kimberley west diamond mining company (pty) limited

Kimberley West Diamond Mining Company (Pty) Limited

Presentation compiled by E. W. Myhill – mandated 31st May 2008 2/46

Index

1. Purpose of the Document ______________________________________________ 3

2. Introduction to the Kimberley West Mine ___________________________________ 5

2.1. Department of Minerals & Energy – Mining Right ________________________ 10

3. Locality Maps _______________________________________________________ 24

4. Summary of Historical Developments ___________________________________ 29

5. Data of known Diamond Pipes ________________________________________ 36

6. Preliminary Geological and Geomagnetic Report __________________________ 39

6.1. Kimberlite Bodies in The Kimberley West Group _________________________ 43

6.2. Ground Magnetic Survey ___________________________________________ 45

6.3. The Theron Geothermal ____________________ Error! Bookmark not defined.

7. Valuation Reports ___________________________ Error! Bookmark not defined.

7.1. J.W.C. Mitchell’s Valuation Report ____________ Error! Bookmark not defined.

7.2. Assessment of Total Diamond Reserves _______________________________ 57

7.3 CP De Leeuw Appraisers Valuation Report ______ Error! Bookmark not defined.

8. Current Status of The Kimberley West Mine _______ Error! Bookmark not defined.

9. Photographic Material ________________________ Error! Bookmark not defined.

9.1. Plant & Equipment & Infrastructure ____________ Error! Bookmark not defined.

9.2. Mining Areas _____________________________ Error! Bookmark not defined.


1. Purpose of the Document


The purpose of this document is to present the historical, geological and financial yields of the Kimberley West Diamond Mine to potential buyers.

Copies of the historical and certified documentation have been copied into this presentation.

______________

Esmond W Myhill For and on behalf of Kimberley West Diamond Mining (Pty) Ltd 31

st May 2008


2. Introduction to the Kimberley West Mine


Diamonds were first found in South Africa on a farm in the Kimberley area in the late 19th Century. Today, throughout the world, Kimberley is well known for its diamonds and the ‘Big Hole’ – the worked out mine of the De Beers Corporation. The Kimberley Mine / tourist attraction is not the only diamondiferous kimberlitic pipe found in the area. Many more diamond bearing kimberlitic pipes and fissures were found in the “Kimberley Diamond Belt”.

The Kimberley West Mine (KWM), previously known as the Excelsior Diamond Mining Company (Pty) Ltd., is located 60 kilometres due West from the historic ‘Big Hole’ De Beers mine – where the De Beers Corporation was established. The KWM is connected by a direct tectonic fracture (fissure) to the De Beer’s Pipe. In fact, the Kimberley West Central Pipe is located at the intersection of tectonic fractures from the De Beers Kimberlite Pipe in Kimberley.

In 1986 the Mine was acquired by the current owners, inspired by the late Mieczyslaw Stolarczyk (Mike Stol), who re-named the Mine ‘The Kimberley West Diamond Mining Company (Pty) Limited. Mike was tragically killed in a motor vehicle accident in 2005.

The late Mieczyslaw Stolarczyk


With limited production facilities KWM were able to extract sufficient quantities of diamonds from the mine’s unprocessed dump material to fund the establishment of the infrastructure. This included the construction of roads, drainage canals, power and water reticulation, workshops, security fencing, staff accommodation, canteen facilities, offices etc.

Workshops at the Kimberley West Mine

The value of infrastructure, improvements, machinery, including mine vehicles located on the mine, was valued in 2001 at US$20 million by international appraisers, the CP de Leeuw Group. The current value of the assets is estimated at US$22 million. At that time it was believed that the KWM was as good a proposition as any of the mines in the Kimberley area as far as the grade and quality of the diamonds were concerned. The mine consisted of the following pipes (intrusions) and blows/fissures, all of which are diamond bearing Kimberlite:

The Central Pipe )

The Western Pipe )

The Eastern Pipe )

A number of fissures )


