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MINEAfrica Seminar

MINEAfrica Seminar. 4 th March 2008. Disclaimer.

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MINEAfrica Seminar

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  1. MINEAfrica Seminar 4th March 2008

  2. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt Disclaimer This presentation and the information contained herein are not an offer of securities for sale in the United States. This presentation is an advertisement and does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities of Namakwa Diamonds Limited (“Namakwa” or the “Company”) nor should it or any part of it form the basis of or be relied on in connection with, any contract or commitment whatsoever. Statements contained within this presentation may contain forward-looking comments, which involve risks and uncertainties that may cause actual results to vary from those contained in the forward-looking statements. In some cases, you can identify such forward-looking statements by terminology such as 'may', 'will', 'could', 'forecasts', 'expects', 'plans', 'anticipates', 'believes', 'estimates', 'predicts', 'potential', or 'continue'. Forward projections reflect management's best estimates based on information available at the time of issue. This Presentation and its contents are confidential and may not be further distributed or passed onto any other person or published or reproduced, in whole or in part, by any medium or in any form for any purpose.

  3. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt Overview Issuer / Ticker • Namakwa Diamonds Limited / NAD Listing location • Full listing on London Stock Exchange main board Listing Date • December 14, 2007 Market Cap* • £170.51m Outstanding Shares • 116.386m Shareholder Base • Founders, Management and Employees retain circa 20% • 20 UK Institutional Shareholders • 3 Swiss Institutional Shareholders • 1 North American Shareholder Use of proceeds • Expand existing producing mining operations • Bring into production selected development projects • Pursue further growth and consolidation opportunities • Increase beneficiation inventory and expand diamond trading operation • Repay existing debt and finance general corporate activities * as of January 29, 2008

  4. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt Namakwa’s Non-Executive Board • Board is committed to be fully UK combined code compliant within 12 months of listing

  5. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt Corporate Nico Kruger 10 years CEO Corporate finance and investment banking in diamond related projects Jean Nel 10 years CFO Corporate finance at Investec Bank and SA resource sector Jacques Conradie 16 years Financial Manager Financial director of African Portland Industrial Holdings Mining Altie Krige 26 years COO Geologist and director of land operations at Trans Hex Richard Hall 22 years Chief Geologist Exploration manager at De Beers, Namaqualand Mines, considered to be the single biggest alluvial mining operation in the world Noel Botha 23 years Chief Metallurgist Metallurgical manager at De Beers and Trans Hex Keith McCulloch 32 years General Manager Mining General mining manager at Trans Hex, experience in Angola Beneficiation Tom Kruger 30 years Deputy Chairman & Founder Founding member of the South African Rough Dealers Association with extensive experience in South African rough diamond trading Heno Kruger 12 years Head of Beneficiation Beneficiation business at Namakwa Andries Janzen 27 years Head of Cutting & Polishing Managing director at Ochta Diamonds, founded Elite Diamonds in 1980 and currently manages Elite Diamonds Louis Janzen 6 years Sales of Polished Diamonds Works at Elite Diamonds focusing on acquisition of polished diamonds Fred Strous 13 years Global Manager: Rough Diamonds Manager of buying stations in the DRC and in Angola for R. Steinmetz & Sons Strong, Experienced Management Team Name ApproximateExperience Position Prior Experience Average of almost 20 years experience

  6. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt Focus on Large, Gem Quality Fine Diamonds

  7. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt Focus on Large, Gem Quality Fine Diamonds

  8. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt Namakwa’s Consistent Strategy for Growth • Huge opportunities in familiar territories (i.e. North West Province of SA) • BEE adds impetus in SA • Grow in each segment of diamond value chain • Small scale alluvial operations • Long-life mining assets • Beneficiation operations Vision Summary • Key differentiator • Increased margins • Trading knowledge adds value across operations • Blends stability with ability to capture opportunities • Direction of integration crucial to success – i.e. beneficiation  mining Vertical Integration Consolidate • Focus on mining assets with high quality product, short lead times and favourable capital intensity • Grow beneficiation business • with additional capital • extending retail distribution • Stable and attractive pricing due to strong demand and inconsistent supply Gem Quality Focus Afro-centric • Significant deposits of target stones • Focus on southern Africa – well known and respected family • Commitment to country of origin beneficiation • Well established local presence (30+ years)

