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ZIM ASSET BLUEPRINT PARLIAMENTARY SEMINAR. ANTWERP Kept promises & Transparent value creation. ARI EPSTEIN CEO Antwerp World Diamond Centre. 12/03/2014. Introduction. Largest concentration of diamond trading companies (1700+) a nd of major rough diamond producers. Why Antwerp ?.

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Antwerp kept promises transparent value creation

ZIM ASSET BLUEPRINT PARLIAMENTARY SEMINAR

ANTWERP

Kept promises &

Transparent value creation

ARI EPSTEIN

CEO

Antwerp World Diamond Centre

12/03/2014



Antwerp kept promises transparent value creation

Largestconcentration of diamondtrading companies (1700+)

and of major roughdiamond producers

WhyAntwerp?

Antwerpgenerates the highest market priceforroughdiamonds

+15% comparedtoothercentres

Highest level of transparency in the world

Major financial institutions supporting the industry



Antwerp kept promises transparent value creation

Antwerp ... kept promises

  • Sept. 2013 :

  • EU sanctions against ZMDC lifted Antwerp lobbying efforts

  • exports to Antwerp can resume

  • Nov. 2013 :

  • Antwerp delegation to Zimbabwe

  • commitment to Minister of Mines Chidakwa to create more revenue through transparent tendering in Antwerp

  • MOU for technical assistance

  • December 2013 :

  • Trial tender of Marange goods: high potential

  • Nov. 2011 – Dec. 2012 :

  • Antwerp supports KP monitoring team

    • M. Van Bockstael & A. Chicane

    • Objective, transparent review reports

Nov. 2009:

KP declares Marange mining operations non-compliant- Marange rough banned

2009

2010

2011

2012

2013

2014

October 2010 :

Antwerp fact finding mission to Zimbabwe

 Commitment to former Minister of Mines Mpofu to help lift EU-sanctions on ZMDC

February 2014 :

2nd Trail tender of Marange goods: unprecedented success

November 2012 :

Marange conform minimum requirements

 exports resumed


Antwerp kept promises transparent value creation

Economic Value additionfor Zimbabwe

Insight in the diamondvalue chain

2012 revenu, $ billion

Source: IDEX, Tacy Ltd. And Chaim Even-Zohar, Diamond Value Chain 2010, Bain report 2011

* Bain estimate, ** total diamond jewelry retail sales


Antwerp kept promises transparent value creation

Import vs. Export comparison

Trade volume

Source: Annual Global Summary 2009-2010-2011-2012 Production, Imports, Exports and KPC Counts

China and India are polishing centers, resulting in these rather high negativemovement percentages.


Antwerp kept promises transparent value creation

Import vs. Export comparison

Averageprice per caratmovement

Revenues are generated outside of the producing country, resulting in beneficiation losses.


Antwerp kept promises transparent value creation

Sales Mechanism

Before and After EU-delisting ZMDC

BEFORE

Diff = $ 4,95/Ct x 12 M. Ct/year = 59,4 Million USD on annual basis

Royalty to the government:

$47 x 15% = $7,05 /Ct

564 M$/year

$76 /Ct

$47 /Ct

AFTER

Royalty to the government:

$80 x 15% = $12 / Ct

960 M$/year

$82 /Ct

$80 /Ct

In case of full Run of Mine

potential > $100 / Ct

$76 /Ct


Antwerp kept promises transparent value creation

Recent ANTWERP Tenders Sold goods

1st Tender

Carat

USD

2nd Tender

Carat

USD


Antwerp kept promises transparent value creation

Recent ANTWERP Tender Conclusions

  • Revenue +30% above expected ‘reserve price’, where the reserved price was hardly ever achieved in Zimbabwe.

  • Revenue +50-60% above tender prices in Zimbabwe/other trade centres

  • Prices for individual stones as high as $18,000/Ct compared to a stated maximum of $400/Ct in previous Zimbabwe Sales.

  • Better cleaning (deep boiling) and sorting  better prices

  • No full run of mine production  Compared to footprint

  • All mining companies and the Zimbabwean Embassy where represented at the tender  Full Transparency


Antwerp kept promises transparent value creation

Economicvalueadditionfor Zimbabwe

Potentialsequence of steps forgrowth


Antwerp kept promises transparent value creation

Value addition for Zimbabwe

Antwerp’s proposal


Antwerp kept promises transparent value creation

Conclusion

From ZIMBABWE to ANTWERP and back  the best way to value creation