Rob McCallum's Presentation to the Saskatchewan Ce

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Kensington Resources was honoured with the opportunity to represent the
Saskatchewan diamond resource sector to a distinguished audience of
Saskatchewan's business leaders, invited by the Honourable Premier
Lorne Calvert.

The presentation and speech is available on the website at:

www.kensington-resources.com/s/Presentations.asp


If you have any questions, or wish further information
Please contact
Mel Gardner, Manager Investor Relations
1-800-710-6083

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Good morning Members of the Saskatchewan Government, and
Distinguished Guests:
It is always a pleasure to be back in Saskatchewan and especially so to
tell you a little bit about diamonds and the Fort à la Corne diamond
project in particular.
[slide 2 “Mining Friendly Saskatchewan”]
Saskatchewan is a great province and known throughout the world for
its many attributes. Above all, its agricultural base, its world class
reserves of potash and uranium as previous speakers have said, and of
course its good people.
Added to this is a government committed to supporting the prosperity
of the province through industry, which of course includes the mining
and resource sector. This relationship is an important and valued asset
for a junior company such as Kensington Resources Ltd.
[slide 3 “Diamonds in Saskatchewan”]
What is not so well known about this great province is that it contains
the largest kimberlite field in the world. Nearly 10 billion tonnes! A
resource so large that it could easily swallow up all other kimberlites in
existence! For those not familiar with diamond geology, kimberlite is
the rock that contains diamonds.
[slide 4 “Kimberley, South Africa”]
Before I get into our focus on diamonds in Saskatchewan, let me just
say that diamonds were first discovered in Kimberley, South Africa,
and it is this city that gave its name to the bluish gray rock that hosts diamonds. Kimberley is famous for its Big Hole and, by the way, it was
entirely excavated by hand using picks and shovels. Quite a feat!
Another fact of importance is that in 1888 the claims of the De Beers
mine and the Kimberley Mine were consolidated into one company, De
Beers Consolidated Mines of which De Beers Canada is our equal
partner at Fort à la Corne.
[slide 5 “Diamonds – Luxury Goods”]
Let’s now understand what is happening in the world of diamonds for it
is this growth in demand that is driving the search for new mines, and
bringing Saskatchewan international attention.
The marketing arm of De Beers in London England, the Diamond
Trading Company, better known as the DTC, has been extremely
successful over the past few years in driving the demand for diamond
jewelry through its Supplier of Choice marketing program that focuses
on the emotional appeal of diamonds.
Diamonds have unique attributes and have inherent meaning for
people ….. they represent love and attachment; wealth and success;
beauty and style …. Attributes not restricted to wedding engagement
events -- sentiments shared by both men and independent women.
[slide 6 “Tremendous Response to New Advertising Campaigns”]
Responding to this, new market segments have been established such
as the right hand ring, the man’s diamond and the three stone Trilogy
ring.

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So successful has the Trilogy sales program been in Japan that the
demand increased 19 fold in 10 months – from 900 million yen to 1.9
billion yen and caused the supply for these 3-stone rings to actually
run out.
[slide 7 “Global Demand for Diamond Jewelry grows Stronger’]
Today the total retail sales of diamond jewelry is US$58 billion per
year with the demand for diamonds growing stronger. In fact diamond
sales are out-performing gold and other luxury items.
While the US and Japan are the largest markets for diamond jewelry,
the rapidly growing prosperity in China and India is causing an
increase in demand in these countries -- an additional 600 million new
consumers are expected to emerge in the next few years.
[slide 8 “Supply and Demand”]
Coupled with this dramatic increase in the demand for quality
diamonds has been a lack of new production. So at a time when
demand is rising rapidly supply is constant to declining. And there are
no new mines on the horizon. (The Supply curve is green and the
Demand curve in red.)
The result of this supply-demand imbalance has been a rise in the
price for rough stones as diamantaires and manufacturers scramble to
lock up supply. The price of rough diamonds has risen some 20% in
2004 and price rises are predicted to continue well into the future.
[slide 9 “World Diamond producers (2003)”]
Canada is currently the third largest producer of diamonds, a situation
that has brought credibility and tremendous interest to further explore
Canada’s diamond resource potential. This, then, is the canvas onto
which the Fort à la Corne picture can be painted.
[slide 10 “Fort à la Corne Attributes”]
For what we have at Fort à la Corne is not only the largest kimberlite
field in the world, but also good infrastructure leading to a potential
low cost, long life mine and one that will produce larger stones of good
quality.
Let me describe for you the location and attributes of Fort à la Corne
and then go on to tell you about what I believe will be the economic
impact on this province if a large mine is eventually built.
[slide 11 “Diamond Exploration Activity in Saskatchewan”]
Here is the main trend of kimberlites at Fort à la Corne which lies 65
km east of Prince Albert. The two most active ventures are Shore Gold
and their Star kimberlite, shown on this claims map in the greeny-gold;
and the Joint Venture between us, Kensington Resources Ltd.,
Cameco Corporation and De Beers Canada – De Beers is the project
operator in this large and most important project, shown on the map
in light blue.
[slide 12 “Fort à la Corne Kimberlite Field”]
As many as 74 kimberlite bodies have been discovered as well as
numerous anomalies which have yet to be explored over an expanse of more than 22,000 hectares. Significantly, 70% of the known
kimberlites are diamond-bearing which is an unusually high
percentage by world standards, and of these, 50% are macrodiamond
bearing – meaning they contain diamonds larger than 0.85 mm.
[slide 13 “Diamonds in Saskatchewan”]
By way of historical reference, diamonds were first reported in the
Melfort-Nipawin area sometime prior to the Second World War. The
next report of diamond related activity was in 1961 when several
stones were reportedly discovered in gravels downstream from
Sturgeon Lake (northwest of Prince Albert).
In 1969, the GSC conducted the first aeromagnetic survey of the area,
but it wasn’t until 1988 that diamond staking was first done and the
first exploratory drill holes confirmed kimberlite. At this point, the
genesis of the Fort à la Corne diamond project as we now know it,
today, began.
To date, exploration activity has established that the Fort à la Corne
kimberlites are enormous, mostly lower grade but with substantial
interspersed higher-grade zones of enrichment.
[slide 14 “Saskatchewan’s ‘Super-Kimberlites’”]
This slide dramatically compares the Fort à la Corne kimberlite
footprints with the most world’s most famous producers and gives you
a sense of the enormity of this opportunity. (The Fort à la Corne
kimberlites are shown in red.)