  9. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt Vertical Integration Adds Value • Capture larger share of the value chain • + • Provide greater volume and range of diamonds for beneficiation • + • Expand diversified distribution channels • + • Strengthen long-term relationships Benefits Diamond Mining Peers Beneficiation $13.1bn $55.4bn Capture Product Premium & Higher Margins Namakwa Source: IDEX 2006

  10. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt Volume Gravel (m3) Recovered Grade (ct/m3) Attributable Carats (ct) Ave Diamond Value (USD/ct) Diverse Portfolio of Mining Assets Country Project Area Resource Classification • South Africa North West Province Indicated 122,137,840 0.0173 1 2,110,196 637 • Inferred 115,732,000 0.0179 1 2,071,647 394 • Albetros Indicated 5,322,735 0.094 500,337 400 • Inferred 2,282,700 0.131 298,212 400 • Angola Tchipoia Inferred NA • Santechifunga2 Inferred NA • Cuangula Inferred NA • DRC Kasai and Indicated 183,690 13.79 1,266,688 150 Tshikapa Rivers • Inferred 7,992,200 1.747 5,206,054 150 • Namibia Tidal Diamonds Indicated NA NA3 212,009 175 • Inferred NA NA4 4,891,258 175 • Total Indicated 4,089,230 • Inferred 12,467,171 • Indicated & Inferred 16,556,401 1 Recovered grade equivalent to 0.865 cpht for indicated resources and 0.895 cpht for inferred resources 2 Santechifunga licence expires in Q1 CY2008. Namakwa is unlikely to apply for the renewal of this licence 3 Recovered grade of 0.114 ct/m2 4 Recovered grade of 0.147 ct/m2 Source: Venmyn Rand (Pty) Ltd

  11. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt Track Record of Value Generation • Private placements of equity: US$3m (July 2006), US$3.5m (Dec 2006) and US$5.1m (Feb 2007) from founders, investors and entrepreneurs • Used to fund acquisitions of additional mining concessions • Preference Share institutional private placement: US$45m (May 2007) • Expand trading and beneficiation business through increase in inventory and acquisition of Elite Diamonds • Supported development of Namakwa’s projects, proving the resources • Successful Initial Public Offering on the London Stock Exchange: Raised US$185m (Dec 2007) • Largest institutional holders include Och-Ziff, Capital International, Blackrock, Goldman Sachs Principal Strategies and Pala Investments amongst others • Further expand and upgrade mining operations and take advantage of consolidation opportunities • Successful IPO indicative of investor appetite for vertically integrated model ~US$54m Pre-IPO Financing 16.6m ct2Resources Increased beneficiation activity and margin ~30,000 ctsProduction³ ~US$185m IPO Proceeds 5.1m ct1 Resources No Producing Assets 1. Management estimate of attributable resources as of December 2006 2. Indicated and inferred resources (Source: Venmyn Rand (Pty) Ltd)3. Annualised August 2007 production

  12. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt Acquisition of North West four producing assets, grouped in nodes Namakwa’s four producing nodes increased production over 20 times since April 2007 From 111 carats in April 2007 to 2,425 carats in August 2007 (almost 30,000 carats annualised) Equipment capacity doubled to 2,115 tph from 1,306 tph Significant value creation in the DRC by consolidation and resource development Completion of vertical integration strategy and increasing beneficiation volumes and margin Expand existing production and bring into production selected development projects Expand production projects in the North West Province (2009E: 100,000 carats) Bring into production selected longer term development projects in South Africa, Angola, the DRC and Namibia Again double equipment capacity to 3,915 tph Pursue further growth and consolidation opportunities Increase beneficiation inventory and expand diamond trading operations Inventory scale to facilitate differentiated parcels of diamonds Develop the cutting and polishing business How We Have Unlocked Value • Planned Value Creation Post IPO • Value Creation Pre IPO

