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Mountain Province Diamonds Announces Proposed Spin-out Of Kennady Diamonds

Shares Issued and Outstanding: 80,345,558 TSX: MPV NYSE- AMEX: MDM

TORONTO AND NEW YORK, Jan. 12, 2012 /PRNewswire/ - Mountain Province Diamonds Inc. ("Mountain Province", the "Company") (TSX: MPV, NYSE-AMEX: MDM) is pleased to announce that its Board of Directors has approved a proposal to spin-out the Company's 100 percent-controlled Kennady North diamond project into a newly incorporated company, Kennady Diamonds Inc.

Patrick Evans, President and CEO, commented: "The proposed spin-out of Kennady North is intended to deliver greater value to Mountain Province shareholders by unlocking the value of this highly prospective diamond project. The transaction will also enable Mountain Province to focus on its flagship Gahcho Kué Project while Kennady Diamonds focuses on advancing the 123 square-kilometer Kennady North Project."

The proposed spin-out will occur through a plan of arrangement (the "Arrangement") and will be subject to regulatory and court approval, as well as shareholder approval at a special meeting currently planned for April, 2012.

Upon completion of the Arrangement and the proposed listing of Kennady Diamonds on the TSX Venture Exchange ("TSXV"), the Company intends to distribute 100 percent of the shares of Kennady Diamonds to Mountain Province shareholders on a pro rata basis. Mountain Province will also provide Kennady Diamonds with sufficient working capital to fund the planned exploration activities for 2012.

Additional details of the spin-out and the time and place for the special meeting will be announced as soon as all the commercial, legal and procedural formalities are finalized.

About Kennady Diamonds

The Kennady Diamonds comprises thirteen leases and claims located to the west and north of the four leases controlled by the Gahcho Kué Joint Venture between De Beers Canada Inc. (51%) and Mountain Province (49%).

Exploration at Kennady North commenced in the late 1990's and resulted in the discovery of the diamondiferous Kelvin, Faraday and Hobbes kimberlites. The number of diamonds recovered from these kimberlites and the size-frequency distribution indicate that they may be of comparable grade to the 5034 (1.77 carats per tonne) and Hearne (2.10 carats per tonne) kimberlites at the Gahcho Kué JV. Exploration samples from Kelvin and Faraday returned a relatively large number of macro diamonds with the two largest being a 0.4 carat diamond from Faraday and a 0.09 carat diamond from Kelvin.

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