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[slide 15 “Compelling Aspects”]
The results of our work to date has provided compelling reasons to
forge forward on further developing the potential at Fort à la Corne.
Because, despite the low grade, the Fort à la Corne kimberlites:
• Have large tonnage with single bodies containing more than 500
million tonnes. (Compare this with the Kimberley Big Hole at 25
million tonnes.)
• Are forecasted to have large stone potential. This is borne out by
diamonds recovered from both the Fort à la Corne JV and Shore
Gold.
•<br>Have lower diamond grade of 12 to 20cpht, but given the large
tonnage, there is an estimated 100 million carats in the ground.
• The diamonds have high average value of US$115 to US$148
per carat based on samples valued by two independent sources
in London (one source is WWW International Diamond
Consultants which is retained by the Government of Canada for
diamond valuation services).
The lower grade description has discouraged some but when one takes
into consideration that a large open pit mine at this operationally
friendly site will have low operating costs, the economic potential of
this field becomes obvious.
[slide 16 “A New Approach”]
De Beers is cognizant of this opportunity which is clear from recent
developments -- an aggressive action plan for advanced exploration
and evaluation of the Fort à la Corne claims has been formulated and will be taken to the Boards of the respective Joint Venture companies
in February.
This plan has the objective of reaching a pre-feasibility decision by the
end of 2007. If this plan proceeds favourably a new mine should be
possible.
De Beers also favours the political stability of Canada and its
supportive Provincial Governments as over half its worldwide
exploration budget of nearly $100 million is allocated to our country.
[slide 17 “Economy of Scale”]
The current exploration programs are focused on the southern portion
of the claim where there is an intense cluster of kimberlite bodies.
There are as many as 25 kimberlites in a 5 km radius that includes
those kimberlite bodies that have already proven their potential value.
The new aggressive action plan considers the cluster as a single unit
and lends itself to an open-pit mining scenario that would include
several kimberlite bodies together. An open-pit mine would prove its
economics as the most cost effective way to maximize the opportunity
of these high tonnage but low grade kimberlites.
In this slide the red bodies are kimberlites where we have already
defined a resource at the deposit level and the dark blue bodies are
those drilled in the 2004 program to search for higher grade units.

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[slide 18 “Open Pit Mining’]
Open-pit mining can be conducted on a very large scale with markedly
low operating costs. We show this open pit mine at Finsch to offer you
an image of a likely development. However, the Fort à la Corne
version would be tremendously larger – it would be an unprecedented
economy of scale operation and would most likely consist of a number
of large open pits feeding into a central plant.
[slide 19 “Fort à la Corne is conducive to an economy of scale mining
activity”]
Our economic models are optimistic because the costs associated with
a mining operation at Fort à la Corne are significantly lower than most
others due to the amenities associated with its location. Fort à la
Corne has reasonable all-year climate which means that an operation
would not be seasonal. Also, the site has close proximity to:
- Population centres with available workforce and service sectors
- Existing all-weather ground transportation routes
- Utility infrastructure in place or easily constructed
The anticipated diamond mine will contribute to Saskatchewan’s future
prosperity. Besides jobs, the potential diamond mine that is being
considered will strengthen the provincial economy and enhance socio-economic
development related to an improved quality of life for local
residents. The challenge for these local communities will be to manage
the growth.
[slide 20 “Revenue for the Province”]
Revenue to the province will come directly from:
• Government Royalties and Taxes
o Importantly, the government has indicated their support
for the mine development by stating that the capital tax
surcharge would be waived and royalties would be low with
likely a “holiday” until the initial capital is recovered. This
tax “holiday” helps to create a favourable economic
feasibility plan.
• Also from revenues from Goods and Services involved in the
development and ongoing operation of the mine
• And indirectly from government would benefit from income
taxes, sales tax, fuel tax, corporate tax, etc.
Considering the low margins of our potential operation of Fort à la
Corne $20/tonne vs uranium at $12,000/tonne -- the government has
indicated their willingness not to impact development through onerous
royalties and taxes.
[slide 21 “Jobs, Jobs, Jobs”]
Naturally, the biggest upside for the province is the employment
opportunities that a mine will generate.
[slide 22 “Diavik Diamond Mine Example”] Again we can look at the
Diavik Mine as a case study of a Canadian operation. This offers
valuable information to project a mine scenario for Fort à la Corne.

