior to the discovery of diamonds

in Kimberley South Africa

Prior to 2016 all production from

secondary alluvial deposits

July 2016 – 1st production from the

Braúna 3 mine – South America’s first

diamond producer from kimberlite

Brazil’s 2016 production reached

183,516 carats – 5X increase over 2015

production

Excellent exploration potential – 1,320

known kimberlites, few properly tested

Brazil – A Long History of Diamond Production

Sources: i) Relatório Técnico 50 – Perfil do Diamante, Ministério de Minas e Energia – MME; J.Mendo Consultoria, 2009. ii) Kimberley Process Rough Diamond Statistics,

Annual Summary Tables 2004 to 2015. iii) Trends in Exports and Imports, Brazilian KPCS rough diamonds; iv) 2016 Global Diamond Production by Mine, Paul Zimnisky.

Colonial Production

Diamantina, MG

Addition of Production

from Chapada

Diamantina, BA

New Production from

Juina, Mato Grosso

Lack of

Published

Statistics

Production from

MG, Juina

Rondônia, Piaui

Addition of

Braúna

Kimberlite

Production,

Bahia

Until 2016 - 100% Alluvial Production

All historical production from

alluvial deposits

Est. 45M carats produced over

period of 291 years

Predominantly informal

“garimpeiro” production

History of large famous diamonds

Presidente Vargas (727 ct)

Darci Vargas (460 ct)

Charneca I (428 ct)

President Dutra (408 ct)

Coromandel VI (401 ct)

Diamond

Provinces

(Alluvial)

Sources: i) Relatório Técnico 50 – Perfil do Diamante, Ministério de Minas e Energia – MME; J.Mendo Consultoria,

2009. ii) The Great Diamonds of the Coromandel Area and its Geological Significance, Liccardo & Svizzero,

University of São Paulo

History of Famous Large Diamonds

Presidente

Vargas

(726.6 ct)

Coromandel VI

(400.7 ct)

Darcy Vargas

(460 ct)

2016 World Diamond Production

7

Location Carats US$ Millions

1º Russia 35,500,000 3,379

2º Botswana 19,600,000 3,109

3º Australia 16,800,000 420

4º Canada 13,650,000 1,722

5º Angola 6,500,000 553

6º South Africa 6,117,000 658

7º Namibia 1,580,000 796

8º Sierra Leone 300,000 90

9º Lesotho 290,000 302

10º Zimbabwe 200,000 18

11º Brazil 183,516 50

12º Tanzania 170,000 41

Ranking by Production (ct)

Location Carats US$ Millions

1º Russia 35,500,000 3,379

2º Botswana 19,600,000 3,109

3º Canada 13,650,000 1,722

4º Namibia 1,580,000 796

5º South Africa 6,117,000 658

6º Angola 6,500,000 553

7º Australia 16,800,000 420

8º Lesotho 290,000 302

9º Sierra Leone 300,000 90

10º Brazil 183,516 50

11º Tanzania 170,000 41

12º Zimbabwe 200,000 18

Ranking by Value (US$ Millions)

Projected 2017 World Diamond Production

8

Location Carats US$ Millions

1º Russia 35,500,000 3,379

2º Botswana 19,600,000 3,109

3º Canada 18,122,000 2,170

4º Australia 16,800,000 420

5º Angola 6,500,000 553

6º South Africa 6,117,000 658

7º Namibia 1,580,000 796

8º Sierra Leone 300,000 90

9º Lesotho 290,000 302

10º Brazil 290,000 78

11º Zimbabwe 200,000 18

12º Tanzania 170,000 41

Ranking by Production (ct)

Location Carats US$ Millions

1º Russia 35,500,000 3,379

2º Botswana 19,600,000 3,109

3º Australia 16,800,000 420

4º Canada 13,650,000 1,722

5º Angola 6,500,000 553

6º South Africa 6,117,000 658

7º Namibia 1,580,000 796

8º Lesotho 290,000 302

9º Sierra Leone 300,000 90

10º Brazil 290,000 78

11º Tanzania 170,000 41

12º Zimbabwe 200,000 18

Ranking by Value (US$ Millions)

High Value Diamond Production

9

4th

Brazil is now ranked 4th in the world in terms of US$ value per carat of

production (was in 12th position in 2015)

“Projeto Diamantes Brasil” CPRM – Geological Survey of Brazil

2009 – CPRM initiated a systematic

research project focused on diamond

exploration

1,320 kimberlites located including 93

new discoveries

Majority are proximal to alluvial diamond

production

Most of the new discoveries are isolated

from known kimberlite clusters

Project status:

4,869 samples collected

200,000 KIMs to be analysed

Source: i) Dr. Valdir Silveira, Coordenador do Projeto, Chefe do Departamento de Recursos Minerais,

CPRM; ii) Projeto Diamante Brasil: Estudo das Provincias Kimberliticas e Áreas Diamantiferas do Brasil; 5o

Diamond Simposio Brasileiro de Geologica do Diamante 2010. iii) Homero Braz Silva, Brasilexplor.