For many years De Beers expressed an interest in acquiring the mine. During 1999 they agreed to the purchase of a 40% stake and requested permission for further geological exploration. Permission was granted subject to De Beers disclosing the results to the owners. It was revealed that the De Beers exploration discovered the existence of an additional pipe just North of, and immediately adjacent to, the Central Pipe. The owners were not satisfied with the De Beers’ disclosure and following consultation with an expert on the Kimberley Diamond Belt, the owners decided not to pursue the proposed involvement with De Beers. Subsequent exploration of the KWM has revealed demarcated pipes and fissures consisting of the following:

Pipe Area

Central 1.42 Ha )

Western 4.41 Ha )

All surface area calculation dimensions reduced by Dr Greeff

Northern Not included )

Eastern 6.74 Ha )

Western Fissure 0.92 Ha )

Middle blow Not included )

South Eastern blow 0.887 Ha )

North-Western blow 0.28 Ha )

Dr G.J. Greeff (PhD. Stellenbosch), an internationally renowned geologist and expert on the diamonds of the Kimberley Diamond Belt, conservatively estimated the total area at 14,657 hectares. Prior to the discovery of the last two pipes Dr Greeff placed an in situ value of KWM at US$1.4 Billion. Dr Greeff’s valuation of the mine, dated July 2000, is based on a value of $100 per carat; a 30% reduced surface area and an assumed conclusive mining depth of only 300 metres.

Dr Greeff’s assumptions Actual for Kimberley area or relevant

comparable value

Mine Depth 300 Metres +100 metres (full body of pipe intact)

Surface area

14,657 Hectares + 45 Hectare (actual all pipes fissures)

USD per Carat

$100 $535 (average of 70 000 carats, 2001)

Carats per 100 tons

25 +200 (actual for Venetia, pre Karoo)


The assumed tonnage of Kimberlite with a grade of 25 carats per 100 tons would therefore produce a total of 21.67 million carats. This equates to S$2,167,000,000 based upon Dr Greeff’s very conservative estimate, in July 2000, of $100 per carat.

With the inclusion of the 2 latest pipes the KWM ranks amongst the largest known deposits in the world. The Northern pipes, together with the two recently discovered pipes, are pre-Karoo series intrusions which would date these Kimberlite bodies to over 200 million years in age. The other known intrusions are much younger and generally the same as the rest of the Kimberley Diamond Belt and the Botswana Kimberlite pipes - approximately 50 million years in age. The Geological & Geomagnetic Report compiled by Dr. J.J. Greeff is included in this presentation. From the present pilot plant it has been established that execellent recoveries were made from the unprocessed dump material, (This material was excavated from the Central Pipe down to a depth of 30 metres, during the period that the Theron Holdings / Excelsior Diamond Co. owned the property. No extraction process was conducted on the material) due to substantial dilution of Kimberlitic by waste rock, dwyka, brecciate shale etc. the average yield was 8 – 12 ccts/100 tons.

Eastern pipe +/- 22cts/100 tons

Central pipe, Eastern Fissure 29 ccts/100 tons

Western pipe recoveries were inconclusive as the clay content in the yellow ground created processing difficulties.

Types of Diamonds

White – Colourless

Cape Silvers

Champaign to Brown

Rose to Orange

A valuation Report compiled by CP De Leeuw Appraisers is included in this presentation. Current Status of the Mine regarding Mining rights In July 2007 the South African Government Department of Minerals and Energy, Kimberley Office issued the Kimberley West Diamond Mining Company (Pty) Ltd., with a New Order Mining Right.


2.1. Department of Minerals & Energy – Mining Right


3. Locality Maps


South Africa

Northern Cape


Kimberley Area

Satellite image of Kimberley Area indicating KWM


Survey Map


4. Summary of Historical Developments


Date Event

1896 : The central pipe was discovered by Dr. Alex Du Toit. Theron Prospects commenced mining operations.

1902 : Boer Commandos overran the Mine and occupied the area until 1904.

1904 : Klippan Syndicate obtained the rights to the mine and listed

the Kimberley West on the J.S.E in 1905, with capital of £350 000.