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[slide 23 “Fort à la Corne Employment Opportunities”]
A large open pit would employ approx. 500 to 600 people in the mine,
plant and offices. A large percentage of these will be skilled categories,
requiring applicants to have a minimum of secondary school education
and in many cases, a trade certificate. Job opportunities will be
available for:
• equipment and plant operators
• skilled trades, such as
o welders;
o diesel mechanics
• engineers
o for surveying land for continued mine planning, grade
control, etc.
o and geologists for continued exploration.
During the construction phase there is typically twice the number
employed as in full production therefore add another 1,000 to 1,200
short term direct jobs – all a minimum of secondary school education
and in most cases skilled training.
[slide 24 “A Network of Work Opportunities for the Province”]
Because the mine will be a ‘drive-in, drive-out’ operation, the local
communities will flourish with newly created jobs and opportunities. As
a rule of thumb, a multiplier for indirect jobs is 2:1 so another 1,000
to 1,200 jobs will be created through services supporting mining
activity.
New job prospects will likely come from
• offshoot industries and,
• enhanced entrepreneurial activity
Within the province, the diamond industry represents a new source for
other skilled labour and support services. This includes, diamond
sorting for valuation which would have to be done in-province for tax
purposes, security services, etc.
Currently, the JV exploration activity offers substantial work creation
opportunities. Provisions have been made for equitable and fair
employment during seasonal exploration programs. With the current
accelerated agenda, these jobs will be less seasonal and will likely
continue until the commencement of the building of a mine.
[slide 25 “Community Relations”]
The Fort à la Corne Joint Venture has made great efforts to champion
local communities and establish its commitment to Saskatchewan.
Community Relations are valued and maintained through active and
open lines of communication with:
• Local Economic Development Groups
• City and Town Councils
• Local Rural Municipalities
• Fort à la Corne Land Use Committee
• and through regular Public Information Presentations
[slide 26 “Proactive Environmental Practices”]

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The Joint Venture also practices a proactive environmental program
which is monitored by Saskatchewan Environment and complies with
ISO14001. It includes
- Flora/Fauna Habitat screening
- Heritage site screening.
[slide 27]
Despite the fact that we have two operating mines in the north, the
Canadian diamond industry is relatively unknown. This Joint Venture is
fortunate to be able to draw on the intellectual property of De Beers
Canada. With their 100 years of experience, vast resources, state of
the art facilities and skilled and experienced people they bring valued
credibility and expertise to Fort à la Corne.
As you can see we are very enthusiastic about the prospects of a
diamond mine potential in Saskatchewan, but we are also keenly
aware that at this time, none of the projects have proven their
resources to the level of confidence needed to make a production
decision and to go forward on the execution of these concepts.
[slide 28 “Summary”]
However, the project fundamentals illustrate a very strong reason for
professional opinions that claim a diamond mine will one day be built
at Fort à la Corne.
To recap these fundamentals:
• There is a growing demand for diamonds with a shortage of
supply looming.
• Fort à la Corne is a world-class diamond bearing kimberlite
deposit with immense tonnage and large, high-quality diamonds.
• An economy of scale mining operation at Fort à la Corne is
realizable because of the large tonnage and an infrastructure
supportive of a low-cost operation.
• A government that realizes Fort à la Corne is marginal and is
prepared to be flexible and work proactively with us to get a
large mine established.
As we enter an aggressive new phase in the development of Fort à la
Corne, I am excited by the prospects, as a professional mining
engineer with 50 years in the business, I believe a mine will be built.
And I can assure you that I will work diligently with all of our
stakeholders to achieve this goal.
Thank you

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Kensington Resources' New PowerPoint Presentation
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We have posted a new PowerPoint presentation on the Kensington
Resources website. This presentation was given to a group of investors
in Calgary on December 2 at "An Evening of Glitter." The presentation
includes data on the Diamond Jewelry market which Rob collected during
his recent visit to the DTC in London. We have also included the
Mission Statement or Objective of the JV Management Team.

If you have any questions, or wish to learn more details of the slides,
please call Mel Gardner at 1-800-710-6083.

To view the presentation:
www.kensington-resources.com/presentation_evening/slide1.htm

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Copyright (c) 2004 KENSINGTON RESOURCES LTD. (KRT) All rights
reserved. For more information visit our website at
www.kensington-resources.com/ or send
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Message sent on Fri Dec 3, 2004 at 11:00:02 AM Pacific Time