  13. 1. Beneficiation Business Overview2. Mining Business Overview3. Financials and OtherAppendix: Relevant Information

  14. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt Beneficiation Value Chain • Cost ofDiamondProduction • US$5.0bn Rough Diamond Diamond Pipeline Polished Diamond Diamond Pipeline 2006 • RoughDiamondSales • US$13.1bn • Value ofPolishedEx-Production • US$18.7bn • Polished Diamond Content in Sales • US$18.5bn • Retail Sales of Diamond Jewellery • US$68.5bn Value Chain Themes • Inefficiencies caused by limited information flow for margin protection • Margins, inventory holding period, working capital and cost increase down the chain • Beneficiation link necessary for successful integration: from mines to luxury goods Source: IDEX 2006

  15. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt Beneficiation Overview • Diamond value chain margins • Key differentiating factor • Value maximization Relationships Product Knowledge Market Insight Distribution Channels • Diamond Information Chain InformationFlow IncreasedMargins IndustryIntegration

  16. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt Demonstrable Higher Prices Achieved by Namakwa • Namakwa achieves a higher price on the sale of its diamonds than the global average Comparison of Average Price for Fine Diamonds ($/cts) Source: WWW International Diamond Consultants Ltd, 2007. Analysis based on the period from 28-Mar-2007 to 13-Jul-2007. Total volume includes production and purchases

  17. 1. Beneficiation Business Overview2. Mining Business Overview3. Financials and OtherAppendix: Relevant Information

  18. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt North West Province Overview North West Province Consolidation in the North West ProvincePhase 2 Northern Node North-Eastern Node Western-Node Central Node ‘Bamboesspruit Run’ ‘Soutpan Run’ South-Eastern Node ‘Mooifontein Run’ ‘Sewefontein Run’ Southern Node North West Province, North West South Africa Location South Western-Node 100% Effective Interest1 Comprises of 8 regions (7 nodes and the Pypklip area). There are four producing mines in four of the nodes. Resources: 2.110 m cts indicated and 2.072m cts inferred Description Consolidation in the North West ProvincePhase 3 Production start date 2006 Northern Node Open cast alluvial, DMS plants Mining type/ Plants Capex2 $76.0m for 2008-2012 ($38.7m in 2008) Production cts (000) $/cts 1. Source: Venmyn Rand (Pty) Ltd 2. Based on Venmyn Rand (Pty) Ltd. Capex is calculated based onl forecasted Capex in rand terms and forecasted FX rate (US$/ZAR)

  19. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt DRC Overview DRC Concession Map Start of exploration 641 Northern Node Western-Node South Western-Node Location Tshikapa Triangle, DRC Highly prospective flats on 2306 50% to 100% Effective Interest1 Description Comprises of 27 concessions which covers almost 1000 km2. There are four nodal areas for exploration. Production start date Exploration moving to production, bulk sampling end 2008 Open cast alluvial, DMS plants Mining type/ Plants Capex2 $34.0m for 2008-2009

  20. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt A Significant Development Project Pipeline North West Albetros DRC Namibia Angola North West, South Africa Namaqualand, South Africa South West of DRC near Tshikapa town 55 km North of Port Luderitz, Namibia North East of Angola Location Effective Interest1 50% – 100% 90% – 95% 50 – 90% 100% 37 – 70% 1,440 inferred 500 indicated and 298 inferred 1,267 indicated and 5,206 inferred 212 indicated and 4,891 inferred NA Resources (k cts) 1. Source: Venmyn Rand (Pty) Ltd.

  21. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt BEE Considerations • The BEE Requirements require that a New Order Prospecting Right applicant must be at least 26% owned and controlled by historically disadvantaged South Africans (HDSAs) • For New Order Mining Right applications, the applicant must show how it will reach the targets of 15% BEE participation by May 2009 and 26% by May 2014 • Namakwa has a registered HDSA trust for the benefit of all HDSA employees which will be the anchor project for all South African mining operations • This structure is currently being implemented with a view of finalisation by 2008 • BEE requirements for the beneficiation industry have not yet been determined – once these are clear, Namakwa will implement an appropriate structure