1905 : The South African Mines, Commerce and Industries news

sheet of Dec 2 1905 reports two test washings of clean ground recorded in the books of the first mining syndicate as follows:

1. Loads (1 load = .8 ton) washed, 625; yielding 260½ -

42½ carats per 100 loads (= 53.125 per 100 ton)

2. Loads washed 2,120 yielding 212 – 10 carats per

100 loads (=12.5 per 100 ton)

Item 1 makes reference to the blue ground of the Central Pipe. No reference is made to the location of loads washed in Item 2

1906 : Reference made to the Theron’s Mine or Kimberley West in an

extract from the Science Annual Report by Dr. Alex du Toit

1927 : Central and Western Pipes flooded due to a breach in the Dam wall. The economic depression forced the Klippan Syndicate into liquidation.

1947 : Frank Biggs transferred the Mine to the Consolidated Transvaal and Free State Mining Company.

1951 : Consolidated Transvaal and Free State Mining Company Limited sold Mine to Excelsior Diamond Company (Pty) Ltd.

1979 : Theron Holdings Ltd., parent company of their wholly owned subsidiary Excelsior Diamond Mining Company (Pty) Ltd., liquidated by Bank consortium following the sinking of their uninsured sea mining vessel off the West Coast of Africa.


1986

:

Mine acquired by Mieczyslaw Stolarczyk (Mike Stol) in settlement of legal action instituted by Mike Stol for breach of Banking Rules. Thus the Mine was never, in fact, offered for sale.

Report by Geologist W. M. Manaczynski quoting.

1. Author from ‘Further conclusions from Minutes of

Geological Consultation’ quotes “some nineteen and

half thousand registered carats of diamonds

recovered from a relatively small overburden section”

during the period 1951 – 1976

2. Report by Nikel Corporation dated 26 December

1969 states “ 20 sample pits of 10ft deep were sunk

in the area of the Eastern Pipe with the recoveries

from these pits producing:

a. 229 Diamonds of 0,3 carats

b. 10 Diamonds of 1-2 carats

c. 4 Diamonds of 2-3 carats

d. 1 Diamond of 3-4 carats

e. Largest Diamond recovered was 8,06 carats

Recovery was 24.82 carats per 100 loads (1 load = .8 ton) which is equal to >29.78 carats per 100 ton.

1986> : Mike Stol, then owner of Excelsior Diamond Mining Company (Pty) Ltd., immediately started the establishment of the infrastructure required (roads, drainage canals, power and water reticulation, work shops, security fencing, staff accommodation, canteen facilities, offices etc.). All development / investment was funded by the owners on a cash basis from the sales of diamonds, the exploration, development and sale of other mining operations such as Granite, Quartzite and alluvial diamond properties - a very slow process!

5 January 1991 : Sworn Appraisement & Certificate issued by Johan Wilhelm Christiaan Mitchell placing a value on KWM 'the Theron Mine Property' at $580,000,000.


1999

:

Excelsior Diamond Mining Company (Pty) Ltd., declined offer from De Beers for a 40% shareholding in the mine.

30 October 1999 : Report of Preliminary Geological and Geomagnetic investigation of Multiple Diamondiferous Kimberlite Intrusions at the Kimberley West Mine (old Theron Mine) compiled by Dr JJ Greeff (Ph.D. Stellenbosch)

10 July 2000 : Report on an assessment of the Total Diamond Reserves in the intrusive Kimberllte bodies forming part of the Kimberley West Mine, (Theron Diamond Mine) confirming reserves and values at $2.2 Billion. compiled by Dr JJ Greeff (Ph.D.) Stellenbosch

September 2001 : CP De Leeuw Africa (Pty) Ltd. valued the KWM total diamond reserves at $1.344, 000,000. The value of the infrastructure was assessed as $20,000,000.

29th June 2007 : New Order Mining Right signed and issued to the Kimberley West Diamond Mining Company (Pty) Limited by the Department of Minerals & Energy, Kimberley Office

11th July 2007 : New Order Mining Right registered at the Minerals & Petroleum Titles Registration Office under reference 52/2007 (MR)


5. Data of known Diamond Pipes


Note: Test results indicate that the total area, of the KWM Kimberlite Diamond pipes, is amongst the largest known area of diamond pipes in the world (indicated in red below)


6. Preliminary Geological and Geomagnetic Report


6.1. Kimberlite Bodies in The Kimberley West Group


6.2. Ground Magnetic Survey

kimberley west diamond mining company (pty) limited

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