Industry Rule of Thumb: “Of approximately 10,000 kimberlites discovered around the world to

date, only about 1,000 have proved to be diamondiferous, and only about 100 were economically

viable to develop” (Bain and Company, Inc. Diamond Industry Report 2011)

1,320 Kimberlites

1,320 Kimberlites

10% 1% <1% 5%

“Industry Odds” for Brazil Brazil Today

~13

economically

viable

1,320

kimberlites

~132

diamond-

bearing

1,320

kimberlites

~70

diamond-

bearing

Est. 3 economically viable

(Braúna 3, Catalão 1,

Canasta 1)

1,320 Kimberlites and No Mines?

With 1,320 kimberlites discovered,

Why haven’t we found more

kimberlites with economic potential

in Brazil?

Comparing Brazil to Canada might give us an answer.

Comparison

Kimberlite Exploration Canada vs Brazil

Comparable

Surface Area - Country 8.5 M Sq Km 10.0 M Sq Km

# of Kimberlites

discovered 1,320 770

# of diamondiferous

kimberlites ~70 ~425

Kimberlites Bulk Sampled

(> 100 t) ~46 >300 (?)

Investment Incentives No Yes

MiDa Processing

Availability No

2 ISO

Accredited

Laboratories

Dense Media Processing

Availability

2 Private

Plants

2 ISO Credited

Laboratories

Kimberlite Exploration Exploration & Development Expenditure Comparison

0

20

40

60

80

100

120

140

160

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

USD

Millions

Peak of $350M (2006)

Sources: 1. Canada – Natural Resources Canada – Annual and Revised Spending Intentions by Commodity;

2. Company Annual Financial Reporting and Personal Contacts

Braúna Diamond Mine – Lipari Mining

New diamond producer – commenced

commercial production in July 2016

116,757 carats produced in 2016 with a

value of over US$23M

2017 production projected at 210,000 carats

with a value of US$42.0M

7-year open pit mine life with a projected

average annual production of 340,000 carats

Good quality of rough diamond production

with an average sales value of US$200 per

carat

Excellent potential to transition to an

underground operation

16

17

JAIBARAS

VERISSIMO CATALAO

Advanced-stage diamond project in the famous

Coromandel diamond district

Five diamond-bearing kimberlite pipes being

developed

Dense Media Separation plant currently on-site

and under construction

Production of ~90,000 carats per year projected

upon completion of project financing

Catalão Diamond Project, Goiás State Five Star Diamonds

Five Star’s bulk

sampling plant

Braúna Diamond Mine South America’s Largest Diamond Producer

18

Lipari Mineração Ltda.

100% owned Braúna Diamond Mine

in Brazil – South America’s largest

diamond producer

1st diamond mine in South America

developed from kimberlite –

primary source rock of rough

diamond

Commercial production started in

July 2016

2016 production = 116,757 carats

valued at US$23M

2016 export sales = 97,280 carats

sold for US$19M or US$194 per

carat

39.75 carat “Special”

19

All currency in United States Dollars converted from

Brazilian Reals at R$3.25:US$1.00

Braúna Kimberlites 22 kimberlite occurrences discovered to date

100% diamond-bearing with grades ranging from

<1 cpht to 79.4 cpht

Braúna 3 pipe:

2 hectare kimberllite pipe

~US$70M spent on exploration and mine

development

Diamond grade increases with depth due to

increased volume of higher grade ore below

50 metres depth

Excellent potential to transition from open

pit to underground mining operation

Future exploration to focus on expansion of

mineable resources

1. At depth below the open pit at Braúna 3

2. From kimberlites surrounding the Braúna 3

mine and processing plant

20

Braúna 3 Kimberlite

Mineral Resources 2 (as of 31/12/16) Tonnes Grade

(cpht)

Contained

Carats

South Lobe Resource + Stockpile 5,678,840 57.0 3,237,026

Central + North Resource + Stockpile 2,187,248 10.1 220,330

Total Resource & Stockpiles 7,866,087 44.0 3,457,356

Notes:

1. NCL Mining (Brasil) Ltd; Open pit mineable resource as per long term mine plan of January 2014.

2. Measured, indicated + inferred resource of 09/2014 by SRK Consulting depleted as of 31/12/2016.

Legend

Macrocrystic Hypabyssal Kimberlite

Segregationary Kimberlite

Brecciated Kimberlite

Contact Breccia

Open Pit Benches (@ 31-12-16)

2 hectare kimberlite pipe

1 of 22 kimberlite occurrences on Lipari’s concessions

Kimberlite resource defined by drilling to a depth of 300

metres

Mine plan open pit resource contains approximately 2.5 million

carats to a depth of 260 metres below surface 1

Excellent correlation between geological model and mined

volumes (only 5% difference in tonnages)