  22. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt Environmental Responsibility • Responsibility for the environment is an important consideration for Namakwa • Alluvial mining does not require the use of hazardous chemicals • Environmental liabilities are significantly lower than other forms of mining • Shallow, open cast mines also mitigate ultimate environmental liability • Current environmental liability, net of ring-fenced cash, estimated by independent consultants to be $1.3m • Namakwa currently uses borehole water which is returned to mined out areas (over 80% returned to the water table) • When DMS plants are installed, water will be recirculated and only 20% of required volume will be fresh • Backfill of mined ore is part of current processes to ensure low impact mining Rehabilitation of an Old Mine Source: Company

  23. 1. Beneficiation Business Overview2. Mining Business Overview3. Financials and OtherAppendix: Relevant Information

  24. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt Namakwa’s Capital Structure • Salient capital structure • Number of ordinary shares in issue: 116.4m • Number of A shares issued by Namakwa’s SA holding company: 9.1m* • Total fully diluted number of shares in issue: 125.5m • Cash on hand (US $ equivalent): US$141 million • Diamond inventory at cost: • Rough diamonds: US$8.7 million • Polished diamonds: US$2.7million * For further information on A share structure refer to slide 36

  25. 1. Beneficiation Business Overview2. Mining Business Overview3. Financials and OtherAppendix: Relevant Information

  26. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt Further Management Expertise Mining Neil Shadwell 22 years Project Manager - DRC Engineering Manager with Ingwe Coal (BHP) and Chief Engineer ITM – Angola Lourens Myburg 12 years Geological Manager - West Coast Geologist; Snr Geologist Namaqualand Mines Colyn Purdon 29 years Metallurgical Manager Metallurgical Manager Sheba; Snr Manager: Metallurgical Projects, Trans Hex; Principal Engineer Bateman                      Louis Pienaar 44 years Geological Manager - NW Marine diamonds in Namibia, Grasdrif and Oena mines, Orange River Deon Bowers 16 years Geological Manager-NW Production Ore-Quality Controller; Senior Geologist Koingnaas Mines (De Beers) Andre Appel 26 years Regional Manager NW Engineering Manager, Business Unit Manager and General Manager Trans Hex. Engineering Manager First Uranium Human Resources Edward Monoketsi 13 years Human Resource Manager NW Snr Human Resource Office, Human Resource Superintendent, Trans Hex Group Basil Andrews 13 years Chief Safety Officer Safety Officer, Chief Safety Officer Trans Hex Group Name ApproximateExperience Position Prior Experience 25

  27. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt Sourcing of Rough • Own and 3rd party • Product knowledge • Sorting process • Categorization determines optimal strategy for maximum value • Critical mass effects strategy Beneficiation Overview Beneficiation Strategy Distribution Channels • Understanding demand & supply dynamics • Market intelligence for ultimate value creation • Strategy is a function of • Cashflow • Market dynamics • Product mix • Distribution channels • Beneficiation pressures in country of origin • Procurement knowledge • Tender process • Open Market • Relationship driven sales • Wholesale • Partnerships • Jewellery high diamond content • Luxury goods markets • Branding opportunities • Function of Product Type • Understand Destinations Production Planning Value Maximisation Information Flow Rough Customers Strategy Decision Polished

  28. tugela\Namakwa Diamonds\Roadshow\10 Namakwa Roadshow Presentation.ppt A share salient terms • Namakwa designed the A share structure to facilitate economic participation in Namakwa by SA shareholders • In terms of South African Exchange Control Regulations South African residents are precluded from owning shares in non-South African companies (save for some exemptions not relevant to Namakwa) • Namakwa’s South African subsidiary, Namakwa Diamond Holdings (Pty) Limited issued 9,05m A shares to SA residents • The A shares mirror the economic benefits accruing to Namakwa ordinary shares save that dividends and any proceeds from a sale are paid in SA in Rands to comply with Exchange Control Regulations • From a valuation perspective Namakwa views the A shares as part of the fully diluted share capital of Namakwa and hence the number of A shares (9,1m) should be added to the ordinary shares of Namakwa (116.4m) for total fully diluted number of shares for valuation purposes (125.5m)

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