Recovered grade (2016) averaged 23.9 cpht versus planned

21.9 cpht for 2016

21

Braúna Diamond Mine Open-pit kimberlite mine

Drilling, blasting, excavation and transport of

approximately 28,000 tonnes of rock per day

Owner-operated mining fleet and equipment

maintenance = low cost of operations

7-year open pit mine plan to a depth of 260

metres below surface

Integrated diamond plant processing 2,300

tonnes of ore per day

Processing circuit consists of 3-stage crushing

and screening followed by dense media

concentration of heavy minerals and recovery

of diamonds using hands-off, X-ray technology

Mine and processing plant connected to State

electrical grid = low cost production

State-of-the-art water circuit recovers 95% of

the water used in the processing operations –

no need for a tailings dam

Braúna 3 open pit mine with the

processing plant in the

background. 22

Production Plan Average of 340,000 carats per year

Legend

Macrocrystic Hypabyssal Kimberlite

Segregationary Kimberlite

Brecciated Kimberlite

Contact Breccia

Open Pit Benches (@ 31-12-16)

0

50

100

150

200

250

300

350

400

450

500

2016a 2017 2018 2019 2020 2021 2022

Kcts

Production Plan – Open Pit Mine (cts x 1000)

23

2016 Production Results

2016 Production Results Plan Actual Var +/-

Total tonnes mined 6,700,000 7,078,290 +5%

Total ore tonnes mined 455,000 765,576 +41%

Tonnes processed 450,000 488,904 +8%

Production (carats) 98,550 116,757 +16%

Recovered grade (cpht) 1 21.9 23.9 +8%

Carats exported/sold 2 88,550 97,280 +9%

Gross sales revenue (US$) $15,230,600 $18,879,796 +19%

Average sales value (US$/carat)3 $172 $194 +11%

Notes:

1. Recovered diamond grade for “Plan” based on the resource grade of 25.8 cpht for the ore projected to be mined

during the period less 15% mining dilution. Recovered diamond grade for “Actual” is based on the average grade for

the diamonds recovered from ore processed during 2016;

2. “Plan” carats exported/sold for 2017 assumed 10,000 carats were held in mine inventory at year end;

3. “Plan” average sales value of US$172 per carat based on the projected average sales value as reported in the resource

statement by SRK Consulting of R$558 per carat converted at an exchange rate of R$3.25:US$1.00.

24

2017 Production Guidance

2017 Production Guidance Plan

Total tonnes to be mined 9,843,000

Total ore tonnes to be mined 1,155,000

Total ore tonnes to be processed 830,000

Planned production (carats) 210,000

Projected recovered diamond grade (cpht) 25.3

Projected exports / sales (carats) 200,000

Projected gross sales revenues (US$) $42,000,000

Average sales prices (US$/carat) $200

An assortment of Braúna

diamonds. 25

Photos Braúna Diamond Mine, Nordestina, Bahia State, Brazil

26

27

Water reservoir

Administration,

warehouse &

cafeteria buildings

Gate house &

security station

Garage &

workshops

Processing plant

Aerial photo of the Braúna Mine

facilities (July 2016)

Braúna 3 open pit mine. Mining face being prepared for

blasting operations.

Lipari’s two Atlas Copco blast-hole drills operating in the

open pit mine.

28

29

View from the top of the tailings load-out bin towards the

DMS feed bin (right), dense media circuit and thickener (left)

and final recovery building (centre left).

View of the crushing and screening circuit from the top of the

secondary crusher. The primary crushing circuit is on the left

and the scrubbing and screening circuit is in the centre of the

photo at the end of the conveyor in the foreground.

30

Flow Sort™ diamond recovery machine. Lipari has three

double stage X-ray recovery machines to separate the

diamonds from the heavy mineral concentrates produced by

the dense media circuit.

Sorting team picking diamonds from the Flow Sort ™

concentrates in the “glove box”. Lipari’s processing operation

is a hands-off operation and each day’s production is sorted,

weighed and dropped directly from the glove box into a safe.

Three pieces of a large broken diamond recovered in August

2016. The largest piece weighs 51.80 cts. The piece in the

centre weighs 12.65 cts, and the piece on the right weighs

27.30 cts. All three pieces are white, clear and free of

inclusions. Total weight of the three pieces combined is

91.75 carats. The original stone weight including 4 other

smaller pieces that were recovered was 106 carats.

125.60 ct octahedron recovered in

September 2016.

51.80 ct “half” of the 106 carat

stone

31

32

Lipari diamonds. Lipari diamonds.

Lipari Mineração Ltda.

Escritório Administrativo/Administrative Office:

Rua Carlos Alberto dos Santos, 517, sala 301

Ed. Mais Empresarial, CEP: 42.700-000

Buraquinho, Lauro de Freitas, BA, Brazil.

Tel: +55 (71) 3369 4808

www.lipari.com.br

33